(II) the applicable covered bond 
regulator authorizes the borrowing or 
credit. 
(C) LIMITED LIABILITY.—A servicer or ad-
ministrator shall not be liable for any error in 
business judgment when borrowing funds or oth-
erwise obtaining credit under this paragraph (2) 
unless the servicer or administrator acted in bad 
faith or in willful disregard of its duties. 
(D) STUDY ON BORROWINGS AND CREDIT.— 
The Comptroller General of the United States 
shall conduct a study on whether the Federal re-
serve banks should be authorized to lend funds or 
otherwise extend credit to an estate under this 
paragraph (2) and, if so, what conditions and 
limits should be established to mitigate any risk 
that the United States Government could absorb 
credit losses on the cover pool held by the estate. 
The Comptroller General shall submit a report to 
the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Fi-
nancial Services of the House of Representatives 
on the results of the study not later than 6 
months after the date of enactment of this Act. 
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(3) DISTRIBUTIONS BY ESTATE.—All payments 
or other distributions by an estate shall be made at 
the times, in the amounts, and in the manner set 
forth in the covered bonds, the related transaction doc-
uments, and any contracts executed by or on behalf 
of the estate in compliance with this Act and the over-
sight program. To the extent that the relative priority 
of the liabilities of the estate are not specified in or 
otherwise ascertainable from their terms, distributions 
shall be made on each distribution date under the cov-
ered bonds, the related transaction documents, or any 
contracts executed by or on behalf of the estate— 
(A) first, to pay accrued and unpaid super-
priority claims under paragraph (2)(B)(ii); 
(B) second, to pay accrued and unpaid ad-
ministrative expense claims under paragraph 
(1)(I), paragraph (2)(B)(ii), section 4(b)(5)(A), 
or section 4(c)(6)(A); 
(C) third, to pay— 
(i) accrued and unpaid claims under 
the covered bonds and the related trans-
action documents according to their terms; 
and 
(ii) accrued and unpaid pari passu 
claims under paragraph (2)(B)(ii); and 
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(D) fourth, to pay accrued and unpaid sub-
ordinated claims under paragraph (2)(B)(i). 
(4) DISTRIBUTIONS ON RESIDUAL INTEREST.— 
After all other claims against and interests in an es-
tate have been fully and irrevocably paid or defeased, 
the trustee shall or shall cause a servicer or adminis-
trator to distribute the remainder of the estate to or 
at the direction of the owner of the residual interest. 
No interim distribution on the residual interest may 
be made before that time, unless the applicable cov-
ered bond regulator— 
(A) approves the distribution after deter-
mining that all other claims against and inter-
ests in the estate will be fully, timely, and irrev-
ocably paid according to their terms; and 
(B) provides an indemnity, for the benefit 
of the estate, assuring that all other claims 
against and interests in the estate will be fully, 
timely, and irrevocably paid according to their 
terms. 
(5) CLOSING OF ESTATE.—After an estate has 
been fully administered, the trustee shall close the es-
tate and, except as otherwise directed by the applica-
ble covered bond regulator, shall destroy all records of 
the estate. 
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(6) NO LOSS TO TAXPAYERS.—Taxpayers shall 
bear no losses from the resolution of an estate under 
this Act. To the extent that the Secretary and the Cor-
poration jointly determine that the Deposit Insurance 
Fund incurred actual losses that are higher because 
the covered bond program of an insured depository 
institution was subject to resolution under this Act 
rather than as part of the receivership of the institu-
tion under the Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.), the Corporation may exercise the 
powers available under section 7(b) of the Federal De-
posit Insurance Act (12 U.S.C. 1817(b)) to recover an 
amount equal to those losses after consulting with the 
Secretary. 
SEC. 5. SECURITIES LAW PROVISIONS. 
(a) EXISTING EXEMPTIONS APPLICABLE TO COVERED 
BONDS.— 
(1) TREATMENT OF CERTAIN BANKS AND OTHER 
ENTITIES.—Any covered bond issued or guaranteed by 
a bank or by an eligible issuer described in section 
2(9)(D) and sponsored solely by 1 or more banks for 
the sole purpose of issuing covered bonds is and shall 
be treated as a security issued or guaranteed by a 
bank under section 3(a)(2) of the Securities Act of 
1933 (15 U.S.C. 77c(a)(2)), section 3(c)(3) of the In-
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vestment Company Act of 1940 (15 U.S.C. 80a- 
3(c)(3)), and section 304(a)(4)(A) of the Trust Inden-
ture Act of 1939 (15 U.S.C. 77ddd(a)(4)(A)). No cov-
ered bond issued or guaranteed by a bank or by an 
eligible issuer described in section 2(9)(D) and spon-
sored solely by 1 or more banks for the sole purpose 
of issuing covered bonds shall be treated as an asset- 
backed security (as defined in section 3 of the Securi-
ties and Exchange Act of 1934 (15 U.S.C. 78c)). Each 
covered bond regulator for 1 or more banks shall 
adopt disclosure and reporting regulations for offers 
or sales of covered bonds by a bank or an eligible 
issuer described in this paragraph. Such regulations 
shall provide for uniform and consistent standards for 
such covered bond issuers, to the extent possible, and 
shall be consistent with existing regulations governing 
offers or sales of nonconvertible debt. 
(2) TREATMENT OF CERTAIN ASSOCIATIONS AND 
COOPERATIVE BANKS.—Any covered bond issued by 
an entity described in section 3(a)(5)(A) of the Secu-
rities Act of 1933 (15 U.S.C. 77c(a)(5)(A)) or by an 
eligible issuer described in section 2(9)(D) and spon-
sored solely by 1 or more such entities for the sole 
purpose of issuing covered bonds is and shall be treat-
ed as a security issued by such an entity under sec-
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tion 3(a)(5)(A) of the Securities Act of 1933 (15 
U.S.C. 77c(a)(5)(A)), section 3(c)(3) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-3(c)(3)), and 
section 304(a)(4)(A) of the Trust Indenture Act of 
1939 (15 U.S.C. 77ddd(a)(4)(A)). No covered bond 
issued by an entity described in section 3(a)(5)(A) of 
the Securities Act of 1933 (15 U.S.C. 77c(a)(5)(A)) or 
by an eligible issuer described in section 2(9)(D) and 
sponsored solely by 1 or more such entities for the sole 
purpose of issuing covered bonds shall be treated as 
an asset-backed security (as defined in section 3 of the 
Securities and Exchange Act of 1934 (15 U.S.C. 
78c)). Each covered bond regulator for 1 or more enti-
ties described in section 3(a)(5)(A) of the Securities 
Act of 1933 (15 U.S.C. 77c(a)(5)(A)) shall adopt, as 
part of the securities regulations of the covered bond 
regulator, a separate scheme of registration, disclo-
sure, and reporting obligations and exemptions for of-
fers or sales of covered bonds that are described in this 
paragraph. Such regulations shall provide for uni-
form and consistent standards for such covered bond 
issuers, to the extent possible, and shall be consistent 
with regulations governing offers or sales of similar 
securities. 
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