I

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.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Financial Contract

5 Netting Improvement Act of 2001’’.
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1 SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON2 SERVATORS OR RECEIVERS OF INSURED DE3 POSITORY INSTITUTIONS.

4 (a) DEFINITION OF QUALIFIED FINANCIAL CON5 TRACT.—Section 11(e)(8)(D)(i) of the Federal Deposit In6 surance Act (12 U.S.C. 1821(e)(8)(D)(i)) is amended by

7 inserting ‘‘, resolution or order’’ after ‘‘any similar agree8 ment that the Corporation determines by regulation’’.

9 (b) DEFINITION OF SECURITIES CONTRACT.—Sec10 tion 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act

11 (12 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as fol12 lows:

13 ‘‘(ii) SECURITIES CONTRACT.—The

14 term ‘securities contract’—

15 ‘‘(I) means a contract for the

16 purchase, sale, or loan of a security, a

17 certificate of deposit, a mortgage loan,

18 or any interest in a mortgage loan, a

19 group or index of securities, certifi20 cates of deposit, or mortgage loans or

21 interests therein (including any inter22 est therein or based on the value

23 thereof) or any option on any of the

24 foregoing, including any option to

25 purchase or sell any such security,
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1 certificate of deposit, loan, interest,

2 group or index, or option;

3 ‘‘(II) does not include any pur4 chase, sale, or repurchase obligation

5 under a participation in a commercial

6 mortgage loan unless the Corporation

7 determines by regulation, resolution,

8 or order to include any such agree9 ment within the meaning of such

10 term;

11 ‘‘(III) means any option entered

12 into on a national securities exchange

13 relating to foreign currencies;

14 ‘‘(IV) means the guarantee by or

15 to any securities clearing agency of

16 any settlement of cash, securities, cer17 tificates of deposit, mortgage loans or

18 interests therein, group or index of se19 curities, certificates of deposit, or

20 mortgage loans or interests therein

21 (including any interest therein or

22 based on the value thereof) or option

23 on any of the foregoing, including any

24 option to purchase or sell any such se-
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1 curity, certificate of deposit, loan, in2 terest, group or index, or option;

3 ‘‘(V) means any margin loan;

4 ‘‘(VI) means any other agree5 ment or transaction that is similar to

6 any agreement or transaction referred

7 to in this clause;

8 ‘‘(VII) means any combination of

9 the agreements or transactions re10 ferred to in this clause;

11 ‘‘(VIII) means any option to

12 enter into any agreement or trans13 action referred to in this clause;

14 ‘‘(IX) means a master agreement

15 that provides for an agreement or

16 transaction referred to in subclause

17 (I), (III), (IV), (V), (VI), (VII), or

18 (VIII), together with all supplements

19 to any such master agreement, with20 out regard to whether the master

21 agreement provides for an agreement

22 or transaction that is not a securities

23 contract under this clause, except that

24 the master agreement shall be consid25 ered to be a securities contract under
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1 this clause only with respect to each

2 agreement or transaction under the

3 master agreement that is referred to

4 in subclause (I), (III), (IV), (V), (VI),

5 (VII), or (VIII); and

6 ‘‘(X) means any security agree7 ment or arrangement or other credit

8 enhancement related to any agree9 ment or transaction referred to in this

10 clause.’’.

11 (c) DEFINITION OF COMMODITY CONTRACT.—Sec12 tion 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act

13 (12 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as fol14 lows:

15 ‘‘(iii) COMMODITY CONTRACT.—The

16 term ‘commodity contract’ means—

17 ‘‘(I) with respect to a futures

18 commission merchant, a contract for

19 the purchase or sale of a commodity

20 for future delivery on, or subject to

21 the rules of, a contract market or

22 board of trade;

23 ‘‘(II) with respect to a foreign fu24 tures commission merchant, a foreign

25 future;
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1 ‘‘(III) with respect to a leverage

2 transaction merchant, a leverage

3 transaction;

4 ‘‘(IV) with respect to a clearing

5 organization, a contract for the pur6 chase or sale of a commodity for fu7 ture delivery on, or subject to the

8 rules of, a contract market or board

9 of trade that is cleared by such clear10 ing organization, or commodity option

11 traded on, or subject to the rules of,

12 a contract market or board of trade

13 that is cleared by such clearing orga14 nization;

15 ‘‘(V) with respect to a commodity

16 options dealer, a commodity option;

17 ‘‘(VI) any other agreement or

18 transaction that is similar to any

19 agreement or transaction referred to

20 in this clause;

21 ‘‘(VII) any combination of the

22 agreements or transactions referred to

23 in this clause;
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1 ‘‘(VIII) any option to enter into

2 any agreement or transaction referred

3 to in this clause;

4 ‘‘(IX) a master agreement that

5 provides for an agreement or trans6 action referred to in subclause (I),

7 (II), (III), (IV), (V), (VI), (VII), or

8 (VIII), together with all supplements

9 to any such master agreement, with10 out regard to whether the master

11 agreement provides for an agreement

12 or transaction that is not a com13 modity contract under this clause, ex14 cept that the master agreement shall

15 be considered to be a commodity con16 tract under this clause only with re17 spect to each agreement or trans18 action under the master agreement

19 that is referred to in subclause (I),

20 (II), (III), (IV), (V), (VI), (VII), or

21 (VIII); or

22 ‘‘(X) any security agreement or

23 arrangement or other credit enhance24 ment related to any agreement or
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1 transaction referred to in this

2 clause.’’.

3 (d) DEFINITION OF FORWARD CONTRACT.—Section

4 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12

5 U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:

6 ‘‘(iv) FORWARD CONTRACT.—The

7 term ‘forward contract’ means—

8 ‘‘(I) a contract (other than a

9 commodity contract) for the purchase,

10 sale, or transfer of a commodity or

11 any similar good, article, service,

12 right, or interest which is presently or

13 in the future becomes the subject of

14 dealing in the forward contract trade,

15 or product or byproduct thereof, with

16 a maturity date more than 2 days

17 after the date the contract is entered

18 into, including a repurchase trans19 action, reverse repurchase transaction,

20 consignment, lease, swap, hedge

21 transaction, deposit, loan, option, allo22 cated transaction, unallocated trans23 action, or any other similar agree24 ment;
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1 ‘‘(II) any combination of agree2 ments or transactions referred to in

3 subclauses (I) and (III);

4 ‘‘(III) any option to enter into

5 any agreement or transaction referred

6 to in subclause (I) or (II);

7 ‘‘(IV) a master agreement that

8 provides for an agreement or trans9 action referred to in subclause (I),

10 (II), or (III), together with all supple11 ments to any such master agreement,

12 without regard to whether the master

13 agreement provides for an agreement

14 or transaction that is not a forward

15 contract under this clause, except that

16 the master agreement shall be consid17 ered to be a forward contract under

18 this clause only with respect to each

19 agreement or transaction under the

20 master agreement that is referred to

21 in subclause (I), (II), or (III); or

22 ‘‘(V) any security agreement or

23 arrangement or other credit enhance24 ment related to any agreement or
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1 transaction referred to in subclause

2 (I), (II), (III), or (IV).’’.

3 (e) DEFINITION OF REPURCHASE AGREEMENT.—

4 Section 11(e)(8)(D)(v) of the Federal Deposit Insurance

5 Act (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as

6 follows:

7 ‘‘(v) REPURCHASE AGREEMENT.—The

8 term ‘repurchase agreement’ (which defini9 tion also applies to the term ‘reverse repur10 chase agreement’)—

11 ‘‘(I) means an agreement, includ12 ing related terms, which provides for

13 the transfer of 1 or more certificates

14 of deposit, mortgage-related securities

15 (as such term is defined in the Securi16 ties Exchange Act of 1934), mortgage

17 loans, interests in mortgage-related

18 securities or mortgage loans, eligible

19 bankers’ acceptances, qualified foreign

20 government securities or securities

21 that are direct obligations of, or that

22 are fully guaranteed by, the United

23 States or any agency of the United

24 States against the transfer of funds

25 by the transferee of such certificates
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1 of deposit, eligible bankers’ accept2 ances, securities, loans, or interests

3 with a simultaneous agreement by

4 such transferee to transfer to the

5 transferor thereof certificates of de6 posit, eligible bankers’ acceptances,

7 securities, loans, or interests as de8 scribed above, at a date certain not

9 later than 1 year after such transfers

10 or on demand, against the transfer of

11 funds, or any other similar agreement;

12 ‘‘(II) does not include any repur13 chase obligation under a participation

14 in a commercial mortgage loan unless

15 the Corporation determines by regula16 tion, resolution, or order to include

17 any such participation within the

18 meaning of such term;

19 ‘‘(III) means any combination of

20 agreements or transactions referred to

21 in subclauses (I) and (IV);

22 ‘‘(IV) means any option to enter

23 into any agreement or transaction re24 ferred to in subclause (I) or (III);
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1 ‘‘(V) means a master agreement

2 that provides for an agreement or

3 transaction referred to in subclause

4 (I), (III), or (IV), together with all

5 supplements to any such master

6 agreement, without regard to whether

7 the master agreement provides for an

8 agreement or transaction that is not a

9 repurchase agreement under this

10 clause, except that the master agree11 ment shall be considered to be a re12 purchase agreement under this sub13 clause only with respect to each agree14 ment or transaction under the master

15 agreement that is referred to in sub16 clause (I), (III), or (IV); and

17 ‘‘(VI) means any security agree18 ment or arrangement or other credit

19 enhancement related to any agree20 ment or transaction referred to in

21 subclause (I), (III), (IV), or (V).

22 For purposes of this clause, the term

23 ‘qualified foreign government security’

24 means a security that is a direct obligation

25 of, or that is fully guaranteed by, the cen-
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1 tral government of a member of the Orga2 nization for Economic Cooperation and

3 Development (as determined by regulation

4 or order adopted by the appropriate Fed5 eral banking authority).’’.

6 (f) DEFINITION OF SWAP AGREEMENT.—Section

7 11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12

8 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows:

9 ‘‘(vi) SWAP AGREEMENT.—The term

10 ‘swap agreement’ means—

11 ‘‘(I) any agreement, including the

12 terms and conditions incorporated by

13 reference in any such agreement,

14 which is an interest rate swap, option,

15 future, or forward agreement, includ16 ing a rate floor, rate cap, rate collar,

17 cross-currency rate swap, and basis

18 swap; a spot, same day-tomorrow, to19 morrow-next, forward, or other for20 eign exchange or precious metals

21 agreement; a currency swap, option,

22 future, or forward agreement; an eq23 uity index or equity swap, option, fu24 ture, or forward agreement; a debt

25 index or debt swap, option, future, or
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1 forward agreement; a credit spread or

2 credit swap, option, future, or forward

3 agreement; a commodity index or

4 commodity swap, option, future, or

5 forward agreement; or a weather

6 swap, weather derivative, or a weather

7 option;

8 ‘‘(II) any agreement or trans9 action similar to any other agreement

10 or transaction referred to in this

11 clause that is presently, or in the fu12 ture becomes, regularly entered into

13 in the swap market (including terms

14 and conditions incorporated by ref15 erence in such agreement) and that is

16 a forward, swap, future, or option on

17 1 or more rates, currencies, commod18 ities, equity securities or other equity

19 instruments, debt securities or other

20 debt instruments, or economic indices

21 or measures of economic risk or value;

22 ‘‘(III) any combination of agree23 ments or transactions referred to in

24 this clause;
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1 ‘‘(IV) any option to enter into

2 any agreement or transaction referred

3 to in this clause;

4 ‘‘(V) a master agreement that

5 provides for an agreement or trans6 action referred to in subclause (I),

7 (II), (III), or (IV), together with all

8 supplements to any such master

9 agreement, without regard to whether

10 the master agreement contains an

11 agreement or transaction that is not a

12 swap agreement under this clause, ex13 cept that the master agreement shall

14 be considered to be a swap agreement

15 under this clause only with respect to

16 each agreement or transaction under

17 the master agreement that is referred

18 to in subclause (I), (II), (III), or (IV);

19 and

20 ‘‘(VI) any security agreement or

21 arrangement or other credit enhance22 ment related to any agreements or

23 transactions referred to in subpara24 graph (I), (II), (III), (IV), or (V).
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1 Such term is applicable for purposes of

2 this title only and shall not be construed or

3 applied so as to challenge or affect the

4 characterization, definition, or treatment of

5 any swap agreement under any other stat6 ute, regulation, or rule, including the Secu7 rities Act of 1933, the Securities Exchange

8 Act of 1934, the Public Utility Holding

9 Company Act of 1935, the Trust Indenture

10 Act of 1939, the Investment Company Act

11 of 1940, the Investment Advisers Act of

12 1940, the Securities Investor Protection

13 Act of 1970, the Commodity Exchange

14 Act, and the regulations promulgated by

15 the Securities and Exchange Commission

16 or the Commodity Futures Trading Com17 mission.’’.

18 (g) DEFINITION OF TRANSFER.—Section

19 11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12

20 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows:

21 ‘‘(viii) TRANSFER.—The term ‘trans22 fer’ means every mode, direct or indirect,

23 absolute or conditional, voluntary or invol24 untary, of disposing of or parting with

25 property or with an interest in property,
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1 including retention of title as a security in2 terest and foreclosure of the depository

3 institutions’s equity of redemption.’’.

4 (h) TREATMENT OF QUALIFIED FINANCIAL CON5 TRACTS.—Section 11(e)(8) of the Federal Deposit Insur6 ance Act (12 U.S.C. 1821(e)(8)) is amended—

7 (1) in subparagraph (A), by striking ‘‘para8 graph (10)’’ and inserting ‘‘paragraphs (9) and

9 (10)’’;

10 (2) in subparagraph (A)(i), by striking ‘‘to

11 cause the termination or liquidation’’ and inserting

12 ‘‘such person has to cause the termination, liquida13 tion, or acceleration’’;

14 (3) by amending subparagraph (A)(ii) to read

15 as follows:

16 ‘‘(ii) any right under any security

17 agreement or arrangement or other credit

18 enhancement related to 1 or more qualified

19 financial contracts described in clause

20 (i);’’; and

21 (4) by amending subparagraph (E)(ii) to read

22 as follows:

23 ‘‘(ii) any right under any security

24 agreement or arrangement or other credit

25 enhancement related to 1 or more qualified
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1 financial contracts described in clause

2 (i);’’.

3 (i) AVOIDANCE OF TRANSFERS.—Section

4 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12

5 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section

6 5242 of the Revised Statutes of the United States (12

7 U.S.C. 91) or any other Federal or State law relating to

8 the avoidance of preferential or fraudulent transfers,’’ be9 fore ‘‘the Corporation’’.

10 SEC. 3. AUTHORITY OF THE CORPORATION WITH RESPECT

11 TO FAILED AND FAILING INSTITUTIONS.

12 (a) IN GENERAL.—Section 11(e)(8) of the Federal

13 Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is

14 amended—

15 (1) in subparagraph (E), by striking ‘‘other

16 than paragraph (12) of this subsection, subsection

17 (d)(9)’’ and inserting ‘‘other than subsections (d)(9)

18 and (e)(10)’’; and

19 (2) by adding at the end the following new sub20 paragraphs:

21 ‘‘(F) CLARIFICATION.—No provision of law

22 shall be construed as limiting the right or

23 power of the Corporation, or authorizing any

24 court or agency to limit or delay, in any man25 ner, the right or power of the Corporation to
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1 transfer any qualified financial contract in ac2 cordance with paragraphs (9) and (10) of this

3 subsection or to disaffirm or repudiate any such

4 contract in accordance with paragraph (1).

5 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC6 TIVE.—

7 ‘‘(i) IN GENERAL.—Notwithstanding

8 the provisions of subparagraphs (A) and

9 (E), and sections 403 and 404 of the Fed10 eral Deposit Insurance Corporation Im11 provement Act of 1991, no walkaway

12 clause shall be enforceable in a qualified fi13 nancial contract of an insured depository

14 institution in default.

15 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

16 For purposes of this subparagraph, the

17 term ‘walkaway clause’ means a provision

18 in a qualified financial contract that, after

19 calculation of a value of a party’s position

20 or an amount due to or from 1 of the par21 ties in accordance with its terms upon ter22 mination, liquidation, or acceleration of the

23 qualified financial contract, either does not

24 create a payment obligation of a party or

25 extinguishes a payment obligation of a
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1 party in whole or in part solely because of

2 such party’s status as a nondefaulting

3 party.’’.

4 (b) TECHNICAL AND CONFORMING AMENDMENT.—

5 Section 11(e)(12)(A) of the Federal Deposit Insurance

6 Act (12 U.S.C. 1821(e)(12)(A)) is amended by inserting

7 ‘‘or the exercise of rights or powers’’ after ‘‘the appoint8 ment’’.

9 SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALI10 FIED FINANCIAL CONTRACTS.

11 (a) TRANSFERS OF QUALIFIED FINANCIAL CON12 TRACTS TO FINANCIAL INSTITUTIONS.—Section 11(e)(9)

13 of the Federal Deposit Insurance Act (12 U.S.C.

14 1821(e)(9)) is amended to read as follows:

15 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON16 TRACTS.—

17 ‘‘(A) IN GENERAL.—In making any trans18 fer of assets or liabilities of a depository institu19 tion in default which includes any qualified fi20 nancial contract, the conservator or receiver for

21 such depository institution shall either—

22 ‘‘(i) transfer to 1 financial institution,

23 other than a financial institution for which

24 a conservator, receiver, trustee in bank25 ruptcy, or other legal custodian has been
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1 appointed or which is otherwise the subject

2 of a bankruptcy or insolvency proceeding—

3 ‘‘(I) all qualified financial con4 tracts between any person or any af5 filiate of such person and the deposi6 tory institution in default;

7 ‘‘(II) all claims of such person or

8 any affiliate of such person against

9 such depository institution under any

10 such contract (other than any claim

11 which, under the terms of any such

12 contract, is subordinated to the claims

13 of general unsecured creditors of such

14 institution);

15 ‘‘(III) all claims of such deposi16 tory institution against such person or

17 any affiliate of such person under any

18 such contract; and

19 ‘‘(IV) all property securing or

20 any other credit enhancement for any

21 contract described in subclause (I) or

22 any claim described in subclause (II)

23 or (III) under any such contract; or

24 ‘‘(ii) transfer none of the qualified fi25 nancial contracts, claims, property or other
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1 credit enhancement referred to in clause (i)

2 (with respect to such person and any affil3 iate of such person).

4 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR5 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

6 AGENCY OF A FOREIGN BANK OR FINANCIAL IN7 STITUTION.—In transferring any qualified fi8 nancial contracts and related claims and prop9 erty pursuant to subparagraph (A)(i), the con10 servator or receiver for such depository institu11 tion shall not make such transfer to a foreign

12 bank, financial institution organized under the

13 laws of a foreign country, or a branch or agency

14 of a foreign bank or financial institution unless,

15 under the law applicable to such bank, financial

16 institution, branch or agency, to the qualified

17 financial contracts, and to any netting contract,

18 any security agreement or arrangement or other

19 credit enhancement related to 1 or more quali20 fied financial contracts, the contractual rights

21 of the parties to such qualified financial con22 tracts, netting contracts, security agreements or

23 arrangements, or other credit enhancements are

24 enforceable substantially to the same extent as

25 permitted under this section.
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1 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

2 TO THE RULES OF A CLEARING ORGANIZA3 TION.—In the event that a conservator or re4 ceiver transfers any qualified financial contract

5 and related claims, property and credit en6 hancements pursuant to subparagraph (A)(i)

7 and such contract is subject to the rules of a

8 clearing organization, the clearing organization

9 shall not be required to accept the transferee as

10 a member by virtue of the transfer.

11 ‘‘(D) DEFINITION.—For purposes of this

12 section, the term ‘financial institution’ means a

13 broker or dealer, a depository institution, a fu14 tures commission merchant, or any other insti15 tution as determined by the Corporation by reg16 ulation to be a financial institution.’’.

17 (b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

18 COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal

19 Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is

20 amended by amending the flush material following clause

21 (ii) to read as follows: ‘‘the conservator or receiver shall

22 notify any person who is a party to any such contract of

23 such transfer by 5:00 p.m. (eastern time) on the business

24 day following the date of the appointment of the receiver,
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1 in the case of a receivership, or the business day following

2 such transfer, in the case of a conservatorship.’’.

3 (c) RIGHTS AGAINST RECEIVER AND TREATMENT OF

4 BRIDGE BANKS.—Section 11(e)(10) of the Federal De5 posit Insurance Act (12 U.S.C. 1821(e)(10)) is further

6 amended—

7 (1) by redesignating subparagraph (B) as sub8 paragraph (D); and

9 (2) by inserting after subparagraph (A) the fol10 lowing new subparagraphs:

11 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE12 ABLE.—

13 ‘‘(i) RECEIVERSHIP.—A person who is

14 a party to a qualified financial contract

15 with an insured depository institution may

16 not exercise any right such person has to

17 terminate, liquidate, or net such contract

18 under paragraph (8)(A) or section 403 or

19 404 of the Federal Deposit Insurance Cor20 poration Improvement Act of 1991 solely

21 by reason of or incidental to the appoint22 ment of a receiver for the depository insti23 tution (or the insolvency or financial condi24 tion of the depository institution for which

25 the receiver has been appointed)—
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1 ‘‘(I) until 5:00 p.m. (eastern

2 time) on the business day following

3 the date of the appointment of the re4 ceiver; or

5 ‘‘(II) after the person has re6 ceived notice that the contract has

7 been transferred pursuant to para8 graph (9)(A).

9 ‘‘(ii) CONSERVATORSHIP.—A person

10 who is a party to a qualified financial con11 tract with an insured depository institution

12 may not exercise any right such person has

13 to terminate, liquidate, or net such con14 tract under paragraph (8)(E) or section

15 403 or 404 of the Federal Deposit Insur16 ance Corporation Improvement Act of

17 1991, solely by reason of or incidental to

18 the appointment of a conservator for the

19 depository institution (or the insolvency or

20 financial condition of the depository insti21 tution for which the conservator has been

22 appointed).

23 ‘‘(iii) NOTICE.—For purposes of this

24 subsection, the Corporation as receiver or

25 conservator of an insured depository insti-
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1 tution shall be deemed to have notified a

2 person who is a party to a qualified finan3 cial contract with such depository institu4 tion if the Corporation has taken steps

5 reasonably calculated to provide notice to

6 such person by the time specified in sub7 paragraph (A) of this subsection.

8 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

9 The following institutions shall not be consid10 ered a financial institution for which a conser11 vator, receiver, trustee in bankruptcy, or other

12 legal custodian has been appointed or which is

13 otherwise the subject of a bankruptcy or insol14 vency proceeding for purposes of paragraph

15 (9)—

16 ‘‘(i) a bridge bank; or

17 ‘‘(ii) a depository institution organized

18 by the Corporation, for which a conser19 vator is appointed either—

20 ‘‘(I) immediately upon the orga21 nization of the institution; or

22 ‘‘(II) at the time of a purchase

23 and assumption transaction between

24 such institution and the Corporation
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1 as receiver for a depository institution

2 in default.’’.

3 SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR

4 REPUDIATION OF QUALIFIED FINANCIAL

5 CONTRACTS.

6 (a) IN GENERAL.—Section 11(e) of the Federal De7 posit Insurance Act (12 U.S.C. 1821(e)) is further

8 amended—

9 (1) by redesignating paragraphs (11) through

10 (15) as paragraphs (12) through (16), respectively;

11 and

12 (2) by inserting after paragraph (10) the fol13 lowing new paragraph:

14 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

15 QUALIFIED FINANCIAL CONTRACTS.—In exercising

16 the rights of disaffirmance or repudiation of a con17 servator or receiver with respect to any qualified fi18 nancial contract to which an insured depository in19 stitution is a party, the conservator or receiver for

20 such institution shall either—

21 ‘‘(A) disaffirm or repudiate all qualified fi22 nancial contracts between—

23 ‘‘(i) any person or any affiliate of

24 such person; and
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1 ‘‘(ii) the depository institution in de2 fault; or

3 ‘‘(B) disaffirm or repudiate none of the

4 qualified financial contracts referred to in sub5 paragraph (A) (with respect to such person or

6 any affiliate of such person).’’.

7 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

8 Section 11(e)(8) of the Federal Deposit Insurance Act (12

9 U.S.C. 1821(e)(8)), as amended by section 2(i), is further

10 amended in subparagraph (C)(i), by striking ‘‘(11)’’ and

11 inserting ‘‘(12)’’.

12 SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER

13 AGREEMENTS.

14 Section 11(e)(8)(D)(vii) of the Federal Deposit In15 surance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to

16 read as follows:

17 ‘‘(vii) TREATMENT OF MASTER

18 AGREEMENT AS 1 AGREEMENT.—Any mas19 ter agreement for any contract or agree20 ment described in any preceding clause of

21 this subparagraph (or any master agree22 ment for such master agreement or agree23 ments), together with all supplements to

24 such master agreement, shall be treated as

25 a single agreement and a single qualified
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1 financial contract. If a master agreement

2 contains provisions relating to agreements

3 or transactions that are not themselves

4 qualified financial contracts, the master

5 agreement shall be deemed to be a quali6 fied financial contract only with respect to

7 those transactions that are themselves

8 qualified financial contracts.’’.

9 SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IM10 PROVEMENT ACT OF 1991.

11 (a) DEFINITIONS.—Section 402 of the Federal De12 posit Insurance Corporation Improvement Act of 1991 (12

13 U.S.C. 4402) is amended—

14 (1) in paragraph (2)—

15 (A) by inserting ‘‘or exempt from such reg16 istration pursuant to an order of the Securities

17 and Exchange Commission’’ before the semi18 colon at the end of subparagraph (A)(ii); and

19 (B) by inserting ‘‘or that has been granted

20 an exemption pursuant to section 4(c)(1) of

21 such Act’’ before the period at the end of sub22 paragraph (B);

23 (2) in paragraph (6)—
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1 (A) by redesignating subparagraphs (B)

2 through (D) as subparagraphs (C) through (E),

3 respectively;

4 (B) by inserting after subparagraph (A)

5 the following new subparagraph:

6 ‘‘(B) an uninsured national bank or an un7 insured State bank that is a member of the

8 Federal Reserve System if the national bank or

9 State member bank is not eligible to make ap10 plication to become an insured bank under sec11 tion 5 of the Federal Deposit Insurance Act;’’;

12 and

13 (C) by amending subparagraph (C) (as re14 designated) to read as follows:

15 ‘‘(C) a branch or agency of a foreign bank,

16 a foreign bank and any branch or agency of the

17 foreign bank, or the foreign bank that estab18 lished the branch or agency, as those terms are

19 defined in section 1(b) of the International

20 Banking Act of 1978;’’;

21 (3) in paragraph (11), by adding before the pe22 riod ‘‘and any other clearing organization with which

23 such clearing organization has a netting contract’’;

24 (4) by amending paragraph (14)(A)(i) to read

25 as follows:
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1 ‘‘(i) means a contract or agreement

2 between two or more financial institutions,

3 clearing organizations, or members that

4 provides for netting present or future pay5 ment obligations or payment entitlements

6 (including liquidation or closeout values re7 lating to such obligations or entitlements)

8 among the parties to the agreement; and’’;

9 and

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

11 paragraph:

12 ‘‘(15) PAYMENT.—The term ‘payment’ means a

13 payment of United States dollars, another currency,

14 or a composite currency, and a noncash delivery, in15 cluding a payment or delivery to liquidate an

16 unmatured obligation.’’.

17 (b) ENFORCEABILITY OF BILATERAL NETTING CON18 TRACTS.—Section 403 of the Federal Deposit Insurance

19 Corporation Improvement Act of 1991 (12 U.S.C. 4403)

20 is amended—

21 (1) by amending subsection (a) to read as fol22 lows:

23 ‘‘(a) GENERAL RULE.—Notwithstanding any other

24 provision of State or Federal law (other than paragraphs

25 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal
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1 Deposit Insurance Act or any order authorized under sec2 tion 5(b)(2) of the Securities Investor Protection Act of

3 1970), the covered contractual payment obligations and

4 the covered contractual payment entitlements between any

5 two financial institutions shall be netted in accordance

6 with, and subject to the conditions of, the terms of any

7 applicable netting contract (except as provided in section

8 561(b)(2) of title 11, United States Code).’’; and

9 (2) by adding at the end the following new sub10 section:

11 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE12 MENTS.—The provisions of any security agreement or ar13 rangement or other credit enhancement related to 1 or

14 more netting contracts between any two financial institu15 tions shall be enforceable in accordance with their terms

16 (except as provided in section 561(b)(2) of title 11, United

17 States Code) and shall not be stayed, avoided, or otherwise

18 limited by any State or Federal law (other than para19 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the

20 Federal Deposit Insurance Act and section 5(b)(2) of the

21 Securities Investor Protection Act of 1970).’’.

22 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

23 NETTING CONTRACTS.—Section 404 of the Federal De24 posit Insurance Corporation Improvement Act of 1991 (12

25 U.S.C. 4404) is amended—
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1 (1) by amending subsection (a) to read as fol2 lows:

3 ‘‘(a) GENERAL RULE.—Notwithstanding any other

4 provision of State or Federal law (other than paragraphs

5 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

6 Deposit Insurance Act and any order authorized under

7 section 5(b)(2) of the Securities Investor Protection Act

8 of 1970), the covered contractual payment obligations and

9 the covered contractual payment entitlements of a member

10 of a clearing organization to and from all other members

11 of a clearing organization shall be netted in accordance

12 with and subject to the conditions of any applicable net13 ting contract (except as provided in section 561(b)(2) of

14 title 11, United States Code).’’; and

15 (2) by adding at the end the following new sub16 section:

17 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE18 MENTS.—The provisions of any security agreement or ar19 rangement or other credit enhancement related to 1 or

20 more netting contracts between any two members of a

21 clearing organization shall be enforceable in accordance

22 with their terms (except as provided in section 561(b)(2)

23 of title 11, United States Code) and shall not be stayed,

24 avoided, or otherwise limited by any State or Federal law

25 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec-
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1 tion 11(e) of the Federal Deposit Insurance Act and sec2 tion 5(b)(2) of the Securities Investor Protection Act of

3 1970).’’.

4 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN5 SURED NATIONAL BANKS AND UNINSURED FEDERAL

6 BRANCHES AND AGENCIES.—The Federal Deposit Insur7 ance Corporation Improvement Act of 1991 (12 U.S.C.

8 4401 et seq.) is amended—

9 (1) by redesignating section 407 as section

10 407A; and

11 (2) by adding after section 406 the following

12 new section:

13 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED

14 NATIONAL BANKS AND UNINSURED FEDERAL

15 BRANCHES AND AGENCIES.

16 ‘‘(a) IN GENERAL.—Notwithstanding any other pro17 vision of law, paragraphs (8), (9), (10), and (11) of section

18 11(e) of the Federal Deposit Insurance Act shall apply

19 to an uninsured national bank or uninsured Federal

20 branch or Federal agency except—

21 ‘‘(1) any reference to the ‘Corporation as re22 ceiver’ or ‘the receiver or the Corporation’ shall refer

23 to the receiver of an uninsured national bank or un24 insured Federal branch or Federal agency appointed

25 by the Comptroller of the Currency;
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1 ‘‘(2) any reference to the ‘Corporation’ (other

2 than in section 11(e)(8)(D) of such Act), the ‘Cor3 poration, whether acting as such or as conservator

4 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer

5 to the receiver or conservator of an uninsured na6 tional bank or uninsured Federal branch or Federal

7 agency appointed by the Comptroller of the Cur8 rency; and

9 ‘‘(3) any reference to an ‘insured depository in10 stitution’ or ‘depository institution’ shall refer to an

11 uninsured national bank or an uninsured Federal

12 branch or Federal agency.

13 ‘‘(b) LIABILITY.—The liability of a receiver or conser14 vator of an uninsured national bank or uninsured Federal

15 branch or agency shall be determined in the same manner

16 and subject to the same limitations that apply to receivers

17 and conservators of insured depository institutions under

18 section 11(e) of the Federal Deposit Insurance Act.

19 ‘‘(c) REGULATORY AUTHORITY.—

20 ‘‘(1) IN GENERAL.—The Comptroller of the

21 Currency, in consultation with the Federal Deposit

22 Insurance Corporation, may promulgate regulations

23 to implement this section.

24 ‘‘(2) SPECIFIC REQUIREMENT.—In promul25 gating regulations to implement this section, the
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1 Comptroller of the Currency shall ensure that the

2 regulations generally are consistent with the regula3 tions and policies of the Federal Deposit Insurance

4 Corporation adopted pursuant to the Federal De5 posit Insurance Act.

6 ‘‘(d) DEFINITIONS.—For purposes of this section, the

7 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign

8 bank’ have the same meaning as in section 1(b) of the

9 International Banking Act.’’.

10 SEC. 8. BANKRUPTCY CODE AMENDMENTS.

11 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR12 CHASE AGREEMENT, SECURITIES CLEARING AGENCY,

13 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU14 RITIES CONTRACT.—Title 11, United States Code, is

15 amended—

16 (1) in section 101—

17 (A) in paragraph (25)—

18 (i) by striking ‘‘means a contract’’

19 and inserting ‘‘means—

20 ‘‘(A) a contract’’;

21 (ii) by striking ‘‘, or any combination

22 thereof or option thereon;’’ and inserting

23 ‘‘, or any other similar agreement;’’; and

24 (iii) by adding at the end the fol25 lowing:
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1 ‘‘(B) any combination of agreements or

2 transactions referred to in subparagraphs (A)

3 and (C);

4 ‘‘(C) any option to enter into an agreement

5 or transaction referred to in subparagraph (A)

6 or (B);

7 ‘‘(D) a master agreement that provides for

8 an agreement or transaction referred to in sub9 paragraph (A), (B), or (C), together with all

10 supplements to any such master agreement,

11 without regard to whether such master agree12 ment provides for an agreement or transaction

13 that is not a forward contract under this para14 graph, except that such master agreement shall

15 be considered to be a forward contract under

16 this paragraph only with respect to each agree17 ment or transaction under such master agree18 ment that is referred to in subparagraph (A),

19 (B) or (C); or

20 ‘‘(E) any security agreement or arrange21 ment, or other credit enhancement related to

22 any agreement or transaction referred to in

23 subparagraph (A), (B), (C), or (D), but not to

24 exceed the actual value of such contract on the

25 date of the filing of the petition;’’;
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1 (B) in paragraph (46), by striking ‘‘on any

2 day during the period beginning 90 days before

3 the date of’’ and inserting ‘‘at any time before’’;

4 (C) by amending paragraph (47) to read

5 as follows:

6 ‘‘(47) ‘repurchase agreement’ (which definition

7 also applies to a ‘reverse repurchase agreement’)—

8 ‘‘(A) means—

9 ‘‘(i) an agreement, including related

10 terms, which provides for the transfer of 1

11 or more certificates of deposit, mortgage12 related securities (as defined in the Securi13 ties Exchange Act of 1934), mortgage

14 loans, interests in mortgage-related securi15 ties or mortgage loans, eligible bankers’ ac16 ceptances, qualified foreign government se17 curities, or securities that are direct obliga18 tions of, or that are fully guaranteed by,

19 the United States or any agency of the

20 United States against the transfer of funds

21 by the transferee of such certificates of de22 posit, eligible bankers’ acceptances, securi23 ties, loans, or interests, with a simulta24 neous agreement by such transferee to

25 transfer to the transferor thereof certifi-
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1 cates of deposit, eligible bankers’ accept2 ance, securities, loans, or interests of the

3 kind described above, at a date certain not

4 later than 1 year after such transfer or on

5 demand, against the transfer of funds;

6 ‘‘(ii) any combination of agreements

7 or transactions referred to in clauses (i)

8 and (iii);

9 ‘‘(iii) an option to enter into an agree10 ment or transaction referred to in clause

11 (i) or (ii);

12 ‘‘(iv) a master agreement that pro13 vides for an agreement or transaction re14 ferred to in clause (i), (ii), or (iii), together

15 with all supplements to any such master

16 agreement, without regard to whether such

17 master agreement provides for an agree18 ment or transaction that is not a repur19 chase agreement under this paragraph, ex20 cept that such master agreement shall be

21 considered to be a repurchase agreement

22 under this paragraph only with respect to

23 each agreement or transaction under the

24 master agreement that is referred to in

25 clause (i), (ii), or (iii); or
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1 ‘‘(v) any security agreement or ar2 rangement or other credit enhancement re3 lated to any agreement or transaction re4 ferred to in clause (i), (ii), (iii), or (iv), but

5 not to exceed the actual value of such con6 tract on the date of the filing of the peti7 tion; and

8 ‘‘(B) does not include a repurchase obliga9 tion under a participation in a commercial

10 mortgage loan,

11 and, for purposes of this paragraph, the term ‘quali12 fied foreign government security’ means a security

13 that is a direct obligation of, or that is fully guaran14 teed by, the central government of a member of the

15 Organization for Economic Cooperation and Devel16 opment;’’;

17 (D) in paragraph (48) by inserting ‘‘or ex18 empt from such registration under such section

19 pursuant to an order of the Securities and Ex20 change Commission’’ after ‘‘1934’’; and

21 (E) by amending paragraph (53B) to read

22 as follows:

23 ‘‘(53B) ‘swap agreement’—

24 ‘‘(A) means—
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1 ‘‘(i) any agreement, including the

2 terms and conditions incorporated by ref3 erence in such agreement, which is an in4 terest rate swap, option, future, or forward

5 agreement, including a rate floor, rate cap,

6 rate collar, cross-currency rate swap, and

7 basis swap; a spot, same day-tomorrow, to8 morrow-next, forward, or other foreign ex9 change or precious metals agreement; a

10 currency swap, option, future, or forward

11 agreement; an equity index or an equity

12 swap, option, future, or forward agree13 ment; a debt index or a debt swap, option,

14 future, or forward agreement; a credit

15 spread or a credit swap, option, future, or

16 forward agreement; a commodity index or

17 a commodity swap, option, future, or for18 ward agreement; or a weather swap,

19 weather derivative, or weather option;

20 ‘‘(ii) any agreement or transaction

21 similar to any other agreement or trans22 action referred to in this paragraph that—

23 ‘‘(I) is presently, or in the future

24 becomes, regularly entered into in the

25 swap market (including terms and
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1 conditions incorporated by reference

2 therein); and

3 ‘‘(II) is a forward, swap, future,

4 or option on 1 or more rates, cur5 rencies, commodities, equity securities,

6 or other equity instruments, debt se7 curities or other debt instruments, or

8 economic indices or measures of eco9 nomic risk or value;

10 ‘‘(iii) any combination of agreements

11 or transactions referred to in this para12 graph;

13 ‘‘(iv) any option to enter into an

14 agreement or transaction referred to in

15 this paragraph;

16 ‘‘(v) a master agreement that provides

17 for an agreement or transaction referred to

18 in clause (i), (ii), (iii), or (iv), together

19 with all supplements to any such master

20 agreement, and without regard to whether

21 the master agreement contains an agree22 ment or transaction that is not a swap

23 agreement under this paragraph, except

24 that the master agreement shall be consid25 ered to be a swap agreement under this
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1 paragraph only with respect to each agree2 ment or transaction under the master

3 agreement that is referred to in clause (i),

4 (ii), (iii), or (iv); or

5 ‘‘(B) any security agreement or arrange6 ment or other credit enhancement related to

7 any agreements or transactions referred to in

8 subparagraph (A), but not to exceed the actual

9 value of such contract on the date of the filing

10 of the petition; and

11 ‘‘(C) is applicable for purposes of this title

12 only and shall not be construed or applied so as

13 to challenge or affect the characterization, defi14 nition, or treatment of any swap agreement

15 under any other statute, regulation, or rule, in16 cluding the Securities Act of 1933, the Securi17 ties Exchange Act of 1934, the Public Utility

18 Holding Company Act of 1935, the Trust In19 denture Act of 1939, the Investment Company

20 Act of 1940, the Investment Advisers Act of

21 1940, the Securities Investor Protection Act of

22 1970, the Commodity Exchange Act, and the

23 regulations prescribed by the Securities and Ex24 change Commission or the Commodity Futures

25 Trading Commission.’’;
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1 (2) by amending section 741(7) to read as fol2 lows:

3 ‘‘(7) ‘securities contract’—

4 ‘‘(A) means—

5 ‘‘(i) a contract for the purchase, sale,

6 or loan of a security, a certificate of de7 posit, a mortgage loan or any interest in a

8 mortgage loan, a group or index of securi9 ties, certificates of deposit or mortgage

10 loans or interests therein (including an in11 terest therein or based on the value there12 of), or option on any of the foregoing, in13 cluding an option to purchase or sell any

14 such security, certificate of deposit, loan,

15 interest, group or index, or option;

16 ‘‘(ii) any option entered into on a na17 tional securities exchange relating to for18 eign currencies;

19 ‘‘(iii) the guarantee by or to any secu20 rities clearing agency of a settlement of

21 cash, securities, certificates of deposit,

22 mortgage loans or interests therein, group

23 or index of securities, or mortgage loans or

24 interests therein (including any interest

25 therein or based on the value thereof), or
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1 option on any of the foregoing, including

2 an option to purchase or sell any such se3 curity, certificate of deposit, loan, interest,

4 group or index, or option;

5 ‘‘(iv) any margin loan;

6 ‘‘(v) any other agreement or trans7 action that is similar to an agreement or

8 transaction referred to in this paragraph;

9 ‘‘(vi) any combination of the agree10 ments or transactions referred to in this

11 paragraph;

12 ‘‘(vii) any option to enter into any

13 agreement or transaction referred to in

14 this paragraph;

15 ‘‘(viii) a master agreement that pro16 vides for an agreement or transaction re17 ferred to in clause (i), (ii), (iii), (iv), (v),

18 (vi), or (vii), together with all supplements

19 to any such master agreement, without re20 gard to whether the master agreement pro21 vides for an agreement or transaction that

22 is not a securities contract under this

23 paragraph, except that such master agree24 ment shall be considered to be a securities

25 contract under this paragraph only with
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1 respect to each agreement or transaction

2 under such master agreement that is re3 ferred to in clause (i), (ii), (iii), (iv), (v),

4 (vi), or (vii); or

5 ‘‘(ix) any security agreement or ar6 rangement or other credit enhancement re7 lated to any agreement or transaction re8 ferred to in this paragraph, but not to ex9 ceed the actual value of such contract on

10 the date of the filing of the petition; and

11 ‘‘(B) does not include any purchase, sale,

12 or repurchase obligation under a participation

13 in a commercial mortgage loan.’’; and

14 (3) in section 761(4)—

15 (A) by striking ‘‘or’’ at the end of subpara16 graph (D); and

17 (B) by adding at the end the following:

18 ‘‘(F) any other agreement or transaction

19 that is similar to an agreement or transaction

20 referred to in this paragraph;

21 ‘‘(G) any combination of the agreements or

22 transactions referred to in this paragraph;

23 ‘‘(H) any option to enter into an agree24 ment or transaction referred to in this para25 graph;
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1 ‘‘(I) a master agreement that provides for

2 an agreement or transaction referred to in sub3 paragraph (A), (B), (C), (D), (E), (F), (G), or

4 (H), together with all supplements to such mas5 ter agreement, without regard to whether the

6 master agreement provides for an agreement or

7 transaction that is not a commodity contract

8 under this paragraph, except that the master

9 agreement shall be considered to be a com10 modity contract under this paragraph only with

11 respect to each agreement or transaction under

12 the master agreement that is referred to in sub13 paragraph (A), (B), (C), (D), (E), (F), (G), or

14 (H); or

15 ‘‘(J) any security agreement or arrange16 ment or other credit enhancement related to

17 any agreement or transaction referred to in this

18 paragraph, but not to exceed the actual value of

19 such contract on the date of the filing of the pe20 tition;’’.

21 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI22 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER23 CHANT.—Section 101 of title 11, United States Code, is

24 amended—
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1 (1) by striking paragraph (22) and inserting

2 the following new paragraph:

3 ‘‘(22) the term ‘financial institution’—

4 ‘‘(A) means a Federal reserve bank or an

5 entity (domestic or foreign) that is a commer6 cial or savings bank, industrial savings bank,

7 savings and loan association, trust company, a

8 bank or a corporation organized under section

9 25A of the Federal Reserve Act and, when any

10 such bank or entity is acting as agent or custo11 dian for a customer in connection with a securi12 ties contract, as defined in section 741, such

13 customer; and

14 ‘‘(B) includes any person described in sub15 paragraph (A) which operates, or operates as, a

16 multilateral clearing organization pursuant to

17 section 409 of the Federal Deposit Insurance

18 Corporation Improvement Act of 1991;’’;

19 (2) by inserting after paragraph (22) the fol20 lowing:

21 ‘‘(22A) ‘financial participant’ means an entity

22 that, at the time it enters into a securities contract,

23 commodity contract or forward contract, or at the

24 time of the filing of the petition, has 1 or more

25 agreements or transactions described in paragraph
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1 (1), (2), (3), (4), (5), or (6) of section 561(a) with

2 the debtor or any other entity (other than an affil3 iate) of a total gross dollar value of at least

4 $1,000,000,000 in notional or actual principal

5 amount outstanding on any day during the previous

6 15-month period, or has gross mark-to-market posi7 tions of at least $100,000,000 (aggregated across

8 counterparties) in 1 or more such agreement or

9 transaction with the debtor or any other entity

10 (other than an affiliate) on any day during the pre11 vious 15-month period;’’; and

12 (3) by amending paragraph (26) to read as fol13 lows:

14 ‘‘(26) ‘forward contract merchant’ means a

15 Federal reserve bank, or an entity whose business

16 consists in whole or in part of entering into forward

17 contracts as or with merchants or in a commodity,

18 as defined or in section 761, or any similar good, ar19 ticle, service, right, or interest which is presently or

20 in the future becomes the subject of dealing or in

21 the forward contract trade;’’.

22 (c) DEFINITION OF MASTER NETTING AGREEMENT

23 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec24 tion 101 of title 11, United States Code, is amended by
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1 inserting after paragraph (38) the following new para2 graphs:

3 ‘‘(38A) ‘master netting agreement’ means an

4 agreement providing for the exercise of rights, in5 cluding rights of netting, setoff, liquidation, termi6 nation, acceleration, or closeout, under or in connec7 tion with 1 or more contracts that are described in

8 any 1 or more of paragraphs (1) through (5) of sec9 tion 561(a), or any security agreement or arrange10 ment or other credit enhancement related to 1 or

11 more of the foregoing. If a master netting agreement

12 contains provisions relating to agreements or trans13 actions that are not contracts described in para14 graphs (1) through (5) of section 561(a), the master

15 netting agreement shall be deemed to be a master

16 netting agreement only with respect to those agree17 ments or transactions that are described in any 1 or

18 more of the paragraphs (1) through (5) of section

19 561(a);

20 ‘‘(38B) ‘master netting agreement participant’

21 means an entity that, at any time before the filing

22 of the petition, is a party to an outstanding master

23 netting agreement with the debtor;’’.

24 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

25 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR-
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1 CHASE AGREEMENTS, AND MASTER NETTING AGREE2 MENTS UNDER THE AUTOMATIC-STAY.—

3 (1) IN GENERAL.—Section 362(b) of title 11,

4 United States Code, is amended—

5 (A) in paragraph (6), by inserting ‘‘,

6 pledged to and under the control of,’’ after

7 ‘‘held by’’;

8 (B) in paragraph (7), by inserting ‘‘,

9 pledged to and under the control of,’’ after

10 ‘‘held by’’;

11 (C) by amending paragraph (17) to read

12 as follows:

13 ‘‘(17) under subsection (a), of the setoff by a

14 swap participant of a mutual debt and claim under

15 or in connection with 1 or more swap agreements

16 that constitutes the setoff of a claim against the

17 debtor for any payment or other transfer of property

18 due from the debtor under or in connection with any

19 swap agreement against any payment due to the

20 debtor from the swap participant under or in con21 nection with any swap agreement or against cash,

22 securities, or other property held by, pledged to and

23 under the control of, or due from such swap partici24 pant to margin, guarantee, secure, or settle any

25 swap agreement;’’;
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1 (D) in paragraph (18) by striking the pe2 riod at the end and inserting ‘‘; or’’; and

3 (E) by inserting after paragraph (18) the

4 following new paragraph:

5 ‘‘(19) under subsection (a), of the setoff by a

6 master netting agreement participant of a mutual

7 debt and claim under or in connection with 1 or

8 more master netting agreements or any contract or

9 agreement subject to such agreements that con10 stitutes the setoff of a claim against the debtor for

11 any payment or other transfer of property due from

12 the debtor under or in connection with such agree13 ments or any contract or agreement subject to such

14 agreements against any payment due to the debtor

15 from such master netting agreement participant

16 under or in connection with such agreements or any

17 contract or agreement subject to such agreements or

18 against cash, securities, or other property held by,

19 pledged to and under the control of, or due from

20 such master netting agreement participant to mar21 gin, guarantee, secure, or settle such agreements or

22 any contract or agreement subject to such agree23 ments, to the extent such participant is eligible to

24 exercise such offset rights under paragraph (6), (7),
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1 or (17) for each individual contract covered by the

2 master netting agreement in issue.’’.

3 (2) LIMITATION.—Section 362 of title 11,

4 United States Code, is amended by adding at the

5 end the following:

6 ‘‘(i) LIMITATION.—The exercise of rights not subject

7 to the stay arising under subsection (a) pursuant to para8 graph (6), (7), or (17), or (32) of subsection (b) shall not

9 be stayed by any order of a court or administrative agency

10 in any proceeding under this title.’’.

11 (e) LIMITATION OF AVOIDANCE POWERS UNDER

12 MASTER NETTING AGREEMENT.—Section 546 of title 11,

13 United States Code, is amended—

14 (1) in subsection (g) (as added by section 103

15 of Public Law 101–311)—

16 (A) by striking ‘‘under a swap agreement’’;

17 and

18 (B) by striking ‘‘in connection with a swap

19 agreement’’ and inserting ‘‘under or in connec20 tion with any swap agreement’’; and

21 (2) by adding at the end the following:

22 ‘‘(j) Notwithstanding sections 544, 545, 547,

23 548(a)(1)(B), and 548(b), the trustee may not avoid a

24 transfer made by or to a master netting agreement partici25 pant under or in connection with any master netting
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1 agreement or any individual contract covered thereby that

2 is made before the commencement of the case, except

3 under section 548(a)(1)(A), and except to the extent the

4 trustee could otherwise avoid such a transfer made under

5 an individual contract covered by such master netting

6 agreement.’’.

7 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

8 AGREEMENTS.—Section 548(d)(2) of title 11, United

9 States Code, is amended—

10 (1) in subparagraph (C), by striking ‘‘and’’;

11 (2) in subparagraph (D), by striking the period

12 and inserting ‘‘; and’’; and

13 (3) by adding at the end the following new sub14 paragraph:

15 ‘‘(E) a master netting agreement participant

16 that receives a transfer in connection with a master

17 netting agreement or any individual contract covered

18 thereby takes for value to the extent of such trans19 fer, except, with respect to a transfer under any in20 dividual contract covered thereby, to the extent such

21 master netting agreement participant otherwise did

22 not take (or is otherwise not deemed to have taken)

23 such transfer for value.’’.
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1 (g) TERMINATION OR ACCELERATION OF SECURITIES

2 CONTRACTS.—Section 555 of title 11, United States Code,

3 is amended—

4 (1) by amending the section heading to read as

5 follows:

6 ‘‘§ 555. Contractual right to liquidate, terminate, or

7 accelerate a securities contract’’;

8 and

9 (2) in the first sentence, by striking ‘‘liquida10 tion’’ and inserting ‘‘liquidation, termination, or ac11 celeration’’.

12 (h) TERMINATION OR ACCELERATION OF COMMOD13 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

14 United States Code, is amended—

15 (1) by amending the section heading to read as

16 follows:

17 ‘‘§ 556. Contractual right to liquidate, terminate, or

18 accelerate a commodities contract or for19 ward contract’’;

20 and

21 (2) in the first sentence, by striking ‘‘liquida22 tion’’ and inserting ‘‘liquidation, termination, or ac23 celeration’’.
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1 (i) TERMINATION OR ACCELERATION OF REPUR2 CHASE AGREEMENTS.—Section 559 of title 11, United

3 States Code, is amended—

4 (1) by amending the section heading to read as

5 follows:

6 ‘‘§ 559. Contractual right to liquidate, terminate, or

7 accelerate a repurchase agreement’’;

8 and

9 (2) in the first sentence, by striking ‘‘liquida10 tion’’ and inserting ‘‘liquidation, termination, or ac11 celeration’’.

12 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

13 OF SWAP AGREEMENTS.—Section 560 of title 11, United

14 States Code, is amended—

15 (1) by amending the section heading to read as

16 follows:

17 ‘‘§ 560. Contractual right to liquidate, terminate, or

18 accelerate a swap agreement’’;

19 (2) in the first sentence, by striking ‘‘termi20 nation of a swap agreement’’ and inserting ‘‘liquida21 tion, termination, or acceleration of 1 or more swap

22 agreements’’; and

23 (3) by striking ‘‘in connection with any swap

24 agreement’’ and inserting ‘‘in connection with the
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1 termination, liquidation, or acceleration of 1 or more

2 swap agreements’’.

3 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

4 OFFSET UNDER A MASTER NETTING AGREEMENT AND

5 ACROSS CONTRACTS.—(1) Title 11, United States Code,

6 is amended by inserting after section 560 the following:

7 ‘‘§ 561. Contractual right to terminate, liquidate, ac8 celerate, or offset under a master netting

9 agreement and across contracts

10 ‘‘(a) IN GENERAL.—Subject to subsection (b), the ex11 ercise of any contractual right, because of a condition of

12 the kind specified in section 365(e)(1), to cause the termi13 nation, liquidation, or acceleration of or to offset or net

14 termination values, payment amounts or other transfer ob15 ligations arising under or in connection with 1 or more

16 (or the termination, liquidation, or acceleration of 1 or

17 more)—

18 ‘‘(1) securities contracts, as defined in section

19 741(7);

20 ‘‘(2) commodity contracts, as defined in section

21 761(4);

22 ‘‘(3) forward contracts;

23 ‘‘(4) repurchase agreements;

24 ‘‘(5) swap agreements; or

25 ‘‘(6) master netting agreements,
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1 shall not be stayed, avoided, or otherwise limited by oper2 ation of any provision of this title or by any order of a

3 court or administrative agency in any proceeding under

4 this title.

5 ‘‘(b) EXCEPTION.—

6 ‘‘(1) A party may exercise a contractual right

7 described in subsection (a) to terminate, liquidate, or

8 accelerate only to the extent that such party could

9 exercise such a right under section 555, 556, 559,

10 or 560 for each individual contract covered by the

11 master netting agreement in issue.

12 ‘‘(2) If a debtor is a commodity broker subject

13 to subchapter IV of chapter 7—

14 ‘‘(A) a party may not net or offset an obli15 gation to the debtor arising under, or in con16 nection with, a commodity contract against any

17 claim arising under, or in connection with,

18 other instruments, contracts, or agreements

19 listed in subsection (a), except to the extent the

20 party has positive net equity in the commodity

21 accounts at the debtor, as calculated under such

22 subchapter; and

23 ‘‘(B) another commodity broker may not

24 net or offset an obligation to the debtor arising

25 under, or in connection with, a commodity con-
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1 tract entered into or held on behalf of a cus2 tomer of the debtor against any claim arising

3 under, or in connection with, other instruments,

4 contracts, or agreements listed in subsection

5 (a).

6 ‘‘(c) RULE OF APPLICATION.—Subparagraphs (A)

7 and (B) of subsection (b)(2) shall not be construed as pro8 hibiting the offset of claims and obligations arising pursu9 ant to—

10 ‘‘(1) a cross-margining arrangement that has

11 been approved by the Commodity Futures Trading

12 Commission or that has been submitted to such

13 Commission pursuant to section 5a(a)(12) of the

14 Commodity Exchange Act and has been permitted to

15 go into effect; or

16 ‘‘(2) another netting arrangement, between a

17 clearing organization (as defined in section 761) and

18 another entity, that has been approved by the Com19 modity Futures Trading Commission.

20 ‘‘(d) DEFINITION.—As used in this section, the term

21 ‘contractual right’ includes a right set forth in a rule or

22 bylaw of a national securities exchange, a national securi23 ties association, or a securities clearing agency, a right

24 set forth in a bylaw of a clearing organization or contract

25 market or in a resolution of the governing board thereof,
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1 and a right, whether or not evidenced in writing, arising

2 under common law, under law merchant, or by reason of

3 normal business practice.’’.

4 (2) CONFORMING AMENDMENT.—The table of sec5 tions of chapter 5 of title 11, United States Code, is

6 amended by inserting after the item relating to section

7 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a

master netting agreement and across contracts.’’.

8 (l) MUNICIPAL BANKRUPTCIES.—Section 901(a) of

9 title 11, United States Code, is amended—

10 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

11 (2) by inserting ‘‘559, 560, 561, 562,’’ after

12 ‘‘557,’’.

13 (m) ANCILLARY PROCEEDINGS.—Section 304 of title

14 11, United States Code, is amended by adding at the end

15 the following new subsection:

16 ‘‘(d) Any provisions of this title relating to securities

17 contracts, commodity contracts, forward contracts, repur18 chase agreements, swap agreements, or master netting

19 agreements shall apply in a case ancillary to a foreign pro20 ceeding under this section or any other section of this title

21 so that enforcement of contractual provisions of such con22 tracts and agreements in accordance with their terms will

23 not be stayed or otherwise limited by operation of any pro24 vision of this title or by order of a court in any proceeding
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1 under this title, and to limit avoidance powers to the same

2 extent as in a proceeding under chapter 7 or 11 (such

3 enforcement not to be limited based on the presence or

4 absence of assets of the debtor in the United States).’’.

5 (n) COMMODITY BROKER LIQUIDATIONS.—Title 11,

6 United States Code, is amended by inserting after section

7 766 the following:

8 ‘‘§ 767. Commodity broker liquidation and forward

9 contract merchants, commodity brokers,

10 stockbrokers, financial institutions, fi11 nancial participants, securities clearing

12 agencies, swap participants, repo partici13 pants, and master netting agreement par14 ticipants

15 ‘‘Notwithstanding any other provision of this title,

16 the exercise of rights by a forward contract merchant,

17 commodity broker, stockbroker, financial institution, fi18 nancial participant, securities clearing agency, swap par19 ticipant, repo participant, or master netting agreement

20 participant under this title shall not affect the priority of

21 any unsecured claim it may have after the exercise of such

22 rights.’’.

23 (o) STOCKBROKER LIQUIDATIONS.—Title 11, United

24 States Code, is amended by inserting after section 752 the

25 following:
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1 ‘‘§ 753. Stockbroker liquidation and forward contract

2 merchants, commodity brokers, stock3 brokers, financial institutions, financial

4 participants, securities clearing agencies,

5 swap participants, repo participants, and

6 master netting agreement participants

7 ‘‘Notwithstanding any other provision of this title,

8 the exercise of rights by a forward contract merchant,

9 commodity broker, stockbroker, financial institution, secu10 rities clearing agency, swap participant, repo participant,

11 financial participant, or master netting agreement partici12 pant under this title shall not affect the priority of any

13 unsecured claim it may have after the exercise of such

14 rights.’’.

15 (p) SETOFF.—Section 553 of title 11, United States

16 Code, is amended—

17 (1) in subsection (a)(3)(C), by inserting ‘‘(ex18 cept for a setoff of a kind described in section

19 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(32), 555,

20 556, 559, 560 or 561)’’ before the period; and

21 (2) in subsection (b)(1), by striking

22 ‘‘362(b)(14)’’ and inserting ‘‘362(b)(17),

23 362(b)(32), 555, 556, 559, 560, 561’’.

24 (q) SECURITIES CONTRACTS, COMMODITY CON25 TRACTS, AND FORWARD CONTRACTS.—Title 11, United

26 States Code, is amended—
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1 (1) in section 362(b)(6), by striking ‘‘financial

2 institutions,’’ each place such term appears and in3 serting ‘‘financial institution, financial participant’’;

4 (2) in section 546(e), by inserting ‘‘financial

5 participant,’’ after ‘‘financial institution,’’;

6 (3) in section 548(d)(2)(B), by inserting ‘‘fi7 nancial participant,’’ after ‘‘financial institution,’’;

8 (4) in section 555—

9 (A) by inserting ‘‘financial participant,’’

10 after ‘‘financial institution,’’; and

11 (B) by inserting before the period at the

12 end ‘‘, a right set forth in a bylaw of a clearing

13 organization or contract market or in a resolu14 tion of the governing board thereof, and a right,

15 whether or not in writing, arising under com16 mon law, under law merchant, or by reason of

17 normal business practice’’; and

18 (5) in section 556, by inserting ‘‘, financial par19 ticipant’’ after ‘‘commodity broker’’.

20 (r) CONFORMING AMENDMENTS.—Title 11, United

21 States Code, is amended—

22 (1) in the table of sections of chapter 5—

23 (A) by amending the items relating to sec24 tions 555 and 556 to read as follows:

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract.
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‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’;

1 and

2 (B) by amending the items relating to sec3 tions 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.’’;

4 and

5 (2) in the table of sections of chapter 7—

6 (A) by inserting after the item relating to

7 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.’’;

8 and

9 (B) by inserting after the item relating to

10 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.’’.

11 SEC. 9. RECORDKEEPING REQUIREMENTS.

12 Section 11(e)(8) of the Federal Deposit Insurance

13 Act (12 U.S.C. 1821(e)(8)) is amended by adding at the

14 end the following new subparagraph:

15 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

16 The Corporation, in consultation with the ap17 propriate Federal banking agencies, may pre-
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1 scribe regulations requiring more detailed rec2 ordkeeping with respect to qualified financial

3 contracts (including market valuations) by in4 sured depository institutions.’’.

5 SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECU6 TION REQUIREMENT.

7 Section 13(e)(2) of the Federal Deposit Insurance

8 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows:

9 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

10 EXECUTION REQUIREMENT.—An agreement to pro11 vide for the lawful collateralization of—

12 ‘‘(A) deposits of, or other credit extension

13 by, a Federal, State, or local governmental enti14 ty, or of any depositor referred to in section

15 11(a)(2), including an agreement to provide col16 lateral in lieu of a surety bond;

17 ‘‘(B) bankruptcy estate funds pursuant to

18 section 345(b)(2) of title 11, United States

19 Code;

20 ‘‘(C) extensions of credit, including any

21 overdraft, from a Federal reserve bank or Fed22 eral home loan bank; or

23 ‘‘(D) 1 or more qualified financial con24 tracts, as defined in section 11(e)(8)(D),
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1 shall not be deemed invalid pursuant to paragraph

2 (1)(B) solely because such agreement was not exe3 cuted contemporaneously with the acquisition of the

4 collateral or because of pledges, delivery, or substi5 tution of the collateral made in accordance with such

6 agreement.’’.

7 SEC. 11. DAMAGE MEASURE.

8 (a) IN GENERAL.—Title 11, United States Code, is

9 amended—

10 (1) by inserting after section 561 the following:

11 ‘‘§ 562. Damage measure in connection with swap

12 agreements, securities contracts, forward

13 contracts, commodity contracts, repur14 chase agreements, or master netting

15 agreements

16 ‘‘If the trustee rejects a swap agreement, securities

17 contract as defined in section 741, forward contract, com18 modity contract (as defined in section 761) repurchase

19 agreement, or master netting agreement pursuant to sec20 tion 365(a), or if a forward contract merchant, stock21 broker, financial institution, securities clearing agency,

22 repo participant, financial participant, master netting

23 agreement participant, or swap participant liquidates, ter24 minates, or accelerates such contract or agreement, dam25 ages shall be measured as of the earlier of—
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1 ‘‘(1) the date of such rejection; or

2 ‘‘(2) the date of such liquidation, termination,

3 or acceleration.’’; and

4 (2) in the table of sections of chapter 5 by in5 serting after the item relating to section 561 the fol6 lowing:

‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase

agreements, or master netting agreements.’’.

7 (b) CLAIMS ARISING FROM REJECTION.—Section

8 502(g) of title 11, United States Code, is amended—

9 (1) by designating the existing text as para10 graph (1); and

11 (2) by adding at the end the following:

12 ‘‘(2) A claim for damages calculated in accordance

13 with section 562 shall be allowed under subsection (a), (b),

14 or (c), or disallowed under subsection (d) or (e), as if such

15 claim had arisen before the date of the filing of the peti16 tion.’’.

17 SEC. 12. SIPC STAY.

18 Section 5(b)(2) of the Securities Investor Protection

19 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding

20 after subparagraph (B) the following new subparagraph:

21 ‘‘(C) EXCEPTION FROM STAY.—

22 ‘‘(i) Notwithstanding section 362 of

23 title 11, United States Code, neither the

24 filing of an application under subsection
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1 (a)(3) nor any order or decree obtained by

2 the Securities Investor Protection Corpora3 tion from the court shall operate as a stay

4 of any contractual rights of a creditor to

5 liquidate, terminate, or accelerate a securi6 ties contract, commodity contract, forward

7 contract, repurchase agreement, swap

8 agreement, or master netting agreement,

9 each as defined in title 11 United States

10 Code, to offset or net termination values,

11 payment amounts, or other transfer obliga12 tions arising under or in connection with 1

13 or more of such contracts or agreements,

14 or to foreclose on any cash collateral

15 pledged by the debtor whether or not with

16 respect to 1 or more of such contracts or

17 agreements.

18 ‘‘(ii) Notwithstanding clause (i), such

19 application, order, or decree may operate

20 as a stay of the foreclosure on or disposi21 tion of securities collateral pledged by the

22 debtor, whether or not with respect to 1 or

23 more of such contracts or agreements, se24 curities sold by the debtor under a repur-
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1 chase agreement or securities lent under a

2 securities lending agreement.

3 ‘‘(iii) As used in this section, the term

4 ‘contractual right’ includes a right set

5 forth in a rule or bylaw of a national secu6 rities exchange, a national securities asso7 ciation, or a securities clearing agency, a

8 right set forth in a bylaw of a clearing or9 ganization or contract market or in a reso10 lution of the governing board thereof, and

11 a right, whether or not in writing, arising

12 under common law, under law merchant,

13 or by reason of normal business practice.’’.

14 SEC. 13. ASSET-BACKED SECURITIZATIONS.

15 Section 541 of title 11, United States Code, is

16 amended—

17 (1) in subsection (b)—

18 (A) by striking ‘‘or’’ at the end of para19 graph (4)(B)(ii);

20 (B) by redesignating paragraph (5) as

21 paragraph (6); and

22 (C) by inserting after paragraph (4) the

23 following new paragraph:

24 ‘‘(5) any eligible asset (or proceeds thereof), to

25 the extent that such eligible asset was transferred by
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1 the debtor before the date of commencement of the

2 case, to an eligible entity in connection with an

3 asset-backed securitization, except to the extent such

4 asset (or proceeds or value thereof) may be recov5 ered by the trustee under section 550 by virtue of

6 avoidance under section 548(a)(1); or’’; and

7 (2) by adding at the end the following new sub8 section:

9 ‘‘(e) For purposes of this section, the following defini10 tions shall apply:

11 ‘‘(1) the term ‘asset-backed securitization’

12 means a transaction in which eligible assets trans13 ferred to an eligible entity are used as the source of

14 payment on securities, including all securities issued

15 by governmental units, at least 1 class or tranche of

16 which is rated investment grade by 1 or more na17 tionally recognized securities rating organizations,

18 when the securities are initially issued by an issuer;

19 ‘‘(2) the term ‘eligible asset’ means—

20 ‘‘(A) financial assets (including interests

21 therein and proceeds thereof), either fixed or re22 volving, whether or not such assets are in exist23 ence as of the date of the transfer, including

24 residential and commercial mortgage loans, con25 sumer receivables, trade receivables, assets of
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1 governmental units (including payment obliga2 tions relating to taxes, receipts, fines, tickets,

3 and other sources of revenue), and lease receiv4 ables, that, by their terms, convert into cash

5 within a finite time period, plus any residual in6 terest in property subject to receivables in7 cluded in such financial assets plus any rights

8 or other assets designed to assure the servicing

9 or timely distribution of proceeds to security

10 holders;

11 ‘‘(B) cash; and

12 ‘‘(C) securities, including all securities

13 issued by governmental units.

14 ‘‘(3) the term ‘eligible entity’ means—

15 ‘‘(A) an issuer; or

16 ‘‘(B) a trust, corporation, partnership, gov17 ernmental unit, limited liability company (in18 cluding a single member limited liability com19 pany), or other entity engaged exclusively in the

20 business of acquiring and transferring eligible

21 assets directly or indirectly to an issuer and

22 taking actions ancillary thereto;

23 ‘‘(4) the term ‘issuer’ means a trust, corpora24 tion, partnership, governmental unit, limited liability

25 company (including a single member limited liability
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1 company), or other entity engaged exclusively in the

2 business of acquiring and holding eligible assets,

3 issuing securities backed by eligible assets, and tak4 ing actions ancillary thereto; and

5 ‘‘(5) the term ‘transferred’ means the debtor,

6 pursuant to a written agreement, represented and

7 warranted that eligible assets were sold, contributed,

8 or otherwise conveyed with the intention of removing

9 them from the estate of the debtor pursuant to sub10 section (b)(5) (whether or not reference is made to

11 this title or any section of this title), irrespective,

12 without limitation, of—

13 ‘‘(A) whether the debtor directly or indi14 rectly obtained or held an interest in the issuer

15 or in any securities issued by the issuer;

16 ‘‘(B) whether the debtor had an obligation

17 to repurchase or to service or supervise the

18 servicing of all or any portion of such eligible

19 assets; or

20 ‘‘(C) the characterization of such sale, con21 tribution, or other conveyance for tax, account22 ing, regulatory reporting, or other purposes.’’.

23 SEC. 14. APPLICATION OF AMENDMENTS.

24 The amendments made by this Act shall apply with

25 respect to cases commenced or appointments made under
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1 any Federal or State law after the date of the enactment

2 of this Act, but shall not apply with respect to cases com3 menced or appointments made under any Federal or State

4 law before the date of the enactment of this Act.

Æ