I 
111TH CONGRESS 
1ST SESSION 
H. R. 710 
To secure additional Tier I capital for the United States banking system 
from parties other than the Federal Government by providing authority 
to the Secretary of the Treasury to guaranty certain new preferred 
stock investments made by public pensions acting in a collective fashion, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 27, 2009 
Mr. ACKERMAN introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on Ways 
and Means, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To secure additional Tier I capital for the United States 
banking system from parties other than the Federal Gov-
ernment by providing authority to the Secretary of the 
Treasury to guaranty certain new preferred stock invest-
ments made by public pensions acting in a collective 
fashion, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Public Retiree’s Invest-
ment Act of 2009’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) The United States banking system’s ability 
to extend credit on a basis consistent with healthy 
economic activity is restricted by a need or desire to 
conserve capital in the face of anticipated losses. 
(2) A shortage of banking capital may continue 
to exist because private investors are generally un-
willing to provide such capital given their inability to 
accurately assess the risk exposure of any individual 
institution while the Federal Government’s ability to 
function as a capital provider may be constrained by 
concerns regarding Federal control of the banking 
system as well its desire to use Federal funds in nu-
merous areas besides capitalization of the banking 
system. 
(3) State and local public pension funds are 
long term investors whose constituents benefit from 
a well-capitalized banking system with the ability to 
extend credit broadly at all levels of the economy. 
(4) Certain State and local pension plans have 
broad investment powers under State law which 
would include the ability to form cooperative busi-
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ness endeavors solely owned by them or in concert 
with public pension plans in other States. 
(5) Certain of these public pension plans have 
indicated their willingness and ability to rapidly 
form and fund a vehicle to be mutually owned by 
them for the sole purpose of investing in preferred 
stocks of United States banking institutions subject 
to certain guaranties provided by the Secretary of 
the Treasury or other appropriate Federal Govern-
ment officer or agency. 
SEC. 3. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) ELIGIBLE INVESTMENTS.—The term ‘‘eligi-
ble investment’’ means any preferred stock invest-
ment which meets the requirements of this Act by 
any public pension bank capital infusion fund. 
(2) PUBLIC PENSION PLANS.—The term ‘‘pub-
lic pension plan’’ means any State and local pension 
plan that has broad investment powers and author-
ity under State law, including the authority to estab-
lish, administer, and participate in cooperative busi-
ness endeavors solely owned by the plan or other 
public pension plans. 
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(3) PUBLIC PENSION BANK CAPITAL INFUSION 
FUND.—The term ‘‘public pension bank capital infu-
sion fund’’ means any investment vehicle mutually 
owned by public pension plans for the sole purpose 
of investing in preferred stocks of United States 
banking institutions, subject to certain guarantees 
provided by the Secretary of the Treasury or other 
appropriate Federal Government officer or agency, 
that meets the requirements of this Act for such 
capital infusion funds. 
(4) QUALIFIED EQUITY OFFERING.—The term 
‘‘qualified equity offering’’ means the sale for cash, 
by a financial institution after the date of an invest-
ment by a public pension bank capital infusion fund 
in any eligible investment issued by such institution, 
of perpetual preferred stock or common stock which 
qualifies as Tier 1 capital of such financial institu-
tion. 
(5) REGUARANTEE.—The term ‘‘reguarantee’’ 
means a guarantee issued by a guarantor of the pay-
ment of, or the fulfillment of any other obligation 
under, a guarantee issued by another guarantor. 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
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SEC. 4. PUBLIC PENSION PLAN INVESTMENTS IN CERTAIN 
BANK PREFERRED STOCK INSTRUMENTS. 
(a) GUARANTEE AND REGUARANTEE AUTHORITY.— 
The Secretary may guarantee eligible investments or re-
guarantee a guarantee of eligible investments. 
(b) REQUIREMENTS AND PROCEDURES FOR GUARAN-
TEES.— 
(1) TERM AND OTHER CONDITIONS OF GUARAN-
TEES.—Any guarantee or reguarantee provided by 
the Secretary under subsection (a) with respect to 
an eligible investment shall— 
(A) be an unconditional guarantee for the 
life of the eligible investment; and 
(B) shall cover the timely payment of divi-
dends on, and the ultimate return of principal 
of, such eligible investment, in accordance with 
the terms of the eligible investment. 
(2) PROCEDURES.—The process by which the 
Secretary shall be notified of a need to perform 
under a guarantee or reguarantee issue under sub-
section (a) and the manner in which the Secretary 
shall perform the duties of guarantor or reguarantor 
shall be mutually agreed to by the Secretary, the 
other guarantor, in the case of a reguarantee from 
the Secretary, and the public pension bank capital 
infusion fund. 
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(c) TERMS OF ELIGIBILITY FOR PUBLIC PENSION 
PLANS.— 
(1) AUTHORIZED
UNDER
STATE
LAW.—The 
Secretary may not guarantee or reguarantee eligible 
investments of a public pension bank capital infusion 
fund under subsection (a) unless each public pension 
plan which has a mutual ownership interest in such 
capital infusion fund is authorized under State law 
to establish, or participate in the formation of, a 
wholly owned mutual fund or a limited liability cor-
poration, in the case of joint ownership with other 
public pension plans. 
(2) CHOICE OF LAW ISSUE.—The powers of any 
public pension plan for purposes of this subsection 
shall— 
(A) in all instances be determined by the 
law of the domicile State of such public pension 
plans; and 
(B) in the case of a joint endeavor among 
public pension plans from different States, by a 
choice of law agreement (among the partici-
pating public pension plans) to which each 
State represented by a plan has granted full 
faith and credit. 
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(d) TERMS OF ELIGIBILITY FOR ELIGIBLE INVEST-
MENTS BY A PUBLIC PENSION BANK CAPITAL INFUSION 
FUND.— 
(1) MAXIMUM AMOUNT PER FUND.—The eligi-
ble investments of a public pension bank capital in-
fusion fund shall be eligible for a guarantee or re-
guarantee under this section only if the aggregate 
amount of such investments by the fund do not ex-
ceed $50,000,000,000. 
(2) 
INSTITUTION
ELIGIBLE
FOR
INVEST-
MENTS.—Only an investment in preferred stock that 
meets the requirements of subsection (e) and has 
been issued by a financial institution which meets 
the definition of a qualifying financial institution 
under the TARP Capital Purchase Program estab-
lished under the authority of the Emergency Eco-
nomic Stabilization Act of 2008 may be treated as 
an eligible investment for purposes of this Act. 
(e) PREFERRED STOCK REQUIREMENTS.—Preferred 
stock meets the requirements of this subsection if the fol-
lowing terms and conditions are met by such stock: 
(1) SECURITY.—The stock bears senior pre-
ferred status with a liquidation preference of $1,000 
per share or higher as provided in the TARP Capital 
Purchase Program. 
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(2) RANKING.—The stock is senior to common 
stock and pari passu with existing preferred shares 
other than preferred shares which by their terms 
rank junior to any existing preferred shares. 
(3) REGULATORY CAPITAL STATUS.—The pre-
ferred stock meets the requirement for treatment as 
Tier I capital for the financial institution which 
issued it. 
(4) TERM.—The term of the stock is perpetual. 
(5) DIVIDENDS.— 
(A) IN GENERAL.—The stock pays cumu-
lative dividends at— 
(i) an initial rate of 8.5 percent per 
year; and 
(ii) after the end of the 1-year period 
beginning on the date of the enactment of 
this Act, at the prevailing reset rate deter-
mined in accordance with subparagraph 
(B). 
(B) RESET RATE.—The term ‘‘reset rate’’ 
means the rate determined at the end of the 1- 
year period beginning on the date of the enact-
ment of this Act and each 1-year period there-
after by adding together— 
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(i) the yield prevailing as of the close 
of business of the date of the determina-
tion on 10-year United States treasury 
notes; and 
(ii) the difference between 8.5 percent 
and the yield prevailing as of the close of 
business on the date of the enactment of 
this Act on 10-year United States treasury 
notes. 
(6) REDEMPTION.— 
(A) TIMING.—The redemption of the stock 
is subject to the following conditions: 
(i) The stock may not be redeemed for 
a period of 3 years from the date of the 
initial investment by the public pension 
bank capital infusion fund, except with the 
proceeds from a qualified equity offering 
which results in aggregate gross proceeds 
to the financial institution which issued the 
stock of not less than 25 percent of the 
issue price of the stock. 
(ii) After the third anniversary of the 
date of the investment, the stock may be 
redeemed, in whole or in part, at any time 
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and from time to time, at the option of the 
financial institution. 
(B) AMOUNT.—All redemptions of the 
stock are at 100 percent of the issue price, plus 
any accrued and unpaid dividends and shall be 
subject to the approval of the primary Federal 
financial regulator of the issuing financial insti-
tution. 
(7) RESTRICTIONS
ON
DIVIDENDS.—For as 
long as the preferred stock is outstanding, no divi-
dends may be declared or paid on junior preferred 
shares, preferred shares ranking pari passu with the 
preferred stock, or common shares (other than in 
the case of pari passu preferred shares’ dividends on 
a pro rata basis with the preferred stock) nor may 
the financial institution which issued the preferred 
stock repurchase or redeem any junior preferred 
shares, preferred shares ranking pari passu with the 
preferred stock, or common shares until such time 
as the preferred stock has been redeemed in whole. 
(8) VOTING
RIGHTS.—The preferred stock is 
nonvoting, other than class voting rights on— 
(A) any authorization or issuance of shares 
ranking senior to the preferred stock; 
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(B) any amendment to the rights of the 
preferred stock; or 
(C) any merger, exchange or similar trans-
action which would adversely affect the rights 
of the preferred stock. 
(9) APPOINT
OF
DIRECTORS.—The stock in-
strument provides that if dividends on the preferred 
stock are not paid in full for more than 4 consecu-
tive dividend periods, the Secretary may elect 2 di-
rectors to serve on the board of directors of the 
issuing financial institution until such time as full 
dividends have been paid for 4 consecutive dividend 
periods. 
(10) TIMING OF GUARANTY PAYMENTS.—The 
payment of guaranty payments under this Act shall 
be pursuant to a policy mutually agreed to by the 
Secretary, the other guarantor, in the case of a re-
guarantee from the Secretary, and the public pen-
sion bank capital infusion fund which policy shall be 
consistent with the intent of the guarantee, as speci-
fied in section 4(b). 
(f) EFFECTIVE PERIOD OF GUARANTEE AUTHOR-
ITY.—Notwithstanding any other provision of this section, 
any guarantee or reguarantee under this subsection may 
only be provided on an eligible investment whose initial 
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issuance is made before the end of the 3-year period begin-
ning on the date of the enactment of this Act . 
(g) TREATMENT UNDER OTHER LAW.—A public 
pension bank capital infusion fund that is a mutual fund 
vehicle or limited liability corporation owned by one or 
more public pension plans and managed under contract 
by an appropriate service vender (as approved by the Sec-
retary) who reports to the fund directly or through its 
chief investment officer shall be deemed to be a political 
subdivision of a State as that term is defined in section 
414(d) of the Internal Revenue Code of 1986 and shall 
be exempt from taxation pursuant to section 115 of such 
Code. 
(h) REPORTS.— 
(1) IN GENERAL.—In the case of any guarantee 
or reguarantee issued by the Secretary, under sub-
section (a), with respect to eligible investments, the 
guarantor of such eligible investments shall submit 
a report to the Congress (and to the Secretary, in 
any case in which the Secretary is the reguarantor) 
on the status of the guarantee or reguarantee. 
(2) CONTENTS.—Each report submitted under 
paragraph (1) shall include, at a minimum— 
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(A) the name of any institution issuing eli-
gible investments for which a guarantee is in ef-
fect; 
(B) the face amount of each eligible invest-
ment covered by the guarantee; 
(C) the amount of dividends paid, declared 
and due under the terms of the eligible invest-
ment; and 
(D) the amount of any payments made by 
the guarantor as a result of the enactment of 
this Act. 
Æ 
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