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(1) IN GENERAL.—No guaranteed company or
guaranteed banking office may delegate or assign
the performance of a guaranteed obligation unless
the person to which the performance is delegated or
assigned is a guaranteed company or guaranteed
banking office.
(2) TRANSFERRING PARTY AND SYNDICATE NO
LONGER OBLIGED ON OBLIGATION.—Notwithstand-
ing any Federal or State law, a guaranteed company
or guaranteed banking office that was the transferor
of the guaranteed obligation, and the cross-guaran-
tee syndicate for such a company or office, shall not
be obliged to perform on a guaranteed obligation
transferred in compliance with paragraph (1).
SEC. 115. REQUIREMENTS APPLICABLE ONLY TO STOP–
LOSS CONTRACTS.
(a) OBLIGATIONS GUARANTEED UNDER
A STOP-
LOSS CONTRACT.—
(1) OBLIGATIONS REQUIRED TO BE GUARAN-
TEED
OBLIGATIONS.—A nondepository guarantor’s
cross-guarantee obligations shall be guaranteed obli-
gations under a stop-loss contract.
(2) NO OTHER GUARANTEED OBLIGATIONS.—
Except for the obligations described in paragraph
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(1), no obligation of a nondepository guarantor may
be a guaranteed obligation.
(b) RISK DIVERSIFICATION.—
(1) MINIMUM NUMBERS OF DIRECT GUARAN-
TORS.—A direct guarantor under a stop-loss con-
tract may not guarantee more than 2 percent of the
guaranteed obligations under such contract.
(2) SECOND-TIER
GUARANTORS.—The direct
guarantors under any stop-loss contract shall have,
in the aggregate, no fewer than 150 direct guaran-
tors.
SEC. 116. ELIGIBILITY AND REQUIREMENTS FOR DIRECT
GUARANTORS.
(a) ELIGIBILITY.—
(1) IN GENERAL.—No person may become a di-
rect guarantor unless such person is a guaranteed
company or a nondepository guarantor.
(2) NONDEPOSITORY GUARANTOR.—
(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C) of this paragraph and sub-
section (c) of this section, any person may be
a nondepository guarantor.
(B) INELIGIBILITY OF DEPOSITORY INSTI-
TUTIONS.—
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(i) IN GENERAL.—No depository insti-
tution, or subsidiary of a depository insti-
tution, may be a nondepository guarantor.
(ii) RULE
OF
CONSTRUCTION
FOR
FOREIGN BANKS.—Clause (i) shall not be
construed as prohibiting a foreign bank
which has a branch in the United States
from being a nondepository guarantor.
(iii) RULE
IF
FOREIGN
BANK
IS
A
GUARANTEED COMPANY.—A foreign bank
which is a guaranteed company may not be
a nondepository guarantor.
(C) INELIGIBILITY OF GOVERNMENT ENTI-
TIES.—
(i) IN GENERAL.—No entity which—
(I) has direct or indirect taxing
authority;
(II) is a government sponsored
enterprise; or
(III) may issue securities in
which the owners of the securities are
exempt from taxation under State or
Federal law,
may be a nondepository guarantor.
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(ii) RULE
OF
CONSTRUCTION
FOR
GOVERNMENT
PENSION
FUNDS.—Clause
(i) shall not be construed as to prohibit
any pension fund operated for the benefit
of government employees from being a
nondepository guarantor.
(3) GUARANTEED
DEPOSITORY
INSTITUTIONS
AUTHORIZED
TO
BE
DIRECT
GUARANTORS.—Not-
withstanding any other Federal or State law restrict-
ing the powers of depository institutions, a guaran-
teed depository institution may be a direct guarantor
under any cross-guarantee or stop-loss contract.
(b) DESIGNATED DIRECT GUARANTOR.—
(1) ONLY ONE GUARANTEED COMPANY WITHIN
A GUARANTEED FINANCIAL GROUP MAY BE A DI-
RECT GUARANTOR.—No guaranteed company shall
be a direct guarantor if another guaranteed com-
pany under the same cross-guarantee contract al-
ready is a direct guarantor under any cross-guaran-
tee or stop-loss contract.
(2) DESIGNATION OF DIRECT GUARANTOR IN
CROSS-GUARANTEE
CONTRACT.—In the case of a
cross-guarantee contract in which two or more com-
panies are guaranteed under the contract, the con-
tract shall designate which guaranteed company
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may, in accordance with paragraph (1), be a direct
guarantor.
(c) FINANCIAL
RESOURCE
REQUIREMENTS
FOR
NONDEPOSITORY GUARANTORS.—No person may become
a nondepository guarantor unless such person has a net
worth of at least $100,000,000 at the time such person
would, but for this paragraph, become a direct guarantor
under a cross-guarantee or stop-loss contract.
(d) RISK DIVERSIFICATION REQUIREMENTS FOR DI-
RECT GUARANTORS.—
(1) PROJECTED
ANNUAL
PREMIUM
CAPACITY
AND PROJECTED ANNUAL PREMIUM LIMIT.—A per-
son may not become a direct guarantor under a
cross-guarantee or stop-loss contract if, upon the
contract (but for this paragraph) taking effect—
(A) the sum of the estimated annual pre-
mium which the person would receive as a di-
rect guarantor under the contract and the per-
son’s projected annual premium income would
exceed such person’s projected annual premium
capacity as of—
(i) in the case of a contract which
would take effect on or before the 15th day
of any calendar month, the second cal-
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endar month preceding such calendar
month; or
(ii) in the case of a contract which
would take effect after the 15th day of any
calendar month, the end of the calendar
month preceding such calendar month; or
(B) the estimated annual premium which
the person would receive as a direct guarantor
under the contract would exceed such person’s
projected annual premium limit as of—
(i) in the case of a contract which
would take effect on or before the 15th day
of any calendar month, the second cal-
endar month preceding such calendar
month; or
(ii) in the case of a contract which
would take effect after the 15th day of any
calendar month, the end of the calendar
month preceding such calendar month.
(2) CALCULATION OF PROJECTED ANNUAL PRE-
MIUM.—
(A) IN
GENERAL.—The syndicate agent
under any cross-guarantee or stop-loss contract
shall determine the projected annual premium
earned by any direct guarantor for any calendar
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month by calculating the amount of such guar-
antor’s share of the premium accrued under the
contract 
during 
such 
month 
and 
then
annualizing such amount.
(B) FIRST
TWO
MONTHS.—During the
first two calendar months in which any cross-
guarantee or stop-loss contract is in effect, the
syndicate agent shall determine the projected
annual premium under the contract for each of
these two calendar months by annualizing the
premium rate in effect on the date the contract
becomes effective.
(3) CALCULATION OF THE ESTIMATED ANNUAL
PREMIUM FOR THE APPROVED CONTRACT.—
(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘‘estimated annual pre-
mium’’ means the annualized premium rate
likely to be in effect on the date the contract
becomes effective.
(B) SYNDICATE
AGENT
ESTIMATE.—The
proposed syndicate agent for the contract shall
make a reasonable estimate of the amount in
paragraph (1) within five days prior to the date
on which the contract is to become effective.
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(4) CALCULATION OF PROJECTED ANNUAL PRE-
MIUM INCOME.—For purposes of making any deter-
mination under paragraph (1)(A) with respect to a
direct guarantor, the term ‘‘projected annual pre-
mium income’’ means the total projected annual pre-
miums from all cross-guarantee and stop-loss con-
tracts under which such guarantor is a direct guar-
antor, other than the contract for which such deter-
mination is being made, as of—
(A) in the case of contract which would be-
come effective on or before the 15th day of any
calendar month, the second calendar month
preceding such calendar month; and
(B) in the case of a contract which would
become effective after the 15th day of any cal-
endar month, the calendar month preceding
such calendar month.
(5) ADJUSTMENT OF PROJECTED ANNUAL PRE-
MIUM CAPACITY FOR CHANGED CIRCUMSTANCES.—
The Corporation may, by rulemaking, set the pro-
jected annual premium capacity below 3 percent if
the Corporation determines that the existing per-
centage is too high to ensure an adequate capital
base for the cross-guarantee system.
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(e) LIABILITY OF ACQUIRER OF ANY DIRECT GUAR-
ANTOR.—Any person which acquires (as defined in section
13(f)(8)(B) of the Federal Deposit Insurance Act) any di-
rect guarantor shall be obligated for all of the cross-guar-
antee obligations of such guarantor under any cross-guar-
antee or stop-loss contract to which such guarantor is a
direct guarantor.
SEC. 117. PROVISIONS RELATING TO CROSS-GUARANTEE
AND STOP-LOSS SYNDICATES.
(a) POWERS AND DUTIES OF SYNDICATE AGENTS.—
(1) SYNDICATE AGENT IS AGENT OF DIRECT
GUARANTORS.—
(A) IN
GENERAL.—The syndicate agent
under any cross-guarantee or stop-loss contract
shall act as an agent of the direct guarantors
under such contract.
(B) EXCEPTIONS.—Notwithstanding sub-
paragraph (A), the syndicate agent also shall
have—
(i) a duty to protect the confidential-
ity of any aspect of a guaranteed party’s
affairs which the contract specifies shall be
protected; and
(ii) duties to the Corporation as speci-
fied in this title.
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(2) POWERS OF SYNDICATE AGENT.—No per-
son under a cross-guarantee or stop-loss contract
other than the syndicate agent shall have the follow-
ing powers:
(A) MONITOR
PERFORMANCE.—Monitor
the performance, or contract with a third party
to monitor the performance, of any party guar-
anteed under such contract.
(B) COLLECT PREMIUMS.—Collect the pre-
miums due to the direct guarantors under such
contract.
(3) SYNDICATE AGENT REPORTS SUBMITTED TO
THE CENTRAL ELECTRONIC REPOSITORY.—The syn-
dicate agent under any cross-guarantee or stop-loss
contract shall submit in electronic form to the
central electronic repository by the 15th of each cal-
endar month a report—
(A) of the equity capital or the net worth,
as the case may be, of the guaranteed financial
group or nondepository guarantor under the
contract as of the end of the prior calendar
month; and
(B) of the projected annual premium due
each direct guarantor, as of the end of the prior
calendar month.
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(4) CONFIRMATION
OF
GUARANTEE
OF
SPE-
CIFIC OBLIGATIONS.—
(A) IN
GENERAL.—The syndicate agent
under any cross-guarantee contract shall—
(i) determine, at the request of any
current or prospective creditor of a guar-
anteed company or guaranteed banking of-
fice under such contract, whether, assum-
ing that the company or office has or will
have an obligation to the creditor, such ob-
ligation would be a guaranteed obligation
under the contract; and
(ii) promptly notify the current or
prospective creditor of the agent’s deter-
mination.
(B) DETERMINATION
BINDING
ON
SYN-
DICATE.—Any notification of determination
under subparagraph (A) shall be binding on the
cross-guarantee syndicate.
(C) FEE.—A syndicate agent may charge
a current or prospective creditor a fee for mak-
ing the determination and notifying the creditor
under subparagraph (A).
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(5) AGREEMENT
GOVERNING
THE
RELATION-
SHIP
BETWEEN
THE
SYNDICATE
AND
SYNDICATE
AGENT.—
(A) IN GENERAL.—Any agreement between
the direct guarantors and the syndicate agent
governing the relationship between such parties
must be included in the cross-guarantee or
stop-loss contract.
(B) LIMITS ON SIDE CONTRACTS.—No di-
rect guarantor or group of direct guarantors
under a cross-guarantee or stop-loss contract
may enter into any other contract or binding
agreement pertaining to the contract with the
syndicate agent under such cross-guarantee or
stop-loss contract.
(6) AUTHORIZATION OF INFORMATION SHARING
AMONG SYNDICATE AGENTS.—Notwithstanding Fed-
eral or State law, the Corporation may prescribe
rules allowing syndicate agents to share information
if the Corporation finds that the benefits of such in-
formation sharing outweigh the anticompetitive risks
of such sharing.
(b) EXEMPTION FROM SECURITIES LAWS.—Notwith-
standing Federal or State law, interests in any cross-guar-
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antee or stop-loss syndicate are not securities for any pur-
pose.
(c) TAXATION OF SYNDICATES.—
(1) TREATED
AS
PARTNERSHIP.—Any cross-
guarantee or stop-loss syndicate shall be treated as
a partnership for purposes of the Internal Revenue
Code of 1986.
(2) CONSOLIDATED
RETURNS
BY
SYNDICATE
AGENT.—A syndicate agent shall file an annual in-
formation return with the Internal Revenue Service
with respect to all syndicates for which such agent
is an agent, and all distributions with respect to
such syndicates, on a consolidated basis.
(3) TAX
EXEMPT
STATUS.—Any syndicate
under any cross-guarantee or stop-loss contract, any
income or gross receipts (including premiums), and
any activity of the syndicate shall be exempt from all
taxation imposed by any State, county, municipality,
or local taxing authority.
(d) REPLACEMENT OF SYNDICATE AGENTS.—
(1) IN GENERAL.—The cross-guarantee or stop-
loss syndicate under any cross-guarantee or stop-loss
contract may at any time and without cause replace
the syndicate agent under such contract, subject to
the guaranteed financial group or nondepository
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guarantor’s approval of the new syndicate agent, by
amending the contract and obtaining the Corpora-
tion’s approval of the new syndicate agent under sec-
tion 123.
(2) NO EFFECT ON CONTRACT.—The replace-
ment of a syndicate agent by the direct guarantors
in accordance with paragraph (1) shall not affect the
continuing existence or enforceability of the contract.
(3) WITHDRAWAL OF SYNDICATE AGENT.—
(A) SAME-DAY SUBMISSION OF AMENDED
CONTRACT WITH NEW SYNDICATE AGENT.—If a
syndicate agent should resign or otherwise cease
providing required services under a cross-guar-
antee or stop-loss contract, whether wrongfully,
as allowed under such contract, or for any other
reason, the cross-guarantee or stop-loss syn-
dicate shall by the end of the business day on
which the resignation or cessation of services is
effective submit an amendment to the contract,
with a successor syndicate agent named in the
amendment, to the Corporation for approval.
(B) INTERIM
CGRC
APPOINTMENT.—The
Corporation may appoint a successor syndicate
agent to serve until a cross-guarantee or stop-
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loss syndicate has complied with the require-
ments under subparagraph (A).
(e) CAUSES OF ACTION AGAINST A SYNDICATE OR
SYNDICATE AGENT.—
(1) CAUSES
OF
ACTION
AGAINST
A
SYN-
DICATE.—
(A) IN
GENERAL.—A cross-guarantee or
stop-loss syndicate shall be sued as an entity,
and no direct guarantor may be sued in such
guarantor’s individual capacity, for—
(i) breach of the cross-guarantee or
stop-loss contract;
(ii) liability for the acts or omissions
of the syndicate agent under the contract;
or
(iii) wrongs arising out of any action
authorized by the syndicate, including ac-
tions undertaken pursuant to sections
113(n) and 117(h)(2).
(B) SEVERAL LIABILITY.—Section 113(e)
shall apply in determining a direct guarantor’s
liability under any cause of action under sub-
paragraph (A).
(C) SERVICE OF PROCESS.—For the pur-
poses of any action under subparagraph (A)—
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(i) the syndicate agent shall be the
agent for the cross-guarantee or stop-loss
syndicate for service of process; and
(ii) service of process upon a syn-
dicate agent shall serve as the exclusive
manner of service of process upon the syn-
dicate under the contract.
(2) CONDUCT FOR WHICH SYNDICATES HAVE
NO LEGAL DUTY TO THIRD PARTIES.—A cross-guar-
antee or stop-loss syndicate shall have no legal duty
under Federal or State law to any person with re-
spect to—
(A) the level or accuracy of the premium
rate under a cross-guarantee or stop-loss con-
tract;
(B) the adequacy of a syndicate agent’s
monitoring of a guaranteed party; or
(C) the decision whether to enforce or
waive a right or privilege of the syndicate under
the cross-guarantee or stop-loss contract.
(3) CONDUCT FOR WHICH SYNDICATE AGENTS
HAVE NO LEGAL DUTY TO THIRD PARTIES.—A syn-
dicate agent shall have no legal duty under Federal
or State law to any person other than the parties to
a cross-guarantee or stop-loss contract with respect
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to the adequacy of the agent’s performance of such
agent’s contractual obligations under the contract.
(4) LIABILITY FOR ACTS OF A GUARANTEED
PARTY.—Subject to sections 114(a) and 115(a), a
cross-guarantee syndicate, stop-loss syndicate, or
syndicate agent shall not be liable for any alleged
tortious conduct, breach of contract, or violation of
statutory obligation by a guaranteed party under the
contract.
(5) BAR ON PUNITIVE DAMAGES.—No punitive
damages shall be allowed in any action against a
cross-guarantee syndicate, stop-loss syndicate, or
syndicate agent in the syndicate’s or agent’s capac-
ity as such under a cross-guarantee or stop-loss con-
tract.
(f) CAUSES OF ACTION BY A SYNDICATE, SYNDICATE
AGENT, OR DIRECT GUARANTOR.—
(1) DIRECT
GUARANTORS
CANNOT
SUE
IN
THEIR INDIVIDUAL CAPACITY IN ACTIONS THAT ARE
DERIVATIVE OF ACTIONS OF THE SYNDICATE.—No
direct guarantor may sue, in such guarantor’s indi-
vidual capacity, any person under Federal or State
law for injuries arising out of any cross-guarantee or
stop-loss contract unless—
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(A) such guarantor’s injury is a special in-
jury distinct from injuries suffered by other di-
rect guarantors which are members of the
cross-guarantee or stop-loss syndicate; or
(B) such guarantor’s claim is against the
cross-guarantee or stop-loss syndicate itself.
(2) BAR ON CERTAIN ACTIONS AGAINST THIRD
PARTIES.—Except for an action for breach of con-
tract, a cross-guarantee syndicate, stop-loss syn-
dicate, or syndicate agent shall not have a cause of
action under Federal or State law against any per-
son for any loss arising out of any cross-guarantee
or stop-loss contract unless the syndicate or syn-
dicate agent (as the case may be), in addition to
proving the required elements of a cause of action
under Federal or State law, proves by a preponder-
ance of the evidence that—
(A) the party made a false representation
to the syndicate, guarantor, or syndicate agent;
(B) the party had actual knowledge that
the representation was false; and
(C) the false representation was material;
(g) CAUSE OF ACTION BY THE SYNDICATE AGAINST
THE SYNDICATE AGENT.—In any action by the cross-
guarantee or stop-loss syndicate against the syndicate
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agent to recover damages due to a loss (as the term ‘‘loss’’
is defined in section 113(a)(1)(D)), the syndicate must,
in addition to proving the required elements of a cause
of action under Federal or State law, prove by a prepon-
derance of the evidence—
(1) that—
(A) the syndicate agent made a false rep-
resentation to the syndicate;
(B) the syndicate agent had actual knowl-
edge that the representation was false; and
(C) the false representation was material;
or
(2) that the syndicate agent consciously dis-
regarded substantial and unjustifiable risks being
taken by the guaranteed party under the contract.
(h) RELATIONSHIP AMONG SYNDICATE MEMBERS.—
(1) SYNDICATE
MEMBERS
NOT
AGENTS
FOR
EACH OTHER.—Subject to paragraph (2), no direct
guarantor in a cross-guarantee or stop-loss syndicate
shall be liable under agency law for the actions of
any other direct guarantor in the syndicate.
(2) SYNDICATE MAY VOTE TO APPOINT A MEM-
BER AS AGENT FOR THE SYNDICATE.—A cross-guar-
antee or stop-loss syndicate may, consistent with
section 113(n), vote to appoint one or more direct
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guarantors under the contract as an agent for the
syndicate.
(i) REGISTRATION OF SYNDICATES.—
(1) IN GENERAL.—The Corporation shall pre-
scribe rules providing for the registering of cross-
guarantee and stop-loss syndicates for the purpose
solely of allowing persons a reference by which to
identify individual syndicates.
(2) REGISTRATION UPON SUBMISSION OF THE
CONTRACT FOR APPROVAL.—The rules under para-
graph (1) shall provide for the automatic registra-
tion of a cross-guarantee or stop-loss syndicate upon
submission for approval of a cross-guarantee or
stop-loss contract under section 123.
(3) DISTINGUISHING
AMONG
SYNDICATES.—
The rules under paragraph (1) shall reference a
cross-guarantee or a stop-loss syndicate as a unique
syndicate with permanent identification.
SEC. 118. ASSUMPTION OF CONTROL OF A GUARANTEED
COMPANY 
BY 
A 
CROSS-GUARANTEE 
SYN-
DICATE.
(a) RIGHT OF CROSS-GUARANTEE SYNDICATE TO
ASSUME CONTROL.—A cross-guarantee syndicate under
any cross-guarantee contract shall have the right to as-
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sume control of a guaranteed company under the contract
under the following circumstances:
(1) CANCELLATION.—Immediately after a can-
cellation of the contract by the syndicate or the
guaranteed financial group has become effective un-
less a successor cross-guarantee contract has taken
effect.
(2) Expiration.—Immediately after the expira-
tion of the cross-guarantee contract unless a succes-
sor cross-guarantee contract has taken effect.
(b) RIGHT OF GUARANTEED PARTY TO SEEK TO
STAY ASSUMPTION OF CONTROL.—
(1) IN GENERAL.—A guaranteed company may
file an action requesting a stay of any assumption
of control by a cross-guarantee syndicate.
(2) TIME LIMIT FOR OBJECTING TO ASSUMP-
TION OF CONTROL.—
(A) IN GENERAL.—Any action under para-
graph (1) shall be filed either within 30 days
after the notice of cancellation under section
113(h)(1) is given or more than 60 days prior
to the expiration of the contract, whichever the
case may be.
(B) EXCEPTION IF SUCCESSOR CONTRACT
IS
OBTAINED.—Subparagraph (A) shall not
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apply to a guaranteed company which has, sub-
sequent to the notice of cancellation or the date
60 days prior to expiration, become guaranteed
under a successor cross-guarantee contract.
(3) EXPEDITED REVIEW.—The United States
district court with jurisdiction over the cross-guaran-
tee contract shall provide expedited review of any ac-
tion under paragraph (1).
(4) BASIS OF DETERMINATION.—In any action
under paragraph (1), the court shall not stay the as-
sumption of control by a cross-guarantee syndicate
if the conditions for assuming control under sub-
section (a) have been met.
(c) RIGHTS OF CROSS-GUARANTEE SYNDICATE TO
ENJOIN VIOLATIONS OF THE CONTRACT UNTIL ASSUM-
ING CONTROL.—
(1) INJUNCTIVE REMEDIES.—Upon giving no-
tice of cancellation of the cross-guarantee contract
under section 113(h)(1) or the expiration of the con-
tract, the cross-guarantee syndicate shall be granted
injunctive relief to enforce any restrictions imposed
under the contract.
(2) APPOINTMENT OF A CONSERVATOR.—
(A) IN GENERAL.—Upon giving notice of
cancellation of the cross-guarantee contract