I 
110TH CONGRESS 
2D SESSION 
H. R. 6333 
To amend the Internal Revenue Code of 1986 to modify the limitations 
on the deduction of interest by financial institutions which hold tax- 
exempt bonds. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 20, 2008 
Mr. FRANK of Massachusetts (for himself, Mr. NEAL of Massachusetts, Mr. 
CAPUANO, Mr. KANJORSKI, and Mr. CLEAVER) introduced the following 
bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to modify 
the limitations on the deduction of interest by financial 
institutions which hold tax-exempt bonds. 
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 ‘‘Municipal Bond Mar-
ket Support Act of 2008’’. 
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SEC. 2. MODIFICATION OF SMALL ISSUER EXCEPTION TO 
TAX-EXEMPT INTEREST EXPENSE ALLOCA-
TION RULES FOR FINANCIAL INSTITUTIONS. 
(a) 
INCREASE
IN
LIMITATION.—Subparagraphs 
(C)(i), (D)(i), and (D)(iii)(II) of section 265(b)(3) of the 
Internal Revenue Code of 1986 are each amended by 
striking ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 
(b) REPEAL OF AGGREGATION RULES APPLICABLE 
TO SMALL ISSUER DETERMINATION.—Paragraph (3) of 
section 265(b) of such Code is amended by striking sub-
paragraphs (E) and (F). 
(c) ELECTION TO APPLY LIMITATION AT BORROWER 
LEVEL.—Paragraph (3) of section 265(b) of such Code, 
as amended by subsection (b), is amended by adding at 
the end the following new subparagraph: 
‘‘(E) ELECTION TO APPLY LIMITATION ON 
AMOUNT
OF
OBLIGATIONS
AT
BORROWER 
LEVEL.— 
‘‘(i) IN
GENERAL.—An issuer, the 
proceeds of the obligations of which are to 
be used to make or finance eligible loans, 
may elect to apply subparagraphs (C) and 
(D) by treating each borrower as the issuer 
of a separate issue. 
‘‘(ii) ELIGIBLE LOAN.—For purposes 
of this subparagraph— 
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‘‘(I) IN GENERAL.—The term ‘el-
igible loan’ means one or more loans 
to a qualified borrower the proceeds of 
which are used by the borrower and 
the outstanding balance of which in 
the 
aggregate 
does 
not 
exceed 
$30,000,000. 
‘‘(II) QUALIFIED
BORROWER.— 
The term ‘qualified borrower’ means a 
borrower which is an organization de-
scribed in section 501(c)(3) and ex-
empt from taxation under section 
501(a) or a State or political subdivi-
sion thereof. 
‘‘(iii) MANNER
OF
ELECTION.—The 
election described in clause (i) may be 
made by an issuer for any calendar year at 
any time prior to its first issuance during 
such year of obligations the proceeds of 
which will be used to make or finance one 
or more eligible loans.’’. 
(d) INFLATION ADJUSTMENT.—Paragraph (3) of sec-
tion 265(b) of such Code, as amended by subsections (b) 
and (c), is amended by adding at the end the following 
new subparagraph: 
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‘‘(F) INFLATION
ADJUSTMENT.—In the 
case of any calendar year after 2009, the 
$30,000,000 amounts contained in subpara-
graphs (C)(i), (D)(i), (D)(iii)(II), and (E)(ii)(I) 
shall each be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year, determined by substituting 
‘calendar year 2008’ ‘for calendar year 
1992’ in subparagraph (B) thereof. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest mul-
tiple of $100,000.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
SEC. 3. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EX-
EMPT INTEREST EXPENSE OF FINANCIAL IN-
STITUTIONS. 
(a) IN GENERAL.—Subsection (b) of section 265 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
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