I

104TH CONGRESS

2D SESSION H. R. 4318

To provide for a system of guaranteeing the deposits and certain other

liabilities of depository institutions through a self-regulating system of

cross-guarantees, to protect taxpayers against deposit insurance losses,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 28, 1996

Mr. PETRI introduced the following bill; which was referred to the Committee

on Banking and Financial Services, and in addition to the Committee on

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 provide for a system of guaranteeing the deposits and

certain other liabilities of depository institutions through

a self-regulating system of cross-guarantees, to protect

taxpayers against deposit insurance losses, and for other

purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Deposit Insurance Reform, Regulatory Modernization,

6 and Taxpayer Protection Act of 1996’’.
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1 (b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents.

TITLE I—100-PERCENT CROSS-GUARANTEES

Subtitle A—Definitions

Sec. 101. Definitions.

Sec. 102. Rules of construction.

Subtitle B—Cross-Guarantee Process

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

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

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

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

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

Sec. 116. Eligibility and requirements for direct guarantors.

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

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

syndicate.

Sec. 119. Judicial review of contracts and related actions.

Subtitle C—Powers and Duties of the CGRC

CHAPTER 1—CROSS-GUARANTEE PROCESS

Sec. 121. Cross-Guarantee Regulation Corporation.

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

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

Sec. 124. Central electronic repository.

Sec. 125. Restriction on closed loops.

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

CHAPTER 2—PROTECTION OF INSURED DEPOSITS

Sec. 128. Backup insurance for deposits in guaranteed depository institutions.

Subtitle D—Miscellaneous Provisions

Sec. 131. Institutions offering uninsured deposits.

Sec. 132. Federal Reserve lending.

Sec. 133. Advertising by guaranteed financial groups.

Sec. 134. Guaranteed depository institutions remain federally insured depositories for purposes of state or federal law.

Subtitle E—Transition to 100 Percent Cross-Guarantee Process

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

depository institutions and amount of total assets.

Sec. 142. Mandatory date on which depository institutions must become guaranteed.

Sec. 143. Appointment of receiver for institutions which fail to comply with

transition requirements.

Sec. 144. Funding the cross-guarantee backup fund.
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Sec. 145. Abolition of the Federal Financial Institutions Examination Council.

Sec. 146. Abolition of the Federal Deposit Insurance Corporation.

Sec. 147. Continuation of orders, resolutions, and determinations.

TITLE II—AMENDMENTS TO OTHER BANKING LAWS

Sec. 201. Amendments relating to national banks.

Sec. 202. Amendments relating to member banks.

Sec. 203. Amendments relating to savings associations.

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

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

Sec. 206. Amendments to other banking laws.

TITLE III—AMENDMENTS TO TITLE 11, UNITED STATES CODE

Subtitle A—Amendments to Chapter 1 of Title 11

Sec. 301. Definitions.

Sec. 302. Applicability of chapters.

Sec. 303. Public access to papers.

Sec. 304. Who may be a debtor.

Subtitle B—Amendments to Chapter 3 of Title 11

Sec. 311. Party in interest.

Sec. 312. Qualification of trustee.

Sec. 313. Notice.

Sec. 314. Money of estates.

Sec. 315. Automatic stay.

Sec. 316. Executory contracts and unexpired leases.

Subtitle C—Amendments to Chapter 5 of Title 11

Sec. 321. Obligations of direct guarantors.

Sec. 322. Debtor’s duties.

Sec. 323. Exceptions to discharge.

Sec. 324. Limitation on avoiding powers.

Sec. 325. Preferences.

Sec. 326. Fraudulent transfers and obligations.

Sec. 327. Post-petition transactions.

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

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

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

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

Subtitle D—Amendments to Chapter 11 of Title 11

CHAPTER 1—AMENDMENTS TO EXISTING LAW

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

Sec. 342. Who may file a plan.

Sec. 343. Impairment of claims or interests.

Sec. 344. Acceptance of plan.

Sec. 345. Confirmation hearing.

Sec. 346. Confirmation of plan.

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

Sec. 351. Guaranteed company reorganization.

Sec. 352. Inapplicability of other sections.

Sec. 353. Effective date of filing.

Sec. 354. Appointment of trustee.

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

Sec. 356. Replacement or modification of cross-guarantee contract.

Sec. 357. Effect of Federal, state, and local legislation and regulations.

Sec. 358. Liquidation.

TITLE IV—AMENDMENT TO TITLE 28, UNITED STATES CODE

Sec. 401. Venue.

1 TITLE I—100-PERCENT CROSS2 GUARANTEES

3 Subtitle A—Definitions

4 SEC. 101. DEFINITIONS.

5 In this title—

6 (1) AFFILIATE.—The term ‘‘affiliate’’ means,

7 with respect to any company, any other company

8 that controls, is controlled by, or is under common

9 control with such company.

10 (2) AGENCY.—The term ‘‘agency’’, when used

11 in connection with a reference to a foreign bank, has

12 the same meaning given to such term in section 1(b)

13 of the International Banking Act of 1978.

14 (3) BRANCH.—The term ‘‘branch’’, when used

15 in connection with a reference to a foreign bank, has

16 the same meaning given to such term in section 1(b)

17 of the International Banking Act of 1978.
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1 (4) BUSINESS DAY.—The term ‘‘business day’’

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

3 legal holiday for the Federal Government.

4 (5) CENTRAL ELECTRONIC REPOSITORY.—The

5 term ‘‘central electronic repository’’ means the re6 pository established under section 124(a)(1).

7 (6) CLOSED LOOP.—The term ‘‘closed loop’’

8 means a set of cross-guarantee and stop-loss con9 tracts in which each direct guarantor under the set

10 of contracts also is a guaranteed party under one

11 contract within the set of contracts.

12 (7) COMPANY.—The term ‘‘company’’—

13 (A) means any corporation, limited liability

14 company, partnership, business trust, associa15 tion, or similar organization; and

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

17 or a group of branches and agencies, of a for18 eign bank.

19 (8) CONTROL.—

20 (A) IN GENERAL.—The term ‘‘control’’

21 means, with respect to one company’s relation22 ship to another company, one company’s owner23 ship or power to, directly or indirectly, vote an

24 aggregate of 5 percent or more of any class or

25 classes of the securities which separately or to-
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1 gether, taking into account the relative voting

2 weight of different shares, have the power to

3 elect a majority of the members of such other

4 company’s board of directors.

5 (B) RULE.—The Corporation may pre6 scribe rules to implement the intent of this

7 paragraph.

8 (9) CORPORATION.—The term ‘‘Corporation’’

9 means the Cross-Guarantee Regulation Corporation.

10 (10) CROSS-GUARANTEE ACTIVATION DATE.—

11 The term ‘‘cross-guarantee activation date’’ means

12 the date on which the first cross-guarantee contracts

13 become effective under section 141(a).

14 (11) CROSS-GUARANTEE BACKUP FUND.—The

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

16 established pursuant to section 128(a).

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

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

19 which—

20 (A) is entered into between—

21 (i) one or more companies, at least

22 one of which is a depository institution;

23 and

24 (ii) a cross-guarantee syndicate;
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1 (B) is approved by the Corporation under

2 section 123;

3 (C) has become effective in accordance

4 with the contract’s terms; and

5 (D) is not enjoined under section

6 123(e)(2)(B).

7 (13) CROSS-GUARANTEE OBLIGATION.—The

8 term ‘‘cross-guarantee obligation’’ means an obliga9 tion of a direct guarantor arising out of a cross10 guarantee or stop-loss contract, and includes the ob11 ligations of such guarantor under section 125(c)(2)

12 of this title and sections 321 and 355 of title III.

13 (14) CROSS-GUARANTEE SYNDICATE.—The

14 term ‘‘cross-guarantee syndicate’’ means any group

15 of direct guarantors which has entered into a cross16 guarantee contract with a guaranteed financial

17 group.

18 (15) DEPOSIT.—

19 (A) IN GENERAL.—The term ‘‘deposit’’

20 means—

21 (i) any obligation within the meaning

22 given the term in paragraphs (1) through

23 (4) of section 3(l) of the Federal Deposit

24 Insurance Act; and
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1 (ii) any other obligation that the Cor2 poration determines is a deposit-like obli3 gation by general usage.

4 (B) DEPOSITS INCLUDE OBLIGATIONS PAY5 ABLE OUTSIDE THE UNITED STATES.—The

6 term ‘‘deposit’’ includes any obligation de7 scribed in subparagraph (A) without regard to

8 whether the obligation is payable within or

9 without the United States.

10 (C) EXCLUSION FOR CHECKABLE SUBOR11 DINATED DEBT.—The term ‘‘deposit’’ shall not

12 include any obligation which, under section

13 114(a)(2)(A), may not be a guaranteed obliga14 tion.

15 (16) DEPOSITORY INSTITUTION.—The term

16 ‘‘depository institution’’ has the meaning given to

17 such term in section 3(c) of the Federal Deposit In18 surance Act.

19 (17) DIRECT GUARANTOR.—The term ‘‘direct

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

21 stop-loss syndicate which has entered into a cross22 guarantee or stop-loss contract with a guaranteed fi23 nancial group or nondepository guarantor.

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

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

5 (B) the consolidated liabilities, including

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

8 (19) FAILED DEPOSITORY INSTITUTION.—The

9 term ‘‘failed depository institution’’ means any de10 pository institution for which a conservator or re11 ceiver has been appointed by the Federal Deposit In12 surance Corporation.

13 (20) FOREIGN BANK.—The term ‘‘foreign

14 bank’’ has the same meaning given to such term in

15 section 1(b) of the International Banking Act of

16 1978, except that such term shall not include any

17 bank organized under the laws of Puerto Rico,

18 Guam, American Samoa, the Virgin Islands, or any

19 territory of the United States.

20 (21) GROUP CROSS-GUARANTEE CONTRACT.—

21 The term ‘‘group cross-guarantee contract’’ means a

22 contract which—

23 (A) is entered into between two or more

24 guaranteed financial groups and a cross-guar25 antee syndicate;
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1 (B) is approved by the Corporation under

2 section 123;

3 (C) has become effective in accordance

4 with the contract’s terms; and

5 (D) is not enjoined under section

6 123(e)(2)(B).

7 (22) GUARANTEED BANKING OFFICE.—The

8 term ‘‘guaranteed banking office’’ means any branch

9 or agency of a foreign bank where—

10 (A) the foreign bank is a guaranteed com11 pany pursuant to section 112(e); or

12 (B) the branch or agency has entered into

13 a cross-guarantee contract with a cross-guaran14 tee syndicate.

15 (23) GUARANTEED COMPANY.—

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

17 company’’ means any company which has en18 tered into a cross-guarantee contract with a

19 cross-guarantee syndicate.

20 (B) FOREIGN BANKS.—

21 (i) IN GENERAL.—Notwithstanding

22 subparagraph (A), a foreign bank shall not

23 be a guaranteed company solely because a

24 branch or agency of such bank is a guar-
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1 anteed banking office under a cross-guar2 antee contract.

3 (ii) EXCEPTION FOR FOREIGN BANKS

4 WHICH ARE SUBSIDIARIES.—Notwithstand5 ing clause (i), a foreign bank may be a

6 guaranteed company, if such bank is guar7 anteed under a cross-guarantee contract

8 under section 112(e).

9 (24) GUARANTEED DEPOSITORY INSTITU10 TION.—The term ‘‘guaranteed depository institu11 tion’’ means a depository institution which is a guar12 anteed company.

13 (25) GUARANTEED FINANCIAL GROUP.—The

14 term ‘‘guaranteed financial group’’ means one or

15 more guaranteed companies or guaranteed banking

16 offices guaranteed under the same cross-guarantee

17 contract.

18 (26) GUARANTEED OBLIGATION.—

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

20 obligation’’ means an obligation of a guaranteed

21 party the performance of which has been guar22 anteed by a cross-guarantee or stop-loss syn23 dicate.

24 (B) RULE OF CONSTRUCTION.—The term

25 ‘‘performance’’ under subparagraph (A) in-
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1 cludes timely payment of any deposit or other

2 obligation, including interest, if failure to pay in

3 a timely manner would constitute a breach of

4 contract.

5 (27) GUARANTEED PARTY.—The term ‘‘guaran6 teed party’’ means any guaranteed company, guar7 anteed banking office, or nondepository guarantor.

8 (28) INSURED DEPOSIT.—The term ‘‘insured

9 deposit’’ means any deposit of a guaranteed deposi10 tory institution which is insured against loss by the

11 cross-guarantee backup fund under section 128.

12 (29) NET WORTH.—The term ‘‘net worth’’—

13 (A) means, with respect to a nondepository

14 guarantor, the amount which is equal to the

15 stockholders’ equity, the partnership equity, the

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

17 as the case may be, as determined in accord18 ance with generally accepted accounting prin19 ciples;

20 (B) does not include any equitable interest

21 or liability which the Corporation determines

22 should not be treated as net worth for purposes

23 of this title; and

24 (C) in the case of any nondepository guar25 antor which controls another nondepository
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1 guarantor or a guaranteed financial group, does

2 not include the net worth or equity capital of

3 the subsidiary guarantor or group.

4 (30) NONDEPOSITORY GUARANTOR.—The term

5 ‘‘nondepository guarantor’’ means any person which

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

7 syndicate.

8 (31) PREMIUM INCOME.—The term ‘‘premium

9 income’’ means any income accrued by a direct guar10 antor under any cross-guarantee or stop-loss con11 tract.

12 (32) PROJECTED ANNUAL PREMIUM.—The

13 term ‘‘projected annual premium’’ means the

14 amount calculated under section 116(d)(2).

15 (33) PROJECTED ANNUAL PREMIUM CAPAC16 ITY.—The term ‘‘projected annual premium capac17 ity’’ means the amount which is equal to—

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

19 3 percent of the equity capital of the guaran20 teed financial group guaranteed under the same

21 cross-guarantee contract under which such com22 pany is a guaranteed company; or

23 (B) in the case of a nondepository guaran24 tor, 3 percent of the net worth of the non25 depository guarantor.
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1 (34) PROJECTED ANNUAL PREMIUM LIMIT.—

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

3 the amount which is equal to 3 percent of projected

4 annual premium capacity.

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

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

7 a direct guarantor.

8 (36) STATE DEPOSITORY INSTITUTION.—The

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

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

11 Deposit Insurance Act.

12 (37) STOP-LOSS CONTRACT.—The term ‘‘stop13 loss contract’’ means a contract which—

14 (A) is entered into between a person and

15 a stop-loss syndicate;

16 (B) is approved by the Corporation under

17 section 123;

18 (C) has become effective in accordance

19 with the contract’s terms; and

20 (D) is not enjoined under section

21 123(e)(2)(B).

22 (38) STOP-LOSS SYNDICATE.—The term ‘‘stop23 loss syndicate’’ means any group of direct guaran24 tors which has entered into a stop-loss contract with

25 a nondepository guarantor.
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1 (39) SUBORDINATED DEBT.—

2 (A) IN GENERAL.—The term ‘‘subordi3 nated debt’’ means an obligation assumed by a

4 guaranteed company or guaranteed banking of5 fice which is subordinate in right of payment to

6 any general creditor of the company or office.

7 (B) GENERAL CREDITOR.—For purposes

8 of this paragraph, the term ‘‘general creditor’’

9 means—

10 (i) any creditor to which a guaranteed

11 company or guaranteed banking office has

12 an obligation which is a guaranteed obliga13 tion under the cross-guarantee contract for

14 such company or office, unless that credi15 tor is otherwise specifically secured by one

16 or more assets of the company or office;

17 and

18 (ii) any creditor of the guaranteed

19 company or guaranteed banking office

20 which is—

21 (I) not protected under the con22 tract; and

23 (II) not subordinated to the claims of

24 other creditors or treated as a preference

25 in a bankruptcy proceeding.
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1 (40) SUBSIDIARY.—The term ‘‘subsidiary’’

2 means, with reference to a company, any company

3 which such company controls.

4 (41) SYNDICATE AGENT.—The term ‘‘syndicate

5 agent’’ means any person which acts as the agent

6 for the direct guarantors under any cross-guarantee

7 or stop-loss contract.

8 SEC. 102. RULES OF CONSTRUCTION.

9 (a) GENERAL RULES OF CONSTRUCTION.—

10 (1) IN GENERAL.—This title shall be liberally

11 construed and applied to promote its underlying pur12 poses and policies.

13 (2) PURPOSES OF THIS TITLE.—The purposes

14 of this title are—

15 (A) to create and maintain a private, com16 petitive deposit insurance marketplace;

17 (B) to require each bank and savings asso18 ciation which accepts deposits to protect the full

19 amount of such deposits, along with most other

20 nondeposit liabilities, by obtaining cross-guar21 antee contracts from syndicates of direct guar22 antors;

23 (C) to induce depository institutions to

24 lend and invest wisely by authorizing direct
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1 guarantors which issue cross-guarantee con2 tracts to—

3 (i) charge risk-sensitive premiums for

4 the guarantees provided; and

5 (ii) negotiate with the banks and sav6 ings associations which enter into such

7 contracts all other terms and conditions, to

8 the extent such terms and conditions are

9 not inconsistent with this Act or other pro10 visions of law;

11 (D) to make the cross-guarantee process as

12 self-regulating as possible by establishing nu13 merous constructive tensions among the partici14 pants in the system;

15 (E) to establish a closed system of guaran16 tors with tier after tier of guarantors to stand

17 behind a guarantee and a ‘‘stop-loss’’ mecha18 nism to spread large losses as widely as possible

19 to ensure that no guaranteed obligation will

20 ever go unpaid;

21 (F) to force guarantors to pay promptly

22 for any losses that do occur and to prevent

23 guarantors from using legal actions to recover

24 any losses from other persons, except under

25 highly exceptional circumstances; and
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1 (G) to regulate the cross-guarantee mar2 ketplace only to the extent necessary to main3 tain the safety, soundness, and viability of the

4 entire cross-guarantee process and not the sol5 vency of any individual bank or savings associa6 tion regardless of its size.

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

8 title—

9 (1) the terms ‘‘guaranteed company,’’ ‘‘guaran10 teed depository institution,’’ ‘‘guaranteed financial

11 group,’’ ‘‘guaranteed party,’’ and ‘‘nondepository

12 guarantor’’ refer to those parties in their capacity as

13 parties guaranteed under a cross-guarantee or stop14 loss contract;

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

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

17 a cross-guarantee or stop-loss contract;

18 (3) the term ‘‘control’’ in such phrases as ‘‘as19 sumption of control’’ or ‘‘assumes control’’ shall not

20 have the meaning given the term under section

21 101(8);

22 (4) ‘‘including’’ shall not be construed more re23 strictively than the ordinary usage of such term so

24 as to exclude any other thing not referred to or de25 scribed; and
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1 (5) the phrases ‘‘has entered into a cross-guar2 antee contract’’ and ‘‘has entered into a stop-loss

3 contract,’’ as used in sections 101(22), 101(23), and

4 101(30), shall not be construed to refer to a con5 tract which is no longer in effect.

6 Subtitle B—Cross-Guarantee Process

7 SEC. 111. DEPOSITORY INSTITUTIONS PROHIBITED FROM

8 OPERATING WITHOUT A CROSS-GUARANTEE

9 CONTRACT.

10 After the applicable effective date under section 142,

11 a depository institution shall be a guaranteed depository

12 institution or guaranteed banking office unless the deposi13 tory institution—

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

15 branch (as the terms ‘‘Federal branch’’ and ‘‘in16 sured branch’’ are defined in sections 3(r) and 3(s)

17 of the Federal Deposit Insurance Act); or

18 (b) is a failed depository institution.

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

20 CONTRACTS.

21 (a) CROSS-GUARANTEE CONTRACTS.—

22 (1) SCOPE OF CROSS-GUARANTEE SYSTEM.—

23 (A) LIMIT ON GUARANTEED COMPANIES.—

24 Subject to section 112(e), no company which is
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1 not a depository institution may be a guaran2 teed company.

3 (B) LIMIT ON THE NUMBER OF GUARAN4 TEED PARTIES WITHIN A GUARANTEED FINAN5 CIAL GROUP.—Subject to sections 112(d) and

6 112(e), no guaranteed company or guaranteed

7 banking office shall be guaranteed under the

8 same cross-guarantee contract as another guar9 anteed company or guaranteed banking office.

10 (2) NECESSARY PARTIES.—Each cross-guaran11 tee contract shall have the following parties:

12 (A) A guaranteed financial group consist13 ing of the party or parties guaranteed under

14 the contract.

15 (B) The direct guarantors of the guaran16 teed financial group.

17 (C) A syndicate agent acting on behalf of

18 the direct guarantors.

19 (3) AFFILIATE GUARANTEE.—Any affiliate of a

20 depository institution may guarantee the perform21 ance of such institution’s guaranteed obligations

22 under a cross-guarantee contract.

23 (b) STOP-LOSS CONTRACTS.—

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

25 have the following parties:
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1 (A) A nondepository guarantor as the

2 party guaranteed under the contract.

3 (B) The direct guarantors of the non4 depository guarantor.

5 (C) A syndicate agent acting on behalf of

6 the direct guarantors.

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

8 nondepository guarantor may guarantee the per9 formance of the guaranteed obligations of such non10 depository guarantor.

11 (c) GROUP CROSS-GUARANTEE CONTRACTS.—

12 (1) IN GENERAL.—

13 (A) POOLING OF RISK.—Subject to the

14 provisions of this subsection, the cross-guaran15 tee contracts of two or more guaranteed finan16 cial groups may be pooled for syndication.

17 (B) SEPARATE CONTRACT FOR A SYN18 DICATE OF POOLED CONTRACTS.—The direct

19 guarantors comprising the cross-guarantee syn20 dicate for a group of cross-guarantee contracts

21 may enter into a separate contract (hereinafter

22 ‘‘group cross-guarantee contract’’) under which

23 the cross-guaranteed contracts pooled under

24 such contract shall be incorporated by ref25 erence.
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1 (C) PROPORTIONAL RISK.—Each direct

2 guarantor under a group cross-guarantee con3 tract shall have the same proportional rights,

4 privileges, duties, and obligations in each cross5 guarantee contract incorporated by reference in

6 the syndicate contract as such guarantor has in

7 the syndicate contract.

8 (2) APPROVAL OF GROUP CROSS-GUARANTEE

9 CONTRACT AND ITS POOL OF CROSS-GUARANTEE

10 CONTRACTS.—The Corporation shall approve or re11 ject, as a group, a proposed group cross-guarantee

12 contract and the cross-guarantee contracts pooled

13 under that contract.

14 (3) AGGREGATION OF ASSETS FOR PURPOSES

15 OF RISK DIVERSIFICATION.—The assets of all guar16 anteed parties pooled under a group cross-guarantee

17 contract shall be aggregated for purposes of apply18 ing the risk diversification requirement established

19 in section 114(b).

20 (4) NO CROSS LIABILITY OF GUARANTEED PAR21 TIES.—No guaranteed party under any cross-guar22 antee contract shall be liable for any portion of the

23 guaranteed obligations of a guaranteed party under

24 any other cross-guarantee contract which is pooled

25 under the same group cross-guarantee contract.
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1 (5) INDIVIDUAL TERMS AND RATES.—The

2 terms, conditions, and premium rates of a cross3 guarantee contract pooled under a group cross-guar4 antee contract may differ from the terms, condi5 tions, and premium rates under any other cross6 guarantee contract pooled under the syndicate con7 tract.

8 (6) PARTIES TO INDIVIDUAL CROSS-GUARANTEE

9 CONTRACTS RETAIN SAME RIGHTS AND DUTIES.—No

10 right, privilege, duty, or obligation that applies

11 under this title to any party to a cross-guarantee

12 contract shall be affected by the pooling of the cross13 guarantee contract with other contracts covered by

14 a group cross-guarantee contract.

15 (7) ADDITIONAL GUARANTEED PARTIES UNDER

16 A GROUP CROSS-GUARANTEE CONTRACT.—A group

17 cross-guarantee contract may be amended under sec18 tion 123 to add a guaranteed financial group or a

19 depository institution with a proposed cross-guaran20 tee contract to the existing syndicate contract if—

21 (A) the syndicate contract remains in com22 pliance with all of the provisions of this title

23 after the addition of the institution to the syn24 dicate contract; and
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1 (B) the term of the syndicate contract is

2 not extended beyond the original term of any

3 cross-guarantee contract already pooled under

4 the syndicate contract by the addition of the in5 stitution.

6 (8) TERM OF A GROUP CROSS-GUARANTEE CON7 TRACT.—A group cross-guarantee contract shall con8 tinue in force until each guaranteed party which is

9 guaranteed under the syndicate contract has ceased

10 to be a guaranteed party under a cross-guarantee

11 contract pooled under the syndicate contract.

12 (9) LENGTH OF CROSS-GUARANTEE CONTRACT

13 POOLED UNDER A SYNDICATE CONTRACT.—No

14 cross-guarantee contract pooled under a group cross15 guarantee contract shall have a term longer than the

16 remaining term of the syndicate contract.

17 (10) RULE OF CONSTRUCTION.—Nothing in

18 this subsection shall be construed as preventing a

19 cross-guarantee or stop-loss syndicate from becom20 ing a syndicate under two or more cross-guarantee

21 or stop-loss contracts without including such con22 tracts under a group cross-guarantee contract.

23 (d) AFFILIATES AND OTHER PARTIES RELATED TO

24 A DEPOSITORY INSTITUTION WHICH SHALL BE GUARAN25 TEED UNDER ONE CONTRACT.—
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1 (1) IN GENERAL.—Subject to paragraph (4), a

2 guaranteed depository institution shall be guaran3 teed under the same cross-guarantee contract with

4 all other affiliated guaranteed depository institu5 tions.

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

7 if more than two-thirds of the shares of any deposi8 tory institution are directly or indirectly under com9 mon ownership with more than two-thirds of the

10 shares of any other depository institution, such de11 pository institutions shall be guaranteed depository

12 institutions under the same cross-guarantee con13 tract.

14 (3) DOMESTIC BRANCHES AND AGENCIES OF

15 FOREIGN BANKS.—

16 (A) IN GENERAL.—If any branch of a for17 eign bank is a guaranteed banking office, all

18 branches and agencies of such foreign bank

19 shall be guaranteed banking offices under the

20 same cross-guarantee contract.

21 (B) BRANCHES AND AGENCIES AFFILI22 ATED WITH GUARANTEED DEPOSITORY INSTI23 TUTIONS.—

24 (i) IN GENERAL.—A guaranteed bank25 ing office shall be guaranteed under the
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1 same cross-guarantee contract as any af2 filiated guaranteed depository institution.

3 (ii) DEFINITION OF AFFILIATION.—

4 (I) IN GENERAL.—For purposes

5 of this subparagraph, the term ‘‘affili6 ate’’ shall have the same meaning as

7 defined in section 101(1) except that

8 ‘‘control’’ shall mean the ownership or

9 power to, directly or indirectly, vote

10 an aggregate of 50 percent or more of

11 any class or classes of the securities

12 which separately or together, taking

13 into account the relative voting weight

14 of different shares, have the power to

15 elect a majority of the members of the

16 company’s board of directors.

17 (II) RULES.—The Corporation

18 shall prescribe rules to implement the

19 intent of this subparagraph.

20 (4) RULES.—For cases under this subsection in

21 which a guaranteed depository institution may be re22 quired to be guaranteed under more than one con23 tract, the Corporation shall prescribe rules for deter24 mining which cross-guarantee contract shall guaran25 tee such a depository institution’s obligations.
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1 (e) NONDEPOSITORY INSTITUTIONS WHICH MAY BE2 COME GUARANTEED COMPANIES.—

3 (1) SUBSIDIARIES.—

4 (A) IN GENERAL.—A company controlled

5 by a guaranteed depository institution may be

6 a guaranteed company under the same cross7 guarantee contract under which the guaranteed

8 depository institution is guaranteed.

9 (B) DEFINITION OF CONTROL.—

10 (i) IN GENERAL.—For purposes of

11 this paragraph, the term ‘‘control’’ means,

12 with respect to one company’s relationship

13 to another company, one company’s owner14 ship or power to, directly or indirectly, vote

15 an aggregate of 50 percent or more of any

16 class or classes of the securities which sep17 arately or together, taking into account the

18 relative voting weight of different shares,

19 have the power to elect a majority of the

20 members of such other company’s board of

21 directors.

22 (ii) RULES.—The Corporation shall

23 prescribe rules to implement the intent of

24 this paragraph.

25 (2) AFFILIATED FOREIGN BANKS.—
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1 (A) IN GENERAL.—A foreign bank affili2 ated to a guaranteed depository institution may

3 be guaranteed under the same cross-guarantee

4 contract under which the guaranteed depository

5 institution is guaranteed.

6 (B) DEFINITION OF AFFILIATION.—

7 (i) IN GENERAL.—For purposes of

8 this subparagraph, the term ‘‘affiliate’’

9 shall have the same meaning as defined in

10 section 101(1) except that ‘‘control’’ shall

11 mean the ownership or power to, directly

12 or indirectly, vote an aggregate of 50 per13 cent or more of any class or classes of the

14 securities which separately or together,

15 taking into account the relative voting

16 weight of different shares, have the power

17 to elect a majority of the members of the

18 company’s board of directors.

19 (ii) RULES.—The Corporation shall

20 prescribe rules to implement the intent of

21 this paragraph.

22 (f) PROVISIONS RELATING TO SYNDICATE

23 AGENTS.—

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

25 agent may not—
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1 (A) be an affiliate of any guaranteed party

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

3 or

4 (B) acquire or retain any ownership inter5 est in any guaranteed party under any cross6 guarantee or stop-loss contract.

7 (2) NO DEPOSITORY INSTITUTION, FOREIGN

8 BANK, OR NONDEPOSITORY GUARANTOR MAY BE A

9 SYNDICATE AGENT.—No depository institution, for10 eign bank, or nondepository guarantor may be a

11 syndicate agent under any cross-guarantee or stop12 loss contract.

13 (3) PROHIBITIONS ON INTERLOCKS.—

14 (A) IN GENERAL.—No owner, director, of15 ficer, employee, agent, or partner of a syndicate

16 agent may be an owner, director, officer, em17 ployee, agent, or partner of any guaranteed

18 party or other syndicate agent under any cross19 guarantee or stop-loss contract.

20 (B) SUBCONTRACTORS.—

21 (i) IN GENERAL.—A subcontractor of

22 a syndicate agent may be a subcontractor

23 to any guaranteed party or other syndicate

24 agent under any cross-guarantee or stop25 loss contract.
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1 (ii) PERSONNEL OVERLAPS.—

2 (I) IN GENERAL.—Subject to

3 subclause (II), an owner, director, of4 ficer, employee, agent, or partner of a

5 subcontractor of a syndicate agent

6 may be an owner, director, officer,

7 employee, agent, or partner of any

8 guaranteed party or other syndicate

9 agent under any cross-guarantee or

10 stop-loss contract.

11 (II) EXCEPTION FOR GUARAN12 TEED PARTY UNDER THE SAME CON13 TRACT.—An owner, director, officer,

14 employee, agent, or partner of a sub15 contractor of a syndicate agent per16 forming monitoring work on a guaran17 teed party under a cross-guarantee or

18 stop-loss contract may not be an

19 owner, director, officer, employee,

20 agent, or partner of the guaranteed

21 party under the contract.

22 (C) DEFINITION OF OWNER.—For pur23 poses of this paragraph, the term ‘‘owner’’

24 means, with respect to any company, a person

25 who controls the company.
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1 SEC. 113. REQUIREMENTS COMMON TO CROSS-GUARANTEE

2 AND STOP-LOSS CONTRACTS.

3 (a) STOP-LOSS LIMIT FOR LOSSES OF A GUARAN4 TEED PARTY AS A DIRECT GUARANTOR OF OTHER GUAR5 ANTEED PARTIES.—

6 (1) DEFINITIONS.—For purposes of this sub7 section:

8 (A) LEVEL 1 PARTY.—The term ‘‘level 1

9 party’’ means a guaranteed party under any

10 cross-guarantee or stop-loss contract.

11 (B) LEVEL 2 PARTY.—The term ‘‘level 2

12 party’’ means a direct guarantor of a level 1

13 party.

14 (C) LEVEL 3 PARTY.—The term ‘‘level 3

15 party’’ means a direct guarantor of a level 2

16 party.

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

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

19 the cash outlays, including administrative ex20 penses, required to fulfill a level 2 party’s cross21 guarantee obligations to a level 1 party due to

22 the occurrence of such loss event, using as a

23 discount rate the sum of—

24 (i) 2 percent; and

25 (ii) the average annual percentage

26 yield on 3-month bills issued by the Sec-
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1 retary of the Treasury under section

2 3104(a) of title 31, United States Code, as

3 determined by the Corporation as of the

4 most recent issue date preceding the date

5 of the loss event.

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

7 means an event described in paragraph (3).

8 (F) STOP-LOSS LIABILITY.—The term

9 ‘‘stop-loss liability’’ means an obligation ac10 crued by a level 3 party to a level 2 party under

11 paragraph (2).

12 (G) STOP-LOSS RECOVERY.—The term

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

14 by a level 2 party due to the obligation of a

15 level 3 party under paragraph (2).

16 (2) STOP-LOSS OBLIGATION OF DIRECT GUAR17 ANTORS.—

18 (A) STOP-LOSS RECOVERY.—For any 12-

19 calendar month period in which a cross-guaran20 tee or stop-loss contract exists between level 3

21 parties and a level 2 party as of the first day

22 of the first calendar month of such period, the

23 level 3 parties shall be obligated to pay to the

24 level 2 party an amount equal to the total

25 amount of losses accrued by the level 2 party
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1 in such party’s capacity as a direct guarantor

2 of level 1 parties during such 12-calendar3 month period, minus the sum of—

4 (i) the greater of—

5 (I) the amount equal to 5 times

6 the total amount of cross-guarantee

7 and stop-loss premium income accru8 ing to the level 2 party in such party’s

9 capacity as a direct guarantor of level

10 1 parties during such 12-calendar11 month period;

12 (II) the amount equal to 5 times

13 the total amount of cross-guarantee

14 and stop-loss premium income accru15 ing to the level 2 party in such party’s

16 capacity as a direct guarantor of level

17 1 parties during the 12-calendar18 month period preceding such 12-cal19 endar-month period;

20 (III) in the case of a 12-cal21 endar-month period ending in a

22 month which is among the first 11

23 calendar months that the level 2 party

24 has ever been a party guaranteed

25 under a cross-guarantee or stop-loss
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1 contract, the amount equal to the av2 erage monthly cross-guarantee and

3 stop-loss premium income accruing to

4 the level 2 party in such party’s ca5 pacity as a direct guarantor of level 1

6 parties since first becoming a party

7 guaranteed under a cross-guarantee

8 or stop-loss contract, multiplied by 60;

9 or

10 (IV) in the case of a 12-calendar11 month period ending in a month

12 which is among the first 23 calendar

13 months that the level 2 party has ever

14 been a party guaranteed under a

15 cross-guarantee or stop-loss contract,

16 the amount equal to 5 times the total

17 amount of cross-guarantee and stop18 loss premium income accruing to the

19 level 2 party in such party’s capacity

20 as a direct guarantor of level 1 par21 ties, without taking into account any

22 reduction in premium income due to

23 the transfer, under section 113(m), of

24 the level 2 party’s interest in any
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1 cross-guarantee or stop-loss syndicate;

2 and

3 (ii) recoveries accrued under this

4 paragraph by the level 2 party for each 12-

5 calendar-month period ending at the end of

6 each of the first 11 calendar months in

7 such 12-calendar-month period.

8 (B) CARRYOVER FROM PREVIOUS CON9 TRACTS.—The amounts calculated in subpara10 graph (A) shall include all losses, premium in11 come, and stop-loss recoveries of the level 2

12 party under any cross-guarantee or stop-loss

13 contracts under which the level 2 party was a

14 party guaranteed during such 12-calendar15 month period.

16 (C) MERGER OR CONSOLIDATION OF TWO

17 OR MORE GUARANTEED PARTIES.—In the case

18 of any level 2 party which merged or consoli19 dated with any other party which was a level 2

20 party guaranteed under another cross-guaran21 tee or stop-loss contract, the amounts cal22 culated in subparagraph (A) shall include all

23 losses, premium income, and stop-loss recover24 ies of both of the parties prior to the merger or

25 consolidation.
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1 (D) OTHER GUARANTEED PARTIES UNDER

2 THE CONTRACT WHICH WERE PREVIOUSLY DI3 RECT GUARANTORS.—The amounts calculated

4 in subparagraph (A) for the level 2 party shall

5 include all losses, premium income, and stop6 loss recoveries of any other party guaranteed

7 under the same cross-guarantee contract as the

8 level 2 party, which occurred while such other

9 party was a level 2 party while guaranteed

10 under the same or another cross-guarantee or

11 stop-loss contract.

12 (E) TIMING OF STOP-LOSS RECOVERY.—A

13 stop-loss recovery shall accrue as of the last day

14 of the last calendar month of the 12-calendar15 month period under which the stop-loss recov16 ery was calculated.

17 (F) ADJUSTMENT FOR CATASTROPHIC

18 LOSSES.—

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

20 month, a closed loop exists in which every

21 direct guarantor under the contracts in the

22 closed loop accrues a stop-loss recovery for

23 such month, then the calculation of stop24 loss recovery for the 12-calendar-month pe25 riod ending in such month for all the con-
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1 tracts in the closed loop shall be adjusted

2 as required under clauses (ii) and (iii).

3 (ii) ADJUSTMENT.—If, for any cal4 endar month, a closed loop meets the con5 ditions of clause (i), the amounts cal6 culated in subparagraph (A) shall, for the

7 12-calendar month period in which such

8 calendar month is the last month, be ad9 justed by increasing from 5 to 6, under

10 clauses (i)(I) and (i)(II) of subparagraph

11 (A), the amount multiplied by the premium

12 income accruing to a level 2 party and by

13 increasing from 60 to 72, under clause

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

15 multiplied by the average monthly pre16 mium accruing to the level 2 party.

17 (iii) FURTHER ADJUSTMENT.—If,

18 after making the adjustments to the cal19 culation of stop-loss recovery under clause

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

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

22 the amounts under clauses (i)(I) and

23 (i)(II) of subparagraph (A) shall be in24 creased by 1 and the amount under clause

25 (i)(III) of subparagraph (A) shall be in-
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1 creased by 12, until at least one direct

2 guarantor under a contract in such closed

3 loop is not accruing a stop-loss recovery

4 for the calendar month in clause (i).

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

6 level 2 party shall accrue a loss as the direct guaran7 tor of a Level 1 party as of—

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

9 which the level 1 party accrues a stop-loss re10 covery; or

11 (B) the day on which, with respect to a

12 level 1 party which is a guaranteed company,

13 the earliest of the following occurs:

14 (i) Notice is filed with the Corporation

15 under section 118(d)(2)(D) by the cross16 guarantee syndicate of which the level 2

17 party is a member that the syndicate has

18 assumed control of the level 1 party.

19 (ii) A transaction is completed which

20 the Corporation, upon request by the syn21 dicate agent under the contract and pursu22 ant to paragraph (9), determines—

23 (I) involves the acquisition of the

24 level 1 party or a significant portion

25 of the party’s assets, the merger or
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1 consolidation of the level 1 party with

2 any other party, the liquidation of the

3 level 1 party, or any other similar

4 transaction involving the level 1 party;

5 and

6 (II) results proximately in a loss

7 for the level 2 parties in their capacity

8 as guarantors under the cross-guaran9 tee contract.

10 (iii) The level 1 party becomes a debt11 or in a case under title 11, United States

12 Code.

13 (4) PREPARATION OF ORIGINAL LOSS ESTIMATE

14 BY SYNDICATE AGENT.—The syndicate agent for the

15 cross-guarantee contract under which a level 2 party

16 is a direct guarantor shall, whenever a loss event

17 under subparagraph (3)(B) occurs under such con18 tract—

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

20 and

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

22 following the calendar month in which such loss

23 event occurs, notify the central electronic repos24 itory of the estimate of the loss under subpara25 graph (A).
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1 (5) REVISION OF LOSS ESTIMATE BY SYN2 DICATE AGENT.—The syndicate agent for the cross3 guarantee contract under which a level 2 party is a

4 direct guarantor shall, whenever a loss event under

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

6 (A) revise the original estimate of the loss

7 for such loss event and notify the central elec8 tronic repository of such revised estimate at

9 least as often as the 15th day of—

10 (i) the third calendar month following

11 the calendar month in which the loss event

12 took place;

13 (ii) the twelfth calendar month follow14 ing the calendar month in which the loss

15 event took place; and

16 (iii) every twelfth month after the cal17 endar month in clause (ii); and

18 (B) for each estimate of the loss described

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

20 third party a confirmation of the reasonableness

21 of the revised estimate of the loss.

22 (6) COMPLETION OF CASH OUTLAYS BECOMES

23 FINAL AMOUNT.—Notwithstanding paragraph (5),

24 once a level 2 party has made the final cash dis25 bursement to fulfill such party’s cross-guarantee ob-
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1 ligations due to any loss event under subparagraph

2 (3)(B)—

3 (A) the syndicate agent for the cross-guar4 antee contract under which the level 2 party is

5 a direct guarantor shall calculate the loss from

6 such loss event (subject to the third party con7 firmation in subparagraph (5)(B)) and notify

8 the central electronic repository of this calcula9 tion; and

10 (B) no further revisions of the loss from

11 such loss event shall be permitted.

12 (7) CALCULATION AND CLEARINGHOUSE DU13 TIES OF CENTRAL ELECTRONIC REPOSITORY.—

14 (A) CALCULATION OF STOP-LOSS LIABIL15 ITY.—After notification under paragraphs (4),

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

17 shall calculate the stop-loss recovery for every

18 level 2 party for every 12-month calendar pe19 riod affected by the initial estimate, revised es20 timates, and final loss amounts.

21 (B) ADJUSTMENT FOR INTEREST.—Upon

22 completing the calculations under subparagraph

23 (A), the central electronic repository shall then

24 adjust the amounts owed between level 2 and

25 level 3 parties as specified in paragraph (8).
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1 (C) NETTING CALCULATION.—Upon com2 pleting the calculations under subparagraph

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

4 each person that is a direct guarantor or guar5 anteed party, net the amounts owed by such

6 person in its capacity as a level 3 party with

7 the amount such person is entitled to receive in

8 its capacity as a level 2 party to determine the

9 overall liability or right to payment for such

10 person.

11 (D) NOTIFICATION OF PARTIES.—Within

12 five business days after receiving notification

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

14 electronic repository shall notify any level 2

15 party or level 3 party of the results of the cal16 culations under subparagraphs (A), (B), and

17 (C).

18 (E) SETTLEMENT.—

19 (i) PAYMENTS TO BE MADE.—Within

20 three business days after receiving notifica21 tion under subparagraph (D), each party

22 which, given the calculations under sub23 paragraph (C), has a net liability shall pay

24 the amount of such liability to the central

25 electronic repository.
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1 (ii) DISBURSEMENT OF PAYMENTS.—

2 Upon receiving all payments under clause

3 (i), the central electronic repository shall

4 promptly disburse to each party which has

5 a right to payment, given the calculations

6 under subparagraph (C), the amount owed

7 such party.

8 (iii) PENALTIES FOR LATE PAY9 MENT.—If an obligation under clause (i) is

10 not paid in a timely manner, any party

11 which fails to perform its obligation under

12 this title to pay the balance owed under

13 clause (i), including the guarantors of the

14 specific party most directly liable under

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

16 for damages of 10 percent of the unpaid

17 amount for which the party is obligated,

18 plus interest at the rate specified under

19 subparagraph (C) of paragraph (8).

20 (F) RULES.—The Corporation may pre21 scribe such rules as may be necessary to imple22 ment this paragraph.

23 (8) CALCULATION OF STOP-LOSS PAYMENTS

24 PLUS INTEREST.—
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1 (A) ORIGINAL ESTIMATE.—If a determina2 tion under subparagraph (7)(A) is based on the

3 original estimate of loss under paragraph (4)

4 and results in a stop-loss recovery for a level 2

5 party, each level 3 party shall owe to the level

6 2 party the amount of the stop-loss liability for

7 such level 3 party plus interest on the amount

8 of such liability from the last day of the month

9 in which the loss occurred to the date of pay10 ment under this subparagraph.

11 (B) REVISION OF ESTIMATES.—If a deter12 mination under subparagraph (7)(A) results

13 in—

14 (i) an increase from the previous esti15 mate of the stop-loss recovery for a par16 ticular month, then each level 3 party shall

17 owe to the level 2 party the amount of the

18 increase in the level 3 party’s stop-loss li19 ability plus interest on the amount of the

20 increase in such liability from the last day

21 of such month until payment is made

22 under this clause; or

23 (ii) a decrease from the previous esti24 mate of the stop-loss recovery for a par25 ticular month, then the level 2 party shall
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1 owe each level 3 party the amount of the

2 decrease in such level 3 party’s stop-loss

3 liability plus interest on the amount of the

4 decrease in such liability from the last day

5 of such month until payment is made

6 under this clause.

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

8 cross-guarantee or stop-loss contract shall agree

9 to the interest rate to be used for the calcula10 tion of interest under subparagraphs (A) and

11 (B).

12 (9) CGRC ADJUDICATION OF TIMING OF LOSS

13 EVENTS.—

14 (A) INFORMAL CGRC ADJUDICATION.—The

15 Corporation shall establish procedures to deter16 mine the timing of loss events under paragraph

17 (3)(B)(ii).

18 (B) JUDICIAL REVIEW.—Any guaranteed

19 party may seek judicial review of any deter20 mination under subparagraph (A).

21 (b) DIRECT GUARANTOR’S CROSS-GUARANTEE OBLI22 GATIONS UNDER THE CONTRACT ARE INDEPENDENT

23 FROM OTHER PARTIES’ OBLIGATIONS.—The cross-guar24 antee obligations of a direct guarantor under any cross-
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1 guarantee or stop-loss contract shall be independent of

2 any obligation of any other party under the contract.

3 (c) GUARANTEED PARTY CANNOT BE A DIRECT

4 GUARANTOR UNDER THE SAME CONTRACT.—No guaran5 teed party may be a direct guarantor under the cross6 guarantee or stop-loss contract under which such party is

7 a guaranteed party.

8 (d) DIRECT GUARANTORS PROHIBITED FROM OB9 TAINING COLLATERAL FOR CROSS-GUARANTEE OBLIGA10 TIONS.—No direct guarantor under any cross-guarantee

11 or stop-loss contract may obtain or retain a lien or security

12 interest in a guaranteed party under the contract, or in

13 any assets of the guaranteed party, in connection with

14 such guarantor’s cross-guarantee obligations under the

15 contract, unless the guaranteed party is a guaranteed

16 banking office.

17 (e) PROVISIONS OF CONTRACT REGARDING DIVISION

18 OF LIABILITY.—

19 (1) SEVERAL LIABILITY.—No direct guarantor

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

21 be jointly liable for the cross-guarantee obligations

22 of any other direct guarantor under the contract.

23 (2) DIVISION OF LIABILITY.—

24 (A) DETERMINED BY CONTRACT.—Subject

25 to section 116(d), the terms of a cross-guaran-
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1 tee or stop-loss contract shall establish the divi2 sion of liability among the direct guarantors

3 under the contract.

4 (B) ADJUSTMENT.—If the division of li5 ability under a cross-guarantee or stop-loss con6 tract does not equal 100 percent, each direct

7 guarantor’s assigned liability under the contract

8 shall be adjusted proportionately so that the di9 vision of liability equals 100 percent.

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

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

14 shall be proportionate to such guarantor’s interest in

15 the syndicate.

16 (4) SYNDICATES NOT PARTNERSHIPS OR JOINT

17 VENTURES.—Notwithstanding any state law, a

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

21 (f) PREMIUM REQUIREMENTS.—Each cross-guaran22 tee and stop-loss contract shall describe the method for

23 calculating, and the timing of payment, for any premium

24 payable to the direct guarantors under the contract.

25 (g) MAXIMUM TERM OF CONTRACTS.—
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1 (1) TERM OF CONTRACT.—A cross-guarantee or

2 stop-loss contract may not have a term of more than

3 5 years.

4 (2) AMENDMENTS.—The parties to any cross5 guarantee or stop-loss contract may agree to extend

6 the term of the contract as long as the contract as

7 amended still expires within 5 years after the origi8 nal effective date of the contract.

9 (3) RENEWAL OF CONTRACT MUST BE AP10 PROVED BY THE CORPORATION.—No cross-guaran11 tee or stop-loss contract may be renewed by the par12 ties to the contract, and no successor contract may

13 become effective, without the approval of the Cor14 poration under section 123.

15 (4) REMEDY FOR CONTINUING A CROSS-GUAR16 ANTEE CONTRACT AFTER EXPIRATION DATE.—After

17 the 30th day following the expiration of a cross18 guarantee contract in which—

19 (A) the direct guarantors have not as20 sumed control under section 118(a) of all the

21 guaranteed companies guaranteed under the

22 contract;

23 (B) a guaranteed party under such con24 tract has not become a guaranteed party under

25 another cross-guarantee contract;
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1 (C) a successor contract is not being con2 sidered for approval under section 123 or the

3 Corporation has already rejected two successor

4 contracts;

5 (D) the guaranteed party is not appealing

6 the rejection by the Corporation, under section

7 123, of a successor contract or final judgment

8 has been reached on such an appeal; or

9 (E) the guaranteed party is not a debtor

10 under any proceeding under title 11 of the

11 United States Code,

12 the Corporation may appoint a receiver for the guar13 anteed party and file a bankruptcy petition, pursu14 ant to section 125(c).

15 (h) CANCELLATION OF CONTRACTS BY SYN16 DICATES.—

17 (1) RIGHT TO CANCEL.—

18 (A) DEFAULT RULE.—Unless otherwise

19 agreed in a cross-guarantee or stop-loss con20 tract, a cross-guarantee or stop-loss syndicate

21 may cancel such contract at any time without

22 cause provided that the syndicate agent under

23 such contract provides notice of such cancella24 tion to the Corporation and the guaranteed
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1 party or parties under the contract at least 90

2 days prior to the effective date of cancellation.

3 (B) MINIMUM NOTICE PERIOD STILL RE4 QUIRED FOR ANY CONTRARY AGREEMENT.—If

5 the parties to a cross-guarantee or stop-loss

6 contract agree to cancellation rules different

7 than those provided under subparagraph (A),

8 the contract shall still require the syndicate

9 agent under the contract to give notice of can10 cellation to the Corporation and to the guaran11 teed party or parties under the contract at least

12 90 days prior to the effective date of the can13 cellation.

14 (C) WITHDRAWAL OF CANCELLATION NO15 TICE.—A cross-guarantee syndicate may, prior

16 to the cancellation becoming effective, withdraw

17 the cancellation notice issued under this para18 graph.

19 (2) CANCELLATION OF ONE GUARANTEED FI20 NANCIAL GROUP UNDER A GROUP CONTRACT.—A

21 cross-guarantee syndicate may cancel a cross-guar22 antee contract with 1 guaranteed financial group

23 under a group cross-guarantee contract without af24 fecting the rights, privileges, duties, and obligations

25 arising out of the syndicate contract with regard to
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1 the other guaranteed financial groups under the syn2 dicate contract.

3 (3) LIMITATIONS ON GURANTEED PARTY.—A

4 guaranteed party under any cross-guarantee or stop5 loss contract may not become a direct guarantor

6 under any other cross-guarantee or stop-loss con7 tract during any of the following periods:

8 (A) The period beginning on the date such

9 party receives a notice of cancellation under

10 paragraph (1) or (2) with respect to such con11 tract and ending on the date the party becomes

12 a guaranteed party under a successor contract

13 or the cancellation notice is withdrawn under

14 paragraph (1)(C).

15 (B) The period beginning on the date the

16 contract expires and ending on the date the

17 party becomes a guaranteed party under a suc18 cessor contract.

19 (4) CONTINUED EFFECTIVENESS OF CROSS20 GUARANTEE CONTRACTS UNTIL OTHER COVERAGE IS

21 OBTAINED.—

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

23 party under a cross-guarantee or stop-loss con24 tract shall remain in effect after the effective

25 date of the cancellation of the contract by the
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1 direct guarantors or after the expiration of such

2 contract, as the case may be, until—

3 (i) the guaranteed party becomes a

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

6 (ii) in the case of a guaranteed party

7 which ceases to exist as a legal entity, the

8 guaranteed obligations of the institution

9 are satisfied or become guaranteed obliga10 tions covered under another cross-guaran11 tee or stop-loss contract.

12 (B) CANCELLATION WHEN NONDEPOSI13 TORY GUARANTOR IS NOT A DIRECT GUARAN14 TOR.—Notwithstanding subparagraph (A), a

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

17 the party guaranteed under the contract—

18 (i) is not at the time of cancellation a

19 direct guarantor under any cross-guarantee

20 or stop-loss contract; and

21 (ii) has transferred any remaining

22 risk under any cross-guarantee or stop-loss

23 contract under which such guarantor was

24 formerly a direct guarantor to another di25 rect guarantor.
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1 (i) CANCELLATION OF CONTRACTS BY GUARANTEED

2 PARTY.—

3 (1) IN GENERAL.—The guaranteed financial

4 group or nondepository guarantor which is the party

5 guaranteed under a cross-guarantee or stop-loss con6 tract may notify the syndicate agent for the direct

7 guarantors under the contract at any time of such

8 party’s intention to cancel the contract.

9 (2) CANCELLATION NOT EFFECTIVE UNTIL

10 SUBSTITUTE COVERAGE OBTAINED.—The cancella11 tion of any cross-guarantee or stop-loss contract

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

13 cancelling party becomes a guaranteed financial

14 group or a nondepository guarantor under another

15 cross-guarantee or stop-loss contract.

16 (3) ALLOWING NONDEPOSITORY GUARANTORS

17 TO EXIT THE BUSINESS.—Notwithstanding para18 graph (2), a cancellation of a stop-loss contract by

19 a nondepository guarantor shall take effect imme20 diately if the nondepository guarantor—

21 (A) is not at the time of cancellation a di22 rect guarantor under any cross-guarantee or

23 stop-loss contract; and

24 (B) has transferred any remaining risk

25 under any cross-guarantee or stop-loss contract
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1 under which such guarantor was formerly a di2 rect guarantor to another direct guarantor.

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

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

5 stop-loss contract which is canceled pursuant to

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

7 amount determined in accordance with the terms of

8 the contract.

9 (j) CONTINUED EFFECTIVENESS OF CONTRACTS

10 AFTER CONVERSION OF CHARTER OF DEPOSITORY INSTI11 TUTION.—If—

12 (1) any State depository institution becomes a

13 Federal depository institution;

14 (2) any Federal depository institution becomes

15 a State depository institution;

16 (3) any bank becomes a savings association;

17 (4) any savings association becomes a bank; or

18 (5) any depository institution in any other way

19 modifies its legal status,

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

23 in effect immediately before such conversion shall remain

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

2 UNDER THE CONTRACTS.—

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

5 contract may void or rescind the contract, regardless

6 of any defense to the existence or enforceability of

7 the contract that might exist under Federal or State

8 law.

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

11 excuse for the failure to perform any obligation

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

13 be effective.

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

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

18 (A) the contract ceases to comply with any

19 requirement under this title; or

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

21 to comply with this title.

22 (l) DISTRIBUTION OF LOSSES BETWEEN PRIOR AND

23 SUCCESSOR SYNDICATES.—

24 (1) CLAIMS-MADE GUARANTEE.—Subject to

25 paragraph (2), as between two or more cross-guar-
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1 antee or stop-loss syndicates which have over time

2 guaranteed a particular guaranteed party, a cross3 guarantee obligation shall lie with the syndicate

4 which was the cross-guarantee or stop-loss syndicate

5 at the time a cause of action described under section

6 117(e)(1)(A)(i) was filed with respect to the obliga7 tion.

8 (2) EXCEPTION FOR STOP-LOSS OBLIGA9 TIONS.—The obligation of direct guarantors under

10 section 113(a) shall lie with the cross-guarantee syn11 dicate described under paragraph (2)(A) of such

12 subsection.

13 (m) SUBSTITUTION OF DIRECT GUARANTORS.—

14 (1) AUTHORIZATION OF TRANSFERS SUBJECT

15 TO CGRC APPROVAL.—

16 (A) IN GENERAL.—Any direct guarantor’s

17 rights, privileges, duties, and obligations under

18 a cross-guarantee or stop-loss contract, and any

19 portion of any such rights, privileges, duties,

20 and obligations, may be transferred to a succes21 sor direct guarantor, subject to the approval of

22 the Corporation (pursuant to section 123 of

23 this title).

24 (B) TRANSFER OF LONG-TAIL OBLIGA25 TIONS.—A person which was formerly a direct
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1 guarantor under a cross-guarantee or stop-loss

2 contract which was formerly, but no longer is,

3 in effect may transfer to any person which is a

4 designated direct guarantor under section

5 116(b) any residual rights, privileges, duties,

6 and obligations under the contract, subject to

7 the approval of the Corporation (pursuant to

8 section 123 of this title).

9 (2) TRANSFEROR NO LONGER OBLIGED ON

10 CONTRACT.—Notwithstanding any Federal or State

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

12 shall not be obliged to perform the transferee’s obli13 gations under the contract should the transferee fail

14 to perform.

15 (3) PARTIES AUTHORIZED TO RESTRICT SUB16 STITUTION OF GUARANTORS IN A CONTRACT.—A

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

18 syndicate under a cross-guarantee or stop-loss con19 tract may provide in such contract that any transfer

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

21 guarantor in such contract shall be subject to the

22 approval of such party or syndicate.

23 (4) ALLOCATION OF INCOME AND LOSSES BE24 TWEEN THE TRANSFEROR AND TRANSFEREE.—
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1 (A) IN GENERAL.—Subject to subpara2 graph (B), a transferor’s accrued (but unpaid)

3 premium income and losses as of the date of

4 transfer under paragraph (1) may be allocated

5 between the transferor and transferee in any

6 manner provided for in the transfer agreement.

7 (B) LOSSES ON CROSS-GUARANTEE OBLI8 GATIONS.—The transferor shall be liable for

9 any losses due to a loss event (as defined in sec10 tion 113(a)) occurring prior to a transfer under

11 paragraph (1) and the transferee shall be liable

12 for any losses due to a loss event after the

13 transfer.

14 (n) SYNDICATE VOTING RULES.—

15 (1) PROPORTIONAL VOTING.—Each cross-guar16 antee and stop-loss contract shall provide that a di17 rect guarantor’s voting rights in the cross-guarantee

18 or stop-loss syndicate shall be proportional to such

19 guarantor’s interest in the syndicate.

20 (2) VARIATIONS PERMITTED IN VOTING RE21 QUIREMENTS.—A cross-guarantee or stop-loss con22 tract may provide that the number of votes needed

23 to approve an action by a cross-guarantee or stop24 loss syndicate under the contract may differ depend25 ing upon the action on which a vote is taken.
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1 (o) GUARANTEED PARTY CAN BE COVERED ONLY

2 UNDER ONE CONTRACT.—No guaranteed party under

3 any cross-guarantee or stop-loss contract may be a guar4 anteed party under another cross-guarantee or stop-loss

5 contract.

6 (p) AUTHORITY OF THE CGRC TO DIRECT TRANS7 FER.—

8 (1) IN GENERAL.—If any merger, acquisition,

9 consolidation, or other combination of two or more

10 direct guarantors within any cross-guarantee or

11 stop-loss syndicate occurs which causes the contract

12 to materially exceed the limitations set forth in sec13 tion 114(b)(1) or paragraph (1) or (2) of section

14 115(b), the Corporation may issue an order direct15 ing the merged or consolidated guarantor to obtain

16 a successor for that part of the guarantor’s interest

17 that exceeds the statutory limit.

18 (2) EXTENT OF GUARANTEED PARTY’S ABILITY

19 TO BLOCK TRANSFER.—In the case of any transfer

20 under paragraph (1), a guaranteed party may bar

21 the transfer under the authority of subsection

22 (m)(3) if such party demonstrates to the Corpora23 tion that that transfer of the interest to a particular

24 guarantor would raise reasonable competitive con25 cerns.
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1 (q) MERGER OR CONSOLIDATION OF TWO OR MORE

2 GUARANTEED PARTIES.—After any merger, acquisition,

3 consolidation, or other combination of two or more guar4 anteed parties, the successor party’s cross-guarantee or

5 stop-loss contract shall meet the same requirements under

6 section 114(b)(1) or paragraph (1) or (2) of section

7 115(b), that the successor would have to meet if the suc8 cessor sought to become a guaranteed party under a new

9 cross-guarantee or stop-loss contract.

10 (r) MODIFICATION OF CONTRACTS.—An agreement

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

12 consideration to be binding.

13 (s) BAR ON REINSURANCE.—Subject to sections

14 112(a)(3) and 112(b)(2), a direct guarantor may not rein15 sure such guarantor’s interest in a cross-guarantee or

16 stop-loss contract.

17 (t) RULE OF CONSTRUCTION RELATING TO CON18 TRACT TERMS.—No provision of this title shall be con19 strued as prohibiting any cross-guarantee or stop-loss con20 tract from containing any term or condition other than

21 terms or conditions expressly prohibited by this title.

22 SEC. 114. REQUIREMENTS APPLICABLE ONLY TO CROSS23 GUARANTEE CONTRACTS.

24 (a) OBLIGATIONS GUARANTEED UNDER A CROSS25 GUARANTEE CONTRACT.—
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1 (1) OBLIGATIONS REQUIRED TO BE GUARAN2 TEED OBLIGATIONS.—The following obligations of

3 any guaranteed company or guaranteed banking of4 fice shall be guaranteed obligations under a cross5 guarantee contract:

6 (A) DEPOSITS.—

7 (i) BANKS AND SAVINGS ASSOCIA8 TIONS.—In the case of a guaranteed de9 pository institution, all deposits.

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

12 guaranteed banking office, all deposits of

13 such office payable at a location within the

14 United States.

15 (B) INTEREST-BEARING OBLIGATIONS

16 OTHER THAN SUBORDINATED DEBT.—All inter17 est-bearing obligations other than subordinated

18 debt.

19 (C) ALL OTHER CUSTOMER BALANCES AND

20 PROPERTY.—All balances owed by, or previously

21 identified property held in custody by, the guar22 anteed company or guaranteed banking office in

23 its capacity as a fiduciary, including escrows,

24 balances in brokerage accounts, and balances

25 on stored-value cards.
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1 (D) BALANCES DUE CLEARINGHOUSES,

2 THE FEDERAL RESERVE, AND IN SETTLEMENT

3 OF OTHER TRANSACTIONS.—All obligations

4 owed to clearinghouses, to the Federal Reserve

5 for funds transfers, and to other funds and se6 curities clearance and settlement systems.

7 (E) OTHER OBLIGATIONS OWED TO DI8 RECT GUARANTORS OR GUARANTEED DEPOSI9 TORY INSTITUTIONS.—All non-interest-bearing

10 obligations owed to a direct guarantor or guar11 anteed depository institution.

12 (F) CROSS-GUARANTEE OBLIGATIONS.—

13 Cross-guarantee obligations for which the guar14 anteed company is liable as a direct guarantor

15 under any other cross-guarantee or stop-loss

16 contract.

17 (G) BACKUP FUND PAYMENTS.—Obliga18 tions to repay the cross-guarantee backup fund

19 pursuant to section 128(c)(3).

20 (H) CERTAIN OTHER OBLIGATIONS.—All

21 direct and contingent liabilities under any con22 tract or commitment under—

23 (i) any letter of credit or bankers’ ac24 ceptance; and
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1 (ii) any securities contract, commodity

2 contract, forward contract, repurchase

3 agreement, or swap agreement (as such

4 terms are defined in section 11(e)(8)(D) of

5 the Federal Deposit Insurance Act).

6 (I) LIABILITY UNDER RECOURSE AGREE7 MENTS.—Any liability under recourse agree8 ments that arises when a guaranteed company

9 or guaranteed banking office sells loans or

10 other assets.

11 (J) CERTAIN LINES OF CREDIT.—Any

12 binding commitment to lend funds.

13 (K) ACCRUED INTEREST.—Any accrued in14 terest on an underlying obligation which is a

15 guaranteed obligation.

16 (L) FRAUD RELATED TO SUBORDINATED

17 DEBT.—The liability of any guaranteed party

18 for damages due to the fraudulent actions of

19 such party related to marketing subordinated

20 debt.

21 (M) OBLIGATIONS ERRONEOUSLY CON22 FIRMED BY SYNDICATE AGENT.—Any obligation

23 binding on the cross-guarantee syndicate under

24 section 117(a)(4)(B).
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1 (N) RESIDUAL OBLIGATIONS WHICH THE

2 CGRC DEEMS MUST BE GUARANTEED.—Subject

3 to paragraph (3)(C), any other obligation which

4 the Corporation determines, through rules con5 sistent with the purposes of this title, should be

6 guaranteed under each cross-guarantee con7 tract.

8 (2) OBLIGATIONS WHICH MAY NOT BE GUARAN9 TEED.—The following obligations of any guaranteed

10 company or guaranteed banking office may not be

11 guaranteed obligations under a cross-guarantee con12 tract:

13 (A) SUBORDINATED DEBT.—

14 (i) IN GENERAL.—Subordinated debt

15 issued by the guaranteed company or guar16 anteed banking office.

17 (ii) INCLUDES DEBT WHICH MAY BE

18 REDEEMED BY THE DEBTHOLDER BY

19 CHECK OR OTHER MEANS.—For purposes

20 of this subparagraph, the term ‘‘subordi21 nated debt’’ includes subordinated debt

22 which may be withdrawn by or credited to

23 the debtholder by a check, wire transfer, or

24 other order of the debtholder.
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1 (B) EQUITY INTERESTS.—Any equity in2 terest in the guaranteed company or guaranteed

3 banking office.

4 (3) OBLIGATIONS WHICH MAY BE INCLUDED

5 UNDER A CROSS-GUARANTEE CONTRACT.—

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

7 guaranteed company or guaranteed banking of8 fice which is not required to be, or not prohib9 ited from being, a guaranteed obligation under

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

11 obligation under a cross-guarantee contract to

12 the extent the contract so expressly provides.

13 (B) RULES UPON SWITCH TO A SUCCESSOR

14 CONTRACT.—Any obligation that was a guaran15 teed obligation under the previous cross-guaran16 tee contract shall be a guaranteed obligation

17 under the successor contract, if such obligation

18 accrues prior to the obligee receiving notice

19 from the syndicate agent under the successor

20 contract that obligations of the same type as

21 were guaranteed under the previous contract

22 shall not be guaranteed under the successor

23 contract.

24 (C) JUDGMENTS AND SETTLEMENTS.—

25 Unless the cross-guarantee contract expressly
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1 provides to the contrary, no judgment or settle2 ment from any action arising from any alleged

3 tortious conduct, breach of contract, or viola4 tion of statutory obligation by the guaranteed

5 company shall be a guaranteed obligation.

6 (b) RISK DIVERSIFICATION.—

7 (1) MINIMUM NUMBER OF DIRECT AND SEC8 OND-TIER GUARANTORS.—Each cross-guarantee con9 tract shall comply with the requirements relating to

10 the maximum percentage of all guaranteed obliga11 tions under the contract which may be guaranteed

12 by any one direct guarantor and the minimum num13 ber of second-tier guarantors which the guaranteed

14 party or parties shall have in the aggregate, as de15 termined under the following table (as adjusted pur16 suant to paragraph (2)) on the basis of the total as17 sets of all the guaranteed parties under the contract:

Aggregate amount of assets of all guaranteed parties under

the contract

Maximum percentage of crossguarantee liability assumable by

any 1 direct

guarantor

Minimum number of secondtier guarantors

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

Greater than $100,000,000 but less than or equal to

$500,000,000 ............................................................ 4.0 125

Greater than $500,000,000 but less than or equal to

$1,000,000,000 ......................................................... 2.5 150

Greater than $1,000,000,000 but less than or equal to

$10,000,000,000 ....................................................... 1.5 200

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

18 (2) ADJUSTMENT OF DOLLAR AMOUNTS FOR

19 INFLATION.—The amounts contained in the table in
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1 paragraph (1) relating to the aggregate assets of

2 guaranteed parties under any cross-guarantee con3 tract shall be adjusted annually by the Corporation,

4 after the end of the 1-year period beginning on the

5 date of the enactment of this Act, based on the

6 change in the implicit price deflator for the gross do7 mestic product or its successor measure.

8 (c) BASIS FOR CALCULATING EQUITY CAPITAL.—

9 Each cross-guarantee contract shall describe the manner

10 in which the equity capital of the guaranteed financial

11 group shall be calculated for purposes of the contract.

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

14 may include terms relating to the provision of emergency

15 liquidity to a guaranteed party by any direct guarantor

16 without regard to the relative interest in the contract held

17 by any guarantor providing the liquidity.

18 (e) INTERNAL GUARANTEES.—A guaranteed com19 pany under any cross-guarantee contract shall be jointly

20 and severally liable to the direct guarantors under such

21 contract for any loss incurred by the guarantors in connec22 tion with the cross-guarantee obligations of the guarantors

23 to any other guaranteed company under such contract.

24 (f) DELEGATION OF PERFORMANCE OF GUARAN25 TEED OBLIGATIONS.—
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1 (1) IN GENERAL.—No guaranteed company or

2 guaranteed banking office may delegate or assign

3 the performance of a guaranteed obligation unless

4 the person to which the performance is delegated or

5 assigned is a guaranteed company or guaranteed

6 banking office.

7 (2) TRANSFERRING PARTY AND SYNDICATE NO

8 LONGER OBLIGED ON OBLIGATION.—Notwithstand9 ing any Federal or State law, a guaranteed company

10 or guaranteed banking office that was the transferor

11 of the guaranteed obligation, and the cross-guaran12 tee syndicate for such a company or office, shall not

13 be obliged to perform on a guaranteed obligation

14 transferred in compliance with paragraph (1).

15 SEC. 115. REQUIREMENTS APPLICABLE ONLY TO STOP–

16 LOSS CONTRACTS.

17 (a) OBLIGATIONS GUARANTEED UNDER A STOP18 LOSS CONTRACT.—

19 (1) OBLIGATIONS REQUIRED TO BE GUARAN20 TEED OBLIGATIONS.—A nondepository guarantor’s

21 cross-guarantee obligations shall be guaranteed obli22 gations under a stop-loss contract.

23 (2) NO OTHER GUARANTEED OBLIGATIONS.—

24 Except for the obligations described in paragraph
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1 (1), no obligation of a nondepository guarantor may

2 be a guaranteed obligation.

3 (b) RISK DIVERSIFICATION.—

4 (1) MINIMUM NUMBERS OF DIRECT GUARAN5 TORS.—A direct guarantor under a stop-loss con6 tract may not guarantee more than 2 percent of the

7 guaranteed obligations under such contract.

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

9 guarantors under any stop-loss contract shall have,

10 in the aggregate, no fewer than 150 direct guaran11 tors.

12 SEC. 116. ELIGIBILITY AND REQUIREMENTS FOR DIRECT

13 GUARANTORS.

14 (a) ELIGIBILITY.—

15 (1) IN GENERAL.—No person may become a di16 rect guarantor unless such person is a guaranteed

17 company or a nondepository guarantor.

18 (2) NONDEPOSITORY GUARANTOR.—

19 (A) IN GENERAL.—Subject to subpara20 graphs (B) and (C) of this paragraph and sub21 section (c) of this section, any person may be

22 a nondepository guarantor.

23 (B) INELIGIBILITY OF DEPOSITORY INSTI24 TUTIONS.—
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1 (i) IN GENERAL.—No depository insti2 tution, or subsidiary of a depository insti3 tution, may be a nondepository guarantor.

4 (ii) RULE OF CONSTRUCTION FOR

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

6 construed as prohibiting a foreign bank

7 which has a branch in the United States

8 from being a nondepository guarantor.

9 (iii) RULE IF FOREIGN BANK IS A

10 GUARANTEED COMPANY.—A foreign bank

11 which is a guaranteed company may not be

12 a nondepository guarantor.

13 (C) INELIGIBILITY OF GOVERNMENT ENTI14 TIES.—

15 (i) IN GENERAL.—No entity which—

16 (I) has direct or indirect taxing

17 authority;

18 (II) is a government sponsored

19 enterprise; or

20 (III) may issue securities in

21 which the owners of the securities are

22 exempt from taxation under State or

23 Federal law,

24 may be a nondepository guarantor.
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1 (ii) RULE OF CONSTRUCTION FOR

2 GOVERNMENT PENSION FUNDS.—Clause

3 (i) shall not be construed as to prohibit

4 any pension fund operated for the benefit

5 of government employees from being a

6 nondepository guarantor.

7 (3) GUARANTEED DEPOSITORY INSTITUTIONS

8 AUTHORIZED TO BE DIRECT GUARANTORS.—Not9 withstanding any other Federal or State law restrict10 ing the powers of depository institutions, a guaran11 teed depository institution may be a direct guarantor

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

13 (b) DESIGNATED DIRECT GUARANTOR.—

14 (1) ONLY ONE GUARANTEED COMPANY WITHIN

15 A GUARANTEED FINANCIAL GROUP MAY BE A DI16 RECT GUARANTOR.—No guaranteed company shall

17 be a direct guarantor if another guaranteed com18 pany under the same cross-guarantee contract al19 ready is a direct guarantor under any cross-guaran20 tee or stop-loss contract.

21 (2) DESIGNATION OF DIRECT GUARANTOR IN

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

23 cross-guarantee contract in which two or more com24 panies are guaranteed under the contract, the con25 tract shall designate which guaranteed company
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1 may, in accordance with paragraph (1), be a direct

2 guarantor.

3 (c) FINANCIAL RESOURCE REQUIREMENTS FOR

4 NONDEPOSITORY GUARANTORS.—No person may become

5 a nondepository guarantor unless such person has a net

6 worth of at least $100,000,000 at the time such person

7 would, but for this paragraph, become a direct guarantor

8 under a cross-guarantee or stop-loss contract.

9 (d) RISK DIVERSIFICATION REQUIREMENTS FOR DI10 RECT GUARANTORS.—

11 (1) PROJECTED ANNUAL PREMIUM CAPACITY

12 AND PROJECTED ANNUAL PREMIUM LIMIT.—A per13 son may not become a direct guarantor under a

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

15 contract (but for this paragraph) taking effect—

16 (A) the sum of the estimated annual pre17 mium which the person would receive as a di18 rect guarantor under the contract and the per19 son’s projected annual premium income would

20 exceed such person’s projected annual premium

21 capacity as of—

22 (i) in the case of a contract which

23 would take effect on or before the 15th day

24 of any calendar month, the second cal-
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1 endar month preceding such calendar

2 month; or

3 (ii) in the case of a contract which

4 would take effect after the 15th day of any

5 calendar month, the end of the calendar

6 month preceding such calendar month; or

7 (B) the estimated annual premium which

8 the person would receive as a direct guarantor

9 under the contract would exceed such person’s

10 projected annual premium limit as of—

11 (i) in the case of a contract which

12 would take effect on or before the 15th day

13 of any calendar month, the second cal14 endar month preceding such calendar

15 month; or

16 (ii) in the case of a contract which

17 would take effect after the 15th day of any

18 calendar month, the end of the calendar

19 month preceding such calendar month.

20 (2) CALCULATION OF PROJECTED ANNUAL PRE21 MIUM.—

22 (A) IN GENERAL.—The syndicate agent

23 under any cross-guarantee or stop-loss contract

24 shall determine the projected annual premium

25 earned by any direct guarantor for any calendar
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1 month by calculating the amount of such guar2 antor’s share of the premium accrued under the

3 contract during such month and then

4 annualizing such amount.

5 (B) FIRST TWO MONTHS.—During the

6 first two calendar months in which any cross7 guarantee or stop-loss contract is in effect, the

8 syndicate agent shall determine the projected

9 annual premium under the contract for each of

10 these two calendar months by annualizing the

11 premium rate in effect on the date the contract

12 becomes effective.

13 (3) CALCULATION OF THE ESTIMATED ANNUAL

14 PREMIUM FOR THE APPROVED CONTRACT.—

15 (A) IN GENERAL.—For purposes of para16 graph (1), the term ‘‘estimated annual pre17 mium’’ means the annualized premium rate

18 likely to be in effect on the date the contract

19 becomes effective.

20 (B) SYNDICATE AGENT ESTIMATE.—The

21 proposed syndicate agent for the contract shall

22 make a reasonable estimate of the amount in

23 paragraph (1) within five days prior to the date

24 on which the contract is to become effective.
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1 (4) CALCULATION OF PROJECTED ANNUAL PRE2 MIUM INCOME.—For purposes of making any deter3 mination under paragraph (1)(A) with respect to a

4 direct guarantor, the term ‘‘projected annual pre5 mium income’’ means the total projected annual pre6 miums from all cross-guarantee and stop-loss con7 tracts under which such guarantor is a direct guar8 antor, other than the contract for which such deter9 mination is being made, as of—

10 (A) in the case of contract which would be11 come effective on or before the 15th day of any

12 calendar month, the second calendar month

13 preceding such calendar month; and

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

15 become effective after the 15th day of any cal16 endar month, the calendar month preceding

17 such calendar month.

18 (5) ADJUSTMENT OF PROJECTED ANNUAL PRE19 MIUM CAPACITY FOR CHANGED CIRCUMSTANCES.—

20 The Corporation may, by rulemaking, set the pro21 jected annual premium capacity below 3 percent if

22 the Corporation determines that the existing per23 centage is too high to ensure an adequate capital

24 base for the cross-guarantee system.
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1 (e) LIABILITY OF ACQUIRER OF ANY DIRECT GUAR2 ANTOR.—Any person which acquires (as defined in section

3 13(f)(8)(B) of the Federal Deposit Insurance Act) any di4 rect guarantor shall be obligated for all of the cross-guar5 antee obligations of such guarantor under any cross-guar6 antee or stop-loss contract to which such guarantor is a

7 direct guarantor.

8 SEC. 117. PROVISIONS RELATING TO CROSS-GUARANTEE

9 AND STOP-LOSS SYNDICATES.

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

11 (1) SYNDICATE AGENT IS AGENT OF DIRECT

12 GUARANTORS.—

13 (A) IN GENERAL.—The syndicate agent

14 under any cross-guarantee or stop-loss contract

15 shall act as an agent of the direct guarantors

16 under such contract.

17 (B) EXCEPTIONS.—Notwithstanding sub18 paragraph (A), the syndicate agent also shall

19 have—

20 (i) a duty to protect the confidential21 ity of any aspect of a guaranteed party’s

22 affairs which the contract specifies shall be

23 protected; and

24 (ii) duties to the Corporation as speci25 fied in this title.
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1 (2) POWERS OF SYNDICATE AGENT.—No per2 son under a cross-guarantee or stop-loss contract

3 other than the syndicate agent shall have the follow4 ing powers:

5 (A) MONITOR PERFORMANCE.—Monitor

6 the performance, or contract with a third party

7 to monitor the performance, of any party guar8 anteed under such contract.

9 (B) COLLECT PREMIUMS.—Collect the pre10 miums due to the direct guarantors under such

11 contract.

12 (3) SYNDICATE AGENT REPORTS SUBMITTED TO

13 THE CENTRAL ELECTRONIC REPOSITORY.—The syn14 dicate agent under any cross-guarantee or stop-loss

15 contract shall submit in electronic form to the

16 central electronic repository by the 15th of each cal17 endar month a report—

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

19 as the case may be, of the guaranteed financial

20 group or nondepository guarantor under the

21 contract as of the end of the prior calendar

22 month; and

23 (B) of the projected annual premium due

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

25 calendar month.
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1 (4) CONFIRMATION OF GUARANTEE OF SPE2 CIFIC OBLIGATIONS.—

3 (A) IN GENERAL.—The syndicate agent

4 under any cross-guarantee contract shall—

5 (i) determine, at the request of any

6 current or prospective creditor of a guar7 anteed company or guaranteed banking of8 fice under such contract, whether, assum9 ing that the company or office has or will

10 have an obligation to the creditor, such ob11 ligation would be a guaranteed obligation

12 under the contract; and

13 (ii) promptly notify the current or

14 prospective creditor of the agent’s deter15 mination.

16 (B) DETERMINATION BINDING ON SYN17 DICATE.—Any notification of determination

18 under subparagraph (A) shall be binding on the

19 cross-guarantee syndicate.

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

21 a current or prospective creditor a fee for mak22 ing the determination and notifying the creditor

23 under subparagraph (A).
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1 (5) AGREEMENT GOVERNING THE RELATION2 SHIP BETWEEN THE SYNDICATE AND SYNDICATE

3 AGENT.—

4 (A) IN GENERAL.—Any agreement between

5 the direct guarantors and the syndicate agent

6 governing the relationship between such parties

7 must be included in the cross-guarantee or

8 stop-loss contract.

9 (B) LIMITS ON SIDE CONTRACTS.—No di10 rect guarantor or group of direct guarantors

11 under a cross-guarantee or stop-loss contract

12 may enter into any other contract or binding

13 agreement pertaining to the contract with the

14 syndicate agent under such cross-guarantee or

15 stop-loss contract.

16 (6) AUTHORIZATION OF INFORMATION SHARING

17 AMONG SYNDICATE AGENTS.—Notwithstanding Fed18 eral or State law, the Corporation may prescribe

19 rules allowing syndicate agents to share information

20 if the Corporation finds that the benefits of such in21 formation sharing outweigh the anticompetitive risks

22 of such sharing.

23 (b) EXEMPTION FROM SECURITIES LAWS.—Notwith24 standing Federal or State law, interests in any cross-guar-
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1 antee or stop-loss syndicate are not securities for any pur2 pose.

3 (c) TAXATION OF SYNDICATES.—

4 (1) TREATED AS PARTNERSHIP.—Any cross5 guarantee or stop-loss syndicate shall be treated as

6 a partnership for purposes of the Internal Revenue

7 Code of 1986.

8 (2) CONSOLIDATED RETURNS BY SYNDICATE

9 AGENT.—A syndicate agent shall file an annual in10 formation return with the Internal Revenue Service

11 with respect to all syndicates for which such agent

12 is an agent, and all distributions with respect to

13 such syndicates, on a consolidated basis.

14 (3) TAX EXEMPT STATUS.—Any syndicate

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

16 income or gross receipts (including premiums), and

17 any activity of the syndicate shall be exempt from all

18 taxation imposed by any State, county, municipality,

19 or local taxing authority.

20 (d) REPLACEMENT OF SYNDICATE AGENTS.—

21 (1) IN GENERAL.—The cross-guarantee or stop22 loss syndicate under any cross-guarantee or stop-loss

23 contract may at any time and without cause replace

24 the syndicate agent under such contract, subject to

25 the guaranteed financial group or nondepository
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1 guarantor’s approval of the new syndicate agent, by

2 amending the contract and obtaining the Corpora3 tion’s approval of the new syndicate agent under sec4 tion 123.

5 (2) NO EFFECT ON CONTRACT.—The replace6 ment of a syndicate agent by the direct guarantors

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

8 continuing existence or enforceability of the contract.

9 (3) WITHDRAWAL OF SYNDICATE AGENT.—

10 (A) SAME-DAY SUBMISSION OF AMENDED

11 CONTRACT WITH NEW SYNDICATE AGENT.—If a

12 syndicate agent should resign or otherwise cease

13 providing required services under a cross-guar14 antee or stop-loss contract, whether wrongfully,

15 as allowed under such contract, or for any other

16 reason, the cross-guarantee or stop-loss syn17 dicate shall by the end of the business day on

18 which the resignation or cessation of services is

19 effective submit an amendment to the contract,

20 with a successor syndicate agent named in the

21 amendment, to the Corporation for approval.

22 (B) INTERIM CGRC APPOINTMENT.—The

23 Corporation may appoint a successor syndicate

24 agent to serve until a cross-guarantee or stop-
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1 loss syndicate has complied with the require2 ments under subparagraph (A).

3 (e) CAUSES OF ACTION AGAINST A SYNDICATE OR

4 SYNDICATE AGENT.—

5 (1) CAUSES OF ACTION AGAINST A SYN6 DICATE.—

7 (A) IN GENERAL.—A cross-guarantee or

8 stop-loss syndicate shall be sued as an entity,

9 and no direct guarantor may be sued in such

10 guarantor’s individual capacity, for—

11 (i) breach of the cross-guarantee or

12 stop-loss contract;

13 (ii) liability for the acts or omissions

14 of the syndicate agent under the contract;

15 or

16 (iii) wrongs arising out of any action

17 authorized by the syndicate, including ac18 tions undertaken pursuant to sections

19 113(n) and 117(h)(2).

20 (B) SEVERAL LIABILITY.—Section 113(e)

21 shall apply in determining a direct guarantor’s

22 liability under any cause of action under sub23 paragraph (A).

24 (C) SERVICE OF PROCESS.—For the pur25 poses of any action under subparagraph (A)—
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1 (i) the syndicate agent shall be the

2 agent for the cross-guarantee or stop-loss

3 syndicate for service of process; and

4 (ii) service of process upon a syn5 dicate agent shall serve as the exclusive

6 manner of service of process upon the syn7 dicate under the contract.

8 (2) CONDUCT FOR WHICH SYNDICATES HAVE

9 NO LEGAL DUTY TO THIRD PARTIES.—A cross-guar10 antee or stop-loss syndicate shall have no legal duty

11 under Federal or State law to any person with re12 spect to—

13 (A) the level or accuracy of the premium

14 rate under a cross-guarantee or stop-loss con15 tract;

16 (B) the adequacy of a syndicate agent’s

17 monitoring of a guaranteed party; or

18 (C) the decision whether to enforce or

19 waive a right or privilege of the syndicate under

20 the cross-guarantee or stop-loss contract.

21 (3) CONDUCT FOR WHICH SYNDICATE AGENTS

22 HAVE NO LEGAL DUTY TO THIRD PARTIES.—A syn23 dicate agent shall have no legal duty under Federal

24 or State law to any person other than the parties to

25 a cross-guarantee or stop-loss contract with respect
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1 to the adequacy of the agent’s performance of such

2 agent’s contractual obligations under the contract.

3 (4) LIABILITY FOR ACTS OF A GUARANTEED

4 PARTY.—Subject to sections 114(a) and 115(a), a

5 cross-guarantee syndicate, stop-loss syndicate, or

6 syndicate agent shall not be liable for any alleged

7 tortious conduct, breach of contract, or violation of

8 statutory obligation by a guaranteed party under the

9 contract.

10 (5) BAR ON PUNITIVE DAMAGES.—No punitive

11 damages shall be allowed in any action against a

12 cross-guarantee syndicate, stop-loss syndicate, or

13 syndicate agent in the syndicate’s or agent’s capac14 ity as such under a cross-guarantee or stop-loss con15 tract.

16 (f) CAUSES OF ACTION BY A SYNDICATE, SYNDICATE

17 AGENT, OR DIRECT GUARANTOR.—

18 (1) DIRECT GUARANTORS CANNOT SUE IN

19 THEIR INDIVIDUAL CAPACITY IN ACTIONS THAT ARE

20 DERIVATIVE OF ACTIONS OF THE SYNDICATE.—No

21 direct guarantor may sue, in such guarantor’s indi22 vidual capacity, any person under Federal or State

23 law for injuries arising out of any cross-guarantee or

24 stop-loss contract unless—
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1 (A) such guarantor’s injury is a special in2 jury distinct from injuries suffered by other di3 rect guarantors which are members of the

4 cross-guarantee or stop-loss syndicate; or

5 (B) such guarantor’s claim is against the

6 cross-guarantee or stop-loss syndicate itself.

7 (2) BAR ON CERTAIN ACTIONS AGAINST THIRD

8 PARTIES.—Except for an action for breach of con9 tract, a cross-guarantee syndicate, stop-loss syn10 dicate, or syndicate agent shall not have a cause of

11 action under Federal or State law against any per12 son for any loss arising out of any cross-guarantee

13 or stop-loss contract unless the syndicate or syn14 dicate agent (as the case may be), in addition to

15 proving the required elements of a cause of action

16 under Federal or State law, proves by a preponder17 ance of the evidence that—

18 (A) the party made a false representation

19 to the syndicate, guarantor, or syndicate agent;

20 (B) the party had actual knowledge that

21 the representation was false; and

22 (C) the false representation was material;

23 (g) CAUSE OF ACTION BY THE SYNDICATE AGAINST

24 THE SYNDICATE AGENT.—In any action by the cross25 guarantee or stop-loss syndicate against the syndicate
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1 agent to recover damages due to a loss (as the term ‘‘loss’’

2 is defined in section 113(a)(1)(D)), the syndicate must,

3 in addition to proving the required elements of a cause

4 of action under Federal or State law, prove by a prepon5 derance of the evidence—

6 (1) that—

7 (A) the syndicate agent made a false rep8 resentation to the syndicate;

9 (B) the syndicate agent had actual knowl10 edge that the representation was false; and

11 (C) the false representation was material;

12 or

13 (2) that the syndicate agent consciously dis14 regarded substantial and unjustifiable risks being

15 taken by the guaranteed party under the contract.

16 (h) RELATIONSHIP AMONG SYNDICATE MEMBERS.—

17 (1) SYNDICATE MEMBERS NOT AGENTS FOR

18 EACH OTHER.—Subject to paragraph (2), no direct

19 guarantor in a cross-guarantee or stop-loss syndicate

20 shall be liable under agency law for the actions of

21 any other direct guarantor in the syndicate.

22 (2) SYNDICATE MAY VOTE TO APPOINT A MEM23 BER AS AGENT FOR THE SYNDICATE.—A cross-guar24 antee or stop-loss syndicate may, consistent with

25 section 113(n), vote to appoint one or more direct
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1 guarantors under the contract as an agent for the

2 syndicate.

3 (i) REGISTRATION OF SYNDICATES.—

4 (1) IN GENERAL.—The Corporation shall pre5 scribe rules providing for the registering of cross6 guarantee and stop-loss syndicates for the purpose

7 solely of allowing persons a reference by which to

8 identify individual syndicates.

9 (2) REGISTRATION UPON SUBMISSION OF THE

10 CONTRACT FOR APPROVAL.—The rules under para11 graph (1) shall provide for the automatic registra12 tion of a cross-guarantee or stop-loss syndicate upon

13 submission for approval of a cross-guarantee or

14 stop-loss contract under section 123.

15 (3) DISTINGUISHING AMONG SYNDICATES.—

16 The rules under paragraph (1) shall reference a

17 cross-guarantee or a stop-loss syndicate as a unique

18 syndicate with permanent identification.

19 SEC. 118. ASSUMPTION OF CONTROL OF A GUARANTEED

20 COMPANY BY A CROSS-GUARANTEE SYN21 DICATE.

22 (a) RIGHT OF CROSS-GUARANTEE SYNDICATE TO

23 ASSUME CONTROL.—A cross-guarantee syndicate under

24 any cross-guarantee contract shall have the right to as-
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1 sume control of a guaranteed company under the contract

2 under the following circumstances:

3 (1) CANCELLATION.—Immediately after a can4 cellation of the contract by the syndicate or the

5 guaranteed financial group has become effective un6 less a successor cross-guarantee contract has taken

7 effect.

8 (2) Expiration.—Immediately after the expira9 tion of the cross-guarantee contract unless a succes10 sor cross-guarantee contract has taken effect.

11 (b) RIGHT OF GUARANTEED PARTY TO SEEK TO

12 STAY ASSUMPTION OF CONTROL.—

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

14 file an action requesting a stay of any assumption

15 of control by a cross-guarantee syndicate.

16 (2) TIME LIMIT FOR OBJECTING TO ASSUMP17 TION OF CONTROL.—

18 (A) IN GENERAL.—Any action under para19 graph (1) shall be filed either within 30 days

20 after the notice of cancellation under section

21 113(h)(1) is given or more than 60 days prior

22 to the expiration of the contract, whichever the

23 case may be.

24 (B) EXCEPTION IF SUCCESSOR CONTRACT

25 IS OBTAINED.—Subparagraph (A) shall not
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1 apply to a guaranteed company which has, sub2 sequent to the notice of cancellation or the date

3 60 days prior to expiration, become guaranteed

4 under a successor cross-guarantee contract.

5 (3) EXPEDITED REVIEW.—The United States

6 district court with jurisdiction over the cross-guaran7 tee contract shall provide expedited review of any ac8 tion under paragraph (1).

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

10 under paragraph (1), the court shall not stay the as11 sumption of control by a cross-guarantee syndicate

12 if the conditions for assuming control under sub13 section (a) have been met.

14 (c) RIGHTS OF CROSS-GUARANTEE SYNDICATE TO

15 ENJOIN VIOLATIONS OF THE CONTRACT UNTIL ASSUM16 ING CONTROL.—

17 (1) INJUNCTIVE REMEDIES.—Upon giving no18 tice of cancellation of the cross-guarantee contract

19 under section 113(h)(1) or the expiration of the con20 tract, the cross-guarantee syndicate shall be granted

21 injunctive relief to enforce any restrictions imposed

22 under the contract.

23 (2) APPOINTMENT OF A CONSERVATOR.—

24 (A) IN GENERAL.—Upon giving notice of

25 cancellation of the cross-guarantee contract
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1 under section 113(h)(1) or the expiration of the

2 contract, the cross-guarantee syndicate may

3 seek the appointment of a conservator to serve

4 until the syndicate can assume control under

5 subsection (a) and a court may appoint such a

6 conservator, but the court may appoint a con7 servator only if the remedies under paragraph

8 (1) are not adequate to protect the interests of

9 the cross-guarantee syndicate.

10 (B) COURT SHALL APPOINT A CONSERVA11 TOR FROM A LIST SUBMITTED BY CGRC.—The

12 court shall appoint a conservator under sub13 paragraph (A) only from a list supplied by the

14 Corporation to the court of 5 disinterested per15 sons who are qualified and willing to serve as

16 the conservator in the case, and no such person

17 may be a regulatory agency or an employee of

18 a regulatory agency.

19 (C) POWERS OF CONSERVATOR.—

20 (i) IN GENERAL.—The conservator’s

21 duties under this paragraph shall be lim22 ited to monitoring compliance by the guar23 anteed company with the court’s orders

24 and the cross-guarantee contract and mak-
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1 ing reports to the court, as necessary, to

2 ensure such compliance.

3 (ii) NO POWER TO OPERATE COM4 PANY.—The conservator shall have no

5 power to operate the guaranteed company.

6 (D) GUARANTEED COMPANY CAN STILL

7 OBTAIN A SUCCESSOR CONTRACT.—

8 (i) IN GENERAL.—The appointment of

9 a conservator under this paragraph shall

10 not prevent a guaranteed company from

11 obtaining a successor cross-guarantee con12 tract.

13 (ii) DISCHARGE OF CONSERVATOR.—

14 If a guaranteed company obtains a succes15 sor cross-guarantee contract, the conserva16 tor appointed under this contract shall be

17 discharged when the successor contract has

18 become effective according to the successor

19 contract’s terms.

20 (3) EXPEDITED RELIEF.—The United States

21 district court with jurisdiction over the cross-guaran22 tee contract shall provide the relief under para23 graphs (1) and (2) on an expedited basis.

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

25 SYNDICATE AFTER ASSUMPTION OF CONTROL.—
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1 (1) GENERAL POWERS.—

2 (A) OPERATE THE COMPANY.—A cross3 guarantee syndicate which assumes control of a

4 guaranteed company under subsection (a) shall

5 have and may exercise all the powers of the

6 members or shareholders, the directors, and the

7 officers of the company and shall be entitled

8 to—

9 (i) conduct all business of the guaran10 teed company;

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

12 assets of the guaranteed company;

13 (iii) collect all obligations and money

14 due the company;

15 (iv) perform in the name of the com16 pany all functions of the company consist17 ent with the appointment of the syndicate

18 as the successor to the managers and di19 rectors of the company and the duties of

20 the syndicate with respect to the company;

21 and

22 (v) preserve and conserve the assets

23 and property of such company.

24 (B) DISPOSITION OF COMPANY.—The

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

2 (a) may—

3 (i) merge or consolidate the guaran4 teed company with another guaranteed

5 company;

6 (ii) sell or otherwise dispose of the

7 company; or

8 (iii) place the company in liquidation

9 and proceed to realize upon the assets of

10 the company.

11 (2) DUTIES.—

12 (A) PAYMENT OF OBLIGATIONS.—

13 (i) IN GENERAL.—If a cross-guaran14 tee syndicate assumes control of a guaran15 teed company, the guaranteed company re16 mains liable for all of the company’s obli17 gations without regard to such assumption

18 of control.

19 (ii) ASSUMPTION OF CONTROL DOES

20 NOT MAKE SYNDICATE LIABLE FOR

21 UNGUARANTEED OBLIGATIONS.—Nothing

22 in this subparagraph shall be construed to

23 the effect that the act of assuming control

24 of a guaranteed company makes members

25 of the cross-guarantee syndicate liable for
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1 the obligations of the guaranteed company

2 which are not guaranteed obligations.

3 (B) DISTRIBUTION OF ASSETS.—In any

4 case in which funds remain from the liquida5 tion, sale, or other disposition of the assets of

6 any guaranteed company after all depositors,

7 creditors, other claimants, and administrative

8 expenses of the syndicate have been paid or oth9 erwise resolved, the syndicate shall promptly

10 distribute such funds to the company’s share11 holders or members, as the case may be.

12 (C) FIDUCIARY DUTY.—A cross-guarantee

13 syndicate which assumes control of a guaran14 teed company in accordance with subsection (a)

15 shall succeed to the same fiduciary responsibil16 ity as the directors of such company had under

17 applicable law.

18 (D) NOTICE TO CGRC.—If a cross-guaran19 tee syndicate assumes control of a guaranteed

20 company under subsection (a), the syndicate

21 shall on the same day notify the Corporation

22 that it has assumed control.

23 (3) SPECIAL FDIC POWERS DO NOT APPLY.—

24 Nothing in this title shall be construed to give a

25 cross-guarantee syndicate, upon assuming control of
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1 a guaranteed company under this section, the power

2 to limit or expand the rights and obligations of the

3 guaranteed company, by analogous reference to any

4 statutory law or common law which grants, or may

5 be construed as granting, special rights to the Fed6 eral Deposit Insurance Corporation to repudiate con7 tracts of an insured depository institution for which

8 the Federal Deposit Insurance Corporation has been

9 appointed a conservator or receiver.

10 (e) NO AUTHORITY FOR CGRC, ANY FEDERAL

11 BANKING AGENCY, OR STATE BANK SUPERVISOR TO

12 STAY ASSUMPTION OF CONTROL.—Neither the Corpora13 tion nor any Federal banking agency, State bank super14 visor, or any other Federal or State agency may take any

15 action to prevent the assumption of control of a guaran16 teed company under subsection (a).

17 (f) ASSUMPTION OF CONTROL NOT AN EVENT OF

18 DEFAULT OR GROUNDS FOR ACCELERATION OF OBLIGA19 TIONS.—The assumption of control of a guaranteed com20 pany under subsection (a) shall not be an event of default

21 by the guaranteed company or grounds for acceleration

22 of any obligation, whether or not it is a guaranteed obliga23 tion, under any agreement to which the guaranteed com24 pany is a party.
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1 (g) SECOND-TIER GUARANTORS CANNOT DISPUTE

2 LOSSES.—A direct guarantor of any direct guarantor

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

4 assumes control of a guaranteed party under subsection

5 (a) may not bring a cause of action against the cross-guar6 antee syndicate based on damages arising out of the syn7 dicate’s decision to assume control or failure to minimize

8 losses under the cross-guarantee contract.

9 SEC. 119. JUDICIAL REVIEW OF CONTRACTS AND RELATED

10 ACTIONS.

11 (a) JURISDICTION OF FEDERAL COURTS.—

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

13 1331 of title 28, United States Code, any action

14 arising under any cross-guarantee or stop-loss con15 tract shall be deemed to arise under Federal law.

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

17 cross-guarantee or stop-loss contract which is

18 brought in a State court may be removed by the de19 fendant or the defendants to a district court of the

20 United States.

21 (3) DESIGNATION OF COURT IN CONTRACT.—

22 Each cross-guarantee and stop-loss contract shall

23 designate the district court of the United States

24 which shall have original jurisdiction over any action

25 described under section 117(e)(1)(A)(i).
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1 (b) THIRD PARTY BENEFICIARY ACTIONS.—

2 (1) RESTRICTIONS ON THIRD PARTY BENE3 FICIARY ACTIONS.—Notwithstanding any State law,

4 no creditor of any guaranteed party under any cross5 guarantee contract may bring an action against the

6 cross-guarantee syndicate under such contract for

7 failure to perform any cross-guarantee obligation

8 under the contract without first having obtained a

9 judgment against the guaranteed party for failure to

10 perform such obligation, unless the direct guarantors

11 have assumed control of the guaranteed party under

12 section 118(a).

13 (2) INTERVENTION BY SYNDICATE.—

14 (A) IN GENERAL.—A cross-guarantee or

15 stop-loss syndicate under any cross-guarantee

16 or stop-loss contract may intervene in any ac17 tion brought by one or more creditors against

18 a guaranteed party under the contract if any

19 judgment against the guaranteed party in such

20 action could affect the potential liabilities of the

21 direct guarantors under the contract.

22 (B) RIGHT OF INTERVENTION BELONGS

23 TO THE SYNDICATE AS A WHOLE.—Any inter24 vention under subparagraph (A) shall be exer25 cised by a cross-guarantee or stop-loss syn-
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1 dicate as a whole and no individual member of

2 a cross-guarantee or stop-loss syndicate shall

3 have a right to intervene in any action de4 scribed in subparagraph (A).

5 (c) APPLICABLE STATE LAW.—

6 (1) IN GENERAL.—Unless otherwise indicated

7 in this title, State law shall apply under this title to

8 any cross-guarantee or stop-loss contract.

9 (2) PARTIES’ CHOICE OF STATE CONTRACT

10 LAW.—Each cross-guarantee and stop-loss contract

11 shall designate the State law that shall be applicable

12 under paragraph (1).

13 Subtitle C—Powers and Duties of the CGRC

14 CHAPTER 1—CROSS-GUARANTEE PROCESS

15 SEC. 121. THE CROSS-GUARANTEE REGULATION CORPORA16 TION.

17 (a) CREATION.—

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

19 a body corporate the ‘‘Cross Guarantee Regulation

20 Corporation’’ which shall have succession until dis21 solved by act of Congress.

22 (2) CORPORATION NOT AN AGENCY.—The Cor23 poration shall not be an agency or establishment of

24 the United States Government.
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1 (3) HEADQUARTERED IN THE DISTRICT OF CO2 LUMBIA.—The Corporation shall maintain its prin3 cipal office in the District of Columbia.

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

5 the Corporation elsewhere in this title, the Corporation

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

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

8 its corporate name and through its own counsel, in

9 any State, Federal, or other court;

10 (2) to adopt, alter, and use a corporate seal,

11 which shall be judicially noticed;

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

13 of Directors, such bylaws as may be necessary or ap14 propriate to carry out the purposes of this title, in15 cluding bylaws relating to—

16 (A) the conduct of its business; and

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

18 and employees for liabilities and expenses actu19 ally and reasonably incurred by any such person

20 in connection with the defense or settlement of

21 an action or suit if such person acted in good

22 faith and in a manner reasonably believed to be

23 consistent with the purposes of this chapter.
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1 (4) to adopt, amend, and repeal, by its Board

2 of Directors, such rules as authorized under sub3 section (e)(2) of this section;

4 (5) to conduct business (including the carrying

5 on and maintenance of offices) and to exercise all

6 other rights and powers granted to it by this chapter

7 in any State or other jurisdiction without regard to

8 any qualification, licensing, or other statute in such

9 State or other jurisdiction;

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

11 of or otherwise acquire, to own, hold, improve, use,

12 or otherwise deal in or with, and to sell, convey,

13 mortgage, pledge, lease, exchange or otherwise dis14 pose of, any property, real, personal or mixed, or

15 any interest therein, wherever situated;

16 (7) subject to subsection (c), to hire such offi17 cers, attorneys, employees, and agents as may be re18 quired, to determine their qualifications, to define

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

20 them and fix the penalty thereof; and

21 (8) to enter into contracts, to execute instru22 ments, to incur liabilities, and to do any and all

23 other acts and things as may be necessary or inci24 dental to the conduct of its business and the exercise
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1 of all other rights and powers granted to the Cor2 poration under this title.

3 (c) BOARD OF DIRECTORS.—

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

5 Board of Directors which, subject to the provisions

6 of this title, shall determine the policies which shall

7 govern the operations of the Corporation.

8 (2) NUMBER AND APPOINTMENT.—The Board

9 of Directors shall consist of seven persons as follows:

10 (A) One director shall be appointed by the

11 Secretary of the Treasury from among the offi12 cers of the Department of Treasury that have

13 been confirmed with the advice and consent of

14 the Senate, and shall be removable by the Sec15 retary without cause at any time.

16 (B) Six directors shall be appointed by the

17 President, by and with the advice and consent

18 of the Senate, as follows—

19 (i) three such directors shall be se20 lected from among senior officers of com21 panies that are or are likely to be guaran22 teed depository institutions, provided that

23 the directors are not from the same geo24 graphical area and represent different as25 pects of the industry;
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1 (ii) one such director shall be selected

2 from among senior officers of companies

3 that are or are likely to be syndicate

4 agents; and

5 (iii) two such directors shall be se6 lected from the general public from among

7 persons who are not either regulatory offi8 cials nor associated with a guaranteed de9 pository institution, syndicate agent, or

10 nondepository guarantor and have not been

11 such an official or had any such associa12 tion for the five years preceding appoint13 ment.

14 (3) CHAIRMAN AND VICE CHAIRMAN.—The

15 President shall designate a Chairman and Vice

16 Chairman from among those directors appointed

17 under paragraph (2)(B)(iii) of this subsection.

18 (4) TERMS.—

19 (A) FOUR-YEAR TERMS.—Except as pro20 vided under subparagraphs (B) and (C), each

21 director shall be appointed for a term of four

22 years.

23 (B) TRANSITION RULES.—
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1 (i) STAGGERED TERMS.—Of the direc2 tors first appointed under paragraph

3 (2)(B)—

4 (I) one shall hold office for a

5 term expiring on December 31 of the

6 first full calendar year after passage

7 of this Act;

8 (II) two shall hold office for a

9 term expiring on December 31 of the

10 second full calendar year after pas11 sage of this Act;

12 (III) one shall hold office for a

13 term expiring on December 31 of the

14 third full calendar year after passage

15 of this Act; and

16 (IV) two shall hold office for a

17 term expiring on December 31 of the

18 fourth full calendar year after passage

19 of this Act.

20 (ii) TIMING OF PARTICULAR DIREC21 TOR’S TERM.—

22 (I) INDUSTRY APPOINTEES’

23 TERMS WILL END IN DIFFERENT

24 YEARS.—One of the directors ap25 pointed under each of the clauses
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1 (i)(I), (II), (III), (IV) shall consist of

2 the four directors appointed under

3 paragraphs (2)(B)(i) and (ii).

4 (II) APPOINTEES FROM THE

5 GENERAL PUBLIC.—One director ap6 pointed under both clause (i)(II) and

7 (IV) shall consist of one of the two di8 rectors appointed under paragraph

9 (2)(B)(iii).

10 (iii) TREASURY DIRECTOR MUST BE

11 APPOINTED SOON AFTER ENACTMENT.—

12 The Secretary of the Treasury shall ap13 point the director designated under para14 graph (2)(A) within 30 days after enact15 ment of this Act.

16 (C) VACANCIES.—

17 (i) APPOINTMENT IN SAME MAN18 NER.—A vacancy on the Board of Direc19 tors shall be filled in the same manner as

20 the original appointment was made.

21 (ii) APPOINTMENT ONLY FOR THE RE22 MAINDER OF THE TERM.—Any director ap23 pointed under clause (i) shall be appointed

24 only for the remainder of the term of his

25 predecessor.
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1 (D) REMAINING A DIRECTOR UNTIL A SUC2 CESSOR HAS TAKEN OFFICE.—A director may

3 serve after the expiration of his term until his

4 successor has taken office.

5 (5) COMPENSATION.—

6 (A) CHAIRMAN AND VICE CHAIRMAN.—The

7 compensation of the Chairman and Vice Chair8 man shall be as provided in the bylaws of the

9 Corporation.

10 (B) OTHER DIRECTORS.—The remaining

11 five directors shall serve without compensation

12 except that they are entitled to receive reim13 bursement for expenses incurred in connection

14 with official business of the Corporation.

15 (6) OFFICERS AND EMPLOYEES AS MEMBERS

16 OF THE BOARD OF DIRECTORS.—No officer, attor17 ney, employee, or agent of the Corporation shall be

18 a member of the Board of Directors.

19 (7) BOARD OF DIRECTORS TO DETERMINE OFFI20 CERS.—The officers of the Corporation shall be em21 ployed at the will of the Board of Directors.

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

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

24 executive officer, president, senior executive, or other
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1 official with managerial or executive authority within

2 the Corporation.

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

4 (1) TIMING OF MEETINGS.—The Board of Di5 rectors shall meet at the call of its Chairman, or as

6 otherwise provided by the bylaws of the Corporation,

7 except that the director appointed under subsection

8 (c)(2)(A) may call a meeting until at least three

9 other directors have taken office.

10 (2) QUORUM TRANSITION RULE.—The bylaws

11 shall determine how many members constitute a

12 quorum when the Board of Directors meet, except

13 that the director appointed under subsection

14 (c)(2)(A) shall alone constitute a quorum until at

15 least three other directors have taken office.

16 (e) BYLAWS AND RULEMAKING.—

17 (1) BYLAWS.—

18 (A) PROCEDURE.—The Board of Directors

19 shall file with the Secretary of the Treasury a

20 copy of the proposed initial bylaws of the Cor21 poration and any proposed bylaw changes ac22 companied by a concise general statement of

23 the basis and purpose for such changes.

24 (B) CHANGES BECOME EFFECTIVE UNLESS

25 THE TREASURY DEPARTMENT OBJECTS.—Any
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1 bylaws submissions under subparagraph (A)

2 shall become effective thirty days after the fil3 ing of such changes with the Secretary of the

4 Treasury, unless—

5 (i) the Secretary of the Treasury, by

6 notice to the Corporation setting forth the

7 reasons therefor, disapproves of such pro8 posed bylaw changes as being contrary to

9 the purposes of this title; or

10 (ii) the Secretary of the Treasury de11 cides, at its own discretion, that public

12 comment shall be obtained, in which case

13 it may, after notifying the Corporation in

14 writing of such finding, require that the

15 procedures set forth in paragraph (2) be

16 followed with respect to such a bylaw

17 change.

18 (2) RULEMAKING.—

19 (A) RULEMAKING AUTHORITY.—The Cor20 poration shall have the power to issue a rule

21 only if—

22 (i) the power to issue the rule is ex23 plicitly provided for in this title; or

24 (ii) the Corporation demonstrates

25 that—
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1 (I) the rule implements statutory

2 language in this title; and

3 (II) improves the efficiency of the

4 cross-guarantee system.

5 (B) SUBSTANTIVE BASIS FOR RULES.—

6 Any proposed rule or proposed rule change shall

7 be approved only if there is substantial evidence

8 supporting the findings on which the proposed

9 rule is based.

10 (C) RULEMAKING PROCEDURES.—

11 (i) IN GENERAL.—The Corporation

12 shall use the informal rulemaking proce13 dures under the Administrative Procedures

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

15 under this paragraph.

16 (ii) RIGHT TO A HEARING.—In addi17 tion to the procedures under clause (i), any

18 person may during the comment period re19 quest a hearing and such hearing, if re20 quested, shall take place within 30 days

21 after the end of the comment period.

22 (iii) SUBMITTING RULES TO TREAS23 URY.—After having completed the proce24 dures under clauses (i) and (ii), the Cor-
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1 poration shall file with the Secretary of the

2 Treasury a copy of the proposed rules.

3 (iv) TREASURY AUTHORITY TO RE4 JECT RULES.—Any proposed rules or rule

5 changes submitted under clause (iii) shall

6 become effective thirty days after the filing

7 of such proposed rules or rule changes with

8 the Secretary of the Treasury, unless the

9 Secretary of the Treasury, by notice to the

10 Corporation setting forth the reasons

11 therefor, disapproves of such proposed

12 rules or rule changes as being contrary to

13 the purposes of this title.

14 (D) JUDICIAL REVIEW.—

15 (i) STANDING.—Any person suffering

16 a legal wrong, or adversely affected or ag17 grieved within the meaning of this title, by

18 the rules issued under this paragraph is

19 entitled to judicial review thereof.

20 (ii) JURISDICTION.—The United

21 States Court of Appeals for the District of

22 Columbia shall have exclusive original ju23 risdiction over any action under clause (i).

24 (iii) FINALITY.—A rule must be final

25 to be reviewable under this subparagraph.
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1 (iv) TIMING.—A petition for review

2 under this subparagraph must be filed

3 within 90 days after the date on which the

4 rule became final.

5 (E) INITIAL DEADLINE.—For any rule cov6 ered by subparagraph (A)(i), the Corporation

7 shall issue a final rule within one year after

8 passage of this Act.

9 (f) FUNDING.—

10 (1) INITIAL BORROWING.—

11 (A) BIF FINANCING.—The Corporation

12 shall have the power to borrow up to $20 mil13 lion from the Bank Insurance Fund.

14 (B) USE OF SUCH FINANCING.—The Cor15 poration shall use any amount borrowed under

16 subparagraph (A) to establish the central elec17 tronic repository, pay initial salaries and other

18 operating expenses, buy equipment, develop

19 computer software, and otherwise begin oper20 ations.

21 (C) REPAYMENT.—The Corporation shall

22 repay any borrowing under subparagraph (A)

23 within 5 years after the cross-guarantee activa24 tion date from income obtained under para25 graph (2).
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1 (D) INTEREST ON LOAN.—

2 (i) TIMING OF PAYMENTS.—No prin3 cipal or interest payments on the loan de4 scribed in subparagraph (A) shall be due

5 prior to one year after the cross-guarantee

6 activation date.

7 (ii) INTEREST RATE.—The interest

8 rate on the borrowing under this para9 graph shall be equal to .25 percent plus

10 the average annual percentage yield on 3-

11 month bills issued by the Secretary of the

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

13 United States Code.

14 (2) FINANCING FROM OPERATIONS.—

15 (A) SELF-SUPPORTING.—The Corporation

16 shall repay the loan under paragraph (1) and

17 pay for its ongoing operating expenses by as18 sessing fees as authorized under subparagraph

19 (B) and collecting penalties as authorized under

20 this title and shall not, subject to paragraph

21 (1), receive any financing or operating subsidies

22 from the United States Treasury.

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

24 reasonable fee upon any party which—
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1 (i) submits a cross-guarantee, stop2 loss, or group cross-guarantee contract, or

3 amendment thereto, for approval;

4 (ii) requests use of any service pro5 vided by the central electronic repository;

6 or

7 (iii) requests a certification under sec8 tion 124(b).

9 (g) MISCELLANEOUS PROVISIONS.—

10 (1) INSPECTION OF REPORTS.—

11 (A) IN GENERAL.—Any notice, report, or

12 other document filed with the Corporation pur13 suant to this title, other than financial state14 ments filed by nondepository guarantors pursu15 ant to section 117(a)(3)(A), shall be available

16 for public inspection unless the Corporation or

17 the Secretary of Treasury determines that dis18 closure thereof is not in the public interest.

19 (B) CONGRESSIONAL ACCESS.—Nothing

20 under subparagraph (A) shall act to deny docu21 ments or information to the Congress of the

22 United States or to the committees of either

23 House having jurisdiction over depository insti24 tutions and related matters under the rules of

25 each body.
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1 (C) TREASURY ACCESS TO THE CORPORA2 TION’S DOCUMENTS.—The Corporation shall

3 provide the Secretary of Treasury with any doc4 ument or information which the Secretary in

5 his or her discretion requests.

6 (2) SUITS AGAINST THE CORPORATION AND ITS

7 OFFICERS.—

8 (A) WAIVER OF SOVEREIGN IMMUNITY.—

9 The Corporation waives sovereign immunity to

10 the same extent provided for under the Admin11 istrative Procedures Act (5 U.S.C. § 702).

12 (B) SUITS FOR MONEY DAMAGES.—Nei13 ther the Corporation nor any of the Corpora14 tion’s directors, officers, attorneys, agents, or

15 employees shall have any liability to any person

16 for any action taken or not taken under or in

17 connection with any matter contemplated by

18 this title, if the act was taken or not taken in

19 good faith or there were reasonable grounds for

20 taking or not taking the action.

21 (3) EXEMPTION FROM TAXATION.—The Cor22 poration, its property, its franchise, capital, reserves,

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

24 taxation now or hereafter imposed by the United

25 States or by any State or local taxing authority, ex-
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1 cept that any real property or tangible personal

2 property (other than cash and securities) of the Cor3 poration shall be subject to State and local taxation

4 to the same extent according to its value as other

5 real and tangible personal property is taxed.

6 (4) FISCAL YEAR.—The fiscal year of the Cor7 poration shall be the calendar year.

8 SEC. 122. REGULATION OF THE CROSS-GUARANTEE PROC9 ESS.

10 (a) CROSS-GUARANTEE REGULATION CORPORATION

11 ENFORCEMENT AUTHORITY.—

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

13 Corporation shall have exclusive authority to enforce

14 compliance with provisions of this title.

15 (2) ENFORCEMENT.—The Corporation shall

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

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

18 Insurance Act and paragraph (1) and each subpara19 graph, other than subparagraphs (B) and (C), of

20 paragraph (2) of subsection (i) of such section in en21 forcing this title with respect to any syndicate agent,

22 guaranteed party, or direct guarantor, but only with

23 respect to any violation of any requirements under

24 this title.

25 (b) LIMITATION ON STATE JURISDICTION.—
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1 (1) IN GENERAL.—Notwithstanding any provi2 sion of state law, no state may exercise authority

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

4 contract with respect to—

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

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

7 (B) the rights, duties, privileges, or obliga8 tions of such party under the contract or pursu9 ant to this title.

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

11 shall not be construed as affecting the authority of

12 any state to determine the powers and regulate the

13 activities of state depository institutions.

14 SEC. 123. APPROVAL PROCESS FOR CROSS-GUARANTEE,

15 STOP-LOSS, AND GROUP CROSS-GUARANTEE

16 CONTRACTS.

17 (a) EXPEDITED APPROVAL OF CONTRACTS AND CON18 TRACT AMENDMENTS.—

19 (1) NOTICE AND REVIEW REQUIREMENT.—Ex20 cept as provided in paragraph (3), no cross-guaran21 tee, stop-loss, or group cross-guarantee contract, and

22 no amendment to any such contract, shall be deemed

23 approved unless——
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1 (A) the Corporation has been given 15

2 business days to review the contract or amend3 ment; and

4 (B) before the end of the 15-day period de5 scribed in subparagraph (A), the Corporation

6 has not issued an order—

7 (i) disapproving the contract or

8 amendment; or

9 (ii) extending the period within which

10 the Corporation may disapprove the con11 tract or amendment in accordance with

12 paragraph (6).

13 (2) SUBMISSION OF CONTRACT OR AMENDMENT

14 IN ELECTRONIC FORM.—The Corporation shall pre15 scribe rules requiring that any cross-guarantee, stop16 loss, or group cross-guarantee contract, and any

17 amendment to such contract, being submitted for re18 view under this subsection shall be submitted in elec19 tronic form to the central electronic repository.

20 (3) NOTICE OF APPROVAL BEFORE END OF DIS21 APPROVAL PERIOD.—A cross-guarantee, stop-loss, or

22 group cross-guarantee contract, and any amendment

23 to any such contract, shall be deemed approved be24 fore the expiration of the period described in para25 graph (1)(A) (or extended in accordance with para-
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1 graph (6)) for disapproving such contract if the Cor2 poration notifies the parties that the Corporation

3 does not intend to disapprove the contract.

4 (4) SUBMISSION OF INFORMATION AND CER5 TIFICATIONS.—

6 (A) IN GENERAL.—The syndicate agent

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

8 or group cross-guarantee contract, or any

9 amendment to any such contract, submitted to

10 the Corporation for review under paragraph

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

12 such proposed contract such information and

13 attestations or certifications as the Corporation

14 may require by rule.

15 (B) LIMITATION ON SCOPE OF INFORMA16 TION REQUIRED.—The rules prescribed by the

17 Corporation under subparagraph (A) may not

18 require the submission of any information other

19 than information directly necessary for the Cor20 poration to determine whether any proposed

21 cross-guarantee, stop-loss, or group cross-guar22 antee contract, or amendment thereto, submit23 ted to the Corporation for approval is in compli24 ance with the requirements of this title.

25 (5) ADDITIONAL INFORMATION.—
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1 (A) IN GENERAL.—The Corporation may,

2 by specific request in connection with a particu3 lar proposed cross-guarantee, stop-loss, or

4 group cross-guarantee contract, or amendment

5 to any contract, submitted to the Corporation,

6 require, on one occasion only, that additional

7 information be submitted with respect to such

8 contract or amendment, except that the Cor9 poration may require only such information as

10 may be relevant to—

11 (i) a determination of the extent to

12 which the proposed contract is in compli13 ance with the requirements of this title;

14 and

15 (ii) the Corporation’s evaluation of the

16 contract in accordance with this section.

17 (B) NOTICE OF EXPLANATION.—For any

18 request for additional information under sub19 paragraph (A), the Corporation shall provide a

20 detailed explanation of the specific reasons why

21 such additional information is needed.

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

23 in connection with a particular proposed cross-guar24 antee, stop-loss, or group cross-guarantee contract,

25 or any amendment to any such contract, which is
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1 submitted to the Corporation, the Corporation re2 quests additional information under paragraph (5),

3 the Corporation may by order provide that the Cor4 poration shall have any additional period (not to ex5 ceed 5 business days beginning on the date on which

6 the Corporation receives such information) within

7 which to disapprove the proposed contract.

8 (7) REVOCATION OF APPROVAL.—The Corpora9 tion may revoke its approval of a contract under this

10 subsection if a court has enjoined the operation of

11 the contract under subsection (e)(2)(B).

12 (b) LIMITED GROUNDS FOR DISAPPROVAL OF PRO13 POSED CONTRACT OR AMENDMENT.—The Corporation

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

15 group cross-guarantee contract, or any amendment to any

16 such contract, if and only if—

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

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

19 or

20 (2) the information submitted under subsection

21 (a) was insufficient to determine whether the con22 tract and the parties to the contract are in compli23 ance with this title.

24 (c) NOTICE OF DISAPPROVAL.—
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1 (1) IN GENERAL.—If the Corporation dis2 approves any cross-guarantee, stop-loss, or group

3 cross-guarantee contract, or any amendment thereto,

4 the Corporation shall immediately notify the parties

5 to such contract of the disapproval.

6 (2) STATEMENT OF REASON FOR DIS7 APPROVAL.—The notice under paragraph (1) shall

8 contain a detailed explanation of the specific reasons

9 for the disapproval under this section.

10 (d) CONDITIONAL APPROVALS.—

11 (1) IN GENERAL.—The Corporation shall pre12 scribe rules which would allow a cross-guarantee,

13 stop-loss, or group cross-guarantee contract to be

14 conditionally approved, in a manner otherwise in ac15 cordance with this section, if, at the time such condi16 tional approval is granted, all the information re17 quired by the Corporation to make a final deter18 mination of whether the contract meets the require19 ments of this title cannot be known or ascertained.

20 (2) RECONFIRMATION.—The rules prescribed

21 under paragraph (1) shall allow the Corporation,

22 upon receipt of all the information the Corporation

23 needs to determine whether the contract meets the

24 requirements of this title, 3 business days to give the

25 contract a final approval.
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1 (3) REPLACEMENT OF GUARANTORS.—The

2 rules prescribed under paragraph (1) shall allow,

3 without restriction, the replacement of a direct guar4 antor with another direct guarantor during the pe5 riod between the date of conditional approval and

6 final approval.

7 (e) JUDICIAL REVIEW.—

8 (1) CONTRACTS DISAPPROVED.—

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

10 disapproved under this section may seek judicial

11 review of the disapproval of a contract under

12 this section.

13 (B) LIMITATION ON STANDING.—Only a

14 party to a contract disapproved under this sec15 tion may bring an action under this paragraph.

16 (2) CONTRACTS APPROVED.—

17 (A) IN GENERAL.—Any guaranteed party

18 may seek judicial review of the approval of a

19 contract under this section.

20 (B) INJUNCTIVE RELIEF IF THE CON21 TRACT HAS NOT YET TAKEN EFFECT.—If a

22 guaranteed party brings an action under sub23 paragraph (A) and the contract approved under

24 this section has not yet become effective accord25 ing to the contract’s terms, a court may enjoin
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1 the operation of the contract if it violates any

2 requirement under this title.

3 (C) LIMITATION ON REVIEW IF THE CON4 TRACT HAS BECOME EFFECTIVE.—

5 (i) IN GENERAL.—A cross-guarantee

6 or stop-loss contract may be reviewed only

7 with respect to whether the contract vio8 lates section 116(a) or section 125.

9 (ii) REMEDIES.—

10 (I) SECTION 125 VIOLATION.—

11 Any court which holds that a cross12 guarantee or stop-loss contract vio13 lates section 125 shall order the Cor14 poration to use the remedies available

15 under section 125 to eliminate the vio16 lation.

17 (II) SECTION 116(a) VIOLA18 TION.—Any court which holds that a

19 cross-guarantee or stop-loss contract

20 violates section 116(a) shall order the

21 Corporation to adjust each direct

22 guarantor’s liability pursuant to sec23 tion 113(e)(2)(B).

24 (III) INJUNCTIONS DIS25 ALLOWED.—No court may enjoin the
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1 operation of a cross-guarantee or

2 stop-loss contract.

3 (3) JURISDICTION.—No court other than a dis4 trict court of the United States shall have original

5 jurisdiction of any action under this subsection.

6 (f) RULES TO AVOID FRAUDULENT SIGNATORIES TO

7 CONTRACTS.—

8 (1) IN GENERAL.—The Corporation shall issue

9 rules which will provide a means, within the time

10 frame of subsection (a), by which, prior to approval

11 of a cross-guarantee, stop-loss, or group cross-guar12 antee contract, the Corporation can ensure that

13 every party listed as a party to the contract agreed

14 to become a party to the contract.

15 (2) AVOIDING DUPLICATION.—In issuing the

16 rules under paragraph (1), the Corporation may rely

17 on mechanisms established by the parties to cross18 guarantee, stop-loss, or group cross-guarantee con19 tracts to ensure that all signatories to the contract

20 agreed to the contract’s terms and shall, whenever

21 possible, avoid duplicating such efforts.

22 (3) REMEDIES IF PARTY STILL FALSELY LIST23 ED AS DIRECT GUARANTOR.—

24 (A) IN GENERAL.—Any guaranteed party

25 named as a direct guarantor under any cross-
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1 guarantee or stop-loss contract even though

2 such party did not agree to become a party to

3 the contract shall have all the rights, privileges,

4 duties, and obligations of a direct guarantor

5 under the contract.

6 (B) REMEDIES.—Subject to 113(k), any

7 guaranteed party falsely listed as a direct guar8 antor under subparagraph (A) shall have any

9 recourse provided under Federal or State law

10 against the persons responsible for the false

11 listing.

12 (g) ACCELERATED REVIEW FOR SECONDARY TRANS13 FERS OF SYNDICATE INTERESTS.—In the case of a con14 tract amendment which consists solely of a transfer of in15 terest under section 113(m), the provisions of this section

16 shall apply except—

17 (1) the applicable period for approval under

18 subsection (a)(1) shall be 3 business days instead of

19 15 business days;

20 (2) the Corporation may not extend the dis21 approval period as provided for under subsection

22 (a)(6); and

23 (3) the Corporation may disapprove the con24 tract amendment under subsection (b) only if the
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1 amended contract would violate section 113(m), sec2 tion 116(a), or section 125.

3 SEC. 124. CENTRAL ELECTRONIC REPOSITORY.

4 (a) ESTABLISHMENT.—

5 (1) CGRC ESTABLISHES CENTRAL ELECTRONIC

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

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

8 the Corporation shall establish and maintain a

9 central electronic repository for cross-guarantee,

10 stop-loss, and group cross-guarantee contracts.

11 (2) MAINTENANCE OF ALL PAST, CURRENT,

12 DISAPPROVED, AND PROPOSED CONTRACTS.—The

13 central electronic repository shall maintain files, in

14 electronic form, of all cross-guarantee, stop-loss, and

15 group cross-guarantee contracts, including expired,

16 cancelled, and disapproved contracts, all amend17 ments to any such contract, and all proposed con18 tracts and contract amendments which have been

19 filed with the Corporation, but not yet acted upon.

20 (3) DIRECT ACCESS TO CENTRAL ELECTRONIC

21 REPOSITORY.—The files in the central electronic re22 pository established under this section shall be di23 rectly and immediately accessible by any person

24 under procedures established by the Corporation.
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1 (4) CENTRAL ELECTRONIC REPOSITORY VER2 SION OF THE CONTRACT AS A COMPLETELY INTE3 GRATED AGREEMENT.—

4 (A) LEGAL EVIDENCE OF THE CON5 TRACT.—The provisions of any cross-guarantee,

6 stop-loss, or group cross-guarantee contract, in7 cluding any amendment to any such contract,

8 on file in the central electronic repository shall

9 be—

10 (i) irrebuttable evidence of the con11 tract; and

12 (ii) superior evidence to all other

13 forms or versions of the contract.

14 (B) PROHIBITION ON ADDITIONAL

15 TERMS.—The contract on file in the central

16 electronic repository shall be a complete and ex17 clusive statement of the terms of any cross18 guarantee, stop-loss, or group cross-guarantee

19 contract and no evidence of additional terms is

20 admissible to supplement the contract on file in

21 the repository.

22 (b) AVAILABILITY OF CERTIFIED COPIES.—

23 (1) IN GENERAL.—The central electronic repos24 itory shall provide upon request a copy of any con25 tract maintained under subsection (a)(2) to any per-
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1 son, any government officer, agency, or department,

2 or any court.

3 (2) CERTIFICATION OF COPIES.—

4 (A) IN GENERAL.—Each copy of a cross5 guarantee or stop-loss contract provided in ac6 cordance with paragraph (1) shall contain a

7 certification by the central electronic repository

8 that such copy is true and correct.

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

10 cross-guarantee or stop-loss contract which is

11 certified in accordance with subparagraph (A)

12 shall establish prima facie the contract.

13 (c) MAINTENANCE OF DATA BASE OF ACTIVE GUAR14 ANTORS.—The central electronic repository shall maintain

15 in electronic form a data base containing the names of

16 the direct guarantors under each cross-guarantee or stop17 loss contract which has not expired or been canceled and

18 such other information with regard to such contracts that

19 will enable any person to determine whether or not any

20 such contract, proposed contract, or proposed amendment

21 to any contract, is in compliance with this title and the

22 rules prescribed under this title.

23 (d) STANDARD CONTRACT LANGUAGE.—The Cor24 poration is authorized to maintain in the central electronic

25 repository and update as needed standard language for
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1 various provisions of cross-guarantee, stop-loss, and group

2 cross-guarantee contracts that parties to these contracts

3 may, at their sole discretion, incorporate by reference in

4 contracts and contract amendments they submit to the

5 Corporation for approval.

6 (e) REGISTRY OF INDIVIDUALS WITH A QUESTION7 ABLE RECORD.—The Corporation is authorized to main8 tain in the central electronic repository a list of individuals

9 who have been indicted or convicted of a crime related to

10 a financial institution or had a judgment entered against

11 them in a civil case related to financial institutions.

12 SEC. 125. RESTRICTION ON CLOSED LOOPS.

13 (a) PROHIBITION OF MORE THAN ONE UNRELATED

14 CLOSED LOOP.—At no time shall two or more closed loops

15 exist unless at least one cross-guarantee or stop-loss con16 tract is a contract in each closed loop that exists in the

17 system.

18 (b) CGRC CALL-BACK.—If, at any time, the require19 ments of subsection (a) are violated—

20 (1) the Corporation shall on the same business

21 day notify each guaranteed party under each cross22 guarantee and stop-loss contract which is part of the

23 closed loop which has the fewest number of contracts

24 that it must obtain a successor cross-guarantee or

25 stop-loss contract; and
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1 (2) each guaranteed party under paragraph (1)

2 shall have 10 business days upon notification to sub3 mit a successor contract to the Corporation for ap4 proval.

5 (c) CGRC FILING OF A BANKRUPTCY PETITION.—

6 (1) FILING OF A BANKRUPTCY PETITION BY

7 THE CGRC.—

8 (A) APPOINTMENT OF CGRC AS RE9 CEIVER.—

10 (i) FAILURE TO SUBMIT A CON11 TRACT.—If a guaranteed company has not

12 met the deadline to submit a contract for

13 approval under subsection (b), the Cor14 poration shall appoint itself as receiver for

15 the company.

16 (ii) LIMITS ON CGRC’S POWERS.—Ex17 cept as provided in this paragraph and sec18 tion 113(g)(4), the Corporation may not

19 appoint itself receiver or file a bankruptcy

20 petition for a guaranteed company.

21 (B) CGRC IMMEDIATELY FILES A BANK22 RUPTCY PETITION.—On the same business day

23 that the Corporation appoints itself as receiver,

24 the Corporation shall file a voluntary petition

25 under section 301 of title 11, United States
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1 Code, on behalf of the guaranteed company for

2 which the Corporation appointed itself receiver.

3 (2) RECOVERY FROM ALL GUARANTEED PAR4 TIES FOR LOSSES DUE TO CLOSED LOOPS.—

5 (A) IN GENERAL.—In the case of any

6 guaranteed company for which the Corporation

7 files a bankruptcy petition under paragraph

8 (1)(B), all guaranteed parties shall be liable to

9 cover any loss to the bankruptcy estate arising

10 out of the bankruptcy trustee’s duty to perform

11 on all guaranteed obligations of the guaranteed

12 company.

13 (B) LIABILITY PROPORTIONAL TO A PAR14 TY’S SHARE OF OVERALL GUARANTEED OBLIGA15 TIONS.—A guaranteed party shall be liable

16 under subparagraph (A) in proportion to such

17 party’s share of the guaranteed obligations of

18 all guaranteed parties at the time of the filing

19 of the bankruptcy petition by the Corporation.

20 (C) CGRC AUTHORIZATION.—The Cor21 poration is authorized to, and shall, assess

22 guaranteed parties for any amounts owed under

23 this paragraph.
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1 (d) STANDING.—Any person can bring an action in

2 a district court of the United States to force the Corpora3 tion to take action under this section.

4 SEC. 126. TREASURY OVERSIGHT OF THE CROSS-GUARAN5 TEE REGULATION CORPORATION.

6 (a) ENFORCEMENT OF THE ACT.—In the event that

7 the Corporation should fail to fulfill any of its duties under

8 this title, the Secretary of the Treasury may apply to the

9 Federal district court for the District of Columbia for an

10 order requiring the Corporation to discharge its obliga11 tions under this title and for such other relief as the court

12 may deem necessary to carry out the purposes of this title.

13 (b) EXAMINATIONS AND REPORTS.—

14 (1) EXAMINATIONS.—The Secretary of the

15 Treasury may make such examinations and inspec16 tions of the Corporation and require the Corporation

17 to furnish it with such reports and records or copies

18 thereof as the Secretary may consider necessary to

19 implement the purposes of this title.

20 (2) REPORTS.—

21 (A) ANNUAL REPORT.—Within 90 days

22 after the close of each fiscal year of the Cor23 poration, the Corporation shall submit to the

24 Treasury Department a written report relative

25 to the conduct of its business, and the exercise
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1 of the other rights and powers granted by this

2 title, during such fiscal year.

3 (B) INFORMATION TO BE INCLUDED IN

4 REPORT.—The report under subparagraph (A)

5 shall include financial statements setting forth

6 the financial position of the Corporation at the

7 end of such fiscal year and the results of its op8 erations (including the source and application

9 of its funds) for such fiscal year.

10 (C) REQUIRED AUDIT.—The financial

11 statements required under subparagraph (B)

12 shall be examined by an independent public ac13 countant or firm of independent public account14 ants, selected by the Corporation and satisfac15 tory to the Treasury Department, and shall be

16 accompanied by the report thereon of such ac17 countant or firm.

18 (D) SUBMISSION TO THE PRESIDENT AND

19 CONGRESS.—The Secretary of the Treasury

20 shall submit the report under subparagraph (A)

21 to the President and Congress with such com22 ment thereon as the Secretary deems appro23 priate.
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1 CHAPTER 2—PROTECTION OF INSURED

2 DEPOSITS

3 SEC. 128. BACKUP INSURANCE FOR DEPOSITS IN GUARAN4 TEED DEPOSITORY INSTITUTIONS.

5 (a) ESTABLISHMENT OF CROSS-GUARANTEE

6 BACKUP FUND.—

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

8 the cross-guarantee backup fund consisting of

9 amounts deposited pursuant to section 144 and sub10 section (c).

11 (2) ADMINISTRATION OF FUND.—The cross12 guarantee backup fund shall be administered by the

13 Federal Deposit Insurance Corporation until such

14 time as the administration of the fund is transferred

15 to the Corporation as provided for in section

16 144(e)(3).

17 (b) BACKUP DEPOSIT INSURANCE.—

18 (1) FUND LIABILITY.—Deposits in any guaran19 teed depository institution or guaranteed banking of20 fice shall be insured against loss, to the same extent

21 as deposits are insured against loss under section

22 11(a) of the Federal Deposit Insurance Act (as in

23 effect on the day before the enactment of this Act),

24 in the event that no adjustment under section

25 113(a)(2)(F)(iii) will be sufficient to protect all
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1 guaranteed obligations of all guaranteed companies

2 against loss.

3 (2) SUBORDINATED DEBT NOT TREATED AS

4 DEPOSIT.—No subordinated debt of any guaranteed

5 depository institution or any guaranteed banking of6 fice may be treated as a deposit for purposes of

7 paragraph (1).

8 (c) USE AND DISPOSITION OF FUND.—

9 (1) IN GENERAL.—Amounts in the cross-guar10 antee backup fund may be used only to meet obliga11 tions incurred under subsection (b)(1).

12 (2) INVESTMENTS.—Amounts on deposit in the

13 cross-guarantee backup fund shall be invested in di14 rect obligations of the United States and interest

15 thereon shall accumulate in the fund.

16 (3) REPAYMENT.—A guaranteed depository in17 stitution or guaranteed banking office shall be

18 obliged to repay the cross-guarantee backup fund,

19 including any foregone interest under paragraph (2),

20 for any payments made to the institution or banking

21 office or the institution’s or banking office’s deposi22 tors pursuant to paragraph (1).

23 (d) ASSESSMENTS.—If the repayment required pur24 suant to paragraph (3) of subsection (c) is not repaid to

25 the cross-guarantee backup fund within 30 days after pay-
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1 ment under paragraph (1) of subsection (c), the Federal

2 Deposit Insurance Corporation or the Corporation, as the

3 case may be, shall levy pro rata on all insured deposits

4 in guaranteed depository institutions and guaranteed

5 banking offices, as of the end of the calendar quarter pre6 ceding the payment under paragraph (1), an amount equal

7 to the amount owed under paragraph (3).

8 Subtitle D—Miscellaneous Provisions

9 SEC. 131. INSTITUTIONS OFFERING UNINSURED DEPOSITS.

10 The Corporation shall ensure that any company,

11 other than—

12 (a) a depository institution;

13 (b) a branch which is not an insured branch (as

14 the term ‘‘insured branch’’ is defined in section 3(s)

15 of the Federal Deposit Insurance Act);

16 (c) an insured credit union or noninsured credit

17 union (as such terms are defined in section 101(7)

18 of the Federal Credit Union Act);

19 (d) a broker or dealer registered under the Se20 curities Exchange Act of 1934; or

21 (e) an investment company registered under the

22 Investment Company Act of 1940,

23 which accepts deposits or assumes obligations which would

24 be deposits if the company were a bank or savings associa25 tion (as defined in section 3 of the Federal Deposit Insur-
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1 ance Act) is accepting such deposits and assuming such

2 obligations in accordance with all applicable Federal and

3 State laws which relate to the licensing and regulation of

4 institutions which accept deposits or assume such obliga5 tions.

6 SEC. 132. FEDERAL RESERVE LENDING.

7 Before February 1 of each calendar year beginning

8 after the cross-guarantee activation date, the Board of

9 Governors of the Federal Reserve System shall submit a

10 report to the committees of both Houses of the Congress

11 of the United States having jurisdiction over depository

12 institutions containing—

13 (a) a certification that—

14 (1) no loss was incurred by such Board or

15 any Federal Reserve Bank during the preceding

16 calendar year on any loan or other advance to

17 any guaranteed company during such year; and

18 (2) no loss is anticipated on any such loan

19 or advance which remains outstanding at the

20 end of such year; or

21 (b) the amount of any such loss or anticipated

22 loss.

23 SEC. 133. ADVERTISING BY GUARANTEED FINANCIAL

24 GROUPS.

25 (a) ADVERTISING DEPOSIT GUARANTEES.—
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1 (1) IN GENERAL.—A guaranteed company or

2 guaranteed banking office may advertise that depos3 its and certain other liabilities are fully guaranteed

4 against any loss under a cross-guarantee contract

5 approved by the Corporation.

6 (2) CROSS-GUARANTEE LOGO.—Before the end

7 of the 1-year period beginning on the date of the en8 actment of this Act, the Corporation—

9 (A) shall design, after consultation with

10 depository institutions, a logotype for use by a

11 guaranteed company or guaranteed banking of12 fice, which shall include language which states

13 ‘‘This institution is operating under a cross14 guarantee contract approved by the Cross15 Guarantee Regulation Corporation’’; and

16 (B) authorize guaranteed companies and

17 guaranteed banking offices to use such logo18 type.

19 (3) RULES GOVERNING MANNER OF ADVERTIS20 ING.—The Corporation shall prescribe rules govern21 ing the manner in which a guaranteed company or

22 guaranteed banking office may display any logotype

23 permitted under this subsection.
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1 (b) ADVERTISING BACKUP INSURANCE.—A deposi2 tory institution which is guaranteed under a cross-guaran3 tee contract—

4 (1) shall display at each place of business of the

5 institution any sign described in section 18(a) of the

6 Federal Deposit Insurance Act; and

7 (2) may advertise that deposits at the institu8 tion are insured by the federal government to the

9 same extent as deposits are insured against loss

10 under section 11(a) of the Federal Deposit Insur11 ance Act (as in effect on the date before the enact12 ment of this Act).

13 (c) EQUAL TREATMENT IN ADVERTISING THE FDIC

14 LOGO.—The rules governing advertising under subsection

15 (b) shall not provide for different treatment based on

16 whether or not a depository institution is a guaranteed

17 depository institution.

18 SEC. 134. GUARANTEED DEPOSITORY INSTITUTIONS RE19 MAIN FEDERALLY INSURED DEPOSITORIES

20 FOR PURPOSES OF STATE OR FEDERAL LAW.

21 Unless a State or party to a contract otherwise pro22 vides subsequent to the passage of this act, a guaranteed

23 depository institution shall be deemed to be a federally in24 sured depository institution within the meaning of section

25 3(c)(2) of the Federal Deposit Insurance Act for purposes
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1 of any State or Federal law or private agreement which

2 determines the legally acceptable institutions in which to

3 deposit funds.

4 Subtitle E—Transition to 100 Percent Cross5 Guarantee Process

6 SEC. 141. EFFECTIVE DATE OF SYSTEM BASED ON MINI7 MUM NUMBER OF GUARANTEED DEPOSITORY

8 INSTITUTIONS AND AMOUNT OF TOTAL AS9 SETS.

10 (a) IN GENERAL.—No cross-guarantee or stop-loss

11 contract shall take effect before the later of—

12 (1) the end of the 18-month period beginning

13 on the date of the enactment of this Act; or

14 (2) 40 business days after the date on which

15 the Corporation has approved, under subsection (b),

16 a minimum of 250 cross-guarantee contracts under

17 which depository institutions which, in the aggre18 gate, have total assets of not less than

19 $500,000,000,000 are guaranteed companies or

20 guaranteed banking offices.

21 (b) CONTINGENT EFFECT OF CONTRACTS UNTIL EF22 FECTIVE DATE.—

23 (1) IN GENERAL.—The Corporation may condi24 tionally approve a cross-guarantee or stop-loss con25 tract to become effective on the date to be deter-
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1 mined under subsection (a) even though not all di2 rect guarantors under the contract meet the require3 ments under section 116(a)(1).

4 (2) MINIMUM REQUIREMENTS.—No cross-guar5 antee or stop-loss contract conditionally approved

6 under paragraph (1) shall receive final approval

7 from the Corporation for purposes of subsection

8 (a)(2) unless—

9 (A) the cross-guarantee or stop-loss con10 tract is 1 of a set of contracts in which each

11 contract—

12 (i) is a contract in the same closed

13 loop; and

14 (ii) becomes effective at the same time

15 every other contract within the set of con16 tracts takes effect; and

17 (B) at the time such contract becomes ef18 fective, the requirements of section 125(a) are

19 met.

20 (c) PUBLICATION OF CROSS-GUARANTEE ACTIVA21 TION DATE.—The Corporation shall submit for publica22 tion in the Federal Register the date of the cross-guaran23 tee activation date on the day that such date is

24 ascertained.
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1 (d) ONE-TIME CONVERSION TO GUARANTEED PARTY

2 STATUS.—Notwithstanding any provision of section 142,

3 section 111 shall apply with respect to any depository in4 stitution as of the date—

5 (1) on which such institution first becomes a

6 guaranteed depository institution or guaranteed

7 banking office;

8 (2) on which any depository institution which is

9 affiliated with such depository institution becomes a

10 guaranteed depository institution; or

11 (3) on which any depository institution which is

12 under common ownership with such depository insti13 tution under section 112(d)(2) becomes a guaran14 teed depository institution.

15 SEC. 142. MANDATORY DATE ON WHICH DEPOSITORY INSTI16 TUTIONS MUST BECOME GUARANTEED.

17 (a) IN GENERAL.—A depository institution may oper18 ate without being a guaranteed depository institution until

19 the end of a two-year period beginning on the last day

20 of a calendar quarter in which—

21 (1) more than 90 percent of the consolidated

22 assets at book value of all depository institutions are

23 owned by guaranteed depository institutions; or

24 (2) more than 90 percent of all depository insti25 tutions are guaranteed depository institutions.
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1 (b) CONSOLIDATED ASSETS AT BOOK VALUE DE2 FINED.—

3 (1) IN GENERAL.—The term ‘‘consolidated as4 sets at book value’’ means the total value, as deter5 mined on a consolidated basis and in accordance

6 with generally accepted accounting principles, of all

7 tangible and intangible property of any depository

8 institution, all subsidiaries of such institution, all af9 filiates of such institution which are depository insti10 tutions, and all subsidiaries of such affiliates.

11 (2) RULES.—The Corporation may issue rules

12 to further define the term consistent with this sub13 section.

14 SEC. 143. APPOINTMENT OF RECEIVER FOR INSTITUTIONS

15 WHICH FAIL TO COMPLY WITH TRANSITION

16 REQUIREMENTS.

17 The Federal Deposit Insurance Corporation shall im18 mediately appoint a receiver for any depository institution

19 which is not a guaranteed depository institution or guar20 anteed banking office under any cross-guarantee contract

21 as of the date by which such institution is required to be

22 a guaranteed depository institution or guaranteed banking

23 office under section 142.
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1 SEC. 144. FUNDING THE CROSS-GUARANTEE BACKUP FUND.

2 (a) SEQUENCE OF ACTIONS TO BE TAKEN ON THE

3 CROSS-GUARANTEE ACTIVATION DATE.—On the cross4 guarantee activation date, the Federal Deposit Insurance

5 Corporation shall:

6 (1) MERGE EXISTING DEPOSIT INSURANCE

7 FUNDS.—Merge the Savings Association Insurance

8 Fund (established under section 11(a)(6)(A) of the

9 Federal Deposit Insurance Act) into the Bank In10 surance Fund (established under section 11(a)(5)(A)

11 of the Federal Deposit Insurance Act) with the

12 Bank Insurance Fund assuming all of the assets and

13 liabilities of the Savings Association Insurance

14 Fund.

15 (2) ADJUST LOSS RESERVE IN THE BANK IN16 SURANCE FUND.—Subsequent to the merger under

17 paragraph (1), adjust the Bank Insurance Fund’s

18 reserve for losses to reflect the present value of the

19 fund’s expected losses due to depository institutions

20 that did not become guaranteed depository institu21 tions on the cross-guarantee activation date.

22 (3) TRANSFER FUNDS TO FICO.—Transfer from

23 the Bank Insurance Fund to the Financing Corpora24 tion (established under section 21(a) of the Federal

25 Home Loan Bank Act) such sums as shall be suffi26 cient to carry out the purposes of subsection (c).
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1 (4) ADJUST DESIGNATED RESERVE RATIO FOR

2 THE BANK INSURANCE FUND.—After carrying out

3 the provisions of paragraphs (1) through (3), cal4 culate a designated reserve ratio for the Bank Insur5 ance Fund that shall be used after the cross-guaran6 tee activation date for the purpose of determining

7 deposit insurance assessments in lieu of the des8 ignated reserve ratio specified under section

9 7(b)(2)(A)(iv)(I) of the Federal Deposit Insurance

10 Act.

11 (b) ACTIONS SUBSEQUENT TO THE CROSS-GUARAN12 TEE ACTIVATION DATE.—Within 30 days after carrying

13 out the provisions of subsection (a), the Federal Deposit

14 Insurance Corporation shall transfer to the cross-guaran15 tee backup fund an amount equal to the product of—

16 (1) the estimated insured deposits held by de17 pository institutions becoming guaranteed depository

18 institutions on the cross-guarantee activation date;

19 and

20 (2) the ratio calculated under subsection (a)(4).

21 (c) DEFEASE REMAINING INTEREST PAYABLE ON

22 FICO BONDS.—

23 (1) PURCHASE ZERO COUPON INSTRUMENTS.—

24 The directors of the Financing Corporation (estab25 lished under section 21(a) of the Federal Home
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1 Loan Bank Act) shall use the funds transferred to

2 the Financing Corporation under subsection (a)(3)

3 to purchase noninterest bearing direct obligations of

4 the United States with face amounts (the amount of

5 principal payable at maturity) and maturities ap6 proximately equal to the remaining interest due and

7 payable on obligations issued by the Financing Cor8 poration under section 21(e) of the Federal Home

9 Loan Bank Act.

10 (2) TERMINATE FICO ASSESSMENT AUTHOR11 ITY.—Upon purchasing the securities described in

12 paragraph (1), the Financing Corporation shall

13 cease making assessments authorized under section

14 21(f) of the Federal Home Loan Bank Act.

15 (d) ACTIONS TO BE TAKEN ON EVERY JUNE 30 AND

16 DECEMBER 31 AFTER THE CROSS-GUARANTEE ACTIVA17 TION DATE.—

18 (1) ADJUST RESERVES FOR LOSSES.—On every

19 June 30 and December 31 after the cross-guarantee

20 activation date, the Federal Deposit Insurance Cor21 poration shall adjust the reserve for losses in the

22 Bank Insurance Fund to reflect contemporaneous

23 estimates of the present value of future losses to be

24 paid from the fund.
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1 (2) TRANSFER ADDITIONAL FUNDS TO BACKUP

2 FUND.—Upon making the adjustments described in

3 paragraph (1), the Federal Deposit Insurance Cor4 poration shall transfer to the cross-guarantee

5 backup fund an amount equal to the product of—

6 (A) the estimated insured deposits, as of

7 the beginning of the six-month period ending on

8 June 30 or December 31, for all depository in9 stitutions that became guaranteed depository

10 institutions during such a six-month period;

11 and

12 (B) the ratio calculated under subsection

13 (a)(4).

14 (e) ACTIONS TO BE TAKEN AFTER THE TRANSITION

15 PERIOD.—

16 (1) SEQUENCE OF ACTIONS TO BE TAKEN AT

17 THE END OF THE TRANSITION PERIOD.—Imme18 diately upon the appointment of all receivers under

19 section 143, the Federal Deposit Insurance Corpora20 tion shall—

21 (A) adjust the Bank Insurance Fund’s re22 serves for losses to reflect the expenses of wind23 ing up each Federal Deposit Insurance Cor24 poration receivership still open after all receiv25 ers have been appointed under section 143; and
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1 (B) after making the adjustment described

2 in subparagraph (A), transfer all funds remain3 ing in the Bank Insurance Fund to the cross4 guarantee backup fund.

5 (2) ACTIONS TO BE TAKEN AS FDIC RECEIVER6 SHIPS ARE CLOSED OUT.—Upon liquidating all as7 sets and paying all remaining claims and direct and

8 indirect expenses of a receivership administered by

9 the Federal Deposit Insurance Corporation, except

10 the claim of the Federal Deposit Insurance Corpora11 tion, the Federal Deposit Insurance Corporation

12 shall transfer to the cross-guarantee backup fund all

13 of the funds remaining in the receivership.

14 (3) FINAL TRANSFER TO THE CROSS-GUARAN15 TEE BACKUP FUND.—After closing out the last

16 Bank Insurance Fund receivership, the Federal De17 posit Insurance Corporation shall liquidate all of its

18 remaining assets, transfer all of its remaining funds

19 to the cross-guarantee backup fund, and then trans20 fer the administration of the fund to the Corpora21 tion.

22 SEC. 145. ABOLITION OF THE FEDERAL FINANCIAL INSTI23 TUTIONS EXAMINATION COUNCIL.

24 The Federal Financial Institutions Examination

25 Council is hereby abolished, effective on the date on which,
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1 pursuant to section 142, all depository institutions shall

2 be guaranteed depository institutions.

3 SEC. 146. ABOLITION OF THE FEDERAL DEPOSIT INSUR4 ANCE CORPORATION.

5 (a) IN GENERAL.—The Federal Deposit Insurance

6 Corporation is hereby abolished, effective on the date on

7 which the last receivership or conservatorship resulting

8 from the appointment of a receiver or conservator by the

9 Federal Deposit Insurance Corporation has been liq10 uidated, disposed of, or otherwise resolved.

11 (b) SAVINGS PROVISIONS RELATED TO THE FDIC.—

12 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA13 TIONS NOT AFFECTED.—Subsection (a) shall not af14 fect the validity of any right, privilege, duty, or obli15 gation of the United States, the Federal Deposit In16 surance Corporation, or any other person, which ex17 isted on the day before the date of the enactment of

18 this Act.

19 (2) CONTINUATION OF SUITS.—No action or

20 other proceeding commenced by or against the Fed21 eral Deposit Insurance Corporation shall abate by

22 reason of the enactment of this Act, except that the

23 Secretary of Treasury shall be substituted for the

24 Federal Deposit Insurance Corporation as a party to

25 any such action or proceeding.
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1 SEC. 147. CONTINUATION OF ORDERS, RESOLUTIONS, AND

2 DETERMINATIONS.

3 All orders, resolutions, determinations, and rules

4 which have been issued, made, prescribed, or allowed prior

5 to a depository institution becoming a guaranteed deposi6 tory institution shall continue in effect according to the

7 terms of such orders, resolutions, determinations, and

8 rules until modified, terminated, set aside, or superseded

9 in accordance with applicable law by the agency which is10 sued the order, resolution, determination, or rule, by any

11 court of competent jurisdiction, by operation of this Act,

12 or by operation of law.

13 TITLE II—AMENDMENTS TO OTHER

14 BANKING LAWS

15 SEC. 201. AMENDMENTS RELATING TO NATIONAL BANKS.

16 (a) EXEMPTIONS FROM MINIMUM CAPITAL, STOCK,

17 AND OTHER REQUIREMENTS COVERED BY CROSS-GUAR18 ANTEE CONTRACTS.—

19 (1) CAPITAL OF NATIONAL BANKS.—Section

20 5138 of the Revised Statutes of the United States

21 (12 U.S.C. 51) is amended by adding at the end the

22 following new sentence: ‘‘This section shall not apply

23 with respect to any national bank which is a guaran24 teed depository institution (as defined in section

25 101(a)(7) of the Deposit Insurance Reform, Regu-
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1 latory Modernization, and Taxpayer Protection Act

2 of 1996).’’.

3 (2) PREFERRED STOCK IN MEMBER BANKS.—

4 Section 345 of the Banking Act of 1935 (12 U.S.C.

5 51B–1) is amended by adding at the end the follow6 ing new sentence: ‘‘This section shall not apply with

7 respect to any bank which is a guaranteed deposi8 tory institution (as defined in section 101(a)(7) of

9 the Deposit Insurance Reform, Regulatory Mod10 ernization, and Taxpayer Protection Act of 1996).’’.

11 (3) DEFICIENT CAPITAL PROVISION FOR NA12 TIONAL BANKS.—Section 5205 of the Revised Stat13 utes of the United States (12 U.S.C. 55) is amended

14 by adding at the end the following new sentence:

15 ‘‘This section shall not apply with respect to any na16 tional bank which is a guaranteed depository institu17 tion (as defined in section 101(a)(7) of the Deposit

18 Insurance Reform, Regulatory Modernization, and

19 Taxpayer Protection Act of 1996).’’.

20 (4) WITHDRAWAL OF CAPITAL PROVISION FOR

21 NATIONAL BANKS.—Section 5204 of the Revised

22 Statutes of the United States (12 U.S.C. 56) is

23 amended by adding at the end the following new

24 sentence: ‘‘This section shall not apply with respect

25 to any national bank which is a guaranteed deposi-
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1 tory institution (as defined in section 101(a)(7) of

2 the Deposit Insurance Reform, Regulatory Mod3 ernization, and Taxpayer Protection Act of 1996).’’.

4 (5) INCREASE IN CAPITAL PROVISION FOR NA5 TIONAL BANKS.—Section 5142 of the Revised Stat6 utes of the United States (12 U.S.C. 57) is amended

7 by adding at the end the following new sentence:

8 ‘‘This section shall not apply with respect to any na9 tional bank which is a guaranteed depository institu10 tion (as defined in section 101(a)(7) of the Deposit

11 Insurance Reform, Regulatory Modernization, and

12 Taxpayer Protection Act of 1996).’’.

13 (6) DECREASE AND DISTRIBUTION OF CAPITAL

14 PROVISION FOR NATIONAL BANKS.—Section 5143 of

15 the Revised Statutes of the United States (12

16 U.S.C. 59) is amended by adding at the end the fol17 lowing new sentence: ‘‘Notwithstanding the preced18 ing sentence, the approval of the Comptroller of the

19 Currency shall not be required for any reduction of

20 capital stock, or any distribution to shareholders by

21 reason of any such reduction, under such sentence

22 by any national bank which is a guaranteed deposi23 tory institution (as defined in section 101(a)(7) of

24 the Deposit Insurance Reform, Regulatory Mod25 ernization, and Taxpayer Protection Act of 1996).’’.
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1 (7) DIVIDEND PROVISIONS.—

2 (A) IN GENERAL.—Section 5199(a) of the

3 Revised Statutes of the United States (12

4 U.S.C. 60(a)) is amended—

5 (i) by striking ‘‘(a) The directors’’ and in6 serting:

7 ‘‘(a) DECLARATION OF DIVIDEND.—

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

9 the directors’’;

10 (ii) by striking ‘‘expedient; except that

11 until the surplus fund of such association’’

12 and inserting ‘‘expedient.

13 ‘‘(2) EXCEPTION FOR CERTAIN UNDERCAPITAL14 IZED ASSOCIATIONS.—Until the surplus fund of a

15 national bank’’; and

16 (iii) by adding at the end of para17 graph (2) (as so redesignated by clause (ii)

18 of this subparagraph) the following: ‘‘This

19 paragraph shall not apply with respect to

20 any national bank which is a guaranteed

21 depository institution (as defined in section

22 101(a)(7) of the Deposit Insurance Re23 form, Regulatory Modernization, and Tax24 payer Protection Act of 1996).’’.
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1 (B) TECHNICAL AND CONFORMING AMEND2 MENT.—Section 5199(b) of the Revised Stat3 utes of the United States (12 U.S.C. 60(b)) is

4 amended—

5 (i) by striking ‘‘(b) The approval of

6 the Comptroller’’ and inserting ‘‘(b) AP7 PROVAL OF THE COMPTROLLER.—Except

8 in the case of a national bank which is a

9 guaranteed depository institution (as de10 fined in section 101(a)(7) of the Deposit

11 Insurance Reform, Regulatory Moderniza12 tion, and Taxpayer Protection Act of

13 1996), the approval of the Comptroller’’;

14 and

15 (ii) by striking ‘‘such association’’ and

16 inserting ‘‘a national bank’’.

17 (b) EXEMPTIONS FROM REQUIREMENTS RELATING

18 TO DIRECTORS OF BANKS.—

19 (1) QUALIFICATIONS OF NATIONAL BANK DI20 RECTORS.—Section 5146 of the Revised Statutes of

21 the United States (12 U.S.C. 72) is amended by

22 adding at the end the following new sentence: ‘‘This

23 section shall not apply with respect to any national

24 bank which is a guaranteed depository institution

25 (as defined in section 101(a)(7) of the Deposit In-
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1 surance Reform, Regulatory Modernization, and

2 Taxpayer Protection Act of 1996).’’.

3 (2) SERVICE OF PRESIDENT OF NATIONAL

4 BANK AS CHAIRMAN OF THE BANK’S BOARD OF DI5 RECTORS.—Section 5150 of the Revised Statutes of

6 the United States (12 U.S.C. 76) is amended by

7 adding at the end the following new sentence: ‘‘This

8 section shall not apply with respect to any national

9 bank which is a guaranteed depository institution

10 (as defined in section 101(a)(7) of the Deposit In11 surance Reform, Regulatory Modernization, and

12 Taxpayer Protection Act of 1996).’’.

13 (3) MEMBER BANK DIRECTOR INTERLOCKS

14 WITH SECURITIES FIRMS.—Section 32 of the Bank15 ing Act of 1933 (12 U.S.C. 78) is amended by add16 ing at the end the following new sentence: ‘‘This sec17 tion shall not apply with respect to any member

18 bank which is a guaranteed depository institution

19 (as defined in section 101(a)(7) of the Deposit In20 surance Reform, Regulatory Modernization, and

21 Taxpayer Protection Act of 1996).’’.

22 (4) LOANS ON OR PURCHASE OF NATIONAL

23 BANK’S OWN STOCK.—Section 5201 of the Revised

24 Statutes of the United States (12 U.S.C. 83) is

25 amended by adding at the end the following new
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1 sentence: ‘‘This section shall not apply with respect

2 to any national bank which is a guaranteed deposi3 tory institution (as defined in section 101(a)(7) of

4 the Deposit Insurance Reform, Regulatory Mod5 ernization, and Taxpayer Protection Act of 1996).’’.

6 (c) EXEMPTION FROM REQUIREMENT RELATING TO

7 LOANS TO ONE BORROWER.—Section 5200 of the Revised

8 Statutes of the United States (12 U.S.C. 84) is amended

9 by adding at the end the following new subsection:

10 ‘‘(e) EXEMPTION OF GUARANTEED COMPANIES.—

11 This section shall not apply with respect to any national

12 bank which is a guaranteed depository institution (as de13 fined in section 101(a)(7) of the Deposit Insurance Re14 form, Regulatory Modernization, and Taxpayer Protection

15 Act of 1996).’’.

16 (d) EXEMPTION FROM REQUIREMENTS RELATING

17 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGENCIES

18 AT NATIONAL BANKS.—Section 5153 of the Revised Stat19 utes of the United States (12 U.S.C. 90) is amended—

20 (1) in the 1st undesignated paragraph, by strik21 ing ‘‘All national banking associations’’ and insert22 ing ‘‘(a) IN GENERAL.—All national banks’’;

23 (2) in the 2nd undesignated paragraph, by

24 striking ‘‘Any national banking association’’ and in-
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1 serting ‘‘(b) DEPOSITORY FOR STATE AND LOCAL

2 GOVERNMENTS.—Any national bank’’;

3 (3) in the 3rd undesignated paragraph, by

4 striking ‘‘Any national banking association’’ and in5 serting ‘‘(c) DEPOSITORY FOR INDIAN TRIBES.—

6 Any national bank’’; and

7 (4) by adding at the end the following new sub8 section:

9 ‘‘(d) EXEMPTION FROM SECURITY AND COLLATERAL

10 REQUIREMENTS.—A national bank which is a guaranteed

11 depository institution (as defined in section 101(a)(7) of

12 the Deposit Insurance Reform, Regulatory Modernization,

13 and Taxpayer Protection Act of 1996) shall not be re14 quired to give any security which is otherwise required

15 under subsection (a), (b), or (c) for deposits with the bank

16 under this section or for the performance of the bank as

17 financial agent.’’.

18 (e) EXEMPTION FROM PROVISION RELATING TO

19 TRANSFERS BY NATIONAL BANKS IN CONTEMPLATION OF

20 INSOLVENCY.—Section 5242 of the Revised Statutes of

21 the United States (12 U.S.C. 91) is amended by adding

22 at the end the following new sentence: ‘‘This section shall

23 not apply with respect to any national bank which is a

24 guaranteed depository institution (as defined in section
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1 101(a)(7) of the Deposit Insurance Reform, Regulatory

2 Modernization, and Taxpayer Protection Act of 1996.)’’.

3 (f) EXEMPTION FROM REQUIREMENTS RELATING TO

4 REPORTS OF CONDITION.—Section 5211 of the Revised

5 Statutes of the United States (12 U.S.C. 161) is amended

6 by adding at the end the following new subsection:

7 ‘‘(d) EXEMPTION OF GUARANTEED COMPANIES.—

8 This section shall not apply with respect to any national

9 bank which is a guaranteed depository institution (as de10 fined in section 101(a)(7) of the Deposit Insurance Re11 form, Regulatory Modernization, and Taxpayer Protection

12 Act of 1996.)’’.

13 (g) CONSENT OF GUARANTORS REQUIRED FOR VOL14 UNTARY DISSOLUTION.—

15 (1) IN GENERAL.—Section 5220 of the Revised

16 Statutes of the United States (12 U.S.C. 181) is

17 amended—

18 (A) in the 1st undesignated paragraph, by

19 striking ‘‘Any association’’ and inserting ‘‘(a)

20 IN GENERAL.—Any national bank’’;

21 (B) in the 2nd undesignated paragraph, by

22 striking ‘‘The shareholders shall designate’’ and

23 inserting ‘‘(b) LIQUIDATING AGENT OR COM24 MITTEE.—The shareholders shall designate’’;

25 and
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1 (C) by adding at the end the following new

2 subsection:

3 ‘‘(c) CONSENT OF GUARANTORS REQUIRED FOR

4 GUARANTEED COMPANIES.—In the case of any national

5 bank which is a guaranteed depository institution (as de6 fined in section 101(a)(7) of the Deposit Insurance Re7 form, Regulatory Modernization, and Taxpayer Protection

8 Act of 1996), the national bank may go into liquidation

9 and be closed in accordance with subsection (a) only with

10 the consent of the direct guarantors of such bank.’’.

11 (2) NOTICE TO SYNDICATE AGENT.—Section

12 5221 of the Revised Statutes of the United States

13 (12 U.S.C. 182) is amended by inserting ‘‘and, in

14 the case of a national bank which is a guaranteed

15 depository institution (as defined in section

16 101(a)(7) of the Deposit Insurance Reform, Regu17 latory Modernization, and Taxpayer Protection Act

18 of 1996), to the syndicate agent of such bank’’ after

19 ‘‘Comptroller of the Currency’’.

20 (h) COMPTROLLER OF THE CURRENCY NOT AUTHOR21 IZED TO APPOINT RECEIVER.—

22 (1) IN GENERAL.—The Act entitled ‘‘An Act

23 authorizing the appointment of receivers of national

24 banking associations, and for other purposes.’’ and

25 approved June 30, 1876, is amended by inserting
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1 after the 1st section (12 U.S.C. 191) the following

2 new section:

3 ‘‘SEC. 2. EXEMPTION OF GUARANTEED NATIONAL BANKS.

4 ‘‘This Act shall not apply with respect to any national

5 bank which is a guaranteed depository institution (as de6 fined in section 101(a)(7) of the Deposit Insurance Re7 form, Regulatory Modernization, and Taxpayer Protection

8 Act of 1996).’’.

9 (2) EXEMPTION FROM ADDITIONAL GROUND

10 FOR THE APPOINTMENT OF RECEIVERS.—Section

11 5234 of the Revised Statutes (12 U.S.C. 192) is

12 amended by adding at the end the following new

13 sentence: ‘‘This sentence shall not apply with respect

14 to any national bank which is a guaranteed deposi15 tory institution (as defined in section 101(a)(7) of

16 the Deposit Insurance Reform, Regulatory Mod17 ernization, and Taxpayer Protection Act of 1996).’’.

18 (i) COMPTROLLER OF THE CURRENCY NOT AUTHOR19 IZED TO APPOINT CONSERVATOR.—The Bank Conserva20 tion Act is amended by inserting after section 206 the fol21 lowing new section:

22 ‘‘SEC. 207. EXEMPTION OF GUARANTEED NATIONAL BANKS.

23 ‘‘This subchapter shall not apply with respect to any

24 national bank which is a guaranteed depository institution

25 (as defined in section 101(a)(7) of the Deposit Insurance
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1 Reform, Regulatory Modernization, and Taxpayer Protec2 tion Act of 1996).’’.

3 (j) COMPTROLLER OF THE CURRENCY NOT AUTHOR4 IZED TO EXAMINE GUARANTEED BANKS.—Section 5240

5 of the Revised Statutes of the United States (12 U.S.C.

6 481—485) is amended by adding at the end of the 1st

7 paragraph of such section the following new sentence:

8 ‘‘Notwithstanding any other provision of this section, the

9 authority of the Comptroller of the Currency to examine

10 any national bank or any affiliate of a national bank shall

11 not apply with respect to any national bank which is a

12 guaranteed depository institution (as defined in section

13 101(a)(7) of the Deposit Insurance Reform, Regulatory

14 Modernization, and Taxpayer Protection Act of 1996) or

15 any affiliate of such bank.’’.

16 (k) EXEMPTION FROM LIMITATION OR CONDITIONS

17 ON REAL ESTATE LENDING AUTHORITY.—Section 24(a)

18 of the Federal Reserve Act (12 U.S.C. 371(a)) is amended

19 by adding at the end the following new sentence: ‘‘Not20 withstanding the preceding sentence, a national bank

21 which is a guaranteed depository institution (as defined

22 in section 101(a)(7) of the Deposit Insurance Reform,

23 Regulatory Modernization, and Taxpayer Protection Act

24 of 1996) shall not be subject to section 18(o) of the Fed25 eral Deposit Insurance Act or any restriction or require-
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1 ment prescribed by the Comptroller of the Currency under

2 the preceding sentence.’’.

3 SEC. 202. AMENDMENTS RELATING TO MEMBER BANKS.

4 (a) FEDERAL RESERVE BOARD AND FEDERAL RE5 SERVE BANKS NOT AUTHORIZED TO EXAMINE GUARAN6 TEED MEMBER BANKS.—

7 (1) IN GENERAL.—Section 11(a)(1) of the Fed8 eral Reserve Act (12 U.S.C. 248(a)(1)) is amended

9 by adding at the end the following new sentence:

10 ‘‘Notwithstanding any other provision of this section,

11 the authority of the Board or any Federal reserve

12 bank to examine any member bank shall not apply

13 with respect to any member bank which is a guaran14 teed depository institution (as defined in section

15 101(a)(7) of the Deposit Insurance Reform, Regu16 latory Modernization, and Taxpayer Protection Act

17 of 1996).’’.

18 (2) SPECIAL EXAMINATIONS.—The 1st sentence

19 of the 5th undesignated paragraph of section 5240

20 of the Revised Statutes of the United States (12

21 U.S.C. 483) is amended by inserting ‘‘which are not

22 guaranteed depository institutions (as defined in sec23 tion 101(a)(7) of the Deposit Insurance Reform,

24 Regulatory Modernization, and Taxpayer Protection
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1 Act of 1996)’’ after ‘‘member banks within its dis2 trict’’.

3 (3) FOREIGN OPERATION OF STATE MEMBER

4 BANKS.—The last sentence of the 6th undesignated

5 paragraph of section 5240 of the Revised Statutes of

6 the United States (12 U.S.C. 481) is amended by

7 inserting ‘‘and are not guaranteed depository institu8 tions (as defined in section 101(a)(7) of the Deposit

9 Insurance Reform, Regulatory Modernization, and

10 Taxpayer Protection Act of 1996)’’ before the pe11 riod.

12 (4) EXAMINATIONS IN CONNECTION WITH AD13 VANCES OR DISCOUNTS.—Section 11(n) of the Fed14 eral Reserve Act (12 U.S.C. 248(n)) is amended by

15 striking ‘‘depository institution,’’ and inserting ‘‘de16 pository institution (other than a guaranteed deposi17 tory institution (as defined in section 101(a)(7) of

18 the Deposit Insurance Reform, Regulatory Mod19 ernization, and Taxpayer Protection Act of 1996)),’’.

20 (b) EXEMPTION FROM MEMBER BANK LOAN LIMI21 TATIONS.—Section 11(m) of the Federal Reserve Act (12

22 U.S.C. 248(m)) is amended by adding at the end the fol23 lowing new sentence: ‘‘This paragraph shall not apply with

24 respect to any member bank which is a guaranteed deposi25 tory institution (as defined in section 101(a)(7) of the De-
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1 posit Insurance Reform, Regulatory Modernization, and

2 Taxpayer Protection Act of 1996).’’.

3 (c) EXEMPTION FROM LIMITATION ON ACCESS TO

4 FED WIRE.—Section 11 of the Federal Reserve Act (12

5 U.S.C. 248) is amended by inserting after paragraph (n)

6 the following new paragraph:

7 ‘‘(o) PROHIBITION ON LIMITS ON ACCESS TO PAY8 MENT AND CLEARING SYSTEMS BY GUARANTEED MEM9 BER BANKS.—Notwithstanding any other provision of law,

10 the Board may not limit or deny access by any member

11 bank which is a guaranteed depository institution (as de12 fined in section 101(a)(7) of the Deposit Insurance Re13 form, Regulatory Modernization, and Taxpayer Protection

14 Act of 1996) to the payment system or any system in ef15 fect for clearing transactions in securities for the purpose

16 of protecting any such system from any risk.’’.

17 (d) FEDERAL RESERVE BOARD NOT AUTHORIZED

18 TO APPOINT CONSERVATOR OR RECEIVER.—Section

19 11(p) of the Federal Reserve Act (12 U.S.C. 248(p)) (as

20 added by section 133(f) of the Federal Deposit Insurance

21 Corporation Act of 1991) is amended to read as follows:

22 ‘‘(p) AUTHORITY TO APPOINT CONSERVATOR OR RE23 CEIVER.—

24 ‘‘(A) IN GENERAL.—Except as provided in sub25 paragraph (B), the Board may appoint the Federal
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1 Deposit Insurance Corporation as conservator or re2 ceiver for a State member bank under section

3 11(c)(8) of the Federal Deposit Insurance Act.

4 ‘‘(B) EXCEPTION FOR GUARANTEED DEPOSI5 TORY INSTITUTIONS.—This paragraph shall not

6 apply with respect to any member bank which is a

7 guaranteed depository institution (as defined in sec8 tion 101(a)(7) of the Deposit Insurance Reform,

9 Regulatory Modernization, and Taxpayer Protection

10 Act of 1996).’’.

11 (e) QUALIFICATION OF GUARANTEED STATE BANKS

12 FOR MEMBER BANK STATUS WITHOUT APPLICATION.—

13 (1) IN GENERAL.—The 1st undesignated para14 graph of section 9 of the Federal Reserve Act (12

15 U.S.C. 321) is amended by adding at the end the

16 following new sentence: ‘‘Notwithstanding the appli17 cation requirement contained in the 1st sentence of

18 this paragraph, any State bank which is a guaran19 teed depository institution (as defined in section

20 101(a)(7) of the Deposit Insurance Reform, Regu21 latory Modernization, and Taxpayer Protection Act

22 of 1996) may become a member of the Federal Re23 serve System without application by agreeing to be

24 subject to all applicable provisions of this Act and by
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1 subscribing to stock in the same manner and

2 amount as a national bank under section 2.’’.

3 (2) EXEMPTION FROM CAPITAL, RESERVE, AND

4 REPORTING REQUIREMENTS.—The 1st sentence of

5 the 6th undesignated paragraph of section 9 of the

6 Federal Reserve Act (12 U.S.C. 324) is amended by

7 inserting ‘‘, other than a bank which is a guaranteed

8 depository institution (as defined in section

9 101(a)(7) of the Deposit Insurance Reform, Regu10 latory Modernization, and Taxpayer Protection Act

11 of 1996),’’ after ‘‘banks admitted to membership

12 under authority of this section’’.

13 (3) EXEMPTION FROM EXAMINATION.—The 7th

14 undesignated paragraph of section 9 of the Federal

15 Reserve Act (12 U.S.C. 325) is amended by striking

16 ‘‘such banks’’ and inserting ‘‘, any bank admitted to

17 membership under this section, other than a bank

18 which is a guaranteed depository institution (as de19 fined in section 101(a)(7) of the Deposit Insurance

20 Reform, Regulatory Modernization, and Taxpayer

21 Protection Act of 1996),’’.

22 (4) EXEMPTION FROM SPECIAL EXAMINA23 TIONS.—The 8th undesignated paragraph of section

24 9 of the Federal Reserve Act (12 U.S.C. 326) is

25 amended by adding at the end the following new
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1 sentence: ‘‘Notwithstanding any other provision of

2 this paragraph, the authority of the Board to exam3 ine any member bank shall not apply with respect to

4 any member bank which is a guaranteed depository

5 institution (as defined in section 101(a)(7) of the

6 Deposit Insurance Reform, Regulatory Moderniza7 tion, and Taxpayer Protection Act of 1996).’’.

8 (5) EXEMPTION FROM CERTAIN FORFEITURE

9 PROVISION.—The 9th undesignated paragraph of

10 section 9 of the Federal Reserve Act (12 U.S.C.

11 327) is amended by inserting ‘‘, other than a bank

12 which is a guaranteed depository institution (as de13 fined in section 101(a)(7) of the Deposit Insurance

14 Reform, Regulatory Modernization, and Taxpayer

15 Protection Act of 1996),’’ after ‘‘a member bank’’.

16 (6) EXEMPTION FROM ADDITIONAL CAPITAL

17 REQUIREMENT.—The 11th undesignated paragraph

18 of section 9 of the Federal Reserve Act (12 U.S.C.

19 329) is amended by adding at the end the following

20 new sentence: ‘‘This paragraph shall not apply with

21 respect to any member bank which is a guaranteed

22 depository institution (as defined in section

23 101(a)(7) of the Deposit Insurance Reform, Regu24 latory Modernization, and Taxpayer Protection Act

25 of 1996).’’.
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1 (7) EXEMPTION FROM SECURITY AND COLLAT2 ERAL REQUIREMENT.—The last sentence of the 15th

3 undesignated paragraph of section 9 of the Federal

4 Reserve Act (12 U.S.C. 332) is amended by insert5 ing ‘‘, other than a bank which a guaranteed deposi6 tory institution (as defined in section 101(a)(7) of

7 the Deposit Insurance Reform, Regulatory Mod8 ernization, and Taxpayer Protection Act of 1996),’’

9 after ‘‘the banks and trust companies thus des10 ignated’’.

11 (8) MEMBERSHIP QUALIFICATION IN THE CASE

12 OF STATE MUTUAL SAVINGS BANKS.—The 16th un13 designated paragraph of section 9 of the Federal Re14 serve Act (12 U.S.C. 333) is amended by inserting

15 after the 1st sentence the following new sentence:

16 ‘‘Notwithstanding the application requirement con17 tained in the preceding sentence, any State mutual

18 savings bank which is a guaranteed depository insti19 tution (as defined in section 101(a)(7) of the De20 posit Insurance Reform, Regulatory Modernization,

21 and Taxpayer Protection Act of 1996) may become

22 a member of the Federal Reserve System without

23 application by agreeing to be subject to all applicable

24 provisions of this Act and by subscribing to stock

25 in the same manner and amount as provided in this
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1 paragraph for State mutual savings banks applying

2 for membership.’’

3 (9) EXEMPTION FROM AFFILIATE REPORTING

4 REQUIREMENTS.—

5 (A) IN GENERAL.—The 1st sentence of the

6 17th undesignated paragraph of section 9 of

7 the Federal Reserve Act (12 U.S.C. 334) is

8 amended by inserting ‘‘, other than a bank

9 which is a guaranteed depository institution (as

10 defined in section 101(a)(7) of the Deposit In11 surance Reform, Regulatory Modernization, and

12 Taxpayer Protection Act of 1996),’’ after ‘‘bank

13 admitted to membership under this section’’.

14 (B) EXEMPTION FROM ADDITIONAL AFFIL15 IATE REPORTING REQUIREMENTS.—The 18th

16 undesignated paragraph of section 9 of the

17 Federal Reserve Act (12 U.S.C. 334) is amend18 ed by inserting ‘‘, other than a bank which is

19 a guaranteed depository institution (as defined

20 in section 101(a)(7) of the Deposit Insurance

21 Reform, Regulatory Modernization, and Tax22 payer Protection Act of 1996),’’ after ‘‘affili23 ated member bank’’.

24 (10) EXEMPTION FROM EXAMINATION RE25 QUIREMENTS.—The 22d undesignated paragraph of
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1 section 9 of the Federal Reserve Act (12 U.S.C.

2 338) is amended by inserting ‘‘, other than a bank

3 which is a guaranteed depository institution (as de4 fined in section 101(a)(7) of the Deposit Insurance

5 Reform, Regulatory Modernization, and Taxpayer

6 Protection Act of 1996),’’ after ‘‘State member

7 banks’’ the 1st place such term appears.

8 (f) EXEMPTION FROM INTEREST REQUIREMENTS.—

9 Section 19(i) of the Federal Reserve Act (12 U.S.C. 371a)

10 is amended by adding at the end the following new sen11 tence: ‘‘No provision of this subsection shall apply with

12 respect to a member bank which is a guaranteed deposi13 tory institution (as defined in section 101(a)(7) of the De14 posit Insurance Reform, Regulatory Modernization, and

15 Taxpayer Protection Act of 1996).’’.

16 (g) EXEMPTION FROM REQUIREMENTS RELATING

17 TO INTERBANK LIABILITIES AND TRANSACTIONS WITH

18 AFFILIATES.—

19 (1) INTERBANK LIABILITIES.—Section 23 of

20 the Federal Reserve Act (12 U.S.C. 371(b–2)) is

21 amended by adding at the end the following new

22 subsection:

23 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN24 STITUTIONS.—A guaranteed depository institution (as de25 fined in section 101(a)(7) of the Deposit Insurance Re-
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1 form, Regulatory Modernization, and Taxpayer Protection

2 Act of 1996) shall not be subject to any regulation or

3 order issued under this section.’’.

4 (2) EXEMPTION FROM RESTRICTIONS ON

5 TRANSACTIONS WITH AFFILIATES.—Sections 23A

6 and 23B of the Federal Reserve Act (12 U.S.C.

7 371c, 371c–1) are each amended by adding at the

8 end of each such section the following new sub9 section:

10 ‘‘(f) EXEMPTION FOR GUARANTEED DEPOSITORY IN11 STITUTIONS.—This section shall not apply to any guaran12 teed depository institution (as defined in section 101(a)(7)

13 of the Deposit Insurance Reform, Regulatory Moderniza14 tion, and Taxpayer Protection Act of 1996) or any affili15 ate of any such institution that is a guaranteed company

16 (as defined in section 101(a)(6) of the Deposit Insurance

17 Reform, Regulatory Modernization, and Taxpayer Protec18 tion Act of 1996).’’.

19 (h) EXEMPTION FROM LIMITATION ON INVEST20 MENTS IN, OR LOANS ON, BANK PREMISES.—Section 24A

21 of the Federal Reserve Act (12 U.S.C. 371d) is amended

22 by adding at the end the following new sentence: ‘‘This

23 section shall not apply to any guaranteed depository insti24 tution (as defined in section 101(a)(7) of the Deposit In-
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1 surance Reform, Regulatory Modernization, and Taxpayer

2 Protection Act of 1996).’’.

3 (i) EXEMPTION FROM LIMITATIONS ON BANKERS’

4 ACCEPTANCES.—Section 13(7) of the Federal Reserve Act

5 (12 U.S.C. 372) is amended by adding at the end the fol6 lowing new subparagraph:

7 ‘‘(I) EXEMPTION FROM LIMITATIONS FOR

8 GUARANTEED DEPOSITORY INSTITUTIONS.—

9 Subparagraphs (B), (C), (D), (E), (F), and (H)

10 shall not apply to any guaranteed depository in11 stitution (as defined in section 101(a)(7) of the

12 Deposit Insurance Reform, Regulatory Mod13 ernization, and Taxpayer Protection Act of

14 1996).’’

15 (j) EXEMPTION FROM PURCHASING AND LENDING

16 LIMITS RELATING TO DIRECTORS AND OFFICERS.—Sec17 tion 22 of the Federal Reserve Act (12 U.S.C. 375, 376,

18 503, 375a, and 375b) is amended by inserting before sub19 section (d) the following new subsection:

20 ‘‘(c) EXEMPTION FOR GUARANTEED DEPOSITORY IN21 STITUTIONS.—Subsections (d), (e), (g), and (h) shall not

22 apply to any guaranteed depository institution (as defined

23 in section 101(a)(7) of the Deposit Insurance Reform,

24 Regulatory Modernization, and Taxpayer Protection Act

25 of 1996) or any affiliate of any such institution.’’.
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1 SEC. 203. AMENDMENTS RELATING TO SAVINGS ASSOCIA2 TIONS.

3 (a) GUARANTEED SAVINGS ASSOCIATION DE4 FINED.—Section 2 of the Home Owners’ Loan Act (12

5 U.S.C. 1462) is amended by adding at the end the follow6 ing new paragraphs:

7 ‘‘(10) GUARANTEED SAVINGS ASSOCIATION.—

8 The term ‘guaranteed savings association’ means a

9 savings association which is a guaranteed depository

10 institution (as defined in section 101(a)(7) of the

11 Deposit Insurance Reform, Regulatory Moderniza12 tion, and Taxpayer Protection Act of 1996).

13 ‘‘(11) GUARANTEED FEDERAL SAVINGS ASSO14 CIATION.—The term ‘guaranteed Federal savings as15 sociation’ means a Federal savings association which

16 is a guaranteed depository institution (as defined in

17 section 101(a)(7) of the Deposit Insurance Reform,

18 Regulatory Modernization, and Taxpayer Protection

19 Act of 1996).’’.

20 (b) EXEMPTION FROM EXAMINATION AND REGULA21 TION BY DIRECTOR OF THE OFFICE OF THRIFT SUPER22 VISION.—

23 (1) IN GENERAL.—Section 4(a) of the Home

24 Owners’ Loan Act (12 U.S.C. 1463(a)) is amended

25 by adding at the end the following new paragraph:
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1 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—‘‘The authority of the Director

3 under this subsection or subsection (b) or (c) to ex4 amine any savings association or prescribe regula5 tions applicable to savings associations shall not

6 apply with respect to any guaranteed savings asso7 ciation.’’.

8 (2) FEDERAL SAVINGS ASSOCIATIONS.—Section

9 5(a) of the Home Owners’ Loan Act (12 U.S.C.

10 1464(a)) is amended by adding at the end the fol11 lowing new sentence: ‘‘The authority of the Director

12 under the preceding sentence to prescribe regula13 tions to provide for the examination and regulation

14 of Federal savings associations shall not apply with

15 respect to the examination or regulation of any

16 guaranteed Federal savings association.’’.

17 (3) EXEMPTION FROM EXAMINATION FEE PRO18 VISIONS.—Section 9 of the Home Owners’ Loan Act

19 (12 U.S.C. 1467) is amended by adding at the end

20 the following new subsection:

21 ‘‘(n) EXEMPTION FOR GUARANTEED SAVINGS ASSO22 CIATIONS.—This section and the authority of the Director

23 under this section shall not apply with respect to any guar24 anteed savings association.’’.
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1 (c) EXCEPTIONS TO LIMITATIONS ON DEPOSIT AND

2 RELATED POWERS.—Section 5(b)(1) of the Home Own3 ers’ Loan Act (12 U.S.C. 1464(b)(1)) is amended by add4 ing at the end the following new subparagraph:

5 ‘‘(G) SPECIAL RULES APPLICABLE TO GUARAN6 TEED SAVINGS ASSOCIATIONS.—

7 ‘‘(i) STATUTORY AUTHORITY.—A guaran8 teed Federal savings association shall have the

9 powers described in subparagraphs (C), (E),

10 and (F) without regard to the condition or limi11 tation contained in each such subparagraph re12 lating to regulations of the Director.

13 ‘‘(ii) LIMITATION ON REGULATORY AU14 THORITY.—The exercise by a guaranteed Fed15 eral savings association of powers established

16 under subparagraph (A) or (D) or the last sen17 tence of subparagraph (B) shall not be subject

18 to any regulations prescribed by the Director

19 under such provision.

20 ‘‘(iii) EXEMPTION.—A guaranteed Federal

21 savings association shall not be subject to the

22 1st sentence of subparagraph (B).’’.

23 (d) EXCEPTIONS TO LIMITATIONS ON LOAN AND IN24 VESTMENT POWERS.—Section 5(c) of the Home Owners’
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1 Loan Act (12 U.S.C. 1464(c)) is amended by adding at

2 the end the following new paragraph:

3 ‘‘(7) EXCEPTIONS FOR GUARANTEED SAVINGS

4 ASSOCIATIONS.—

5 ‘‘(A) LIMITATION ON REGULATORY AU6 THORITY.—The exercise by a guaranteed Fed7 eral savings association of powers established

8 under any provision of this subsection shall not

9 be subject to any regulations prescribed by the

10 Director under this subsection.

11 ‘‘(B) EXEMPTION FROM MAXIMUM

12 AMOUNT LIMITATIONS.—A guaranteed Federal

13 savings association shall not be subject to any

14 limitation in this subsection on the outstanding

15 amount of loans or investments by the associa16 tion under any provision of this subsection,

17 without regard to whether such maximum

18 amount is expressed as a fixed dollar amount or

19 as a percentage of such association’s assets or

20 capital.’’.

21 (e) EXEMPTION FROM ENFORCEMENT AND

22 CONSERVATORSHIP AND RECEIVERSHIP PROVISIONS.—

23 Section 5(d) of the Home Owners’ Loan Act (12 U.S.C.

24 1464(d)) is amended by adding at the end the following

25 new paragraph:
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1 ‘‘(7) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—This subsection and the authority

3 of the Director under this subsection shall not apply

4 with respect to any guaranteed savings association.’’.

5 (f) EXEMPTION FROM FITNESS STANDARDS.—Sec6 tion 5(e) of the Home Owners’ Loan Act (12 U.S.C.

7 1464(e)) is amended by adding at the end the following

8 new sentence:

9 ‘‘The preceding sentence shall not apply with respect to

10 any savings association which, at the time the charter is

11 granted, is a guaranteed depository institution (as defined

12 in section 101(a)(7) of the Deposit Insurance Reform,

13 Regulatory Modernization, and Taxpayer Protection Act

14 of 1996) or is required to be a guaranteed depository insti15 tution before such association accepts any deposit.’’.

16 (g) EXEMPTION FROM REQUIREMENTS RELATING

17 TO SECURITY FOR DEPOSITS OF GOVERNMENT AGEN18 CIES.—Section 5(k) of the Home Owners’ Loan Act (12

19 U.S.C. 1464(k)) is amended by adding at the end the fol20 lowing new sentence: ‘‘A guaranteed savings association

21 shall not be required to give any security for deposits with

22 the savings association under this section or for the per23 formance of the association as fiscal agent.’’.

24 (h) EXEMPTION FROM MINIMUM CAPITAL REQUIRE25 MENTS.—Section 5(s) of the Home Owners’ Loan Act (12
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1 U.S.C. 1464(s)) is amended by adding at the end the fol2 lowing new paragraph:

3 ‘‘(6) EXEMPTION FOR GUARANTEED SAVINGS

4 ASSOCIATIONS.—This subsection and the authority

5 of the Director under this subsection shall not apply

6 with respect to any guaranteed savings association.’’.

7 (i) EXEMPTION FROM CAPITAL STANDARDS.—Sec8 tion 5(t)(1) of the Home Owners’ Loan Act (12 U.S.C.

9 1464(t)(1)) is amended by adding at the end the following

10 new subparagraph:

11 ‘‘(E) EXEMPTION FOR GUARANTEED SAVINGS

12 ASSOCIATIONS.—This subsection and the authority

13 of the Director under this subsection shall not apply

14 with respect to any guaranteed savings association.’’.

15 (j) EXEMPTION FROM REQUIREMENT RELATING TO

16 LOANS TO ONE BORROWER.—Section 5(u) of the Home

17 Owners’ Loan Act (12 U.S.C. 1464(u)) is amended by

18 adding at the end the following new paragraph:

19 ‘‘(4) EXEMPTION FOR GUARANTEED SAVINGS

20 ASSOCIATIONS.—This subsection shall not apply with

21 respect to any guaranteed savings association.’’.

22 (k) EXEMPTION FROM REQUIREMENT RELATING TO

23 REPORTS OF CONDITION.—Section 5(v) of the Home

24 Owners’ Loan Act (12 U.S.C. 1464(v)) is amended by

25 adding at the end the following new paragraph:
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1 ‘‘(9) EXEMPTION FOR GUARANTEED SAVINGS

2 ASSOCIATIONS.—This subsection shall not apply with

3 respect to any guaranteed savings association.’’.

4 (l) EXEMPTION FROM REQUIREMENT RELATING TO

5 LIQUID ASSETS.—Section 6 of the Home Owners’ Loan

6 Act (12 U.S.C. 1465) is amended by adding at the end

7 the following new subsection:

8 ‘‘(g) EXEMPTION FOR GUARANTEED SAVINGS ASSO9 CIATIONS.—This section shall not apply with respect to

10 any guaranteed savings associations.’’.

11 (m) EXEMPTION FROM AFFILIATE TRANSACTION

12 AND LENDING LIMITS RELATING TO DIRECTORS AND OF13 FICERS.—Section 11 of the Home Owners’ Loan Act (12

14 U.S.C. 1468) is amended by adding at the end the follow15 ing new subsection:

16 ‘‘(d) EXEMPTION FOR GUARANTEED SAVINGS ASSO17 CIATIONS.—This section shall not apply with respect to

18 any guaranteed savings association.’’.

19 SEC. 204. AMENDMENTS RELATING TO SAVINGS AND LOAN

20 HOLDING COMPANIES.

21 (a) GUARANTEED SAVINGS ASSOCIATION DE22 FINED.—Section 10(a)(1) of the Home Owners’ Loan Act

23 (12 U.S.C. 1467a(a)(1)) is amended by adding at the end

24 the following new subparagraph:
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1 ‘‘(K) GUARANTEED SAVINGS ASSOCIA2 TION.—The term ‘guaranteed savings associa3 tion’ includes any savings association referred

4 to in subparagraph (A) which is a guaranteed

5 depository institution (as defined in section

6 101(a)(7) of the Deposit Insurance Reform,

7 Regulatory Modernization, and Taxpayer Pro8 tection Act of 1996).’’.

9 (b) EXEMPTION FROM EXAMINATION AND REPORT10 ING REQUIREMENT.—Section 10(b) of the Home Owners’

11 Loan Act (12 U.S.C. 1467a(b)) is amended by adding at

12 the end the following new paragraph:

13 ‘‘(7) EXEMPTION FOR S&L HOLDING COMPANY

14 WHICH CONTROLS A GUARANTEED SAVINGS ASSOCIA15 TION.—Paragraphs (2), (3), and (4) and the author16 ity of the Director under any such paragraph shall

17 not apply with respect to any savings and loan hold18 ing company which controls a guaranteed savings as19 sociation and any subsidiary of such company.’’.

20 (c) COORDINATION WITH SECTION 11.—Section

21 10(d) of the Home Owners’ Loan Act (12 U.S.C.

22 1467a(d)) is amended by striking ‘‘Transaction’’ and in23 serting ‘‘Subject to section 11(d), transactions’’.

24 (d) EXEMPTION FROM REQUIREMENTS RELATING

25 TO DECLARATION OF DIVIDEND.—Section 10(f) of the
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1 Home Owners’ Loan Act (12 U.S.C. 1467a(f)) is amended

2 by adding at the end the following new sentence: ‘‘This

3 subsection shall not apply with respect to any savings and

4 loan company which controls a guaranteed savings asso5 ciation.’’.

6 (e) EXEMPTION FROM RESTRICTIONS ON HIGH-RISK

7 ACTIVITIES.—Section 10(p) of the Home Owners’ Loan

8 Act (12 U.S.C. 1467a(p)) is amended by adding at the

9 end the following new paragraph:

10 ‘‘(3) EXEMPTION FOR PARENT OF GUARAN11 TEED SAVINGS ASSOCIATION.—This subsection shall

12 not apply with respect to any savings and loan com13 pany which controls a guaranteed savings associa14 tion.’’.

15 (f) NONAPPLICABILITY OF QUALIFIED STOCK ISSU16 ANCE PROVISIONS.—Section 10(q)(1)(A) of the Home

17 Owners’ Loan Act (12 U.S.C. 1467a(q)(1)(A)) is amend18 ed—

19 (1) in clause (i), by inserting ‘‘which is not a

20 guaranteed savings association’’ after ‘‘undercapital21 ized savings association’’; and

22 (2) in clause (ii), by inserting ‘‘and does not

23 control a guaranteed savings association’’ after

24 ‘‘controls an undercapitalized savings association’’.
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1 SEC. 205. AMENDMENTS RELATING TO THE FEDERAL DE2 POSIT INSURANCE CORPORATION.

3 (a) AMENDMENTS TO DEFINITIONS.—

4 (1) DEFINITIONS RELATING TO DEPOSITORY

5 INSTITUTIONS.—Section 3(c) of the Federal Deposit

6 Insurance Act (12 U.S.C. 1813(c)) is amended by

7 adding at the end the following new paragraphs:

8 ‘‘(6) GUARANTEED DEPOSITORY INSTITUTION

9 NOT INCLUDED.—Except as otherwise specifically

10 provided in any provision of this Act, the terms ‘de11 pository institution’ and ‘insured depository institu12 tion’ do not include any guaranteed depository insti13 tution.

14 ‘‘(7) GUARANTEED DEPOSITORY INSTITU15 TION.—The term ‘guaranteed depository institution’

16 has the meaning given to such term in section

17 101(a)(7) of the Deposit Insurance Reform, Regu18 latory Modernization, and Taxpayer Protection Act

19 of 1996.’’.

20 (2) DEFINITION RELATING TO BANKS.—Section

21 3(a) of the Federal Deposit Insurance Act (12

22 U.S.C. 1813(a)) is amended by adding at the end

23 the following new paragraph:

24 ‘‘(5) GUARANTEED DEPOSITORY INSTITUTIONS

25 NOT INCLUDED.—Except as otherwise specifically

26 provided in any provision of this Act, the terms
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1 ‘bank’, ‘national bank’, ‘State bank’, ‘District bank’,

2 ‘branch’, and ‘Federal branch’, whether or not any

3 such term appears in conjunction with the term ‘in4 sured’, ‘member’, or ‘nonmember’, do not include

5 any guaranteed depository institution.’’.

6 (3) DEFINITION RELATING TO SAVINGS ASSO7 CIATIONS.—Section 3(b) of the Federal Deposit In8 surance Act (12 U.S.C. 1813(b)) is amended by

9 adding at the end the following new paragraph:

10 ‘‘(4) GUARANTEED DEPOSITORY INSTITUTIONS

11 NOT INCLUDED.—Except as otherwise specifically

12 provided in any provision of this Act, the terms ‘sav13 ings association’, ‘Federal savings association’, and

14 ‘State savings association’, whether or not any such

15 term appears in conjunction with the term ‘insured’,

16 do not include any guaranteed depository institu17 tion.’’.

18 (4) DEFINITION RELATING TO APPROPRIATE

19 FEDERAL BANKING AGENCY.—Section 3(q) of the

20 Federal Deposit Insurance Act (12 U.S.C. 1813(q))

21 is amended by adding before the last sentence the

22 following new paragraph:

23 ‘‘(5) The Cross-Guarantee Regulation Corpora24 tion in the case of a guaranteed depository institu25 tion.’’.
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1 (b) PROHIBITION ON NEW INSURED DEPOSITORY IN2 STITUTIONS, BY CHARTER OR CONVERSION, AFTER EF3 FECTIVE DATE OF CROSS-GUARANTEE SYSTEM.—

4 (1) NO CONTINUATION OF INSURANCE IN CON5 NECTION WITH CONVERSIONS.—Section 4 of the

6 Federal Deposit Insurance Act (12 U.S.C. 1814) is

7 amended by adding at the end the following new

8 subsection:

9 ‘‘(e) INAPPLICABILITY OF SUBSECTIONS (b), (c), AND

10 (d) AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS11 TEM.—Subsections (b), (c), and (d) shall not apply as of

12 the effective date of the cross-guarantee system under sub13 section (a) of section 141 of the Deposit Insurance Re14 form, Regulatory Modernization, and Taxpayer Protection

15 Act of 1996, as published by the Cross-Guarantee Regula16 tion Corporation in the Federal Register pursuant to sub17 section (c) of such section.’’.

18 (2) NO NEW INSURANCE UNDER THE FEDERAL

19 DEPOSIT INSURANCE ACT.—Section 5 of the Federal

20 Deposit Insurance Act (12 U.S.C. 1815) is amended

21 by adding at the end the following new subsection:

22 ‘‘(f) PROHIBITION ON APPROVAL OF INSURANCE

23 AFTER EFFECTIVE DATE OF CROSS-GUARANTEE SYS24 TEM.—No application for insurance under this section

25 may be approved by the Corporation on or after the date
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1 by which the Cross-Guarantee Regulation Corporation has

2 approved, under subsection (a) of section 141 of the De3 posit Insurance Reform, Regulatory Modernization, and

4 Taxpayer Protection Act of 1996, 250 cross-guarantee

5 contracts described in subsection (a)(2) of such section.’’.

6 (c) TERMINATION OF DEPOSIT INSURANCE OF GUAR7 ANTEED DEPOSITORY INSTITUTION.—Section 8(a) of the

8 Federal Deposit Insurance Act (12 U.S.C. 1818(a)) is

9 amended—

10 (1) by redesignating paragraph (10) as para11 graph (11); and

12 (2) by inserting after paragraph (9), the follow13 ing new paragraph:

14 ‘‘(10) TERMINATION OF INSURANCE OF GUAR15 ANTEED DEPOSITORY INSTITUTION.—The status of

16 any insured depository institution as an insured de17 pository institution shall cease as of the date the in18 stitution becomes a guaranteed depository institu19 tion.’’.

20 (d) INELIGIBILITY OF GUARANTEED DEPOSITORY

21 INSTITUTION FOR DEPOSIT INSURANCE UNDER THE

22 FEDERAL DEPOSIT INSURANCE ACT.—Section 5(a)(1) of

23 the Federal Deposit Insurance Act (12 U.S.C. 1815(a)(1))

24 is amended by striking ‘‘trust funds (as defined in section
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1 3(p)),’’ and inserting ‘‘trust funds (as defined in section

2 3(p)) and is not a guaranteed depository institution,’’.

3 (e) APPLICABILITY OF INSURANCE LOGO PROVI4 SIONS.—Section 18(a) of the Federal Deposit Insurance

5 Act (12 U.S.C. 1828(a)) is amended by adding at the end

6 the following new paragraph:

7 ‘‘(4) APPLICABILITY TO GUARANTEED INSTITU8 TIONS.—For purposes of this subsection, the terms

9 ‘insured bank’ and ‘insured savings association’ shall

10 be deemed to include any bank (as defined in section

11 3(a) without regard to paragraph (5) of such sec12 tion) and any savings association (as defined in sec13 tion 3(b) without regard to paragraph (4) of such

14 section) which is a guaranteed depository institu15 tion.’’.

16 (f) GUARANTEED DEPOSITORY INSTITUTIONS NOT

17 EXEMPT FROM LIMITATION ON INSURANCE UNDERWRIT18 ING.—Section 24(b) of the Federal Deposit Insurance Act

19 (12 U.S.C. 1831a(b)) is amended by adding at the end

20 the following new paragraph:

21 ‘‘(3) APPLICABILITY TO GUARANTEED DEPOSI22 TORY INSTITUTIONS.—Notwithstanding section

23 3(a)(5), the term ‘insured State bank’ includes, for

24 purposes of this subsection, a State bank which is a

25 guaranteed depository institution.’’.
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1 SEC. 206. AMENDMENTS TO OTHER BANKING LAWS.

2 (a) EXEMPTION FROM DEPOSITORY INSTITUTION

3 MANAGEMENT INTERLOCKS ACT.—Section 205 of the De4 pository Institution Management Interlocks Act (12

5 U.S.C. 3204) is amended by adding at the end the follow6 ing new paragraph:

7 ‘‘(10) GUARANTEED DEPOSITORY INSTITU8 TION.—Any guaranteed depository institution and

9 any affiliate of such institution.’’.

10 (b) EXEMPTION FROM REAL ESTATE APPRAISAL

11 REQUIREMENTS.—Section 1121(4) of the Financial Insti12 tutions Reform, Recovery, and Enforcement Act of 1989

13 (12 U.S.C. 3350(4)) is amended to read as follows:

14 ‘‘(4) FEDERALLY RELATED TRANSACTION.—

15 The term ‘Federally related transaction’—

16 ‘‘(A) means any real estate-related finan17 cial transaction which—

18 ‘‘(i) a Federal financial institutions

19 regulatory agency or the Resolution Trust

20 Corporation engages in, contracts for, or

21 regulates;

22 ‘‘(ii) requires the services of an ap23 praiser; and

24 ‘‘(B) does not include any real estate-relat25 ed financial transaction which is regulated by a

26 Federal financial institutions regulatory agency
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1 solely by reason of the involvement of a guaran2 teed depository institution (as defined in section

3 101(a)(7) of the Deposit Insurance Reform,

4 Regulatory Modernization, and Taxpayer Pro5 tection Act of 1996) in such transaction.’’.

6 (c) EXEMPTION FROM PAYMENT SYSTEM REQUIRE7 MENTS.—Subtitle A of title IV of the Federal Deposit In8 surance Corporation Improvement Act of 1991 (12 U.S.C.

9 4401 et seq.) is amended by adding at the end the follow10 ing new section:

11 ‘‘SEC. 408. EXEMPTION FOR GUARANTEED DEPOSITORY IN12 STITUTIONS.

13 ‘‘This subtitle shall not apply with respect to a depos14 itory institution which is a guaranteed depository institu15 tion (as defined in section 101(a)(7) of the Deposit Insur16 ance Reform, Regulatory Modernization, and Taxpayer

17 Protection Act of 1996).’’.

18 (d) EXEMPTION FROM THE INTERNATIONAL LEND19 ING SUPERVISION ACT OF 1983.—The last sentence of

20 section 903(2) of the International Lending Supervision

21 Act of 1983 (12 U.S.C. 3902(2)) is amended by inserting

22 ‘‘or a guaranteed depository institution (as defined in sec23 tion 101(a)(7) of the Deposit Insurance Reform, Regu24 latory Modernization, and Taxpayer Protection Act of

25 1996)’’ before the period.
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1 TITLE III—AMENDMENTS TO TITLE 11,

2 UNITED STATES CODE

3 Subtitle A—Amendments to Chapter 1 of

4 Title 11

5 SEC. 301. DEFINITIONS.

6 Section 101 of title 11, United States Code, is

7 amended—

8 (a) by adding new subsection (7A)—

9 ‘‘(7A) ‘company’ means any corporation, part10 nership, limited liability company, business trust, as11 sociation, or similar organization, but does not in12 clude a governmental unit;’’;

13 (b) by adding new subsection (10A)—

14 ‘‘(10A) ‘cross-guarantee contract’ means a con15 tract which—

16 ‘‘(A) is entered into between—

17 ‘‘(i) one or more companies, at least

18 one of which is a depository institution;

19 and

20 ‘‘(ii) a cross-guarantee syndicate;

21 ‘‘(B) is approved by the regulation cor22 poration under section 123 of title I of this Act;

23 ‘‘(C) has become effective in accordance

24 with the contract’s terms; and
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1 ‘‘(D) is not enjoined under section

2 123(e)(2)(B) of title I of this Act;’’;

3 (c) by adding new subsection (10B)—

4 ‘‘(10B) ‘cross-guarantee obligation’ means an

5 obligation of a direct guarantor arising out of a

6 cross-guarantee or stop-loss contract, and includes

7 the obligations of such guarantor under section

8 125(c)(2) of title I of this Act and sections 321 and

9 355 of this title;’’;

10 (d) by adding new subsection (10C)—

11 ‘‘(10C) ‘cross-guarantee premium payment’

12 means the payment a guaranteed company periodi13 cally makes to the guaranteed company’s direct

14 guarantors under the terms of a cross-guarantee

15 contract;’’;

16 (e) by adding new subsection (10D)—

17 ‘‘(10D) ‘cross-guarantee syndicate’ means any

18 group of direct guarantors which has entered into a

19 cross-guarantee contract with one or more guaran20 teed companies;’’;

21 (f) by adding new subsection (13A)—

22 ‘‘(13A) ‘depository institution’ has the meaning

23 given to such term in section 3(c)(1) of the Federal

24 Deposit Insurance Act (12 U.S.C. 1813(c)(1)), how25 ever, for the purposes of this title, depository institu-
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1 tion shall not mean a Federal branch or an insured

2 branch as those terms are defined in sections (3)(r)

3 and (3)(s) of the Federal Deposit Insurance Act (12

4 U.S.C. 1813(r) and (s));’’;

5 (g) by adding new subsection (13B)—

6 ‘‘(13B) ‘direct guarantor’ means a member of a

7 cross-guarantee or stop-loss syndicate which has en8 tered into a cross-guarantee or stop-loss contract

9 with a guaranteed party;’’;

10 (h) by adding new subsection (27A)—

11 ‘‘(27A) ‘guaranteed company’ means any com12 pany which has entered into a cross-guarantee con13 tract with a cross-guarantee syndicate and has guar14 anteed obligations outstanding as of the date of the

15 filing of the petition;’’;

16 (i) by adding new subsection (27B)—

17 ‘‘(27B) ‘guaranteed creditor’ means any entity

18 who owns or is the beneficiary of a guaranteed obli19 gation;’’;

20 (j) by adding new subsection (27C)—

21 ‘‘(27C) ‘guaranteed obligation’ means an obli22 gation of a guaranteed party of which a cross-guar23 antee or stop-loss syndicate has guaranteed perform24 ance, including the timely payment of principal and
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1 interest, if a failure to perform in a timely manner

2 constitutes a breach of contract;’’;

3 (k) by adding new subsection (27D)—

4 ‘‘(27D) ‘guaranteed party’ means any guaran5 teed company or nondepository guarantor;’’;

6 (l) by adding new subsection (39A)—

7 ‘‘(39A) ‘monitoring fee payment’ means the

8 periodic payment made by a guaranteed party to a

9 syndicate agent under the terms of the guaranteed

10 party’s cross-guarantee or stop-loss contract;’’;

11 (m) by adding new subsection (40A)—

12 ‘‘(40A) ‘nondepository guarantor’ means any

13 person or company which has entered into a stop14 loss contract with a stop-loss syndicate;’’;

15 (n) by adding new subsection (44A)—

16 ‘‘(44A) ‘regulation corporation’ means the

17 Cross Guarantee Regulation Corporation;’’;

18 (o) by adding new subsection (53E):

19 ‘‘(53E) ‘stop-loss contract’ means a contract

20 which—

21 ‘‘(A) is entered into between a person or a

22 company and a stop-loss syndicate;

23 ‘‘(B) is approved by the regulation cor24 poration under section 123 of title I of this Act;
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1 ‘‘(C) has become effective in accordance

2 with the contract’s terms; and

3 ‘‘(D) is not enjoined under section

4 123(e)(2)(B) of title I of this Act;’’;

5 (p) by adding new subsection (53F)—

6 ‘‘(53F) ‘stop-loss premium payment’ means the

7 payment a nondepository guarantor periodically

8 makes to direct guarantors under the nondepository

9 guarantor’s stop-loss contract;’’;

10 (q) by adding new subsection (53G)—

11 ‘‘(53G) ‘stop-loss syndicate’ means any group of

12 direct guarantors which has entered into a stop-loss

13 contract with a nondepository guarantor;’’;

14 (r) by adding new subsection (53H)—

15 ‘‘(53H) ‘syndicate agent’ means any person or

16 company who acts as the agent for the direct guar17 antors under any cross-guarantee or stop-loss con18 tract;’’.

19 SEC. 302. APPLICABILITY OF CHAPTERS.

20 Section 103 of title 11, United States Code, is

21 amended—

22 (a) in subsection (a) by striking ‘‘section 1161’’

23 and adding ‘‘sections 1161 and 1181’’;

24 (b) by adding new subsection (h)—
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1 ‘‘(h) Subchapter V of chapter 11 of this title applies

2 only in a case under such chapter in which a guaranteed

3 company is the debtor’’; and

4 (c) by redesignating subsections (h) and (i) as

5 (i) and (j).

6 SEC. 303. PUBLIC ACCESS TO PAPERS.

7 Section 107 of title 11, United States Code, is

8 amended—

9 (a) in subsection (a) by striking ‘‘subsection

10 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

11 (b) by adding new subsection (c)—

12 ‘‘(c) Notwithstanding subsection (a) of this sec13 tion, the identity of a guaranteed creditor and the

14 amount of a guaranteed creditor’s claim in a case

15 under subchapter V of chapter 11 is not a matter

16 of public record and shall be kept confidential.’’.

17 SEC. 304. WHO MAY BE A DEBTOR.

18 Section 109 of title 11, United States Code, is

19 amended—

20 (a) in subsection (b)(2) by striking ‘‘or’’ from

21 the end of the subsection;

22 (b) in subsection (b)(3) by striking ‘‘.’’ and

23 adding ‘‘; or’’ at the end of the subsection;

24 (c) by adding new paragraph (b)(4)—

25 ‘‘(4) a guaranteed company.’’;
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1 (d) in subsection (d) by striking ‘‘and a rail2 road’’ and inserting ‘‘a railroad, and a guaranteed

3 company’’;

4 (e) by adding new subsection (h)—

5 ‘‘(h) A company must be a debtor under subchapter

6 V of chapter 11 if—

7 ‘‘(1) the company is a guaranteed company; or

8 ‘‘(2) the company would be a guaranteed com9 pany but for the requirement that the company has

10 guaranteed obligations outstanding as of the date of

11 the filing of the petition and after the date of the

12 filing of the petition, the company incurs guaranteed

13 obligations.’’; and

14 (f) by adding new subsection (i)—

15 ‘‘(i) Once a guaranteed company has become a debtor

16 under subchapter V of chapter 11, it is not eligible for

17 relief under any other subchapter of chapter 11 or under

18 any other chapter in this title.’’

19 Subtitle B—Amendments to Chapter 3 of

20 Title 11

21 SEC. 311. PARTY IN INTEREST.

22 Title 11, United States Code, is amended by adding

23 new section 308—
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1 ‘‘§ 308. Party in Interest

2 ‘‘(a) The regulation corporation shall be a party in

3 interest in any action seeking to impair or limit the obliga4 tions or duties of the debtor or of a direct guarantor under

5 a cross-guarantee or stop-loss contract.

6 ‘‘(b) A cross-guarantee or stop-loss syndicate shall be

7 a party in interest for the purpose of filing objections to

8 the allowance of a claim or interest as provided under sec9 tion 502(a) of this title.

10 ‘‘(c) A cross-guarantee or stop-loss syndicate shall be

11 a party in interest in any determination of whether a claim

12 is a guaranteed obligation under a cross-guarantee or

13 stop-loss contract in a case under subchapter V of chapter

14 11 of this title.’’.

15 SEC. 312. QUALIFICATION OF TRUSTEE.

16 Section 322 of title 11, United States Code, is

17 amended—

18 (a) in subsection (a) by inserting ‘‘1183,’’ after

19 ‘‘1163,’’; and

20 (b) by adding new paragraph (b)(3)—

21 ‘‘(3) In a case under subchapter V of chapter

22 11, the United States trustee shall consult with the

23 syndicate agent monitoring the debtor as of the date

24 of the filing of the petition and shall consider any

25 existing bonds covering the guaranteed company
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1 when determining the amount of the bond required

2 to be filed under subsection (a) of this section.’’.

3 SEC. 313. NOTICE.

4 Section 342 of title 11, United States Code, is

5 amended by adding new subsection (d)—

6 ‘‘(d) Notwithstanding subsection (a) of this section,

7 notice of the entry of an order for relief in a case under

8 subchapter V of chapter 11 shall be given by publication

9 and shall be given in writing to the syndicate agent and

10 to all creditors having claims that are not guaranteed obli11 gations. Notice to the syndicate agent shall constitute no12 tice to all guaranteed creditors in the case.’’.

13 SEC. 314. MONEY OF ESTATES.

14 Section 345 of title 11, United States Code, is

15 amended in subsection (b) by inserting after the third

16 usage of ‘‘United States’’ ‘‘or is guaranteed under a cross17 guarantee contract.’’.

18 SEC. 315. AUTOMATIC STAY.

19 Section 362 of title 11, United States Code, is

20 amended by adding new paragraph (b)(19):

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

22 the exercise of any right of a guaranteed creditor

23 under applicable nonbankruptcy law to collect, en24 force or recover a guaranteed obligation from the

25 debtor.’’.
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1 SEC. 316. EXECUTORY CONTRACTS AND UNEXPIRED

2 LEASES.

3 Section 365 of title 11, United States Code, is

4 amended—

5 (a) in subsection (a) by striking ‘‘and (d)’’ and

6 inserting ‘‘(d), and (q)’’;

7 (b) in paragraph (e)(1), by inserting ‘‘guaran8 teed obligation,’’ after the first usage of ‘‘contract’’;

9 by inserting ‘‘, guaranteed obligation,’’ after the sec10 ond usage of ‘‘contract’’; by striking ‘‘or’’ after the

11 first usage of ‘‘terminated’’; by inserting ‘‘;’’ after

12 the first usage of ‘‘terminated’’; by inserting ‘‘or any

13 liability thereunder accelerated,’’ after the first

14 usage of ‘‘modified,’’; by striking ‘‘or’’ after ‘‘right’’;

15 by inserting ‘‘;’’ after ‘‘right’’; by inserting ‘‘, or li16 ability’’ after ‘‘obligation’’; by inserting ‘‘, guaran17 teed obligation,’’ after the third usage of ‘‘contract’’;

18 by striking ‘‘or’’ after the second usage of ‘‘termi19 nated’’; by inserting ‘‘;’’ after the second usage of

20 ‘‘terminated’’; by inserting ‘‘or accelerated’’ after the

21 second usage of ‘‘modified,’’; and by inserting ‘‘,

22 guaranteed obligation,’’ after the fourth usage of

23 ‘‘contract’’;

24 (c) in subparagraph (e)(2)(B), by striking

25 ‘‘such contract is a’’ and inserting ‘‘such contract is

26 not a guaranteed obligation but is some other’’;
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1 (d) by adding a new subsection (p):

2 ‘‘(p) Notwithstanding subsection (c)(2) of this sec3 tion, the trustee shall be deemed to have assumed as of

4 the date of filing of the petition all cross-guarantee and

5 stop-loss contracts to which the debtor is a party. The

6 trustee shall immediately pay all cross-guarantee premium

7 payments, stop-loss premium payments, and monitoring

8 fee payments due under any cross-guarantee or stop-loss

9 contract so assumed. Any claim for a subsequent breach

10 of the obligations under such contracts shall be entitled

11 to priority under section 507(a)(1). The trustee shall not

12 reject any cross-guarantee or stop-loss contract.’’; and

13 (e) in paragraph (f)(1) by inserting after ‘‘Ex14 cept as provided in subsection (c) of this section’’

15 the following to complete the clause, ‘‘and excluding

16 those executory contracts described in subsection

17 (p)’’.

18 Subtitle C—Amendments to Chapter 5 of

19 Title 11

20 SEC. 321. OBLIGATIONS OF DIRECT GUARANTORS.

21 Title 11, United States Code, is amended by adding

22 a new section 511:

23 ‘‘§ 511. Obligations of Direct Guarantors

24 ‘‘The direct guarantors of a debtor shall pay to the

25 trustee the amount by which losses accrued by the estate
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1 as a direct guarantor since the date the petition was filed

2 exceed the cross-guarantee and stop-loss premiums the es3 tate has accrued since that date. Such payment shall be

4 received by the trustee on the effective date of a plan con5 firmed under section 1129 of this title or, in the case of

6 a liquidation under section 1187 of this title, at the time

7 of the transfer to an unrelated party or the termination

8 of all of the estate’s guaranteed obligations. The claim re9 sulting from the amount paid by the direct guarantors in

10 accordance with this subsection shall be subordinated to

11 all other claims in the case for the purpose of distribution

12 under this title.’’.

13 SEC. 322. DEBTOR’S DUTIES.

14 Section 521 of title 11, United States Code, is

15 amended—

16 (a) in paragraph (1) by inserting ‘‘(a)’’ at the

17 beginning of the paragraph; and

18 (b) by adding new subparagraph (1)(b):

19 ‘‘(b) in a case under subchapter V of chapter 11 and

20 subject to the requirement of subsection 107(c) of this

21 title, file under seal the list of guaranteed creditors and

22 the amount of the claims of the guaranteed creditors.’’.

23 SEC. 323. EXCEPTIONS TO DISCHARGE.

24 Section 523 of title 11, United States Code, is

25 amended by adding new paragraph (a)(17):
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1 ‘‘(17) which arises as a result of the debtor’s

2 cross-guarantee obligations.’’.

3 SEC. 324. LIMITATION ON AVOIDING POWERS.

4 Section 546 of title 11, United States Code, is

5 amended—

6 (a) by redesignating the second subsection (g)

7 as subsection (h); and

8 (b) by adding new subsection (i):

9 ‘‘(i) Notwithstanding sections 544, 545, 547, and

10 548(a)(2) of this title, the trustee may not avoid a transfer

11 that is a cross-guarantee premium payment, a stop-loss

12 premium payment, or a monitoring fee payment made be13 fore the commencement of the case, except under section

14 548(a)(1) of this title.’’.

15 SEC. 325. PREFERENCES.

16 Section 547 of title 11, United States Code, is

17 amended by adding new subsection (h):

18 ‘‘(h) For the purposes of this section, a payment of

19 a guaranteed obligation is deemed to be a payment of a

20 debt incurred by the debtor in the ordinary course of busi21 ness or financial affairs of the debtor and the transferee.’’.

22 SEC. 326. FRAUDULENT TRANSFERS AND OBLIGATIONS.

23 Section 548 of title 11, United States Code, is

24 amended in paragraph (d)(2) by adding new subparagraph

25 (E):
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1 ‘‘(E) A cross-guarantee syndicate or a syn2 dicate agent that receives a cross-guarantee

3 premium payment, a stop-loss premium pay4 ment, or a monitoring fee payment takes for

5 value to the extent of such payment.’’.

6 SEC. 327. POST–PETITION TRANSACTIONS.

7 Section 549 of title 11, United States Code, is

8 amended—

9 (a) in subsection (a) by striking ‘‘subsections

10 (b) or (c)’’ and by inserting ‘‘subsections (b), (c), or

11 (d)’’;

12 (b) by adding new subsection (d)—

13 ‘‘(d) The trustee may not avoid under subsection (a)

14 of this section a transfer of property to a transferee whose

15 claim, in the absence of such transfer, would be guaran16 teed under a cross-guarantee or stop-loss contract’’; and

17 (c) by redesignating subsection (d) as sub18 section (e).

19 SEC. 328. CONTRACTUAL RIGHT TO LIQUIDATE A SECURI20 TIES CONTRACT.

21 Section 555 of title 11, United States Code, is

22 amended—

23 (a) by inserting ‘‘(a)’’ at the beginning of the

24 section; and

25 (b) by adding new subsection (b)—
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1 ‘‘(b) Subsection (a) of this section shall not apply in

2 any case under subchapter V of chapter 11.’’.

3 SEC. 329. CONTRACTUAL RIGHT TO LIQUIDATE A COMMOD4 ITIES CONTRACT OR FORWARD CONTRACT.

5 Section 556 of title 11, United States Code, is

6 amended—

7 (a) by inserting ‘‘(a)’’ at the beginning of the

8 section; and

9 (b) by adding new subsection (b)—

10 ‘‘(b) Subsection (a) of this section shall not apply in

11 any case under subchapter V of chapter 11.’’.

12 SEC. 330. CONTRACTUAL RIGHT TO LIQUIDATE A REPUR13 CHASE AGREEMENT.

14 Section 559 of title 11, United States Code, is

15 amended—

16 (a) by inserting ‘‘(a)’’ at the beginning of the

17 section; and

18 (b) by adding new subsection (b)—

19 ‘‘(b) Subsection (a) of this section shall not apply in

20 any case under subchapter V of chapter 11.’’.

21 SEC. 331. CONTRACTUAL RIGHT TO TERMINATE A SWAP

22 AGREEMENT.

23 Section 560 of title 11, United States Code, is

24 amended—
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1 (a) by inserting ‘‘(a)’’ at the beginning of the

2 section; and

3 (b) by adding new subsection (b)—

4 ‘‘(b) Subsection (a) of this section shall not apply in

5 any case under subchapter V of chapter 11.’’.

6 Subtitle D—Amendments to Chapter 11 of

7 Title 11

8 CHAPTER 1—AMENDMENTS TO EXISTING LAW

9 SEC. 341. CREDITORS’ AND EQUITY SECURITY HOLDERS’

10 COMMITTEES.

11 Section 1102 of title 11, United States Code, is

12 amended in paragraph (a)(1) by inserting at the end ‘‘:

13 Provided, however, That only creditors holding claims that

14 are not guaranteed obligations under a cross-guarantee or

15 stop-loss contract and are not direct guarantors may be

16 appointed to such committee in a case under subchapter

17 V of chapter 11’’.

18 SEC. 342. WHO MAY FILE A PLAN.

19 Section 1121 of title 11, United States Code, is

20 amended by adding new subsection (f):

21 ‘‘(f) Notwithstanding subsection (c) of this section,

22 a guaranteed creditor may not file a plan in a case under

23 subchapter V of chapter 11.’’.
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1 SEC. 343. IMPAIRMENT OF CLAIMS OR INTERESTS.

2 Section 1124 of title 11, United States Code, is

3 amended—

4 (a) by inserting ‘‘(a)’’ at the beginning of the

5 section; and

6 (b) by adding new subsection (b)—

7 ‘‘(b) Notwithstanding subsection (a) of this section,

8 the claim of a guaranteed creditor is deemed to be

9 unimpaired in a case under subchapter V of chapter 11.’’.

10 SEC. 344. ACCEPTANCE OF PLAN.

11 Section 1126 of title 11, United States Code, is

12 amended in subsection (a) by inserting at the end of the

13 first sentence:’’, ‘‘provided, however, that a guaranteed

14 creditor is not entitled to accept or reject a plan in a case

15 under subchapter V of chapter 11’’.

16 SEC. 345. CONFIRMATION HEARING.

17 Section 1128 of title 11, United States Code, is

18 amended in subsection (b) by inserting after ‘‘A party in

19 interest’’:’’, ‘‘other than a guaranteed creditor in a case

20 under subchapter V of chapter 11,’’.

21 SEC. 346. CONFIRMATION OF PLAN.

22 Section 1129 of title 11, United States Code, is

23 amended—

24 (a) in paragraph (a)(4), by inserting at the

25 end:’’, ‘‘Provided, however, That no such approval of

26 any payment by a cross-guarantee or stop-loss syn-
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1 dicate is required when the cross-guarantee or stop2 loss syndicate is the proponent of the plan and the

3 payment is made pursuant to a cross-guarantee or

4 stop-loss contract’’; and

5 (b) by adding new subsection (e)—

6 ‘‘(e) Notwithstanding subsections (a) and (b) of this

7 section, the court may confirm a plan that otherwise meets

8 the requirements of subsection (a) and (b) of this section

9 even though, in a case under subchapter V of chapter 11,

10 a guaranteed creditor receives or retains no property

11 under the plan.’’.

12 SEC. 347. EFFECT OF CONFIRMATION.

13 Section 1141 of title 11, United States Code, is

14 amended—

15 (a) in subsection (a) by striking ‘‘(d)(2) and

16 (d)(3)’’ and by inserting ‘‘(d)(2), (d)(3), (d)(4), and

17 (d)(5)’’;

18 (b) by inserting new paragraph (d)(4)—

19 ‘‘(4) Except as provided in subsection 365(k) of

20 this title, the confirmation of a plan does not dis21 charge a guaranteed company that is a debtor under

22 subchapter V of chapter 11 of this title from any

23 debt arising out of a guaranteed obligation’’;

24 (c) by inserting new paragraph (d)(5)—
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1 ‘‘(5) Except as provided in section 365(k) of

2 this title, the confirmation of a plan does not dis3 charge a debtor of its obligations and liabilities as

4 a direct guarantor under a cross-guarantee or stop5 loss contract’’; and

6 (d) by redesignating paragraph (d)(4) as (d)(6).

7 CHAPTER 2—ENACTMENT OF SUBCHAPTER V

8 SEC. 351. GUARANTEED COMPANY REORGANIZATION.

9 Title 11, United States Code, is amended by adding

10 a new subchapter V:

11 ‘‘Subchapter V—Guaranteed Company

12 Reorganization’’.

13 SEC. 352. INAPPLICABILITY OF OTHER SECTIONS.

14 Title 11, United States Code, is amended by adding

15 new section 1181:

16 ‘‘§ 1181. Inapplicability of other sections

17 ‘‘Sections 341, 343, 1104, 1105, and 1107 do not

18 apply in a case under subchapter V of chapter 11.’’.

19 SEC. 353. EFFECTIVE DATE OF FILING.

20 Title 11, United States Code, is amended by adding

21 new section 1182:

22 ‘‘§ 1182. Effective date of filing

23 ‘‘The effective date and time of the filing of a petition

24 under this subchapter shall be the close of business on
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1 the business day preceding the date on which the petition

2 is actually filed.’’.

3 SEC. 354. APPOINTMENT OF TRUSTEE.

4 Title 11, United States Code, is amended by adding

5 new section 1183:

6 ‘‘§ 1183. Appointment of trustee

7 ‘‘As soon as practicable after the entry of an order

8 for relief, the regulation corporation shall submit to the

9 United States Trustee a list of five disinterested persons

10 who are qualified and willing to serve as the trustee in

11 the case. The United States Trustee shall appoint one

12 such person to serve as the trustee in the case. Neither

13 the syndicate agent monitoring the debtor as of the date

14 of the filing of the petition nor a governmental unit or

15 the employee of a governmental unit shall be eligible to

16 serve as the trustee.’’.

17 SEC. 355. LIABILITY OF DIRECT GUARANTORS FOR TRANS18 FERS TO GUARANTEED CREDITORS.

19 Title 11, United States Code, is amended by adding

20 new section 1184:

21 ‘‘§ 1184. Liability of direct guarantors for transfers to

22 guaranteed creditors

23 ‘‘The trustee may recover for the benefit of all guar24 anteed creditors from the direct guarantors of the debtor

25 the amount of any transfers of property of the estate to
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1 or for the benefit of guaranteed creditors that enable such

2 creditors to receive more than such creditors would receive

3 if the trustee was engaged in a liquidation pursuant to

4 section 1187 of this chapter and such transfers had not

5 been made.’’.

6 SEC. 356. REPLACEMENT OR MODIFICATION OF CROSS7 GUARANTEE CONTRACT.

8 Title 11, United States Code, is amended by adding

9 new section 1185:

10 ‘‘§ 1185. Replacement or modification of cross-guaran11 tee contract

12 ‘‘Prior to the debtor filing any application with the

13 regulation corporation for approval of any replacement

14 cross-guarantee contract or for the approval of any modi15 fication of the debtor’s existing cross-guarantee contract,

16 the debtor must obtain the approval of the court to enter

17 into such replacement contract or to modify such existing

18 contract.’’.

19 SEC. 357. EFFECT OF FEDERAL, STATE, AND LOCAL LEGIS20 LATION AND REGULATIONS.

21 Title 11, United States Code, is amended by adding

22 new section 1186:
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1 ‘‘§ 1186. Effect of Federal, State, and local legislation

2 and regulations

3 ‘‘(a) Except with respect to merger, modification of

4 the financial structure of the debtor, or the issuance or

5 sale of securities under a plan, the trustee and the debtor

6 are subject to all Federal, State, and local legislation, reg7 ulations and orders to the same extent as the debtor would

8 be if a petition commencing the case under this chapter

9 had not been filed.

10 ‘‘(b) Notwithstanding subsection (a) of this section,

11 neither Federal receivership law, State receivership law,

12 nor any laws prohibiting the enforcement of an agreement

13 that is not contained in the records of a debtor under this

14 subchapter, including sections 212(a) and 217(4) of the

15 Financial Institutions Reform, Recovery, and Enforce16 ment Act of 1989 (12 U.S.C. 1821(d)(9)(A) and 1823(e)),

17 shall be applicable.

18 ‘‘(c) Notwithstanding any State or Federal law, de19 positors in a guaranteed company that is a debtor under

20 this subsection shall not receive any preference in distribu21 tion under this title over other creditors.’’.

22 SEC. 358. LIQUIDATION.

23 Title 11, United States Code, is amended by adding

24 new section 1187:
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1 ‘‘§ 1187. Liquidation

2 ‘‘On request of a party in interest and after notice

3 and a hearing, the court may order the trustee to cease

4 the debtor’s operation and to collect and reduce to money

5 all of the property of the estate in the same manner as

6 if the case were a case under chapter 7 of this title if

7 such liquidation is in the best interest of creditors.’’.

8 TITLE IV—AMENDMENT TO TITLE 28,

9 UNITED STATES CODE

10 SEC. 401. VENUE.

11 Title 28, United States Code, is amended by adding

12 new subsection 1409(f):

13 ‘‘(f) A proceeding arising in or related to a case under

14 subchapter V of chapter 11 of title 11 regarding the debt15 or’s satisfaction of a guaranteed obligation, whether aris16 ing before or after the commencement of the case, may

17 be commenced in the district court for the district where

18 the State or Federal court sits in which the party com19 mencing such proceeding may, under applicable non-bank20 ruptcy venue provisions, have brought an action on such

21 claim, or in the district court in which such case is pend22 ing. The cross-guarantee syndicate which has entered into

23 a cross-guarantee contract in such a case shall be a party

24 in interest in any proceeding commenced under this sub25 section.’’.

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