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tution does not engage in inappropriate deriva-
tives activities.
(L) Protection against systemic risk.
(2) When a recommendation of the Commission
is found unacceptable by one or more of the applica-
ble Federal financial institution regulatory agencies,
the agency or agencies shall submit to the Commis-
sion, within a time period specified by the Commis-
sion, a written statement of the reasons the rec-
ommendation is unacceptable and such statement
shall be published in the Federal Register.
SEC. 105. TRAINING FOR EXAMINERS AND ASSISTANT EX-
AMINERS.
The Commission shall sponsor training programs
concerning risk management techniques and derivatives
activities for examiners, assistant examiners and other em-
ployees of the Federal financial institution regulatory
agencies. Such training programs shall be open to enroll-
ment by employees of State financial institutions super-
visory agencies and employees of the Federal Housing Fi-
nance Board and the Department of Housing and Urban
Development’s Office of Federal Housing Enterprise
Oversight under conditions specified by the Commission.
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SEC. 106. RISK MANAGEMENT TRAINING.
The Commission shall develop training seminars in
risk management techniques related to derivatives activi-
ties for employees of state or local governments and finan-
cial institutions.
SEC. 107. EFFECT ON FEDERAL REGULATORY AGENCY RE-
SEARCH AND DEVELOPMENT OF NEW FINAN-
CIAL INSTITUTIONS SUPERVISORY METHODS.
Nothing in this title shall be construed to limit or
discourage Federal financial institution regulatory agency
research and development of new financial institutions su-
pervisory methods and tools related to derivatives activi-
ties, nor to preclude the field testing of any innovation
devised by any Federal financial institution regulatory
agency.
SEC. 108. STATE LIAISON.
To encourage the application of uniform examination
principles and standards by State and Federal supervisory
agencies, the Commission shall establish a liaison commit-
tee composed of five representatives of State agencies
which supervise financial institutions which shall meet at
least twice a year with the Commission. Members of the
liaison committee shall receive a reasonable allowance for
necessary expenses incurred in attending meetings.
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SEC. 109. ADMINISTRATION.
(a) AUTHORITY OF CHAIRMAN OF COMMISSION.—
The Chairman of the Commission is authorized to carry
out and to delegate the authority to carry out the internal
administration of the Commission, including the appoint-
ment and supervision of employees and the distribution
of business among members, employees, and administra-
tive units.
(b) USE OF PERSONNEL, SERVICES, AND FACILITIES
OF
FEDERAL
FINANCIAL
INSTITUTION
REGULATORY
AGENCIES.—In addition to any other authority conferred
upon it by this title, in carrying out its functions under
this title, the Commission may utilize, with their consent
and to the extent practical, the personnel, services, and
facilities of the Federal financial institution regulatory
agencies, with or without reimbursement therefor.
(c) COMPENSATION, AUTHORITY, AND DUTIES OF
OFFICERS AND EMPLOYEES; EXPERTS AND CONSULT-
ANTS.—In addition, the Commission may—
(1) subject to the provisions of title 5 relating
to the competitive service, classification, and General
Schedule pay rates, appoint and fix the compensa-
tion of such officers and employees as are necessary
to carry out the provisions of this title, and to pre-
scribe the authority and duties of such officers and
employees; and
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(2) obtain the services of such experts and con-
sultants as are necessary to carry out the provisions
of this title.
SEC. 110. INTERNATIONAL NEGOTIATIONS.
The Chairman of the Board of Governors of the Fed-
eral Reserve System, in consultation with the members of
the Commission, shall encourage governments, central
banks, and regulatory authorities of other countries to
work toward maintaining and, where appropriate, adopt-
ing comparable supervisory standards and regulations,
particularly capital standards, for financial institutions
engaged in derivatives activities.
SEC. 111. CREDIT UNIONS.
Insured credit unions (as defined in section 101(7)
of the Federal Credit Union Act) shall be supervised for
purposes of derivatives activities by the National Credit
Union Administration under standards no less stringent
than standards under which Federal depository institu-
tions (as defined in section 3(c) of the Federal Deposit
Insurance Act) are supervised by the Federal banking
agencies.
SEC. 112. ANNUAL REPORT.
Not later than April 1 of each year, the Commission
shall prepare a report covering its activities during the
preceding calendar year.
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TITLE II—SUPERVISORY
IMPROVEMENTS
SEC. 201. UNSAFE OR UNSOUND BANKING PRACTICES.
(a) IN GENERAL.—Failure of an institution-affiliated
party engaged in derivatives activities to have adequate
technical expertise may be deemed by the appropriate fed-
eral banking agency to constitute an unsafe or unsound
banking practice within the meaning of section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818).
(b) RULE OF CONSTRUCTION.—This section shall be
in addition to and not in derogation of the authority of
any appropriate Federal banking agency under section 8
of the Federal Deposit Insurance Act to determine unsafe
or unsound banking practices.
SEC. 202. INTERNAL CONTROLS.
Section 39(a)(1)(A) of the Federal Deposit Insurance
Act (12 U.S.C. 1831p–1(a)(1)(A)) is amended by striking
‘‘internal controls’’ and inserting ‘‘internal controls (in-
cluding internal controls for derivatives activities)’’.
SEC. 203. FOREIGN BANK SUPERVISION.
Section 7(d)(2)(A) of the International Banking Act
of 1978 (12 U.S.C. 3105(d)(2)(A)) is amended after
‘‘country’’ by inserting ‘‘, including, in the case of a for-
eign bank engaged in derivatives activities, comprehensive
supervision and regulation for derivatives activities (as
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that term is defined in the Risk Management Improve-
ment and Derivatives Oversight Act of 1995). In making
any determination under this paragraph, the Board shall
consider whether the home country maintains comprehen-
sive supervision and regulation of derivatives activities, in-
cluding capital and disclosure standards, not less stringent
than United States standards.’’.
SEC. 204. CONFIDENTIAL EMERGENCY MANAGEMENT RE-
PORTING.
(a) IN GENERAL.—Before the end of the 1-year pe-
riod beginning on the date of the enactment of this Act,
the Federal financial institution regulatory agencies shall
develop the means to obtain all necessary information re-
lating to any derivatives activity or any class of derivative
financial instruments, whenever the appropriate Federal
financial institution regulatory agency determines that re-
ceipt of such information from any financial institution
engaged in derivates activities is necessary as a result of
adverse market conditions or other emergency situations
(as defined by the agency).
(b) ACCESSIBILITY OF INFORMATION.—Each finan-
cial institution referred to in paragraph (1) shall—
(1) assemble such information and retain such
records as the appropriate Federal financial institu-
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tion regulatory agency may require by regulation for
purposes of such paragraph; and
(2) promptly provide to the appropriate Federal
financial institution regulatory agency any informa-
tion requested by the agency pursuant to such para-
graph.
(c) 
CONFIDENTIALITY
OF
INFORMATION
PRO-
VIDED.—No information provided to or obtained by an ap-
propriate Federal financial institution regulatory agency
pursuant to paragraph (1) with respect to any financial
institution may be provided to any person or entity other
than another Federal financial institution regulatory agen-
cy, except that such information may be provided with the
prior written approval of the agency.
(d) DEFINITIONS.—For purposes of this section, the
terms ‘‘Federal financial institution regulatory agencies’’,
‘‘financial institution’’, ‘‘derivative financial instrument’’,
and ‘‘derivatives activities’’ have the same meaning as in
title I of this Act.
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TITLE III—FINANCIAL INSTITU-
TION INSOLVENCY REFORMS
SEC. 301. TREATMENT OF CERTAIN SWAP AGREEMENTS BY
CONSERVATORS OR RECEIVERS OF INSURED
DEPOSITORY INSTITUTIONS.
Section 11(e)(8)(D)(vi)(I) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(8)(D)(vi)(I)) is amended
to read as follows:
‘‘(I) means any agreement, in-
cluding the terms and conditions in-
corporated by reference in any such
agreement, which is a rate swap
agreement, basis swap, commodity
swap, forward rate agreement, inter-
est rate future, interest rate option,
foreign exchange agreement, rate cap
agreement, rate floor agreement, rate
collar 
agreement, 
currency 
swap
agreement, cross-currency rate swap
agreement, currency future, currency
option, equity or equity index swap,
equity or equity index option, bond
option, or any other similar agree-
ment, and’’
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SEC. 302. AUTHORITY OF THE CORPORATION WITH RE-
SPECT TO FAILED AND FAILING INSTITU-
TIONS.
Section 11(e)(8) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(8)) is amended—
(1) in subparagraph (E)—
(A) by striking ‘‘paragraph (12) of this
subsection’’; and
(B) by striking ‘‘subsection (d)(9)’’ and in-
serting 
‘‘subsections 
(d)(9), 
(e)(10), 
and
(n)(4)(I)’’; and
(2) by adding 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 man-
ner, the right or power of the Corporation to
transfer any qualified financial contract in ac-
cordance with paragraph (9) and (10) or to liq-
uidate any such contract.
‘‘(G) RECORDKEEPING REQUIREMENTS.—
The Corporation, in consultation with the ap-
propriate Federal banking agencies, may pre-
scribe regulations requiring more detailed rec-
ordkeeping with respect to qualified financial
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contracts (including market valuations) by in-
sured depository institutions.’’.
SEC. 303. AMENDMENTS RELATING TO TRANSFERS OF
QUALIFIED FINANCIAL CONTRACTS.
(a) TRANSFERS
OF QUALIFIED FINANCIAL CON-
TRACTS TO PERSONS OTHER THAN DEPOSITORY INSTI-
TUTIONS.—Section 11(e)(9)(A) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(9)(A)) is amended to read
as follows:
‘‘(A) transfer to 1 depository institution (other
than a depository institution in default) or to 1 per-
son that is not a depository institution (other than
a person for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been ap-
pointed or which is otherwise the subject of a bank-
ruptcy or insolvency proceeding)—’’.
(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 to read as follows:
‘‘(A) IN GENERAL.—If—
‘‘(i) the receiver for an insured deposi-
tory institution in default makes any
transfer of the assets and liabilities of such
institution; and
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‘‘(ii) the transfer includes any quali-
fied financial contract; the 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 follow-
ing the date of the appointment of the re-
ceiver.’’.
(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
amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (D);
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraphs:
‘‘(B) CERTAIN
RIGHTS
NOT
ENFORCE-
ABLE.—
‘‘(i) IN GENERAL.—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 net
or close out such contract under paragraph
(8)(A) or section 403 or 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991 solely by reason of
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the appointment of a receiver for the de-
pository institution (or the insolvency or fi-
nancial condition of the institution for
which the receiver has been appointed)—
‘‘(I) until 5:00 p.m. (Eastern
time) of the business day following the
date of the appointment of the re-
ceiver; or
‘‘(II) after the person has re-
ceived notice that the contract has
been transferred pursuant to para-
graph (9)(A).
‘‘(ii) NOTICE
TO
LAST-KNOWN
AD-
DRESS.—For purposes of this subpara-
graph, the Corporation as receiver 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 Corpora-
tion has sent notice to the last address of
such person shown on the books and
records of the depository institution with
respect to such contract in the manner
provided for in the contract or by other
means reasonably calculated to reach such
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tional derivatives exchange, publish notice of such
filing and afford interested persons an opportunity
to submit written data, views, and arguments con-
cerning such application.
(3) GRANT OF REGISTRATION OR INITIATION
OF PROCEEDINGS.—Within ninety days of the date
of publication of such notice (or within such longer
period as to which the applicant consents), the
Board shall—
(A) by order grant such registration, or
(B) institute proceedings to determine
whether registration should be denied.
Such proceedings shall include notice of the grounds
for denial under consideration and opportunity for
hearing and shall be concluded within one hundred
eighty days of the date of a publication of notice of
the filing of the application for registration. At the
conclusion of such proceedings the Board, by order,
shall grant or deny such registration. The Board
may extend the time for conclusion of such proceed-
ings for up to ninety days if it finds good cause for
such extension and publishes its reasons for so find-
ing or for such longer period as to which the appli-
cant consents.