IB 
Union Calendar No. 297 
108TH CONGRESS 
2D SESSION 
H. R. 2120 
[Report No. 108–277, Part I] 
To revise the banking and bankruptcy insolvency laws with respect to the 
termination and netting of financial contracts, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2003 
Mr. TOOMEY (for himself, Mr. OXLEY, Mr. KANJORSKI, Mr. LEACH, Mr. 
BAKER, Mr. BACHUS, Mr. SHERMAN, Mrs. MALONEY, Mr. SHAYS, Mrs. 
BIGGERT, Ms. HART, Mrs. KELLY, Mr. NEY, Mr. ACKERMAN, Mr. CROW-
LEY, Mr. MURPHY, Mr. SESSIONS, Mr. FOSSELLA, Mr. EMANUEL, and 
Mr. ISRAEL) introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on the 
Judiciary, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
SEPTEMBER 17, 2003 
Reported from the Committee on Financial Services 
SEPTEMBER 18, 2003 
Referral to the Committee on the Judiciary extended for a period ending not 
later than October 3, 2003 
OCTOBER 3, 2003 
Referral to the Committee on the Judiciary extended for a period ending not 
later than October 31, 2003 
OCTOBER 31, 2003 
Referral to the Committee on the Judiciary extended for a period ending not 
later than November 7, 2003 
NOVEMBER 7, 2003 
Referral to the Committee on the Judiciary extended for a period ending not 
later than November 21, 2003
NOVEMBER 21, 2003 
Referral to the Committee on the Judiciary extended for a period ending not 
later than January 31, 2004 
JANUARY 31, 2004 
Referral to the Committee on the Judiciary extended for a period ending not 
later than March 2, 2004 
FEBRUARY 26, 2004 
Referral to the Committee on the Judiciary extended for a period ending not 
later than June 1, 2004 
JUNE 1, 2004 
Additional sponsors: Mr. HINOJOSA, Mr. WATT, Mr. BOUCHER, and Mr. 
DREIER 
JUNE 1, 2004 
The Committee on the Judiciary discharged; committed to the Committee of 
the Whole House on the State of the Union and ordered to be printed 
A BILL 
To revise the banking and bankruptcy insolvency laws with 
respect to the termination and netting of financial con-
tracts, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Financial Contracts Bankruptcy Reform Act of 2003’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Treatment of certain agreements by conservators or receivers of insured 
depository institutions. 
Sec. 3. Authority of the corporation with respect to failed and failing institu-
tions. 
Sec. 4. Amendments relating to transfers of qualified financial contracts.
Sec. 5. Amendments relating to disaffirmance or repudiation of qualified finan-
cial contracts. 
Sec. 6. Clarifying amendment relating to master agreements. 
Sec. 7. Federal Deposit Insurance Corporation Improvement Act of 1991. 
Sec. 8. Bankruptcy code amendments. 
Sec. 9. Recordkeeping requirements. 
Sec. 10. Exemptions from contemporaneous execution requirement. 
Sec. 11. Damage measure. 
Sec. 12. SIPC stay. 
Sec. 13. Applicability of other sections to chapter 9. 
Sec. 14. Effective date; application of amendments. 
Sec. 15. Savings clause. 
SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CON-
SERVATORS OR RECEIVERS OF INSURED DE-
POSITORY INSTITUTIONS. 
(a) DEFINITION
OF QUALIFIED FINANCIAL CON-
TRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(e)(8)(D)) is amend-
ed— 
(A) by striking ‘‘subsection—’’ and insert-
ing ‘‘subsection, the following definitions shall 
apply:’’; and 
(B) in clause (i), by inserting ‘‘, resolution, 
or order’’ after ‘‘any similar agreement that the 
Corporation determines by regulation’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)(D)) is amended—
(A) by striking ‘‘subsection—’’ and insert-
ing ‘‘subsection, the following definitions shall 
apply:’’; and 
(B) in clause (i), by inserting ‘‘, resolution, 
or order’’ after ‘‘any similar agreement that the 
Board determines by regulation’’. 
(b) DEFINITION OF SECURITIES CONTRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(ii) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 
amended to read as follows: 
‘‘(ii) SECURITIES
CONTRACT.—The 
term ‘securities contract’— 
‘‘(I) means a contract for the 
purchase, sale, or loan of a security, a 
certificate of deposit, a mortgage loan, 
or any interest in a mortgage loan, a 
group or index of securities, certifi-
cates of deposit, or mortgage loans or 
interests therein (including any inter-
est therein or based on the value 
thereof) or any option on any of the 
foregoing, including any option to 
purchase or sell any such security, 
certificate of deposit, mortgage loan,
interest, group or index, or option, 
and including any repurchase or re-
verse repurchase transaction on any 
such security, certificate of deposit, 
mortgage loan, interest, group or 
index, or option; 
‘‘(II) does not include any pur-
chase, sale, or repurchase obligation 
under a participation in a commercial 
mortgage loan unless the Corporation 
determines by regulation, resolution, 
or order to include any such agree-
ment within the meaning of such 
term; 
‘‘(III) means any option entered 
into on a national securities exchange 
relating to foreign currencies; 
‘‘(IV) means the guarantee by or 
to any securities clearing agency of 
any settlement of cash, securities, cer-
tificates of deposit, mortgage loans or 
interests therein, group or index of se-
curities, certificates of deposit, or 
mortgage loans or interests therein 
(including any interest therein or
based on the value thereof) or option 
on any of the foregoing, including any 
option to purchase or sell any such se-
curity, certificate of deposit, mortgage 
loan, interest, group or index, or op-
tion; 
‘‘(V) means any margin loan; 
‘‘(VI) means any other agree-
ment or transaction that is similar to 
any agreement or transaction referred 
to in this clause; 
‘‘(VII) means any combination of 
the agreements or transactions re-
ferred to in this clause; 
‘‘(VIII) means any option to 
enter into any agreement or trans-
action referred to in this clause; 
‘‘(IX) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause 
(I), (III), (IV), (V), (VI), (VII), or 
(VIII), together with all supplements 
to any such master agreement, with-
out regard to whether the master 
agreement provides for an agreement
or transaction that is not a securities 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a securities contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to 
in subclause (I), (III), (IV), (V), (VI), 
(VII), or (VIII); and 
‘‘(X) means any security agree-
ment or arrangement or other credit 
enhancement related to any agree-
ment or transaction referred to in this 
clause, including any guarantee or re-
imbursement obligation in connection 
with any agreement or transaction re-
ferred to in this clause.’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(ii) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(ii)) is amended to read as 
follows: 
‘‘(ii) SECURITIES
CONTRACT.—The 
term ‘securities contract’— 
‘‘(I) means a contract for the 
purchase, sale, or loan of a security, a
certificate of deposit, a mortgage loan, 
or any interest in a mortgage loan, a 
group or index of securities, certifi-
cates of deposit, or mortgage loans or 
interests therein (including any inter-
est therein or based on the value 
thereof) or any option on any of the 
foregoing, including any option to 
purchase or sell any such security, 
certificate of deposit, mortgage loan, 
interest, group or index, or option, 
and including any repurchase or re-
verse repurchase transaction on any 
such security, certificate of deposit, 
mortgage loan, interest, group or 
index, or option; 
‘‘(II) does not include any pur-
chase, sale, or repurchase obligation 
under a participation in a commercial 
mortgage loan unless the Board deter-
mines by regulation, resolution, or 
order to include any such agreement 
within the meaning of such term;
‘‘(III) means any option entered 
into on a national securities exchange 
relating to foreign currencies; 
‘‘(IV) means the guarantee by or 
to any securities clearing agency of 
any settlement of cash, securities, cer-
tificates of deposit, mortgage loans or 
interests therein, group or index of se-
curities, certificates of deposit, or 
mortgage loans or interests therein 
(including any interest therein or 
based on the value thereof) or option 
on any of the foregoing, including any 
option to purchase or sell any such se-
curity, certificate of deposit, mortgage 
loan, interest, group or index, or op-
tion; 
‘‘(V) means any margin loan; 
‘‘(VI) means any other agree-
ment or transaction that is similar to 
any agreement or transaction referred 
to in this clause; 
‘‘(VII) means any combination of 
the agreements or transactions re-
ferred to in this clause;
‘‘(VIII) means any option to 
enter into any agreement or trans-
action referred to in this clause; 
‘‘(IX) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause 
(I), (III), (IV), (V), (VI), (VII), or 
(VIII), together with all supplements 
to any such master agreement, with-
out regard to whether the master 
agreement provides for an agreement 
or transaction that is not a securities 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a securities contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to 
in subclause (I), (III), (IV), (V), (VI), 
(VII), or (VIII); and 
‘‘(X) means any security agree-
ment or arrangement or other credit 
enhancement related to any agree-
ment or transaction referred to in this 
clause, including any guarantee or re-
imbursement obligation in connection 
with any agreement or transaction re-
ferred to in this clause.’’. 
(c) DEFINITION OF COMMODITY CONTRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(iii) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is 
amended to read as follows: 
‘‘(iii) COMMODITY
CONTRACT.—The 
term ‘commodity contract’ means— 
‘‘(I) with respect to a futures 
commission merchant, a contract for 
the purchase or sale of a commodity 
for future delivery on, or subject to 
the rules of, a contract market or 
board of trade; 
‘‘(II) with respect to a foreign fu-
tures commission merchant, a foreign 
future; 
‘‘(III) with respect to a leverage 
transaction 
merchant, 
a 
leverage 
transaction; 
‘‘(IV) with respect to a clearing 
organization, a contract for the pur-
chase or sale of a commodity for fu-
ture delivery on, or subject to the 
rules of, a contract market or board 
of trade that is cleared by such clear-
ing organization, or commodity option 
traded on, or subject to the rules of, 
a contract market or board of trade 
that is cleared by such clearing orga-
nization; 
‘‘(V) with respect to a commodity 
options dealer, a commodity option; 
‘‘(VI) any other agreement or 
transaction that is similar to any 
agreement or transaction referred to 
in this clause; 
‘‘(VII) any combination of the 
agreements or transactions referred to 
in this clause; 
‘‘(VIII) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(IX) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), 
(II), (III), (IV), (V), (VI), (VII), or 
(VIII), together with all supplements
to any such master agreement, with-
out regard to whether the master 
agreement provides for an agreement 
or transaction that is not a com-
modity contract under this clause, ex-
cept that the master agreement shall 
be considered to be a commodity con-
tract under this clause only with re-
spect to each agreement or trans-
action under the master agreement 
that is referred to in subclause (I), 
(II), (III), (IV), (V), (VI), (VII), or 
(VIII); or 
‘‘(X) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in this clause, 
including any guarantee or reimburse-
ment obligation in connection with 
any agreement or transaction referred 
to in this clause.’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(iii) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(iii)) is amended to read as 
follows:
‘‘(iii) COMMODITY
CONTRACT.—The 
term ‘commodity contract’ means— 
‘‘(I) with respect to a futures 
commission merchant, a contract for 
the purchase or sale of a commodity 
for future delivery on, or subject to 
the rules of, a contract market or 
board of trade; 
‘‘(II) with respect to a foreign fu-
tures commission merchant, a foreign 
future; 
‘‘(III) with respect to a leverage 
transaction 
merchant, 
a 
leverage 
transaction; 
‘‘(IV) with respect to a clearing 
organization, a contract for the pur-
chase or sale of a commodity for fu-
ture delivery on, or subject to the 
rules of, a contract market or board 
of trade that is cleared by such clear-
ing organization, or commodity option 
traded on, or subject to the rules of, 
a contract market or board of trade 
that is cleared by such clearing orga-
nization;
‘‘(V) with respect to a commodity 
options dealer, a commodity option; 
‘‘(VI) any other agreement or 
transaction that is similar to any 
agreement or transaction referred to 
in this clause; 
‘‘(VII) any combination of the 
agreements or transactions referred to 
in this clause; 
‘‘(VIII) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(IX) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), 
(II), (III), (IV), (V), (VI), (VII), or 
(VIII), together with all supplements 
to any such master agreement, with-
out regard to whether the master 
agreement provides for an agreement 
or transaction that is not a com-
modity contract under this clause, ex-
cept that the master agreement shall 
be considered to be a commodity con-
tract under this clause only with re-
spect to each agreement or trans-
action under the master agreement 
that is referred to in subclause (I), 
(II), (III), (IV), (V), (VI), (VII), or 
(VIII); or 
‘‘(X) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in this clause, 
including any guarantee or reimburse-
ment obligation in connection with 
any agreement or transaction referred 
to in this clause.’’. 
(d) DEFINITION OF FORWARD CONTRACT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(iv) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is 
amended to read as follows: 
‘‘(iv) 
FORWARD
CONTRACT.—The 
term ‘forward contract’ means— 
‘‘(I) a contract (other than a 
commodity contract) for the purchase, 
sale, or transfer of a commodity or 
any similar good, article, service, 
right, or interest which is presently or
in the future becomes the subject of 
dealing in the forward contract trade, 
or product or byproduct thereof, with 
a maturity date more than 2 days 
after the date the contract is entered 
into, including, a repurchase trans-
action, reverse repurchase transaction, 
consignment, 
lease, 
swap, 
hedge 
transaction, deposit, loan, option, allo-
cated transaction, unallocated trans-
action, or any other similar agree-
ment; 
‘‘(II) any combination of agree-
ments or transactions referred to in 
subclauses (I) and (III); 
‘‘(III) any option to enter into 
any agreement or transaction referred 
to in subclause (I) or (II); 
‘‘(IV) a master agreement that 
provides for an agreement or trans-
action referred to in subclauses (I), 
(II), or (III), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
agreement provides for an agreement
or transaction that is not a forward 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a forward contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to 
in subclause (I), (II), or (III); or 
‘‘(V) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in subclause 
(I), (II), (III), or (IV), including any 
guarantee or reimbursement obliga-
tion in connection with any agreement 
or transaction referred to in any such 
subclause.’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(iv) of the Federal Credit Union Act 
(12 U.S.C. 1787(c)(8)(D)(iv)) is amended to read as 
follows: 
‘‘(iv) 
FORWARD
CONTRACT.—The 
term ‘forward contract’ means— 
‘‘(I) a contract (other than a 
commodity contract) for the purchase,
sale, or transfer of a commodity or 
any similar good, article, service, 
right, or interest which is presently or 
in the future becomes the subject of 
dealing in the forward contract trade, 
or product or byproduct thereof, with 
a maturity date more than 2 days 
after the date the contract is entered 
into, including, a repurchase trans-
action, reverse repurchase transaction, 
consignment, 
lease, 
swap, 
hedge 
transaction, deposit, loan, option, allo-
cated transaction, unallocated trans-
action, or any other similar agree-
ment; 
‘‘(II) any combination of agree-
ments or transactions referred to in 
subclauses (I) and (III); 
‘‘(III) any option to enter into 
any agreement or transaction referred 
to in subclause (I) or (II); 
‘‘(IV) a master agreement that 
provides for an agreement or trans-
action referred to in subclauses (I), 
(II), or (III), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
agreement provides for an agreement 
or transaction that is not a forward 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a forward contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to 
in subclause (I), (II), or (III); or 
‘‘(V) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in subclause 
(I), (II), (III), or (IV), including any 
guarantee or reimbursement obliga-
tion in connection with any agreement 
or transaction referred to in any such 
subclause.’’. 
(e) DEFINITION OF REPURCHASE AGREEMENT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(v) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 
amended to read as follows:
‘‘(v) REPURCHASE AGREEMENT.—The 
term ‘repurchase agreement’ (which defini-
tion also applies to a reverse repurchase 
agreement)— 
‘‘(I) means an agreement, includ-
ing related terms, which provides for 
the transfer of one or more certifi-
cates of deposit, mortgage-related se-
curities (as such term is defined in 
the Securities Exchange Act of 1934), 
mortgage loans, interests in mortgage- 
related securities or mortgage loans, 
eligible bankers’ acceptances, qualified 
foreign government securities or secu-
rities that are direct obligations of, or 
that are fully guaranteed by, the 
United States or any agency of the 
United States against the transfer of 
funds by the transferee of such certifi-
cates of deposit, eligible bankers’ ac-
ceptances, securities, mortgage loans, 
or interests with a simultaneous 
agreement by such transferee to 
transfer to the transferor thereof cer-
tificates of deposit, eligible bankers’
acceptances, 
securities, 
mortgage 
loans, or interests as described above, 
at a date certain not later than 1 year 
after such transfers or on demand, 
against the transfer of funds, or any 
other similar agreement; 
‘‘(II) does not include any repur-
chase obligation under a participation 
in a commercial mortgage loan unless 
the Corporation determines by regula-
tion, resolution, or order to include 
any such participation within the 
meaning of such term; 
‘‘(III) means any combination of 
agreements or transactions referred to 
in subclauses (I) and (IV); 
‘‘(IV) means any option to enter 
into any agreement or transaction re-
ferred to in subclause (I) or (III); 
‘‘(V) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause 
(I), (III), or (IV), together with all 
supplements to any such master 
agreement, without regard to whether
the master agreement provides for an 
agreement or transaction that is not a 
repurchase 
agreement 
under 
this 
clause, except that the master agree-
ment shall be considered to be a re-
purchase agreement under this sub-
clause only with respect to each agree-
ment or transaction under the master 
agreement that is referred to in sub-
clause (I), (III), or (IV); and 
‘‘(VI) means any security agree-
ment or arrangement or other credit 
enhancement related to any agreement 
or transaction referred to in subclause 
(I), (III), (IV), or (V), including any 
guarantee or reimbursement obligation 
in connection with any agreement or 
transaction referred to in any such 
subclause. 
For purposes of this clause, the term 
‘qualified foreign government security’ 
means a security that is a direct obligation 
of, or that is fully guaranteed by, the cen-
tral government of a member of the Orga-
nization for Economic Cooperation and
Development (as determined by regulation 
or order adopted by the appropriate Fed-
eral banking authority).’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D)(v) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)(D)(v)) is amended to read as fol-
lows: 
‘‘(v) REPURCHASE AGREEMENT.—The 
term ‘repurchase agreement’ (which defini-
tion also applies to a reverse repurchase 
agreement)— 
‘‘(I) means an agreement, includ-
ing related terms, which provides for 
the transfer of one or more certifi-
cates of deposit, mortgage-related se-
curities (as such term is defined in 
the Securities Exchange Act of 1934), 
mortgage loans, interests in mortgage- 
related securities or mortgage loans, 
eligible bankers’ acceptances, qualified 
foreign government securities or secu-
rities that are direct obligations of, or 
that are fully guaranteed by, the 
United States or any agency of the 
United States against the transfer of
funds by the transferee of such certifi-
cates of deposit, eligible bankers’ ac-
ceptances, securities, mortgage loans, 
or interests with a simultaneous 
agreement by such transferee to 
transfer to the transferor thereof cer-
tificates of deposit, eligible bankers’ 
acceptances, 
securities, 
mortgage 
loans, or interests as described above, 
at a date certain not later than 1 year 
after such transfers or on demand, 
against the transfer of funds, or any 
other similar agreement; 
‘‘(II) does not include any repur-
chase obligation under a participation 
in a commercial mortgage loan unless 
the Board determines by regulation, 
resolution, or order to include any such 
participation within the meaning of 
such term; 
‘‘(III) means any combination of 
agreements or transactions referred to 
in subclauses (I) and (IV);
‘‘(IV) means any option to enter 
into any agreement or transaction re-
ferred to in subclause (I) or (III); 
‘‘(V) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause 
(I), (III), or (IV), together with all 
supplements to any such master 
agreement, without regard to whether 
the master agreement provides for an 
agreement or transaction that is not a 
repurchase 
agreement 
under 
this 
clause, except that the master agree-
ment shall be considered to be a re-
purchase agreement under this sub-
clause only with respect to each agree-
ment or transaction under the master 
agreement that is referred to in sub-
clause (I), (III), or (IV); and 
‘‘(VI) means any security agree-
ment or arrangement or other credit 
enhancement related to any agree-
ment or transaction referred to in 
subclause (I), (III), (IV), or (V), in-
cluding any guarantee or reimburse-
ment obligation in connection with 
any agreement or transaction referred 
to in any such subclause. 
For purposes of this clause, the term 
‘qualified foreign government security’ 
means a security that is a direct obligation 
of, or that is fully guaranteed by, the cen-
tral government of a member of the Orga-
nization for Economic Cooperation and 
Development (as determined by regulation 
or order adopted by the appropriate Fed-
eral banking authority).’’. 
(f) DEFINITION OF SWAP AGREEMENT.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(vi) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is 
amended to read as follows: 
‘‘(vi) SWAP AGREEMENT.—The term 
‘swap agreement’ means— 
‘‘(I) any agreement, including the 
terms and conditions incorporated by 
reference in any such agreement, 
which is an interest rate swap, option, 
future, or forward agreement, includ-
ing a rate floor, rate cap, rate collar,
cross-currency rate swap, and basis 
swap; a spot, same day-tomorrow, to-
morrow-next, forward, or other for-
eign exchange or precious metals 
agreement; a currency swap, option, 
future, or forward agreement; an eq-
uity index or equity swap, option, fu-
ture, or forward agreement; a debt 
index or debt swap, option, future, or 
forward agreement; a total return, 
credit spread or credit swap, option, 
future, or forward agreement; a com-
modity index or commodity swap, op-
tion, future, or forward agreement; or 
a weather swap, weather derivative, or 
weather option; 
‘‘(II) any agreement or trans-
action that is similar to any other 
agreement or transaction referred to 
in this clause and that is of a type 
that has been, is presently, or in the 
future becomes, the subject of recur-
rent dealings in the swap markets (in-
cluding terms and conditions incor-
porated by reference in such agree-
ment) and that is a forward, swap, fu-
ture, or option on one or more rates, 
currencies, commodities, equity securi-
ties or other equity instruments, debt 
securities or other debt instruments, 
quantitative measures associated with 
an occurrence, extent of an occur-
rence, or contingency associated with 
a financial, commercial, or economic 
consequence, or economic or financial 
indices or measures of economic or fi-
nancial risk or value; 
‘‘(III) any combination of agree-
ments or transactions referred to in 
this clause; 
‘‘(IV) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(V) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), 
(II), (III), or (IV), together with all 
supplements to any such master 
agreement, without regard to whether 
the master agreement contains an
agreement or transaction that is not a 
swap agreement under this clause, ex-
cept that the master agreement shall 
be considered to be a swap agreement 
under this clause only with respect to 
each agreement or transaction under 
the master agreement that is referred 
to in subclause (I), (II), (III), or (IV); 
and 
‘‘(VI) any security agreement or 
arrangement or other credit enhance-
ment related to any agreements or 
transactions referred to in subclause 
(I), (II), (III), (IV), or (V), including 
any guarantee or reimbursement obli-
gation in connection with any agree-
ment or transaction referred to in any 
such subclause. 
Such term is applicable for purposes of 
this subsection only and shall not be con-
strued or applied so as to challenge or af-
fect the characterization, definition, or 
treatment of any swap agreement under 
any other statute, regulation, or rule, in-
cluding the Securities Act of 1933, the Se-
curities Exchange Act of 1934, the Public 
Utility Holding Company Act of 1935, the 
Trust Indenture Act of 1939, the Invest-
ment Company Act of 1940, the Invest-
ment Advisers Act of 1940, the Securities 
Investor Protection Act of 1970, the Com-
modity Exchange Act, the Gramm-Leach- 
Bliley Act, and the Legal Certainty for 
Bank Products Act of 2000.’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)(D)) is amended by adding at the 
end the following new clause: 
‘‘(vi) SWAP AGREEMENT.—The term 
‘swap agreement’ means— 
‘‘(I) any agreement, including the 
terms and conditions incorporated by 
reference in any such agreement, 
which is an interest rate swap, option, 
future, or forward agreement, includ-
ing a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis 
swap; a spot, same day-tomorrow, to-
morrow-next, forward, or other for-
eign exchange or precious metals
agreement; a currency swap, option, 
future, or forward agreement; an eq-
uity index or equity swap, option, fu-
ture, or forward agreement; a debt 
index or debt swap, option, future, or 
forward agreement; a total return, 
credit spread or credit swap, option, 
future, or forward agreement; a com-
modity index or commodity swap, op-
tion, future, or forward agreement; or 
a weather swap, weather derivative, or 
weather option; 
‘‘(II) any agreement or trans-
action that is similar to any other 
agreement or transaction referred to 
in this clause and that is of a type 
that has been, is presently, or in the 
future becomes, the subject of recur-
rent dealings in the swap markets (in-
cluding terms and conditions incor-
porated by reference in such agree-
ment) and that is a forward, swap, fu-
ture, or option on one or more rates, 
currencies, commodities, equity securi-
ties or other equity instruments, debt
securities or other debt instruments, 
quantitative measures associated with 
an occurrence, extent of an occur-
rence, or contingency associated with 
a financial, commercial, or economic 
consequence, or economic or financial 
indices or measures of economic or fi-
nancial risk or value; 
‘‘(III) any combination of agree-
ments or transactions referred to in 
this clause; 
‘‘(IV) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(V) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), 
(II), (III), or (IV), together with all 
supplements to any such master 
agreement, without regard to whether 
the master agreement contains an 
agreement or transaction that is not a 
swap agreement under this clause, ex-
cept that the master agreement shall 
be considered to be a swap agreement
under this clause only with respect to 
each agreement or transaction under 
the master agreement that is referred 
to in subclause (I), (II), (III), or (IV); 
and 
‘‘(VI) any security agreement or 
arrangement or other credit enhance-
ment related to any agreements or 
transactions referred to in subclause 
(I), (II), (III), (IV), or (V), including 
any guarantee or reimbursement obli-
gation in connection with any agree-
ment or transaction referred to in any 
such subclause. 
Such term is applicable for purposes of 
this subsection only and shall not be con-
strued or applied so as to challenge or af-
fect the characterization, definition, or 
treatment of any swap agreement under 
any other statute, regulation, or rule, in-
cluding the Securities Act of 1933, the Se-
curities Exchange Act of 1934, the Public 
Utility Holding Company Act of 1935, the 
Trust Indenture Act of 1939, the Invest-
ment Company Act of 1940, the Invest-
ment Advisers Act of 1940, the Securities 
Investor Protection Act of 1970, the Com-
modity Exchange Act, the Gramm-Leach- 
Bliley Act, and the Legal Certainty for 
Bank Products Act of 2000.’’. 
(g) DEFINITION OF TRANSFER.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(D)(viii) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) 
is amended to read as follows: 
‘‘(viii) TRANSFER.—The term ‘trans-
fer’ means every mode, direct or indirect, 
absolute or conditional, voluntary or invol-
untary, of disposing of or parting with 
property or with an interest in property, 
including retention of title as a security in-
terest and foreclosure of the depository in-
stitution’s equity of redemption.’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(D) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)(D)) (as amended by subsection 
(f) of this section) is amended by adding at the end 
the following new clause: 
‘‘(viii) TRANSFER.—The term ‘trans-
fer’ means every mode, direct or indirect,
absolute or conditional, voluntary or invol-
untary, of disposing of or parting with 
property or with an interest in property, 
including retention of title as a security in-
terest and foreclosure of the depository in-
stitution’s equity of redemption.’’. 
(h) TREATMENT
OF QUALIFIED FINANCIAL CON-
TRACTS.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(8)) is amended— 
(A) in subparagraph (A)— 
(i) by striking ‘‘paragraph (10)’’ and 
inserting ‘‘paragraphs (9) and (10)’’; 
(ii) in clause (i), by striking ‘‘to cause 
the termination or liquidation’’ and insert-
ing ‘‘such person has to cause the termi-
nation, liquidation, or acceleration’’; and 
(iii) by striking clause (ii) and insert-
ing the following new clause: 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement related to one or more quali-
fied financial contracts described in clause 
(i);’’; and
(B) in subparagraph (E), by striking 
clause (ii) and inserting the following: 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement related to one or more quali-
fied financial contracts described in clause 
(i);’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)) is amended— 
(A) in subparagraph (A)— 
(i) by striking ‘‘paragraph (12)’’ and 
inserting ‘‘paragraphs (9) and (10)’’; 
(ii) in clause (i), by striking ‘‘to cause 
the termination or liquidation’’ and insert-
ing ‘‘such person has to cause the termi-
nation, liquidation, or acceleration’’; and 
(iii) by striking clause (ii) and insert-
ing the following new clause: 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement related to 1 or more qualified 
financial contracts described in clause 
(i);’’; and
(B) in subparagraph (E), by striking 
clause (ii) and inserting the following new 
clause: 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement related to 1 or more qualified 
financial contracts described in clause 
(i);’’. 
(i) AVOIDANCE OF TRANSFERS.— 
(1) 
FDIC-INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 11(e)(8)(C)(i) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 
amended by inserting ‘‘section 5242 of the Revised 
Statutes of the United States or any other Federal 
or State law relating to the avoidance of preferential 
or fraudulent transfers,’’ before ‘‘the Corporation’’. 
(2) 
INSURED
CREDIT
UNIONS.—Section 
207(c)(8)(C)(i) of the Federal Credit Union Act (12 
U.S.C. 1787(c)(8)(C)(i)) is amended by inserting 
‘‘section 5242 of the Revised Statutes of the United 
States or any other Federal or State law relating to 
the avoidance of preferential or fraudulent trans-
fers,’’ before ‘‘the Board’’.
SEC. 3. AUTHORITY OF THE FDIC AND NCUAB WITH RE-
SPECT TO FAILED AND FAILING INSTITU-
TIONS. 
(a) FEDERAL DEPOSIT INSURANCE CORPORATION.— 
(1) IN GENERAL.—Section 11(e)(8) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1821(e)(8)) 
is amended— 
(A) in subparagraph (E), by striking 
‘‘other than paragraph (12) of this subsection, 
subsection (d)(9)’’ and inserting ‘‘other than 
subsections (d)(9) and (e)(10)’’; and 
(B) by adding at the end the following new 
subparagraphs: 
‘‘(F) CLARIFICATION.—No provision of law 
shall be construed as limiting the right or 
power of the Corporation, or authorizing any 
court or agency to limit or delay, in any man-
ner, the right or power of the Corporation to 
transfer any qualified financial contract in ac-
cordance with paragraphs (9) and (10) of this 
subsection or to disaffirm or repudiate any such 
contract in accordance with subsection (e)(1) of 
this section. 
‘‘(G) WALKAWAY
CLAUSES
NOT
EFFEC-
TIVE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
the provisions of subparagraphs (A) and 
(E), and sections 403 and 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991, no walkaway 
clause shall be enforceable in a qualified fi-
nancial contract of an insured depository 
institution in default. 
‘‘(ii) WALKAWAY CLAUSE DEFINED.— 
For purposes of this subparagraph, the 
term ‘walkaway clause’ means a provision 
in a qualified financial contract that, after 
calculation of a value of a party’s position 
or an amount due to or from 1 of the par-
ties in accordance with its terms upon ter-
mination, liquidation, or acceleration of the 
qualified financial contract, either does not 
create a payment obligation of a party or 
extinguishes a payment obligation of a 
party in whole or in part solely because of 
such party’s status as a nondefaulting 
party.’’. 
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENT.—Section 11(e)(12)(A) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amend-
ed by inserting ‘‘or the exercise of rights or powers 
by’’ after ‘‘the appointment of’’. 
(b) NATIONAL
CREDIT
UNION
ADMINISTRATION 
BOARD.— 
(1) IN
GENERAL.—Section 207(c)(8) of the 
Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 
amended— 
(A) in subparagraph (E) (as amended by 
section 2(h)), by striking ‘‘other than para-
graph (12) of this subsection, subsection 
(b)(9)’’ and inserting ‘‘other than subsections 
(b)(9) and (c)(10)’’; and 
(B) by adding at the end the following new 
subparagraphs: 
‘‘(F) CLARIFICATION.—No provision of law 
shall be construed as limiting the right or 
power of the Board, or authorizing any court or 
agency to limit or delay, in any manner, the 
right or power of the Board to transfer any 
qualified financial contract in accordance with 
paragraphs (9) and (10) of this subsection or to 
disaffirm or repudiate any such contract in ac-
cordance with subsection (c)(1) of this section. 
‘‘(G) WALKAWAY
CLAUSES
NOT
EFFEC-
TIVE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
the provisions of subparagraphs (A) and 
(E), and sections 403 and 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991, no walkaway 
clause shall be enforceable in a qualified fi-
nancial contract of an insured credit union 
in default. 
‘‘(ii) WALKAWAY CLAUSE DEFINED.— 
For purposes of this subparagraph, the 
term ‘walkaway clause’ means a provision 
in a qualified financial contract that, after 
calculation of a value of a party’s position 
or an amount due to or from 1 of the par-
ties in accordance with its terms upon ter-
mination, liquidation, or acceleration of the 
qualified financial contract, either does not 
create a payment obligation of a party or 
extinguishes a payment obligation of a 
party in whole or in part solely because of 
such party’s status as a nondefaulting 
party.’’. 
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENT.—Section 207(c)(12)(A) of the Federal Credit 
Union Act (12 U.S.C. 1787(c)(12)(A)) is amended
by inserting ‘‘or the exercise of rights or powers by’’ 
after ‘‘the appointment of’’. 
SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALI-
FIED FINANCIAL CONTRACTS. 
(a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 
(1) TRANSFERS
OF
QUALIFIED
FINANCIAL 
CONTRACTS TO FINANCIAL INSTITUTIONS.—Section 
11(e)(9) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(9)) is amended to read as follows: 
‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON-
TRACTS.— 
‘‘(A) IN GENERAL.—In making any trans-
fer of assets or liabilities of a depository institu-
tion in default which includes any qualified fi-
nancial contract, the conservator or receiver for 
such depository institution shall either— 
‘‘(i) transfer to one financial institu-
tion, other than a financial institution for 
which a conservator, receiver, trustee in 
bankruptcy, or other legal custodian has 
been appointed or which is otherwise the 
subject of a bankruptcy or insolvency pro-
ceeding— 
‘‘(I) all qualified financial con-
tracts between any person or any af-