I

103D CONGRESS

1ST SESSION H. R. 3570

To amend the Federal Deposit Insurance Act to provide for a system of

insuring the deposits of depository institutions through a self-regulating

system of cross-guarantees, to protect taxpayers against deposit insurance

losses, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 19, 1993

Mr. PETRI (for himself, Mr. COX, Mr. ARMEY, Mr. LEVY, and Mr.

ROHRABACHER) introduced the following bill; which was referred jointly

to the Committees on Banking, Finance and Urban Affairs, the Judiciary, and Ways and Means

A BILL

To amend the Federal Deposit Insurance Act to provide

for a system of insuring the deposits of depository institutions through a self-regulating system of cross-guarantees, to protect taxpayers against deposit insurance

losses, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Deposit Insurance Reform, Regulatory Modernization,

6 and Taxpayer Protection Act of 1993’’.
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1 (b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

TITLE I—100 PERCENT CROSS-GUARANTEES

Subtitle A—Definitions

Sec. 101. Definitions.

Sec. 102. Rules of construction.

Subtitle B—Cross-Guarantee Process

Sec. 111. Depository institutions prohibited from operating without a crossguarantee contract.

Sec. 112. Parties to cross-guarantee and stop-loss contracts.

Sec. 113. Requirements common to cross-guarantee and stop-loss contracts.

Sec. 114. Requirements applicable only to cross-guarantee contracts.

Sec. 115. Requirements applicable only to stop-loss contracts.

Sec. 116. Eligibility and requirements for direct guarantors.

Sec. 117. Provisions relating to cross-guarantee and stop-loss syndicates.

Sec. 118. Assumption of control of a guaranteed company by a cross-guarantee

syndicate.

Sec. 119. Enforcement of contracts.

Subtitle C—Powers and Duties of the CGRC

CHAPTER 1—CROSS-GUARANTEE PROCESS

Sec. 121. The Cross-Guarantee Regulation Corporation.

Sec. 122. Regulation of the cross-guarantee process.

Sec. 123. Approval process for cross-guarantee and stop-loss contracts.

Sec. 124. Central electronic repository.

Sec. 125. Restrictions on closed loops.

Sec. 126. Treasury oversight of the Cross-Guarantee Regulation Corporation.

CHAPTER 2—PROTECTION OF INSURED DEPOSITS

Sec. 128. Backup insurance on deposits at guaranteed depository institutions.

Subtitle D—Miscellaneous Provisions

Sec. 131. Institutions offering uninsured deposits.

Sec. 132. Preemption of state depositor preference laws.

Sec. 133. Federal Reserve lending.

Sec. 134. Advertising by guaranteed financial groups.

Sec. 135. Guaranteed depository institutions remain federally insured depositories for purposes of state law.

Subtitle E—Transition to 100 Percent Cross-Guarantee Process

Sec. 141. Effective date of system based on minimum number of guaranteed

depository institutions and amount of total assets.

Sec. 142. Mandatory phase-in of cross-guarantees after effective date of system.

Sec. 143. Appointment of conservator or receiver for institutions which fail to

comply with transition requirements.

Sec. 144. Exit fees.
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Sec. 145. Severance pay and related benefits for former Federal and State

banking agency employees.

Sec. 146. Abolition of Federal Financial Institutions Examination Council.

Sec. 147. Abolition of the Federal Deposit Insurance Corporation.

TITLE II—AMENDMENTS TO OTHER BANKING LAWS

Sec. 201. Amendments relating to national banks.

Sec. 202. Amendments relating to member banks.

Sec. 203. Amendments relating to savings associations.

Sec. 204. Amendments relating to savings and loan holding companies.

Sec. 205. Amendments relating to the Federal Deposit Insurance Corporation.

Sec. 206. Amendments to other banking laws.

TITLE III—AMENDMENTS TO TITLE 11, UNITED STATES CODE

Subtitle A—Amendments to chapter 1 of Title 11

Sec. 301. Definitions.

Sec. 302. Applicability of chapters.

Sec. 303. Public access to papers.

Sec. 304. Who may be a debtor.

Subtitle B—Amendments to chapter 3 of Title 11

Sec. 311. Party in interest.

Sec. 312. Qualification of trustee.

Sec. 313. Notice.

Sec. 314. Automatic stay.

Sec. 315. Executory contracts and unexpired leases.

Subtitle C—Amendments to chapter 5 of Title 11

Sec. 321. Claims of direct guarantors.

Sec. 322. Debtor’s duties.

Sec. 323. Exceptions to discharge.

Sec. 324. Limitation on avoiding powers.

Sec. 325. Preferences.

Sec. 326. Fraudulent transfers and obligations.

Sec. 327. Post-petition transactions.

Sec. 328. Contractual right to liquidate a securities contract.

Sec. 329. Contractual right to liquidate a commodities contract or forward contract.

Sec. 330. Contractual right to liquidate a repurchase agreement.

Sec. 331. Contractual right to terminate a swap agreement.

Subtitle D—Amendments to chapter 11 of Title 11

CHAPTER 1—AMENDMENTS TO EXISTING LAW

Sec. 341. Creditors’ and equity security holders’ committees.

Sec. 342. Who may file a plan.

Sec. 343. Impairment of claims or interest.

Sec. 344. Acceptance of plan.

Sec. 345. Confirmation hearing.

Sec. 346. Confirmation of plan.

Sec. 347. Effect of confirmation.
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CHAPTER 2—ENACTMENT OF SUBCHAPTER V

Sec. 351. Guaranteed company reorganization.

Sec. 352. Inapplicability of other sections.

Sec. 353. Effective date of filing.

Sec. 354. Appointment of trustee.

Sec. 355. Liability of direct guarantors for transfers to guaranteed creditors.

Sec. 356. Effect of Federal legislation and Federal, state, and local regulations.

Sec. 357. Liquidation.

TITLE IV—AMENDMENT TO TITLE 28, UNITED STATES CODE

Sec. 401. Venue.

1 SEC. 2. FINDINGS AND PURPOSES.

2 The purposes of this Act are:

3 (1) To create a competitive and essentially self4 regulating private deposit insurance marketplace by

5 requiring each bank and savings association which

6 accepts deposits to protect the full amount of

7 dsposits held along with most other nondeposit li8 abilities by obtaining cross-guarantee contracts from

9 syndicates of guarantors.

10 (2) To induce depository institutions to lend

11 and invest wisely by authorizing guarantors who

12 issue cross-guarantee contracts to—

13 (A) charge risk-sensitive premiums for the

14 guarantees provided; and

15 (B) negotiate with the banks and savings

16 association who enter into such contracts all

17 other terms and conditions, to the extent such

18 terms and conditions are not inconsistent with

19 this Act or other provision of law.
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1 (3) To make the cross-guarantee process as

2 self-regulating as possible by establishing a closed

3 system of guarantors which has an inviolable ‘‘stop4 loss’’ mechanism and numerous constructive tensions

5 among the participants in the system.

6 (4) To regulate the cross-guarantee market7 place only to the extent necessary to maintain the

8 safety, soundness, and viability of the entire cross9 guarantee process and not the solvency of any indi10 vidual bank or savings association regardless of its

11 size.

12 TITLE I—100 PERCENT CROSS13 GUARANTEES

14 Subtitle A—Definitions

15 SEC. 101. DEFINITIONS.

16 (a) DEFINITIONS RELATING TO DEPOSITORY INSTI17 TUTIONS, NON-DEPOSITORY GUARANTORS, AND AFFILI18 ATES.—For purposes of this title:

19 (1) COMPANY.—The term ‘‘company’’

20 (A) means any corporation, partnership,

21 business trust, association, or similar organiza22 tion; and

23 (B) does not include a branch or agency,

24 or a group of branches and agencies, of a for25 eign bank.
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1 (2) DEPOSITORY INSTITUTION.—The term ‘‘de2 pository institution’’ has the meaning given to such

3 term in section 3(c) of the Federal Deposit Insur4 ance Act.

5 (3) FAILED DEPOSITORY INSTITUTION.—The

6 term ‘‘failed depository institution’’ means any de7 pository institution for which a conservator or re8 ceiver has been appointed by the FDIC.

9 (4) FOREIGN BANK BRANCHES AND AGEN10 CIES.—The terms ‘‘agency’’ and ‘‘branch’’, when

11 used in connection with a reference to a foreign

12 bank, and the term ‘‘foreign bank’’ have the mean13 ings given to such terms in section 1(b) of the Inter14 national Banking Act of 1978.

15 (5) GUARANTEED BANKING OFFICE.—The term

16 ‘‘guaranteed banking office’’ means any branch or

17 agency of a foreign bank where the foreign bank has

18 entered into a cross-guarantee contract with a cross19 guarantee syndicate.

20 (6) GUARANTEED COMPANY.—

21 (A) IN GENERAL.—The term ‘‘guaranteed

22 company’’ means any company which has en23 tered into, and continues to be guaranteed

24 under, a cross-guarantee contract with a cross25 guarantee syndicate.
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1 (B) FOREIGN BANKS.—

2 (i) IN GENERAL.—Notwithstanding

3 subparagraph (A), a foreign bank shall not

4 be a guaranteed company solely because a

5 branch or agency of such bank is a guar6 anteed banking office under a cross-guar7 antee contract.

8 (ii) EXCEPTION FOR FOREIGN BANKS

9 WHICH ARE SUBSIDIARIES.—Notwithstand10 ing clause (i), a foreign bank may be a

11 guaranteed company, if such bank is guar12 anteed under a cross-guarantee contract

13 under section 112(e)(1).

14 (7) GUARANTEED DEPOSITORY INSTITUTION.—

15 The term ‘‘guaranteed depository institution’’ means

16 a depository institution which is a guaranteed com17 pany.

18 (8) GUARANTEED FINANCIAL GROUP.—The

19 term ‘‘guaranteed financial group’’ means—

20 (A) a depository institution which is the

21 sole guaranteed company under a cross-guaran22 tee contract;

23 (B) 2 or more companies, at least 1 of

24 which is a depository institution and all of
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1 which are guaranteed companies under the

2 same cross-guarantee contract;

3 (C) any guaranteed banking office which—

4 (i) is a branch; and

5 (ii) is the sole guaranteed banking of6 fice under a cross-guarantee contract; or

7 (D) any 2 or more branches and agencies,

8 at least 1 of which is a branch and all of which

9 ara guaranteed banking offices under the same

10 cross-guarantee contract.

11 (9) NONDEPOSITORY GUARANTOR.—The term

12 ‘‘nondepository guarantor’’ means any person which

13 has entered into a stop-loss contract with a stop-loss

14 syndicate.

15 (10) STATE DEPOSITORY INSTITUTION.—The

16 term ‘‘state depository institution’’ has the meaning

17 given to such term in section 3(c)(5) of the Federal

18 Deposit Insurance Act.

19 (11) TERMS RELATING TO AFFILIATION AND

20 CONTROL.—

21 (A) AFFILIATE.—The term ‘‘affiliate’’

22 means, with respect to any company, any other

23 company that controls, is controlled by, or is

24 under common control with such company.
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1 (B) CONTROL.—The term ‘‘control’’

2 means, with respect to one company’s relation3 ship to another company, one company’s owner4 ship or power to, directly or indirectly, vote 5

5 percent or more of any class of voting securities

6 of another company.

7 (C) SUBSIDIARY.—The term ‘‘subsidiary’’

8 means, with respect to any company, any com9 pany which such company controls.

10 (b) DEFINITIONS RELATING TO CROSS-GUARANTEE

11 AND STOP-LOSS CONTRACTS.—For purposes of this title:

12 (1) CROSS-GUARANTEE CONTRACT.—The term

13 ‘‘cross-guarantee contract’’ means a contract

14 which—

15 (A) is entered into between—

16 (i) 1 or more companies, at least 1 of

17 which is a depository institution; and

18 (ii) a cross-guarantee syndicate; and

19 (B) is approved by the Corporation under

20 section 123.

21 (2) CROSS-GUARANTEE OBLIGATION.—The

22 term ‘‘cross-guarantee obligation’’ means an obliga23 tion of a direct guarantor arising out of a cross24 guarantee or stop-loss contract, and shall include the

25 obligations of such guarantor under section
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1 125(c)(2) of this title and sections 321 and 355 of

2 title III.

3 (3) CROSS-GUARANTEE SYNDICATE.—The term

4 ‘‘cross-guarantee syndicate’’ means any group of di5 rect guarantors which has entered into a cross-guar6 antee contract with a guaranteed financial group.

7 (4) DIRECT GUARANTOR.—The term ‘‘direct

8 guarantor’’ means a member of a cross-guarantee or

9 stop-loss syndicate which has entered into a cross10 guarantee or stop-loss contract with a guaranteed

11 party.

12 (5) GROUP CROSS-GUARANTEE SYNDICATE CON13 TRACT.—The term ‘‘group cross-guarantee syndicate

14 contract’’ means a contract which—

15 (A) is entered into between 2 or more

16 guaranteed financial groups and a cross-guar17 antee syndicate; and

18 (B) is approved by the Corporation under

19 sections 112(c)(2) and 123.

20 (6) GUARANTEED OBLIGATION.—

21 (A) IN GENERAL.—The term ‘‘guaranteed

22 obligation’’ means an obligation of a guaranteed

23 party on which a cross-guarantee or stop-loss

24 syndicate has guaranteed performance.
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1 (B) RULE OF CONSTRUCTION.—The term

2 ‘‘performance’’ under subparagraph (A) shall be

3 construed to include making payment of prin4 cipal and interest at the promised time of pay5 ment, such that failure to immediately perform

6 in a timely manner constitutes a breach of con7 tract.

8 (7) GUARANTEED PARTY.—The term ‘‘guaran9 teed party’’ means any guaranteed company, guar10 anteed banking office, or nondepository guarantor.

11 (8) PROJECTED ANNUAL PREMIUM.—The term

12 ‘‘projected annual premium’’ means the amount cal13 culated under section 116(d)(2).

14 (9) PROJECTED ANNUAL PREMIUM CAPACITY.—

15 The term ‘‘projected annual premium capacity’’

16 means the amount which is equal to—

17 (A) in the case of a guaranteed company,

18 3 percent of the equity capital of the guaran19 teed financial group which is the party guaran20 teed under the same cross-guarantee contract

21 under which such company is a guaranteed

22 company; or

23 (B) in the case of a nondepository guaran24 tor, 3 percent of the net worth of the guaran25 tor.
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1 (10) PROJECTED ANNUAL PREMIUM LIMIT.—

2 The term ‘‘projected annual premium limit’’ means

3 the amount which is equal to 3 percent of projected

4 annual premium capacity.

5 (11) SECOND-TIER GUARANTOR.—The term

6 ‘‘second-tier guarantor’’ means a direct guarantor of

7 one of a guaranteed party’s direct guarantors.

8 (12) STOP-LOSS CONTRACT.—The term ‘‘stop9 loss contract’’ means a contract which—

10 (A) is entered into between a person and

11 a stop-loss syndicate; and

12 (B) is approved by the Corporation under

13 section 123 of this title.

14 (13) STOP-LOSS SYNDICATE.—The term ‘‘stop15 loss syndicate’’ means any group of direct guaran16 tors which has entered into a stop-loss contract with

17 a nondepository guarantor.

18 (14) SYNDICATE AGENT.—The term ‘‘syndicate

19 agent’’ means any person who acts as the agent for

20 the direct guarantors under any cross-guarantee or

21 stop-loss contract.

22 (c) DEFINITIONS RELATING TO FINANCIAL

23 TERMS.—For purposes of this title:

24 (1) EQUITY CAPITAL.—The term ‘‘equity cap25 ital’’ means, with respect to any guaranteed finan-
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1 cial group, the amount, as valued pursuant to sec2 tion 114(c), which is equal to—

3 (A) the consolidated assets of the guaran4 teed financial group; minus

5 (B) the consolidated liabilities, including

6 the estimated liquidation value of contingent li7 abilities, of the guaranteed financial group.

8 (2) NET WORTH.—The term ‘‘net worth’’—

9 (A) means, with respect to a nondepository

10 guarantor, the amount which is equal to the

11 stockholders’ equity, the partnership equity, the

12 net worth, or the fund balance of the guarantor,

13 as the case may be, as determined in accord14 ance with generally accepted accounting prin15 ciples;

16 (B) does not include any equitable interest

17 or liability which the Corporation determines

18 should not be treated as net worth for purposes

19 of this title; and

20 (C) in the case of any nondepository guar21 antor which controls another nondepository

22 guarantor or a guaranteed financial group, does

23 not include the net worth or equity capital of

24 the subsidiary guarantor or group.
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1 (3) PREMIUM INCOME.—The term ‘‘premium

2 income’’ means any income accrued by a direct guar3 antor under any cross-guarantee or stop-loss con4 tract.

5 (4) SUBORDINATED DEBT.—

6 (A) IN GENERAL.—The term ‘‘subordi7 nated debt’’ means any obligation assumed by

8 a guaranteed company or guaranteed banking

9 office which is subordinate in right and pay10 ment to any general creditor of the company or

11 office.

12 (B) GENERAL CREDITORS.—The term

13 ‘‘general creditors’’ includes—

14 (i) any creditor to which a guaranteed

15 company or guaranteed banking office has

16 an obligation which is a guaranteed obliga17 tion under the cross-guarantee contract for

18 such company or office, unless that credi19 tor is otherwise specifically secured by one

20 or more assets of the company or office;

21 and

22 (ii) any creditor of the guaranteed

23 company or guaranteed banking office

24 who—
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1 (I) is not protected under the

2 contract; and

3 (II) is not subject to preference

4 or subordination in a receivership or

5 bankruptcy proceeding.

6 (5) UNENCUMBERED LIQUID ASSETS.—The

7 term ‘‘unencumbered liquid assets’’ means, with re8 spect to any nondepository guarantor, the amount

9 which is equal to the sum of—

10 (A) the total amount of cash held by the

11 guarantor;

12 (B) the total amount on deposit for the

13 benefit of the guarantor in any transaction ac14 count at any guaranteed financial group or in

15 any Federal Reserve bank, including amounts

16 passed through any Federal home loan bank or

17 depository institution to a Federal Reserve

18 bank pursuant to the Federal Reserve Act;

19 (C) an amount equal to 95 percent of the

20 total market value of investment-grade debt se21 curities which are held by or for the benefit of

22 the guarantor and which mature in less than 5

23 years; and
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1 (D) an amount equal to 80 percent of the

2 total market value of equity securities which are

3 held by or for the benefit of the guarantor,

4 to the extent any such amount is not pledged, re5 stricted, or otherwise encumbered.

6 (d) DEFINITIONS RELATING TO FUNDS.—For pur7 poses of this title:

8 (1) CROSS-GUARANTEE BACKUP FUND.—The

9 term ‘‘cross-guarantee backup fund’’ means the fund

10 established pursuant to section 128(a).

11 (2) DEPOSIT.—The term ‘‘deposit’’ has the

12 meaning given to such term in section 3(1) of the

13 Federal Deposit Insurance Act, except that such

14 term does not include any obligation which, under

15 section 114(a)(2), may not be a guaranteed obliga16 tion.

17 (3) FDIC SEVERANCE FUND.—The term

18 ‘‘FDIC severance fund’’ means the fund established

19 under section 145(d)(1) and administered by the

20 FDIC for the purpose of providing severance pay

21 and related benefits for employees of Federal or

22 State agencies engaged in the regulation of deposi23 tory institutions as of the date of the enactment of

24 this Act.
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1 (4) INSURED DEPOSIT.—The term ‘‘insured de2 posit’’ means any deposit of a guaranteed depository

3 institution which is insured against loss by the cross4 guarantee backup fund under section 128.

5 (e) DEFINITIONS OF OTHER TERMS.—For purposes

6 of this title:

7 (1) BUSINESS DAY.—The term ‘‘business day’’

8 means any day other than a Saturday, Sunday, or

9 legal holiday for the Federal Government.

10 (2) CENTRAL ELECTRONIC REPOSITORY.—The

11 term ‘‘central electronic repository’’ means the re12 pository established pursuant to section 124(a)(1).

13 (3) CLOSED LOOP.—The term ‘‘closed loop’’

14 means a set of cross-guarantee and stop-loss con15 tracts in which any person which is a direct guaran16 tor under any contract which is part of such set of

17 contracts, and any person which is directly or indi18 rectly liable for a guaranteed obligation of any such

19 direct guarantor, are persons which are guaranteed

20 under a cross-guarantee or stop-loss contract which

21 is part of such set of contracts.

22 (4) CORPORATION.—The term ‘‘Corporation’’

23 means the Cross-Guarantee Regulation Corporation.

24 (5) CROSS-GUARANTEE ACTIVATION DATE.—

25 The term ‘‘cross-guarantee activation date’’ means
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1 the date on which the first cross-guarantee contracts

2 become effective under section 141(a).

3 (6) FDIC.—The term ‘‘FDIC’’ means the Fed4 eral Deposit Insurance Corporation.

5 SEC. 102. RULES OF CONSTRUCTION.

6 (a) IN GENERAL.—This title shall be liberally con7 strued and applied to promote its underlying purposes and

8 policies.

9 (b) SPECIFIC RULES OF CONSTRUCTION.—In this

10 title—

11 (1) the terms ‘‘guaranteed company,’’ ‘‘guaran12 teed depository institution,’’ ‘‘guaranteed party,’’

13 and ‘‘nondepository guarantor’’ refer to a party in

14 such party’s capacity as a party guaranteed under a

15 cross-guarantee or stop-loss contract;

16 (2) the term ‘‘direct guarantor’’ refers to a

17 party in such party’s capacity as a guarantor under

18 a cross-guarantee or stop-loss contract;

19 (3) the use of the word ‘‘control’’ in such

20 phrases as ‘‘assumption of control’’ or ‘‘assumes

21 control’’ shall not take on the meaning given the

22 word control under section 101(a)(11)(B);

23 (4) ‘‘including’’ is not limiting; and

24 (5) the phrases ‘‘has entered into a cross-guar25 antee contract’’ and ‘‘has entered into a stop-loss
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1 contract,’’ as used in sections 101(a)(5), 101(a)(6),

2 and 101(a)(9), shall not be construed to refer to a

3 contract which is no longer in effect.

4 Subtitle B—Cross-Guarantee

5 Process

6 SEC. 111. DEPOSITORY INSTITUTIONS PROHIBITED FROM

7 OPERATING WITHOUT A CROSS-GUARANTEE

8 CONTRACT.

9 After the applicable effective date under section 142,

10 a depository institution shall be a guaranteed depository

11 institution or guaranteed banking office unless the deposi12 tory institution—

13 (a) is a Federal branch that is not an insured

14 branch (as the terms ‘‘Federal branch’’ and ‘‘in15 sured branch’’ are defined in sections 3(r) and 3(s)

16 of the Federal Deposit Insurance Act);

17 (b) is a failed depository institution; or

18 (c) has not yet had a conservator or receiver

19 appointed by the FDIC under section 143.

20 SEC. 112. PARTIES TO CROSS-GUARANTEE AND STOP-LOSS

21 CONTRACTS.

22 (a) CROSS-GUARANTEE CONTRACTS.—

23 (1) IN GENERAL.—Each cross-guarantee con24 tract shall have at least the following parties:
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1 (A) A guaranteed financial group as the

2 party guaranteed under the contract.

3 (B) The direct guarantors of the guaran4 teed financial group.

5 (C) A syndicate agent acting on behalf of

6 the direct guarantors.

7 (2) AFFILIATE GUARANTEE.—Any affiliate of a

8 depository institution may guarantee the perform9 ance of such institution’s guaranteed obligations

10 under a cross-guarantee contract.

11 (b) STOP-LOSS CONTRACTS.—

12 (1) IN GENERAL.—Each stop-loss contract shall

13 have at least the following parties:

14 (A) A nondepository guarantor as the

15 party guaranteed under the contract.

16 (B) The direct guarantors of the

17 nondepository guarantor.

18 (C) A syndicate agent acting on behalf of

19 the direct guarantors.

20 (2) AFFILIATE GUARANTEE.—Any affiliate of a

21 nondepository guarantor may guarantee the per22 formance of the guaranteed obligations of such

23 nondepository guarantor.

24 (c) GROUP CROSS-GUARANTEE SYNDICATE CON25 TRACTS.—
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1 (1) IN GENERAL.—

2 (A) POOLING OF RISK.—Subject to the

3 provisions of this subsection, the cross-guaran4 tee contracts of 2 or more guaranteed financial

5 groups may be pooled for syndication.

6 (B) SEPARATE CONTRACT FOR A SYN7 DICATE OF POOLED CONTRACTS.—The direct

8 guarantors comprising the cross-guarantee syn9 dicate for a group of cross-guarantee contracts

10 may enter into a separate contract (hereinafter

11 ‘‘group cross-guarantee syndicate contract’’)

12 under which the cross-guaranteed contracts

13 pooled under such contract shall be incor14 porated by reference.

15 (C) PROPORTIONAL RISK.—Each direct

16 guarantor under a group cross-guarantee syn17 dicate contract shall have the same proportional

18 rights, privileges, duties, and obligations in each

19 cross-guarantee contract incorporated by ref20 erence in the syndicate contract as such guar21 antor has in the syndicate contract.

22 (2) APPROVAL OF GROUP CROSS-GUARANTEE

23 SYNDICATE CONTRACT AND ITS POOL OF CROSS24 GUARANTEE CONTRACTS.—The Corporation shall

25 approve or reject, as a group, a proposed group
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1 cross-guarantee syndicate contract and the cross2 guarantee contracts pooled under that contract.

3 (3) AGGREGATION OF ASSETS FOR PURPOSES

4 OF RISK DIVERSIFICATION.—The assets of all guar5 anteed parties pooled under a group cross-guarantee

6 syndicate contract shall be aggregated for purposes

7 of applying the risk diversification requirement es8 tablished in section 114(b).

9 (4) NO CROSS LIABILITY OF GUARANTEED PAR10 TIES.—No guaranteed party under any cross-guar11 anteed contract shall be liable for any portion of the

12 guaranteed obligations of a guaranteed party under

13 any other cross-guarantee contract which is pooled

14 under the same group cross-guarantee syndicate

15 contract.

16 (5) INDIVIDUAL TERMS AND RATES.—The

17 terms, conditions, and premium rates under each

18 cross-guarantee contract which is pooled under a

19 group cross-guarantee syndicate contract may differ

20 from the terms, conditions, and premium rates

21 under any other cross-guarantee contract which is

22 pooled under the syndicate contract.

23 (6) PARTIES TO INDIVIDUAL CROSS-GUARANTEE

24 CONTRACTS RETAIN SAME RIGHTS AND DUTIES.—No

25 right, privilege, duty, or obligation applicable under
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1 this title to any party to a cross-guarantee contract

2 shall be affected by the inclusion of the cross-guar3 antee contract in a pool of contracts covered under

4 a group cross-guarantee syndicate contract.

5 (7) ADDITIONAL GUARANTEED PARTIES UNDER

6 A GROUP CROSS-GUARANTEE SYNDICATE CON7 TRACT.—A group cross-guarantee syndicate contract

8 can be amended under section 123 to add a guaran9 teed financial group or a depository institution with

10 a proposed cross-guarantee contract to the existing

11 syndicate contract if—

12 (A) the syndicate contract remains in com13 pliance with all of the provisions of this title

14 after the addition of the institution to the syn15 dicate contract; and

16 (B) the life of the syndicate contract is not

17 extended beyond the original term of any cross18 guarantee contract already pooled under the

19 syndicate contract by the addition of the insti20 tution.

21 (8) LIFE OF A GROUP CROSS-GUARANTEE SYN22 DICATE CONTRACT.—A group cross-guarantee syn23 dicate contract shall continue in force until each

24 guaranteed party which is guaranteed under the syn25 dicate contract has ceased to be a guaranteed party
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1 under a cross-guarantee contract which is pooled

2 under the syndicate contract.

3 (9) LENGTH OF CROSS-GUARANTEE CONTRACT

4 POOLED UNDER A SYNDICATE CONTRACT.—No

5 cross-guarantee contract pooled under a group cross6 guarantee syndicate contract shall have a term

7 longer than the remaining term of the syndicate con8 tract.

9 (10) RULE OF CONSTRUCTION.—Nothing in

10 this subsection shall be construed as preventing a

11 cross-guarantee or stop-loss syndicate from becom12 ing a syndicate under 2 or more cross-guarantee or

13 stop-loss contracts without including such contracts

14 under a group cross-guarantee syndicate contract.

15 (d) AFFILIATES AND OTHER PARTIES RELATED TO

16 A DEPOSITORY INSTITUTION WHICH SHALL BE GUARAN17 TEED UNDER 1 CONTRACT.—

18 (1) IN GENERAL.—Subject to paragraph (4), a

19 guaranteed depository institution shall be guaran20 teed under the same cross-guarantee contract under

21 which any other affiliated guaranteed depository in22 stitution is guaranteed.

23 (2) CHAIN BANKS.—Subject to paragraph (4),

24 if more than two-thirds of the shares of any deposi25 tory institution are under common ownership or con-
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1 trol with more than two-thirds of the shares of any

2 other depository institution, such depository institu3 tions shall be guaranteed depository institutions

4 under the same cross-guarantee contract.

5 (3) DOMESTIC BRANCHES AND AGENCIES OF

6 FOREIGN BANKS.—If any branch of a foreign bank

7 enters into a cross-guarantee contract with a cross8 guarantee syndicate, all branches and agencies of

9 such foreign bank shall be guaranteed banking of10 fices under the same cross-guarantee contract.

11 (4) REGULATIONS.—With respect to any depos12 itory institution controlled by more than 1 unaffili13 ated company, the Corporation shall prescribe regu14 lations determining under which cross-guarantee

15 contract the institution shall be a guaranteed deposi16 tory institution.

17 (e) SUBSIDIARIES WHICH MAY BE GUARANTEED

18 UNDER 1 CROSS-GUARANTEE CONTRACT.—

19 (1) IN GENERAL.—Any company controlled by

20 a guaranteed depository institution may be a guar21 anteed company under the same cross-guarantee

22 contract under which such depository institution is

23 guaranteed.

24 (2) DEFINITION OF CONTROL.—For purposes

25 of this subsection, the term ‘‘control’’ means, with
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1 respect to a guaranteed depository institution’s rela2 tionship to another company, the guaranteed deposi3 tory institution’s ownership or power to, directly or

4 indirectly, vote more than 50 percent of any class of

5 voting securities of the other company.

6 (f) PROVISIONS RELATING TO SYNDICATE

7 AGENTS.—

8 (1) ANTI-AFFILIATION RULES.—A syndicate

9 agent may not—

10 (A) be an affiliate of any other person who

11 is a party to any cross-guarantee or stop-loss

12 contract; or

13 (B) acquire or retain any ownership inter14 est in any such person.

15 (2) NO DEPOSITORY INSTITUTION, FOREIGN

16 BANK, OR NON-DEPOSITORY GUARANTOR MAY BE A

17 SYNDICATE AGENT.—No depository institution, for18 eign bank, or nondepository guarantor may be a

19 syndicate agent.

20 (3) NO SYNDICATE AGENT MAY BE A DIRECT

21 GUARANTOR.—No person who is a syndicate agent

22 under any cross-guarantee or stop-loss contract may

23 be, as long as such contract is in effect, a direct

24 guarantor under any cross-guarantee or stop-loss

25 contract.
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1 (4) PROHIBITION ON INTERLOCKS.—No direc2 tor, officer, employee, or subcontractor of a syn3 dicate agent under any cross-guarantee or stop-loss

4 contract or any director, officer, or employee of such

5 subcontractor may be a director, officer, or employee

6 of any other party to such contract.

7 SEC. 113. REQUIREMENTS COMMON TO CROSS-GUARANTEE

8 AND STOP-LOSS CONTRACTS.

9 (a) STOP-LOSS LIMIT FOR LOSSES OF A GUARAN10 TEED PARTY AS A DIRECT GUARANTOR OF OTHER GUAR11 ANTEED PARTIES.—

12 (1) DEFINITIONS.—For purposes of this sub13 section:

14 (A) LEVEL 1 PARTY.—The term ‘‘Level 1

15 party’’ means a guaranteed party under any

16 cross-guarantee or stop-loss contract.

17 (B) LEVEL 2 PARTY.—The term ‘‘Level 2

18 party’’ means a direct guarantor of a Level 1

19 party.

20 (C) LEVEL 3 PARTY.—The term ‘‘Level 3

21 party’’ means a direct guarantor of a Level 2

22 party.

23 (D) LOSS.—The term ‘‘loss’’ means the

24 present value, as of the date of a loss event, of

25 the cash outlays required to fulfill a Level 2
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1 party’s cross-guarantee obligations to a Level 1

2 party due to the occurrence of such loss event,

3 using as a discount rate the sum of—

4 (i) 2 percent; and

5 (ii) the average annual percentage

6 yield on 3-month bills issued by the Sec7 retary of the Treasury under section

8 3104(a) of title 31, United States Code, as

9 determined by the Corporation as of the

10 most recent issue date preceding the date

11 of the loss event.

12 (E) LOSS EVENT.—The term ‘‘loss event’’

13 means any event described in paragraph (3).

14 (F) STOP-LOSS LIABILITY.—The term

15 ‘‘stop-loss liability’’ means a debt accrued by a

16 Level 3 party under a cross-guarantee or stop17 loss contract due to its obligation to a Level 2

18 party under paragraph (2).

19 (G) STOP-LOSS RECOVERY.—The term

20 ‘‘stop-loss recovery’’ means the amount accrued

21 in any calendar month by a Level 2 party due

22 to the obligation of a Level 3 party under para23 graph (2).

24 (2) STOP-LOSS OBLIGATION OF DIRECT GUAR25 ANTORS.—
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1 (A) STOP-LOSS RECOVERY.—For any 12-

2 calendar month period in which a cross-guaran3 tee or stop-loss contract exists between Level 3

4 parties and a Level 2 party as of the end of the

5 first calendar month of such period, Level 3

6 parties shall be obligated to pay to a Level 2

7 party an amount equal to the total amount of

8 losses accrued by the Level 2 party in such par9 ty’s capacity as a direct guarantor of Level 1

10 parties during such 12-calendar month period,

11 minus the sum of—

12 (i) the greater of—

13 (I) the amount equal to 5 times

14 the total amount of cross-guarantee

15 and stop-loss premium income accru16 ing to a Level 2 party in such party’s

17 capacity as a direct guarantor of

18 Level 1 parties during such 12-cal19 endar month period;

20 (II) the amount equal to 5 times

21 the total amount of cross-guarantee

22 and stop-loss premium income accru23 ing to the Level 2 party in such par24 ty’s capacity as a direct guarantor of

25 Level 1 parties during the 12-calendar
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1 month period preceding such 12-cal2 endar month period; or

3 (III) in the case of a calendar

4 month which is among the first 11

5 calendar months that the Level 2

6 party has ever been a party guaran7 teed under a cross-guarantee or stop8 loss contract, the amount equal to the

9 average monthly cross-guarantee and

10 stop-loss premium income accruing to

11 the Level 2 party in such party’s ca12 pacity as a direct guarantor of Level

13 1 parties since first becoming a party

14 guaranteed under a cross-guarantee

15 or stop-loss contract, multiplied by 60;

16 and

17 (ii) recoveries accrued under this

18 paragraph by the Level 2 party for each

19 12-calendar month period ending at the

20 end of each of the first 11 calendar months

21 in such 12-calendar month period.

22 (B) CARRYOVER FROM PREVIOUS CON23 TRACTS.—The amounts calculated in subpara24 graph (A) shall include all losses, premium in25 come, and stop-loss recoveries of the Level 2
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1 party under any cross-guarantee or stop-loss

2 contracts under which the Level 2 party was a

3 party guaranteed during such 12-calendar

4 month period.

5 (C) MERGER OF TWO OR MORE GUARAN6 TEED PARTIES.—In the case of any Level 2

7 party which merged with any other party which

8 was a Level 2 party guaranteed under another

9 cross-guarantee or stop-loss contract, the

10 amounts calculated in subparagraph (A) shall

11 include all losses, premium income, and stop12 loss recoveries of both of the parties prior to

13 the merger.

14 (D) OTHER GUARANTEED PARTIES UNDER

15 THE CONTRACT WHICH WERE PREVIOUSLY DI16 RECT GUARANTORS.—The amounts calculated

17 in subparagraph (A) for the Level 2 party shall

18 include all losses, premium income, and stop19 loss recoveries of any other party guaranteed

20 under the same cross-guarantee contract as the

21 Level 2 party, which occurred while such other

22 party was a Level 2 party while guaranteed

23 under the same or another cross-guarantee or

24 stop-loss contract.
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1 (E) TIMING OF STOP-LOSS RECOVERY.—A

2 stop-loss recovery shall be accrued as of the last

3 day of the last calendar month of the 12-cal4 endar month period under which the stop-loss

5 recovery was calculated.

6 (F) ADJUSTMENT FOR CATASTROPHIC

7 LOSSES.—

8 (i) IN GENERAL.—If, for any calendar

9 month, a closed loop exists in which every

10 guaranteed party guaranteed under a con11 tract in the closed loop accrues a stop-loss

12 recovery for such month, then the calcula13 tion of stop-loss recovery for the 12-cal14 endar month period ending in such month

15 for all the contracts in the closed loop shall

16 be adjusted as required under clauses (ii)

17 and (iii).

18 (ii) ADJUSTMENT.—If, for any cal19 endar month, a closed loop meets the con20 ditions of clause (i), the amounts cal21 culated in subparagraph (A) shall, for the

22 12-calendar month period in which such

23 calendar month is the last month, be ad24 justed by increasing from 5 to 6, under

25 clauses (i)(I) and (i)(II) of subparagraph
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1 (A), the amount multiplied by the premium

2 income accruing to a Level 2 party and by

3 increasing from 60 to 72, under clause

4 (i)(III) of subparagraph (A), the amount,

5 multiplied by the average monthly pre6 mium accruing to the Level 2 party.

7 (iii) FURTHER ADJUSTMENT.—If,

8 after making the adjustments to the cal9 culation of stop-loss recovery under clause

10 (ii), every contract in the closed loop under

11 clause (i) still accrues a stop-loss recovery,

12 the amounts under (i)(I) and (i)(II) shall

13 be increased by one and the amount under

14 (i)(III) shall be increased by twelve, until

15 at least one guaranteed party guaranteed

16 under a contract in such closed loop is not

17 accruing a stop-loss recovery for the cal18 endar month in clause (i).

19 (3) DETERMINATION OF TIME OF LOSS.—A

20 Level 2 party shall accrue a loss as the direct guar21 antor of a Level 1 party as of—

22 (A) the last day of the calendar month in

23 which a Level 1 party accrues a stop-loss recov24 ery; or
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1 (B) the date on which, with respect to a

2 Level 1 party which is a guaranteed company,

3 the earliest of the following events occurs:

4 (i) Notice is filed with the Corporation

5 under section 118(d)(2)(C) by the cross6 guarantee syndicate of which the Level 2

7 party is a member that the syndicate has

8 assumed control of the Level 1 party.

9 (ii) A transaction which—

10 (I) involves the acquisition of the

11 Level 1 party or a significant portion

12 of the party’s assets, the merger of

13 the Level 1 party with any other

14 party, the liquidation of the Level 1

15 party, or any other transaction involv16 ing a significant portion of the assets

17 or liabilities of the Level 1 party; and

18 (II) results directly in a loss for

19 which the Level 2 parties are liable

20 under the cross-guarantee contract.

21 (iii) The Level 1 party becomes a

22 debtor in a case under title 11, United

23 States Code.

24 (4) PREPARATION OF ORIGINAL LOSS ESTIMATE

25 BY SYNDICATE AGENT.—The syndicate agent for the
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1 cross-guarantee contract under which a Level 2

2 party is a direct guarantor shall, whenever a loss

3 event under subparagraph (3)(B) occurs under such

4 contract—

5 (A) estimate the loss for such loss event;

6 and

7 (B) by the 15th day of the calendar month

8 following the calendar month in which such loss

9 event occurs, notify the central electronic repos10 itory of the estimate of the loss under subpara11 graph (A).

12 (5) REVISION OF LOSS ESTIMATE BY SYN13 DICATE AGENT.—The syndicate agent for the cross14 guarantee contract under which the Level 2 party is

15 a direct guarantor shall, whenever a loss event under

16 subparagraph (3)(B) occurs under such contract—

17 (A) revise the original estimate of the loss

18 for such loss event and notify the central elec19 tronic repository of such revised estimate at

20 least as often as the 15th day of—

21 (i) the third calendar month following

22 the calendar month in which the loss event

23 took place;
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1 (ii) the twelfth calendar month follow2 ing the calendar month in which the loss

3 event took place; and

4 (iii) every twelfth month after the cal5 endar month in clause (ii); and

6 (B) for each estimate of the loss described

7 in clauses (A)(ii) and (A)(iii), obtain from a

8 third party a confirmation of the reasonableness

9 of the revised estimate of the loss.

10 (6) COMPLETION OF CASH OUTLAYS BECOMES

11 FINAL AMOUNT.—Notwithstanding paragraph (5),

12 once the Level 2 parties have made the final cash

13 disbursement to fulfill such parties’ cross-guarantee

14 obligations due to any loss event under subpara15 graph (3)(B).—

16 (A) the syndicate agent for the cross-guar17 antee contract under which the Level 2 parties

18 are direct guarantors shall calculate the loss

19 from such loss event (subject to the third party

20 confirmation in subparagraph (5)(B)) and no21 tify the central electronic repository of this cal22 culation; and

23 (B) no further revisions of the loss from

24 such loss event need take place.
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1 (7) CALCULATION AND CLEARINGHOUSE DU2 TIES OF CENTRAL ELECTRONIC REPOSITORY.—

3 (A) CALCULATION OF STOP-LOSS LIABIL4 ITY.—After notification under paragraphs (4),

5 (5), and (6), the central electronic repository

6 shall calculate the stop-loss recovery for every

7 Level 2 party for every 12-month calendar pe8 riod affected by the estimates, revised esti9 mates, and final loss amounts.

10 (B) ADJUSTMENT FOR INTEREST.—Upon

11 completing the calculations under subparagraph

12 (A), the central electronic repository shall then

13 adjust the amounts owed between Level 2 and

14 Level 3 parties as outlined in paragraph (8).

15 (C) NETTING CALCULATION.—Upon com16 pleting the calculations under subparagraph

17 (B), the central electronic repository shall, for

18 each person that is a direct guarantor or guar19 anteed party, net the amounts owed by such

20 person in its capacity as a Level 3 party with

21 the amount such person is entitled to receive in

22 its capacity as a Level 2 party to determine the

23 overall liability or right to payment for such

24 person.
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1 (D) NOTIFICATION OF PARTIES.—Within

2 five business days after receiving notification

3 under paragraphs (4), (5), and (6), the central

4 electronic repository shall notify any Level 2

5 party or Level 3 party of the results of the cal6 culations under subparagraphs (A), (B), and

7 (C).

8 (E) SETTLEMENT.—

9 (i) RECEIPT OF PAYMENTS.—Within

10 three business days after receiving notifica11 tion under subparagraph (D), each party

12 which, given the calculations under sub13 paragraph (C), has a net liability shall pay

14 the amount of such liability to the central

15 electronic repository.

16 (ii) DISBURSAL OF PAYMENTS.—Upon

17 receiving all payments under clause (i), the

18 central electronic repository shall promptly

19 disburse to each party which has a right to

20 payment, given the calculations under sub21 paragraph (C), the amount owed such

22 party.

23 (iii) PENALTIES FOR LATE PAY24 MENT.—If an obligation under clause (i) is

25 not paid in a timely manner, any party
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1 which fails to perform its obligation under

2 this title to pay the balance owed under

3 clause (i), including the guarantors of the

4 specific party most directly liable under

5 clause (i), shall be liable to the Corporation

6 for damages of 10 percent of the unpaid

7 amount for which the party is obliged, plus

8 interest at the rate specified under sub9 paragraph (C) of paragraph (8).

10 (F) REGULATIONS.—The Corporation may

11 prescribe regulations necessary to implement

12 this paragraph.

13 (8) CALCULATION OF STOP-LOSS PAYMENTS

14 PLUS INTEREST.—

15 (A) ORIGINAL ESTIMATE.—If a determina16 tion under subparagraph (7)(A) is based on the

17 original estimate of loss under paragraph (4)

18 and results in a stop-loss recovery for the Level

19 2 party, each Level 3 party shall owe to the

20 Level 2 party the amount of the stop-loss liabil21 ity for such Level 3 party plus interest on the

22 amount of such liability from the last day of the

23 month in which the loss occurred to the date of

24 payment under this subparagraph.
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1 (B) REVISION OF ESTIMATES.—If a deter2 mination under subparagraph (7)(A) results

3 in—

4 (i) an increase from the previous esti5 mate of the stop-loss recovery for a par6 ticular month, then each Level 3 party

7 shall owe to the Level 2 party the amount

8 of the increase in the Level 3 party’s stop9 loss liability plus interest on the amount of

10 the increase in such liability from the last

11 day of such month until payment is made

12 under this clause; or

13 (ii) a decrease from the previous esti14 mate of the stop-loss recovery for a par15 ticular month, then the Level 2 party shall

16 owe each Level 3 party the amount of the

17 decrease in such Level 3 party’s stop-loss

18 liability plus interest on the amount of the

19 decrease in such liability from the last day

20 of such month until payment is made

21 under this clause.

22 (C) INTEREST RATE.—The parties to any

23 cross-guarantee or stop-loss contract shall agree

24 to the interest rate to be used for the calcula-
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1 tion of interest under subparagraphs (A) and

2 (B).

3 (b) DIRECT GUARANTOR’S CROSS-GUARANTEE OBLI4 GATIONS UNDER THE CONTRACT ARE INDEPENDENT

5 FORM OTHER PARTIES’ OBLIGATIONS.—The cross-guar6 antee obligations of a direct guarantor under any cross7 guarantee or stop-loss contract shall be independent of

8 any obligation of any other party under the contract.

9 (c) GUARANTEED PARTY CANNOT BE A DIRECT

10 GUARANTOR UNDER THE SAME CONTRACT.—No guaran11 teed party can be a direct guarantor under the cross-guar12 antee or stop-loss contract under which such party is a

13 guaranteed party.

14 (d) DIRECT GUARANTORS PROHIBITED FROM OB15 TAINING COLLATERAL FOR CROSS-GUARANTEE OBLIGA16 TIONS.—No direct guarantor under any cross-guarantee

17 or stop-loss contract may obtain or retain a security inter18 est in a guaranteed party under the contract, or in any

19 assets of the guaranteed party, in connection with such

20 guarantor’s cross-guarantee obligations under the con21 tract, unless the guaranteed party is a guaranteed banking

22 office.

23 (e) PROVISIONS OF CONTRACT REGARDING DIVISION

24 OF LIABILITY.—
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1 (1) SEVERAL LIABILITY.—No direct guarantor

2 under any cross-guarantee or stop-loss contract shall

3 be liable for the cross-guarantee obligations of any

4 other direct guarantor under the contract.

5 (2) DIVISION OF LIABILITY.—Subject to the

6 risk diversification requirements of section 116(d),

7 the terms of a cross-guarantee or stop-loss contract

8 shall establish the division of liability among the di9 rect guarantors under the contract.

10 (3) LIABILITY OF DIRECT GUARANTOR PROPOR11 TIONATE TO INTEREST IN SYNDICATE.—The rights,

12 privileges, duties, and obligations of a direct guaran13 tor under a cross-guarantee or stop-loss contract

14 shall be proportionate to such guarantor’s interest in

15 the syndicate.

16 (4) SYNDICATES NOT PARTNERSHIPS OR JOINT

17 VENTURES.—Notwithstanding any state law, a

18 cross-guarantee or stop-loss syndicate is not a part19 nership or joint venture, except for purposes of sec20 tion 117(c)(1).

21 (f) PREMIUM REQUIREMENTS.—

22 (1) IN GENERAL.—Each cross-guarantee and

23 stop-loss contract shall describe the method for cal24 culating and the timing of payment for any premium

25 payable to the direct guarantors under the contract.
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1 (2) RESTRICTION ON REPRICING OF RISK DUE

2 TO STOP-LOSS OBLIGATION.—No method of calculat3 ing the premium payable under paragraph (1) shall,

4 directly or indirectly, take into account losses that a

5 guaranteed party accrues while guaranteed under

6 the contract in such party’s capacity as a direct

7 guarantor under another cross-guarantee or stop8 loss contract.

9 (g) MAXIMUM EFFECTIVE PERIOD OF CONTRACT.—

10 (1) LENGTH OF CONTRACT.—A cross-guarantee

11 or stop-loss contract may not have an effective pe12 riod of more than 5 years.

13 (2) AMENDMENTS.—The parties to any cross14 guarantee or stop-loss contract may agree to extend

15 the length of the contract as long as the contract as

16 amended still expires within 5 years after the origi17 nal effective date of the contract.

18 (3) RENEWAL OF CONTRACT MUST BE AP19 PROVED BY THE CORPORATION.—No cross-guaran20 tee or stop-loss contract may be renewed by the par21 ties to the contract, and no successor contract may

22 become effective, without the approval of the Cor23 poration under section 123.

24 (4) PENALTIES FOR CONTINUING CONTRACT

25 AFTER EXPIRATION DATE.—For every day after the
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1 30th day following the expiration of a cross-guaran2 tee contract in which—

3 (A) the direct guarantors have not as4 sumed control under section 118(a) of all the

5 guaranteed companies guaranteed under the

6 contract;

7 (B) a guaranteed party under such con8 tract has not become a guaranteed party under

9 another cross-guarantee contract;

10 (C) a successor contract is not being con11 sidered for approval under section 123 or the

12 Corporation has already rejected two successor

13 contracts;

14 (D) the guaranteed party is not appealing

15 the rejection by the Corporation, under section

16 123, of a successor contract or final judgment

17 has been reached on such an appeal; or

18 (E) the guaranteed party is not a debtor

19 under any proceeding under title 11 of the

20 United States Code,

21 the Corporation may at its discretion penalize each

22 direct guarantor under such contract up to

23 $100,000.

24 (h) CANCELLATION OF CONTRACTS BY SYN25 DICATES.—
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1 (1) RIGHT TO CANCEL.

2 (A) DEFAULT RULE.—Unless otherwise

3 agreed in a cross-guarantee or stop-loss con4 tract, a cross-guarantee or stop-loss syndicate

5 may cancel such contract at any time without

6 cause provided that the syndicate agent under

7 such contract provides written notice of such

8 cancellation to the Corporation and the guaran9 teed party or parties under the contract at least

10 90 days prior to the effective date of cancella11 tion.

12 (B) MINIMUM NOTICE PERIOD RE13 QUIRED.—The parties to a cross-guarantee or

14 stop-loss contract may agree to cancellation

15 rules different than those provided under sub16 paragraph (A), provided that the contract still

17 requires the syndicate agent under the contract

18 to give written notice of cancellation to the Cor19 poration and to the guaranteed party or parties

20 under the contract at least 90 days prior to the

21 effective date of the cancellation.

22 (2) CANCELLATION OF ONE GUARANTEED FI23 NANCIAL GROUP UNDER A GROUP CONTRACT.—A

24 cross-guarantee syndicate may cancel a cross-guar25 antee contract with 1 guaranteed financial group
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1 under a group cross-guarantee syndicate contract

2 without affecting the rights, privileges, duties, and

3 obligations arising out of the syndicate contract with

4 regard to the other guaranteed financial groups

5 under the syndicate contract.

6 (3) LIMITATIONS ON GUARANTEED PARTY.—A

7 guaranteed party under any cross-guarantee or stop8 loss contract may not become a direct guarantor

9 under any other cross-guarantee or stop-loss con10 tract during any of the following periods:

11 (A) The period beginning on the date such

12 party receives a notice of cancellation under

13 paragraph (1) or (2) with respect to such con14 tract and ending on the date the party becomes

15 a guaranteed party under a successor contract.

16 (B) The period beginning on the date the

17 contract expires and ending on the date the

18 party becomes a guaranteed party under a suc19 cessor contract.

20 (4) CONTINUED EFFECTIVENESS OF CON21 TRACTS UNTIL OTHER COVERAGE IS OBTAINED.—

22 (A) IN GENERAL.—The obligations of any

23 party to a cross-guarantee or stop-loss contract

24 shall remain in effect after the effective date of

25 the cancellation of the contract by the direct
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1 guarantors or after the expiration of such con2 tract, as the case may be, until—

3 (i) the guaranteed party becomes a

4 guaranteed party under another cross5 guarantee or stop-loss contract; or

6 (ii) in the case of a guaranteed party

7 which ceases to exist as a legal entity, the

8 guaranteed obligations of the institution

9 are liquidated or become guaranteed obli10 gations covered under another cross-guar11 antee or stop-loss contract.

12 (B) CANCELLATION WHEN NONDEPOS13 ITORY GUARANTOR IS NOT A DIRECT GUARAN14 TOR.—Notwithstanding subparagraph (A), a

15 cancellation of a stop-loss contract by a stop16 loss syndicate shall take effect immediately if

17 the nondepository guarantor which is the party

18 guaranteed under the contract—

19 (i) is not at the time of cancellation of

20 direct guarantor under any cross-guarantee

21 or stop-loss contract; and

22 (ii) has transferred any remaining

23 risk under any cross-guarantee or stop-loss

24 contract under which such guarantor was
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1 formerly a direct guarantor to another di2 rect guarantor.

3 (i) CANCELLATION OF CONTRACTS BY GUARANTEED

4 PARTY.—

5 (1) IN GENERAL.—The guaranteed financial

6 group or nondepository guarantor which is the party

7 guaranteed under a cross-guarantee or stop-loss con8 tract may notify the direct guarantors under the

9 contract at any time of such party’s intention to

10 cancel the contract.

11 (2) CANCELLATION NOT EFFECTIVE UNTIL

12 SUBSTITUTE COVERAGE IS OBTAINED.—The can13 cellation of any cross-guarantee or stop-loss contract

14 under paragraph (1) shall not take effect until the

15 cancelling party becomes a guaranteed financial

16 group or a nondepository guarantor under another

17 cross-guarantee or stop-loss contract.

18 (3) ALLOWING NONDEPOSITORY GUARANTORS

19 TO EXIT THE BUSINESS.—Notwithstanding para20 graph (2), a cancellation of a stop-loss contract by

21 a nondepository guarantor shall take effect imme22 diately if the nondepository guarantor—

23 (A) is not at the time of cancellation a di24 rect guarantor under any cross-guarantee or

25 stop-loss contract; and
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1 (B) has transferred any remaining risk

2 under any cross-guarantee or stop-loss contract

3 under which such guarantor was formerly a di4 rect guarantor to another direct guarantor.

5 (4) CANCELLATION FEE.—The cross-guarantee

6 or stop-loss syndicate under a cross-guarantee or

7 stop-loss contract which is cancelled pursuant to

8 paragraph (1) may impose a cancellation fee in an

9 amount determined in accordance with the terms of

10 the contract.

11 (j) CONTINUED EFFECTIVENESS OF CONTRACTS

12 AFTER CONVERSION OF CHARTER OF DEPOSITORY INSTI13 TUTION.—If—

14 (1) any State depository institution becomes a

15 Federal depository institution;

16 (2) any Federal depository institution becomes

17 a State depository institution;

18 (3) any bank becomes a savings association;

19 (4) or any savings association becomes a bank,

20 through a conversion of the charter of the depository insti21 tution, any cross-guarantee contract under which the insti22 tution is a guaranteed depository institution and which is

23 in effect immediately before such conversion shall remain

24 in effect after the conversion.
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1 (k) CONTINUING APPLICABILITY OF OBLIGATIONS

2 UNDER THE CONTRACTS.—

3 (1) NO VOIDING OR RESCINDING OF CON4 TRACTS.—No party to a cross-guarantee or stop-loss

5 contract may void or rescind the contract, regardless

6 of any defense to the existence or enforceability of

7 the contract that might exist under Federal or State

8 law.

9 (2) NO EXCUSES TO PERFORMANCE.—Notwith10 standing any provision of Federal or State law, no

11 excuse for the failure to perform any obligation

12 under a cross-guarantee or stop-loss contract shall

13 be effective.

14 (3) NONCOMPLIANCE DOES NOT AFFECT OBLI15 GATIONS.—A party to a cross-guarantee or stop-loss

16 contract shall remain obliged under the contract re17 gardless of whether—

18 (A) the contract ceases to comply with any

19 requirement under this title; or

20 (B) one or more parties to the contract fail

21 to comply with this title.

22 (l) SUBMISSION OF DISPUTES TO ARBITRATION.—

23 The terms of any cross-guarantee or stop-loss contract

24 may provide for resolving disputes under the contract

25 through binding arbitration.
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1 (m) SUBSTITUTION OF DIRECT GUARANTORS.—

2 (1) IN GENERAL.—Any direct guarantor’s

3 rights, privileges, duties and obligations under a

4 cross-guarantee or stop-loss contract, and any por5 tion of any such rights, privileges, duties, and obli6 gations, may be transferred to a successor direct

7 guarantor, subject to the approval of the Corpora8 tion (pursuant to section 123 of this title).

9 (2) TRANSFEROR NO LONGER OBLIGED ON

10 CONTRACT.—Notwithstanding any Federal or State

11 law, a transferor of an interest under paragraph (1)

12 shall not be obliged to performed on the contract

13 should the transferee fail to perform.

14 (3) PARTIES AUTHORIZED TO RESTRICT SUB15 STITUTION OF GUARANTORS IN A CONTRACT.—A

16 guaranteed party or a cross-guarantee or stop-loss

17 syndicate under a cross-guarantee or stop-loss con18 tract may provide in such contract that any transfer

19 under paragraph (1) of any interest of any direct

20 guarantor in such contract shall be subject to the

21 approval of such party or syndicate.

22 (n) SYNDICATE VOTING RULES.—

23 (1) PROPORTIONAL VOTING.—Each cross-guar24 antee and stop-loss contract shall provide that a di25 rect guarantor’s voting rights in the cross-guarantee
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1 or stop-loss syndicate shall be proportional to such

2 guarantor’s interest in the syndicate.

3 (2) VARIATIONS PERMITTED IN VOTING RE4 QUIREMENTS.—A cross-guarantee or stop-loss con5 tract may provide that the number of votes needed

6 to approve an action by a cross-guarantee or stop7 loss syndicate under the contract may differ depend8 ing upon the action on which a vote is taken.

9 (o) GUARANTEED COMPANY CAN BE COVERED ONLY

10 UNDER 1 CONTRACT.—No guaranteed company under

11 any cross-guarantee or stop-loss contract may be a guar12 anteed company under another cross-guarantee or stop13 loss contract.

14 (p) AUTHORITY OF THE CGRC TO DIRECT ASSIGN15 MENT.—If any merger, acquisition, or other combination

16 of 2 direct guarantors within any cross-guarantee or stop17 loss syndicate occurs which causes the contract to materi18 ally exceed the limitations set forth in section 114(b)(1)

19 or paragraph (1) or (2) of section 115(b), the Corporation

20 may issue an order directing the merged guarantor to ob21 tain a successor for that part of the guarantor’s interest

22 that exceeds the statutory limit.

23 (q) MERGER OF 2 OR MORE GUARANTEED COMPA24 NIES.—After any merger, acquisition, or other combina25 tion of 2 or more guaranteed companies, the successor
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1 party’s cross-guarantee or stop-loss contract shall meet

2 the same requirements under section 114(b)(1) or para3 graph (1) or (2) of section 115(b), that the successor

4 would have to meet if the successor sought to become a

5 guaranteed party under a new cross-guarantee or stop-loss

6 contract.

7 (r) MODIFICATION OF CONTRACTS.—An agreement

8 amending a cross-guarantee or stop-loss contract needs no

9 consideration to be binding.

10 (s) RULE OF CONSTRUCTION RELATING TO CON11 TRACT TERMS.—No provision of this title shall be con12 strued as prohibiting any cross-guarantee or stop-loss con13 tract from containing any term or condition other than

14 terms or conditions which are expressly prohibited by this

15 title.

16 SEC. 114. REQUIREMENTS APPLICABLE ONLY TO CROSS17 GUARANTEE CONTRACTS

18 (a) OBLIGATIONS GUARANTEED UNDER A CROSS19 GUARANTEE CONTRACT.—

20 (1) OBLIGATIONS REQUIRED TO BE GUARAN21 TEED OBLIGATIONS.—The following obligations of

22 any guaranteed company or guaranteed banking of23 fice shall be guaranteed obligations under a cross24 guarantee contract:

25 (A) DEPOSITS.—
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1 (i) BANKS AND SAVINGS ASSOCIA2 TIONS.—In the case of a guaranteed de3 pository institution, all deposits (as deter4 mined without regard to subparagraph (A)

5 or (B) of section 3(l)(5) of the Federal De6 posit Insurance Act), including insured de7 posits, payable at any office of the guaran8 teed company located within or without the

9 United States.

10 (ii) BRANCHES OF FOREIGN DEPOSI11 TORY INSTITUTIONS.—In the case of a

12 guaranteed banking office, all deposits of

13 such office payable at a location within the

14 United States.

15 (B) LOANS AND ADVANCES FROM A DI16 RECT GUARANTOR, FEDERAL RESERVE BANK,

17 OR FEDERAL HOME LOAN BANK.—All loans and

18 advances from a direct guarantor, a Federal

19 Reserve bank, or a Federal home loan bank.

20 (C) INTEREST-BEARING OBLIGATIONS

21 OTHER THAN SUBORDINATED DEBT.—All other

22 interest-bearing obligations other than subordi23 nated debt.

24 (D) BALANCES DUE CLEARINGHOUSES,

25 THE FEDERAL RESERVE, AND IN SETTLEMENT
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1 OF OTHER TRANSACTIONS.—All obligations

2 owed to clearinghouses, to the Federal Reserve

3 for funds transfers, to other funds transfer sys4 tems, and to any other person in settlement of

5 financial transactions.

6 (E) CROSS-GUARANTEE OBLIGATIONS.—

7 Cross-guarantee obligations for which the guar8 anteed company is liable as a direct guarantor

9 under any other cross-guarantee or stop-loss

10 contract.

11 (F) OBLIGATIONS INCURRED FOR FEE IN12 COME.—All other direct and contingent liabil13 ities under any contract or commitment for

14 which the guaranteed company or guaranteed

15 banking office has or may receive any fee or

16 other comparable consideration, including for

17 any letter of credit or bankers’ acceptance, and

18 any securities contract, commodity contract,

19 forward contract, repurchase agreement, or

20 swap agreement (as such terms are defined in

21 section 11(e)(8)(D) of the Federal Deposit In22 surance Act).

23 (G) ASSESSMENTS ON DEPOSITORY INSTI24 TUTIONS FOR COSTS OF CLOSED LOOPS.—All li25 abilities assessed under section 125(c)(2).
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1 (H) LIABILITY UNDER RECOURSE AGREE2 MENTS.—Any liability under recourse agree3 ments that arises when a guaranteed company

4 or guaranteed banking office sells loans or

5 other assets.

6 (2) OBLIGATIONS WHICH MAY NOT BE GUARAN7 TEED.—The following obligations of any guaranteed

8 company or guaranteed banking office may not be

9 guaranteed obligations under a cross-guarantee con10 tract:

11 (A) SUBORDINATED DEBT.—

12 (i) IN GENERAL.—Subordinated debt

13 issued by the guaranteed company or guar14 anteed banking office.

15 (ii) INCLUDES DEBT WHICH MAY BE

16 REDEEMED BY THE DEBTHOLDER BY

17 CHECK OR OTHER MEANS.—For purposes

18 of this subparagraph, the term ‘‘subordi19 nated debt’’ includes subordinated debt

20 which may be withdrawn by or credited to

21 the debtholder by a check, wire transfer, or

22 other order of the debtholder.

23 (B) EQUITY INTERESTS.—Any equity in24 terest in the guaranteed company or guaranteed

25 banking office.
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1 (3) OBLIGATIONS WHICH MAY BE INCLUDED

2 UNDER A CROSS-GUARANTEE CONTRACT.—

3 (A) IN GENERAL.—Any obligation of any

4 guaranteed company or guaranteed banking of5 fice which is not required to be, or not prohib6 ited from being, a guaranteed obligation under

7 paragraphs (1) and (2) may be a guaranteed

8 obligation under a cross-guarantee contract to

9 the extent provided by the terms of the con10 tract.

11 (B) RULES UPON SWITCH TO A SUCCESSOR

12 CONTRACT.—Any obligation that was a guaran13 teed obligation under the previous cross-guaran14 tee contract shall be a guaranteed obligation

15 under the successor contract, if such obligation

16 accrues prior to the obligee receiving written

17 notice from the syndicate agent under the suc18 cessor contract that obligations of the same

19 type as were guaranteed under the previous

20 contract shall not be guaranteed under the suc21 cessor contract.

22 (4) JUDGMENTS AND SETTLEMENTS.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), a cross-guarantee contract may pro25 vide that any judgment against a guaranteed
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1 company under the contract, or any obligation

2 of the company under a settlement agreement,

3 in any action against the company in the com4 pany’s capacity as trustee or custodian with re5 spect to any person, shall be treated as a guar6 anteed obligation of such company to the extent

7 that the company’s duty to act as trustee or

8 custodian with respect to such person, or to a

9 designated 3d-party beneficiary, was expressly

10 established by written agreement of the parties

11 or by operation of law.

12 (B) RULE OF CONSTRUCTION.—Subpara13 graph (A) shall not be construed to provide that

14 the amount of any judgment or settlement from

15 any action arising from any alleged tortious

16 conduct, breach of contract, or violation of stat17 utory obligation (other than the agreement es18 tablishing the duty of the institution to act as

19 trustee or custodian) is a guaranteed obligation

20 unless the cross-guarantee contract expressly so

21 provides.

22 (5) VICARIOUS LIABILITY.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), a direct guarantor or syndicate

25 agent under any cross-guarantee contract shall
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1 not be vicariously liable for any alleged tortious

2 conduct, breach of contract, or violation of stat3 utory obligation by any guaranteed party under

4 the contract.

5 (B) EXCEPTION FOR FRAUD RELATED TO

6 SUBORDINATED DEBT.—Not withstanding sub7 paragraph (A), the liability of any guaranteed

8 party under a cross-guarantee contract for

9 damages due to the fraudulent actions of such

10 party related to marketing subordinated debt

11 shall be a guaranteed obligation under the con12 tract.

13 (b) RISK DIVERSIFICATION.—

14 (1) MINIMUM NUMBER OF DIRECT AND SEC15 OND-TIER GUARANTORS.—Each cross-guarantee con16 tract shall comply with the requirements relating to

17 the maximum percentage of all guaranteed obliga18 tions under the contract which may be guaranteed

19 by any 1 direct guarantor and the minimum number

20 of second-tier guarantors which the guaranteed

21 party or parties shall have in the aggregate, as de22 termined under the following table (as adjusted pur23 suant to paragraph (2)) on the basis of the total as24 sets of all the guaranteed parties under the contract:
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Aggregate amount of assets of all guaranteed parties under the contract

Maximum percentage of crossguarantee liability assumable by

any 1 direct

guarantor

Minimum number of second-tier

guarantors

$100,000,000 or less .............................. 5.0 100

Greater than $100,000,000 but less

than or equal to $500,000,000 .......... 4.0 125

Greater than $500,000,000 but less

than or equal to $1,000,000,000 ....... 2.5 150

Greater than $1,000,000,000 but less

than or equal to $10,000,000,000 ..... 1.5 200

More than $10,000,000,000 .................. 1.0 250

1 (2) ADJUSTMENT OF DOLLAR AMOUNTS FOR

2 INFLATION.—The amounts contained in the table in

3 paragraph (1) relating to the aggregate assets of

4 guaranteed parties under any cross-guarantee con5 tract shall be adjusted annually by the Corporation

6 on the basis of changes in the deflator for the gross

7 domestic product.

8 (c) BASIS FOR VALUING ASSETS AND LIABILITIES.—

9 Each cross-guarantee contract shall describe the manner

10 in which the equity capital of the guaranteed financial

11 group shall be calculated for purposes of the contract.

12 (d) EMERGENCY LIQUIDITY.—Notwithstanding sec13 tion 113(e)(3), the parties to a cross-guarantee contract

14 may include terms relating to the provision of emergency

15 liquidity to a guaranteed party by any direct guarantor

16 without regard to the relative interest in the contract held

17 by any guarantor providing the liquidity.
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1 (e) INTERNAL GUARANTEES.—A guaranteed com2 pany under any cross-guarantee contract shall be jointly

3 and severally liable to the direct guarantors under such

4 contract for any loss incurred by the guarantors in connec5 tion with the cross-guarantee obligations of the guarantors

6 to any other guaranteed company under such contract.

7 SEC. 115. REQUIREMENTS APPLICABLE ONLY TO STOP8 LOSS CONTRACTS.

9 (a) GUARANTEED OBLIGATIONS UNDER A STOP10 LOSS CONTRACT.—

11 (1) OBLIGATIONS REQUIRED TO BE GUARAN12 TEED OBLIGATIONS.—A nondepository guarantor’s

13 cross-guarantee obligations shall be guaranteed obli14 gations under a stop-loss contract.

15 (2) NO OTHER GUARANTEED OBLIGATIONS.—

16 Except for the obligations described in paragraph

17 (1), no obligation of a nondepository guarantor may

18 be a guaranteed obligation.

19 (b) RISK DIVERSIFICATION.—

20 (1) MINIMUM NUMBERS OF DIRECT GUARAN21 TORS.—A direct guarantor under a stop-loss con22 tract may not guarantee more than 2 percent of the

23 guaranteed obligations under such contract.

24 (2) SECOND-TIER GUARANTORS.—The direct

25 guarantors under any stop-loss contract shall have,
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1 in the aggregate, no fewer than 150 direct guaran2 tors.

3 SEC. 116. ELIGIBILITY AND REQUIREMENTS FOR DIRECT

4 GUARANTORS.

5 (a) ELIGIBILITY.—

6 (1) IN GENERAL.—No person may become a di7 rect guarantor unless such person is a guaranteed

8 company or a nondepository guarantor.

9 (2) NONDEPOSITORY GUARANTOR.—

10 (A) IN GENERAL.—Subject to subpara11 graphs (B) and (C) of this paragraph and sub12 section (c) of this section, any person may be

13 a nondepository guarantor.

14 (B) NONELIGIBILITY OF DEPOSITORY IN15 STITUTIONS.—

16 (i) IN GENERAL.—No depository insti17 tution, or subsidiary of a depository insti18 tution, may be a nondepository guarantor.

19 (ii) RULE OF CONSTRUCTION FOR

20 FOREIGN BANKS.—Clause (i) shall not be

21 construed as prohibiting a foreign bank

22 which has a branch in the United States

23 from being a nondepository guarantor.

24 (iii) FOREIGN BANK DEFINED.—For

25 purposes of clause (ii), the term ‘‘foreign
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1 bank’’ shall exclude any company orga2 nized under the laws of a territory of the

3 United States, Puerto Rico, Guam, Amer4 ican Samoa, or the Virgin Islands.

5 (C) NONELIGIBILITY OF GOVERNMENTS.—

6 (i) IN GENERAL.—No entity with di7 rect or indirect taxing authority may be a

8 nondepository guarantor.

9 (ii) RULE OF CONSTRUCTION FOR

10 GOVERNMENT PENSION FUNDS.—Clause

11 (i) shall not be construed as to prohibit

12 any pension fund operated for the benefit

13 of government employees from being a

14 nondepository guarantor.

15 (3) GUARANTEED DEPOSITORY INSTITUTIONS

16 AUTHORIZED TO BE DIRECT GUARANTORS.—Not17 withstanding any other Federal or State law restrict18 ing the powers of depository institutions, a guaran19 teed depository institution may be a direct guarantor

20 under any cross-guarantee or stop-loss contract.

21 (b) DESIGNATED DIRECT GUARANTOR.—

22 (1) ONLY ONE GUARANTEED COMPANY WITHIN

23 A GUARANTEED FINANCIAL GROUP MAY BE A DI24 RECT GUARANTOR.—No guaranteed company shall

25 be a direct guarantor if another guaranteed com-
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1 pany under the same cross-guarantee contract al2 ready is a direct guarantor under any cross-guaran3 tee or stop-loss contract.

4 (2) DESIGNATION OF DIRECT GUARANTOR IN

5 CROSS-GUARANTEE CONTRACT.—In the case of a

6 cross-guarantee contract in which 2 or more compa7 nies are guaranteed under the contract, the contract

8 shall designate which guaranteed company may, in

9 accordance with paragraph (1), be a direct guaran10 tor.

11 (c) FINANCIAL RESOURCES REQUIREMENTS FOR

12 NONDEPOSITORY GUARANTORS.—

13 (1) NET WORTH.—No person may become a

14 nondepository guarantor unless such person has a

15 net worth of not less than $100,000,000 at the time

16 such person would, but for this paragraph, become

17 a direct guarantor under a cross-guarantee or stop18 loss contract.

19 (2) LIQUIDITY RESOURCES.— Each nondepos20 itory guarantor shall maintain unencumbered liquid

21 assets in an amount equal to or greater than the

22 amount which is equal to 5 times the projected an23 nual premium from all cross-guarantee and stop-loss

24 contracts under which the nondepository guarantor

25 is a direct guarantor.
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1 (3) ASSET REQUIREMENTS.—Only assets which

2 are maintained within the United States and subject

3 to the jurisdiction of a United States court may be

4 taken into account for purposes of meeting the re5 quirements of paragraphs (1) and (2).

6 (d) RISK DIVERSIFICATION REQUIREMENTS FOR DI7 RECT GUARANTORS.—

8 (1) PROJECTED ANNUAL PREMIUM CAPACITY

9 AND PROJECTED ANNUAL PREMIUM LIMIT.—A per10 son may not become a direct guarantor under a

11 cross-guarantee or stop-loss contract if, upon the

12 contract (but for this paragraph) taking effect—

13 (A) the sum of the estimated annual pre14 mium which the person would receive as a di15 rect guarantor under the contract and the per16 son’s projected annual premium income would

17 exceed such person’s projected annual premium

18 capacity as of—

19 (i) in the case of a contract which

20 would take effect on or before the 15th day

21 of any calendar month, the 2d calendar

22 month preceding such calendar month; or

23 (ii) in the case of a contract which

24 would take effect after the 15th day of any
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1 calendar month, the end of the calendar

2 month preceding such calendar month; or

3 (B) the estimated annual premium which

4 the person would receive as a direct guarantor

5 under the contract would exceed such person’s

6 projected annual premium limit as of—

7 (i) in the case of a contract which

8 would take effect on or before the 15th day

9 of any calendar month, the 2d calendar

10 month preceding such calendar month; or

11 (ii) in the case of a contract which

12 would take effect after the 15th day of any

13 calendar month, the end of the calendar

14 month preceding such calendar month.

15 (2) CALCULATION OF PROJECTED ANNUAL PRE16 MIUM.—

17 (A) IN GENERAL.—The syndicate agent

18 under any cross-guarantee or stop-loss contract

19 shall determine the projected annual premium

20 due any direct guarantor for any calendar

21 month by calculating the amount of such guar22 antor’s share of the premium accrued by the

23 guaranteed party or parties under the contract

24 during such month and then annualizing such

25 amount.
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1 (B) FIRST TWO MONTHS.—During the

2 first 2 calendar months in which any cross3 guarantee or stop-loss contract is in effect, the

4 syndicate agent shall determine the projected

5 annual premium under the contract for each of

6 these 2 calendar months by annualizing the pre7 mium rate in effect on the date the contract be8 comes effective.

9 (3) CALCULATION OF THE ESTIMATED ANNUAL

10 PREMIUM FOR THE APPROVED CONTRACT.—

11 (A) IN GENERAL.—For purposes of para12 graph (1), the term ‘‘estimated annual pre13 mium’’ means the annualized premium rate

14 likely to be in effect on the date the contract

15 becomes effective.

16 (B) SYNDICATE AGENT ESTIMATE.—The

17 proposed syndicate agent for the contract shall

18 make an estimate of the amount in paragraph

19 (1) within five days prior to the date on which

20 the contract is to become effective.

21 (4) CALCULATION OF PROJECTED ANNUAL PRE22 MIUM INCOME.—For purposes of making any deter23 mination under paragraph (1)(A) with respect to a

24 direct guarantor, the term ‘‘projected annual pre25 mium income’’ means the total projected annual pre-
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1 miums from all cross-guarantee or stop-loss con2 tracts under which such guarantor is a direct guar3 antor, other than the contract for which such deter4 mination is being made, as of—

5 (A) in the case of contract which would be6 come effective on or before the 15th day of any

7 calendar month, the 2d calendar month preced8 ing such calendar month; and

9 (B) in the case of a contract which would

10 become effective after the 15th day of any cal11 endar month, the calendar month preceding

12 such calendar month.

13 (e) LIABILITY OF ACQUIRER OF ANY DIRECT GUAR14 ANTOR.—Any person who acquires (as defined in section

15 13(f)(8)(B) of the Federal Deposit Insurance Act) any di16 rect guarantor shall be obligated for all of the cross-guar17 antee obligations of such guarantor under any cross-guar18 antee or stop-loss contract to which such guarantor is a

19 direct guarantor.

20 SEC. 117. PROVISIONS RELATING TO CROSS-GUARANTEE

21 AND STOP-LOSS SYNDICATES.

22 (a) POWERS AND DUTIES OF SYNDICATE AGENTS.—

23 (1) SYNDICATE AGENT IS AGENT OF DIRECT

24 GUARANTORS.—
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1 (A) IN GENERAL.—The syndicate agent

2 under any cross-guarantee or stop-loss contract

3 shall act as an agent of the direct guarantors

4 under such contract.

5 (B) EXCEPTIONS.—Notwithstanding sub6 paragraph (A), the syndicate agent also shall

7 have—

8 (i) a duty to protect the confidential9 ity of any aspect of a guaranteed party’s

10 affairs which the contract specifies shall be

11 protected; and

12 (ii) duties to the Corporation as speci13 fied in this title.

14 (2) POWERS OF SYNDICATE AGENT.—No per15 son under a cross-guarantee or stop-loss contract

16 other than the syndicate agent shall have the follow17 ing powers:

18 (A) MONITOR PERFORMANCE.—Monitor

19 the performance, or contract with a third party

20 to monitor the performance, of any party guar21 anteed under such contract.

22 (B) COLLECT PREMIUMS.—Collect the pre23 miums due to the direct guarantors under such

24 contract.
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1 (3) SYNDICATE AGENT REPORTS SUBMITTED TO

2 THE CENTRAL ELECTRONIC REPOSITORY.—The syn3 dicate agent under any cross-guarantee or stop-loss

4 contract shall submit in electronic form to the

5 central electronic repository by the 15th of each cal6 endar month a report—

7 (A) of the equity capital or the net worth,

8 as the case may be, of the guaranteed financial

9 group or nondepository guarantor under the

10 contract as of the end of the prior calendar

11 month;

12 (B) of the projected annual premium due

13 each direct guarantor, as of the end of the prior

14 calendar month; and

15 (C) in the case of a stop-loss contract, of

16 the unencumbered liquid assets of the

17 nondepository guarantor as of the end of the

18 prior calendar month.

19 (4) CONFIRMATION OF GUARANTEE OF SPE20 CIFIC OBLIGATIONS.—

21 (A) IN GENERAL.—The syndicate agent

22 under any cross-guarantee contract shall—

23 (i) determine, at the request of any

24 current or prospective creditor of a guar-
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1 anteed company or guaranteed banking of2 fice under such contract, whether—

3 (I) the company or office has or

4 will have an obligation to the creditor;

5 and

6 (II) such obligation is or would

7 be a guaranteed obligation under the

8 contract; and

9 (ii) promptly notify the current or

10 prospective creditor in writing of the

11 agent’s determination.

12 (B) DETERMINATION BINDING ON SYN13 DICATE.—Any notification of determination

14 under subparagraph (A) with respect to any

15 guaranteed company or guaranteed banking of16 fice shall be binding on the cross-guarantee syn17 dicate which is a party to such contract.

18 (C) FEE.—A syndicate agent may charge

19 a creditor a fee for making the determination

20 and notifying the creditor under subparagraph

21 (A).

22 (5) SIDE CONTRACTS.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), no direct guarantor or group of di25 rect guarantors under a cross-guarantee or
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1 stop-loss contract may enter into any other con2 tract or binding agreement pertaining to the

3 contract with the syndicate agent under such

4 cross-guarantee or stop-loss contract.

5 (B) EXCEPTION FOR CERTAIN LIMITED

6 CONTRACTS.—Notwithstanding subparagraph

7 (A), a syndicate agent and the direct guaran8 tors under a cross-guarantee or stop-loss con9 tract may enter into another contract or bind10 ing agreement if—

11 (i) the terms of such contract or

12 agreement relate solely to rights and obli13 gations of such parties to each other under

14 the cross-guarantee or stop-loss contract,

15 including the compensation of the agent, to

16 the extent such terms are not inconsistent

17 with the cross-guarantee or stop-loss con18 tract; and

19 (ii) the contract or agreement does

20 not affect any right or obligation of—

21 (I) any guaranteed party under

22 the cross-guarantee or stop-loss con23 tract; or

24 (II) any creditor or shareholder

25 of any such guaranteed company.
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1 (b) SYNDICATION OF CROSS-GUARANTEE AND STOP2 LOSS RISKS.—Notwithstanding any provision of Federal

3 or State law, interests in any cross-guarantee or stop-loss

4 syndicate are not securities for any purpose and any per5 son or group of persons may organize and market the risk

6 of loss represented by the participation of any person as

7 a direct guarantor under any cross-guarantee or stop-loss

8 contract.

9 (c) TAXATION OF SYNDICATES.—

10 (1) TREATED AS PARTNERSHIP.—Any cross11 guarantee or stop-loss syndicate shall be treated as

12 a partnership for purposes of the Internal Revenue

13 Code of 1986.

14 (2) CONSOLIDATED RETURNS BY SYNDICATE

15 AGENT.—A syndicate agent may file an annual in16 formation return with respect to all syndicates for

17 which such agent is an agent, and all distributions

18 with respect to such syndicates, on a consolidated

19 basis.

20 (3) TAX-EXEMPT STATUS.—Any syndicate

21 under any cross-guarantee or stop-loss contract, any

22 income or gross receipts (including premiums), and

23 any activity of the syndicate shall be exempt from all

24 taxation imposed by any State, county, municipality,

25 or local taxing authority.
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1 (d) AUDITS OF SYNDICATE AGENTS.—Unless other2 wise agreed, the direct guarantors under any cross-guar3 antee or stop-loss contract shall have the right to retain

4 a third party to audit the performance of the syndicate

5 agent under the terms of the contract.

6 (e) REPLACEMENT OF SYNDICATE AGENTS.—

7 (1) IN GENERAL.—The cross-guarantee or stop8 loss syndicate under any cross-guarantee or stop-loss

9 contract may at any time and without cause replace

10 the syndicate agent under such contract, subject to

11 the guaranteed financial group or nondepository

12 guarantor’s approval of the new syndicate agent, by

13 amending the contract and obtaining the Corpora14 tion’s approval of the new syndicate agent under sec15 tion 123.

16 (2) NO EFFECT ON CONTRACT.—The replace17 ment of a syndicate agent by the direct guarantors

18 in accordance with paragraph (1) shall not affect the

19 continuing existence or enforceability of the contract.

20 (3) WITHDRAWAL OF SYNDICATE AGENT.—

21 (A) IMMEDIATE SUBMISSION OF AMENDED

22 CONTRACT WITH NEW SYNDICATE AGENT.—If a

23 syndicate agent should resign or otherwise cease

24 providing required services under a cross-guar25 antee or stop-loss contract, whether wrongfully,
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1 as allowed under such contract, or for any other

2 reason, the cross-guarantee or stop-loss syn3 dicate shall immediately submit an amendment

4 to the contract, with a successor syndicate

5 agent named in the amendment, to the Cor6 poration for approval.

7 (B) INTERIM CGRC APPOINTMENT.—The

8 Corporation may appoint a successor syndicate

9 agent to serve until a cross-guarantee or stop10 loss syndicate has complied with the require11 ments under subparagraph (A).

12 (f) CAUSE OF ACTION BY THE SYNDICATE AGAINST

13 THE SYNDICATE AGENT.—

14 (1) STANDARD OF LIABILITY.—Unless other15 wise agreed, a cross-guarantee or stop-loss syndicate

16 shall have a cause of action against the syndicate

17 agent for losses accrued by members of the syn18 dicate under a cross-guarantee or stop-loss contract

19 only if the syndicate consciously disregarded sub20 stantial and unjustifiable risks being taken by the

21 guaranteed party under the contract.

22 (2) CAUSE OF ACTION BELONGS TO THE SYN23 DICATE.—An action against a syndicate agent under

24 paragraph (1) may be brought solely by the syn25 dicate as a whole and no individual member of the
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1 syndicate shall have a cause of action against the

2 syndicate agent.

3 SEC. 118. ASSUMPTION OF CONTROL OF A GUARANTEED

4 COMPANY BY A CROSS-GUARANTEE SYN5 DICATE.

6 (a) RIGHT OF CROSS-GUARANTEE SYNDICATE TO

7 ASSUME CONTROL.—A cross-guarantee syndicate under

8 any cross-guarantee contract shall have the right to as9 sume control of a guaranteed company under the contract

10 under the following circumstances:

11 (1) CANCELLATION.—Immediately after a can12 cellation of the contract by the syndicate or the

13 guaranteed financial group has become effective un14 less a successor cross-guarantee contract has taken

15 effect.

16 (2) EXPIRATION.—Immediately after the expi17 ration of the cross-guarantee contract unless a suc18 cessor cross-guarantee contract has taken effect.

19 (b) RIGHT OF GUARANTEED PARTY TO SEEK TO

20 STAY ASSUMPTION OF CONTROL.—

21 (1) IN GENERAL.—A guaranteed company may

22 file an action requesting a stay of any assumption

23 of control by a cross-guarantee syndicate.

24 (2) TIME LIMIT FOR OBJECTING TO ASSUMP25 TION OF CONTROL.—Except in the case in which the
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1 guaranteed company has obtained a successor cross2 guarantee contract, any action under paragraph (1)

3 shall be filed either within thirty days after the no4 tice of cancellation under section 113(h)(1) is given

5 or more than sixty days prior to the expiration of

6 the contract, whichever the case may be.

7 (3) EXPEDITED REVIEW.—The United States

8 district court with jurisdiction over the cross-guaran9 tee contract shall provide expedited review of any ac10 tion under paragraph (1).

11 (4) BASIS OF DETERMINATION.—In any action

12 under paragraph (1), the court shall stay the as13 sumption of control by a cross-guarantee syndicate

14 only if the conditions for assuming control under

15 subsection (a) have not been met.

16 (c) RIGHTS OF CROSS-GUARANTEE SYNDICATE TO

17 ENJOIN VIOLATIONS OF THE CONTRACT UNTIL ASSUM18 ING CONTROL.—

19 (1) INJUNCTIVE REMEDIES.—Upon giving no20 tice of cancellation of the cross-guarantee contract

21 under section 113(h)(1) or the expiration of the con22 tract, the cross-guarantee syndicate shall be granted

23 injunctive relief to enforce any restrictions imposed

24 under the contract.

25 (2) APPOINTMENT OF A RECEIVER.—
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1 (A) IN GENERAL.—Upon giving notice of

2 cancellation of the cross-guarantee contract

3 under section 113(h)(1) or the expiration of the

4 contract, the cross-guarantee syndicate may

5 seek the appointment of a receiver to serve until

6 the syndicate can assume control under sub7 section (a) and a court may in its discretion ap8 point such a receiver, but the court may ap9 point a receiver only if the remedies under

10 paragraph (1) are not adequate to protect the

11 interests of the cross-guarantee syndicate.

12 (B) CGRC SHALL SUBMIT LIST OF PRO13 SPECTIVE RECEIVERS.—The court shall appoint

14 a receiver under subparagraph (A) only from a

15 list supplied by the Corporation to the court of

16 five disinterested persons who are qualified and

17 willing to serve as the receiver in the case.

18 (3) EXPEDITED RELIEF.—The United States

19 district court with jurisdiction over the cross-guaran20 tee contract shall provide the relief under para21 graphs (1) and (2) on an expedited basis.

22 (d) POWERS AND DUTIES OF A CROSS-GUARANTEE

23 SYNDICATE AFTER ASSUMPTION OF CONTROL.—

24 (1) GENERAL POWERS.—
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1 (A) OPERATE THE COMPANY.—A cross2 guarantee syndicate which assumes control of a

3 guaranteed company under subsection (a) shall

4 have and may exercise all the powers of the

5 members or shareholders, the directors, and the

6 officers of the company and shall be entitled

7 to—

8 (i) conduct all business of the guaran9 teed company;

10 (ii) take over the books, records, and

11 assets of the guaranteed company;

12 (iii) collect all obligations and money

13 due the company;

14 (iv) perform in the name of the com15 pany all functions of the company consist16 ent with the appointment of the syndicate

17 as the successor to the managers and di18 rectors of the company and the duties of

19 the syndicate with respect to the company;

20 and

21 (v) preserve and conserve the assets

22 and property of such company.

23 (B) DISPOSITION OF COMPANY.—The

24 cross-guarantee syndicate which assumes con-
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1 trol of a guaranteed company under subsection

2 (a) may—

3 (i) merge the guaranteed company

4 with another guaranteed company;

5 (ii) sell or otherwise dispose of the

6 company; or

7 (iii) place the company in liquidation

8 and proceed to realize upon the assets of

9 the company.

10 (2) DUTIES—

11 (A) DISTRIBUTION OF ASSETS.—In any

12 case in which funds remain from the liquida13 tion, sale, or other disposition of the assets of

14 any guaranteed company after all depositors,

15 creditors, other claimants, and administrative

16 expenses of the syndicate have been paid or oth17 erwise resolved, the syndicate shall promptly

18 distribute such funds to the company’s share19 holders or members, as the case may be.

20 (B) FIDUCIARY DUTY.—A cross-guarantee

21 syndicate which assumes control of a guaran22 teed company in accordance with subsection (a)

23 shall succeed to the same fiduciary responsibil24 ity as the directors and officers of such com25 pany had under applicable law.
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1 (C) NOTICE TO CGRC.—If a cross-guaran2 tee syndicate assumes control of a guaranteed

3 company under subsection (a), the syndicate

4 shall on the same day notify the Corporation

5 that it has assumed control.

6 (e) NO AUTHORITY FOR CGRC, ANY FEDERAL

7 BANKING AGENCY, OR STATE BANK SUPERVISOR TO

8 STAY ASSUMPTION OF CONTROL.—Neither the Corpora9 tion nor any Federal banking agency, State bank super10 visor, or any other Federal or State agency may take any

11 action to prevent the assumption of control of a guaran12 teed company under subsection (a).

13 (f) ASSUMPTION OF CONTROL NOT AN EVENT OF

14 DEFAULT OR GROUNDS FOR ACCELERATION OF OBLIGA15 TIONS.—The assumption of control of a guaranteed com16 pany under subsection (a) shall not be an event of default

17 by the guaranteed company or grounds for acceleration

18 of any guaranteed obligation under any agreement to

19 which the guaranteed company is a party.

20 (g) SECOND-TIER GUARANTORS CANNOT DISPUTE

21 LOSSES.—A direct guarantor of any direct guarantor

22 which is a member of a cross-guarantee syndicate which

23 assumes control of a guaranteed party under subsection

24 (a) may not bring a cause of action against the cross-guar25 antee syndicate based on damages arising out of the syn-
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1 dicate’s decision to assume control or failure to minimize

2 losses under the cross-guarantee contract.

3 SEC. 119. ENFORCEMENT OF CONTRACTS.

4 (a) JURISDICTION OF FEDERAL COURTS.—

5 (1) IN GENERAL.—For purposes of section

6 1331 of title 28, United States Code, any action

7 arising under any cross-guarantee or stop-loss con8 tract, or any contract arising under section

9 117(a)(5)(B), shall be deemed to arise under Fed10 eral law and may be brought in the district court of

11 the United States designated under paragraph (3).

12 (2) REMOVAL.—Any action arising under any

13 cross-guarantee or stop-loss contract, or any con14 tract under section 117(a)(5)(B), which is brought

15 in a State court may be removed by the defendant

16 or the defendants to the district court of the United

17 States designated under paragraph (3).

18 (3) DESIGNATION OF COURT IN CONTRACT.—

19 Each cross-guarantee and stop-loss contract shall

20 designate the district court of the United States

21 which shall have original jurisdiction over any action

22 brought in or removed to Federal court under para23 graphs (1) and (2).

24 (b) RESTRICTIONS ON THIRD PARTY BENEFICIARY

25 ACTIONS.—Notwithstanding any State law, no creditor of
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1 any guaranteed party under any cross-guarantee or stop2 loss contract may bring an action against the cross-guar3 antee syndicate under such contract for failure to perform

4 any cross-guarantee obligation under the contract without

5 first having obtained a judgment against the guaranteed

6 party for failure to perform such obligation, unless the di7 rect guarantors have assumed control of the guaranteed

8 party under section 118(a).

9 (c) SERVICE OF PROCESS.—For purposes of any ac10 tion under subsection (a)—

11 (1) the syndicate agent shall be the agent for

12 all direct guarantors for service of process for ac13 tions brought against the syndicate; and

14 (2) service of process upon a syndicate agent

15 shall serve as the exclusive manner of service of

16 process upon any direct guarantor under the con17 tract.

18 (d) APPLICABLE STATE LAW.—

19 (1) STATE CONTRACT LAW AS INTERSTITIAL

20 LAW.—Unless otherwise indicated in this title, appli21 cable state law shall apply under this title to any

22 cross-guarantee or stop-loss contract.

23 (2) PARTIES’ CHOICE OF STATE LAW.—Each

24 cross-guarantee and stop-loss contract shall des-
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1 ignate the state law that shall be applicable under

2 paragraph (1).

3 Subtitle C—Powers and Duties of

4 the CGRC

5 CHAPTER 1—CROSS-GUARANTEE

6 PROCESS

7 SEC. 121. THE CROSS-GUARANTEE REGULATION CORPORA8 TION.

9 (a) CREATION.—

10 (1) IN GENERAL.—There is hereby established

11 a body corporate the ‘‘Cross Guarantee Regulation

12 Corporation’’ which shall have succession until dis13 solved by act of Congress.

14 (2) CORPORATION NOT AN AGENCY.—The Cor15 poration shall not be an agency or establishment of

16 the United States Government.

17 (3) HEADQUARTERED IN THE DISTRICT OF CO18 LUMBIA.—The Corporation shall maintain its prin19 cipal office in the District of Columbia.

20 (b) POWERS.—In addition to any powers granted to

21 the Corporation elsewhere in this title, the Corporation

22 shall have, consistent with this title, the power—

23 (1) to sue and be sued, complain and defend, in

24 its corporate name and through its own counsel, in

25 any State, Federal, or other court;
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1 (2) to adopt, alter, and use a corporate seal

2 which shall be judicially noticed;

3 (3) to adopt, amend, and repeal, by its Board

4 of Directors, such bylaws as may be necessary or ap5 propriate to carry out the purposes of this title, in6 cluding bylaws relating to—

7 (A) the conduct of its business; and

8 (B) the indemnity of its directors, officers,

9 and employees for liabilities and expenses actu10 ally and reasonably incurred by any such person

11 in connection with the defense or settlement of

12 an action or suit if such person acted in good

13 faith and in a manner reasonably believed to be

14 consistent with the purposes of this chapter.

15 (4) to adopt, amend, and repeal, by its Board

16 of Directors, such rules as authorized under sub17 section (e)(2) of this section;

18 (5) to conduct business (including the carrying

19 on and maintenance of offices) and to exercise all

20 other rights and powers granted to it by this chapter

21 in any State or other jurisdiction without regard to

22 any qualification, licensing, or other statute in such

23 State or other jurisdiction;

24 (6) to lease, purchase, accept gifts or donations

25 of or otherwise acquire, to own, hold, improve, use,
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1 or otherwise deal in or with, and to sell, convey,

2 mortgage, pledge, lease, exchange or otherwise dis3 pose of, any property, real, personal or mixed, or

4 any interest therein, wherever situated;

5 (7) subject to subsection (c), to hire such offi6 cers, attorneys, employees, and agents as may be re7 quired, to determine their qualifications to define

8 their duties, to fix their salaries, require bonds for

9 them and fix the penalty thereof; and

10 (8) to enter into contracts, to execute instru11 ments, to incur liabilities, and to do any and all

12 other acts and things as may be necessary or inci13 dental to the conduct of its business and the exercise

14 of all other rights and powers granted to the Cor15 poration under this title.

16 (c) BOARD OF DIRECTORS.—

17 (1) FUNCTIONS.—The Corporation shall have a

18 Board of Directors which, subject to the provisions

19 of this title, shall determine the policies which shall

20 govern the operations of the Corporation.

21 (2) NUMBER AND APPOINTMENT.—The Board

22 of Directors shall consist of seven persons as follows:

23 (A) One director shall be appointed by the

24 Secretary of the Treasury from among the offi25 cers of the Department of Treasury and shall
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1 be removable by the Secretary without cause at

2 any time.

3 (B) Six directors shall be appointed by the

4 President, by and with the advice and consent

5 of the Senate, as follows—

6 (i) two such directors shall be selected

7 from among senior officers of companies

8 that are or are likely to be guaranteed de9 pository institutions, provided that the di10 rectors are not from the same geographical

11 area and represent different aspects of the

12 industry;

13 (ii) one such director shall be selected

14 from among senior officers of companies

15 that are or are likely to be nondepository

16 guarantors;

17 (iii) one such director shall be selected

18 from among senior officers of companies

19 that are or are likely to be syndicate

20 agents; and

21 (iv) two such directors shall be se22 lected from the general public from among

23 persons who are not either regulatory offi24 cials nor associated with a guaranteed de25 pository institution, syndicate agent, or
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1 nondepository guarantor and have not been

2 such an official or had any such associa3 tion for the 2 years preceding appoint4 ment.

5 (3) CHAIRMAN AND VICE CHAIRMAN.—The

6 President shall designate a Chairman and Vice

7 Chairman from among those directors appointed

8 under paragraph (2)(B)(iv) of this subsection.

9 (4) TERMS.—

10 (A) FOUR-YEAR TERMS.—Except as pro11 vided under subparagraphs (B) and (C), each

12 director shall be appointed for a term of 4

13 years.

14 (B) TRANSITION RULES.—

15 (i) STAGGERED TERMS.—Of the direc16 tors first appointed under paragraph

17 (2)(B)—

18 (I) one shall hold office for a

19 term expiring on December 31 of the

20 first full calendar year after passage

21 of this Act;

22 (II) two shall hold office for a

23 term expiring on December 31 of the

24 second full calendar year after pas25 sage of this Act;
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1 (III) one shall hold office for a

2 term expiring on December 31 of the

3 third full calendar year after passage

4 of this Act; and

5 (IV) two shall hold office for a

6 term expiring on December 31 of the

7 fourth full calendar year after passage

8 of this Act.

9 (ii) TIMING OF PARTICULAR DIREC10 TOR’S TERM.—

11 (I) INDUSTRY APPOINTEES’

12 TERMS WILL END IN DIFFERENT

13 YEARS.—One of the directors ap14 pointed under each of the clauses

15 (i)(I), (II), (III), (IV) shall consist of

16 the 4 directors appointed under para17 graphs (2)(B)(i), (ii), and (iii).

18 (II) APPOINTEES FROM THE

19 GENERAL PUBLIC.—One director ap20 pointed under both clause (i)(II) and

21 (IV) shall consist of one of the 2 di22 rectors appointed under paragraph

23 (2)(B)(iv).

24 (iii) TREASURY DIRECTOR MUST BE

25 APPOINTED SOON AFTER ENACTMENT.—
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1 The Secretary of Treasury shall appoint

2 the director designated under paragraph

3 (2)(A) within 30 days after enactment of

4 this Act.

5 (C) VACANCIES.—

6 (i) APPOINTMENT IN SAME MAN7 NER.—A vacancy on the Board of Direc8 tors shall be filled in the same manner as

9 the original appointment was made.

10 (ii) APPOINTMENT ONLY FOR THE RE11 MAINDER OF THE TERM.—Any director ap12 pointed under clause (i) shall be appointed

13 only for the remainder of the term of his

14 predecessor.

15 (D) REMAINING A DIRECTOR UNTIL A SUC16 CESSOR IS APPOINTED.—A director may serve

17 after the expiration of his term until his succes18 sor has taken office.

19 (5) COMPENSATION.—

20 (A) CHAIRMAN AND VICE CHAIRMAN.—The

21 compensation of the Chairman and Vice Chair22 man shall be as provided in the bylaws of the

23 Corporation.

24 (B) OTHER DIRECTORS.—The remaining

25 five directors shall serve without compensation
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1 except that they are entitled to receive reim2 bursement for expenses incurred in connection

3 with official business of the Corporation.

4 (6) OFFICER AND EMPLOYEES AS MEMBERS OF

5 THE BOARD OF DIRECTORS.—

6 (A) IN GENERAL.—Subject to Subpara7 graph (B), no officer, attorney, employee, or

8 agent of the Corporation shall be a member of

9 the Board of Directors.

10 (B) TRANSITION RULE.—The chief execu11 tive officer of the Corporation may be 1 of the

12 public members of the Board of Directors until

13 5 years after the cross-guarantee activation

14 date.

15 (7) BOARD OF DIRECTORS TO DETERMINE OF16 FICERS.—The officers of the Corporation shall be

17 employed at the will of the Board of Directors.

18 (8) DEFINITION OF OFFICER.—For purposes of

19 this subsection, the term ‘‘officer’’ includes any chief

20 executive officer, president, senior executive, or other

21 official with managerial or executive authority within

22 the Corporation.

23 (d) MEETINGS OF THE BOARD OF DIRECTORS.—

24 (1) TIMING OF MEETINGS.—The Board of Di25 rectors shall meet at the call of its Chairman, or as
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1 otherwise provided by the bylaws of the Corporation,

2 except that the director appointed under subsection

3 (c)(2)(A) may by himself call a meeting until at

4 least three other directors have taken office.

5 (2) QUORUM TRANSITION RULE.—The bylaws

6 shall determine how many members constitute a

7 quorum when the Board of Directors meet, except

8 that the director appointed under subsection

9 (c)(2)(A) shall by himself constitute a quorum until

10 at least three other directors have taken office.

11 (e) BYLAWS AND RULEMAKING.—

12 (1) BYLAWS.—

13 (A) PROCEDURE.—The Board of Directors

14 shall file with the Secretary of the Treasury a

15 copy of the proposed initial bylaws of the Cor16 poration and any proposed bylaw changes ac17 companied by a concise general statement of

18 the basis and purpose for such changes.

19 (B) CHANGES BECOME EFFECTIVE UNLESS

20 THE TREASURY DEPARTMENT OBJECTS.—Any

21 bylaws submissions under subparagraph (A)

22 shall become effective 30 days after the filing of

23 such changes with the Secretary of the Treas24 ury, unless—
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1 (i) the Secretary of the Treasury, by

2 notice to the Corporation setting forth the

3 reasons therefor, disapproves of such pro4 posed bylaw changes as being contrary to

5 the purposes of this title; or

6 (ii) the Secretary of the Treasury de7 cides, at its own discretion, that public

8 comment shall be obtained, in which case

9 it may, after notifying the Corporation in

10 writing of such finding, require that the

11 procedures set forth in paragraph (2) be

12 followed with respect to such a bylaw

13 change.

14 (2) RULEMAKING.—

15 (A) RULEMAKING AUTHORITY.—The Cor16 poration shall have the power to issue a rule

17 only if—

18 (i) the power to issue the rule is ex19 plicitly provided for in this title; or

20 (ii) the Corporation demonstrates

21 that—

22 (I) the rule implements statutory

23 language in this title; and

24 (II) improves the efficiency of the

25 cross-guarantee system.
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1 (B) SUBSTANTIVE BASIS FOR RULES.—

2 Any proposed rule or proposed rule change shall

3 be approved only if there is substantial evidence

4 supporting the findings on which the proposed

5 rule is based.

6 (C) RULEMAKING PROCEDURES.—

7 (i) IN GENERAL.—The Corporation

8 shall use the informal rulemaking proce9 dures under the Administrative Procedures

10 Act (5 U.S.C. 553) in prescribing rules

11 under this paragraph.

12 (ii) RIGHT TO A HEARING.—In addi13 tion to the procedures under clause (i), any

14 person may during the comment period re15 quest a hearing and such hearing, if re16 quested, shall take place within 30 days

17 after the end of the comment period.

18 (iii) SUBMITTING RULES TO TREAS19 URY.—After having completed the proce20 dures under clauses (i) and (ii), the Cor21 poration shall file with the Secretary of the

22 Treasury a copy of the proposed rules.

23 (iv) TREASURY AUTHORITY TO RE24 JECT RULES.—Any proposed rules submit25 ted under clause (iii) shall become effective
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1 30 days after the filing of such changes

2 with the Secretary of the Treasury, unless

3 the Secretary of the Treasury, by notice to

4 the Corporation setting forth the reasons

5 therefor, disapproves of such proposed rule

6 changes as being contrary to the purposes

7 of this title.

8 (D) JUDICIAL REVIEW.—

9 (i) STANDING.—Any person suffering

10 a legal wrong, or adversely affected or ag11 grieved within the meaning of this title, by

12 the rules issued under this paragraph is

13 entitled to judicial review thereof.

14 (ii) JURISDICTION.—The United

15 States Court of Appeals for the District of

16 Columbia shall have exclusive original ju17 risdiction over any action under clause (i).

18 (E) INITIAL DEADLINE.—For any rule cov19 ered by subparagraph (A)(i), the Corporation

20 shall issue a final rule within 1 year after pas21 sage of this Act.

22 (f) FUNDING.—

23 (1) INITIAL BORROWING.—

24 (A) BIF AND SAIF FINANCING.—The Cor25 poration shall have the power to borrow
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1 $20,000,000 from the Bank Insurance Fund

2 and Savings Association Insurance Fund, in the

3 manner described under section 144(d).

4 (B) USE OF SUCH FINANCING.—The Cor5 poration shall use any amount borrowed under

6 subparagraph (A) to establish the central elec7 tronic repository, pay initial salaries and other

8 operating expenses, buy equipment, develop

9 computer software, and otherwise begin oper10 ations.

11 (C) REPAYMENT.—The Corporation shall

12 repay any borrowing under subparagraph (A)

13 within 5 years after the cross-guarantee activa14 tion date from income obtained under para15 graph (2).

16 (D) INTEREST ON LOAN.—

17 (i) TIMING OF PAYMENTS.—No prin18 cipal or interest payments on the loan de19 scribed in subparagraph (A) shall be due

20 prior to 1 year after the cross-guarantee

21 activation date.

22 (ii) INTEREST RATE.—The interest

23 rate on the borrowing under this para24 graph shall be equal to .25 percent plus

25 the average annual percentage yield on 3-
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1 month bills issued by the Secretary of the

2 Treasury under section 3104(a) of title 31,

3 United States Code.

4 (2) FINANCING FROM OPERATIONS.—

5 (A) SELF-SUPPORTING.—The Corporation

6 shall repay the loan under paragraph (1) and

7 pay for its ongoing operating expenses by as8 sessing fees as authorized under subparagraph

9 (B) and collecting penalties as authorized under

10 this title and shall not, subject to paragraph

11 (1), receive any financing or operating subsidies

12 from the United States Treasury.

13 (B) FEES.—The Corporation may assess a

14 reasonable fee upon any party which—

15 (i) submits a cross-guarantee, stop16 loss, or group cross-guarantee syndicate

17 contract for approval;

18 (ii) requests use of any service pro19 vided by the central electronic repository;

20 or

21 (iii) requests a certification under sec22 tion 124(b).

23 (g) MISCELLANEOUS PROVISIONS.—

24 (1) INSPECTION OF REPORTS.—
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1 (A) IN GENERAL.—Any notice, report, or

2 other document filed with the Corporation pur3 suant to this title, other than financial state4 ments filed by nondepository guarantors pursu5 ant to section 117(a)(3)(A), shall be available

6 for public inspection unless the Corporation or

7 the Secretary of Treasury determines that dis8 closure thereof is not in the public interest.

9 (B) CONGRESSIONAL ACCESS.—Nothing

10 under subparagraph (A) shall act to deny docu11 ments or information to the Congress of the

12 United States or to the committees of either

13 House having jurisdiction over depository insti14 tutions and related matters under the rules of

15 each body.

16 (C) TREASURY ACCESS TO THE CORPORA17 TION’S DOCUMENTS.—The Corporation shall

18 provide the Secretary of Treasury with any doc19 ument or information which the Secretary in

20 his or her discretion requests.

21 (2) LIABILITY OF CORPORATION AND ITS OFFI22 CERS.—Neither the Corporation nor any of its direc23 tors, officers, attorneys, agents, or employees shall

24 have any liability to any person for any action taken
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1 or omitted in good faith under or in connection with

2 any matter contemplated by this title.

3 (3) EXEMPTION FROM TAXATION.—The Cor4 poration, its property, its franchise, capital, reserves,

5 surplus, and its income, shall be exempt from all

6 taxation now or hereafter imposed by the United

7 States or by any State or local taxing authority, ex8 cept that any real property or tangible personal

9 property (other than cash and securities) of the Cor10 poration shall be subject to State and local taxation

11 to the same extent according to its value as other

12 real and tangible personal property is taxed.

13 (4) FISCAL YEAR.—The fiscal year of the Cor14 poration shall be the calendar year.

15 SEC. 122. REGULATION OF THE CROSS-GUARANTEE PROC16 ESS.

17 (a) CROSS-GUARANTEE REGULATION CORPORATION

18 ENFORCEMENT AUTHORITY.—

19 (1) IN GENERAL.—Subject to section 126, the

20 Corporation shall have exclusive authority to enforce

21 compliance with provisions of this title.

22 (2) ENFORCEMENT.—The Corporation shall

23 have the powers provided in subsections (b), (c), (d),

24 (h), (l), and (n) of section 8 of the Federal Deposit

25 Insurance Act and paragraph (1) and each subpara-
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1 graph, other than subparagraphs (B) and (C), of

2 paragraph (2) of subsection (i) of such section in en3 forcing this title with respect to any syndicate agent

4 and to any direct guarantor, but only with respect

5 to any violation of any requirements under this title.

6 (b) LIMITATION ON STATE JURISDICTION.—

7 (1) IN GENERAL.—Notwithstanding any provi8 sion of state law, no State may exercise authority

9 over any party to any cross-guarantee or stop-loss

10 contract with respect to—

11 (A) whether such party may be a party to

12 a cross-guarantee or stop-loss contract; and

13 (B) the rights, duties, privileges, or obliga14 tions of such party under the contract or pursu15 ant to this title.

16 (2) RULE OF CONSTRUCTION.—Paragraph (1)

17 shall not be construed as affecting the authority of

18 any State to determine the powers and regulate the

19 activities of State depository institutions.

20 SEC. 123. APPROVAL PROCESS FOR CROSS-GUARANTEE

21 AND STOP-LOSS CONTRACTS.

22 (a) EXPEDITED APPROVAL OF CONTRACTS AND CON23 TRACT AMENDMENTS.—

24 (1) NOTICE AND REVIEW REQUIREMENT.—Ex25 cept as provided in paragraph (3), no cross-guaran-
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1 tee, stop-loss, or group cross-guarantee syndicate

2 contract, and no amendment to any such contract,

3 may take effect unless—

4 (A) the Corporation has been given 15

5 business days to review the contract or amend6 ment; and

7 (B) before the end of the 15-day period de8 scribed in subparagraph (A), the Corporation

9 has not issued an order—

10 (i) disapproving the contract or

11 amendment, or

12 (ii) extending the period within which

13 the Corporation may disapprove the con14 tract or amendment in accordance with

15 paragraph (6).

16 (2) SUBMISSION OF CONTRACT OR AMENDMENT

17 IN ELECTRONIC FORM.—The Corporation shall pre18 scribe regulations requiring that any cross-guaran19 tee, stop-loss, or group cross-guarantee syndicate

20 contract, and any amendment to such contract,

21 being submitted for review under this subsection

22 shall be submitted in electronic form to the central

23 electronic repository.

24 (3) NOTICE OF APPROVAL BEFORE END OF DIS25 APPROVAL PERIOD.—A cross-guarantee, stop-loss, or
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1 group cross-guarantee syndicate contract, and any

2 amendment to any such contract, may take effect

3 before the expiration of the period described in para4 graph (1)(A) (or extended in accordance with para5 graph (6)) for disapproving such contract if the Cor6 poration notifies the parties that the Corporation

7 does not intend to disapprove the contract.

8 (4) SUBMISSION OF INFORMATION AND CER9 TIFICATIONS.—

10 (A) IN GENERAL.—The syndicate agent

11 under any proposed cross-guarantee, stop-loss,

12 or group cross-guarantee syndicate contract, or

13 any amendment to any such contract, submitted

14 to the Corporation for review under paragraph

15 (1), shall also submit to the Corporation with

16 such proposed contract such information and

17 attestations or certifications as the Corporation

18 may require by regulation.

19 (B) LIMITATION ON SCOPE OF INFORMA20 TION REQUIRED.—The regulations prescribed

21 by the Corporation under subparagraph (A)

22 may not require the submission of any informa23 tion other than information directly necessary

24 for the Corporation to determine whether any

25 proposed cross-guarantee, stop-loss, or group
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1 cross-guarantee syndicate contract, or amend2 ment thereto, submitted to the Corporation for

3 approval is in compliance with the requirements

4 of this title.

5 (5) ADDITIONAL INFORMATION.—

6 (A) IN GENERAL.—The Corporation may,

7 by specific request in connection with a particu8 lar proposed cross-guarantee, stop-loss, or

9 group cross-guarantee syndicate contract, or

10 amendment to any contract, submitted to the

11 Corporation, require, on 1 occasion only, that

12 additional information be submitted with re13 spect to such contract or amendment, except

14 that the Corporation may require only such in15 formation as may be relevant to—

16 (i) a determination of the extent to

17 which the proposed contract is in compli18 ance with the requirements of this title;

19 and

20 (ii) the Corporation’s evaluation of the

21 contract in accordance with this section.

22 (B) WRITTEN NOTICE OF EXPLANATION.—

23 For any request for additional information

24 under subparagraph (A), the Corporation shall

25 provide a detailed explanation of the specific
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1 reasons why such additional information is

2 needed.

3 (6) EXTENSION OF DISAPPROVAL PERIOD.—If,

4 in connection with a particular proposed cross-guar5 antee, stop-loss, or group cross-guarantee syndicate

6 contract, or any amendment to any such contract,

7 which is submitted to the Corporation, the Corpora8 tion requests additional information under para9 graph (5), the Corporation may by order provide

10 that the Corporation shall have any additional period

11 (not to exceed 5 business days beginning on the date

12 on which the Corporation receives such information)

13 within which to disapprove the proposed contract.

14 (b) LIMITED GROUNDS FOR DISAPPROVAL OF PRO15 POSED CONTRACT OR AMENDMENT.—The Corporation

16 may disapprove any proposed cross-guarantee, stop-loss or

17 group cross-guarantee syndicate contract, or any amend18 ment to any such contract, if and only if—

19 (1) the contract, including any party under the

20 contract, fails to meet the requirements of this title;

21 or

22 (2) the information submitted under subsection

23 (a) was insufficient to determine whether the con24 tract and the parties to the contract are in compli25 ance with this title.
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1 (c) WRITTEN NOTICE OF DISAPPROVAL.—

2 (1) IN GENERAL.—If the Corporation dis3 approves any cross-guarantee, stop-loss, or group

4 cross-guarantee syndicate contract, or any amend5 ment thereto, the Corporation shall provide imme6 diate written notice to the parties to such contract

7 of any disapproval at the time of disapproval.

8 (2) STATEMENT OF REASON FOR DIS9 APPROVAL.—The written notice under paragraph (1)

10 shall contain a detailed explanation of the specific

11 reasons for the disapproval under this section.

12 (d) CONDITIONAL APPROVALS.—

13 (1) IN GENERAL.—The Corporation shall pre14 scribe regulations which would allow a cross-guaran15 tee, stop-loss, or group cross-guarantee syndicate

16 contract to be conditionally approved, in a manner

17 otherwise in accordance with this section, before the

18 effective date of the contract if, at the time such

19 conditional approval is granted, all the information

20 which is required for the Corporation to make a

21 final determination of whether the contract meets

22 the requirements of this title cannot be known or

23 ascertained.

24 (2) RECONFIRMATION.—The regulations pre25 scribed under paragraph (1) shall allow the Corpora-
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1 tion, upon receipt of all the information the Cor2 poration needs to determine whether the contract

3 meets the requirements of this title, 3 business days

4 to give the contract a final approval.

5 (3) REPLACEMENT OF GUARANTORS.—The reg6 ulations prescribed under paragraph (1) shall allow,

7 without restriction, the replacement of a direct guar8 antor with another direct guarantor during the pe9 riod between the date of conditional approval and

10 final approval.

11 (e) JUDICIAL REVIEW.—

12 (1) CONTRACTS DISAPPROVED.—

13 (A) IN GENERAL.—Any party to a contract

14 disapproved under this section may seek judicial

15 review of the disapproval of a contract under

16 this section.

17 (B) LIMITATION ON STANDING.—Only a

18 party to a contract disapproved under this sec19 tion may bring an action under this paragraph.

20 (2) CONTRACTS APPROVED.—

21 (A) IN GENERAL.—Subject to subpara22 graph (B), any party to any cross-guarantee,

23 stop-loss, or group cross-guarantee syndicate

24 contract may seek judicial review of the ap25 proval of a contract under this section.
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1 (B) LIMITATION OF REVIEW.—A contract

2 approved under this section may be reviewed

3 only with respect to whether the contract vio4 lates section 116(a) or section 125.

5 (C) REMEDIES.—

6 (i) IN GENERAL.—Any court which

7 under this paragraph holds that a contract

8 violates section 116(a) or section 125 shall

9 order the Corporation to use the remedies

10 available under section 125 to eliminate

11 the violation.

12 (ii) INJUNCTIONS DISALLOWED.—No

13 court may enjoin the operation of a con14 tract approved under this section.

15 (3) JURISDICTION.—No court other than a dis16 trict court of the United States shall have original

17 jurisdiction of any action under this subsection.

18 SEC. 124. CENTRAL ELECTRONIC REPOSITORY.

19 (a) ESTABLISHMENT.—

20 (1) CGRC ESTABLISHES CENTRAL ELECTRONIC

21 REPOSITORY.—Before the end of the 6-month period

22 beginning on the date of the enactment of this Act,

23 the Corporation shall establish and maintain a

24 central electronic repository for cross-guarantee,
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1 stop-loss, and group cross-guarantee syndicate con2 tracts.

3 (2) MAINTENANCE OF ALL PAST AND CURRENT

4 CONTRACTS.—The central electronic repository shall

5 maintain files, in electronic form, of all cross-guar6 antee and stop-loss contracts which have not been

7 disapproved by the Corporation under section 123,

8 including expired and canceled contracts, all amend9 ments to any such contract which have not been dis10 approved by the Corporation under such section, and

11 all proposed contracts and contract amendments

12 which have been filed with the Corporation, but not

13 yet acted upon.

14 (3) DIRECT ACCESS FOR ALL GUARANTORS,

15 GUARANTEED PARTIES, AND SYNDICATE AGENTS.—

16 The files in the central electronic repository estab17 lished under this section shall be directly and imme18 diately accessible by electronic means to any direct

19 guarantor, guaranteed party, and syndicate agent,

20 and any other person who qualifies for access under

21 procedures established by the Corporation.

22 (4) LEGAL EVIDENCE OF THE CONTRACT.—The

23 provisions of any cross-guarantee contract or stop24 loss contract, including any amendment to such con-
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1 tract, on file in the central electronic repository

2 shall—

3 (A) be irrebuttable evidence of the con4 tract; and

5 (B) be superior evidence to all other forms

6 or versions of the contract.

7 (b) AVAILABILITY OF CERTIFIED COPIES.—

8 (1) IN GENERAL.—The central electronic repos9 itory shall make available a copy of any cross-guar10 antee or stop-loss contract on file in the repository,

11 including any amendment to any such contract and

12 any proposed contract or proposed amendment to

13 any contract, to any person, any Government officer,

14 agency, or department, or any court upon request.

15 (2) CERTIFICATION OF COPIES.—

16 (A) IN GENERAL.—Each copy of a cross17 guarantee or stop-loss contract which is made

18 available in accordance with paragraph (1) shall

19 contain a certification by the central electronic

20 repository that such copy is true and correct.

21 (B) PRIMA FACIE EVIDENCE.—A copy of a

22 cross-guarantee or stop-loss contract which is

23 certified in accordance with subparagraph (A)

24 shall establish prima facie the contract.
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1 (c) MAINTENANCE OF DATA BASE OF GUARAN2 TORS.—The central electronic repository shall maintain a

3 data base containing the names of the direct guarantors

4 under each cross-guarantee or stop-loss contract which

5 has not expired or been canceled and such other informa6 tion with regard to such contracts that will enable any

7 person to determine whether or not any such contract,

8 proposed contract, or proposed amendment to any con9 tract, is in compliance with this title and regulations pre10 scribed under this title.

11 (d) STANDARD CONTRACT LANGUAGE.—The Cor12 poration is hereby authorized to maintain in the central

13 electronic repository and update as needed standard lan14 guage for various provisions of cross-guarantee, stop-loss,

15 and group cross-guarantee syndicate contracts that par16 ties to these contracts may, at their sole discretion, incor17 porate by reference in contracts and contract amendments

18 they submit to the Corporation for approval.

19 SEC. 125. RESTRICTIONS ON CLOSED LOOPS.

20 (a) PROHIBITION OF MORE THAN 1 UNRELATED

21 CLOSED LOOP.—At no time shall 2 or more closed loops

22 exist unless at least one cross-guarantee or stop-loss con23 tract is a contract in each closed loop that exists in the

24 system.
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1 (b) CGRC CALL-BACK.—If, at any time, the require2 ments of subsection (a) are violated—

3 (1) the Corporation shall immediately notify

4 each guaranteed party under each cross-guarantee

5 and stop-loss contract which is part of the closed

6 loop which has the fewest number of contracts that

7 it must obtain a successor cross-guarantee or stop8 loss contract; and

9 (2) each guaranteed party under paragraph (1)

10 shall have 10 business days upon notification to sub11 mit a successor contract to the Corporation for ap12 proval.

13 (c) CGRC FILING OF A BANKRUPTCY PETITION.—

14 (1) FILING OF A BANKRUPTCY PETITION BY

15 THE CGRC.—

16 (A) APPOINTMENT OF CGRC AS RE17 CEIVER.—The Corporation shall appoint itself

18 as receiver for a guaranteed company if and

19 only if the company has not met the deadline

20 to submit a contract for approval under sub21 section (b).

22 (B) CGRC IMMEDIATELY FILES A BANK23 RUPTCY PETITION.—Immediately upon appoint24 ing itself as receiver under paragraph (1), the

25 Corporation shall file a voluntary petition under
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1 section 301 of title 11, United States Code, on

2 behalf of the guaranteed company for which the

3 Corporation appointed itself receiver.

4 (2) RECOVERY FROM ALL DEPOSITORY INSTI5 TUTIONS FOR LOSSES DUE TO CLOSED LOOPS.—

6 (A) IN GENERAL.—In the case of any

7 guaranteed company for which the Corporation

8 files a bankruptcy petition under paragraph

9 (1)(B), all depository institutions guaranteed

10 under a cross-guarantee contract shall be liable

11 to cover any loss to the bankruptcy estate aris12 ing out of the bankruptcy trustee’s duty to per13 form on all guaranteed obligations of the guar14 anteed company.

15 (B) LIABILITY PROPORTIONAL TO AN IN16 STITUTION’S SHARE OF OVERALL GUARANTEED

17 OBLIGATIONS.—A guaranteed depository insti18 tution or guaranteed banking office shall be lia19 ble under subparagraph (A) in proportion to

20 such institution’s or office’s share of the depos21 its of all depository institutions at the time of

22 the filing of the bankruptcy petition by the Cor23 poration.

24 (C) CGRC AUTHORIZATION.—The Cor25 poration is authorized to, and shall, assess de-
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1 pository institutions for any amounts owed

2 under this paragraph.

3 (d) STANDING.—Any person can bring an action in

4 a district court of the United States to force the Corpora5 tion to take action under this section.

6 SEC. 126. TREASURY OVERSIGHT OF THE CROSS-GUARAN7 TEE REGULATION CORPORATION

8 (a) ENFORCEMENT OF THE ACT.—In the event that

9 the Corporation should fail to fulfill any of its duties under

10 this title, the Secretary of Treasury may apply to the Fed11 eral district court for the District of Columbia for an order

12 requiring the Corporation to discharge its obligations

13 under this title and for such other relief as the court may

14 deem necessary to carry out the purposes of this title.

15 (b) EXAMINATIONS AND REPORTS.—

16 (1) EXAMINATIONS.—The Secretary of Treas17 ury may make such examinations and inspections of

18 the Corporation and require the Corporation to fur19 nish it with such reports and records or copies there20 of as the Secretary may consider necessary or appro21 priate to effectuate the purposes of this title.

22 (2) REPORTS.—

23 (A) ANNUAL REPORT.—Within 90 days

24 after the close of each fiscal year of the Cor25 poration, the Corporation shall submit to the
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1 Treasury Department a written report relative

2 to the conduct of its business, and the exercise

3 of the other rights and powers granted by this

4 title, during such fiscal year.

5 (B) INFORMATION TO BE INCLUDED IN

6 REPORT.—The report under subparagraph (A)

7 shall include financial statements setting forth

8 the financial position of the Corporation at the

9 end of such fiscal year and the results of its op10 erations (including the source and application

11 of its funds) for such fiscal year.

12 (C) REQUIRED AUDIT.—The financial

13 statements included under subparagraph (B)

14 shall be examined by an independent public ac15 countant or firm of independent public account16 ants, selected by the Corporation and satisfac17 tory to the Treasury Department, and shall be

18 accompanied by the report thereon of such ac19 countant or firm.

20 (D) SUBMISSION TO THE PRESIDENT AND

21 CONGRESS.—The Secretary of Treasury shall

22 submit the report under subparagraph (A) to

23 the President and Congress with such comment

24 thereon as the Secretary deems appropriate.
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1 CHAPTER 2—PROTECTION OF INSURED

2 DEPOSITS

3 SEC. 128. BACKUP INSURANCE ON DEPOSITS AT GUARAN4 TEED DEPOSITORY INSTITUTIONS.

5 (a) ESTABLISHMENT OF CROSS-GUARANTEE

6 BACKUP FUND.—

7 (1) IN GENERAL.—There is hereby established

8 the cross-guarantee backup fund consisting of

9 amounts deposited pursuant to section 144 and sub10 section (c) of this section.

11 (2) ADMINISTRATION OF FUND.—The cross12 guarantee backup fund shall be administered by the

13 Corporation.

14 (b) BACKUP DEPOSIT INSURANCE.—

15 (1) FUND LIABILITY.—Deposits in any guaran16 teed depository institution shall be insured against

17 loss, to the same extent as deposits are insured

18 against loss under section 11(a) of the Federal De19 posit Insurance Act (as in effect on the day before

20 the enactment of this Act), in the event that no ad21 justment under section 113(a)(2)(F)(iii) will be suf22 ficient to protect all guaranteed obligations of all

23 guaranteed companies against loss.

24 (2) SUBORDINATED DEBT NOT TREATED AS

25 DEPOSIT.—No subordinated debt of any guaranteed
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1 depository institution or any guaranteed banking of2 fice may be treated as a deposit for purposes of

3 paragraph (1).

4 (c) USE AND DISPOSITION OF FUND.—

5 (1) IN GENERAL.—Amounts in the cross-guar6 antee backup fund may be used only to meet obliga7 tions incurred under subsection (b)(1).

8 (2) INVESTMENTS.—Amounts on deposit in the

9 cross-guarantee backup fund shall be invested in di10 rect obligations of the United States and interest

11 thereon shall accumulate in the fund.

12 Subtitle D—Miscellaneous

13 Provisions

14 SEC. 131. INSTITUTIONS OFFERING UNINSURED DEPOSITS.

15 The Corporation shall ensure that any company other

16 than—

17 (a) a depository institution;

18 (b) a branch which is not an insured branch (as

19 the term ‘‘insured branch’’ is defined in section 3(s)

20 of the Federal Deposit Insurance Act);

21 (c) an insured credit union or noninsured credit

22 union (as such terms are defined in section 101(7)

23 of the Federal Credit Union Act);

24 (d) a broker or dealer registered under the Se25 curities and Exchange Act of 1934; or
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1 (e) an investment company registered under the

2 Investment Company Act of 1940, which accepts de3 posits or assumes obligations which would be depos4 its if the institution were a bank or savings associa5 tion (as defined in section 3 of the Federal Deposit

6 Insurance Act) is accepting such deposits and as7 suming such obligations in accordance with all appli8 cable Federal and State laws which relate to the li9 censing and regulation of institutions which accept

10 deposits or assume such obligations.

11 SEC. 132. PREEMPTION OF STATE DEPOSITOR PREF12 ERENCE LAWS.

13 Notwithstanding any State law, the depositors of any

14 guaranteed depository institution shall be general credi15 tors for purposes of any bankruptcy proceeding under title

16 11.

17 SEC. 133. FEDERAL RESERVE LENDING.

18 (a) NO COLLATERAL REQUIRED FOR LENDING TO

19 GUARANTEED COMPANY.—The cross-guarantee contract

20 shall be sufficient collateral for any loan to a guaranteed

21 company by any Federal Reserve bank for purposes of any

22 provision of Federal law, any regulation prescribed by the

23 Board of Governors of the Federal Reserve System, or any

24 requirement of any such bank.
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1 (b) CERTIFICATION OF NO LOSS.—Before February

2 1 of each calendar year beginning after the cross-guaran3 tee activation date, the Board of Governors of the Federal

4 Reserve System, shall submit a report to the Committee

5 on Banking, Finance and Urban Affairs of the House of

6 Representatives and the Committee on Banking, Housing,

7 and Urban Affairs of the Senate containing—

8 (1) a certification that—

9 (A) no loss was incurred by such Board or

10 any Federal Reserve Bank during the preceding

11 calendar year on any loan or other advance to

12 any guaranteed company during such year; and

13 (B) no loss is anticipated on any such loan

14 or advance which remains outstanding at the

15 end of such year; or

16 (2) the amount of any such loss or anticipated

17 loss.

18 SEC. 134. ADVERTISING BY GUARANTEED FINANCIAL

19 GROUPS.

20 (a) ADVERTISING DEPOSIT GUARANTEES.—

21 (1) IN GENERAL.—A guaranteed company or

22 guaranteed banking office may advertise that depos23 its and certain other liabilities are fully guaranteed

24 against any loss under a cross-guarantee contract

25 approved by the Corporation.
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1 (2) CROSS-GUARANTEE LOGO.—Before the end

2 of the 1-year period beginning on the date of the en3 actment of this Act, the Corporation shall—

4 (A) design, after consultation with deposi5 tory institutions, a logotype for use by a guar6 anteed company or guaranteed banking office to

7 indicate that such a company or office is guar8 anteed under a cross-guarantee contract; and

9 (B) authorize guaranteed companies and

10 guaranteed banking offices to use such logo11 type.

12 (3) REGULATIONS GOVERNING MANNER OF AD13 VERTISING.—The Corporation shall prescribe regula14 tions governing the manner in which a guaranteed

15 company or guaranteed banking office may display

16 any logotype permitted under this subsection.

17 (b) ADVERTISING BACKUP INSURANCE.—A deposi18 tory institution which is guaranteed under a cross-guaran19 tee contract shall—

20 (1) display at each place of business of the in21 stitution any sign described in section 18(a) of the

22 Federal Deposit Insurance Act; and

23 (2) advertise that deposits at the institution are

24 insured by the Federal Government to $100,000.
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1 SEC. 135. GUARANTEED DEPOSITORY INSTITUTIONS RE2 MAIN FEDERALLY INSURED DEPOSITORIES

3 FOR PURPOSES OF STATE LAW.

4 Unless a State otherwise provides subsequent to the

5 passage of this Act, a guaranteed depository institution

6 shall be deemed to be a federally-insured depository insti7 tution within the meaning of section 3(c)(2) of the Federal

8 Deposit Insurance Act for purposes of any State or Fed9 eral law or private agreement which determines the legally

10 acceptable institutions with which to deposit funds.

11 Subtitle E—Transition to 100

12 Percent Cross-Guarantee Process

13 SEC. 141. EFFECTIVE DATE OF SYSTEM BASED ON MINI14 MUM NUMBER OF GUARANTEED DEPOSITORY

15 INSTITUTIONS AND AMOUNT OF TOTAL AS16 SETS.

17 (a) IN GENERAL.—No cross-guarantee or stop-loss

18 contract shall take effect before the later of—

19 (1) the end of the 18-month period beginning

20 on the date of the enactment of this Act; or

21 (2) forty business days after the date on which

22 the Corporation has approved, under subsection (b),

23 a minimum of 250 cross-guarantee contracts under

24 which depository institutions which, in the aggre25 gate, have total assets of not less than
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1 $500,000,000,000 are guaranteed companies or

2 guaranteed banking offices.

3 (b) CONTINGENT EFFECT OF CONTRACTS UNTIL EF4 FECTIVE DATE.—

5 (1) IN GENERAL.—The Corporation may condi6 tionally approve a cross-guarantee or stop-loss con7 tract to become effective on the date to be deter8 mined under subsection (a) even through not all di9 rect guarantors under the contract meet the require10 ments under section 116(a)(1).

11 (2) MINIMUM REQUIREMENTS.—No cross-guar12 antee or stop-loss contract conditionally approved

13 under paragraph (1) shall receive final approval

14 from the Corporation for purposes of subsection

15 (a)(2) unless—

16 (A) the cross-guarantee or stop-loss con17 tract is 1 of a set of contracts in which each

18 contract—

19 (i) is a contract in the same closed

20 loop; and

21 (ii) becomes effective at the same time

22 every other contract within the set of con23 tracts takes effect; and
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1 (B) at the time such contract becomes ef2 fective, the requirements of section 125(a) are

3 met.

4 (c) PUBLICATION OF SUBSECTION (a) DATE.—The

5 Corporation shall publish a notice in the Federal Register

6 of the date by which contracts may take effect in accord7 ance with subsection (a).

8 (d) ONE-TIME CONVERSION TO GUARANTEED

9 PARTY STATUS.—Notwithstanding any provision of sec10 tion 142, section 111 shall apply with respect to any de11 pository institution as of the date—

12 (1) on which such institution first becomes a

13 guaranteed depository institution or guaranteed

14 banking office;

15 (2) on which any depository institution which is

16 affiliated with such depository institution becomes a

17 guaranteed depository institution; or

18 (3) on which any depository institution which is

19 under common ownership with such depository insti20 tution under section 112(d)(2) becomes a guaran21 teed depository institution.

22 SEC. 142. MANDATORY PHASE-IN OF CROSS-GUARANTEES

23 AFTER EFFECTIVE DATE OF SYSTEM.

24 (a) DEPOSITORY INSTITUTIONS WITH ASSETS OF

25 $1,000,000,000 OR MORE.—Section 111 shall apply as of
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1 the end of the 2-year period beginning on the cross-guar2 antee activation date with respect to any depository insti3 tution which has consolidated assets at book value which

4 are equal to or greater than $1,000,000,000 as of the end

5 of such 2-year period.

6 (b) DEPOSITORY INSTITUTIONS WITH ASSETS OF

7 $500,000,000 OR MORE.—Section 111 shall apply as of

8 the end of the 3-year period beginning on the cross-guar9 antee activation date with respect to any depository insti10 tution which has consolidated assets at book value which

11 are equal to or greater than $500,000,000 as of the end

12 of such 3-year period.

13 (c) DEPOSITORY INSTITUTIONS WITH ASSETS OF

14 $250,000,000 OR MORE.—Section 111 shall apply as of

15 the end of the 4-year period beginning on the cross-guar16 antee activation date with respect to any depository insti17 tution which has consolidated assets at book value which

18 are equal to or greater than $250,000,000 as of the end

19 of such 4-year period.

20 (d) DEPOSITORY INSTITUTIONS WITH ASSETS OF

21 $100,000,000 OR MORE.—Section 111 shall apply as of

22 the end of the 5-year period beginning on the cross-guar23 antee activation date with respect to any depository insti24 tution which has consolidated assets at book value which
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1 are equal to or greater than $100,000,000 as of the end

2 of such 5-year period.

3 (e) DEPOSITORY INSTITUTIONS WITH ASSETS OF

4 $50,000,000 OR MORE.—Section 111 shall apply as of the

5 end of the 6-year period beginning on the cross-guarantee

6 activation date with respect to any depository institution

7 which has consolidated assets at book value which are

8 equal to or greater than $50,000,000 as of the end of such

9 6-year period.

10 (f) DEPOSITORY INSTITUTIONS WITH ASSETS OF

11 $25,000,000 OR MORE.—Section 111 shall apply as of the

12 end of the 7-year period beginning on the cross-guarantee

13 activation date with respect to any depository institution

14 which has consolidated assets at book value which are

15 equal to or greater than $25,000,000 as of the end of such

16 7-year period.

17 (g) ALL OTHER DEPOSITORY INSTITUTIONS.—Sec18 tion 111 shall apply as of the end of the 8-year period

19 beginning on the cross-guarantee activation date with re20 spect to any depository institution which is not described

21 in subsection (a), (b), (c), (d), (e), or (f).

22 (h) CONSOLIDATED ASSETS AT BOOK VALUE DE23 FINED.—The term ‘‘consolidated assets at book value’’

24 means the total value, as determined on a consolidated

25 basis and in accordance with generally accepted account-
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1 ing principles, of all tangible and intangible property of

2 any depository institution, all subsidiaries of such institu3 tion, all affiliates of such institution which are depository

4 institutions, and all subsidiaries of such affiliates.

5 SEC. 143. APPOINTMENT OF CONSERVATOR OR RECEIVER

6 FOR INSTITUTIONS WHICH FAIL TO COMPLY

7 WITH TRANSITION REQUIREMENTS.

8 The FDIC shall immediately appoint a conservator

9 or receiver for any depository institution which is not a

10 guaranteed depository institution or guaranteed banking

11 office under any cross-guarantee contract as of the date

12 by which such institution is required to be a guaranteed

13 depository institution or guaranteed banking office under

14 section 142.

15 SEC. 144. EXIT FEES.

16 (a) CONTINGENT PAYMENT OF EXIT FEE UPON

17 CONVERSION OF DEPOSITORY INSTITUTION TO NEW SYS18 TEM.—

19 (1) PAYMENT OF EXIT FEE.—Any insurance

20 fund member which becomes a guaranteed deposi21 tory institution or guaranteed banking office may be

22 assessed an exit fee in an amount to be determined

23 and assessed under paragraph (2), and such fee

24 shall be deposited in the insurance fund of which the

25 guaranteed depository institution or guaranteed
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1 banking office was a member on the cross-guarantee

2 activation date.

3 (2) DETERMINATION OF AMOUNT OF FEE.—

4 (A) TOTAL AMOUNT OF EXIT FEE TO COL5 LECT FROM MEMBERS OF AN INSURANCE

6 FUND.—The FDIC shall calculate for each in7 surance fund, as of the cross-guarantee activa8 tion date, the total amount of exit fees it would

9 collect as of that date if all members of the in10 surance fund, except those members the FDIC

11 projects will have to be liquidated, did become

12 a guaranteed depository institution or guaran13 teed banking office on such date.

14 (B) CALCULATION OF TOTAL AMOUNT OF

15 EXIT FEES.—For the purpose of subparagraph

16 (A), the total amount of exit fees to be collected

17 for each insurance fund shall be the greater of

18 zero or the present value of—

19 (i) the sum of—

20 (I) total insured deposits of the

21 members of an insurance fund on the

22 cross-guarantee activation date

23 (minus the insured deposits, on such

24 date, held by insurance fund members
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1 which the FDIC estimates will be liq2 uidated) multiplied by 0.2 percent;

3 (II) losses incurred by an insur4 ance fund for depository institutions

5 placed into conservatorship or receiv6 ership after the cross-guarantee acti7 vation date;

8 (III) administrative expenses of

9 an insurance fund incurred after the

10 cross-guarantee activation date; and

11 (IV) transfers from an insurance

12 fund to the FDIC severance fund;

13 minus—

14 (ii) the sum of—

15 (I) the balance in an insurance

16 fund, as of the cross-guarantee activa17 tion date, after adding back any re18 serve for future losses as of such date,

19 provided that the balance in the Sav20 ings Association Insurance Fund on

21 that date shall be the greater of zero

22 or the sum of all amounts assessed

23 against Savings Association Insurance

24 Fund members and interest earned

25 during such period by such fund,
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1 minus the sum of losses paid or ac2 crued for members of such fund

3 placed into conservatorship or receiv4 ership and administrative expenses

5 such fund incurs during such period;

6 and

7 (II) premiums earned by an in8 surance fund after the cross-guaran9 tee activation fund.

10 (C) AMOUNT OF EXIT FEE PAID BY MEM11 BERS OF AN INSURANCE FUND.—Each insur12 ance fund member, on the date such member

13 becomes a guaranteed depository institution or

14 guaranteed banking office, shall pay to the in15 surance fund of which such member was a

16 member on the cross-guarantee activation date

17 an amount equal to the amount calculated in

18 paragraph (B) multiplied by—

19 (i) The insured deposits of such mem20 ber on the cross-guarantee activation date;

21 divided by

22 (ii) The total amount of insured de23 posits of the members of such insurance

24 fund on the cross-guarantee activation

25 date, minus the insured deposits, as of
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1 such date, held by insurance fund members

2 which the FDIC estimates as of that date

3 will be liquidated.

4 (D) INTEREST RATE PAID ON EXIT FEES

5 FOR CONTRACTS THAT BECOME EFFECTIVE

6 AFTER THE CROSS-GUARANTEE ACTIVATION

7 DATE.—Any insurance fund member which

8 pays an exit fee shall also pay on the same day

9 interest on the exit fee for the period between

10 the cross-guarantee activation date and the date

11 on which the exit fee is paid.

12 (3) LIABILITY FOR EXIT FEE.—Any acquirer of

13 an insurance fund member shall be liable for any

14 exit fee due when such acquirer becomes a guaran15 teed depository institution or guaranteed banking of16 fice or, if the acquirer already is a guaranteed de17 pository institution or guaranteed banking office, on

18 the day the acquisition transaction officially is con19 summated.

20 (b) ORIGINAL FUNDING OF CROSS-GUARANTEE

21 BACKUP-FUND.—Upon payment of any exit fee due under

22 paragraph (a)(1), the FDIC shall transfer from the insur23 ance fund of which the depository institution was a mem24 ber, as of the cross-guarantee activation date, to the cross25 guarantee backup fund an amount equal to 0.2 percent
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1 of the insured deposits of such institution as of the cross2 guarantee activation date plus interest on the amount

3 transferred.

4 (c) FUNDING FOR FDIC SEVERANCE FUND.—When

5 necessary, the FDIC shall transfer cash from each insur6 ance fund to cover disbursements the FDIC makes from

7 the FDIC severance fund, with the amount transferred

8 from each fund bearing the same proportion as the insured

9 deposits of such fund, as of the cross-guarantee activation

10 date, bear to the total insured deposits of both funds as

11 of that date.

12 (d) LOANS TO THE CORPORATION.—The FDIC shall

13 extend loans from each of the insurance funds to the Cor14 poration, as authorized under section 121(f)(1)(A), with

15 the amount loaned by each fund bearing the same propor16 tion as the insured deposits of such fund, as of the enact17 ment date of this bill, bear to the total insured deposits

18 of both funds as of that date.

19 (e) ADDITIONAL ASSESSMENTS IN CASE OF SHORT20 FALL IN INSURANCE FUNDS.—

21 (1) ANNUAL REESTIMATE.—As of the first

22 eight anniversaries of the cross-guarantee activation

23 date, the FDIC shall reestimate for each insurance

24 fund the amounts calculated under subsection

25 (a)(2)(B).
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1 (2) PUBLIC COMMENTS AND HEARING.—The

2 FDIC shall seek public comments and hold at least

3 one public hearing before issuing its final judgment

4 on any reestimate made under paragraph (1).

5 (3) DETERMINATION OF ADDITIONAL ASSESS6 MENT.—Within 60 days after a reestimate under

7 subsection (a)(2)(B), the FDIC shall determine

8 under subsection (a)(2)(C) for each member of an

9 insurance fund as of the cross-guarantee activation

10 date which still exists an amount equal to such

11 member’s percentage share of the total insured de12 posits of all members of that insurance fund as of

13 such date which have not ceased to exist, multiplied

14 by the amount determined by the reestimate under

15 subsection (a)(2)(B) for the insurance fund of which

16 such member was a member.

17 (4) NO ADDITIONAL ASSESSMENTS WHEN A

18 FUND IS SOLVENT.—If any amount calculated under

19 paragraph (3) is less than zero, then the assessment

20 under such paragraph shall be zero.

21 (5) COLLECTION OF ADDITIONAL ASSESS22 MENT.—If an insurance fund member liable for an

23 additional assessment under paragraph (3) has be24 come, as of the effective date of the reestimate, a

25 guaranteed depository institution or guaranteed
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1 banking office, then such member shall pay the addi2 tional assessment to the insurance fund to which it

3 belonged on the cross-guarantee activation date

4 within 20 business days after being notified of the

5 additional assessment.

6 (f) ASSESSMENT PROCEDURE.—The FDIC shall pre7 scribe, by regulation, procedures for assessing an exit fee

8 under subsections (a) and (e).

9 (g) EXCESS AMOUNT IN INSURANCE FUNDS SHALL

10 BE TRANSFERRED TO THE CROSS-GUARANTEE BACKUP

11 FUND.—On the eighth anniversary of the cross-guarantee

12 activation date and after first fully accruing for the

13 present value of all losses and expenses associated with

14 depository institutions to be placed in conservatorship or

15 receivership after the eighth anniversary date, any balance

16 remaining in each insurance fund shall be transferred to

17 the cross-guarantee backup fund.

18 (h) CALCULATION OF INTEREST OR DISCOUNT

19 RATE.—For the purpose of this section, the rate of inter20 est or the discount rate to be sued in a calculation for

21 any insurance fund shall be the average daily percentage

22 yield earned on the investments of each insurance fund

23 for the period of time for which interest or a discounted

24 value is being calculated.

25 (i) DEFINITIONS.—For purposes of this section—
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1 (1) the term ‘‘insurance fund’’ means the Bank

2 Insurance Fund or the Savings Association Insur3 ance Fund; and

4 (2) the term ‘‘insurance fund member’’ means

5 a depository institution, the deposits of which were

6 insured by an insurance fund on the cross-guarantee

7 activation date.

8 SEC. 145. SEVERANCE PAY AND RELATED BENEFITS FOR

9 FORMER FEDERAL AND STATE BANKING

10 AGENCY EMPLOYEES.

11 (a) DEFINITIONS.—For purposes of this section—

12 (1) ELIGIBLE EMPLOYEE.—The term ‘‘eligible

13 employee’’ means any individual—

14 (A) who is employed by a Federal banking

15 agency, a State bank supervisor, or the Federal

16 Financial Institutions Examination Council

17 (FFIEC) as of the date of the enactment of

18 this Act, including employees of the FDIC on

19 detail to the Resolution Trust Corporation; and

20 (B) Whose employment is terminated by

21 the agency or supervisor after such date other

22 than for cause.

23 (2) FEDERAL BANKING AGENCY.—The term

24 ‘‘Federal banking agency’’ has the meaning given to
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1 such term in section 3(q) of the Federal Deposit

2 Insurance Act.

3 (3) STATE BANK SUPERVISOR.—The term

4 ‘‘state bank supervisor’’ means any officer, agency,

5 or other entity of any State (as defined in section

6 3(a)(3) of the Federal Deposit Insurance Act) which

7 has primary regulatory authority over State banks

8 or State savings associations (as such terms are de9 fined in section 3 of such Act) in such state.

10 (b) SEVERANCE PAY.—

11 (1) IN GENERAL.—Subject to paragraph (3),

12 any eligible employee shall be entitled to receive in

13 a lump sum, from the FDIC severance fund at the

14 time such employee’s employment by a Federal

15 banking agency, state bank supervisor, or the

16 FFIEC, is terminated, severance pay in the amount

17 which is equal to the sum of—

18 (A) the amount equal to 2 months of com19 pensation at the employee’s average annual rate

20 of base pay for the last 12 calendar months of

21 the employee’s employment by any Federal

22 banking agency or State bank supervisor; plus

23 (B) the product of—

24 (i) the amount equal to 3 weeks of

25 compensation at the employee’s annual
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1 rate of base pay (as determined under sub2 paragraph (A)); and

3 (ii) the number of years (including

4 any fraction of a year) of full-time service

5 of such employee with any Federal banking

6 agency, State bank supervisor, or the

7 FFIEC, or any predecessor of any such

8 agency or supervisor, where such number

9 of years can include employment for more

10 than 1 such agency or supervisor and need

11 not be continuous employment.

12 (2) EXCEPTION FOR EMPLOYEES REEMPLOYED

13 BY ANOTHER FEDERAL OR STATE AGENCY.—Para14 graph (1) shall not apply with respect to any eligible

15 employee who—

16 (A) in the case of an individual who is an

17 eligible employee by virtue of being separated

18 from service with any Federal agency, transfers

19 to or becomes employed by another Federal de20 partment, agency, or Government corporation;

21 or

22 (B) in the case of an individual who is an

23 eligible employee by virtue of being separated

24 from service with a State bank supervisor,

25 transfers to or becomes employed by another
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1 department, agency, or instrumentality of such

2 State.

3 (3) PROHIBITION OF CERTAIN GOVERNMENT

4 SERVICE AFTER ACCEPTING SEVERANCE PAY.—

5 (A) FEDERAL EMPLOYEE.—No individual

6 who receives severance pay under this sub7 section by virtue of being separated from serv8 ice with a Federal agency or State bank super9 visor may be employed by any Federal officer,

10 department, agency, or Government corporation

11 during the 5-year period beginning on the date

12 such severance pay is received by such individ13 ual.

14 (B) STATE EMPLOYEE.—No individual

15 who is, but for this subparagraph, entitled to

16 receive severance pay under this subsection by

17 virtue of being separated from service with a

18 State bank supervisor may receive such pay un19 less such individual has entered into a contract

20 with the FDIC under which such individual, in

21 consideration of the payment of such severance

22 pay, is obligated to return such amount in full,

23 plus interest, to the FDIC if such employee is

24 employed by any officer, department, or agency

25 of that State during the 5-year period begin-
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1 ning on the date such severance pay is received

2 by such individual.

3 (4) PURCHASE OF ADDITIONAL RETIREMENT

4 BENEFITS.—An eligible employee may use any por5 tion of the severance pay to which the employee is

6 entitled under this subsection to purchase additional

7 benefits or make additional investments in any Fed8 eral retirement plan in which the employee is or was

9 entitled to participate as an employee before becom10 ing an eligible employee.

11 (c) RELOCATION EXPENSES AND HEALTH BENE12 FITS.—

13 (1) RELOCATION EXPENSES.—An eligible em14 ployee who obtains employment away from the place

15 such employee was employed by an appropriate Fed16 eral agency or State banking supervisor shall be en17 titled to receive travel, relocation, and moving ex18 penses from the FDIC severance fund to the same

19 extent Federal employees who are transferred or re20 employed are authorized to receive such expenses

21 under subchapter II of chapter 57 of title 5, United

22 States Code.

23 (2) HEALTH BENEFITS.—

24 (A) IN GENERAL.—An eligible employee

25 shall be entitled to receive the same health ben-
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1 efits as such employee received as of the date

2 of termination for a time period which shall

3 consist of the shorter of—

4 (i) eighteen months following the date

5 of termination of employment; or

6 (ii) until such employee obtains alter7 native full-time employment.

8 (B) ADMINISTRATION OF THE PROVISION

9 OF HEALTH BENEFITS.—The agency which ter10 minated the employment of the eligible em11 ployee shall be responsible for administering the

12 provision of health benefits authorized under

13 subparagraph (A), unless such agency has been

14 abolished in which case the Federal or State

15 government (whichever case is appropriate)

16 shall provide for another agency or government

17 entity to perform this function.

18 (C) SEVERANCE FUND COMPENSATION.—

19 The FDIC severance fund shall reimburse any

20 agency or government entity for the costs of

21 providing the benefits authorized under sub22 paragraph (A).

23 (d) FUNDING BENEFITS FOR ELIGIBLE EMPLOY24 EES.—
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1 (1) ESTABLISHMENT OF FDIC SEVERANCE

2 FUND.—There is hereby established the FDIC sever3 ance fund which shall be administered by the FDIC.

4 (2) RELATED EXPENSES.—Expenses incurred

5 by the FDIC in administering the FDIC severance

6 fund shall be paid from the fund.

7 SEC. 146. ABOLITION OF FEDERAL FINANCIAL INSTITU8 TIONS EXAMINATION COUNCIL.

9 The Federal Financial Institutions Examination

10 Council is hereby abolished, effective on the date on which

11 section 142(g) shall become effective.

12 SEC. 147. ABOLITION OF THE FEDERAL DEPOSIT INSUR13 ANCE CORPORATION.

14 The FDIC is hereby abolished, effective on the date

15 on which the last receivership or conservatorship resulting

16 from the appointment of a receiver or conservator by the

17 FDIC has been liquidated, disposed, of, or otherwise

18 resolved.

19 TITLE II—AMENDMENTS TO

20 OTHER BANKING LAWS

21 SEC. 201. AMENDMENTS RELATING TO NATIONAL BANKS.

22 (a) EXEMPTIONS FROM MINIMUM CAPITAL, STOCK,

23 AND OTHER REQUIREMENTS COVERED BY CROSS-GUAR24 ANTEE CONTRACTS.—
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1 (1) CAPITAL OF NATIONAL BANKS.—Section

2 5138 of the Revised Statutes of the United States

3 (12 U.S.C. 51) is amended by adding at the end the

4 following new sentence: ‘‘This section shall not apply

5 with respect to any national bank which is a guaran6 teed depository institution (as defined in section

7 101(a)(7) of the Deposit Insurance Reform, Regu8 latory Modernization, and Taxpayer Protection Act

9 of 1993).’’.

10 (2) PREFERRED STOCK IN MEMBER BANKS.—

11 Section 345 of the Banking Act of 1935 (12 U.S.C.

12 51B–1) is amended by adding at the end the follow13 ing new sentence: ‘‘This section shall not apply with

14 respect to any bank which is a guaranteed deposi15 tory institution (as defined in section 101(a)(7) of

16 the Deposit Insurance Reform, Regulatory Mod17 ernization, and Taxpayer Protection Act of 1993).’’.

18 (3) DEFICIENT CAPITAL PROVISION FOR NA19 TIONAL BANKS.—Section 5205 of the Revised Stat20 utes of the United States (12 U.S.C. 55) is amended

21 by adding at the end the following new sentence:

22 ‘‘This section shall not apply with respect to any na23 tional bank which is a guaranteed depository institu24 tion (as defined in section 101(a)(7) of the Deposit
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1 Insurance Reform, Regulatory Modernization, and

2 Taxpayer Protection Act of 1993).’’.

3 (4) WITHDRAWAL OF CAPITAL PROVISION FOR

4 NATIONAL BANKS.—Section 5204 of the Revised

5 Statutes of the United States (12 U.S.C. 56) is

6 amended by adding at the end the following new

7 sentence: ‘‘This section shall not apply with respect

8 to any national bank which is a guaranteed deposi9 tory institution (as defined in section 101(a)(7) of

10 the Deposit Insurance Reform, Regulatory Mod11 ernization, and Taxpayer Protection Act of 1993).’’.

12 (5) INCREASE IN CAPITAL PROVISION FOR NA13 TIONAL BANKS.—Section 5142 of the Revised Stat14 utes of the United States (12 U.S.C. 57) is amended

15 by adding at the end the following new sentence:

16 ‘‘This section shall not apply with respect to any na17 tional bank which is a guaranteed depository institu18 tion (as defined in section 101(a)(7) of the Deposit

19 Insurance Reform, Regulatory Modernization, and

20 Taxpayer Protection Act of 1993).’’.

21 (6) DECREASE AND DISTRIBUTION OF CAPITAL

22 PROVISION FOR NATIONAL BANKS.—Section 5143 of

23 the Revised Statutes of the United States (12

24 U.S.C. 59) is amended by adding at the end the fol25 lowing new sentence: ‘‘Notwithstanding the preced-
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1 ing sentence, the approval of the Comptroller of the

2 Currency shall not be required for any reduction of

3 capital stock, or any distribution to shareholders by

4 reason of any such reduction, under such sentence

5 by any national bank which is a guaranteed deposi6 tory institution (as defined in section 101(a)(7) of

7 the Deposit Insurance Reform, Regulatory Mod8 ernization, and Taxpayer Protection Act of 1993).’’.

9 (7) DIVIDEND PROVISIONS.—

10 (A) IN GENERAL.—Section 5199(a) of the

11 Revised Statutes of the United States (12

12 U.S.C. 60(a)) is amended—

13 (i) by striking ‘‘(a) The directors’’

14 and inserting:

15 ‘‘(a) DECLARATION OF DIVIDEND.—

16 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

17 the directors’’;

18 (ii) by striking ‘‘expedient; except that

19 until the surplus fund of such association’’

20 and inserting ‘‘expedient’’.

21 ‘‘(2) EXCEPTION FOR CERTAIN UNDER22 CAPITALIZED ASSOCIATIONS.—Until the surplus

23 fund of a national bank’’;

24 and
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1 (iii) by adding at the end of para2 graph (2) (as so redesignated by clause (ii)

3 of this subparagraph) the following: ‘‘This

4 paragraph shall not apply with respect to

5 any national bank which is a guaranteed

6 depository institution (as defined in section

7 101(a)(7) of the Deposit Insurance Re8 form, Regulatory Modernization, and Tax9 payer Protection Act of 1993).’’.

10 (B) TECHNICAL AND CONFORMING AMEND11 MENT.—Section 5199(b) of the Revised Stat12 utes of the United States (12 U.S.C. 60(b)) is

13 amended—

14 (i) by striking ‘‘(b) The approval of

15 the Comptroller’’ and inserting:

16 ‘‘(b) APPROVAL OF THE COMPTROLLER.—Except in

17 the case of a national bank which is a guaranteed deposi18 tory institution (as defined in section 101(a)(7) of the De19 posit Insurance Reform, Regulatory Modernization, and

20 Taxpayer Protection Act of 1993), the approval of the

21 Comptroller’’; and

22 (ii) by striking ‘‘such association’’ and

23 inserting ‘‘a national bank’’.

24 (b) EXEMPTIONS FROM REQUIREMENTS RELATING

25 TO DIRECTORS OF BANKS.—
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1 (1) QUALIFICATIONS OF NATIONAL BANK DI2 RECTORS.—Section 5146 of the Revised Statutes of

3 the United States (12 U.S.C. 72) is amended by

4 adding at the end the following new sentence: ‘‘This

5 section shall not apply with respect to any national

6 bank which is a guaranteed depository institution

7 (as defined in section 101(a)(7) of the Deposit In8 surance Reform, Regulatory Modernization, and

9 Taxpayer Protection Act of 1993).’’.

10 (2) SERVICE OF PRESIDENT OF NATIONAL

11 BANK AS CHAIRMAN OF THE BANK’S BOARD OF DI12 RECTORS.—Section 5150 of the Revised Statutes of

13 the United States (12 U.S.C. 76) is amended by

14 adding at the end the following new sentence: ‘‘This

15 section shall not apply with respect to any national

16 bank which is a guaranteed depository institution

17 (as defined in section 101(a)(7) of the Deposit In18 surance Reform, Regulatory Modernization, and

19 Taxpayer Protection Act of 1993).’’.

20 (3) MEMBER BANK DIRECTOR INTERLOCKS

21 WITH SECURITIES FIRMS.—Section 32 of the Bank22 ing Act of 1933 (12 U.S.C. 78) is amended by add23 ing at the end the following new sentence: ‘‘This sec24 tion shall not apply with respect to any member

25 bank which is a guaranteed depository institution
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1 (as defined in section 101(a)(7) of the Deposit In2 surance Reform, Regulatory Modernization, and

3 Taxpayer Protection Act of 1993).’’.

4 (4) LOANS ON OR PURCHASE OF NATIONAL

5 BANK’S OWN STOCK.—Section 5201 of the Revised

6 Statutes of the United States (12 U.S.C. 83) is

7 amended by adding at the end the following new

8 sentence: ‘‘This section shall not apply with respect

9 to any national bank which is a guaranteed deposi10 tory institution (as defined in section 101(a)(7) of

11 the Deposit Insurance Reform, Regulatory Mod12 ernization, and Taxpayer Protection Act of 1993).’’.

13 (c) EXEMPTION FROM REQUIREMENT RELATING TO

14 LOANS TO 1 BORROWER.—Section 5200 of the Revised

15 Statutes of the United States (12 U.S.C. 84) is amended

16 by adding at the end the following new subsection:

17 ‘‘(e) EXEMPTION OF GUARANTEED COMPANIES.—

18 This section shall not apply with respect to any national

19 bank which is a guaranteed depository institution (as de20 fined in section 101(a)(7) of the Deposit Insurance Re21 form, Regulatory Modernization, and Taxpayer Protection

22 Act of 1993).’’.

23 (d) EXEMPTION FROM REQUIREMENTS RELATING

24 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGENCIES
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1 AT NATIONAL BANKS.—Section 5153 of the Revised Stat2 utes of the United States (12 U.S.C. 90) is amended—

3 (1) in the 1st undesignated paragraph, by strik4 ing ‘‘All national banking associations’’ and insert5 ing:

6 ‘‘(a) IN GENERAL.—All national banks’’;

7 (2) in the 2d undesignated paragraph, by strik8 ing ‘‘Any national banking association’’ and insert9 ing:

10 ‘‘(b) DEPOSITORY FOR STATE AND LOCAL GOVERN11 MENTS.—Any national bank’’;

12 (3) in the 3d undesignated paragraph, by strik13 ing ‘‘Any national banking association’’ and insert14 ing:

15 ‘‘(c) DEPOSITORY FOR INDIAN TRIBES.—Any na16 tional bank’’; and

17 (4) by adding at the end the following new sub18 section:

19 ‘‘(d) EXEMPTION FROM SECURITY AND COLLATERAL

20 REQUIREMENTS.—A national bank which is a guaranteed

21 depository institution (as defined in section 101(a)(7) of

22 the Deposit Insurance Reform, Regulatory Modernization,

23 and Taxpayer Protection Act of 1993) shall not be re24 quired to give any security which is otherwise required

25 under subsection (a), (b), or (c) for deposits with the bank
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1 under this section or for the performance of the bank as

2 financial agent.’’.

3 (e) EXEMPTION FROM PROVISION RELATING TO

4 TRANSFERS BY NATIONAL BANKS IN CONTEMPLATION OF

5 INSOLVENCY.—Section 5242 of the Revised Statutes of

6 the United States (12 U.S.C. 91) is amended by adding

7 at the end the following new sentence: ‘‘This section shall

8 not apply with respect to any national bank which is a

9 guaranteed depository institution (as defined in section

10 101(a)(7) of the Deposit Insurance Reform Regulatory

11 Modernization, and Taxpayer Protection Act of 1993.’’.

12 (f) EXEMPTION FROM REQUIREMENTS RELATING TO

13 REPORTS OF CONDITION.—Section 5211 of the Revised

14 Statutes of the United States (12 U.S.C. 161) is amended

15 by adding at the end the following new subsection:

16 ‘‘(d) EXEMPTION OF GUARANTEED COMPANIES.—

17 This section shall not apply with respect to any national

18 bank which is a guaranteed depository institution (as de19 fined in section 101(a)(7) of the Deposit Insurance Re20 form, Regulatory Modernization, and Taxpayer Protection

21 Act of 1993.’’.

22 (g) CONSENT OF GUARANTORS REQUIRED FOR VOL23 UNTARY DISSOLUTION.—
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1 (1) IN GENERAL.—Section 5220 of the Revised

2 Statutes of the United States (12 U.S.C. 181) is

3 amended—

4 (A) in the 1st undesignated paragraph, by

5 striking ‘‘Any association’’ and inserting:

6 ‘‘(a) IN GENERAL.—Any national bank’’;

7 (B) in the 2d undesignated paragraph, by

8 striking ‘‘The shareholders shall designate’’ and

9 inserting:

10 ‘‘(b) LIQUIDATING AGENT OR COMMITTEE.—The

11 shareholders shall designate’’; and

12 (C) by adding at the end the following new

13 subsection:

14 ‘‘(c) CONSENT OF GUARANTORS REQUIRED FOR

15 GUARANTEED COMPANIES.—In the case of any national

16 bank which is a guaranteed depository institution (as de17 fined in section 101(a)(7) of the Deposit Insurance Re18 form, Regulatory Modernization, and Taxpayer Protection

19 Act of 1993), the national bank may go into liquidation

20 and be closed in accordance with subsection (a) only with

21 the consent of the direct guarantors of such bank.’’.

22 (2) NOTICE TO SYNDICATE AGENT.—Section

23 5221 of the Revised Statutes of the United States

24 (12 U.S.C. 182) is amended by inserting ‘‘and, in

25 the case of a national bank which is a guaranteed
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1 depository institution (as defined in section

2 101(a)(7) of the Deposit Insurance Reform, Regu3 latory Modernization, and Taxpayer Protection Act

4 of 1993), to the syndicate agent of such bank’’ after

5 ‘‘Comptroller of the Currency’’.

6 (h) COMPTROLLER OF THE CURRENCY NOT AU7 THORIZED TO APPOINT RECEIVER.—

8 (1) IN GENERAL.—The Act entitled ‘‘An Act

9 authorizing the appointment of receivers of national

10 banking associations, and for other purposes.’’ and

11 approved June 30, 1876, is amended by inserting

12 after the 1st section (12 U.S.C. 191) the following

13 new section:

14 ‘‘SEC. 2. EXEMPTION OF GUARANTEED NATIONAL BANKS.

15 ‘‘This Act shall not apply with respect to any national

16 bank which is a guaranteed depository institution (as de17 fined in section 101(a)(7) of the Deposit Insurance Re18 form, Regulatory Modernization, and Taxpayer Protection

19 Act of 1993).’’.

20 (2) EXEMPTION FROM ADDITIONAL GROUND

21 FOR THE APPOINTMENT OF RECEIVERS.—Section

22 5234 of the Revised Statutes (12 U.S.C. 192) is

23 amended by adding at the end the following new

24 sentence: ‘‘This sentence shall not apply with respect

25 to any national bank which is a guaranteed deposi-
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1 tory institution (as defined in section 101(a)(7) of

2 the Deposit Insurance Reform, Regulatory Mod3 ernization, and Taxpayer Protection Act of 1993).’’.

4 (i) COMPTROLLER OF THE CURRENCY NOT AUTHOR5 IZED TO APPOINT CONSERVATOR.—The Bank Conserva6 tion Act is amended by inserting after section 206 the fol7 lowing new section:

8 ‘‘SEC. 207. EXEMPTION OF GUARANTEED NATIONAL BANKS.

9 ‘‘This subchapter shall not apply with respect to any

10 national bank which is a guaranteed depository institution

11 (as defined in section 101(a)(7) of the Deposit Insurance

12 Reform, Regulatory Modernization, and Taxpayer Protec13 tion Act of 1993).’’.

14 (j) COMPTROLLER OF THE CURRENCY NOT AUTHOR15 IZED TO EXAMINE GUARANTEED BANKS.—Section 5240

16 of the Revised Statutes of the United States (12 U.S.C.

17 481–485) is amended by adding at the end of the 1st

18 paragraph of such section the following new sentence:

19 ‘‘Notwithstanding any other provision of this section, the

20 authority of the Comptroller of the Currency to examine

21 any national bank or any affiliate of a national bank shall

22 not apply with respect to any national bank which is a

23 guaranteed depository institution (as defined in section

24 101(a)(7) of the Deposit Insurance Reform, Regulatory
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1 Modernization, and Taxpayer Protection Act of 1993) or

2 any affiliate of such bank.’’.

3 (k) EXEMPTION FROM LIMITATION OR CONDITIONS

4 ON REAL ESTATE LENDING AUTHORITY.—Section 24(a)

5 of the Federal Reserve Act (12 U.S.C. 371(a)) is amended

6 by adding at the end the following new sentence: ‘‘Not7 withstanding the preceding sentence, a national bank

8 which is a guaranteed depository institution (as defined

9 in section 101(a)(7) of the Deposit Insurance Reform,

10 Regulatory Modernization, and Taxpayer Protection Act

11 of 1993) shall not be subject to section 18(o) of the Fed12 eral Deposit Insurance Act or any restriction or require13 ment prescribed by the Comptroller of the Currency under

14 the preceding sentence.’’.

15 SEC. 202. AMENDMENTS RELATING TO MEMBER BANKS.

16 (a) FEDERAL RESERVE BOARD AND FEDERAL RE17 SERVE BANKS NOT AUTHORIZED TO EXAMINE GUARAN18 TEED MEMBER BANKS.—

19 (1) IN GENERAL.—Section 11(a)(1) of the Fed20 eral Reserve Act (12 U.S.C. 248(a)(1)) is amended

21 by adding at the end the following new sentence:

22 ‘‘Notwithstanding any other provision of this section,

23 the authority of the Board or any Federal Reserve

24 bank to examine any member bank shall not apply

25 with respect to any member bank which is a guaran-
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1 teed depository institution (as defined in section

2 101(a)(7) of the Deposit Insurance Reform, Regu3 latory Modernization, and Taxpayer Protection Act

4 of 1993).’’.

5 (2) SPECIAL EXAMINATIONS.—The 1st sentence

6 of the 5th undesignated paragraph of section 5240

7 of the Revised Statutes of the United States (12

8 U.S.C. 483) is amended by inserting ‘‘which are not

9 guaranteed depository institutions (as defined in sec10 tion 101(a)(7) of the Deposit Insurance Reform,

11 Regulatory Modernization, and Taxpayer Protection

12 Act of 1993)’’ after ‘‘member banks within its dis13 trict’’.

14 (3) FOREIGN OPERATION OF STATE MEMBER

15 BANKS.—The last sentence of the 6th undesignated

16 paragraph of section 5240 of the Revised Statutes of

17 the United States (12 U.S.C. 481) is amended by

18 inserting ‘‘and are not guaranteed depository institu19 tions (as defined in section 101(a)(7) of the Deposit

20 Insurance Reform, Regulatory Modernization, and

21 Taxpayer Protection Act of 1993)’’ before the pe22 riod.

23 (4) EXAMINATIONS IN CONNECTION WITH AD24 VANCES OR DISCOUNTS.—Section 11(n) of the Fed25 eral Reserve Act (12 U.S.C. 248(n)) is amended by
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1 striking ‘‘depository institution,’’ and inserting ‘‘de2 pository institution (other than a guaranteed deposi3 tory institution (as defined in section 101(a)(7) of

4 the Deposit Insurance Reform, Regulatory Mod5 ernization, and Taxpayer Protection Act of 1993)),’’.

6 (b) EXEMPTION FROM MEMBER BANK LOAN LIMI7 TATIONS.—Section 11(m) of the Federal Reserve Act (12

8 U.S.C. 248(m)) is amended by adding at the end the fol9 lowing new sentence: ‘‘This paragraph shall not apply with

10 respect to any member bank which is a guaranteed deposi11 tory institution (as defined in section 101(a)(7) of the De12 posit Insurance Reform, Regulatory Modernization, and

13 Taxpayer Protection Act of 1993).’’.

14 (c) EXEMPTION FROM LIMITATION ON ACCESS TO

15 FED WIRE.—Section 11 of the Federal Reserve Act (12

16 U.S.C. 248) is amended by inserting after paragraph (n)

17 the following new paragraph:

18 ‘‘(o) PROHIBITION ON LIMITS ON ACCESS TO PAY19 MENT AND CLEARING SYSTEMS BY GUARANTEED MEM20 BER BANKS.—Notwithstanding any other provision of law,

21 the Board may not limit or deny access by any member

22 bank which is a guaranteed depository institution (as de23 fined in section 101(a)(7) of the Deposit Insurance Re24 form, Regulatory Modernization, and Taxpayer Protection

25 Act of 1993) to the payment system or any system in ef-
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1 fect for clearing transactions in securities for the purpose

2 of protecting any such system from any risk.’’.

3 (d) FEDERAL RESERVE BOARD NOT AUTHORIZED

4 TO APPOINT CONSERVATOR OR RECEIVER.—Section

5 11(p) of the Federal Reserve Act (12 U.S.C. 248(p)) (as

6 added by section 133(f) of the Federal Deposit Insurance

7 Corporation Act of 1991) is amended to read as follows:

8 ‘‘(p) AUTHORITY TO APPOINT CONSERVATOR OR RE9 CEIVER.—

10 ‘‘(1) IN GENERAL.—Except as provided in sub11 paragraph (B), the Board may appoint the Federal

12 Deposit Insurance Corporation as conservator or re13 ceiver for a State member bank under section

14 11(c)(8) of the Federal Deposit Insurance Act.

15 ‘‘(2) EXCEPTION FOR GUARANTEED DEPOSI16 TORY INSTITUTIONS.—This paragraph shall not

17 apply with respect to any member bank which is a

18 guaranteed depository institution (as defined in sec19 tion 101(a)(7) of the Deposit Insurance Reform,

20 Regulatory Modernization, and Taxpayer Protection

21 Act of 1993).’’.

22 (e) QUALIFICATION OF GUARANTEED STATE BANKS

23 FOR MEMBER BANK STATUS WITHOUT APPLICATION.—

24 (1) IN GENERAL.—The 1st undesignated para25 graph of section 9 of the Federal Reserve Act (12
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1 U.S.C. 321) is amended by adding at the end the

2 following new sentence: ‘‘Notwithstanding the appli3 cation requirement contained in the 1st sentence of

4 this paragraph, any State bank which is a guaran5 teed depository institution (as defined in section

6 101(a)(7) of the Deposit Insurance Reform, Regu7 latory Modernization, and Taxpayer Protection Act

8 of 1993) may become a member of the Federal Re9 serve System without application by agreeing to be

10 subject to all applicable provisions of this Act and by

11 subscribing to stock in the same manner and

12 amount as a national bank under section 2.’’.

13 (2) EXEMPTION FROM CAPITAL, RESERVE, AND

14 REPORTING REQUIREMENTS.—The 1st sentence of

15 the 6th undesignated paragraph of section 9 of the

16 Federal Reserve Act (12 U.S.C. 324) is amended by

17 inserting ‘‘, other than a bank which is a guaranteed

18 depository institution (as defined in section

19 101(a)(7) of the Deposit Insurance Reform, Regu20 latory Modernization, and Taxpayer Protection Act

21 of 1993),’’ after ‘‘banks admitted to membership

22 under authority of this section’’.

23 (3) EXEMPTION FROM EXAMINATION.—The 7th

24 undesignated paragraph of section 9 of the Federal

25 Reserve Act (12 U.S.C. 325) is amended by striking
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1 ‘‘such banks’’ and inserting ‘‘, any bank admitted to

2 membership under this section, other than a bank

3 which is a guaranteed depository institution (as de4 fined in section 101(a)(7) of the Deposit Insurance

5 Reform, Regulatory Modernization, and Taxpayer

6 Protection Act of 1993),’’.

7 (4) EXEMPTION FROM SPECIAL EXAMINA8 TIONS.—The 8th undesignated paragraph of section

9 9 of the Federal Reserve Act (12 U.S.C. 326) is

10 amended by adding at the end the following new

11 sentence: ‘‘Notwithstanding any other provision of

12 this paragraph, the authority of the Board to exam13 ine any member bank shall not apply with respect to

14 any member bank which is a guaranteed depository

15 institution (as defined in section 101(a)(7) of the

16 Deposit Insurance Reform, Regulatory Moderniza17 tion, and Taxpayer Protection Act of 1993).’’.

18 (5) EXEMPTION FROM CERTAIN FORFEITURE

19 PROVISION.—The 9th undesignated paragraph of

20 section 9 of the Federal Reserve Act (12 U.S.C.

21 327) is amended by inserting ‘‘, other than a bank

22 which is a guaranteed depository institution (as de23 fined in section 101(a)(7) of the Deposit Insurance

24 Reform, Regulatory Modernization, and Taxpayer

25 Protection Act of 1993),’’ after ‘‘a member bank’’.
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1 (6) EXEMPTION FROM ADDITIONAL CAPITAL

2 REQUIREMENT.—The 11th undesignated paragraph

3 of section 9 of the Federal Reserve Act (12 U.S.C.

4 329) is amended by adding at the end the following

5 new sentence: ‘‘This paragraph shall not apply with

6 respect to any member bank which is a guaranteed

7 depository institution (as defined in section

8 101(a)(7) of the Deposit Insurance Reform, Regu9 latory Modernization, and Taxpayer Protection Act

10 of 1993).’’.

11 (7) EXEMPTION FROM SECURITY AND COLLAT12 ERAL REQUIREMENT.—The last sentence of the 15th

13 undesignated paragraph of section 9 of the Federal

14 Reserve Act (12 U.S.C. 332) is amended by insert15 ing ‘‘, other than a bank which is a guaranteed de16 pository institution (as defined in section 101(a)(7)

17 of the Deposit Insurance Reform, Regulatory Mod18 ernization, and Taxpayer Protection Act of 1993),’’

19 after ‘‘the banks and trust companies thus des20 ignated’’.

21 (8) MEMBERSHIP QUALIFICATION IN THE CASE

22 OF STATE MUTUAL SAVINGS BANKS.—The 16th un23 designated paragraph of section 9 of the Federal Re24 serve Act (12 U.S.C. 333) is amended by inserting

25 after the 1st sentence the following new sentence:
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1 ‘‘Notwithstanding the application requirement con2 tained in the preceding sentence, any State mutual

3 savings bank which is a guaranteed depository insti4 tution (as defined in section 101(a)(7) of the De5 posit Insurance Reform, Regulatory Modernization,

6 and Taxpayer Protection Act of 1993) may become

7 a member of the Federal Reserve System without

8 application by agreeing to be subject to all applicable

9 provisions of this Act and by subscribing to stock in

10 the same manner and amount as provided in this

11 paragraph for State mutual savings banks applying

12 for membership.’’.

13 (9) EXEMPTION FROM AFFILIATE REPORTING

14 REQUIREMENTS.—

15 (A) IN GENERAL.—The 1st sentence of the

16 17th undesignated paragraph of section 9 of

17 the Federal Reserve Act (12 U.S.C. 334) is

18 amended by inserting ‘‘, other than a bank

19 which is a guaranteed depository institution (as

20 defined in section 101(a)(7) of the Deposit In21 surance Reform, Regulatory Modernization, and

22 Taxpayer Protection Act of 1993),’’ after ‘‘bank

23 admitted to membership under this section’’.

24 (B) EXEMPTION FROM ADDITIONAL AFFIL25 IATE REPORTING REQUIREMENTS.—The 18th
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1 undesignated paragraph of section 9 of the

2 Federal Reserve Act (12 U.S.C. 334) is amend3 ed by inserting ‘‘, other than a bank which is

4 a guaranteed depository institution (as defined

5 in section 101(a)(7) of the Deposit Insurance

6 Reform, Regulatory Modernization, and Tax7 payer Protection Act of 1993),’’ after ‘‘affili8 ated member bank’’.

9 (10) EXEMPTION FROM EXAMINATION RE10 QUIREMENTS.—The 22d undesignated paragraph of

11 section 9 of the Federal Reserve Act (12 U.S.C.

12 338) is amended by inserting ‘‘, other than a bank

13 which is a guaranteed depository institution (as de14 fined in section 101(a)(7) of the Deposit Insurance

15 Reform, Regulatory Modernization, and Taxpayer

16 Protection Act of 1993),’’ after ‘‘State member

17 banks’’ the 1st place such term appears.

18 (f) EXEMPTION FROM INTEREST REQUIREMENTS.—

19 Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a)

20 is amended by adding at the end the following new sen21 tence: ‘‘No provision of this subsection shall apply with

22 respect to a member bank which is a guaranteed deposi23 tory institution (as defined in section 101(a)(7) of the De24 posit Insurance Reform, Regulatory Modernization, and

25 Taxpayer Protection Act of 1993).’’.
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1 (g) EXEMPTION FROM REQUIREMENTS RELATING

2 TO INTERBANK LIABILITIES AND TRANSACTIONS WITH

3 AFFILIATES.—

4 (1) INTERBANK LIABILITIES.—Section 23 of

5 the Federal Reserve Act (12 U.S.C. 371(b–2)) is

6 amended by adding at the end the following new

7 subsection:

8 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN9 STITUTIONS.—A guaranteed depository institution (as de10 fined in section 101(a)(7) of the Deposit Insurance Re11 form, Regulatory Modernization, and Taxpayer Protection

12 Act of 1993) shall not be subject to any regulation or

13 order issued under this section.’’.

14 (2) EXEMPTION FROM RESTRICTIONS ON

15 TRANSACTIONS WITH AFFILIATES.—Sections 23A

16 and 23B of the Federal Reserve Act (12 U.S.C.

17 371c, 371c–1) are each amended by adding at the

18 end of each such section the following new sub19 section:

20 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN21 STITUTIONS.—This section shall not apply to any guaran22 teed depository institution (as defined in section 101(a)(7)

23 of the Deposit Insurance Reform, Regulatory Moderniza24 tion, and Taxpayer Protection Act of 1993) or any affili25 ate of any such institution that is a guaranteed company
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1 (as defined in section 101(a)(6) of the Deposit Insurance

2 Reform, Regulatory Modernization, and Taxpayer Protec3 tion Act of 1993).’’.

4 (h) EXEMPTION FROM LIMITATION ON INVEST5 MENTS IN, OR LOANS ON, BANK PREMISES.—Section

6 24A of the Federal Reserve Act (12 U.S.C. 371d) is

7 amended by adding at the end the following new sentence:

8 ‘‘This section shall not apply to any guaranteed depository

9 institution (as defined in section 101(a)(7) of the Deposit

10 Insurance Reform, Regulatory Modernization, and Tax11 payer Protection Act of 1993).’’.

12 (i) EXEMPTION FROM LIMITATIONS ON BANKERS’

13 ACCEPTANCES.—Section 13(7) of the Federal Reserve Act

14 (12 U.S.C. 372) is amended by adding at the end the fol15 lowing new subparagraph:

16 ‘‘(I) EXEMPTION FROM LIMITATIONS FOR

17 GUARANTEED DEPOSITORY INSTITUTIONS.—

18 Subparagraphs (B), (C), (D), (E), (F), and (H)

19 shall not apply to any guaranteed depository in20 stitution (as defined in section 101(a)(7) of the

21 Deposit Insurance Reform, Regulatory Mod22 ernization, and Taxpayer Protection Act of

23 1993).’’.

24 (j) EXEMPTION FROM PURCHASING AND LENDING

25 LIMITS RELATING TO DIRECTORS AND OFFICERS.—Sec-
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1 tion 22 of the Federal Reserve Act (12 U.S.C. 375, 376,

2 503, 375a, and 375b) is amended by inserting before sub3 section (d) the following new subsection:

4 ‘‘(c) EXEMPTION FOR GUARANTEED DEPOSITORY

5 INSTITUTIONS.—Subsections (d), (e), (g), and (h) shall

6 not apply to any guaranteed depository institution (as de7 fined in section 101(a)(7) of the Deposit Insurance Re8 form, Regulatory Modernization, and Taxpayer Protection

9 Act of 1993) or any affiliate of any such institution.’’.

10 SEC. 203. AMENDMENTS RELATING TO SAVINGS ASSOCIA11 TIONS.

12 (a) GUARANTEED SAVINGS ASSOCIATION DE13 FINED.—Section 2 of the Home Owners’ Loan Act (12

14 U.S.C. 1462) is amended by adding at the end the follow15 ing new paragraphs:

16 ‘‘(10) GUARANTEED SAVINGS ASSOCIATION.—

17 The term ‘guaranteed savings association’ means a

18 savings association which is a guaranteed depository

19 institution (as defined in section 101(a)(7) of the

20 Deposit Insurance Reform, Regulatory Moderniza21 tion, and Taxpayer Protection Act of 1993).

22 ‘‘(11) GUARANTEED FEDERAL SAVINGS ASSO23 CIATION.—The term ‘guaranteed Federal savings as24 sociation’ means a Federal savings association which

25 is a guaranteed depository institution (as defined in
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1 section 101(a)(7) of the Deposit Insurance Reform,

2 Regulatory Modernization, and Taxpayer Protection

3 Act of 1993).’’.

4 (b) EXEMPTION FROM EXAMINATION AND REGULA5 TION BY DIRECTOR OF THE OFFICE OF THRIFT SUPER6 VISION.—

7 (1) IN GENERAL.—Section 4(a) of the Home

8 Owners’ Loan Act (12 U.S.C. 1463(a)) is amended

9 by adding at the end the following new paragraph:

10 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

11 ASSOCIATIONS.—The authority of the Director under

12 this subsection or subsection (b) or (c) to examine

13 any savings association or prescribe regulations to

14 savings associations shall not apply with respect to

15 any guaranteed savings association.’’.

16 (2) FEDERAL SAVINGS ASSOCIATIONS.—Section

17 5(a) of the Home Owners’ Loan Act (12 U.S.C.

18 1464(a)) is amended by adding at the end the fol19 lowing new sentence: ‘‘The authority of the Director

20 under the preceding sentence to prescribe regula21 tions to provide for the examination and regulation

22 of Federal savings associations shall not apply with

23 respect to the examination or regulation of any

24 guaranteed Federal savings association.’’.
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1 (3) EXEMPTION FROM EXAMINATION FEE PRO2 VISIONS.—Section 9 of the Home Owners’ Loan Act

3 (12 U.S.C. 1467) is amended by adding at the end

4 the following new subsection:

5 ‘‘(n) EXEMPTION FOR GUARANTEED SAVINGS ASSO6 CIATIONS.—This section and the authority of the Director

7 under this section shall not apply with respect to any guar8 anteed savings association.’’.

9 (c) EXCEPTIONS TO LIMITATIONS ON DEPOSIT AND

10 RELATED POWERS.—Section 5(b)(1) of the Home Own11 ers’ Loan Act (12 U.S.C. 1464(b)(1)) is amended by add12 ing at the end the following new subparagraph:

13 ‘‘(G) SPECIAL RULES APPLICABLE TO

14 GUARANTEED SAVINGS ASSOCIATIONS.—

15 ‘‘(i) STATUTORY AUTHORITY.—A

16 guaranteed Federal savings association

17 shall have the powers described in subpara18 graphs (C), (E), and (F) without regard to

19 the condition or limitation contained in

20 each such subparagraph relating to regula21 tions of the Director.

22 ‘‘(ii) LIMITATION ON REGULATORY

23 AUTHORITY.—The exercise by a guaran24 teed Federal savings association of powers

25 established under subparagraph (A) or (D)
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1 or the last sentence of subparagraph (B)

2 shall not be subject to any regulations pre3 scribed by the Director under such provi4 sion.

5 ‘‘(iii) EXEMPTION.—A guaranteed

6 Federal savings association shall not be

7 subject to the 1st sentence of subpara8 graph (B).’’.

9 (d) EXCEPTIONS TO LIMITATIONS ON LOAN AND IN10 VESTMENT POWERS.—Section 5(c) of the Home Owners’

11 Loan Act (12 U.S.C. 1464(c)) is amended by adding at

12 the end the following new paragraph:

13 ‘‘(7) EXCEPTIONS FOR GUARANTEED SAVINGS

14 ASSOCIATIONS.—

15 ‘‘(A) LIMITATION ON REGULATORY AU16 THORITY.—The exercise by a guaranteed Fed17 eral savings association of powers established

18 under any provision of this subsection shall not

19 be subject to any regulations prescribed by the

20 Director under this subsection.

21 ‘‘(B) EXEMPTION FROM MAXIMUM

22 AMOUNT LIMITATIONS.—A guaranteed Federal

23 savings association shall not be subject to any

24 limitation in this subsection on the outstanding

25 amount of loans or investments by the associa-
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1 tion under any provision of this subsection,

2 without regard to whether such maximum

3 amount is expressed as a fixed dollar amount or

4 as a percentage of such association’s assets or

5 capital.’’.

6 (e) EXEMPTION FROM ENFORCEMENT AND

7 CONSERVATORSHIP AND RECEIVERSHIP PROVISIONS.—

8 Section 5(d) of the Home Owners’ Loans Act (12 U.S.C.

9 1464(d)) is amended by adding at the end the following

10 new paragraph:

11 ‘‘(7) EXEMPTION FOR GUARANTEED SAVINGS

12 ASSOCIATIONS.—This subsection and the authority

13 of the Director under this subsection shall not apply

14 with respect to any guaranteed savings association.’’.

15 (f) EXEMPTION FROM FITNESS STANDARDS.—Sec16 tion 5(e) of the Home Owners’ Loan Act (12 U.S.C.

17 1464(e)) is amended by adding at the end the following

18 new sentence: ‘‘The preceding sentence shall not apply

19 with respect to any savings association which, at the time

20 the charter is granted, is a guaranteed depository institu21 tion (as defined in section 101(a)(7) of the Deposit Insur22 ance Reform, Regulatory Modernization, and Taxpayer

23 Protection Act of 1993) or is required to be a guaranteed

24 depository institution before such association accepts any

25 deposit.’’.
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1 (g) EXEMPTION FROM REQUIREMENTS RELATING

2 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGEN3 CIES.—Section 5(k) of the Home Owners’ Loan Act (12

4 U.S.C. 1464(k)) is amended by adding at the end the fol5 lowing new sentence: ‘‘A guaranteed savings association

6 shall not be required to give any security for deposits with

7 the savings association under this section or for the per8 formance of the association as fiscal agent.’’.

9 (h) EXEMPTION FROM MINIMUM CAPITAL REQUIRE10 MENTS.—Section 5(s) of the Home Owners’ Loan Act (12

11 U.S.C. 1464(s)) is amended by adding at the end the fol12 lowing new paragraph:

13 ‘‘(6) EXEMPTION FOR GUARANTEED SAVINGS

14 ASSOCIATIONS.—This subsection and the authority

15 of the Director under this subsection shall not apply

16 with respect to any guaranteed savings association.’’.

17 (i) EXEMPTION FROM CAPITAL STANDARDS.—Sec18 tion 5(t)(1) of the Home Owners’ Loan Act (12 U.S.C.

19 1464(t)(1)) is amended by adding at the end the following

20 new subparagraph:

21 ‘‘(E) EXEMPTION FOR GUARANTEED SAV22 INGS ASSOCIATIONS.—This subsection and the

23 authority of the Director under this subsection

24 shall not apply with respect to any guaranteed

25 savings association.’’.
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1 (j) EXEMPTION FROM REQUIREMENT RELATING TO

2 LOANS TO 1 BORROWER.—Section 5(u) of the Home

3 Owners’ Loan Act (12 U.S.C. 1464(u)) is amended by

4 adding at the end the following new paragraph:

5 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

6 ASSOCIATIONS.—This subsection shall not apply with

7 respect to any guaranteed savings association.’’.

8 (k) EXEMPTION FROM REQUIREMENT RELATING TO

9 REPORTS OF CONDITION.—Section 5(v) of the Home

10 Owners’ Loan Act (12 U.S.C. 1464(v)) is amended by

11 adding at the end the following new paragraph:

12 ‘‘(9) EXEMPTION FOR GUARANTEED SAVINGS

13 ASSOCIATIONS.—This subsection shall not apply with

14 respect to any guaranteed savings association.’’.

15 (l) EXEMPTION FROM REQUIREMENT RELATING TO

16 LIQUID ASSETS.—Section 6 of the Home Owners’ Loan

17 Act (12 U.S.C. 1465) is amended by adding at the end

18 the following new subsection:

19 ‘‘(g) EXEMPTION FOR GUARANTEED SAVINGS ASSO20 CIATIONS.—This section shall not apply with respect to

21 any guaranteed savings associations.’’.

22 (m) EXEMPTION FROM AFFILIATE TRANSACTION

23 AND LENDING LIMITS RELATING TO DIRECTORS AND OF24 FICERS.—Section 11 of the Home Owners’ Loan Act (12
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1 U.S.C. 1468) is amended by adding at the end the follow2 ing new subsection:

3 ‘‘(d) EXEMPTION FOR GUARANTEED SAVINGS ASSO4 CIATIONS.—This section shall not apply with respect to

5 any guaranteed savings association.’’.

6 SEC. 204. AMENDMENTS RELATING TO SAVINGS AND LOAN

7 HOLDING COMPANIES.

8 (a) GUARANTEED SAVINGS ASSOCIATION DE9 FINED.—Section 10(a)(1) of the Home Owners’ Loan Act

10 (12 U.S.C. 1467a(a)(1)) is amended by adding at the end

11 the following new subparagraph:

12 ‘‘(K) GUARANTEED SAVINGS ASSOCIA13 TION.—The term ‘guaranteed savings associa14 tion’ includes any savings association referred

15 to in subparagraph (A) which is a guaranteed

16 depository institution (as defined in section

17 101(a)(7) of the Deposit Insurance Reform,

18 Regulatory Modernization, and Taxpayer Pro19 tection Act of 1993).’’.

20 (b) EXEMPTION FROM EXAMINATION AND REPORT21 ING REQUIREMENT.—Section 10(b) of the Home Owners’

22 Loan Act (12 U.S.C. 1467a(b)) is amended by adding at

23 the end the following new paragraph:

24 ‘‘(7) EXEMPTION FOR S&L HOLDING COMPANY

25 WHICH CONTROLS A GUARANTEED SAVINGS ASSOCIA-
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1 TION.—Paragraphs (2), (3), and (4) and the author2 ity of the Director under any such paragraph shall

3 not apply with respect to any savings and loan hold4 ing company which controls a guaranteed savings as5 sociation and any subsidiary of such company.’’.

6 (c) COORDINATION WITH SECTION 11.—Section

7 10(d) of the Home Owners’ Loan Act (12 U.S.C.

8 1467a(d)) is amended by striking ‘‘Transaction’’ and in9 serting ‘‘Subject to section 11(d), transactions’’.

10 (d) EXEMPTION FROM REQUIREMENTS RELATING

11 TO DECLARATION OF DIVIDEND.—Section 10(f) of the

12 Home Owner’s Loan Act (12 U.S.C. 1467a(f)) is amended

13 by adding at the end the following new sentence: ‘‘This

14 subsection shall not apply with respect to any savings and

15 loan company which controls a guaranteed savings asso16 ciation.’’.

17 (e) EXEMPTION FROM RESTRICTIONS ON HIGH-RISK

18 ACTIVITIES.—Section 10(p) of the Home Owners’ Loan

19 Act (12 U.S.C. 1467a(p)) is amended by adding at the

20 end the following new paragraph:

21 ‘‘(3) EXEMPTION FOR PARENT OF GUARAN22 TEED SAVINGS ASSOCIATION.—This subsection shall

23 not apply with respect to any savings and loan com24 pany which controls a guaranteed savings associa25 tion.’’.
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1 (f) NONAPPLICABILITY OF QUALIFIED STOCK ISSU2 ANCE PROVISIONS.—Section 10(q)(1)(A) of the Home

3 Owners’ Loan Act (12 U.S.C. 1467a(q)(1)(A)) is amend4 ed—

5 (1) in clause (i), by inserting ‘‘which is not a

6 guaranteed savings association’’ after

7 ‘‘undercapitalized savings association’’; and

8 (2) in clause (ii), by inserting ‘‘and does not

9 control a guaranteed savings association’’ after

10 ‘‘controls an undercapitalized savings association’’.

11 SEC. 205. AMENDMENTS RELATING TO THE FEDERAL DE12 POSIT INSURANCE CORPORATION.

13 (a) AMENDMENTS TO DEFINITIONS.—

14 (1) DEFINITIONS RELATING TO DEPOSITORY

15 INSTITUTIONS.—Section 3(c) of the Federal Deposit

16 Insurance Act (12 U.S.C. 1813(c)) is amended by

17 adding at the end the following new paragraphs:

18 ‘‘(6) GUARANTEED DEPOSITORY INSTITUTION

19 NOT INCLUDED.—Except as otherwise specifically

20 provided in any provision of this Act, the terms ‘de21 pository institution’ and ‘insured depository institu22 tion’ do not include any guaranteed depository insti23 tution.

24 ‘‘(7) GUARANTEED DEPOSITORY INSTITU25 TION.—The term ‘guaranteed depository institution’
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1 has the meaning given to such term in section

2 101(a)(7) of the Deposit Insurance Reform, Regu3 latory Modernization, and Taxpayer Protection Act

4 of 1993.’’.

5 (2) DEFINITION RELATING TO BANKS.—Section

6 3(a) of the Federal Deposit Insurance Act (12

7 U.S.C. 1813(a)) is amended by adding at the end

8 the following new paragraph:

9 ‘‘(5) GUARANTEED DEPOSITORY INSTITUTIONS

10 NOT INCLUDED.—Except as otherwise specifically

11 provided in any provision of this Act, the terms

12 ‘bank’, ‘national bank’, ‘State bank’, ‘District bank’,

13 ‘branch’, and ‘Federal branch’, whether or not any

14 such term appears in conjunction with the term ‘in15 sured’, ‘member’, or ‘nonmember’, do not include

16 any guaranteed depository institution.’’.

17 (3) DEFINITION RELATING TO SAVINGS ASSO18 CIATIONS.—Section 3(b) of the Federal Deposit In19 surance Act (12 U.S.C. 1813(b)) is amended by

20 adding at the end the following new paragraph:

21 ‘‘(4) GUARANTEED DEPOSITORY INSTITUTIONS

22 NOT INCLUDED.—Except as otherwise specifically

23 provided in any provision of this Act, the terms ‘sav24 ings association’, ‘Federal savings association’, and

25 ‘State savings association’, whether or not any such
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1 term appears in conjunction with the term ‘insured’,

2 do not include any guaranteed depository institu3 tion.’’.

4 (4) DEFINITION RELATING TO APPROPRIATE

5 FEDERAL BANKING AGENCY.—Section 3(q) of the

6 Federal Deposit Insurance Act (12 U.S.C. 1813(q))

7 is amended by adding before the last sentence the

8 following new paragraph:

9 ‘‘(5) The Cross-Guarantee Regulation Corpora10 tion in the case of a guaranteed depository institu11 tion.’’.

12 (b) PROHIBITION ON NEW INSURED DEPOSITORY

13 INSTITUTIONS, BY CHARTER OR CONVERSION, AFTER

14 EFFECTIVE DATE OF CROSS-GUARANTEE SYSTEM.—

15 (1) NO CONTINUATION OF INSURANCE IN CON16 NECTION WITH CONVERSIONS.—Section 4 of the

17 Federal Deposit Insurance Act (12 U.S.C. 1814) is

18 amended by adding at the end the following new

19 subsection:

20 ‘‘(e) INAPPLICABILITY OF SUBSECTIONS (b), (c), AND

21 (d) AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS22 TEM.—Subsections (b), (c), and (d) shall not apply as of

23 the effective date of the cross-guarantee system under sub24 section (a) of section 141 of the Deposit Insurance Re25 form, Regulatory Modernization, and Taxpayer Protection
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1 Act of 1993, as published by the Cross-Guarantee Regula2 tion Corporation in the Federal Register pursuant to sub3 section (c) of such section.’’.

4 (2) NO NEW INSURANCE UNDER THE FEDERAL

5 DEPOSIT INSURANCE ACT.—Section 5 of the Federal

6 Deposit Insurance Act (12 U.S.C. 1815) is amended

7 by adding at the end the following new subsection:

8 ‘‘(f) PROHIBITION ON APPROVAL OF INSURANCE

9 AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS10 TEM.—No application for insurance under this section

11 may be approved by the Corporation on or after the date

12 by which the Cross-Guarantee Regulation Corporation has

13 approved, under subsection (a) of section 141 of the De14 posit Insurance Reform, Regulatory Modernization, and

15 Taxpayer Protection Act of 1993, 250 cross-guarantee

16 contracts described in subsection (a)(2) of such section.’’.

17 (c) TERMINATION OF DEPOSIT INSURANCE OF GUAR18 ANTEED DEPOSITORY INSTITUTION.—Section 8(a) of the

19 Federal Deposit Insurance Act (12 U.S.C. 1818(a)) is

20 amended—

21 (1) by redesignating paragraph (10) as para22 graph (11); and

23 (2) by inserting after paragraph (9), the follow24 ing new paragraph:
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1 ‘‘(10) TERMINATION OF INSURANCE OF GUAR2 ANTEED DEPOSITORY INSTITUTION.—The status of

3 any insured depository institution as an insured de4 pository institution shall cease as of the date the in5 stitution becomes a guaranteed depository institu6 tion.’’.

7 (d) INELIGIBILITY OF GUARANTEED DEPOSITORY

8 INSTITUTION FOR DEPOSIT INSURANCE UNDER THE

9 FEDERAL DEPOSIT INSURANCE ACT.—Section 5(a)(1) of

10 the Federal Deposit Insurance Act (12 U.S.C. 1815(a)(1))

11 is amended by striking ‘‘trust funds (as defined in section

12 3(p)),’’ and inserting ‘‘trust funds (as defined in section

13 3(p)) and is not a guaranteed depository institution.’’.

14 (e) APPLICABILITY OF INSURANCE LOGO PROVI15 SIONS.—Section 18(a) of the Federal Deposit Insurance

16 Act (12 U.S.C. 1828(a)) is amended by adding at the end

17 the following new paragraph:

18 ‘‘(4) APPLICABILITY TO GUARANTEED INSTITU19 TIONS.—For purposes of this subsection, the terms

20 ‘insured bank’ and ‘insured savings association’ shall

21 be deemed to include any bank (as defined in section

22 3(a) without regard to paragraph (5) of such sec23 tion) and any savings association (as defined in sec24 tion 3(b) without regard to paragraph (4) of such
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1 section) which is a guaranteed depository institu2 tion.’’.

3 (f) GUARANTEED DEPOSITORY INSTITUTIONS NOT

4 EXEMPT FROM LIMITATION ON INSURANCE UNDERWRIT5 ING.—Section 24(b) of the Federal Deposit Insurance Act

6 (12 U.S.C. 1831a(b)) is amended by adding at the end

7 the following new paragraph:

8 ‘‘(3) APPLICABILITY TO GUARANTEED DEPOSI9 TORY INSTITUTIONS.—Notwithstanding section

10 3(a)(5), the term ‘insured State bank’ includes, for

11 purposes of this subsection, a State bank which is a

12 guaranteed depository institution.’’.

13 SEC. 206. AMENDMENTS TO OTHER BANKING LAWS.

14 (a) EXEMPTION FROM DEPOSITORY INSTITUTION

15 MANAGEMENT INTERLOCKS ACT.—Section 205 of the De16 pository Institution Management Interlocks Act (12

17 U.S.C. 3204) is amended by adding at the end the follow18 ing new paragraph:

19 ‘‘(10) GUARANTEED DEPOSITORY INSTITU20 TION.—Any guaranteed depository institution and

21 any affiliate of such institution.’’.

22 (b) EXEMPTION FROM REAL ESTATE APPRAISAL

23 REQUIREMENTS.—Section 1121(4) of the Financial Insti24 tutions Reform, Recovery, and Enforcement Act of 1989

25 (12 U.S.C. 3350(4)) is amended to read as follows:
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1 ‘‘(4) FEDERALLY RELATED TRANSACTION.—

2 The term ‘Federally related transaction’—

3 ‘‘(A) means any real estate-related finan4 cial transaction which—

5 ‘‘(i) a Federal financial institutions

6 regulatory agency or the Resolution Trust

7 Corporation engages in, contracts for, or

8 regulates; and

9 ‘‘(ii) requires the services of an ap10 praiser; and

11 ‘‘(B) does not include any real estate-relat12 ed financial transaction which is regulated by a

13 Federal financial institutions regulatory agency

14 solely by reason of the involvement of a guaran15 teed depository institution (as defined in section

16 101(a)(7) of the Deposit Insurance Reform,

17 Regulatory Modernization, and Taxpayer Pro18 tection Act of 1993) in such transaction.’’.

19 (c) EXEMPTION FROM PAYMENT SYSTEM REQUIRE20 MENTS.—Subtitle A of Title IV of the Federal Deposit

21 Insurance Corporation Improvement Act of 1991 (12

22 U.S.C. 4401 et seq.) is amended by adding at the end

23 the following new section:
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1 ‘‘SEC. 408. EXEMPTION FROM GUARANTEED DEPOSITORY

2 INSTITUTIONS.

3 ‘‘This subtitle shall not apply with respect to a depos4 itory institution which is a guaranteed depository institu5 tion (as defined in section 101(a)(7) of the Deposit Insur6 ance Reform, Regulatory Modernization, and Taxpayer

7 Protection Act of 1993).’’.

8 (d) EXEMPTION FROM THE INTERNATIONAL LEND9 ING SUPERVISION ACT OF 1983.—The last sentence of

10 section 903(2) of the International Lending Supervision

11 Act of 1983 (12 U.S.C. 3902(2)) is amended by inserting

12 ‘‘or a guaranteed depository institution (as defined in sec13 tion 101(a)(7) of the Deposit Insurance Reform, Regu14 latory Modernization, and Taxpayer Protection Act of

15 1993)’’ before the period.

16 TITLE III—AMENDMENTS TO

17 TITLE 11, UNITED STATES CODE

18 Subtitle A—Amendments to

19 Chapter 1 of Title 11

20 SEC. 301. DEFINITIONS.

21 Section 101 of Title 11, United States Code, is

22 amended—

23 (a) by redesignating subsection (3) as sub24 section ‘‘(29)’’;

25 (b) by redesignating subsections (4)–(7) as sub26 sections ‘‘(3)’’–‘‘(6)’’;
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1 (c) by adding new subsection (7):

2 ‘‘(7) ‘company’ means any corporation, partner3 ship, business trust, association, or similar organiza4 tion;’’;

5 (d) by adding new subsection (11):

6 ‘‘(11) ‘cross-guarantee contract’ means a con7 tract which—

8 ‘‘(A) is entered into between—

9 ‘‘(i) one or more companies, at least

10 one of which is a depository institution;

11 and

12 ‘‘(ii) a cross-guarantee syndicate; and

13 ‘‘(B) is approved by the regulation cor14 poration under section 123 of title I of this

15 Act;’’;

16 (e) by adding new subsection (12):

17 ‘‘(12) ‘cross-guarantee obligation’ means an ob18 ligation of a direct guarantor arising out of a cross19 guarantee or stop-loss contract, and shall include the

20 obligations of such direct guarantor under section

21 125(c)(2) of title I of this Act and sections 321 and

22 355 of this title;’’;

23 (f) by adding new subsection (13):

24 ‘‘(13) ‘cross-guarantee premium payment’

25 means the payment a guaranteed company periodi-
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1 cally makes to the guaranteed company’s direct

2 guarantors under the terms of a cross-guarantee

3 contract;’’;

4 (g) by adding new subsection (14):

5 ‘‘(14) ‘cross-guarantee syndicate’ means any

6 group of direct guarantors which has entered into a

7 cross-guarantee contract with one or more guaran8 teed companies;’’;

9 (h) by redesignating subsections (11), (12) and

10 (13) as subsection ‘‘(15)’’, ‘‘(16)’’, and ‘‘(17)’’;

11 (i) by adding new subsection (18):

12 ‘‘(18) ‘depository institution’ has the meaning

13 given to such term in section 3(c)(1) of the Federal

14 Deposit Insurance Act (12 U.S.C. 1813(c)(1)), how15 ever, for the purposes of this title, depository institu16 tion shall not mean a Federal branch or an insured

17 branch as those terms are defined in Sections (3)(r)

18 and (3)(s) of the Federal Deposit Insurance Act (12

19 U.S.C. 1813(4) and (s));’’;

20 (j) by adding new subsection (19):

21 ‘‘(19) ‘direct guarantor’ means a member of a

22 cross-guarantee or stop-loss syndicate which has en23 tered into a cross-guarantee or stop-loss contract

24 with a guaranteed party;’’;
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1 (k) by redesignating subsections (14)–(21A) as

2 subsections ‘‘(20)’’–‘‘(28)’’ and by redesignating

3 subsections (22)–(27) as subsections ‘‘(30)’’–‘‘(35)’’;

4 (l) by adding new subsection (36):

5 ‘‘(36) ‘guaranteed company’ means any com6 pany which has entered into a cross-guarantee con7 tract with a cross-guarantee syndicate and has guar8 anteed obligations outstanding as of the date of the

9 filing of the petition;’’;

10 (m) by adding new subsection (37):

11 ‘‘(37) ‘guaranteed creditor’ means any entity

12 who owns or is the beneficiary of a guaranteed obli13 gation;’’;

14 (n) by adding new subsection (38):

15 ‘‘(38) ‘guaranteed obligation’ means an obliga16 tion of a guaranteed party on which a cross-guaran17 tee or stop-loss syndicate has guaranteed perform18 ance, including payment of principal and interest at

19 the promised time of payment, such that failure to

20 immediately perform in a timely manner constitutes

21 a breach of contract;’’;

22 (o) by adding new subsection (39):

23 ‘‘(39) ‘guaranteed party’ means any guaranteed

24 company or nondepository guarantor;’’;
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1 (p) by redesignating subsections (28)–(35) as

2 subsections ‘‘(40)’’–‘‘(47)’’ and subsection (36)–(38)

3 as subsections ‘‘(49)’’–‘‘(51)’’;

4 (q) by adding new subsection (53):

5 ‘‘(53) ‘monitoring fee payment’ means the peri6 odic payment made by a guaranteed party to a syn7 dicate agent under the terms of the guaranteed par8 ty’s cross-guarantee or stop-loss contract;’’;

9 (r) by adding new subsection (55):

10 ‘‘(55) ‘nondepository guarantor’ means a guar11 anteed party under a stop-loss contract;’’;

12 (s) by redesignating subsection (39) as sub13 section ‘‘(68)’’;

14 (t) by redesignating subsection (40) as sub15 section ‘‘(54)’’;

16 (u) by redesignating subsections (41)–(44) as

17 subsections ‘‘(56)’’–‘‘(59)’’;

18 (v) by adding new subsection (60):

19 ‘‘(60) ‘regulation corporation’ means the Cross20 Guarantee Regulation Corporation;’’;

21 (w) by redesignating subsections (45)–(51) as

22 subsections ‘‘(61)’’–‘‘(67)’’;

23 (x) by redesignating subsections (52) and (53)

24 as subsections ‘‘(69)’’ and ‘‘(70)’’; subsection (54)
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as subsection ‘‘(79)’’ and subsection (54) 1 1 as sub2 section ‘‘(71)’’;

3 (y) by adding new subsection (72):

4 ‘‘(72) ‘stop-loss contract’ means a contract

5 which—

6 ‘‘(A) is entered into between a person or a

7 company and a stop-loss syndicate; and

8 ‘‘(B) is approved by the regulation cor9 poration under section 123 of title I of this

10 Act,’’;

11 (z) by adding new subsection (73):

12 ‘‘(73) ‘stop-loss premium payment’ means the

13 payment a nondepository guarantor periodically

14 makes to direct guarantors under the nondepository

15 guarantor’s stop-loss contract;’’;

16 (aa) by adding new subsection (74):

17 ‘‘(74) ‘stop-loss syndicate’ means any group of

18 direct guarantors which has entered into a stop-loss

19 contract with a nondepository guarantor;’’;

20 (bb) by adding new subsection (77):

21 ‘‘(77) ‘syndicate agent’ means any person or

22 company who acts as the agent for the direct guar23 antors under any cross-guarantee or stop-loss con24 tract;’’; and
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1 (cc) by redesignating subsection (55) as subsection ‘‘(80)’’, subsection (55) 1 2 as subsection

3 ‘‘(75)’’; subsection (56) as subsection ‘‘(48)’’, subsection (56) 1 4 as subsection ‘‘(76)’’ subsection (57)

as subsection ‘‘(52)’’, and subsection (57) 1 5 as sub6 section ‘‘(78)’’.

7 SEC. 302. APPLICABILITY OF CHAPTERS.

8 Section 103 of title 11, United States Code, is

9 amended—

10 (a) in subsection (a) by striking ‘‘section 1161’’

11 and adding ‘‘sections 1161 and 1181’’;

12 (b) by adding new subsection (h):

13 ‘‘(h) Subchapter V of chapter 11 of this title applies

14 only in a case under such chapter in which a guaranteed

15 company is the debtor’’; and

16 (c) by redesignating subsection (h) and (i) to (i)

17 and (j).

18 SEC. 303. PUBLIC ACCESS TO PAPERS.

19 Section 107 of title 11, United States Code, is

20 amended—

21 (a) in subsection (a) by striking ‘‘subsection

22 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

23 (b) by adding new subsection (c):

24 ‘‘(c) Notwithstanding subsection (a) of this section,

25 the identity of a guaranteed creditor and the amount of
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1 a guaranteed creditor’s claim in a case under subchapter

2 V of chapter 11 is not a matter of public record and shall

3 be kept confidential.’’.

4 SEC. 304. WHO MAY BE A DEBTOR.

5 Section 109 of title 11, United States Code, is

6 amended—

7 (a) in subsection (b)(2) by adding at the end

8 ‘‘or a guaranteed company’’;

9 (b) in subsection (d) by striking ‘‘and a rail10 road’’ and inserting ‘‘a railroad, and a guaranteed

11 company’’; and

12 (c) by adding new subsection (h):

13 ‘‘(h) a guaranteed company may only be a debt14 or under subchapter V of chapter 11.’’.

15 Subtitle B—Amendments to

16 Chapter 3 of Title 11

17 SEC. 311. PARTY IN INTEREST.

18 Title 11, United States Code, is amended by adding

19 new section 308:

20 ‘‘§ 308. Party in interest

21 ‘‘(a) The regulation corporation shall be a party in

22 interest in any action seeking to impair or limit the obliga23 tions or duties of the debtor or of a direct guarantor under

24 a cross-guarantee or stop-loss contract.
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1 ‘‘(b) A cross-guarantee or stop-loss syndicate shall be

2 a party in interest in any determination of whether a claim

3 is a guaranteed obligation under a cross-guarantee or

4 stop-loss contract.

5 ‘‘(c) A cross-guarantee or stop-loss syndicate shall be

6 a party in interest for the purpose of filing objections to

7 the allowance of a claim or interest as provided under sec8 tion 502(a) of this title.’’.

9 SEC. 312. QUALIFICATION OF TRUSTEE.

10 Section 322 of title 11, United States Code, is

11 amended—

12 (a) in subsection (a) by inserting ‘‘1183,’’ after

13 ‘‘1163,’’; and

14 (b) by adding new subparagraph (b)(3):

15 ‘‘(3) In a case under subchapter V of chapter 11, the

16 United States trustee shall consult with the syndicate

17 agent monitoring the debtor as of the date of the filing

18 of the petition and shall consider any existing bonds cover19 ing the guaranteed company when determining the

20 amount of the bond required to be filed under subsection

21 (a) of this section.’’.

22 SEC. 313. NOTICE.

23 Section 342 of title 11, United States Code, is

24 amended by adding new subsection (c):
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1 ‘‘(c) Notwithstanding subsection (a) of this section,

2 notice of the entry of an order for relief in a case under

3 subchapter V of Chapter 11 shall be given by publication

4 and shall be given in writing to the syndicate agent and

5 to all creditors having claims that are not guaranteed obli6 gations. Notice to the syndicate agent shall constitute no7 tice to all guaranteed creditors in the case.’’.

8 SEC. 314. AUTOMATIC STAY.

9 Section 362 of title 11, United States Code, is

10 amended by adding new subsection (b)(17):

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

12 the exercise of any right of a guaranteed creditor

13 under applicable nonbankruptcy law to collect, en14 force or recover a guaranteed obligation from the

15 debtor.’’.

16 SEC. 315. EXECUTORY CONTRACTS AND UNEXPIRED

17 LEASES.

18 Section 365 of title 11, United States Code, is

19 amended—

20 (a) in subsection (a) by striking ‘‘and (d)’’ and

21 inserting ‘‘(d), and (q)’’;

22 (b) in subsection (e)(1), by substituting for the

23 existing language—‘‘Notwithstanding a provision in

24 an executory contract, guaranteed obligation, or

25 unexpired lease, or in applicable law, an executory
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1 contract, guaranteed obligation, or unexpired lease

2 of the debtor may not be terminated, modified, or

3 any liability thereunder accelerated, and any right,

4 obligation, or liability under such contract, guaran5 teed obligation, or lease may not be terminated,

6 modified, or accelerated, at any time after the com7 mencement of the case solely because of a provision

8 in such contract, guaranteed obligation, or lease that

9 is conditioned on—’’;

10 (c) in subparagraph (e)(2)(B), by striking

11 ‘‘such contract is a’’ and inserting ‘‘such contract is

12 not a guaranteed obligation but is some other’’;

13 (d) by adding a new subsection (q):

14 ‘‘(q) Notwithstanding subsection (c)(2) of this sec15 tion, the trustee shall be deemed to have assumed as of

16 the date of filing of the petition all cross-guarantee and

17 stop-loss contracts to which the debtor is a party. The

18 trustee shall immediately pay all cross-guarantee premium

19 payments, stop-loss premium payments, and monitoring

20 fee payments due under any cross-guarantee or stop-loss

21 contract so assumed. Any claim for a subsequent breach

22 of the obligations under such contracts shall be entitled

23 to priority under section 507(a)(1). The trustee shall not

24 reject any cross-guarantee or stop-loss contract’’; and
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1 (e) in subsection (f)(1) by inserting after ‘‘Ex2 cept as provided in subsection (c) of this section’’

3 the following to complete the clause, ‘‘and excluding

4 those executory contracts described in subsection

5 (q)’’.

6 Subtitle C—Amendments to

7 Chapter 5 of Title 11

8 SEC. 321. CLAIMS OF DIRECT GUARANTORS.

9 Title 11, United States Code, is amended by adding

10 a new section 511—

11 ‘‘§ 511. Claims of direct guarantors

12 ‘‘The direct guarantors of a debtor shall pay to the

13 trustee the amount by which losses accrued by the estate

14 as a direct guarantor since the date the petition was filed

15 exceed the cross-guarantee and stop-loss premiums the es16 tate has accrued since that date. Such payment shall be

17 received by the trustee on the effective date of a plan con18 firmed under section 1129 of this title or, in the case of

19 a liquidation under section 1186 of this title, at the time

20 of the transfer to an unrelated party or the termination

21 of all of the estate’s guaranteed obligations. The amount

22 paid by the direct guarantors in accordance with this sub23 section shall be subordinated to all other claims in the case

24 for the purpose of distribution under this title.’’.
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1 SEC. 322. DEBTOR’S DUTIES.

2 Section 521 of title 11, United States Code, is

3 amended—

4 (a) in subsection (1) by inserting ‘‘(a)’’ at the

5 beginning of the subsection; and

6 (b) by adding new subparagraph (1)(b)—

7 ‘‘(b) in a case under subchapter V of chapter

8 11 and subject to the requirement of subsection

9 107(c) of this title, file under seal the list of guaran10 teed creditors and the amount of the claims of guar11 anteed creditors.’’.

12 SEC. 323. EXCEPTIONS TO DISCHARGE.

13 Section 523 of title 11, United States Code, is

14 amended by adding new subparagraph (a)(13):

15 ‘‘(13) which arises as a result of the debtor’s

16 cross-guarantee obligations.’’.

17 SEC. 324. LIMITATION ON AVOIDING POWERS.

18 Section 546 of title 11, United States Code, is

19 amended by adding new subsection (h):

20 ‘‘(h) Notwithstanding sections 544, 545, 547 and

21 548(a)(2) of this title, the trustee may not avoid a transfer

22 that is a cross-guarantee premium payment, a stop-loss

23 premium payment, or a monitoring fee payment made be24 fore the commencement of the case, except under section

25 548(a)(1) of this title.’’.
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1 SEC. 325. PREFERENCES.

2 Section 547 of title 11, United States Code, is

3 amended by adding new subsection (h):

4 ‘‘(h) For the purposes of this section, a payment of

5 a guaranteed obligation is deemed to be a payment of a

6 debt incurred by the debtor in the ordinary course of busi7 ness or financial affairs of the debtor and the transferee.’’.

8 SEC. 326. FRAUDULENT TRANSFERS AND OBLIGATIONS.

9 Section 548 of title 11, United States Code, is

10 amended in subsection (d)(2) by adding new subparagraph

11 (E):

12 ‘‘(E) A cross-guarantee syndicate or a syndicate

13 agent that receives a cross-guarantee premium pay14 ment, a stop-loss premium payment, or a monitoring

15 fee payment takes for value to the extent of such

16 payment.’’.

17 SEC. 327. POST-PETITION TRANSACTIONS.

18 Section 549 of title 11, United States Code, is

19 amended—

20 (a) in subsection (a) by striking ‘‘subsections

21 (b) or (c)’’ and by inserting ‘‘subsections (b), (c), or

22 (d)’’;

23 (b) by adding new subsection (d):

24 ‘‘(d) The trustee may not avoid under subsection (a)

25 of this section a transfer of property to a transferee whose
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1 claim, in the absence of such transfer, would be guaran2 teed under a cross-guarantee or stop-loss contract’’; and

3 (c) by redesignating subsection (d) as sub4 section (e).

5 SEC. 328. CONTRACTUAL RIGHT TO LIQUIDATE A SECURI6 TIES CONTRACT.

7 Section 555 of title 11, United States Code, is

8 amended—

9 (a) by inserting ‘‘(a)’’ at the beginning of the

10 section; and

11 (b) by adding new subsection (b):

12 ‘‘(b) Subsection (a) of this section shall not apply in

13 any case under subchapter V of chapter 11.’’.

14 SEC. 329. CONTRACTUAL RIGHT TO LIQUIDATE A COMMOD15 ITIES CONTRACT OR FORWARD CONTRACT.

16 Section 556 of title 11, United States Code, is

17 amended—

18 (a) by inserting ‘‘(a)’’ at the beginning of the

19 section; and

20 (b) by adding new subsection (b):

21 ‘‘(b) Subsection (a) of this section shall not apply in

22 any case under subchapter V of chapter 11.’’.
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1 SEC. 330. CONTRACTUAL RIGHT TO LIQUIDATE A REPUR2 CHASE AGREEMENT.

3 Section 559 of title 11, United States Code, is

4 amended—

5 (a) by inserting ‘‘(a)’’ at the beginning of the

6 section; and

7 (b) by adding new subsection (b):

8 ‘‘(b) Subsection (a) of this section shall not apply in

9 any case under subchapter V of chapter 11.’’.

10 SEC. 331. CONTRACTUAL RIGHT TO TERMINATE A SWAP

11 AGREEMENT.

12 Section 560 of title 11, United States Code, is

13 amended—

14 (a) by inserting ‘‘(a)’’ at the beginning of the

15 section; and

16 (b) by adding new subsection (b):

17 ‘‘(b) Subsection (a) of this section shall not apply in

18 any case under subchapter V of chapter 11.’’.

19 Subtitle D—Amendments to

20 Chapter 11 of Title 11

21 CHAPTER 1—AMENDMENTS TO EXISTING

22 LAW

23 SEC. 341. CREDITORS’ AND EQUITY SECURITY HOLDERS’

24 COMMITTEES.

25 Section 1102 of title 11, United States Code, is

26 amended by subsection (a)(1) by inserting at the end ‘‘:
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1 Provided, however, That only creditors holding claims that

2 are not guaranteed obligations under a cross-guarantee or

3 stop-loss contract and are not direct guarantors may be

4 appointed to such committee in a case under subchapter

5 V of chapter 11’’.

6 SEC. 342. WHO MAY FILE A PLAN.

7 Section 1121 of title 11, United States Code, is

8 amended—

9 (a) by adding new subsection (d):

10 ‘‘(d) Notwithstanding subsection (c) of this section,

11 a guaranteed creditor may not file a plan in a case under

12 subchapter V of chapter 11’’; and

13 (b) by redesignating subsection (d) as sub14 section (e).

15 SEC. 343. IMPAIRMENT OF CLAIMS OR INTERESTS.

16 Section 1124 of title 11, United States Code, is

17 amended—

18 (a) by inserting ‘‘(a)’’ at the beginning of the

19 section; and

20 (b) by adding new subsection (b):

21 ‘‘(b) Notwithstanding subsection (a) of this section,

22 the claim of a guaranteed creditor is deemed to be

23 unimpaired in a case under subchapter V of chapter 11.’’.
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1 SEC. 344. ACCEPTANCE OF PLAN.

2 Section 1126 of title 11, United States Code, is

3 amended in subsection (a) by inserting at the end of the

4 first sentence‘‘: Provided, however, That a guaranteed

5 creditor is not entitled to accept or reject a plan in a case

6 under subchapter V of chapter 11’’.

7 SEC. 345. CONFIRMATION HEARING.

8 Section 1128 of title 11, United States Code, is

9 amended in subsection (b) by inserting after ‘‘A party in

10 interest’’ ‘‘, other than a guaranteed creditor in a case

11 under subchapter V of chapter 11,’’.

12 SEC. 346. CONFIRMATION OF PLAN.

13 Section 1129 of title 11, United States Code, is

14 amended—

15 (a) in subsection (a)(4), by inserting at the end

16 ‘‘: Provided, however, That no such approval of any

17 payment by a cross-guarantee or stop-loss syndicate

18 is required when the cross-guarantee or stop-loss

19 syndicate is the proponent of the plan and the pay20 ment is made pursuant to a cross-guarantee or stop21 loss contract’’; and

22 (b) by adding new subsection (e):

23 ‘‘(e) Notwithstanding subsections (a) and (b) of this

24 section, the court may confirm a plan that otherwise meets

25 the requirements of subsection (a) and (b) of this section

26 even though, in a case under subchapter V of chapter 11,
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1 a guaranteed creditor receives or retains no property

2 under the plan.’’.

3 SEC. 347. EFFECT OF CONFIRMATION.

4 Section 1141 of title 11, United States Code, is

5 amended—

6 (a) in subsection (a) by striking ‘‘(d)(2) and

7 (d)(3)’’ and by inserting ‘‘(d)(2), (d)(3), and

8 (d)(4)’’;

9 (b) by inserting new subsection (d)(4):

10 ‘‘(4) Except as provided in section 365(k) of this title,

11 the confirmation of a plan does not discharge a debtor

12 of its obligations and liabilities as a direct guarantor under

13 a cross-guarantee or stop-loss contract’’; and

14 (c) by redesignating subsection (d)(4) as (d)(5).

15 CHAPTER 2—ENACTMENT OF SUBCHAPTER V

16 SEC. 351. GUARANTEED COMPANY REORGANIZATION.

17 Title 11, United States Code, is amended by adding

18 a new subchapter V—

19 ‘‘Subchapter V—Guaranteed Company

20 Reorganization’’.

21 SEC. 352. INAPPLICABILITY OF OTHER SECTIONS.

22 Title 11, United States Code, is amended by adding

23 new section 1181—
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1 ‘‘§ 1181. Inapplicability of other sections

2 ‘‘Sections 341, 343, 1104, 1105, and 1107 do not

3 apply in a case under subchapter V of Chapter 11.’’.

4 SEC. 353. EFFECTIVE DATE OF FILING.

5 Title 11, United States Code, is amended by adding

6 new section 1182—

7 ‘‘§ 1182. Effective date of filing

8 ‘‘The effective date and time of the filing of a petition

9 under this subchapter shall be the close of business on

10 the business day preceding the date on which the petition

11 is actually filed.’’.

12 SEC. 354. APPOINTMENT OF TRUSTEE.

13 Title 11, United States Code, is amended by adding

14 new section 1183:

15 ‘‘§ 1183. Appointment of trustee

16 ‘‘As soon as practicable after the entry to an order

17 for relief, the regulation corporation shall submit to the

18 United States Trustee a list of 5 disinterested persons who

19 are qualified and willing to serve as the trustee in the case.

20 The United States Trustee shall appoint one such person

21 to serve as the trustee in the case. The syndicate agent

22 monitoring the debtor as of the date of the filing of the

23 petition shall not be eligible to serve as the trustee. The

24 court, after notice and a hearing, may replace a trustee

25 for cause.’’.
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1 SEC. 355. LIABILITY OF DIRECT GUARANTORS FOR TRANS2 FERS TO GUARANTEED CREDITORS.

3 Title 11, United States Code, is amended by adding

4 new section 1184—

5 ‘‘§ 1184. Liability of direct guarantors for transfers to

6 guaranteed creditors

7 ‘‘The trustee may recover for the benefit of the estate

8 from the direct guarantors of the debtor the amount of

9 any transfers of property of the estate to or for the benefit

10 of guaranteed creditors that enable such creditors to re11 ceive more than such creditors would receive if the trustee

12 was engaged in a liquidation pursuant to section 1186 of

13 this chapter and such transfers had not been made.’’.

14 SEC. 356. EFFECTIVE OF FEDERAL LEGISLATION AND FED15 ERAL, STATE, AND LOCAL REGULATIONS.

16 Title 11, United States Code, is amended by adding

17 new section 1185:

18 ‘‘§ 1185. Effect of Federal legislation and Federal,

19 State, and local regulations

20 ‘‘Except with respect to merger, modification of the

21 financial structure of the debtor, or the issuance or sale

22 of securities under a plan, the trustee and the debtor are

23 subject to all Federal legislation and to all Federal, State,

24 and local regulations and orders to the same extent as the

25 debtor would be if a petition commencing the case under

26 this chapter had not been filed.’’.
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1 SEC. 357. LIQUIDATION.

2 Title 11, United States Code, is amended by adding

3 new section 1186:

4 ‘‘§ 1186. Liquidation

5 ‘‘On request of a party in interest and after notice

6 and a hearing, the court may order the trustee to cease

7 the debtor’s operation and to collect and reduce to money

8 all of the property of the estate in the same manner as

9 if the case were a case under chapter 7 of this title if

10 such liquidation is in the best interest of creditors.’’.

11 TITLE IV—AMENDMENT TO

12 TITLE 28, UNITED STATES CODE

13 SEC. 401. VENUE.

14 Title 28, United States Code, is amended by adding

15 new subsection 1409(f):

16 ‘‘(f) A proceeding arising in or related to a case under

17 subchapter V of chapter 11 of title 11 regarding the debt18 or’s satisfaction of a guaranteed obligation, whether aris19 ing before or after the commencement of the case, may

20 be commenced in the district court for the district where

21 the state of Federal court sits in which the party com22 mencing such proceeding may, under applicable non-bank23 ruptcy venue provisions, have brought an action on such

24 claim, or in the district court in which such case is pend25 ing. The cross-guarantee syndicate which has entered into

26 a cross-guarantee contract in such a case shall be a party
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1 in interest in any proceeding commenced under this sub2 section.’’.

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