I 
111TH CONGRESS 
1ST SESSION H. R. 2589 
To establish the Office of Public Finance in the Department of the Treasury 
to make available Federal reinsurance for insurers of tax-exempt munic-
ipal bonds. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 21, 2009 
Mr. CLEAVER (for himself, Mr. HIMES, Mr. FRANK of Massachusetts, Mr. 
BACA, Mr. MORAN of Virginia, Mr. ANDREWS, and Mr. CONNOLLY of 
Virginia) 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 establish the Office of Public Finance in the Department 
of the Treasury to make available Federal reinsurance 
for insurers of tax-exempt municipal 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 Insur-
ance Enhancement Act of 2009’’. 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
SEC. 2. OFFICE OF PUBLIC FINANCE AND FEDERAL REIN-
SURANCE FOR INSURERS OF TAX-EXEMPT 
MUNICIPAL BONDS. 
(a) IN GENERAL.—Subchapter I of chapter 3 of title 
31, United States Code, is amended by adding at the end 
the following new section: 
‘‘SEC. 314. THE OFFICE OF PUBLIC FINANCE. 
‘‘(a) ESTABLISHMENT AND PERSONNEL.— 
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished in the Department of the Treasury an office 
to be known as the ‘Office of Public Finance’ (in 
this section referred to as the ‘Office’). 
‘‘(2) DIRECTOR; STAFFING.—The Secretary of 
the Treasury shall appoint the Director of the Of-
fice, as well as such other staff as the Secretary be-
lieves necessary for the Office to carry out its duties 
under this Act. 
‘‘(b) FEDERAL REINSURANCE
FOR INSURERS
OF 
TAX-EXEMPT MUNICIPAL BONDS.— 
‘‘(1) ESTABLISHMENT.—The Director of the 
Office of Public Finance shall carry out a program 
under this subsection to provide reinsurance for in-
sured losses of qualified municipal bond insurers. 
‘‘(2) QUALIFIED MUNICIPAL BOND INSURERS.— 
Reinsurance coverage under this subsection may be 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
made available only for an insurer, including an in-
surer that is an affiliate of another entity— 
‘‘(A) that is licensed or admitted to engage 
in the business, in any State, of providing in-
surance for the payment of principal and inter-
est due under— 
‘‘(i) any municipal bond; or 
‘‘(ii) any bond, note, security, or other 
debt obligation issued by a special purpose 
corporation, trust, or other entity to fi-
nance a project serving a substantial public 
purpose; and 
‘‘(B) that has, as of the date of purchase 
of reinsurance coverage under this subsection— 
‘‘(i) a corporate or other governing 
charter that prohibits the insurer from 
providing coverage for risks other than the 
risks specified in subparagraph (A) and 
such bonds issued by public purpose 
issuers or ultimate obligors as are not in-
consistent with the intent of Municipal 
Bond Insurance Enhancement Act of 2009 
and as may be approved generally or spe-
cifically by the Director of the Office of 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
Public Finance or the relevant insurance 
regulator; or 
‘‘(ii) entered into an agreement with 
the Director to only provide coverage for 
the risks specified in clause (i). 
A qualified municipal bond insurer shall not be 
precluded from retaining or performing any ob-
ligations in place prior to entering into such an 
agreement with the Office. 
‘‘(3) TERMS
OF
REINSURANCE.—Reinsurance 
coverage under this subsection shall be subject to 
the following requirements: 
‘‘(A) PREMIUMS.—The Director shall es-
tablish and collect risk-based premiums for 
such coverage. Premium charges under this 
subparagraph shall be established in amounts 
that are sufficient, but do not exceed, the min-
imum amounts necessary to cover the costs (as 
such term is defined in section 502 of the Fed-
eral Credit Reform Act of 1990 (2 U.S.C. 
661(a)) of such reinsurance coverage and to 
cover administrative costs of the Secretary that 
are associated with the program for such cov-
erage. 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
‘‘(B) OTHERS.—The Director shall estab-
lish such other terms for such coverage as the 
Director determines are appropriate to provide 
additional capacity in the market for insurance 
of State and local bonds in the most cost-effi-
cient manner. 
‘‘(4) PROGRAM
LIMIT.—The aggregate par 
value of bonds, notes, security, and other debt obli-
gations for which reinsurance is provided under the 
program under this subsection in any of fiscal years 
2010 
through 
2014 
may 
not 
exceed 
$50,000,000,000. 
‘‘(5) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated such sums as 
may be necessary for administrative costs of car-
rying out the program under this subsection during 
the first 12 months of the operation of such pro-
gram. 
‘‘(6) DIVESTMENT.—Not later than the expira-
tion of the 5-year period beginning on the date of 
the enactment of this Act, the Secretary of the 
Treasury shall— 
‘‘(A) establish and submit to the Congress 
a plan providing for the sale of the reinsurance 
assets acquired under the program under this 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
subsection, except that any such sale shall not 
reduce the credit rating of bonds insured under 
such program or the relevant qualified munic-
ipal bond insurer through the submission of of-
fers to purchase such assets; and 
‘‘(B) implement such plan, including solic-
iting offers for the purchase of such operations. 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) INSURED LOSS.—The term ‘insured 
loss’ means any loss resulting from any munic-
ipal bond that is covered by insurance provided 
by a qualified municipal bond insurer. 
‘‘(B) MUNICIPAL BOND.—The term ‘mu-
nicipal bond’ means any bond, note, security, or 
other debt obligation issued by any State or po-
litical subdivision thereof, or by any other entity 
eligible to issue bonds treated as a State or 
local bond (as such term is defined in section 
103(c) of the Internal Revenue Code of 1986 
and the regulations issued thereunder) 
‘‘(C) QUALIFIED
MUNICIPAL
BOND
IN-
SURER.—The term ‘qualified municipal bond in-
surer’ means an insurer that meets the require-
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS
ments in paragraph (2) for reinsurance cov-
erage under this subsection.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter I of chapter 3 of title 31, United States 
Code, is amended by adding at the end the following: 
‘‘314. The Office of Public Finance.’’. 
SEC. 3. REINSURANCE BY OFFICE OF PUBLIC FINANCE NOT 
TREATED AS FEDERAL GUARANTEE UNDER 
TAX EXEMPT BOND REQUIREMENTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
149(b)(3) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘or’’ at the end of clause (ii), by striking 
the period at the end of clause (iii) and inserting ‘‘, or’’, 
and by adding at the end the following new clause: 
‘‘(iv) any guarantee by the Office of 
Public Finance.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
VerDate Nov 24 2008 
20:15 May 24, 2009
Jkt 079200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H2589.IH
H2589
sroberts on PROD1PC70 with BILLS