109TH CONGRESS 
2D SESSION 
H. R. 5585
AN ACT 
To improve the netting process for financial contracts, and 
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Financial Netting Im-
provements Act of 2006’’. 
SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON-
SERVATORS OR RECEIVERS OF DEPOSITORY 
INSTITUTIONS. 
(a) DEFINITION OF SECURITIES CONTRACT.—
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(ii) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 
amended—
(A) in subclause (I)—
(i) by striking ‘‘mortgage loan, or’’ 
and inserting ‘‘mortgage loan,’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such repurchase or re-
verse repurchase transaction is a ‘repur-
chase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)—
(i) by inserting ‘‘(including by nova-
tion)’’ after ‘‘the guarantee’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such settlement is in con-
nection with any agreement or transaction
referred to in subclauses (I) through (XII) 
(other than subclause (II))’’; 
(C) in subclause (IX), by striking ‘‘or 
(VIII)’’ each place such term appears and in-
serting ‘‘(VIII), (IX), or (X)’’; 
(D) by redesignating subclauses (VI), 
(VII), (VIII), (IX), and (X) as subclauses 
(VIII), (IX), (X), (XI), and (XII), respectively; 
and 
(E) by inserting after subclause (V) the 
following new subparagraphs: 
‘‘(VI) means any extension of 
credit for the clearance or settlement 
of securities transactions; 
‘‘(VII) means any loan trans-
action coupled with a securities collar 
transaction, any prepaid securities 
forward transaction, or any total re-
turn swap transaction coupled with a 
securities sale transaction;’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(ii) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(ii)) is amended—
(A) in subclause (I)—
(i) by striking ‘‘mortgage loan, or’’ 
and inserting ‘‘mortgage loan,’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such repurchase or re-
verse repurchase transaction is a ‘repur-
chase agreement’, as defined in clause 
(v))’’; 
(B) in subclause (IV)—
(i) by inserting ‘‘(including by nova-
tion)’’ after ‘‘the guarantee’’; and 
(ii) by inserting before the semicolon 
‘‘(whether or not such settlement is in con-
nection with any agreement or transaction 
referred to in subclauses (I) through (XII) 
(other than subclause (II))’’; 
(C) in subclause (IX), by striking ‘‘or 
(VIII)’’ each place such term appears and in-
serting ‘‘(VIII), (IX), or (X)’’; 
(D) by redesignating subclauses (VI), 
(VII), (VIII), (IX), and (X) as subclauses 
(VIII), (IX), (X), (XI), and (XII), respectively; 
and 
(E) by inserting after subclause (V) the 
following new subparagraphs:
‘‘(VI) means any extension of 
credit for the clearance or settlement 
of securities transactions; 
‘‘(VII) means any loan trans-
action coupled with a securities collar 
transaction, any prepaid securities 
forward transaction, or any total re-
turn swap transaction coupled with a 
securities sale transaction;’’. 
(b) DEFINITION OF FORWARD CONTRACT.—
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(iv)(I) of the Federal 
Deposit 
Insurance 
Act 
(12 
U.S.C. 
1821(e)(8)(D)(iv)(I)) is amended by striking ‘‘trans-
action, reverse repurchase transaction’’ and inserting 
‘‘or reverse repurchase transaction (whether or not 
such repurchase or reverse repurchase transaction is 
a ‘repurchase agreement’, as defined in clause (v))’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(iv)(I) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(iv)(I)) is amended by 
striking ‘‘transaction, reverse repurchase trans-
action’’ and inserting ‘‘or reverse repurchase trans-
action (whether or not such repurchase or reverse