I 

111TH CONGRESS 

1ST SESSION H. R. 384 

To reform the Troubled Assets Relief Program of the Secretary of the 

Treasury and ensure accountability under such Program. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 9, 2009 

Mr. FRANK of Massachusetts introduced the following bill; which was referred 

to the Committee on Financial Services, and in addition to the Committees on Ways and Means and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To reform the Troubled Assets Relief Program of the Secretary of the Treasury and ensure accountability under 

such Program. 

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 ‘‘TARP Reform and Accountability Act of 2009’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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TITLE I—MODIFICATIONS TO TARP AND TARP OVERSIGHT 

Sec. 101. New conditionality for TARP-assisted institutions. 

Sec. 102. Executive compensation and corporate governance. 

Sec. 103. New lending by insured depository institutions that is attributable to 

TARP investments and assistance. 

Sec. 104. Other protections for the taxpayer. 

Sec. 105. Availability of TARP funds to smaller community institutions. 

Sec. 106. Increase in size and authority of Financial Stability Oversight Board. 

Sec. 107. Clarification. 

TITLE II—FORECLOSURE RELIEF 

Sec. 201. TARP foreclosure mitigation plan and implementation. 

Sec. 202. Elements of plan. 

Sec. 203. Program alternatives. 

Sec. 204. Systematic foreclosure prevention and mortgage modification plan established. 

Sec. 204. Modification of plan. 

Sec. 205. Servicer safe harbor. 

Sec. 206. Report by Congressional Oversight Panel. 

TITLE III—AUTO INDUSTRY FINANCING AND RESTRUCTURING 

Sec. 301. Short title. 

Sec. 302. Direct loan provisions. 

TITLE IV—CLARIFICATION OF AUTHORITY 

Sec. 401. Consumer loans. 

Sec. 402. Municipal securities. 

Sec. 403. Commercial real estate loans. 

TITLE V—HOPE FOR HOMEOWNERS PROGRAM IMPROVEMENTS 

Sec. 501. Changes to HOPE for Homeowners Program. 

Sec. 502. Funding of increased HOPE for Homeowners Program credit subsidy 

costs. 

TITLE VI—HOME BUYER STIMULUS 

Sec. 601. Home buyer stimulus program. 

TITLE VII—FDIC PROVISIONS 

Sec. 701. Permanent increase in deposit insurance. 

Sec. 702. Extension of restoration plan period. 

Sec. 703. Borrowing authority. 

Sec. 704. Systemic risk special assessments. 


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1 TITLE I—MODIFICATIONS TO 

2 TARP AND TARP OVERSIGHT 

3 SEC. 101. NEW CONDITIONALITY FOR TARP-ASSISTED IN4 STITUTIONS. 

5 (a) IN GENERAL.—Section 113 of the Emergency 

6 Economic Stabilization Act of 2008 (12 U.S.C. 5223) is 

7 amended by adding at the end the following new sub8 sections: 

9 ‘‘(e) REPORTING, MONITORING AND ACCOUNT10 ABILITY.— 

11 ‘‘(1) PERIODIC PUBLIC REPORTING ON USE OF

12 ASSISTANCE.—The Secretary shall require any as13 sisted institution that became an assisted institution 

14 on or after October 3, 2008, to publicly report, not 

15 less than quarterly, on such institution’s use of the 

16 assistance . 

17 ‘‘(2) ADDITIONAL REQUIREMENTS AND COMPLI18 ANCE.—The Secretary— 

19 ‘‘(A) may establish additional reporting 

20 and information requirements for any direct or 

21 indirect recipient of any assistance or benefit at 

22 any time on or after October 3, 2008, that in23 volves the obligation or expenditure, loan, or in24 vestment of funds available to the Secretary 

25 under this title; and 


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1 ‘‘(B) shall establish appropriate mecha2 nisms to ensure appropriate use and compliance 

3 with all terms of any use of funds made avail4 able under this title. 

5 ‘‘(3) CONSULTATION.—The Secretary shall con6 sult with the appropriate Federal banking agencies 

7 in establishing the reporting requirements under this 

8 subsection that are applicable to insured depository 

9 institutions. 

10 ‘‘(f) USE AND ACCOUNTABILITY FOR USE OF

11 FUNDS.— 

12 ‘‘(1) INSURED DEPOSITORY INSTITUTION.— 

13 ‘‘(A) INVESTMENT IN OR OTHER INJEC14 TION OF FUNDS INTO A DEPOSITORY INSTITU15 TION.—As a condition for the provision of any 

16 investment in the capital or assets of, or any 

17 other provision of assistance to or for the ben18 efit of, any insured depository institution, the 

19 Secretary shall incorporate into the agreement 

20 for such investment or assistance an agreement 

21 between the depository institution and the ap22 propriate Federal banking agency with respect 

23 to such institution on the manner in which the 

24 funds are to be used and benchmarks that the 

25 institution is required to meet in using the 


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1 funding so as to advance the purposes of this 

2 Act to strengthen the soundness of the financial 

3 system and the availability of credit to the econ4 omy. 

5 ‘‘(B) EXAMINATIONS.—In the case of any 

6 assisted insured depository institution that be7 came an assisted institution on or after October 

8 3, 2008, the appropriate Federal banking agen9 cy shall specifically review at least once annu10 ally the use, by the institution, of funds made 

11 available under this Act and compliance by the 

12 institution with the requirements established by 

13 or pursuant to this title or by agreement of the 

14 institution with the Secretary or the appro15 priate Federal banking agency, including execu16 tive compensation and any other specific agree17 ment terms. Such review may be conducted in 

18 connection with the regular full-site examina19 tion, or any other examination. 

20 ‘‘(C) COMPLIANCE PROCEDURES RE21 QUIRED.—Each appropriate Federal banking 

22 agency shall prescribe regulations requiring as23 sisted insured depository institutions to estab24 lish and maintain procedures designed to assure 

25 and monitor the compliance of such depository 


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1 institutions with the requirements established 

2 by or pursuant to this title or by agreement of 

3 the institution with the Secretary or such agen4 cy. 

5 ‘‘(2) USE OF TARP FUNDS FOR MERGERS OR

6 ACQUISITIONS.—Effective as of the date of the en7 actment of the TARP Reform and Accountability 

8 Act of 2009, no assisted institution that became an 

9 assisted institution at any time on or after October 

10 3, 2008, may merge or consolidate with any insured 

11 depository institution or, either directly or indirectly, 

12 acquire the assets of, or assume liability to pay any 

13 deposits made in, any insured depository institution, 

14 and no Federal banking agency may approve any 

15 such action under section 18(c) of the Federal De16 posit Insurance Act, while any of such assistance is 

17 outstanding unless, prior to the approval of such 

18 agency, the Secretary has determined in consultation 

19 with any relevant Federal banking agencies that— 

20 ‘‘(A) such action will reduce risk to the 

21 taxpayer; or 

22 ‘‘(B) the transaction could have been con23 summated without funds provided under this 

24 title. 


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1 ‘‘(3) NONDEPOSITORY INSTITUTIONS.—In the 

2 case of any assisted institution that became an as3 sisted institution on or after October 3, 2008, and 

4 is not described in and subject to paragraph (1), the 

5 Secretary shall establish such reporting requirements 

6 and require any other conditions or agreements no 

7 less stringent than those applicable to assisted in8 sured depository institutions, including requirements 

9 to conduct examinations of the books, affairs, and 

10 procedures of any such financial institution by the 

11 Secretary or by delegation to the Board. 

12 ‘‘(g) NO IMPEDIMENT TO WITHDRAWAL.—Subject to 

13 consultation with the appropriate Federal banking agen14 cies, the Secretary may permit an insured depository insti15 tution to repay any assistance previously provided under 

16 this title to such depository institution without regard to 

17 whether the depository institution has replaced such funds 

18 from any other source.’’. 

19 (b) DEFINITIONS.—Section 3 of the Emergency Eco20 nomic Stabilization Act of 2008 (12 U.S.C. 5202) is 

21 amended by adding at the end the following new para22 graphs: 

23 ‘‘(10) DEFINITIONS RELATING TO INSURED DE24 POSITORY INSTITUTIONS.—The terms ‘depository in25 stitution’, ‘insured depository institution’, ‘Federal 


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1 banking agency’ and ‘appropriate Federal banking 

2 agency’ have the same meanings as in section 3 of 

3 the Federal Deposit Insurance Act. 

4 ‘‘(11) ASSISTED INSTITUTION.—The terms ‘as5 sisted institution’ or ‘assisted insured depository in6 stitution’ means any such institution that receives, 

7 directly or indirectly, any assistance or benefit that 

8 involves the obligation or expenditure, loan, or in9 vestment of funds available to the Secretary under 

10 title I.’’. 

11 SEC. 102. EXECUTIVE COMPENSATION AND CORPORATE 

12 GOVERNANCE. 

13 (a) IN GENERAL.—Section 111 of the Emergency 

14 Economic Stabilization Act of 2008 (12 U.S.C. 5221) is 

15 amended by adding at the end the following new sub16 sections: 

17 ‘‘(e) ACROSS-THE-BOARD EXECUTIVE COMPENSA18 TION AND CORPORATE GOVERNANCE REQUIREMENTS.— 

19 ‘‘(1) STANDARDS REQUIRED.—Effective as of 

20 the date of the enactment of the TARP Reform and 

21 Accountability Act of 2009 and notwithstanding any 

22 provision of, and in addition to any requirement of 

23 subsection (a), (b), or (c) (other than the definitions 

24 in subsection (b)(3)), the Secretary shall require any 

25 assisted institution to meet standards for executive 


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1 compensation and corporate governance while any 

2 assistance under this title is outstanding. 

3 ‘‘(2) SPECIFIC REQUIREMENTS.—The standards 

4 established under paragraph (1) shall include— 

5 ‘‘(A) limits on compensation that exclude 

6 incentives for senior executive officers of an as7 sisted institution which received assistance 

8 under this title to take unnecessary and exces9 sive risks that threaten the value of such insti10 tution during the period that any assistance 

11 under this title is outstanding; 

12 ‘‘(B) a provision for the recovery by such 

13 institution of any bonus or incentive compensa14 tion paid to a senior executive officer based on 

15 statements of earnings, gains, or other criteria 

16 that are later found to be materially inaccurate; 

17 ‘‘(C) a prohibition on such institution mak18 ing any golden parachute payment to a senior 

19 executive officer during the period that the as20 sistance under this title is outstanding; 

21 ‘‘(D) a prohibition on such institution pay22 ing or accruing any bonus or incentive com23 pensation, during the period that the assistance 

24 under this title is outstanding, to the 25 most 

25 highly-compensated employees; and 


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1 ‘‘(E) a prohibition on any compensation 

2 plan that would encourage manipulation of such 

3 institution’s reported earnings to enhance the 

4 compensation of any of its employees. 

5 ‘‘(3) DIVESTITURE.—During the period in 

6 which any assistance under this title to any assisted 

7 institution is outstanding, the institution may not 

8 own or lease any private passenger aircraft, or have 

9 any interest in such aircraft, except that such insti10 tution shall not be treated as being in violation of 

11 this provision with respect to any aircraft or interest 

12 in any aircraft that was owned or held by the insti13 tution immediately before receiving such assistance, 

14 as long as the recipient demonstrates to the satisfac15 tion of the Secretary that all reasonable steps are 

16 being taken to sell or divest such aircraft or interest. 

17 ‘‘(4) APPLICABILITY TO PRIOR ASSISTANCE.— 

18 Notwithstanding any limitations included in sub19 section (a), (b), or (c) with regard to applicability, 

20 the Secretary may apply the requirements of and the 

21 standards established under this subsection to any 

22 assisted institution that received any assistance 

23 under this title on or after the date of the enactment 

24 of the TARP Reform and Accountability Act of 

25 2009. 


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1 ‘‘(f) BOARD OBSERVER.—The Secretary may require 

2 the attendance of an observer delegated by the Secretary, 

3 on behalf of the Secretary, to attend the meetings of the 

4 board of directors of any assisted institution that became 

5 an assisted institution on or after October 3, 2008, and 

6 any committees of such board of directors, while any as7 sistance under this title is outstanding.’’. 

8 (b) REPEAL OF DE MINIMIS EXCEPTION.—Section 

9 111(c) of the Emergency Economic Stabilization Act of 

10 2008 (12 U.S.C. 5221(c)) is amended by striking ‘‘and 

11 only where such purchases per financial institution in the 

12 aggregate exceed $300,000,000 (including direct pur13 chases),’’. 

14 SEC. 103. NEW LENDING BY INSURED DEPOSITORY INSTI15 TUTIONS THAT IS ATTRIBUTABLE TO TARP 

16 INVESTMENTS AND ASSISTANCE. 

17 Section 7(a) of the Federal Deposit Insurance Act 

18 (U.S.C. 1817(a)) is amended by adding at the end the 

19 following new paragraph: 

20 ‘‘(12) LENDING INCREASES ATTRIBUTABLE TO

21 INVESTMENT OR OTHER ASSISTANCE UNDER THE

22 TROUBLED ASSETS RELIEF PROGRAM.— 

23 ‘‘(A) IN GENERAL.—Each report of condi24 tion filed pursuant to this subsection by an in25 sured depository institution which received an 


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1 investment or other assistance under the Trou2 bled Assets Relief Program established by the 

3 Emergency Economic Stabilization Act of 2008 

4 or section 136(d) of the Energy Independence 

5 and Security Act of 2007 shall report the 

6 amount of any increase in new lending in the 

7 period covered by such report (or the amount of 

8 any reduction in any decrease in new lending) 

9 that is attributable to such investment or as10 sistance, to the extent possible. 

11 ‘‘(B) ALTERNATIVE MEASURE.—If an in12 sured depository institution that is subject to 

13 subparagraph (A) cannot accurately quantify 

14 the effect that an investment or other assist15 ance under such Troubled Assets Relief Pro16 gram has had on new lending by the institution, 

17 the insured depository institution shall report 

18 the total amount of the increase in new lending, 

19 if any, in the period covered by such report. 

20 ‘‘(C) DESIGNATION OF REPORTING RE21 QUIREMENT.—The Federal banking agencies 

22 and the Secretary of the Treasury shall specify 

23 the form, content, and manner of reports re24 quired under this paragraph.’’. 


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1 SEC. 104. OTHER PROTECTIONS FOR THE TAXPAYER. 

2 (a) WARRANT REQUIREMENTS.—Subsection (d) of 

3 section 113 of the Emergency Economic Stabilization Act 

4 of 2008 (12 U.S.C. 5223(d)) is amended by striking para5 graph (1) and inserting the following new paragraph: 

6 ‘‘(1) WARRANTS.— 

7 ‘‘(A) IN GENERAL.—The Secretary may 

8 not provide any assistance under this title to 

9 any institution, unless the Secretary, receives 

10 from the institution— 

11 ‘‘(i) in the case of an institution the 

12 securities of which are traded on a national 

13 securities exchange, a warrant giving the 

14 right to the Secretary to receive nonvoting 

15 common stock or preferred stock in such 

16 institution, or voting stock, with respect to 

17 which the Secretary agrees not to exercise 

18 voting power, whichever the Secretary de19 termines appropriate; or 

20 ‘‘(ii) in the case of an institution 

21 other than one described in clause (i), a 

22 warrant for common or preferred stock, or 

23 an instrument that is the economic equiva24 lent (as determined by the Secretary) of 

25 such a warrant in the financial institution 

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1 ing company of the financial institution, or 

2 any company that controls a majority 

3 stake in the financial institution, whichever 

4 the Secretary determines appropriate. 

5 ‘‘(B) AMOUNT.— 

6 ‘‘(i) IN GENERAL.—The warrants or 

7 instruments described in subparagraph (A) 

8 with respect to an assisted institution shall 

9 have a value equal to 15 percent of the ag10 gregate amount of all assistance provided 

11 to the institution under this title. Such 

12 warrants or instruments shall entitle the 

13 Government to purchase— 

14 ‘‘(I) nonvoting common stock, up 

15 to a maximum amount of 15 percent 

16 of the issued and outstanding common 

17 stock of — 

18 ‘‘(aa) the assisted institu19 tion; or 

20 ‘‘(bb) in the case of an as21 sisted institution, the securities 

22 of which are not traded on a na23 tional securities exchange, a hold24 ing company or company that 

25 controls a majority of the stock 


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1 thereof (in this section referred 

2 to as the ‘warrant common’); and 

3 ‘‘(II) preferred stock having an 

4 aggregate liquidation preference equal 

5 to 15 percent of such aggregate loan 

6 amount, less the value of common 

7 stock available for purchase under the 

8 warrant common (in this section re9 ferred to as the ‘warrant preferred’). 

10 ‘‘(ii) COMMON STOCK WARRANT

11 PRICE.—The exercise price on a warrant 

12 or instrument described in paragraph (1) 

13 shall be— 

14 ‘‘(I) the 15-day trailing average, 

15 as of 1 day prior to the date on which 

16 any commitment to provide assistance 

17 under this title was entered into, of 

18 the market price of the common stock 

19 of the assisted institution; or 

20 ‘‘(II) in the case of an assisted 

21 institution, which is a mutual associa22 tion or the securities of which are not 

23 traded on a national securities ex24 change, the economic equivalent of the 


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1 market price described in clause (I), 

2 as determined by the Secretary. 

3 ‘‘(iii) TERMS OF PREFERRED STOCK

4 WARRANT.— 

5 ‘‘(I) IN GENERAL.—The initial 

6 exercise price for the preferred stock 

7 warrant shall be $0.01 per share or 

8 such greater amount as the corporate 

9 charter may require as the par value 

10 per share of the warrant preferred. 

11 The Government shall have the right 

12 to immediately exercise the warrants. 

13 ‘‘(II) REDEMPTION.—The war14 rant preferred may be redeemed at 

15 any time after exercise of the pre16 ferred stock warrant at 100 percent of 

17 its issue price, plus any accrued and 

18 unpaid dividends.’’. 

19 (b) REPEAL OF CERTAIN EXCEPTION.—Section 

20 113(d)(3) of the Emergency Economic Stabilization Act 

21 of 2008 (12 U.S.C. 5223(d)(3)) is amended by striking 

22 subparagraph (A). 

23 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

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1 tion Act of 2008 (12 U.S.C. 2553(d)) is amended by strik2 ing subparagraph (E). 

3 SEC. 105. AVAILABILITY OF TARP FUNDS TO SMALLER COM4 MUNITY INSTITUTIONS. 

5 (a) PROMPT ACTION.—The Secretary shall promptly 

6 take all necessary actions to make available funds under 

7 title I of the Emergency Economic Stabilization Act of 

8 2008 to smaller community financial institutions. 

9 (b) COMPARABLE TERMS.—If any institution be10 comes an assisted institution after the date of the enact11 ment of this Act, such funding for depository institutions 

12 that— 

13 (1) have submitted applications on which no ac14 tion has been taken, such as institutions that are C 

15 corporations (including privately held institutions) 

16 and community development financial institutions; 

17 or 

18 (2) are of a type for which the Secretary has 

19 not yet established an application deadline or for 

20 which any such deadline has not yet occurred as of 

21 the date of the enactment of this Act, such as insti22 tutions that are non-stock corporations, S-corpora23 tions, mutually-owned insured depository institutions 

24 (as defined in section 3 of the Federal Deposit In25 surance Act), 


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1 shall receive such funding on terms comparable to the 

2 terms applicable to institutions that received funding prior 

3 to the date of the enactment of this Act. 

4 (c) DEFINITIONS.—For purposes of this section, the 

5 terms ‘‘S Corporation’’ and ‘‘C Corporation’’ shall have 

6 the same meaning given to those terms in section 1361(a) 

7 of the Internal Revenue Code of 1986. 

8 SEC. 106. INCREASE IN SIZE AND AUTHORITY OF FINAN9 CIAL STABILITY OVERSIGHT BOARD. 

10 (a) AUTHORITY.—Section 104 of the Emergency 

11 Economic Stabilization Act of 2008 (12 U.S.C. 2514) is 

12 amended— 

13 (1) by redesignating subsections (g) and (h) as 

14 subsections (h) and (i), respectively; and 

15 (2) by inserting after subsection (f) the fol16 lowing new subsection: 

17 ‘‘(g) REVIEW AND DECISIONMAKING.—After con18 ducting any review under this section of a policy deter19 mination made by the Secretary, the Financial Stability 

20 Oversight Board may overturn any such policy determination by a 2 21 ⁄3 vote of all members of such board.’’. 

22 (b) APPOINTMENT OF 3 ADDITIONAL MEMBERS.— 

23 Section 104(b) of the Emergency Economic Stabilization 

24 Act of 2008 (12 U.S.C. 2514(b)) is amended— 


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1 (1) by striking ‘‘and’’ at the end of paragraph 

2 (4); 

3 (2) by striking the period at the end of para4 graph (5) and inserting a semicolon; and 

5 (3) by adding at the end the following new 

6 paragraphs: 

7 ‘‘(6) the Chairperson of the Board of Directors 

8 of the Federal Deposit Insurance Corporation; and 

9 ‘‘(7) 2 members appointed by the President, by 

10 and with the consent of the Senate, from among in11 dividuals who are not officers or employees of the 

12 United States Government.’’. 

13 SEC. 107. CLARIFICATION. 

14 Section 101 of the Emergency Economic Stabilization 

15 Act of 2008 (12 U.S.C. 2514(b)) is amended by adding 

16 at the end the following new subsection: 

17 ‘‘(f) CLARIFICATION.—Any provision of capital to, 

18 purchase of equity in, or assistance provided to any insti19 tution under this title shall be considered to be a purchase 

20 of troubled assets for purposes of this title.’’. 


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1 TITLE II—FORECLOSURE 

2 RELIEF 

3 SEC. 201. TARP FORECLOSURE MITIGATION PLAN AND IM4 PLEMENTATION. 

5 (a) PLAN REQUIRED.—Notwithstanding any provi6 sion of title I of the Emergency Economic Stabilization 

7 Act of 2008, none of the funds otherwise available to the 

8 Secretary of the Treasury (in this title referred to as the 

9 ‘‘Secretary’’) pursuant to section 115(a)(3) of such Act 

10 shall be available to the Secretary after March 15, 2009, 

11 unless a comprehensive plan to prevent and mitigate fore12 closures on residential properties, in accordance with the 

13 requirements of this title, has been developed by the Sec14 retary and approved by the Financial Stability Oversight 

15 Board by such date. 

16 (b) COMMITMENT OF RESOURCES.—The comprehen17 sive plan established pursuant to subsection (a) shall re18 quire the commitment of funds made available to the Sec19 retary under title I of the Emergency Economic Stabiliza20 tion Act of 2008 in an amount up to $100,000,000,000, 

21 but in no case less than $40,000,000,000. 

22 (c) IMPLEMENTATION REQUIRED.—The Secretary 

23 shall begin committing funds available to the Secretary 

24 under title I of the Emergency Economic Stabilization Act 


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1 of 2008 to implement the comprehensive plan established 

2 pursuant to subsection (a) by not later than April 1, 2009. 

3 (d) CERTIFICATION.—If by May 1, 2009, the Sec4 retary does not commit more than the minimum of 

5 $40,000,000,000 as required under subsection (b), the 

6 Secretary shall certify to the Congress, no later than May 

7 15, 2009, the specific reasons that such additional funds 

8 have not been committed. 

9 SEC. 202. ELEMENTS OF PLAN. 

10 (a) REQUIRED ELEMENTS.—The comprehensive plan 

11 established pursuant to section 201(a) shall comply with 

12 the following requirements: 

13 (1) OWNER-OCCUPIED RESIDENCES ONLY.— 

14 The programs implemented under the plan shall pre15 vent and mitigate foreclosures specifically on owner16 occupied residential properties. 

17 (2) LEVERAGING OF PRIVATE CAPITAL.—The 

18 plan shall leverage private capital to the maximum 

19 extent possible consistent with the purpose of pre20 venting and mitigating foreclosures on such prop21 erties. 

22 (3) USE OF PROGRAM ALTERNATIVES.—The ac23 tions to be taken under the plan shall consist of one, 

24 or a combination of more than one, of the program 

25 alternatives set forth in section 203. 


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1 (b) CONCENTRATIONS OF FORECLOSURES.—The 

2 comprehensive plan established pursuant to section 201(a) 

3 may include provisions designed to prevent and mitigate 

4 foreclosures on residential properties located in areas that 

5 are most seriously affected by such foreclosures. 

6 SEC. 203. PROGRAM ALTERNATIVES. 

7 The program alternatives set forth in this section are 

8 as follows: 

9 (1) SYSTEMATIC LOAN MODIFICATION PRO10 GRAM.—The systematic foreclosure prevention and 

11 mortgage modification program under section 204. 

12 (2) REDUCTION OF HOPE FOR HOMEOWNERS

13 PROGRAM COSTS.—A program under which the Sec14 retary— 

15 (A) provides coverage for fees under the 

16 HOPE for Homeowners Program under section 

17 257 of the National Housing Act (12 U.S.C. 

18 1715z–23), as amended by title V of this Act; 

19 or 

20 (B) ensures the affordability of interest 

21 rates of mortgages insured under such Pro22 gram. 

23 (3) BUY-DOWN OF SECOND LIEN MORT24 GAGES.—A program under which the Secretary 

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1 tial properties a direct mortgage loan the proceeds 

2 of which shall be used only to reduce the out3 standing debt of such owner under an existing sec4 ond lien mortgage on such residential property, for 

5 the purpose of facilitating loan modification, subject 

6 to such reductions in the principal of such existing 

7 second lien mortgages as the Secretary may require. 

8 (4) SERVICER INCENTIVES AND ASSISTANCE.— 

9 A program under which the Secretary may make 

10 payments to servicers who implement modifications 

11 to mortgages that result in mortgages that meet 

12 such requirements as the Secretary shall establish. 

13 (5) LOAN PURCHASES.—A program under 

14 which the Secretary, or one or more entities that the 

15 Secretary, in consultation with the Secretary of 

16 Housing and Urban Development, enters into a con17 tract with to carry out the program under this para18 graph, which may include the Federal Deposit Insur19 ance Corporation and entities selected as contractors 

20 under section 107 of the Emergency Economic Sta21 bilization Act of 2008, purchases whole loans for the 

22 purpose of modifying or refinancing the loans. 


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1 SEC. 204. SYSTEMATIC FORECLOSURE PREVENTION AND 

2 MORTGAGE MODIFICATION PLAN ESTAB3 LISHED. 

4 (a) IN GENERAL.—The systematic foreclosure pre5 vention and mortgage modification program under this 

6 section shall be a program established by the Secretary, 

7 in consultation with the Chairperson of the Board of Di8 rectors of the Federal Deposit Insurance Corporation and 

9 the Secretary of Housing and Urban Development, that— 

10 (1) provides lenders and loan servicers with cer11 tain compensation to cover administrative costs for 

12 each loan modified according to the required stand13 ards; and 

14 (2) provides loss sharing or guarantees for cer15 tain losses incurred if a modified loan should subse16 quently re-default. 

17 (b) PROGRAM ADMINISTRATION.—The Secretary, in 

18 consultation with the Secretary of Housing and Urban De19 velopment, may contract with one or more entities, includ20 ing the Federal Deposit Insurance Corporation and enti21 ties selected as contractors under section 107 of the Emer22 gency Economic Stabilization Act of 2008, to conduct the 

23 program activities required under the program under this 

24 section. 


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1 (c) PROGRAM COMPONENTS.—The program estab2 lished under subsection (a) may include the following com3 ponents: 

4 (1) ELIGIBLE BORROWERS.—The program shall 

5 be limited to loans secured by owner-occupied prop6 erties. 

7 (2) EXCLUSION FOR EARLY PAYMENT DE8 FAULT.—To promote sustainable mortgages, loss 

9 sharing or guarantees shall be available only after 

10 the borrower has made a specified minimum number 

11 of payments on the modified mortgage. 

12 (3) STANDARD NET PRESENT VALUE TEST.—In 

13 order to promote consistency and simplicity in imple14 mentation and audit, the Secretary shall prescribe a 

15 standardized net present value analysis for partici16 pating lenders and servicers comparing the expected 

17 net present value of modifying past due loans com18 pared to the net present value of foreclosing on them 

19 will be applied. Under this test, standard assump20 tions shall be used to ensure that a consistent stand21 ard for affordability is provided based on a ratio of 

22 the borrower’s mortgage-related expenses for the 

23 first priority mortgage-to-gross income specified by 

24 the Secretary. 


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1 (4) SYSTEMATIC LOAN REVIEW BY PARTICI2 PATING LENDERS AND SERVICERS.—Participating 

3 lenders and servicers shall be required to undertake 

4 a systematic review of all of the loans under their 

5 management, to subject each loan to a standard net 

6 present value test to determine whether it is a suit7 able candidate for modification, and to offer modi8 fications for all loans that pass this test. The pen9 alty for failing to undertake such a systematic re10 view and to carry out modifications where they are 

11 justified would be disqualification from further par12 ticipation in the program until such a systematic 

13 program was introduced. 

14 (5) MODIFICATIONS.—Modifications may in15 clude any of the following: 

16 (A) Reduction in interest rates and fees. 

17 (B) Term or amortization extensions. 

18 (C) Forbearance or forgiveness of prin19 cipal. 

20 (D) Other similar modifications. 

21 (6) SIMPLIFIED LOSS SHARE CALCULATION.— 

22 In order to ensure the administrative efficiency and 

23 effective operation of the program, the Secretary 

24 shall define appropriate measures for loss sharing or 

25 guarantees designed to reduce the risk and loss upon 


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1 redefault of modified mortgages in order to provide 

2 adequate incentives to lenders, servicers, and inves3 tors to modify eligible mortgages and avoid unneces4 sary foreclosures. Interim modifications shall be al5 lowed. 

6 (7) DE MINIMIS TEST.—To lower administra7 tive costs, a de minimis test shall be used to exclude 

8 from loss sharing any modification that does not 

9 lower the monthly payment at least 10 percent. 

10 (8) 8 YEAR LIMIT ON LOSS SHARING PAY11 MENT.—The loss sharing guarantee shall terminate 

12 at the end of the 8-year period beginning on the 

13 date the modification was consummated. 

14 (d) ALTERNATIVE COMPONENTS.—The Secretary 

15 may, with the approval of the Board, implement fore16 closure prevention and mitigation actions other than those 

17 included pursuant to subsection (c) in the comprehensive 

18 plan initially approved by the Board pursuant to section 

19 201(a) that the Secretary believes would provide equiva20 lent or greater impact on foreclosure mitigation. 

21 (e) REGULATIONS.—The Secretary shall prescribe 

22 such regulations as may be necessary to implement this 

23 section and prevent evasions thereof. 

24 (f) TROUBLED ASSETS.—The costs incurred by the 

25 Federal Government in carrying out the loan modification 


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1 program established under this section shall be covered 

2 out of the funds made available to the Secretary of the 

3 Treasury under section 118 of the Emergency Economic 

4 Stabilization Act of 2008 or such other funds as may be 

5 available to the Secretary. 

6 (g) REPORT.—Before the end of the 6-month period 

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

8 Secretary shall submit a progress report to the Congress 

9 containing such findings and such recommendations for 

10 legislative or administrative action as the Secretary may 

11 determine to be appropriate. 

12 SEC. 204. MODIFICATION OF PLAN. 

13 (a) IN GENERAL.—If the Secretary, in consultation 

14 with the Chairperson of the Board of Directors of the Fed15 eral Deposit Insurance Corporation and the Secretary of 

16 Housing and Urban Development, determines at any time 

17 that modification of the comprehensive plan initially ap18 proved by the Board pursuant to section 201(a) (as such 

19 plan may subsequently have been modified pursuant to 

20 this section), or that modification of any component pro21 gram element, is necessary to maximize the prevention of 

22 foreclosures on residential properties or minimize costs to 

23 taxpayers of such foreclosure mitigation, the Secretary 

24 may modify the plan or program element, but only to the 

25 extent such modifications are approved by the Board. 


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1 SEC. 205. SERVICER SAFE HARBOR. 

2 (a) SAFE HARBOR.— 

3 (1) LOAN MODIFICATIONS AND WORKOUT

4 PLANS.—Notwithstanding any other provision of 

5 law, and notwithstanding any investment contract 

6 between a servicer and a securitization vehicle or in7 vestor, a servicer that acts consistent with the duty 

8 set forth in section 129A(a) of Truth in Lending Act 

9 (15 U.S.C. 1639a) shall not be liable for entering 

10 into a loan modification or workout plan with re11 spect to any such mortgage that meets all of the cri12 teria set forth in paragraph (2)(B) to— 

13 (A) any person, based on that person’s 

14 ownership of a residential mortgage loan or any 

15 interest in a pool of residential mortgage loans 

16 or in securities that distribute payments out of 

17 the principal, interest and other payments in 

18 loans on the pool; 

19 (B) any person who is obligated to make 

20 payments determined in reference to any loan 

21 or any interest referred to in subparagraph (A); 

22 or 

23 (C) any person that insures any loan or 

24 any interest referred to in subparagraph (A) 

25 under any law or regulation of the United 


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1 States or any law or regulation of any State or 

2 political subdivision of any State. 

3 (2) ABILITY TO MODIFY MORTGAGES.— 

4 (A) ABILITY.—Notwithstanding any other 

5 provision of law, and notwithstanding any in6 vestment contract between a servicer and a 

7 securitization vehicle or investor, a servicer— 

8 (i) shall not be limited in the ability 

9 to modify mortgages, the number of mort10 gages that can be modified, the frequency 

11 of loan modifications, or the range of per12 missible modifications; and 

13 (ii) shall not be obligated to repur14 chase loans from or otherwise make pay15 ments to the securitization vehicle on ac16 count of a modification, workout, or other 

17 loss mitigation plan for a residential mort18 gage or a class of residential mortgages 

19 that constitute a part or all of the mort20 gages in the securitization vehicle, 

21 if any mortgage so modified meets all of the cri22 teria set forth in subparagraph (B). 

23 (B) CRITERIA.—The criteria under this 

24 subparagraph with respect to a mortgage are as 

25 follows: 


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1 (i) Default on the payment of such 

2 mortgage has occurred or is reasonably 

3 foreseeable. 

4 (ii) The property securing such mort5 gage is occupied by the mortgagor of such 

6 mortgage. 

7 (iii) The servicer reasonably and in 

8 good faith believes that the anticipated re9 covery on the principal outstanding obliga10 tion of the mortgage under the particular 

11 modification or workout plan or other loss 

12 mitigation action will exceed, on a net 

13 present value basis, the anticipated recov14 ery on the principal outstanding obligation 

15 of the mortgage to be realized through 

16 foreclosure. 

17 (3) APPLICABILITY.—This subsection shall 

18 apply only with respect to modifications, workouts, 

19 and other loss mitigation plans initiated before Jan20 uary 1, 2012. 

21 (b) LEGAL COSTS.—If an unsuccessful action is 

22 brought against a servicer by any person described in sub23 paragraph (A), (B), or (C) of subsection (a)(1), such per24 son shall bear any actual legal costs of the servicer, includ25 ing reasonable attorney fees and expert witness fees, inVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 curred in good faith in such action, as determined by the 

2 court. 

3 (c) REPORTING.—Each servicer that engages in loan 

4 modifications or workout plans subject to the safe harbor 

5 in subsection (a) shall report to the Secretary on a regular 

6 basis regarding the extent, scope and results of the 

7 servicer’s modification activities. The Secretary shall pre8 scribe regulations specifying the form, content, and timing 

9 of such reports. 

10 (d) DEFINITION OF SECURITIZATION VEHICLES.— 

11 For purposes of this section, the term ‘‘securitization vehi12 cle’’ means a trust, corporation, partnership, limited liabil13 ity entity, special purpose entity, or other structure that— 

14 (1) is the issuer, or is created by the issuer, of 

15 mortgage pass-through certificates, participation cer16 tificates, mortgage-backed securities, or other similar 

17 securities backed by a pool of assets that includes 

18 residential mortgage loans; and 

19 (2) holds such mortgages. 

20 SEC. 206. REPORT BY CONGRESSIONAL OVERSIGHT PANEL. 

21 The Congressional Oversight Panel established by 

22 section 125 of the Emergency Economic Stabilization Act 

23 of 2008 shall submit a report to the Congress, not later 

24 than July 1, 2009, regarding— 


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1 (1) the actions taken by the Secretary pursuant 

2 to this title; 

3 (2) the impact and effectiveness of such actions 

4 on foreclosures on residential properties; and 

5 (3) the effectiveness of such actions from the 

6 standpoint of minimizing costs to the taxpayers. 

7 TITLE III—AUTO INDUSTRY FI8 NANCING AND RESTRUC9 TURING 

10 SEC. 301. SHORT TITLE. 

11 This title may be cited as the ‘‘TARP Reform and 

12 Accountability Act of 2009’’. 

13 SEC. 302. DIRECT LOAN PROVISIONS. 

14 (a) IN GENERAL.—The Emergency Economic Sta15 bilization Act of 2008 (division A of Public Law 110–343) 

16 is amended by adding at the end the following: 

17 ‘‘TITLE IV—AUTO INDUSTRY FI18 NANCING AND RESTRUC19 TURING 

20 ‘‘SEC. 401. PURPOSES. 

21 ‘‘The purposes of this title are— 

22 ‘‘(1) to clarify and confirm the authority and 

23 facilities to restore liquidity and stability to domestic 

24 vehicle manufacturers in the United States; and 


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1 ‘‘(2) to ensure that such authority and such fa2 cilities are used in a manner that— 

3 ‘‘(A) results in a viable and competitive do4 mestic automobile industry that minimizes ad5 verse effects on the environment; 

6 ‘‘(B) enhances the ability and the capacity 

7 of the domestic automobile industry to pursue 

8 the timely and aggressive production of energy9 efficient advanced technology vehicles; 

10 ‘‘(C) preserves and promotes the jobs of 

11 American workers employed directly by the do12 mestic automobile industry and in related in13 dustries; 

14 ‘‘(D) safeguards the ability of the domestic 

15 automobile industry to provide retirement and 

16 health care benefits for the industry’s retirees 

17 and their dependents; and 

18 ‘‘(E) stimulates manufacturing and sales 

19 of automobiles produced by automobile manu20 facturers in the United States. 

21 ‘‘SEC. 402. PRESIDENTIAL DESIGNATION. 

22 ‘‘(a) DESIGNATION.—The President shall designate 

23 one or more officers from the Executive Branch having 

24 appropriate expertise in such areas as economic stabiliza25 tion, financial aid to commerce and industry, financial reVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 structuring, energy efficiency, and environmental protec2 tion (who shall hereinafter in this title be collectively re3 ferred to as the ‘President’s designee’) to carry out the 

4 purposes of this title, including the facilitation of restruc5 turing necessary to achieve the long-term financial viabil6 ity of domestic automobile manufacturers, who shall serve 

7 at the pleasure of the President. 

8 ‘‘(b) ADDITIONAL PERSONS.—The President or the 

9 President’s designee may also employ, appoint, or contract 

10 with additional persons having such expertise as the Presi11 dent or the President’s designee believes will assist the 

12 Government in carrying out the purposes of this title. 

13 ‘‘(c) PARTICIPATION BY OTHER AGENCY PER14 SONNEL.—Other Federal agencies may provide, at the re15 quest of the President’s designee, staff on detail from such 

16 agencies for purposes of carrying out this title. 

17 ‘‘SEC. 403. BRIDGE FINANCING. 

18 ‘‘(a) IN GENERAL.—The President’s designee shall 

19 authorize and direct the disbursement of bridge loans or 

20 enter into commitments for lines of credit to each auto21 mobile manufacturer that submitted a plan to the Con22 gress on December 2, 2008 (hereafter in this title referred 

23 to as an ‘eligible automobile manufacturer’), and has sub24 mitted a request for such loan or commitment. Nothing 

25 in this section shall preclude the President’s designee from 


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1 authorizing and directing the disbursement of bridge loans 

2 or entering into commitments for lines of credit to other 

3 entities. 

4 ‘‘(b) AMOUNT OF ASSISTANCE.—The President’s des5 ignee shall authorize bridge loans or commitments for 

6 lines of credit to each eligible automobile manufacturer in 

7 an amount that is intended to facilitate the continued op8 erations of the eligible automobile manufacturer and to 

9 prevent the failure of the eligible automobile manufac10 turer, consistent with the plan submitted on December 2, 

11 2008, and subject to available funds. 

12 ‘‘SEC. 404. RESTRUCTURING PROGRESS ASSESSMENT. 

13 ‘‘(a) ESTABLISHMENT OF MEASURES FOR ASSESSING

14 PROGRESS.—Not later than February 1, 2009, the Presi15 dent’s designee shall determine appropriate measures for 

16 assessing the progress of each eligible automobile manu17 facturer toward transforming the plan submitted by such 

18 manufacturer to the Congress on December 2, 2008, into 

19 the restructuring plan to be submitted under section 

20 405(b). 

21 ‘‘(b) EVALUATION OF PROGRESS ON BASIS OF RE22 STRUCTURING PROGRESS ASSESSMENT MEASURES.— 

23 ‘‘(1) IN GENERAL.—The President’s designee 

24 shall evaluate the progress of each eligible auto25 mobile manufacturer toward the development of a 


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1 restructuring plan, on the basis of the restructuring 

2 progress assessment measures established under this 

3 section for such manufacturer. 

4 ‘‘(2) TIMING.—Each evaluation required under 

5 paragraph (1) for any eligible automobile manufac6 turer shall be conducted at the end of the 15-day pe7 riod beginning on the date on which the restruc8 turing progress assessment measures were estab9 lished by the President’s designee for such eligible 

10 automobile manufacturer. 

11 ‘‘SEC. 405. SUBMISSION OF PLANS. 

12 ‘‘(a) NEGOTIATED PLANS.— 

13 ‘‘(1) FACILITATION.— 

14 ‘‘(A) IN GENERAL.—Beginning on the date 

15 of any disbursement under the facility, the 

16 President’s designee shall seek to facilitate 

17 agreement on any restructuring plan to achieve 

18 and sustain the long-term viability, inter19 national competitiveness, and energy efficiency 

20 of an eligible automobile manufacturer, nego21 tiated and agreed to by representatives of inter22 ested parties (in this title referred to as a ‘ne23 gotiated plan’) with respect to any eligible auto24 mobile manufacturer. 


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1 ‘‘(B) INTERESTED PARTIES.—For pur2 poses of this section, the term ‘interested party’ 

3 shall be construed broadly so as to include all 

4 persons who have a direct financial interest in 

5 a particular automobile manufacturer, includ6 ing— 

7 ‘‘(i) employees and retirees of the eli8 gible automobile manufacturer; 

9 ‘‘(ii) trade unions; 

10 ‘‘(iii) creditors; 

11 ‘‘(iv) suppliers; 

12 ‘‘(v) automobile dealers; and 

13 ‘‘(vi) shareholders. 

14 ‘‘(2) ACTIONS OF THE PRESIDENT’S DES15 IGNEE.— 

16 ‘‘(A) IN GENERAL.—For the purpose of 

17 achieving a negotiated plan, the President’s 

18 designee may convene, chair, and conduct for19 mal and informal meetings, discussions, and 

20 consultations, as appropriate, with interested 

21 parties of an eligible automobile manufacturer. 

22 ‘‘(B) CLARIFICATION.—The Federal Advi23 sory Committee Act shall not apply with respect 

24 to any of the activities conducted or taken by 

25 the President’s designee pursuant to this title. 


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1 ‘‘(b) RESTRUCTURING PLAN.—Not later than March 

2 31, 2009, each eligible automobile manufacturer shall sub3 mit to the President’s designee a restructuring plan to 

4 achieve and sustain the long-term viability, international 

5 competitiveness, and energy efficiency of the eligible auto6 mobile manufacturer (in this title referred to as the ‘re7 structuring plan’) in accordance with this section. The 

8 President’s designee shall approve the restructuring plan 

9 if the President’s designee determines that the plan will 

10 result in— 

11 ‘‘(1) the repayment of all Government-provided 

12 financing, consistent with the terms specified in sec13 tion 408, or otherwise agreed to; 

14 ‘‘(2) the ability— 

15 ‘‘(A) to comply with applicable fuel effi16 ciency and emissions requirements; 

17 ‘‘(B) to commence domestic manufacturing 

18 of advanced technology vehicles, as described in 

19 section 136 of the Energy Independence and 

20 Security Act of 2007 (Public Law 110–140; 42 

21 U.S.C. 17013); and 

22 ‘‘(C) to produce new and existing products 

23 and capacity; 

24 ‘‘(3) the achievement of a positive net present 

25 value, using reasonable assumptions and taking into 


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1 account all existing and projected future costs, in2 cluding repayment of any financial assistance pro3 vided pursuant to this title; 

4 ‘‘(4) the ability to rationalize costs, capitaliza5 tion, and capacity with respect to the manufacturing 

6 workforce, suppliers, and dealerships of the eligible 

7 automobile manufacturer; 

8 ‘‘(5) proposals to restructure existing debt, in9 cluding, where appropriate, the conversion of debt to 

10 equity, to improve the ability of the eligible auto11 mobile manufacturer to raise private capital; and 

12 ‘‘(6) a product mix and cost structure that is 

13 competitive in the marketplace. 

14 ‘‘(c) EXTENSION OF NEGOTIATIONS AND PLAN

15 DEADLINE.—Notwithstanding the time limitations in sub16 section (b), the President’s designee, upon making a deter17 mination that the interested parties are negotiating in 

18 good faith, are making significant progress, and that an 

19 additional period of time would likely facilitate agreement 

20 on a negotiated plan, and upon notification of the Con21 gress, may extend for not longer than 30 additional days 

22 the negotiation period under subsection (b). 

23 ‘‘SEC. 406. FINANCING FOR RESTRUCTURING. 

24 ‘‘Upon approval by the President’s designee of a re25 structuring plan, the President’s designee may provide fiVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 nancial assistance to an eligible automobile manufacturer 

2 to implement the restructuring plan. 

3 ‘‘SEC. 407. DISAPPROVAL AND CALL OF LOAN. 

4 ‘‘If the President’s designee has not approved the re5 structuring plan at the expiration of the period provided 

6 in section 405 for submission and approval of the restruc7 turing plan, the President’s designee shall call the loan 

8 or cancel the commitment within 30 days, unless a re9 structuring plan is approved within that period. 

10 ‘‘SEC. 408. TERMS AND CONDITIONS. 

11 ‘‘(a) DURATION.—The duration of any loan made 

12 under this title shall be 7 years, or such period as the 

13 President’s designee may determine with respect to such 

14 loan. 

15 ‘‘(b) NO PREPAYMENT PENALTY.—A loan made 

16 under this title shall be prepayable without penalty at any 

17 time. 

18 ‘‘(c) INFORMATION ACCESS.—As a condition for the 

19 receipt of any financial assistance made under this title, 

20 an eligible automobile manufacturer shall agree— 

21 ‘‘(1) to allow the President’s designee to exam22 ine any books, papers, records, or other data of the 

23 eligible automobile manufacturer, and those of any 

24 subsidiary, affiliate, or entity holding an ownership 

25 interest of 50 percent or more of such automobile 


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1 manufacturer, that may be relevant to the financial 

2 assistance, including compliance with the terms of a 

3 loan or any conditions imposed under this title; and 

4 ‘‘(2) to provide in a timely manner any infor5 mation requested by the President’s designee, in6 cluding requiring any officer or employee of the eli7 gible automobile manufacturer, any subsidiary, affil8 iate, or entity referred to in paragraph (1) with re9 spect to such manufacturer, or any person having 

10 possession, custody, or care of the reports and 

11 records required under paragraph (1), to appear be12 fore the President’s designee at a time and place re13 quested and to provide such books, papers, records, 

14 or other data, as requested, as may be relevant or 

15 material. 

16 ‘‘(d) OVERSIGHT OF TRANSACTIONS AND FINANCIAL

17 CONDITION.— 

18 ‘‘(1) DUTY TO INFORM.—During the period in 

19 which any loan extended under this title remains 

20 outstanding, the eligible automobile manufacturer 

21 which received such loan shall promptly inform the 

22 President’s designee of— 

23 ‘‘(A) any asset sale, investment, contract, 

24 commitment, or other transaction proposed to 

25 be entered into by such eligible automobile 


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1 manufacturer that has a value in excess of 

2 $100,000,000; and 

3 ‘‘(B) any other material change in the fi4 nancial condition of such eligible automobile 

5 manufacturer. 

6 ‘‘(2) AUTHORITY OF THE PRESIDENT’S DES7 IGNEE.—During the period in which any loan ex8 tended under this title remains outstanding, the 

9 President’s designee may— 

10 ‘‘(A) review any asset sale, investment, 

11 contract, commitment, or other transaction de12 scribed in paragraph (1); and 

13 ‘‘(B) prohibit the eligible automobile man14 ufacturer which received the loan from consum15 mating any such proposed sale, investment, 

16 contract, commitment, or other transaction, if 

17 the President’s designee determines that con18 summation of such transaction would be incon19 sistent with or detrimental to the long-term via20 bility of the eligible automobile manufacturer. 

21 ‘‘(3) PROCEDURES.—The President’s designee 

22 may establish procedures for conducting any review 

23 under this subsection. 


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1 ‘‘(e) CONSEQUENCES FOR FAILURE TO COMPLY.— 

2 The terms of any financial assistance made under this title 

3 shall provide that if— 

4 ‘‘(1) an evaluation by the President’s designee 

5 under section 404(b) demonstrates that the eligible 

6 automobile manufacturer which received the finan7 cial assistance has failed to make adequate progress 

8 towards meeting the restructuring progress assess9 ment measures established by the President’s des10 ignee under section 404(a) with respect to such re11 cipient; 

12 ‘‘(2) after March 31, 2009, the eligible auto13 mobile manufacturer which received the financial as14 sistance fails to submit an acceptable restructuring 

15 plan under section 405(b), or fails to comply with 

16 any conditions or requirement applicable under this 

17 title or applicable fuel efficiency and emissions re18 quirements; or 

19 ‘‘(3) after a restructuring plan of an eligible 

20 automobile manufacturer has been approved by the 

21 President’s designee, the auto manufacturer fails to 

22 make adequate progress in the implementation of 

23 the plan, as determined by the President’s designee, 

24 the repayment of any loan may be accelerated to such ear25 lier date or dates as the President’s designee may deterVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 mine and any other financial assistance may be cancelled 

2 by the President’s designee. 

3 ‘‘SEC. 409. TAXPAYER PROTECTION. 

4 ‘‘(a) WARRANTS.— 

5 ‘‘(1) IN GENERAL.—The President’s designee 

6 may not provide any loan under this title, unless the 

7 President’s designee, or such department or agency 

8 as is designated for such purpose by the President, 

9 receives from the eligible automobile manufacturer— 

10 ‘‘(A) in the case of an eligible automobile 

11 manufacturer, the securities of which are traded 

12 on a national securities exchange, a warrant 

13 giving the right to the President’s designee to 

14 receive nonvoting common stock or preferred 

15 stock in such eligible automobile manufacturer, 

16 or voting stock, with respect to which the Presi17 dent’s designee agrees not to exercise voting 

18 power, whichever the President’s designee de19 termines appropriate; or 

20 ‘‘(B) in the case of an eligible automobile 

21 manufacturer other than one described in sub22 paragraph (A), a warrant for common or pre23 ferred stock, or an instrument that is the eco24 nomic equivalent (as determined by the Presi25 dent’s designee) of such a warrant in the holdVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00045 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 ing company of the eligible automobile manu2 facturer, or any company that controls a major3 ity stake in the eligible automobile manufac4 turer, whichever the President’s designee deter5 mines appropriate. 

6 ‘‘(2) AMOUNT.— 

7 ‘‘(A) IN GENERAL.—The warrants or in8 struments described in paragraph (1) shall have 

9 a value equal to 20 percent of the aggregate 

10 amount of all loans provided to the eligible 

11 automobile manufacturer under this title. Such 

12 warrants or instruments shall entitle the Gov13 ernment to purchase— 

14 ‘‘(i) nonvoting common stock, up to a 

15 maximum amount of 20 percent of the 

16 issued and outstanding common stock of— 

17 ‘‘(I) the eligible automobile man18 ufacturer; or 

19 ‘‘(II) in the case of an eligible 

20 automobile manufacturer, the securi21 ties of which are not traded on a na22 tional securities exchange, a holding 

23 company or company that controls a 

24 majority of the stock thereof (in this 


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1 section referred to as the ‘warrant 

2 common’); and 

3 ‘‘(ii) preferred stock having an aggre4 gate liquidation preference equal to 20 per5 cent of such aggregate loan amount, less 

6 the value of common stock available for 

7 purchase under the warrant common (in 

8 this section referred to as the ‘warrant 

9 preferred’). 

10 ‘‘(B) COMMON STOCK WARRANT PRICE.— 

11 The exercise price on a warrant or instrument 

12 described in paragraph (1) shall be— 

13 ‘‘(i) the 15-day trailing average, as of 

14 the day before the date on which any com15 mitment to provide a loan was entered 

16 into, of the market price of the common 

17 stock of the eligible automobile manufac18 turer which received any loan under this 

19 title; or 

20 ‘‘(ii) in the case of an eligible auto21 mobile manufacturer, the securities of 

22 which are not traded on a national securi23 ties exchange, the economic equivalent of 

24 the market price described in clause (i), as 

25 determined by the President’s designee. 


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1 ‘‘(C) TERMS OF PREFERRED STOCK WAR2 RANT.— 

3 ‘‘(i) IN GENERAL.—The initial exer4 cise price for the preferred stock warrant 

5 shall be $0.01 per share or such greater 

6 amount as the corporate charter may re7 quire as the par value per share of the 

8 warrant preferred. The Government shall 

9 have the right to immediately exercise the 

10 warrants. 

11 ‘‘(ii) REDEMPTION.—The warrant 

12 preferred may be redeemed at any time 

13 after exercise of the preferred stock war14 rant at 100 percent of its issue price, plus 

15 any accrued and unpaid dividends. 

16 ‘‘(iii) OTHER TERMS AND CONDI17 TIONS.—Other terms and conditions of the 

18 warrant preferred shall be determined by 

19 the President’s designee to protect the in20 terests of taxpayers. 

21 ‘‘(3) APPLICATION OF OTHER PROVISIONS OF

22 LAW.—Except as otherwise provided in this section, 

23 the requirements for the purchase of warrants under 

24 section 113(d)(2) of the Emergency Economic Sta25 bilization Act of 2008 (division A of Public Law 


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1 110–343) shall apply to any warrant or instrument 

2 described in paragraph (1), including the 

3 antidilution protection provisions therein. 

4 ‘‘(b) EXECUTIVE COMPENSATION AND CORPORATE

5 GOVERNANCE.— 

6 ‘‘(1) IN GENERAL.—During the period in which 

7 any financial assistance under this title remains out8 standing, the eligible automobile manufacturer which 

9 received such assistance shall be subject to— 

10 ‘‘(A) the standards established by the 

11 President’s designee under paragraph (2); and 

12 ‘‘(B) the provisions of section 162(m)(5) of 

13 the Internal Revenue Code of 1986, as applica14 ble. 

15 ‘‘(2) STANDARDS REQUIRED.—The President’s 

16 designee shall require any eligible automobile manu17 facturer which received any financial assistance 

18 under this title to meet appropriate standards for 

19 executive compensation and corporate governance. 

20 ‘‘(3) SPECIFIC REQUIREMENTS.—The standards 

21 established under paragraph (2) shall include— 

22 ‘‘(A) limits on compensation that exclude 

23 incentives for senior executive officers of an eli24 gible automobile manufacturer which received 

25 assistance under this title to take unnecessary 


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1 and excessive risks that threaten the value of 

2 such manufacturer during the period that the 

3 loan is outstanding; 

4 ‘‘(B) a provision for the recovery by such 

5 automobile manufacturer of any bonus or incen6 tive compensation paid to a senior executive of7 ficer based on statements of earnings, gains, or 

8 other criteria that are later found to be materi9 ally inaccurate; 

10 ‘‘(C) a prohibition on such automobile 

11 manufacturer making any golden parachute 

12 payment to a senior executive officer during the 

13 period that the loan is outstanding; 

14 ‘‘(D) a prohibition on such automobile 

15 manufacturer paying or accruing any bonus or 

16 incentive compensation during the period that 

17 the loan is outstanding to the 25 most highly18 compensated employees; and 

19 ‘‘(E) a prohibition on any compensation 

20 plan that would encourage manipulation of such 

21 automobile manufacturer’s reported earnings to 

22 enhance the compensation of any of its employ23 ees. 

24 ‘‘(4) DIVESTITURE.—During the period in 

25 which any financial assistance provided under this 


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1 title to any eligible automobile manufacturer is out2 standing, the eligible automobile manufacturer may 

3 not own or lease any private passenger aircraft, or 

4 have any interest in such aircraft, except that such 

5 eligible automobile manufacturer shall not be treated 

6 as being in violation of this provision with respect to 

7 any aircraft or interest in any aircraft that was 

8 owned or held by the manufacturer immediately be9 fore receiving such assistance, as long as the recipi10 ent demonstrates to the satisfaction of the Presi11 dent’s designee that all reasonable steps are being 

12 taken to sell or divest such aircraft or interest. 

13 ‘‘(5) DEFINITIONS.—For purposes of this sub14 section, the following definitions shall apply: 

15 ‘‘(A) SENIOR EXECUTIVE OFFICER.—The 

16 term ‘senior executive officer’ means an indi17 vidual who is one of the top five most highly 

18 paid executives of a public company, whose 

19 compensation is required to be disclosed pursu20 ant to the Securities Exchange Act of 1934, 

21 and any regulations issued thereunder, and 

22 non-public company counterparts. 

23 ‘‘(B) GOLDEN PARACHUTE PAYMENT.— 

24 The term ‘golden parachute payment’ means 

25 any payment to a senior executive officer for 


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1 departure from a company for any reason, ex2 cept for payments for services performed or 

3 benefits accrued. 

4 ‘‘(c) PROHIBITION ON PAYMENT OF DIVIDENDS.— 

5 Except with respect to obligations owed pursuant to law 

6 to any nonaffiliated party or any existing contract with 

7 any nonaffiliated party in effect as of December 2, 2008, 

8 no dividends or distributions of any kind, or the economic 

9 equivalent thereof (as determined by the President’s des10 ignee), may be paid by any eligible automobile manufac11 turer which receives financial assistance under this title, 

12 or any holding company or company that controls a major13 ity stake in the eligible automobile manufacturer, while 

14 such financial assistance is outstanding. 

15 ‘‘(d) OTHER INTERESTS SUBORDINATED.— 

16 ‘‘(1) IN GENERAL.—In the case of an eligible 

17 automobile manufacturer which received a loan 

18 under this title, to the extent permitted by the terms 

19 of any obligation, liability, or debt of the eligible 

20 automobile manufacturer in effect as of December 2, 

21 2008, any other obligation of such eligible auto22 mobile manufacturer shall be subordinate to such 

23 loan, and such loan shall be senior and prior to all 

24 obligations, liabilities, and debts of the eligible auto25 mobile manufacturer, and such eligible automobile 


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1 manufacturer shall provide to the Government, all 

2 available security and collateral against which the 

3 loans under this title shall be secured. 

4 ‘‘(2) APPLICABILITY IN CERTAIN CASES.—In 

5 the case of an eligible automobile manufacturer re6 ferred to in paragraph (1), the securities of which 

7 are not traded on a national securities exchange, a 

8 loan under this title to the eligible automobile manu9 facturer shall— 

10 ‘‘(A) be treated as a loan to any holding 

11 company of, or company that controls a major12 ity stake in, the eligible automobile manufac13 turer; and 

14 ‘‘(B) be senior and prior to all obligations, 

15 liabilities, and debts of any such holding com16 pany or company that controls a majority stake 

17 in the eligible automobile manufacturer. 

18 ‘‘(e) ADDITIONAL TAXPAYER PROTECTIONS.— 

19 ‘‘(1) DISCHARGE.—A discharge under title 11, 

20 United States Code, shall not discharge an eligible 

21 automobile manufacturer, or any successor in inter22 est thereto, from any debt for financial assistance 

23 received pursuant to this title. 

24 ‘‘(2) EXEMPTION.—Any financial assistance 

25 provided to an eligible automobile manufacturer 


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1 under this title shall be exempt from the automatic 

2 stay established by section 362 of title 11, United 

3 States Code. 

4 ‘‘(3) INTERESTED PARTIES.—Notwithstanding 

5 any provision of title 11, United States Code, any 

6 interest in property or equity rights of the United 

7 States arising from financial assistance provided to 

8 an eligible automobile manufacturer under this title 

9 shall remain unaffected by any plan of reorganiza10 tion, except as the United States may agree to in 

11 writing. 

12 ‘‘SEC. 410. OVERSIGHT AND AUDITS. 

13 ‘‘(a) COMPTROLLER GENERAL OVERSIGHT.— 

14 ‘‘(1) SCOPE OF OVERSIGHT.—The Comptroller 

15 General of the United States shall conduct ongoing 

16 oversight of the activities and performance of the 

17 President’s designee. 

18 ‘‘(2) CONDUCT AND ADMINISTRATION OF OVER19 SIGHT.— 

20 ‘‘(A) GAO PRESENCE.—The President’s 

21 designee shall provide to the Comptroller Gen22 eral appropriate space and facilities for pur23 poses of this subsection. 

24 ‘‘(B) ACCESS TO RECORDS.—To the extent 

25 otherwise consistent with law, the Comptroller 


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1 General shall have access, upon request, to any 

2 information, data, schedules, books, accounts, 

3 financial records, reports, files, electronic com4 munications, or other papers, things, or prop5 erty belonging to or in use by the President’s 

6 designee, at such reasonable time as the Comp7 troller General may request. The Comptroller 

8 General shall be afforded full facilities for 

9 verifying transactions with the balances or secu10 rities held by depositaries, fiscal agents, and 

11 custodians. The Comptroller General may make 

12 and retain copies of such books, accounts, and 

13 other records as the Comptroller General deems 

14 appropriate. 

15 ‘‘(3) REPORTING.—The Comptroller General 

16 shall submit reports of findings under this section to 

17 Congress, regularly and not less frequently than 

18 once every 60 days. The Comptroller General may 

19 also submit special reports under this subsection, as 

20 warranted by the findings of its oversight activities. 

21 ‘‘(b) SPECIAL INSPECTOR GENERAL.—It shall be the 

22 duty of the Special Inspector General established under 

23 section 121 of Public Law 110–343 to conduct, supervise, 

24 and coordinate audits and investigations of the President’s 

25 designee in addition to the duties of the Special Inspector 


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1 General under such section and for such purposes. The 

2 Special Inspector General shall also have the duties, re3 sponsibilities, and authorities of inspectors general under 

4 the Inspector General Act of 1978, including section 6 of 

5 such Act. In the event that the Office of the Special In6 spector General is terminated, the Inspector General of 

7 the Department of the Treasury shall assume the respon8 sibilities of the Special Inspector General under this sub9 section. 

10 ‘‘(c) ACCESS TO RECORDS OF BORROWERS BY

11 GAO.—Notwithstanding any other provision of law, dur12 ing the period in which any financial assistance provided 

13 under this title is outstanding, the Comptroller General 

14 of the United States shall have access, upon request, to 

15 any information, data, schedules, books, accounts, finan16 cial records, reports, files, electronic communications, or 

17 other papers, things, or property belonging to or in use 

18 by the eligible automobile manufacturer, and any sub19 sidiary, affiliate, or entity holding an ownership interest 

20 of 50 percent or more of such eligible automobile manufac21 turer (collectively referred to in this section as ‘related en22 tities’), and to any officer, director, or other agent or rep23 resentative of the eligible automobile manufacturer and its 

24 related entities, at such reasonable times as the Comp25 troller General may request. The Comptroller General may 


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1 make and retain copies of such books, accounts, and other 

2 records as the Comptroller General deems appropriate. 

3 ‘‘SEC. 411. REPORTING AND MONITORING. 

4 ‘‘(a) REPORTING ON CONSUMMATION OF LOANS.— 

5 The President’s designee shall submit a report to the Con6 gress on each bridge loan made under this title not later 

7 than 5 days after the date of the consummation of such 

8 loan. 

9 ‘‘(b) REPORTING ON RESTRUCTURING PROGRESS AS10 SESSMENT MEASURES.—The President’s designee shall 

11 submit a report to the Congress on the restructuring 

12 progress assessment measures established for each manu13 facturer under section 404(a) not later than 10 days after 

14 establishing the restructuring progress assessment meas15 ures. 

16 ‘‘(c) REPORTING ON EVALUATIONS.—The Presi17 dent’s designee shall submit a report to the Congress con18 taining the detailed findings and conclusions of the Presi19 dent’s designee in connection with the evaluation of an eli20 gible automobile manufacturer under section 404(b). 

21 ‘‘(d) REPORTING ON CONSEQUENCES FOR FAILURE

22 TO COMPLY.—The President’s designee shall submit a re23 port to the Congress on the exercise of a right under sec24 tion 408(e) to accelerate indebtedness of an eligible auto25 mobile manufacturer under this title or to cancel any other 


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1 financial assistance provided to such eligible automobile 

2 manufacturer, and the facts and circumstances on which 

3 such exercise was based, before the end of the 10-day pe4 riod beginning on the date of the exercise of the right. 

5 ‘‘(e) MONITORING.—The President’s designee shall 

6 monitor the use of loan funds received by eligible auto7 mobile manufacturers under this title, and shall report to 

8 Congress once every 90 days (beginning 30 days after the 

9 date of enactment of this title) on the progress of the abil10 ity of the recipient of the loan to continue operations and 

11 proceed with restructuring processes that restore the fi12 nancial viability of the recipient and promote environ13 mental sustainability. 

14 ‘‘SEC. 412. REPORT TO CONGRESS ON LACK OF PROGRESS 

15 TOWARD ACHIEVING AN ACCEPTABLE NEGO16 TIATED PLAN. 

17 ‘‘(a) AUTHORITY TO FACILITATE A NEGOTIATED

18 PLAN.—At any such time as the President’s designee de19 termines that action is necessary to avoid disruption to 

20 the economy or to achieve a negotiated plan, the Presi21 dent’s designee shall submit to Congress a report outlining 

22 any additional powers and authorities necessary to facili23 tate the completion of a negotiated plan required under 

24 section 405. 


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1 ‘‘(b) IMPEDIMENTS TO ACHIEVING NEGOTIATED

2 PLANS.—If the President’s designee determines, on the 

3 basis of an evaluation by the President’s designee of the 

4 progress being made by an eligible automobile manufac5 turer toward meeting the restructuring progress assess6 ment measures established under section 404, that ade7 quate progress is not being made toward achieving a nego8 tiated plan by March 31, 2009, the President’s designee 

9 shall submit to Congress a report detailing the impedi10 ments to achievement of a negotiated plan by the eligible 

11 automobile manufacturer. 

12 ‘‘SEC. 413. SUBMISSION OF PLAN TO CONGRESS BY THE 

13 PRESIDENT’S DESIGNEE. 

14 ‘‘Upon submission of a report pursuant to section 

15 412(b), the President’s designee shall provide to Congress 

16 a plan that represents the judgement of the President’s 

17 designee as to the steps necessary to achieve the long-term 

18 viability, international competitiveness, and energy effi19 ciency of the eligible automobile manufacturer, consistent 

20 with the factors set forth in section 405(b), including 

21 through a negotiated plan, a plan to be implemented by 

22 legislation, or a reorganization pursuant to chapter 11 of 

23 title 11, United States Code. 


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1 ‘‘SEC. 414. COORDINATION WITH OTHER LAWS. 

2 ‘‘(a) IN GENERAL.—No provision of this title may be 

3 construed as altering, affecting, or superseding— 

4 ‘‘(1) the provisions of section 129 of division A 

5 of the Consolidated Security, Disaster Assistance, 

6 and Continuing Appropriations Act, 2009, relating 

7 to funding for the manufacture of advanced tech8 nology vehicles; 

9 ‘‘(2) any existing authority to provide financial 

10 assistance or liquidity for purposes of the day-to-day 

11 operations in the ordinary course of business or re12 search and development. 

13 ‘‘(b) ANTITRUST PROVISIONS.— 

14 ‘‘(1) IN GENERAL.—Subject to paragraphs (2) 

15 and (4), the antitrust laws shall not apply to meet16 ings, discussions, or consultations among an eligible 

17 automobile manufacturer and its interested parties 

18 for the purpose of achieving a negotiated plan pur19 suant to section 405(a)(2). 

20 ‘‘(2) EXCLUSIONS.—Paragraph (1) shall not 

21 apply with respect to price-fixing, allocating a mar22 ket between competitors, monopolizing (or attempt23 ing to monopolize) a market, or boycotting. 

24 ‘‘(3) ANTITRUST AGENCY PARTICIPATION.—The 

25 Attorney General of the United States and the Fed26 eral Trade Commission shall, to the extent pracVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00060 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 ticable, receive reasonable advance notice of, and be 

2 permitted to participate in, each meeting, discussion, 

3 or consultation described in paragraph (1). 

4 ‘‘(4) PRESERVATION OF ENFORCEMENT AU5 THORITY.—Paragraph (1) shall not be construed to 

6 preclude the Attorney General of the United States 

7 or the Federal Trade Commission from bringing an 

8 enforcement action under the antitrust laws for in9 junctive relief. 

10 ‘‘(5) SUNSET.—Paragraph (1) shall apply only 

11 with respect to meetings, discussions, or consulta12 tions that occur within the 3-year period beginning 

13 on the date of the enactment of this title. 

14 ‘‘(6) DEFINITION.—For purposes of this sub15 section, the term ‘antitrust laws’— 

16 ‘‘(A) has the same meaning as in sub17 section (a) of the first section of the Clayton 

18 Act (15 U.S.C. 12(a)), except that such term 

19 includes section 5 of the Federal Trade Com20 mission Act (15 U.S.C. 45), to the extent that 

21 such section 5 applies to unfair methods of 

22 competition; and 

23 ‘‘(B) includes any provision of State law 

24 that is similar to the laws referred to in sub25 paragraph (A). 


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1 ‘‘SEC. 415. TREATMENT OF RESTRUCTURING FOR PUR2 POSES OF APPLYING LIMITATIONS ON NET 

3 OPERATING LOSS CARRYFORWARDS AND 

4 CERTAIN BUILT-IN LOSSES. 

5 ‘‘Section 382 of the Internal Revenue Code of 1986 

6 shall not apply in the case of an ownership change result7 ing from this title or pursuant to a restructuring plan ap8 proved under this title. 

9 ‘‘SEC. 416. CLARIFICATION OF AVAILABILITY OF FINANCIAL 

10 SUPPORT FOR FINANCING ARMS. 

11 ‘‘The authority of the President’s designee to provide 

12 assistance to any eligible automobile manufacturer in13 cludes the authority to provide support to finance com14 pany affiliates of the manufacturer to ensure that such 

15 affiliates have the necessary resources to continue to pro16 vide needed credit, including through dealer and other fi17 nancing of consumer and business auto and other vehicle 

18 loans and dealer floor plan loans.’’. 

19 TITLE IV—CLARIFICATION OF 

20 AUTHORITY 

21 SEC. 401. CONSUMER LOANS. 

22 Title I of the Emergency Economic Stabilization Act 

23 of 2008 (12 U.S.C. 5211 et seq.) is amended by adding 

24 at the end the following new section: 


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1 ‘‘SEC. 137. CLARIFICATION OF AUTHORITY REGARDING 

2 CONSUMER LOANS. 

3 ‘‘The authority of the Secretary to take any action 

4 under this title includes the authority to establish or sup5 port facilities to support the availability of consumer 

6 loans, including loans for autos and other vehicles and stu7 dent loans, including through purchase of asset-backed se8 curities, directly or through the Board or any Federal re9 serve bank.’’. 

10 SEC. 402. MUNICIPAL SECURITIES. 

11 Section 103 of the Emergency Economic Stabilization 

12 Act of 2008 (12 U.S.C. 5211) is amended by inserting 

13 after subsection (f) (as added by section 401 of this title) 

14 the following new subsection: 

15 ‘‘(g) CLARIFICATION OF AUTHORITY REGARDING

16 MUNICIPAL SECURITIES.— 

17 ‘‘(1) CLARIFICATION.—The authority of the 

18 Secretary to take any action under this title includes 

19 the authority to provide support to State and local 

20 governments, and other issuers of municipal securi21 ties, which are having difficulty accessing appro22 priate financing in the capital markets. Such sup23 port includes the direct purchase of municipal secu24 rities and providing credit enhancement in connec25 tion with municipal securities whose purchase is fiVerDate Nov 24 2008 02:24 Jan 10, 2009 Jkt 079200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\H384.IH H384

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1 nanced under any facility provided by the Board or 

2 any Federal reserve bank. 

3 ‘‘(2) DEFINITION.—For purposes of this sub4 section, the term ‘municipal security’ has the mean5 ing given the term ‘State or local bond’ in section 

6 103(c) of the Internal Revenue Code of 1986 (26 

7 U.S.C. 103(c)) and the regulations issued there8 under.’’. 

9 SEC. 403. COMMERCIAL REAL ESTATE LOANS. 

10 Title I of the Emergency Economic Stabilization Act 

11 of 2008 (12 U.S.C. 5211 et seq.) is amended by adding 

12 after section 137 (as added by section 401 of this title) 

13 the following new section: 

14 ‘‘SEC. 138. CLARIFICATION OF AUTHORITY REGARDING 

15 COMMERCIAL REAL ESTATE LOANS. 

16 ‘‘The authority of the Secretary to take any action 

17 under this title includes the authority to establish or sup18 port facilities to support the availability of commercial real 

19 estate loans, including through purchase of asset-backed 

20 securities, directly or through the Board of Governors of 

21 the Federal Reserve System or any Federal reserve 

22 bank.’’. 


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1 TITLE V—HOPE FOR HOME2 OWNERS PROGRAM IMPROVE3 MENTS 

4 SEC. 501. CHANGES TO HOPE FOR HOMEOWNERS PRO5 GRAM. 

6 Section 257 of the National Housing Act (12 U.S.C. 

7 1715z–23) is amended— 

8 (1) in subsection (e)— 

9 (A) by striking paragraph (1); 

10 (B) in paragraph (2)(B), by striking ‘‘90 

11 percent’’ and inserting ‘‘93 percent’’; 

12 (C) by striking paragraph (7); 

13 (D) in paragraph (9), by striking ‘‘by pro14 curing’’ and all that follows through ‘‘by any 

15 other method’’; and 

16 (E) by redesignating paragraphs (2), (3), 

17 (4), (5), (6), (8), (9), (10), and (11) as para18 graphs (1), (2), (3), (4), (5), (6), (7), (8), and 

19 (9), respectively; 

20 (2) in subsection (h)(2), by striking ‘‘, or in any 

21 case in which a mortgagor fails to make the first 

22 payment on a refinanced eligible mortgage’’; 

23 (3) by striking subsection (i) and inserting the 

24 following new subsection: 

25 ‘‘(i) ANNUAL PREMIUMS.— 


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1 ‘‘(1) IN GENERAL.—For each refinanced eligible 

2 mortgage insured under this section, the Secretary 

3 shall establish and collect an annual premium in an 

4 amount equal to not less than 0.55 percent of the 

5 amount of the remaining insured principal balance 

6 of the mortgage and not more than 0.75 percent of 

7 such remaining insured principal balance, as deter8 mined according to a schedule established by the 

9 Board that assigns such annual premiums based 

10 upon the credit risk of the mortgage. 

11 ‘‘(2) REDUCTION OR TERMINATION DURING

12 MORTGAGE TERM.—Notwithstanding paragraph (1), 

13 the Secretary may provide that the annual premiums 

14 charged for refinanced eligible mortgages insured 

15 under this section are reduced over the term of the 

16 mortgage or that the collection of such premiums is 

17 discontinued at some time during the term of the 

18 mortgage, in a manner that is consistent with poli19 cies for such reduction or discontinuation of annual 

20 premiums charged for mortgages in accordance with 

21 section 203(c).’’; 

22 (4) in subsection (k)— 

23 (A) by striking the subsection heading and 

24 inserting ‘‘EXIT FEE’’; 


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1 (B) in paragraph (1), in the matter pre2 ceding subparagraph (A), by striking ‘‘such sale 

3 or refinancing’’ and inserting ‘‘the mortgage 

4 being insured under this section’’; and 

5 (C) by striking paragraph (2); 

6 (5) in subsection (s)(3)(A)(ii), by striking ‘‘sub7 section (e)(1)(B) and such other’’ and inserting 

8 ‘‘such’’; 

9 (6) in subsection (v), by inserting after the pe10 riod at the end the following: ‘‘The Board shall con11 form documents, forms, and procedures for mort12 gages insured under this section to those in place for 

13 mortgages insured under section 203(b) to the max14 imum extent possible consistent with the require15 ments of this section.’’; 

16 (7) in subsection (w)(1)(C), by striking 

17 ‘‘(e)(4)(A)’’ and inserting ‘‘(e)(3)(A)’’; and 

18 (8) by adding at the end the following new sub19 section: 

20 ‘‘(x) PAYMENT TO EXISTING LOAN SERVICER.—The 

21 Board may establish a payment to the servicer of the exist22 ing senior mortgage for every loan insured under the 

23 HOPE for Homeowners Program.’’. 


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1 SEC. 502. FUNDING OF INCREASED HOPE FOR HOME2 OWNERS PROGRAM CREDIT SUBSIDY COSTS. 

3 Section 257 of the National Housing Act (12 U.S.C. 

4 1715z–23) is amended by adding after subsection (x) (as 

5 added by section 501 of this title) the following new sub6 section: 

7 ‘‘(y) FUNDING OF CREDIT SUBSIDY COSTS OF 2009 

8 AMENDMENTS.—Notwithstanding section 1338(b) of the 

9 Housing and Community Development Act of 1992 (12 

10 U.S.C. 4568(b)) and subsection (w) of this section— 

11 ‘‘(1) to the extent amounts are available to the 

12 Secretary of the Treasury pursuant to section 118 

13 of the Emergency Economic Stabilization Act of 

14 2008, the Secretary shall use such amounts to cover 

15 any increase in the net costs to the Federal Govern16 ment of the HOPE for Homeowners program under 

17 this section resulting from the amendments made by 

18 title V of the TARP Reform and Accountability Act 

19 of 2009, and actions authorized by title I of the 

20 Emergency Economic Stabilization Act of 2008 shall 

21 include such use; and 

22 ‘‘(2) any remaining net costs to the Federal 

23 Government of the HOPE for Homeowners program 

24 under this section not resulting from the amend25 ments made under this title shall be paid, and the 

26 Secretary of the Treasury shall be reimbursed for 


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1 such costs, in accordance with the provisions of such 

2 section 1338 and subsection (w) of this section.’’. 

3 TITLE VI—HOME BUYER 

4 STIMULUS 

5 SEC. 601. HOME BUYER STIMULUS PROGRAM. 

6 (a) IN GENERAL.—The Secretary of the Treasury (in 

7 this title referred to as the ‘‘Secretary’’) shall carry out 

8 a program using the authority made available by section 

9 1117 of the Housing and Economic Recovery Act of 2008 

10 to stimulate demand for home purchases and reduce 

11 unsold inventories of residential properties, which shall in12 clude ensuring the availability of affordable interest rates 

13 on mortgages made for the purchase, by qualified home 

14 buyers, of 1- to 4-family residential properties. 

15 (b) PURCHASE OBLIGATIONS AND SECURITIES

16 USING HERA AUTHORITY.—The Secretary shall execute 

17 the program under this section through the purchase of 

18 obligations and other securities issued by— 

19 (1) the Federal National Mortgage Association, 

20 pursuant to the authority under section 304(g) of 

21 the Federal National Mortgage Association Charter 

22 Act (12 U.S.C. 1719(g)), 

23 (2) the Federal Home Loan Mortgage Corpora24 tion, pursuant to the authority under section 304(l) 


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1 of the Federal Home Loan Mortgage Corporation 

2 Act (12 U.S.C. 1455(l)), and 

3 (3) any Federal Home Loan Bank, pursuant to 

4 the authority under section 11(l) of the Federal 

5 Home Loan Bank Act (12 U.S.C. 1431(l)), 

6 as added by section 1117 of the Housing and Economic 

7 Recovery Act of 2008 (Public Law 110–289). 

8 (c) USE OF LOAN ORIGINATORS AND PORTFOLIO

9 LENDERS.—The program under this section shall provide 

10 mechanisms to ensure availability of such mortgages for 

11 home purchase having affordable interest rates through fi12 nancial institutions that act as loan originators or as port13 folio lenders. 

14 (d) AVAILABILITY OF AFFORDABLE LOANS UNDER

15 HOPE FOR HOMEOWNERS PROGRAM.—The Secretary, in 

16 consultation with the Secretary of Housing and Urban De17 velopment, shall ensure that the affordable interest rates 

18 made available through the program under this section are 

19 made available in connection with mortgages made for re20 financing eligible mortgages, as such term is defined in 

21 section 257 of the National Housing Act (12 U.S.C. 

22 1715z–23), to be insured under the HOPE for Home23 owners Program under such section. 

24 (e) TARGETING.—In carrying out the program under 

25 this section, the Secretary may take into consideration the 


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1 impact of activities under the program on geographical 

2 areas having the greatest number of properties with fore3 closed-upon mortgages. 

4 TITLE VII—FDIC PROVISIONS 

5 SEC. 701. PERMANENT INCREASE IN DEPOSIT INSURANCE. 

6 (a) AMENDMENTS TO FEDERAL DEPOSIT INSURANCE

7 ACT.—Section 11(a)(1) of the Federal Deposit Insurance 

8 Act (12 U.S.C. 1821(a)) is amended— 

9 (1) in paragraph (1)(E), by striking 

10 ‘‘$100,000’’ and inserting ‘‘$250,000’’ 

11 (2) in paragraph (1)(F)(i), by striking ‘‘2010’’ 

12 and inserting ‘‘2015’’; 

13 (3) in subclause (I) of paragraph (1)(F)(i), by 

14 striking ‘‘$100,000’’ and inserting ‘‘$250,000’’; 

15 (4) in subclause (II) of paragraph (1)(F)(i), by 

16 striking ‘‘the calendar year preceding the date this 

17 subparagraph takes effect under the Federal Deposit 

18 Insurance Reform Act of 2005’’ and inserting ‘‘cal19 endar year 2008’’; and 

20 (5) in paragraph (3)(A)(iii), by striking ‘‘, ex21 cept that $250,000 shall be substituted for $100,000 

22 wherever such term appears in such paragraph’’. 

23 (b) REPEAL OF EESA PROVISION.—Section 136 of 

24 the Emergency Economic Stabilization Act (Public Law 

25 110–343; 122 Stat. 3765) is hereby repealed. 


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1 (c) AMENDMENT TO FEDERAL CREDIT UNION

2 ACT.—Section 207(k) of the Federal Credit Union Act 

3 (12 U.S.C. 1787(k) is amended— 

4 (1) in paragraph (3)— 

5 (A) by striking the opening quotation mark 

6 before ‘‘$250,000’’; 

7 (B) by striking ‘‘, except that $250,000 

8 shall be substituted for $100,000 wherever such 

9 term appears in such section’’; and 

10 (C) by striking the closing quotation mark 

11 after the closing parenthesis; and 

12 (2) in paragraph (5), by striking ‘‘$100,000’’ 

13 and inserting ‘‘$250,000’’; 

14 SEC. 702. EXTENSION OF RESTORATION PLAN PERIOD. 

15 Section 7(b)(3)(E)(ii) of the Federal Deposit Insur16 ance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by 

17 striking ‘‘5-year period’’ and inserting ‘‘8-year period’’. 

18 SEC. 703. BORROWING AUTHORITY. 

19 Section 14(a) of the Federal Deposit Insurance Act 

20 (12 U.S.C. 1814(a)) is amended— 

21 (1) by striking ‘‘$30,000,000,000’’ and insert22 ing ‘‘$100,000,000,000’’; and 

23 (2) by inserting prior to the last sentence, the 

24 following new sentence: ‘‘The Corporation may re25 quest in writing to borrow, and the Secretary may 


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1 authorize and approve the borrowing of, additional 

2 amounts above $100,000,000,000 to the extent that 

3 the Board of Directors and the Secretary determine 

4 such borrowing to be necessary.’’. 

5 SEC. 704. SYSTEMIC RISK SPECIAL ASSESSMENTS. 

6 Section 13(c)(4)(G)(ii) of the Federal Deposit Insur7 ance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read 

8 as follows: 

9 ‘‘(ii) REPAYMENT OF LOSS.— 

10 ‘‘(I) IN GENERAL.—The Corpora11 tion shall recover the loss to the De12 posit Insurance Fund arising from 

13 any action taken or assistance pro14 vided with respect to an insured de15 pository institution under clause (i) 

16 from 1 or more special assessments on 

17 insured depository institutions, deposi18 tory institution holding companies 

19 (with the concurrence of the Secretary 

20 of the Treasury with respect to hold21 ing companies), or both, as the Cor22 poration determines to be appropriate. 

23 ‘‘(II) TREATMENT OF DEPOSI24 TORY INSTITUTION HOLDING COMPA25 NIES.—For purposes of this clause, 


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1 sections 7(c)(2) and 18(h) shall apply 

2 to depository institution holding com3 panies as if they were insured deposi4 tory institutions. 

5 ‘‘(III) REGULATIONS.—The Cor6 poration shall prescribe such regula7 tions as it deems necessary to imple8 ment this clause. In prescribing such 

9 regulations, defining terms, and set10 ting the appropriate assessment rate 

11 or rates, the Corporation shall con12 sider: the types of entities that benefit 

13 from any action taken or assistance 

14 provided under this subparagraph; 

15 economic conditions; the effects on the 

16 industry; and such other factors as 

17 the Corporation deems appropriate.’’. 

Æ 


wwoods2 on PRODPC68 with BILLS