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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 11 Introduced in House (IH)]

107th CONGRESS
  1st Session
                                 H. R. 11

 To revise the banking and bankruptcy insolvency laws with respect to 
   the termination and netting of financial contracts, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 3, 2001

  Mr. Leach 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 revise the banking and bankruptcy insolvency laws with respect to 
   the termination and netting of financial contracts, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Contract Netting 
Improvement Act of 2001''.

SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR RECEIVERS OF 
              INSURED DEPOSITORY INSTITUTIONS.

    (a) Definition of Qualified Financial Contract.--Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)(D)(i)) is amended by inserting ``, resolution or order'' 
after ``any similar agreement that the Corporation determines by 
regulation''.
    (b) Definition of Securities Contract.--Section 11(e)(8)(D)(ii) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 
amended to read as follows:
                            ``(ii) Securities contract.--The term 
                        `securities contract'--
                                    ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                the foregoing, including any option to 
                                purchase or sell any such security, 
                                certificate of deposit, loan, interest, 
                                group or index, or option;
                                    ``(II) does not include any 
                                purchase, sale, or repurchase 
                                obligation under a participation in a 
                                commercial mortgage loan unless the 
                                Corporation determines by regulation, 
                                resolution, or order to include any 
                                such agreement within the meaning of 
                                such term;
                                    ``(III) means any option entered 
                                into on a national securities exchange 
                                relating to foreign currencies;
                                    ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, loan, 
                                interest, group or index, or option;
                                    ``(V) means any margin loan;
                                    ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                    ``(VII) means any combination of 
                                the agreements or transactions referred 
                                to in this clause;
                                    ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                    ``(IX) means a master agreement 
                                that provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                    ``(X) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in this 
                                clause.''.
    (c) Definition of Commodity Contract.--Section 11(e)(8)(D)(iii) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is 
amended to read as follows:
                            ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                    ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                    ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                    ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                    ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                    ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                    ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                    ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                    ``(VIII) any option to enter into 
                                any agreement or transaction referred 
                                to in this clause;
                                    ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only with 
                                respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (II), (III), (IV), (V), (VI), (VII), or 
                                (VIII); or
                                    ``(X) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
    (d) Definition of Forward Contract.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is amended 
to read as follows:
                            ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                    ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or byproduct thereof, with a 
                                maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including a repurchase transaction, 
                                reverse repurchase transaction, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, option, 
                                allocated transaction, unallocated 
                                transaction, or any other similar 
                                agreement;
                                    ``(II) any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (III);
                                    ``(III) any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (II);
                                    ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                    ``(V) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV).''.
    (e) Definition of Repurchase Agreement.--Section 11(e)(8)(D)(v) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 
amended to read as follows:
                            ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to the term `reverse repurchase 
                        agreement')--
                                    ``(I) means an agreement, including 
                                related terms, which provides for the 
                                transfer of 1 or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests with a simultaneous 
                                agreement by such transferee to 
                                transfer to the transferor thereof 
                                certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests as described above, 
                                at a date certain not later than 1 year 
                                after such transfers or on demand, 
                                against the transfer of funds, or any 
                                other similar agreement;
                                    ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                    ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                    ``(IV) means any option to enter 
                                into any agreement or transaction 
                                referred to in subclause (I) or (III);
                                    ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a repurchase 
                                agreement under this subclause only 
                                with respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (III), or (IV); and
                                    ``(VI) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V).
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
    (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(vi) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is amended 
to read as follows:
                            ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                    ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a credit spread or credit 
                                swap, option, future, or forward 
                                agreement; a commodity index or 
                                commodity swap, option, future, or 
                                forward agreement; or a weather swap, 
                                weather derivative, or a weather 
                                option;
                                    ``(II) any agreement or transaction 
                                similar to any other agreement or 
                                transaction referred to in this clause 
                                that is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference in 
                                such agreement) and that is a forward, 
                                swap, future, or option on 1 or more 
                                rates, currencies, commodities, equity 
                                securities or other equity instruments, 
                                debt securities or other debt 
                                instruments, or economic indices or 
                                measures of economic risk or value;
                                    ``(III) any combination of 
                                agreements or transactions referred to 
                                in this clause;
                                    ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                    ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                    ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in 
                                subparagraph (I), (II), (III), (IV), or 
                                (V).
                        Such term is applicable for purposes of this 
                        title only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, and the regulations promulgated by the 
                        Securities and Exchange Commission or the 
                        Commodity Futures Trading Commission.''.
    (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is 
amended to read as follows:
                            ``(viii) Transfer.--The term `transfer' 
                        means every mode, direct or indirect, absolute 
                        or conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institutions's equity of 
                        redemption.''.
    (h) Treatment of Qualified Financial Contracts.--Section 11(e)(8) 
of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is 
amended--
            (1) in subparagraph (A), by striking ``paragraph (10)'' and 
        inserting ``paragraphs (9) and (10)'';
            (2) in subparagraph (A)(i), by striking ``to cause the 
        termination or liquidation'' and inserting ``such person has to 
        cause the termination, liquidation, or acceleration'';
            (3) by amending subparagraph (A)(ii) to read as follows:
                            ``(ii) any right under any security 
                        agreement or arrangement or other credit 
                        enhancement related to 1 or more qualified 
                        financial contracts described in clause (i);''; 
                        and
            (4) by amending subparagraph (E)(ii) to read as follows:
                            ``(ii) any right under any security 
                        agreement or arrangement or other credit 
                        enhancement related to 1 or more qualified 
                        financial contracts described in clause (i);''.
    (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended by 
inserting ``section 5242 of the Revised Statutes of the United States 
(12 U.S.C. 91) or any other Federal or State law relating to the 
avoidance of preferential or fraudulent transfers,'' before ``the 
Corporation''.

SEC. 3. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND FAILING 
              INSTITUTIONS.

    (a) In General.--Section 11(e)(8) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(e)(8)) is amended--
            (1) in subparagraph (E), by striking ``other than paragraph 
        (12) of this subsection, subsection (d)(9)'' and inserting 
        ``other than subsections (d)(9) and (e)(10)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with paragraph (1).
                    ``(G) Walkaway clauses not effective.--
                            ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                            ``(ii) Walkaway clause defined.--For 
                        purposes of this subparagraph, the term 
                        `walkaway clause' means a provision in a 
                        qualified financial contract that, after 
                        calculation of a value of a party's position or 
                        an amount due to or from 1 of the parties in 
                        accordance with its terms upon termination, 
                        liquidation, or acceleration of the qualified 
                        financial contract, either does not create a 
                        payment obligation of a party or extinguishes a 
                        payment obligation of a party in whole or in 
                        part solely because of such party's status as a 
                        nondefaulting party.''.
    (b) Technical and Conforming Amendment.--Section 11(e)(12)(A) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amended 
by inserting ``or the exercise of rights or powers'' after ``the 
appointment''.

SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
              CONTRACTS.

    (a) Transfers of Qualified Financial Contracts to Financial 
Institutions.--Section 11(e)(9) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(e)(9)) is amended to read as follows:
            ``(9) Transfer of qualified financial contracts.--
                    ``(A) In general.--In making any transfer of assets 
                or liabilities of a depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                            ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                    ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the 
                                depository institution in default;
                                    ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such depository institution under any 
                                such contract (other than any claim 
                                which, under the terms of any such 
                                contract, is subordinated to the claims 
                                of general unsecured creditors of such 
                                institution);
                                    ``(III) all claims of such 
                                depository institution against such 
                                person or any affiliate of such person 
                                under any such contract; and
                                    ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                            ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                    ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts, the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                    ``(C) Transfer of contracts subject to the rules of 
                a clearing organization.--In the event that a 
                conservator or receiver transfers any qualified 
                financial contract and related claims, property and 
                credit enhancements pursuant to subparagraph (A)(i) and 
                such contract is subject to the rules of a clearing 
                organization, the clearing organization shall not be 
                required to accept the transferee as a member by virtue 
                of the transfer.
                    ``(D) Definition.--For purposes of this section, 
                the term `financial institution' means a broker or 
                dealer, a depository institution, a futures commission 
                merchant, or any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.''.
    (b) Notice to Qualified Financial Contract Counterparties.--Section 
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(10)(A)) is amended by amending the flush material following 
clause (ii) to read as follows: ``the conservator or receiver shall 
notify any person who is a party to any such contract of such transfer 
by 5:00 p.m. (eastern time) on the business day following the date of 
the appointment of the receiver, in the case of a receivership, or the 
business day following such transfer, in the case of a 
conservatorship.''.
    (c) Rights Against Receiver and Treatment of Bridge Banks.--Section 
11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)) 
is further amended--
            (1) by redesignating subparagraph (B) as subparagraph (D); 
        and
            (2) by inserting after subparagraph (A) the following new 
        subparagraphs:
                    ``(B) Certain rights not enforceable.--
                            ``(i) Receivership.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991 solely by reason of or incidental to 
                        the appointment of a receiver for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                    ``(I) until 5:00 p.m. (eastern 
                                time) on the business day following the 
                                date of the appointment of the 
                                receiver; or
                                    ``(II) after the person has 
                                received notice that the contract has 
                                been transferred pursuant to paragraph 
                                (9)(A).
                            ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991, solely by reason of or incidental to 
                        the appointment of a conservator for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the conservator has been 
                        appointed).
                            ``(iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver or 
                        conservator of an insured depository 
                        institution shall be deemed to have notified a 
                        person who is a party to a qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
                        the time specified in subparagraph (A) of this 
                        subsection.
                    ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                paragraph (9)--
                            ``(i) a bridge bank; or
                            ``(ii) a depository institution organized 
                        by the Corporation, for which a conservator is 
                        appointed either--
                                    ``(I) immediately upon the 
                                organization of the institution; or
                                    ``(II) at the time of a purchase 
                                and assumption transaction between such 
                                institution and the Corporation as 
                                receiver for a depository institution 
                                in default.''.

SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
              QUALIFIED FINANCIAL CONTRACTS.

    (a) In General.--Section 11(e) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(e)) is further amended--
            (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively; and
            (2) by inserting after paragraph (10) the following new 
        paragraph:
            ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                    ``(A) disaffirm or repudiate all qualified 
                financial contracts between--
                            ``(i) any person or any affiliate of such 
                        person; and
                            ``(ii) the depository institution in 
                        default; or
                    ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''.
    (b) Technical and Conforming Amendments.--Section 11(e)(8) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)), as amended by 
section 2(i), is further amended in subparagraph (C)(i), by striking 
``(11)'' and inserting ``(12)''.

SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

    Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(8)(D)(vii)) is amended to read as follows:
                            ``(vii) Treatment of master agreement as 1 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract. If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.

    (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4402) is amended--
            (1) in paragraph (2)--
                    (A) by inserting ``or exempt from such registration 
                pursuant to an order of the Securities and Exchange 
                Commission'' before the semicolon at the end of 
                subparagraph (A)(ii); and
                    (B) by inserting ``or that has been granted an 
                exemption pursuant to section 4(c)(1) of such Act'' 
                before the period at the end of subparagraph (B);
            (2) in paragraph (6)--
                    (A) by redesignating subparagraphs (B) through (D) 
                as subparagraphs (C) through (E), respectively;
                    (B) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System if the national bank or State member bank is not 
                eligible to make application to become an insured bank 
                under section 5 of the Federal Deposit Insurance 
                Act;''; and
                    (C) by amending subparagraph (C) (as redesignated) 
                to read as follows:
                    ``(C) a branch or agency of a foreign bank, a 
                foreign bank and any branch or agency of the foreign 
                bank, or the foreign bank that established the branch 
                or agency, as those terms are defined in section 1(b) 
                of the International Banking Act of 1978;'';
            (3) in paragraph (11), by adding before the period ``and 
        any other clearing organization with which such clearing 
        organization has a netting contract'';
            (4) by amending paragraph (14)(A)(i) to read as follows:
                            ``(i) means a contract or agreement between 
                        two or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or closeout values relating to such obligations 
                        or entitlements) among the parties to the 
                        agreement; and''; and
            (5) by adding at the end the following new paragraph:
            ``(15) Payment.--The term `payment' means a payment of 
        United States dollars, another currency, or a composite 
        currency, and a noncash delivery, including a payment or 
        delivery to liquidate an unmatured obligation.''.
    (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C. 4403) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) General Rule.--Notwithstanding any other provision of State 
or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act or any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970), the covered contractual payment obligations and the 
covered contractual payment entitlements between any two financial 
institutions shall be netted in accordance with, and subject to the 
conditions of, the terms of any applicable netting contract (except as 
provided in section 561(b)(2) of title 11, United States Code).''; and
            (2) by adding at the end the following new subsection:
    ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any two financial institutions 
shall be enforceable in accordance with their terms (except as provided 
in section 561(b)(2) of title 11, United States Code) and shall not be 
stayed, avoided, or otherwise limited by any State or Federal law 
(other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of 
the Federal Deposit Insurance Act and section 5(b)(2) of the Securities 
Investor Protection Act of 1970).''.
    (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C. 4404) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) General Rule.--Notwithstanding any other provision of State 
or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970), the covered contractual payment obligations and the 
covered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organization 
shall be netted in accordance with and subject to the conditions of any 
applicable netting contract (except as provided in section 561(b)(2) of 
title 11, United States Code).''; and
            (2) by adding at the end the following new subsection:
    ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any two members of a clearing 
organization shall be enforceable in accordance with their terms 
(except as provided in section 561(b)(2) of title 11, United States 
Code) and shall not be stayed, avoided, or otherwise limited by any 
State or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) 
of section 11(e) of the Federal Deposit Insurance Act and section 
5(b)(2) of the Securities Investor Protection Act of 1970).''.
    (d) Enforceability of Contracts With Uninsured National Banks and 
Uninsured Federal Branches and Agencies.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.) is 
amended--
            (1) by redesignating section 407 as section 407A; and
            (2) by adding after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
              UNINSURED FEDERAL BRANCHES AND AGENCIES.

    ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal 
Deposit Insurance Act shall apply to an uninsured national bank or 
uninsured Federal branch or Federal agency except--
            ``(1) any reference to the `Corporation as receiver' or 
        `the receiver or the Corporation' shall refer to the receiver 
        of an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency;
            ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator of 
        an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency; 
        and
            ``(3) any reference to an `insured depository institution' 
        or `depository institution' shall refer to an uninsured 
        national bank or an uninsured Federal branch or Federal agency.
    ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank or uninsured Federal branch or agency shall be 
determined in the same manner and subject to the same limitations that 
apply to receivers and conservators of insured depository institutions 
under section 11(e) of the Federal Deposit Insurance Act.
    ``(c) Regulatory Authority.--
            ``(1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may promulgate regulations to implement this section.
            ``(2) Specific requirement.--In promulgating regulations to 
        implement this section, the Comptroller of the Currency shall 
        ensure that the regulations generally are consistent with the 
        regulations and policies of the Federal Deposit Insurance 
        Corporation adopted pursuant to the Federal Deposit Insurance 
        Act.
    ``(d) Definitions.--For purposes of this section, the terms 
`Federal branch', `Federal agency', and `foreign bank' have the same 
meaning as in section 1(b) of the International Banking Act.''.

SEC. 8. BANKRUPTCY CODE AMENDMENTS.

    (a) Definitions of Forward Contract, Repurchase Agreement, 
Securities Clearing Agency, Swap Agreement, Commodity Contract, and 
Securities Contract.--Title 11, United States Code, is amended--
            (1) in section 101--
                    (A) in paragraph (25)--
                            (i) by striking ``means a contract'' and 
                        inserting ``means--
                    ``(A) a contract'';
                            (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                            (iii) by adding at the end the following:
                    ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                    ``(C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or (B);
                    ``(D) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), or (C), together with all supplements to any 
                such master agreement, without regard to whether such 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under such master agreement that is 
                referred to in subparagraph (A), (B) or (C); or
                    ``(E) any security agreement or arrangement, or 
                other credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), but not to exceed the actual value of such 
                contract on the date of the filing of the petition;'';
                    (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and inserting ``at any time before'';
                    (C) by amending paragraph (47) to read as follows:
            ``(47) `repurchase agreement' (which definition also 
        applies to a `reverse repurchase agreement')--
                    ``(A) means--
                            ``(i) an agreement, including related 
                        terms, which provides for the transfer of 1 or 
                        more certificates of deposit, mortgage-related 
                        securities (as defined in the Securities 
                        Exchange Act of 1934), mortgage loans, 
                        interests in mortgage-related securities or 
                        mortgage loans, eligible bankers' acceptances, 
                        qualified foreign government securities, or 
                        securities that are direct obligations of, or 
                        that are fully guaranteed by, the United States 
                        or any agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, loans, or interests, 
                        with a simultaneous agreement by such 
                        transferee to transfer to the transferor 
                        thereof certificates of deposit, eligible 
                        bankers' acceptance, securities, loans, or 
                        interests of the kind described above, at a 
                        date certain not later than 1 year after such 
                        transfer or on demand, against the transfer of 
                        funds;
                            ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                            ``(iii) an option to enter into an 
                        agreement or transaction referred to in clause 
                        (i) or (ii);
                            ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), or (iii), together with all 
                        supplements to any such master agreement, 
                        without regard to whether such master agreement 
                        provides for an agreement or transaction that 
                        is not a repurchase agreement under this 
                        paragraph, except that such master agreement 
                        shall be considered to be a repurchase 
                        agreement under this paragraph only with 
                        respect to each agreement or transaction under 
                        the master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                            ``(v) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), but not to exceed 
                        the actual value of such contract on the date 
                        of the filing of the petition; and
                    ``(B) does not include a repurchase obligation 
                under a participation in a commercial mortgage loan,
        and, for purposes of this paragraph, the term `qualified 
        foreign government security' means a security that is a direct 
        obligation of, or that is fully guaranteed by, the central 
        government of a member of the Organization for Economic 
        Cooperation and Development;'';
                    (D) in paragraph (48) by inserting ``or exempt from 
                such registration under such section pursuant to an 
                order of the Securities and Exchange Commission'' after 
                ``1934''; and
                    (E) by amending paragraph (53B) to read as follows:
            ``(53B) `swap agreement'--
                    ``(A) means--
                            ``(i) any agreement, including the terms 
                        and conditions incorporated by reference in 
                        such agreement, which is an interest rate swap, 
                        option, future, or forward agreement, including 
                        a rate floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a spot, 
                        same day-tomorrow, tomorrow-next, forward, or 
                        other foreign exchange or precious metals 
                        agreement; a currency swap, option, future, or 
                        forward agreement; an equity index or an equity 
                        swap, option, future, or forward agreement; a 
                        debt index or a debt swap, option, future, or 
                        forward agreement; a credit spread or a credit 
                        swap, option, future, or forward agreement; a 
                        commodity index or a commodity swap, option, 
                        future, or forward agreement; or a weather 
                        swap, weather derivative, or weather option;
                            ``(ii) any agreement or transaction similar 
                        to any other agreement or transaction referred 
                        to in this paragraph that--
                                    ``(I) is presently, or in the 
                                future becomes, regularly entered into 
                                in the swap market (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                    ``(II) is a forward, swap, future, 
                                or option on 1 or more rates, 
                                currencies, commodities, equity 
                                securities, or other equity 
                                instruments, debt securities or other 
                                debt instruments, or economic indices 
                                or measures of economic risk or value;
                            ``(iii) any combination of agreements or 
                        transactions referred to in this paragraph;
                            ``(iv) any option to enter into an 
                        agreement or transaction referred to in this 
                        paragraph;
                            ``(v) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), or (iv), together with 
                        all supplements to any such master agreement, 
                        and without regard to whether the master 
                        agreement contains an agreement or transaction 
                        that is not a swap agreement under this 
                        paragraph, except that the master agreement 
                        shall be considered to be a swap agreement 
                        under this paragraph only with respect to each 
                        agreement or transaction under the master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), or (iv); or
                    ``(B) any security agreement or arrangement or 
                other credit enhancement related to any agreements or 
                transactions referred to in subparagraph (A), but not 
                to exceed the actual value of such contract on the date 
                of the filing of the petition; and
                    ``(C) is applicable for purposes of this title only 
                and shall not be construed or applied so as to 
                challenge or affect the characterization, definition, 
                or treatment of any swap agreement under any other 
                statute, regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 1934, the 
                Public Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company Act of 
                1940, the Investment Advisers Act of 1940, the 
                Securities Investor Protection Act of 1970, the 
                Commodity Exchange Act, and the regulations prescribed 
                by the Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.'';
            (2) by amending section 741(7) to read as follows:
            ``(7) `securities contract'--
                    ``(A) means--
                            ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, a group or index of securities, 
                        certificates of deposit or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, loan, interest, group 
                        or index, or option;
                            ``(ii) any option entered into on a 
                        national securities exchange relating to 
                        foreign currencies;
                            ``(iii) the guarantee by or to any 
                        securities clearing agency of a settlement of 
                        cash, securities, certificates of deposit, 
                        mortgage loans or interests therein, group or 
                        index of securities, or mortgage loans or 
                        interests therein (including any interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, loan, interest, group 
                        or index, or option;
                            ``(iv) any margin loan;
                            ``(v) any other agreement or transaction 
                        that is similar to an agreement or transaction 
                        referred to in this paragraph;
                            ``(vi) any combination of the agreements or 
                        transactions referred to in this paragraph;
                            ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        paragraph;
                            ``(viii) a master agreement that provides 
                        for an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this paragraph, 
                        except that such master agreement shall be 
                        considered to be a securities contract under 
                        this paragraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                            ``(ix) any security agreement or 
                        arrangement or other credit enhancement related 
                        to any agreement or transaction referred to in 
                        this paragraph, but not to exceed the actual 
                        value of such contract on the date of the 
                        filing of the petition; and
                    ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in a 
                commercial mortgage loan.''; and
            (3) in section 761(4)--
                    (A) by striking ``or'' at the end of subparagraph 
                (D); and
                    (B) by adding at the end the following:
                    ``(F) any other agreement or transaction that is 
                similar to an agreement or transaction referred to in 
                this paragraph;
                    ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                    ``(H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                    ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G), or (H), together 
                with all supplements to such master agreement, without 
                regard to whether the master agreement provides for an 
                agreement or transaction that is not a commodity 
                contract under this paragraph, except that the master 
                agreement shall be considered to be a commodity 
                contract under this paragraph only with respect to each 
                agreement or transaction under the master agreement 
                that is referred to in subparagraph (A), (B), (C), (D), 
                (E), (F), (G), or (H); or
                    ``(J) any security agreement or arrangement or 
                other credit enhancement related to any agreement or 
                transaction referred to in this paragraph, but not to 
                exceed the actual value of such contract on the date of 
                the filing of the petition;''.
    (b) Definitions of Financial Institution, Financial Participant, 
and Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
            (1) by striking paragraph (22) and inserting the following 
        new paragraph:
            ``(22) the term `financial institution'--
                    ``(A) means a Federal reserve bank or an entity 
                (domestic or foreign) that is a commercial or savings 
                bank, industrial savings bank, savings and loan 
                association, trust company, a bank or a corporation 
                organized under section 25A of the Federal Reserve Act 
                and, when any such bank or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741, such 
                customer; and
                    ``(B) includes any person described in subparagraph 
                (A) which operates, or operates as, a multilateral 
                clearing organization pursuant to section 409 of the 
                Federal Deposit Insurance Corporation Improvement Act 
                of 1991;'';
            (2) by inserting after paragraph (22) the following:
            ``(22A) `financial participant' means an entity that, at 
        the time it enters into a securities contract, commodity 
        contract or forward contract, or at the time of the filing of 
        the petition, has 1 or more agreements or transactions 
        described in paragraph (1), (2), (3), (4), (5), or (6) of 
        section 561(a) with the debtor or any other entity (other than 
        an affiliate) of a total gross dollar value of at least 
        $1,000,000,000 in notional or actual principal amount 
        outstanding on any day during the previous 15-month period, or 
        has gross mark-to-market positions of at least $100,000,000 
        (aggregated across counterparties) in 1 or more such agreement 
        or transaction with the debtor or any other entity (other than 
        an affiliate) on any day during the previous 15-month 
        period;''; and
            (3) by amending paragraph (26) to read as follows:
            ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity whose business consists in whole or in part 
        of entering into forward contracts as or with merchants or in a 
        commodity, as defined or in section 761, or any similar good, 
        article, service, right, or interest which is presently or in 
        the future becomes the subject of dealing or in the forward 
        contract trade;''.
    (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
            ``(38A) `master netting agreement' means an agreement 
        providing for the exercise of rights, including rights of 
        netting, setoff, liquidation, termination, acceleration, or 
        closeout, under or in connection with 1 or more contracts that 
        are described in any 1 or more of paragraphs (1) through (5) of 
        section 561(a), or any security agreement or arrangement or 
        other credit enhancement related to 1 or more of the foregoing. 
        If a master netting agreement contains provisions relating to 
        agreements or transactions that are not contracts described in 
        paragraphs (1) through (5) of section 561(a), the master 
        netting agreement shall be deemed to be a master netting 
        agreement only with respect to those agreements or transactions 
        that are described in any 1 or more of the paragraphs (1) 
        through (5) of section 561(a);
            ``(38B) `master netting agreement participant' means an 
        entity that, at any time before the filing of the petition, is 
        a party to an outstanding master netting agreement with the 
        debtor;''.
    (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-Stay.--
            (1) In general.--Section 362(b) of title 11, United States 
        Code, is amended--
                    (A) in paragraph (6), by inserting ``, pledged to 
                and under the control of,'' after ``held by'';
                    (B) in paragraph (7), by inserting ``, pledged to 
                and under the control of,'' after ``held by'';
                    (C) by amending paragraph (17) to read as follows:
            ``(17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in connection 
        with 1 or more swap agreements that constitutes the setoff of a 
        claim against the debtor for any payment or other transfer of 
        property due from the debtor under or in connection with any 
        swap agreement against any payment due to the debtor from the 
        swap participant under or in connection with any swap agreement 
        or against cash, securities, or other property held by, pledged 
        to and under the control of, or due from such swap participant 
        to margin, guarantee, secure, or settle any swap agreement;'';
                    (D) in paragraph (18) by striking the period at the 
                end and inserting ``; or''; and
                    (E) by inserting after paragraph (18) the following 
                new paragraph:
            ``(19) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with 1 or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements or against cash, 
        securities, or other property held by, pledged to and under the 
        control of, or due from such master netting agreement 
        participant to margin, guarantee, secure, or settle such 
        agreements or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), or (17) 
        for each individual contract covered by the master netting 
        agreement in issue.''.
            (2) Limitation.--Section 362 of title 11, United States 
        Code, is amended by adding at the end the following:
    ``(i) Limitation.--The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), (7), or (17), 
or (32) of subsection (b) shall not be stayed by any order of a court 
or administrative agency in any proceeding under this title.''.
    (e) Limitation of Avoidance Powers Under Master Netting 
Agreement.--Section 546 of title 11, United States Code, is amended--
            (1) in subsection (g) (as added by section 103 of Public 
        Law 101-311)--
                    (A) by striking ``under a swap agreement''; and
                    (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement''; and
            (2) by adding at the end the following:
    ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b), the trustee may not avoid a transfer made by or to a master 
netting agreement participant under or in connection with any master 
netting agreement or any individual contract covered thereby that is 
made before the commencement of the case, except under section 
548(a)(1)(A), and except to the extent the trustee could otherwise 
avoid such a transfer made under an individual contract covered by such 
master netting agreement.''.
    (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
            (1) in subparagraph (C), by striking ``and'';
            (2) in subparagraph (D), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
            ``(E) a master netting agreement participant that receives 
        a transfer in connection with a master netting agreement or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except, with respect to a transfer 
        under any individual contract covered thereby, to the extent 
        such master netting agreement participant otherwise did not 
        take (or is otherwise not deemed to have taken) such transfer 
        for value.''.
    (g) Termination or Acceleration of Securities Contracts.--Section 
555 of title 11, United States Code, is amended--
            (1) by amending the section heading to read as follows:
``Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
              securities contract'';
        and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
            (1) by amending the section heading to read as follows:
``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
              commodities contract or forward contract'';
        and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
            (1) by amending the section heading to read as follows:
``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
              repurchase agreement'';
        and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
            (1) by amending the section heading to read as follows:
``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
              swap agreement'';
            (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of 1 or more swap agreements''; and
            (3) by striking ``in connection with any swap agreement'' 
        and inserting ``in connection with the termination, 
        liquidation, or acceleration of 1 or more swap agreements''.
    (k) Liquidation, Termination, Acceleration, or Offset Under a 
Master Netting Agreement and Across Contracts.--(1) Title 11, United 
States Code, is amended by inserting after section 560 the following:
``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
              offset under a master netting agreement and across 
              contracts
    ``(a) In General.--Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified in 
section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment amounts 
or other transfer obligations arising under or in connection with 1 or 
more (or the termination, liquidation, or acceleration of 1 or more)--
            ``(1) securities contracts, as defined in section 741(7);
            ``(2) commodity contracts, as defined in section 761(4);
            ``(3) forward contracts;
            ``(4) repurchase agreements;
            ``(5) swap agreements; or
            ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
    ``(b) Exception.--
            ``(1) A party may exercise a contractual right described in 
        subsection (a) to terminate, liquidate, or accelerate only to 
        the extent that such party could exercise such a right under 
        section 555, 556, 559, or 560 for each individual contract 
        covered by the master netting agreement in issue.
            ``(2) If a debtor is a commodity broker subject to 
        subchapter IV of chapter 7--
                    ``(A) a party may not net or offset an obligation 
                to the debtor arising under, or in connection with, a 
                commodity contract against any claim arising under, or 
                in connection with, other instruments, contracts, or 
                agreements listed in subsection (a), except to the 
                extent the party has positive net equity in the 
                commodity accounts at the debtor, as calculated under 
                such subchapter; and
                    ``(B) another commodity broker may not net or 
                offset an obligation to the debtor arising under, or in 
                connection with, a commodity contract entered into or 
                held on behalf of a customer of the debtor against any 
                claim arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
    ``(c) Rule of Application.--Subparagraphs (A) and (B) of subsection 
(b)(2) shall not be construed as prohibiting the offset of claims and 
obligations arising pursuant to--
            ``(1) a cross-margining arrangement that has been approved 
        by the Commodity Futures Trading Commission or that has been 
        submitted to such Commission pursuant to section 5a(a)(12) of 
        the Commodity Exchange Act and has been permitted to go into 
        effect; or
            ``(2) another netting arrangement, between a clearing 
        organization (as defined in section 761) and another entity, 
        that has been approved by the Commodity Futures Trading 
        Commission.
    ``(d) Definition.--As used in this section, the term `contractual 
right' includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a securities 
clearing agency, a right set forth in a bylaw of a clearing 
organization or contract market or in a resolution of the governing 
board thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of normal 
business practice.''.
    (2) Conforming amendment.--The table of sections of chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
                            under a master netting agreement and across 
                            contracts.''.
    (l) Municipal Bankruptcies.--Section 901(a) of title 11, United 
States Code, is amended--
            (1) by inserting ``555, 556,'' after ``553,''; and
            (2) by inserting ``559, 560, 561, 562,'' after ``557,''.
    (m) Ancillary Proceedings.--Section 304 of title 11, United States 
Code, is amended by adding at the end the following new subsection:
    ``(d) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master netting agreements shall apply 
in a case ancillary to a foreign proceeding under this section or any 
other section of this title so that enforcement of contractual 
provisions of such contracts and agreements in accordance with their 
terms will not be stayed or otherwise limited by operation of any 
provision of this title or by order of a court in any proceeding under 
this title, and to limit avoidance powers to the same extent as in a 
proceeding under chapter 7 or 11 (such enforcement not to be limited 
based on the presence or absence of assets of the debtor in the United 
States).''.
    (n) Commodity Broker Liquidations.--Title 11, United States Code, 
is amended by inserting after section 766 the following:
``Sec. 767. Commodity broker liquidation and forward contract 
              merchants, commodity brokers, stockbrokers, financial 
              institutions, financial participants, securities clearing 
              agencies, swap participants, repo participants, and 
              master netting agreement participants
    ``Notwithstanding any other provision of this title, the exercise 
of rights by a forward contract merchant, commodity broker, 
stockbroker, financial institution, financial participant, securities 
clearing agency, swap participant, repo participant, or master netting 
agreement participant under this title shall not affect the priority of 
any unsecured claim it may have after the exercise of such rights.''.
    (o) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:
``Sec. 753. Stockbroker liquidation and forward contract merchants, 
              commodity brokers, stockbrokers, financial institutions, 
              financial participants, securities clearing agencies, 
              swap participants, repo participants, and master netting 
              agreement participants
    ``Notwithstanding any other provision of this title, the exercise 
of rights by a forward contract merchant, commodity broker, 
stockbroker, financial institution, securities clearing agency, swap 
participant, repo participant, financial participant, or master netting 
agreement participant under this title shall not affect the priority of 
any unsecured claim it may have after the exercise of such rights.''.
    (p) Setoff.--Section 553 of title 11, United States Code, is 
amended--
            (1) in subsection (a)(3)(C), by inserting ``(except for a 
        setoff of a kind described in section 362(b)(6), 362(b)(7), 
        362(b)(17), 362(b)(32), 555, 556, 559, 560 or 561)'' before the 
        period; and
            (2) in subsection (b)(1), by striking ``362(b)(14)'' and 
        inserting ``362(b)(17), 362(b)(32), 555, 556, 559, 560, 561''.
    (q) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
            (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant'';
            (2) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
            (3) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
            (4) in section 555--
                    (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                    (B) by inserting before the period at the end ``, a 
                right set forth in a bylaw of a clearing organization 
                or contract market or in a resolution of the governing 
                board thereof, and a right, whether or not in writing, 
                arising under common law, under law merchant, or by 
                reason of normal business practice''; and
            (5) in section 556, by inserting ``, financial 
        participant'' after ``commodity broker''.
    (r) Conforming Amendments.--Title 11, United States Code, is 
amended--
            (1) in the table of sections of chapter 5--
                    (A) by amending the items relating to sections 555 
                and 556 to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
                            securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
                            commodities contract or forward 
                            contract.'';
                and
                    (B) by amending the items relating to sections 559 
                and 560 to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
                            repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
                            agreement.'';
                and
            (2) in the table of sections of chapter 7--
                    (A) by inserting after the item relating to section 
                766 the following:

``767. Commodity broker liquidation and forward contract merchants, 
                            commodity brokers, stockbrokers, financial 
                            institutions, financial participants, 
                            securities clearing agencies, swap 
                            participants, repo participants, and master 
                            netting agreement participants.'';
                and
                    (B) by inserting after the item relating to section 
                752 the following:

``753. Stockbroker liquidation and forward contract merchants, 
                            commodity brokers, stockbrokers, financial 
                            institutions, financial participants, 
                            securities clearing agencies, swap 
                            participants, repo participants, and master 
                            netting agreement participants.''.

SEC. 9. RECORDKEEPING REQUIREMENTS.

    Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping with respect to qualified 
                financial contracts (including market valuations) by 
                insured depository institutions.''.

SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.

    Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(e)(2)) is amended to read as follows:
            ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                    ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                    ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                    ``(C) extensions of credit, including any 
                overdraft, from a Federal reserve bank or Federal home 
                loan bank; or
                    ``(D) 1 or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 11. DAMAGE MEASURE.

    (a) In General.--Title 11, United States Code, is amended--
            (1) by inserting after section 561 the following:
``Sec. 562. Damage measure in connection with swap agreements, 
              securities contracts, forward contracts, commodity 
              contracts, repurchase agreements, or master netting 
              agreements
    ``If the trustee rejects a swap agreement, securities contract as 
defined in section 741, forward contract, commodity contract (as 
defined in section 761) repurchase agreement, or master netting 
agreement pursuant to section 365(a), or if a forward contract 
merchant, stockbroker, financial institution, securities clearing 
agency, repo participant, financial participant, master netting 
agreement participant, or swap participant liquidates, terminates, or 
accelerates such contract or agreement, damages shall be measured as of 
the earlier of--
            ``(1) the date of such rejection; or
            ``(2) the date of such liquidation, termination, or 
        acceleration.''; and
            (2) in the table of sections of chapter 5 by inserting 
        after the item relating to section 561 the following:

``562. Damage measure in connection with swap agreements, securities 
                            contracts, forward contracts, commodity 
                            contracts, repurchase agreements, or master 
                            netting agreements.''.
    (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
            (1) by designating the existing text as paragraph (1); and
            (2) by adding at the end the following:
    ``(2) A claim for damages calculated in accordance with section 562 
shall be allowed under subsection (a), (b), or (c), or disallowed under 
subsection (d) or (e), as if such claim had arisen before the date of 
the filing of the petition.''.

SEC. 12. SIPC STAY.

    Section 5(b)(2) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78eee(b)(2)) is amended by adding after subparagraph (B) the 
following new subparagraph:
                    ``(C) Exception from stay.--
                            ``(i) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by the Securities 
                        Investor Protection Corporation from the court 
                        shall operate as a stay of any contractual 
                        rights of a creditor to liquidate, terminate, 
                        or accelerate a securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master netting 
                        agreement, each as defined in title 11 United 
                        States Code, to offset or net termination 
                        values, payment amounts, or other transfer 
                        obligations arising under or in connection with 
                        1 or more of such contracts or agreements, or 
                        to foreclose on any cash collateral pledged by 
                        the debtor whether or not with respect to 1 or 
                        more of such contracts or agreements.
                            ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on or disposition of 
                        securities collateral pledged by the debtor, 
                        whether or not with respect to 1 or more of 
                        such contracts or agreements, securities sold 
                        by the debtor under a repurchase agreement or 
                        securities lent under a securities lending 
                        agreement.
                            ``(iii) As used in this section, the term 
                        `contractual right' includes a right set forth 
                        in a rule or bylaw of a national securities 
                        exchange, a national securities association, or 
                        a securities clearing agency, a right set forth 
                        in a bylaw of a clearing organization or 
                        contract market or in a resolution of the 
                        governing board thereof, and a right, whether 
                        or not in writing, arising under common law, 
                        under law merchant, or by reason of normal 
                        business practice.''.

SEC. 13. ASSET-BACKED SECURITIZATIONS.

    Section 541 of title 11, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by striking ``or'' at the end of paragraph 
                (4)(B)(ii);
                    (B) by redesignating paragraph (5) as paragraph 
                (6); and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) any eligible asset (or proceeds thereof), to the 
        extent that such eligible asset was transferred by the debtor 
        before the date of commencement of the case, to an eligible 
        entity in connection with an asset-backed securitization, 
        except to the extent such asset (or proceeds or value thereof) 
        may be recovered by the trustee under section 550 by virtue of 
        avoidance under section 548(a)(1); or''; and
            (2) by adding at the end the following new subsection:
    ``(e) For purposes of this section, the following definitions shall 
apply:
            ``(1) the term `asset-backed securitization' means a 
        transaction in which eligible assets transferred to an eligible 
        entity are used as the source of payment on securities, 
        including all securities issued by governmental units, at least 
        1 class or tranche of which is rated investment grade by 1 or 
        more nationally recognized securities rating organizations, 
        when the securities are initially issued by an issuer;
            ``(2) the term `eligible asset' means--
                    ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                whether or not such assets are in existence as of the 
                date of the transfer, including residential and 
                commercial mortgage loans, consumer receivables, trade 
                receivables, assets of governmental units (including 
                payment obligations relating to taxes, receipts, fines, 
                tickets, and other sources of revenue), and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any residual interest 
                in property subject to receivables included in such 
                financial assets plus any rights or other assets 
                designed to assure the servicing or timely distribution 
                of proceeds to security holders;
                    ``(B) cash; and
                    ``(C) securities, including all securities issued 
                by governmental units.
            ``(3) the term `eligible entity' means--
                    ``(A) an issuer; or
                    ``(B) a trust, corporation, partnership, 
                governmental unit, limited liability company (including 
                a single member limited liability company), or other 
                entity engaged exclusively in the business of acquiring 
                and transferring eligible assets directly or indirectly 
                to an issuer and taking actions ancillary thereto;
            ``(4) the term `issuer' means a trust, corporation, 
        partnership, governmental unit, limited liability company 
        (including a single member limited liability company), or other 
        entity engaged exclusively in the business of acquiring and 
        holding eligible assets, issuing securities backed by eligible 
        assets, and taking actions ancillary thereto; and
            ``(5) the term `transferred' means the debtor, pursuant to 
        a written agreement, represented and warranted that eligible 
        assets were sold, contributed, or otherwise conveyed with the 
        intention of removing them from the estate of the debtor 
        pursuant to subsection (b)(5) (whether or not reference is made 
        to this title or any section of this title), irrespective, 
        without limitation, of--
                    ``(A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or in any 
                securities issued by the issuer;
                    ``(B) whether the debtor had an obligation to 
                repurchase or to service or supervise the servicing of 
                all or any portion of such eligible assets; or
                    ``(C) the characterization of such sale, 
                contribution, or other conveyance for tax, accounting, 
                regulatory reporting, or other purposes.''.

SEC. 14. APPLICATION OF AMENDMENTS.

    The amendments made by this Act shall apply with respect to cases 
commenced or appointments made under any Federal or State law after the 
date of the enactment of this Act, but shall not apply with respect to 
cases commenced or appointments made under any Federal or State law 
before the date of the enactment of this Act.
                                 <all>
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