I 
111TH CONGRESS 
1ST SESSION H. R. 3145 
To amend the securities laws to prohibit credit default swaps and to provide 
the Securities and Exchange Commission with the authority to regulate 
swap agreements. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 9, 2009 
Ms. WATERS introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To amend the securities laws to prohibit credit default swaps 
and to provide the Securities and Exchange Commission 
with the authority to regulate swap agreements. 
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 ‘‘Credit Default Swap 
Prohibition Act of 2009’’. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds the following: 
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(1) Credit default swaps were conceived as in-
surance instruments, used to diffuse risk and in-
crease liquidity throughout our lending system. 
(2) The credit default swap market has grown 
over the past decade to include contracts that are 
entered into by persons with no economic interest in 
the contract’s underlying reference event, also known 
as naked credit default swaps. 
(3) Certain parties wrote credit default swap 
contracts without posting collateral, leaving them 
overexposed to certain asset classes and creating a 
systemic risk. 
(4) Unconnected and uncollateralized specula-
tion creates an unnecessary risk for our financial 
system. 
(5) Credit default swaps have proved to be 
harmful financial instruments and have caused sig-
nificant wealth destruction during our economic cri-
sis. 
(b) PURPOSE.—The purposes of this Act are— 
(1) to allow the Securities and Exchange Com-
mission to have oversight over all security-based 
swap agreements; and 
(2) to prevent further damage to our economy 
by prohibiting credit default swaps. 
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SEC. 3. ESTABLISHING SECURITIES AND EXCHANGE COM-
MISSION OVERSIGHT OF CREDIT DEFAULT 
SWAPS. 
(a) DEFINITION OF CREDIT DEFAULT SWAP.— 
(1) Section 2(a) of the Securities Act of 1933 
(15 U.S.C. 77b(a)) is amended by adding at the end 
the following: 
‘‘(17) CREDIT
DEFAULT
SWAP.—The term 
‘credit default swap’ means— 
‘‘(A) a swap agreement (as such term is 
defined in section 206A of the Gramm-Leach- 
Bliley Act) that protects a party to such agree-
ment against the risk of a loss of value because 
of the occurrence or non-occurrence of an event 
or contingency specified in such agreement re-
lating to a security, loan, or other reference 
asset; and 
‘‘(B) such other forms of credit risk pro-
tection as the Commission may, by rule, pre-
scribe as necessary or appropriate in the public 
interest or for the protection of investors.’’. 
(2) Section 3(a) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(a)) is amended by adding at 
the end the following: 
‘‘(65) CREDIT
DEFAULT
SWAP.—The term 
‘credit default swap’ means— 
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‘‘(A) a swap agreement (as such term is 
defined in section 206A of the Gramm-Leach- 
Bliley Act) that protects a party to such agree-
ment against the risk of a loss of value because 
of the occurrence or non-occurrence of an event 
or contingency specified in such agreement re-
lating to a security, loan, or other reference 
asset; and 
‘‘(B) such other forms of credit risk pro-
tection as the Commission may, by rule, pre-
scribe as necessary or appropriate in the public 
interest or for the protection of investors.’’. 
(b) SECURITIES ACT JURISDICTION OVER SWAPS.— 
Section 2A(b) of the Securities Act of 1933 (15 U.S.C. 
77b–1(b)) is amended— 
(1) in paragraph (1), by striking ‘‘does not’’ 
and inserting ‘‘shall’’; 
(2) by amending paragraph (2) to read as fol-
lows: 
‘‘(2) The Commission may require the registra-
tion of any security-based swap agreement under 
this title.’’; and 
(3) by amending paragraph (3) to read as fol-
lows: 
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‘‘(3) The Commission may promulgate rules, in-
terpret rules, enforce rules, and issue orders of gen-
eral applicability under this title in a manner that 
imposes or specifies reporting or recordkeeping re-
quirements, procedures, or standards as prophylactic 
measures against fraud, manipulation, or insider 
trading with respect to any security-based swap 
agreement.’’. 
(c) SECURITIES
EXCHANGE
ACT
JURISDICTION 
OVER SWAPS.—Section 3A(b) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c–1(b)) is amended— 
(1) in paragraph (1), by striking ‘‘does not’’ 
and inserting ‘‘shall’’; 
(2) by amending paragraph (2) to read as fol-
lows: 
‘‘(2) The Commission may require registration 
of any security-based swap agreement under this 
title.’’; and 
(3) by amending paragraph (3) to read as fol-
lows: 
‘‘(3) The Commission may promulgate rules, in-
terpret rules, enforce rules, and issue orders of gen-
eral applicability under this title in a manner that 
imposes or specifies reporting or recordkeeping re-
quirements, procedures, or standards as prophylactic 
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measures against fraud, manipulation, or insider 
trading with respect to any security-based swap 
agreement.’’. 
(d) TECHNICAL AND CONFORMING AMENDMENT.— 
(1) Section 17 of the Securities Act of 1933 (15 
U.S.C. 77q) is amended by striking subsection (d). 
(2) Section 9 of the Securities Exchange Act of 
1934 (15 U.S.C. 78i) is amended by striking sub-
section (i). 
(3) Section 15 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o) is amended by striking sub-
section (i) (as added by section 303(f) of the Com-
modity Futures Modernization Act of 2000). 
(4) Section 16 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78p) is amended by striking 
subsection (g). 
(5) Section 20 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78t) is amended by striking sub-
section (f). 
(6) Section 21A of the Securities Exchange Act 
of 1934 (15 U.S.C. 78u–1) is amended by striking 
subsection (g). 
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