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the other guaranteed financial groups under the syn-
dicate contract.
(3) LIMITATIONS
ON
GURANTEED
PARTY.—A
guaranteed party under any cross-guarantee or stop-
loss contract may not become a direct guarantor
under any other cross-guarantee or stop-loss con-
tract during any of the following periods:
(A) The period beginning on the date such
party receives a notice of cancellation under
paragraph (1) or (2) with respect to such con-
tract and ending on the date the party becomes
a guaranteed party under a successor contract
or the cancellation notice is withdrawn under
paragraph (1)(C).
(B) The period beginning on the date the
contract expires and ending on the date the
party becomes a guaranteed party under a suc-
cessor contract.
(4) CONTINUED
EFFECTIVENESS
OF
CROSS-
GUARANTEE CONTRACTS UNTIL OTHER COVERAGE IS
OBTAINED.—
(A) IN GENERAL.—The obligations of any
party under a cross-guarantee or stop-loss con-
tract shall remain in effect after the effective
date of the cancellation of the contract by the
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direct guarantors or after the expiration of such
contract, as the case may be, until—
(i) the guaranteed party becomes a
guaranteed party under another cross-
guarantee or stop-loss contract; or
(ii) in the case of a guaranteed party
which ceases to exist as a legal entity, the
guaranteed obligations of the institution
are satisfied or become guaranteed obliga-
tions covered under another cross-guaran-
tee or stop-loss contract.
(B) CANCELLATION
WHEN
NONDEPOSI-
TORY GUARANTOR IS NOT A DIRECT GUARAN-
TOR.—Notwithstanding subparagraph (A), a
cancellation of a stop-loss contract by a stop-
loss syndicate shall take effect immediately if
the party guaranteed under the contract—
(i) is not at the time of cancellation a
direct guarantor under any cross-guarantee
or stop-loss contract; and
(ii) has transferred any remaining
risk under any cross-guarantee or stop-loss
contract under which such guarantor was
formerly a direct guarantor to another di-
rect guarantor.
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(i) CANCELLATION OF CONTRACTS BY GUARANTEED
PARTY.—
(1) IN
GENERAL.—The guaranteed financial
group or nondepository guarantor which is the party
guaranteed under a cross-guarantee or stop-loss con-
tract may notify the syndicate agent for the direct
guarantors under the contract at any time of such
party’s intention to cancel the contract.
(2) CANCELLATION
NOT
EFFECTIVE
UNTIL
SUBSTITUTE
COVERAGE
OBTAINED.—The cancella-
tion of any cross-guarantee or stop-loss contract
under paragraph (1) shall not take effect until the
cancelling party becomes a guaranteed financial
group or a nondepository guarantor under another
cross-guarantee or stop-loss contract.
(3) ALLOWING
NONDEPOSITORY
GUARANTORS
TO
EXIT
THE
BUSINESS.—Notwithstanding para-
graph (2), a cancellation of a stop-loss contract by
a nondepository guarantor shall take effect imme-
diately if the nondepository guarantor—
(A) is not at the time of cancellation a di-
rect guarantor under any cross-guarantee or
stop-loss contract; and
(B) has transferred any remaining risk
under any cross-guarantee or stop-loss contract
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under which such guarantor was formerly a di-
rect guarantor to another direct guarantor.
(4) CANCELLATION FEE.—The cross-guarantee
or stop-loss syndicate under a cross-guarantee or
stop-loss contract which is canceled pursuant to
paragraph (1) may impose a cancellation fee in an
amount determined in accordance with the terms of
the contract.
(j) CONTINUED EFFECTIVENESS
OF CONTRACTS
AFTER CONVERSION OF CHARTER OF DEPOSITORY INSTI-
TUTION.—If—
(1) any State depository institution becomes a
Federal depository institution;
(2) any Federal depository institution becomes
a State depository institution;
(3) any bank becomes a savings association;
(4) any savings association becomes a bank; or
(5) any depository institution in any other way
modifies its legal status,
through a conversion of the charter of the depository insti-
tution, any cross-guarantee contract under which the insti-
tution is a guaranteed depository institution and which is
in effect immediately before such conversion shall remain
in effect after the conversion.
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(k) CONTINUING APPLICABILITY OF OBLIGATIONS
UNDER THE CONTRACTS.—
(1) NO
VOIDING
OR
RESCINDING
OF
CON-
TRACTS.—No party to a cross-guarantee or stop-loss
contract may void or rescind the contract, regardless
of any defense to the existence or enforceability of
the contract that might exist under Federal or State
law.
(2) NO EXCUSES TO PERFORMANCE.—Notwith-
standing any provision of Federal or State law, no
excuse for the failure to perform any obligation
under a cross-guarantee or stop-loss contract shall
be effective.
(3) NONCOMPLIANCE DOES NOT AFFECT OBLI-
GATIONS.—A party to a cross-guarantee or stop-loss
contract shall remain obliged under the contract re-
gardless of whether—
(A) the contract ceases to comply with any
requirement under this title; or
(B) one or more parties to the contract fail
to comply with this title.
(l) DISTRIBUTION OF LOSSES BETWEEN PRIOR AND
SUCCESSOR SYNDICATES.—
(1) CLAIMS-MADE
GUARANTEE.—Subject to
paragraph (2), as between two or more cross-guar-
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antee or stop-loss syndicates which have over time
guaranteed a particular guaranteed party, a cross-
guarantee obligation shall lie with the syndicate
which was the cross-guarantee or stop-loss syndicate
at the time a cause of action described under section
117(e)(1)(A)(i) was filed with respect to the obliga-
tion.
(2) 
EXCEPTION
FOR
STOP-LOSS
OBLIGA-
TIONS.—The obligation of direct guarantors under
section 113(a) shall lie with the cross-guarantee syn-
dicate described under paragraph (2)(A) of such
subsection.
(m) SUBSTITUTION OF DIRECT GUARANTORS.—
(1) AUTHORIZATION OF TRANSFERS SUBJECT
TO CGRC APPROVAL.—
(A) IN GENERAL.—Any direct guarantor’s
rights, privileges, duties, and obligations under
a cross-guarantee or stop-loss contract, and any
portion of any such rights, privileges, duties,
and obligations, may be transferred to a succes-
sor direct guarantor, subject to the approval of
the Corporation (pursuant to section 123 of
this title).
(B) TRANSFER
OF
LONG-TAIL
OBLIGA-
TIONS.—A person which was formerly a direct
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guarantor under a cross-guarantee or stop-loss
contract which was formerly, but no longer is,
in effect may transfer to any person which is a
designated direct guarantor under section
116(b) any residual rights, privileges, duties,
and obligations under the contract, subject to
the approval of the Corporation (pursuant to
section 123 of this title).
(2) TRANSFEROR
NO
LONGER
OBLIGED
ON
CONTRACT.—Notwithstanding any Federal or State
law, a transferor of an interest under paragraph (1)
shall not be obliged to perform the transferee’s obli-
gations under the contract should the transferee fail
to perform.
(3) PARTIES AUTHORIZED TO RESTRICT SUB-
STITUTION
OF
GUARANTORS
IN
A
CONTRACT.—A
guaranteed party or a cross-guarantee or stop-loss
syndicate under a cross-guarantee or stop-loss con-
tract may provide in such contract that any transfer
under paragraph (1) of any interest of any direct
guarantor in such contract shall be subject to the
approval of such party or syndicate.
(4) ALLOCATION OF INCOME AND LOSSES BE-
TWEEN THE TRANSFEROR AND TRANSFEREE.—
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(A) IN
GENERAL.—Subject to subpara-
graph (B), a transferor’s accrued (but unpaid)
premium income and losses as of the date of
transfer under paragraph (1) may be allocated
between the transferor and transferee in any
manner provided for in the transfer agreement.
(B) LOSSES ON CROSS-GUARANTEE OBLI-
GATIONS.—The transferor shall be liable for
any losses due to a loss event (as defined in sec-
tion 113(a)) occurring prior to a transfer under
paragraph (1) and the transferee shall be liable
for any losses due to a loss event after the
transfer.
(n) SYNDICATE VOTING RULES.—
(1) PROPORTIONAL VOTING.—Each cross-guar-
antee and stop-loss contract shall provide that a di-
rect guarantor’s voting rights in the cross-guarantee
or stop-loss syndicate shall be proportional to such
guarantor’s interest in the syndicate.
(2) VARIATIONS
PERMITTED
IN
VOTING
RE-
QUIREMENTS.—A cross-guarantee or stop-loss con-
tract may provide that the number of votes needed
to approve an action by a cross-guarantee or stop-
loss syndicate under the contract may differ depend-
ing upon the action on which a vote is taken.
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(o) GUARANTEED PARTY CAN BE COVERED ONLY
UNDER ONE CONTRACT.—No guaranteed party under
any cross-guarantee or stop-loss contract may be a guar-
anteed party under another cross-guarantee or stop-loss
contract.
(p) AUTHORITY OF THE CGRC TO DIRECT TRANS-
FER.—
(1) IN GENERAL.—If any merger, acquisition,
consolidation, or other combination of two or more
direct guarantors within any cross-guarantee or
stop-loss syndicate occurs which causes the contract
to materially exceed the limitations set forth in sec-
tion 114(b)(1) or paragraph (1) or (2) of section
115(b), the Corporation may issue an order direct-
ing the merged or consolidated guarantor to obtain
a successor for that part of the guarantor’s interest
that exceeds the statutory limit.
(2) EXTENT OF GUARANTEED PARTY’S ABILITY
TO BLOCK TRANSFER.—In the case of any transfer
under paragraph (1), a guaranteed party may bar
the transfer under the authority of subsection
(m)(3) if such party demonstrates to the Corpora-
tion that that transfer of the interest to a particular
guarantor would raise reasonable competitive con-
cerns.
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(q) MERGER OR CONSOLIDATION OF TWO OR MORE
GUARANTEED PARTIES.—After any merger, acquisition,
consolidation, or other combination of two or more guar-
anteed parties, the successor party’s cross-guarantee or
stop-loss contract shall meet the same requirements under
section 114(b)(1) or paragraph (1) or (2) of section
115(b), that the successor would have to meet if the suc-
cessor sought to become a guaranteed party under a new
cross-guarantee or stop-loss contract.
(r) MODIFICATION OF CONTRACTS.—An agreement
amending a cross-guarantee or stop-loss contract needs no
consideration to be binding.
(s) BAR
ON REINSURANCE.—Subject to sections
112(a)(3) and 112(b)(2), a direct guarantor may not rein-
sure such guarantor’s interest in a cross-guarantee or
stop-loss contract.
(t) RULE OF CONSTRUCTION RELATING TO CON-
TRACT TERMS.—No provision of this title shall be con-
strued as prohibiting any cross-guarantee or stop-loss con-
tract from containing any term or condition other than
terms or conditions expressly prohibited by this title.
SEC. 114. REQUIREMENTS APPLICABLE ONLY TO CROSS-
GUARANTEE CONTRACTS.
(a) OBLIGATIONS GUARANTEED UNDER A CROSS-
GUARANTEE CONTRACT.—
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(1) OBLIGATIONS REQUIRED TO BE GUARAN-
TEED
OBLIGATIONS.—The following obligations of
any guaranteed company or guaranteed banking of-
fice shall be guaranteed obligations under a cross-
guarantee contract:
(A) DEPOSITS.—
(i) BANKS
AND
SAVINGS
ASSOCIA-
TIONS.—In the case of a guaranteed de-
pository institution, all deposits.
(ii) BRANCHES OF FOREIGN DEPOSI-
TORY
INSTITUTIONS.—In the case of a
guaranteed banking office, all deposits of
such office payable at a location within the
United States.
(B) 
INTEREST-BEARING
OBLIGATIONS
OTHER THAN SUBORDINATED DEBT.—All inter-
est-bearing obligations other than subordinated
debt.
(C) ALL OTHER CUSTOMER BALANCES AND
PROPERTY.—All balances owed by, or previously
identified property held in custody by, the guar-
anteed company or guaranteed banking office in
its capacity as a fiduciary, including escrows,
balances in brokerage accounts, and balances
on stored-value cards.
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(D) BALANCES
DUE
CLEARINGHOUSES,
THE FEDERAL RESERVE, AND IN SETTLEMENT
OF
OTHER
TRANSACTIONS.—All obligations
owed to clearinghouses, to the Federal Reserve
for funds transfers, and to other funds and se-
curities clearance and settlement systems.
(E) OTHER
OBLIGATIONS
OWED
TO
DI-
RECT GUARANTORS OR GUARANTEED DEPOSI-
TORY
INSTITUTIONS.—All non-interest-bearing
obligations owed to a direct guarantor or guar-
anteed depository institution.
(F) CROSS-GUARANTEE
OBLIGATIONS.—
Cross-guarantee obligations for which the guar-
anteed company is liable as a direct guarantor
under any other cross-guarantee or stop-loss
contract.
(G) BACKUP
FUND
PAYMENTS.—Obliga-
tions to repay the cross-guarantee backup fund
pursuant to section 128(c)(3).
(H) CERTAIN
OTHER
OBLIGATIONS.—All
direct and contingent liabilities under any con-
tract or commitment under—
(i) any letter of credit or bankers’ ac-
ceptance; and
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(ii) any securities contract, commodity
contract, forward contract, repurchase
agreement, or swap agreement (as such
terms are defined in section 11(e)(8)(D) of
the Federal Deposit Insurance Act).
(I) LIABILITY UNDER RECOURSE AGREE-
MENTS.—Any liability under recourse agree-
ments that arises when a guaranteed company
or guaranteed banking office sells loans or
other assets.
(J) CERTAIN
LINES
OF
CREDIT.—Any
binding commitment to lend funds.
(K) ACCRUED INTEREST.—Any accrued in-
terest on an underlying obligation which is a
guaranteed obligation.
(L) FRAUD RELATED TO SUBORDINATED
DEBT.—The liability of any guaranteed party
for damages due to the fraudulent actions of
such party related to marketing subordinated
debt.
(M) OBLIGATIONS
ERRONEOUSLY
CON-
FIRMED BY SYNDICATE AGENT.—Any obligation
binding on the cross-guarantee syndicate under
section 117(a)(4)(B).
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(N) RESIDUAL OBLIGATIONS WHICH THE
CGRC DEEMS MUST BE GUARANTEED.—Subject
to paragraph (3)(C), any other obligation which
the Corporation determines, through rules con-
sistent with the purposes of this title, should be
guaranteed under each cross-guarantee con-
tract.
(2) OBLIGATIONS WHICH MAY NOT BE GUARAN-
TEED.—The following obligations of any guaranteed
company or guaranteed banking office may not be
guaranteed obligations under a cross-guarantee con-
tract:
(A) SUBORDINATED DEBT.—
(i) IN GENERAL.—Subordinated debt
issued by the guaranteed company or guar-
anteed banking office.
(ii) INCLUDES DEBT WHICH MAY BE
REDEEMED
BY
THE
DEBTHOLDER
BY
CHECK OR OTHER MEANS.—For purposes
of this subparagraph, the term ‘‘subordi-
nated debt’’ includes subordinated debt
which may be withdrawn by or credited to
the debtholder by a check, wire transfer, or
other order of the debtholder.
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(B) EQUITY INTERESTS.—Any equity in-
terest in the guaranteed company or guaranteed
banking office.
(3) OBLIGATIONS
WHICH
MAY
BE
INCLUDED
UNDER A CROSS-GUARANTEE CONTRACT.—
(A) IN GENERAL.—Any obligation of any
guaranteed company or guaranteed banking of-
fice which is not required to be, or not prohib-
ited from being, a guaranteed obligation under
paragraphs (1) and (2) may be a guaranteed
obligation under a cross-guarantee contract to
the extent the contract so expressly provides.
(B) RULES UPON SWITCH TO A SUCCESSOR
CONTRACT.—Any obligation that was a guaran-
teed obligation under the previous cross-guaran-
tee contract shall be a guaranteed obligation
under the successor contract, if such obligation
accrues prior to the obligee receiving notice
from the syndicate agent under the successor
contract that obligations of the same type as
were guaranteed under the previous contract
shall not be guaranteed under the successor
contract.
(C) JUDGMENTS
AND
SETTLEMENTS.—
Unless the cross-guarantee contract expressly
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provides to the contrary, no judgment or settle-
ment from any action arising from any alleged
tortious conduct, breach of contract, or viola-
tion of statutory obligation by the guaranteed
company shall be a guaranteed obligation.
(b) RISK DIVERSIFICATION.—
(1) MINIMUM NUMBER OF DIRECT AND SEC-
OND-TIER GUARANTORS.—Each cross-guarantee con-
tract shall comply with the requirements relating to
the maximum percentage of all guaranteed obliga-
tions under the contract which may be guaranteed
by any one direct guarantor and the minimum num-
ber of second-tier guarantors which the guaranteed
party or parties shall have in the aggregate, as de-
termined under the following table (as adjusted pur-
suant to paragraph (2)) on the basis of the total as-
sets of all the guaranteed parties under the contract:
Aggregate amount of assets of all guaranteed parties under
the contract
Maximum per-
centage of cross-
guarantee liabil-
ity assumable by
any 1 direct
guarantor
Minimum num-
ber of second-
tier guarantors
$100,000,000 or less .....................................................
5.0
100
Greater than $100,000,000 but less than or equal to
$500,000,000 ............................................................
4.0
125
Greater than $500,000,000 but less than or equal to
$1,000,000,000 .........................................................
2.5
150
Greater than $1,000,000,000 but less than or equal to
$10,000,000,000 .......................................................
1.5
200
More than $10,000,000,000 .........................................
1.0
250
(2) ADJUSTMENT
OF
DOLLAR
AMOUNTS
FOR
INFLATION.—The amounts contained in the table in
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paragraph (1) relating to the aggregate assets of
guaranteed parties under any cross-guarantee con-
tract shall be adjusted annually by the Corporation,
after the end of the 1-year period beginning on the
date of the enactment of this Act, based on the
change in the implicit price deflator for the gross do-
mestic product or its successor measure.
(c) BASIS FOR CALCULATING EQUITY CAPITAL.—
Each cross-guarantee contract shall describe the manner
in which the equity capital of the guaranteed financial
group shall be calculated for purposes of the contract.
(d) EMERGENCY LIQUIDITY.—Notwithstanding sec-
tion 113(e)(3), the parties to a cross-guarantee contract
may include terms relating to the provision of emergency
liquidity to a guaranteed party by any direct guarantor
without regard to the relative interest in the contract held
by any guarantor providing the liquidity.
(e) INTERNAL GUARANTEES.—A guaranteed com-
pany under any cross-guarantee contract shall be jointly
and severally liable to the direct guarantors under such
contract for any loss incurred by the guarantors in connec-
tion with the cross-guarantee obligations of the guarantors
to any other guaranteed company under such contract.
(f) DELEGATION
OF PERFORMANCE
OF GUARAN-
TEED OBLIGATIONS.—