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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3128 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3128

To amend the Federal Reserve Act to authorize Federal Reserve Banks to 
examine the methodologies of used by nationally recognized statistical 
 rating organizations in analyzing and rating asset backed securities 
                    and structured finance products.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              July 8, 2009

 Mr. Ellison introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
To amend the Federal Reserve Act to authorize Federal Reserve Banks to 
examine the methodologies of used by nationally recognized statistical 
 rating organizations in analyzing and rating asset backed securities 
                    and structured finance products.

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

SECTION 1. EXAMINATION AUTHORITY WITH RESPECT TO NATIONALLY RECOGNIZED 
              STATISTICAL RATING ORGANIZATIONS.

    Section 13 of the Federal Reserve Act is amended by adding at the 
end the following new paragraph:
            ``(15) Examination authority with respect to nationally 
        recognized statistical rating organizations.--
                    ``(A) In general.--The Board may authorize any 
                Federal reserve bank to examine the methodologies used 
                by nationally recognized statistical rating 
                organizations in analyzing and rating asset backed 
                securities and structured finance products. Such 
                examinations shall be subject to such limitations, 
                restrictions, and regulations as the Board may 
                prescribe.
                    ``(B) Definitions.--For purposes of this paragraph:
                            ``(i) Asset backed security.--The term 
                        `asset backed security' means--
                                    ``(I) a security that is primarily 
                                serviced by the cash flows of a 
                                discrete pool of receivables or other 
                                financial assets (including mortgages), 
                                either fixed or revolving, that by 
                                their terms convert into cash within a 
                                finite time period, plus any rights or 
                                other assets designed to assure the 
                                servicing or timely distributions of 
                                proceeds to the security holders; and
                                    ``(II) such other security as the 
                                Board may prescribe.
                            ``(ii) Nationally recognized statistical 
                        rating organization.--The term `nationally 
                        recognized statistical rating organization' has 
                        the same meaning as in section 3(a)(62) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(62)).
                            ``(iii) Security.--The term `security' has 
                        the same meaning as in section 3(a)(10) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(10)).
                            ``(iv) Structured finance product.--The 
                        term `structured finance product' means a 
                        product that includes--
                                    ``(I) the pooling of assets (either 
                                cash-based or synthetically created);
                                    ``(II) the tranching of liabilities 
                                that are backed by such assets;
                                    ``(III) de-linking of the credit 
                                risk of such assets from the credit 
                                risk of the originator (usually through 
                                use of a finite-lived, standalone 
                                financing vehicle); or
                                    ``(IV) such other elements as the 
                                Board may prescribe.''.
                                 <all>
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