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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1540 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1540

  To provide for enhanced authority of the Federal Deposit Insurance 
  Corporation to act as receiver for certain affiliates of depository 
                 institutions, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 30, 2009

Mr. Corker (for himself and Mr. Warner) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
  To provide for enhanced authority of the Federal Deposit Insurance 
  Corporation to act as receiver for certain affiliates of depository 
                 institutions, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Resolution Reform Act of 2009''.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to allow the Federal Deposit Insurance Corporation (in 
        this Act referred to as the ``Corporation'') to resolve the 
        holding companies, affiliates, and subsidiaries of failed or 
        failing insured depository institutions, consistent with the 
        statutory mission of the Corporation, recognizing that 
        depository institution holding companies serve as a source of 
        strength for their subsidiary institutions, and that their 
        affiliates and subsidiaries may provide critical services for 
        such institutions; and
            (2) to provide a clear and cohesive set of rules to address 
        the increasingly complex and interreliant business structures 
        in which insured depository institutions operate in order to 
        promote efficient and economical resolution.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Affiliate.--The term ``affiliate'' has the same meaning 
        as in section 2(k) of the Bank Holding Company Act of 1956.
            (2) Bridge depository institution holding company.--The 
        term ``bridge depository institution holding company'' means a 
        new depository institution holding company organized by the 
        Corporation pursuant to section 53(b) of the Federal Deposit 
        Insurance Act.
            (3) Corporation.--The terms ``Corporation'' and ``Board'' 
        mean the Federal Deposit Insurance Corporation and the Board of 
        Directors thereof, respectively.
            (4) Covered affiliate or subsidiary.--The term ``covered 
        affiliate or subsidiary'' means any affiliate or subsidiary of 
        a depository institution holding company, or any subsidiary of 
        an insured depository institution that is a subsidiary of that 
        depository institution holding company, as to which the 
        Corporation is appointed receiver.
            (5) Covered depository institution holding company.--The 
        term ``covered depository institution holding company'' means a 
        depository institution holding company with one or more 
        affiliated or subsidiary insured depository institutions for 
        which grounds exist to appoint a receiver pursuant to section 
        11(c) of the Federal Deposit Insurance Act.
            (6) Foreign.--The term ``foreign'' means any country other 
        than the United States and includes any territory, dependency, 
        or possession of any country other than the United States.
            (7) Insured depository institution.--The term ``insured 
        depository institution'' has the same meaning as section 
        3(c)(2) of the Federal Deposit Insurance Act.

SEC. 4. HOLDING COMPANY RESOLUTION AMENDMENTS TO THE FEDERAL DEPOSIT 
              INSURANCE ACT.

    The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by adding at the end the following:

``SEC. 51. RESOLUTION OF COVERED DEPOSITORY INSTITUTION HOLDING 
              COMPANIES, AFFILIATES, AND SUBSIDIARIES.

    ``(a) In General.--Notwithstanding any other provision of Federal 
or State law, except section 52(c), it shall be the responsibility of 
the Corporation to resolve depository institution holding companies of 
failed or failing insured depository institutions and the affiliates 
and subsidiaries of a depository institution holding company, including 
any subsidiary of an insured depository institution that is a 
subsidiary of the depository institution holding company, using the 
powers and authorities conferred upon it by this Act.
    ``(b) Definitions.--For purposes of this section and sections 52 
and 53, the following definitions shall apply:
            ``(1) Bridge depository institution holding company.--The 
        term `bridge depository institution holding company' means a 
        new depository institution holding company organized by the 
        Corporation pursuant to section 53(b).
            ``(2) Covered affiliate or subsidiary.--The term `covered 
        affiliate or subsidiary' means any affiliate or subsidiary of a 
        depository institution holding company, or any subsidiary of an 
        insured depository institution that is a subsidiary of that 
        depository institution holding company, as to which the 
        Corporation is appointed receiver under section 52.
            ``(3) Covered depository institution holding company.--The 
        term `covered depository institution holding company' means a 
        depository institution holding company with one or more 
        affiliated or subsidiary insured depository institutions for 
        which grounds exist to appoint a receiver pursuant to section 
        11(c).
            ``(4) Functionally regulated affiliate or subsidiary.--The 
        term `functionally regulated affiliate or subsidiary' means any 
        company--
                    ``(A) that is not a depository institution holding 
                company or a depository institution; and
                    ``(B) that is--
                            ``(i) a broker or dealer that is registered 
                        under the Securities Exchange Act of 1934;
                            ``(ii) a registered investment adviser, 
                        properly registered by or on behalf of either 
                        the Securities and Exchange Commission in 
                        accordance with the Investment Advisers Act of 
                        1940, or any State, with respect to the 
                        investment advisory activities of such 
                        investment adviser and activities incidental to 
                        such investment advisory activities;
                            ``(iii) an investment company that is 
                        registered under the Investment Company Act of 
                        1940;
                            ``(iv) an insurance company that is subject 
                        to supervision by a State insurance regulator, 
                        with respect to the insurance activities of the 
                        insurance company and activities incidental to 
                        such insurance activities; or
                            ``(v) an entity that is subject to 
                        regulation by the Commodity Futures Trading 
                        Commission, with respect to the commodities 
                        activities of such entity and activities 
                        incidental to such commodities activities.
            ``(5) Functional regulator.--The term `functional 
        regulator' means the Federal or State regulator responsible for 
        regulating the types of activities engaged in by the depository 
        institution holding company, its subsidiary institutions, or 
        other affiliates and subsidiaries. The `functional regulators' 
        are--
                    ``(A) the Securities and Exchange Commission, if 
                the depository institution holding company, any 
                subsidiary institution, or other affiliate thereof, is 
                a broker or dealer registered with the Commission under 
                section 15(b) of the Securities Exchange Act of 1934 
                (15 U.S.C. 78o(b)) in conjunction with the authorities 
                granted to the Securities Investor Protection 
                Corporation, as created by the Securities Investor 
                Protection Act in resolution of brokers or dealers;
                    ``(B) the Commodity Futures Trading Commission, if 
                the depository institution holding company, its 
                subsidiary institution, or other affiliate thereof, is 
                a futures commission merchant or a commodity pool 
                operator registered with the Commodity Futures Trading 
                Commission under the Commodity Exchange Act; and
                    ``(C) a State insurance commission or other board 
                or authority, if the depository institution holding 
                company, or an affiliate or subsidiary thereof, is an 
                insurance company.

``SEC. 52. APPOINTMENT OF THE CORPORATION AS RECEIVER.

    ``(a) Depository Institution Holding Companies.--
            ``(1) In general.--Notwithstanding any other provision of 
        Federal law, the law of any State, or the constitution of any 
        State, and subject to subsection (c), the Corporation shall 
        accept appointment, and shall act as the receiver of a covered 
        depository institution holding company upon such appointment, 
        in the manner provided in paragraph (2) or (3), if the 
        Corporation determines, in its sole discretion, that such 
        appointment will reduce the cost to the Deposit Insurance Fund, 
        and that grounds specified in subsection (f) exist. If the 
        Corporation determines that such appointment will not reduce 
        the cost to the Deposit Insurance Fund, the Corporation may 
        decline the appointment, as provided in subsection (c).
            ``(2) Appointment by the appropriate federal banking 
        agency.--Whenever the appropriate Federal banking agency 
        appoints a receiver for a depository institution holding 
        company, the Federal banking agency shall tender the 
        appointment to the Corporation, and the Corporation shall 
        accept such appointment, unless the Corporation declines the 
        appointment, as provided in subsection (c).
            ``(3) Appointment of the corporation by the corporation.--
        The Board of Directors may appoint the Corporation as receiver 
        of a depository institution holding company, after consultation 
        with the appropriate Federal banking agency, if the Board of 
        Directors determines that, notwithstanding the existence of 
        grounds specified in subsection (f), the appropriate Federal 
        banking agency having supervision of a covered depository 
        institution holding company has declined to appoint the 
        Corporation as receiver.
            ``(4) Functionally regulated depository institution holding 
        companies.--When the appropriate Federal banking agency 
        appoints the Corporation as receiver of a covered depository 
        institution holding company, or the Board of Directors appoints 
        the Corporation as receiver of a covered depository institution 
        holding company, the appropriate Federal banking agency or the 
        Corporation shall consult with the covered depository 
        institution holding company's functional regulator, if any.
    ``(b) Affiliates and Subsidiaries.--
            ``(1) In general.--Notwithstanding any other provision of 
        Federal law, the law of any State, or the constitution of any 
        State, and subject to paragraph (2) and subsection (c), in any 
        case in which the Corporation is appointed under this section 
        as receiver for a depository institution holding company, the 
        Corporation may appoint itself as the receiver of any affiliate 
        or subsidiary of the insured depository institution or 
        depository institution holding company that is incorporated or 
        organized under the laws of any State, if the Corporation 
        determines that such action would facilitate the orderly 
        resolution of the insured depository institution or depository 
        institution holding company, and is consistent with the 
        purposes of this Act.
            ``(2) Functionally regulated subsidiaries.--The Corporation 
        shall consult with the appropriate Federal or State functional 
        regulator when the Corporation appoints itself as the receiver 
        of any functionally regulated affiliate or subsidiary.
    ``(c) Bankruptcy or State Insurance Resolution Option.--
            ``(1) Bankruptcy grounds for declining appointment.--The 
        Corporation may decline to accept appointment for a covered 
        depository institution holding company, when, in its sole 
        discretion, the Corporation determines that the resolution of 
        that holding company would be better accomplished under title 
        11, of the United States Code, or under applicable State 
        insurance law.
            ``(2) Rulemaking required.--The Corporation shall, not 
        later than 180 days after the date of enactment of this 
        section, adopt regulations that establish criteria pursuant to 
        which the Corporation will make the determination described in 
        paragraph (1).
    ``(d) Separate Entities.--
            ``(1) In general.--Subject to paragraph (2), each separate 
        legal entity for which the Corporation is appointed receiver 
        shall constitute a separate receivership.
            ``(2) Applicability.--Paragraph (1) shall not apply to any 
        insured depository institution subsidiary for which the 
        Corporation has appointed itself as receiver.
    ``(e) Corporation Not Subject to Any Other Agency.--When acting as 
the receiver pursuant to an appointment described in subsection (a) or 
(b), the Corporation shall not be subject to the direction or 
supervision of any other agency or department of the United States or 
any State in the exercise of its rights, powers, and privileges.
    ``(f) Grounds for Appointment.--The grounds for appointing the 
Corporation as receiver of a depository institution holding company, 
affiliate, or subsidiary are that one or more grounds exist under 
section 11(c) to appoint a receiver for one or more affiliated insured 
depository institutions.
    ``(g) Termination and Exclusion of Other Actions.--The appointment 
of the Corporation as receiver for a depository institution holding 
company or an insured depository institution that is an affiliate or 
subsidiary of a depository institution holding company shall 
immediately, and by operation of law, terminate any case commenced with 
respect to the depository institution holding company or any affiliate 
or subsidiary under title 11, United States Code, or any proceeding 
under any State insolvency law with respect to the depository 
institution holding company or affiliate or subsidiary. No such case or 
proceeding may be commenced with respect to the depository institution 
holding company or any affiliate or subsidiary of the insured 
depository institution at any time while the Corporation acts as 
receiver of the depository institution holding company or any affiliate 
or subsidiary, without the written agreement of the Corporation.
    ``(h) Judicial Review.--
            ``(1) In general.--If the Corporation is appointed 
        (including the appointment of the Corporation by itself) as 
        receiver of a depository institution holding company under 
        subsection (a), the depository institution holding company may, 
        not later than 30 days thereafter, bring an action in the 
        United States district court for the judicial district in which 
        the home office of such depository institution holding company 
        is located, or in the United States District Court for the 
        District of Columbia, for an order requiring the Corporation to 
        be removed as the receiver (regardless of how such appointment 
        was made), and the court shall, upon the merits, dismiss such 
        action or direct the Corporation to be removed as the receiver.
            ``(2) Other appointment.--If the Corporation appoints 
        itself as receiver of any affiliate or subsidiary of the 
        insured depository institution or depository institution 
        holding company under subsection (b), the affiliate or 
        subsidiary of the insured depository institution or depository 
        institution holding company may, not later than 30 days 
        thereafter, bring an action in the United States district court 
        for the judicial district in which the home office of such any 
        affiliate or subsidiary of the insured depository institution 
        or depository institution holding company is located, or in the 
        United States District Court for the District of Columbia, for 
        an order requiring the Corporation to be removed as the 
        receiver, and the court shall, upon the merits, dismiss such 
        action or direct the Corporation to be removed as the receiver.

``SEC. 53. POWERS AND DUTIES OF CORPORATION AS RECEIVER.

    ``(a) Rulemaking Authority of Corporation.--The Corporation may 
prescribe such regulations as the Corporation determines appropriate 
regarding the orderly resolution and conduct of receiverships of 
covered depository institution holding companies or any affiliate or 
subsidiary, in accordance with section 52.
    ``(b) Receivership, Back-Up Examination, and Enforcement Powers.--
Except as provided in subsections (c) and (e), the Corporation shall 
have the same powers and rights to carry out its duties with respect to 
depository institution holding companies, or affiliates and 
subsidiaries, as the Corporation has under sections 8(t), 10(b), 11, 
12, 13(d), 13(e), 15, and 38, with adaptations made, in the sole 
discretion of the Corporation, that are appropriate to the differences 
in form and function among depository institution holding companies, 
insured depository institutions, and their affiliates and subsidiaries.
    ``(c) Authority To Obtain Credit.--
            ``(1) In general.--A bridge depository institution holding 
        company with respect to which the Corporation is the receiver 
        may obtain unsecured credit and issue unsecured debt.
            ``(2) Inability to obtain credit.--If a bridge depository 
        institution holding company is unable to obtain unsecured 
        credit or issue unsecured debt, the Corporation may authorize 
        the obtaining of credit or the issuance of debt by the bridge 
        depository holding company--
                    ``(A) with priority over any or all of the 
                obligations of the bridge depository holding company;
                    ``(B) secured by a lien on property of the bridge 
                depository holding company that is not otherwise 
                subject to a lien; or
                    ``(C) secured by a junior lien on property of the 
                bridge depository holding company that is subject to a 
                lien.
            ``(3) Limitation.--The Corporation may authorize the 
        obtaining of credit or the issuance of debt by a bridge 
        depository holding company that is secured by a senior or equal 
        lien on property of the bridge depository holding company that 
        is subject to a lien, only if--
                    ``(A) the bridge depository holding company is 
                unable to otherwise obtain such credit or issue such 
                debt; and
                    ``(B) there is adequate protection of the interest 
                of the holder of the lien on the property with respect 
                to which such senior or equal lien is proposed to be 
                granted.
    ``(d) Disposition of Certain Depository Institution Holding 
Companies, Affiliates, and Subsidiaries.--Notwithstanding any other 
provision of law (other than a conflicting provision of this Act), the 
Corporation, in connection with the resolution of any insured 
depository institution with respect to which the Corporation has been 
appointed as receiver, shall--
            ``(1) in the case of any depository institution holding 
        company, or a covered affiliate or subsidiary for which the 
        Corporation is appointed receiver, that is a member of the 
        Securities Investor Protection Corporation (in this section 
        referred to as `SIPC'), coordinate with SIPC in the 
        liquidation, if any, of the company, to facilitate the orderly 
        and timely payment of claims under the Securities Investor 
        Protection Act; and
            ``(2) in the case of any other depository institution 
        holding company, or covered affiliate or subsidiary, that is 
        functionally regulated, coordinate with the appropriate Federal 
        or State functional regulator in the disposition of the 
        company, to facilitate the orderly and timely payment of claims 
        under applicable guaranty plans, including State insurance 
        guaranty plans.
    ``(e) Priority of Expenses and Unsecured Claims.--
            ``(1) In general.--Allowed claims (other than secured 
        claims to the extent of any such security) against a covered 
        depository institution holding company or any covered affiliate 
        or subsidiary that are proven to the satisfaction of the 
        receiver for such covered depository institution holding 
        company, affiliate, or subsidiary shall have priority in the 
        following order:
                    ``(A) Administrative expenses of the receiver.
                    ``(B) Any obligation of the covered depository 
                institution holding company, or covered affiliate or 
                subsidiary, to the Corporation.
                    ``(C) Any general or senior liability of the 
                covered depository institution holding company, or 
                covered affiliate or subsidiary (which is not a 
                liability described in subparagraph (D) or (E)).
                    ``(D) Any obligation subordinated to general 
                creditors which is not an obligation described in 
                subparagraph (E).
                    ``(E) Any obligation to shareholders, members, 
                general partners, limited partners, or other persons 
                with interests in the equity of the covered depository 
                institution holding company, or covered affiliate or 
                subsidiary, arising as a result of their status as 
                shareholders, members, general partners, limited 
                partners, or other persons with interests in the equity 
                of the covered depository institution holding company, 
                or covered affiliate or subsidiary.
            ``(2) Creditors similarly situated.--All claimants of a 
        covered depository institution holding company, or covered 
        affiliate or subsidiary, that are similarly situated under 
        paragraph (1) shall be treated in a similar manner, except that 
        the receiver may take any action (including making payments) 
        that does not comply with this subsection, if--
                    ``(A) the Corporation determines that such action 
                is necessary to maximize the value of the assets of the 
                covered depository institution holding company, or 
                covered affiliate or subsidiary, to maximize the 
                present value return from the sale or other disposition 
                of the assets of the covered depository institution 
                holding company, or to minimize the amount of any loss 
                realized upon the sale or other disposition of the 
                assets of the covered depository holding company, or 
                covered affiliate or subsidiary; and
                    ``(B) all claimants that are similarly situated 
                under paragraph (1) receive not less than the amount 
                provided in section 11(i)(2).
    ``(f) Rule of Construction.--Nothing in the Resolution Reform Act 
is intended to supersede the administration of claims under applicable 
State laws governing insurance guaranty funds or the Securities 
Investor Protection Act of 1970.
    ``(g) Rulemaking.--The Federal Deposit Insurance Corporation shall 
conduct a rulemaking to be completed within 180 days of enactment that 
will lay out specific guidelines and priority of all secured and 
unsecured claims as well as where the resources to satisfy those that 
will be satisfied will be derived.''.

SEC. 5. OTHER SPECIFIC MODIFICATIONS TO FEDERAL DEPOSIT INSURANCE 
              CORPORATION AUTHORITY.

    (a) Recordkeeping.--Section 11(e)(8)(H) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(e)(8)(H)) is amended to read as follows:
                    ``(H) Recordkeeping.--The Corporation, after 
                consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring that any 
                insured depository institution or depository 
                institution holding company maintain such records with 
                respect to qualified financial contracts (including 
                market valuations) as the Corporation determines to be 
                necessary or appropriate to enable it to exercise its 
                rights and fulfill its obligations under this Act.''.
    (b) Golden Parachute Payments.--Section 18(k)(4)(A)(ii)(III) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(k)(4)(A)(ii)(III)) is 
amended--
            (1) by striking ``institution's'';
            (2) by inserting ``or covered company'' after ``insured 
        depository institution''; and
            (3) by inserting before the semicolon: ``, except that the 
        Corporation may define and make a determination of troubled 
        condition for any covered company that does not have an 
        appropriate Federal banking agency''.

SEC. 6. CROSS-BORDER CLAIMS.

    (a) Purpose and Scope.--
            (1) Purpose.--The purpose of this section is to provide 
        effective mechanisms for dealing with cases of cross-border 
        insolvency, with the objectives of--
                    (A) facilitating cooperation between the 
                Corporation, acting in its capacity as receiver of a 
                covered depository institution holding company or 
                covered affiliate or subsidiary of an insured 
                depository institution and the courts and other 
                authorities of foreign countries involved in cross-
                border insolvency cases; and
                    (B) facilitating the orderly resolution of insured 
                depository institutions, covered depository institution 
                holding companies, or covered affiliates or 
                subsidiaries, in receivership.
            (2) Scope.--This section applies in any case in which--
                    (A) the Corporation seeks assistance from a foreign 
                court, foreign representative, or foreign regulatory or 
                supervisory authority in connection with the resolution 
                of a depository institution holding company, or covered 
                affiliate or subsidiary thereof;
                    (B) the assistance of the Corporation is sought by 
                a foreign court, foreign representative, or foreign 
                regulatory or supervisory authority in connection with 
                a foreign proceeding or with a resolution under this 
                Act; or
                    (C) a foreign proceeding and a case under this Act 
                with respect to the same covered depository institution 
                holding company, or covered affiliate or subsidiary, 
                are pending concurrently.
    (b) Coordination and Cooperation.--In regard to matters of 
insolvency and insolvency proceedings, the Corporation may--
            (1) cooperate and coordinate with foreign courts, foreign 
        representatives, and foreign regulatory or supervisory 
        authorities, either directly or through a designated 
        representative, as the Corporation deems appropriate; and
            (2) communicate directly with, or to request information or 
        assistance directly from, foreign courts, foreign 
        representatives, and foreign regulatory or supervisory 
        authorities.
    (c) Claims by Foreign Representatives.--The Corporation, in its 
capacity as receiver of a covered depository institution holding 
company, or covered affiliate or subsidiary, may allow a foreign 
administrator or representative to file claims.
    (d) Coordination of Payments.--
            (1) Limitation.--Notwithstanding any other provision of 
        Federal law, a creditor who has received payment with respect 
        to a claim in a foreign insolvency proceeding may not receive a 
        payment for the same claim brought in a United States 
        insolvency proceeding under this Act against the same 
        depository institution, depository institution holding company, 
        or covered affiliate or subsidiary.
            (2) Subrogation.--A claimant in an insolvency proceeding 
        under this Act that has received payment on its claim shall 
        agree to the subrogation of the Corporation, to the extent of 
        such payment, to any claim or right of claim, arising from the 
        same loss.
    (e) Public Policy Exemption.--Nothing in this section prevents the 
Corporation from refusing to take an action governed by this section if 
the action would be contrary to the public policy of the United States 
or if it would increase losses to the Deposit Insurance Fund.

SEC. 7. MISCELLANEOUS PROVISIONS.

    (a) Bankruptcy Code Amendments.--Section 109(b)(2) of title 11, 
United States Code, is amended by inserting before ``homestead 
association'' the following: ``covered depository institution holding 
company and covered affiliate or subsidiary, as those terms are defined 
in section 51(b) of the Federal Deposit Insurance Act (except if the 
Federal Deposit Insurance Corporation exercises its authority under 
section 52(c) of that Act),''.
    (b) Authority To Appoint Receiver.--
            (1) Federal reserve act.--Section 11(o) of the Federal 
        Reserve Act (12 U.S.C. 248(o)) is amended--
                    (A) by striking ``The Board'' and inserting the 
                following:
            ``(1) State member banks.--The Board''; and
                    (B) by adding at the end the following:
            ``(2) Covered depository institution holding companies.--
        The Board may appoint the Federal Deposit Insurance Corporation 
        as receiver for a covered depository institution holding 
        company (as those terms are defined in section 51(b) of the 
        Federal Deposit Insurance Act) under section 52 of the Federal 
        Deposit Insurance Act.''.
            (2) Home owners' loan act.--Section 10 of the Home Owners' 
        Loan Act (12 U.S.C. 1467a) is amended--
                    (A) by redesignating subsection (t) as subsection 
                (u); and
                    (B) by inserting after subsection (s) the 
                following:
    ``(t) Appointment of FDIC as Receiver.--The Director may appoint 
the Federal Deposit Insurance Corporation as receiver for a covered 
depository institution holding company (as those terms are defined in 
section 51(b) of the Federal Deposit Insurance Act) under section 52 of 
the Federal Deposit Insurance Act.''.
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