SEC. 2. TARP PROFITS USED TO PURCHASE CERTAIN IN-
STRUMENTS FROM LOCAL GOVERNMENTS. 
(a) RESTITUTION FOR LOCAL GOVERNMENTS.—Title 
I of the Emergency Economic Stabilization Act of 2008 
is amended by adding at the end the following new section: 
‘‘SEC. 137. RESTITUTION FOR LOCAL GOVERNMENTS. 
‘‘(a) PURCHASES OF CERTAIN INSTRUMENTS FROM 
LOCAL GOVERNMENTS.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
106(d), and with respect to troubled assets pur-
chased from a specific financial institution, the 
amount of any profit made by the Secretary with re-
spect to such troubled assets shall by used by the 
Secretary to purchase from local governments secu-
rities, bonds, and other financial instruments issued 
by Lehman Brothers Holding, Inc. that were held by 
such governments on September 12, 2008. 
‘‘(2) LIMITATIONS.— 
‘‘(A) DOLLAR
AMOUNT.—The aggregate 
amount of all purchases made by the Secretary 
under 
paragraph 
(1) 
shall 
not 
exceed 
$1,700,000,000. 
‘‘(B) 
NONAPPLICABILITY
TO
PENSION 
FUNDS.—Financial instruments held by a pen-
sion fund may not be purchased pursuant to 
paragraph (1). 
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‘‘(3) PURCHASE AMOUNT.—For purposes of de-
termining the purchase price of a financial instru-
ment under paragraph (1)— 
‘‘(A) with respect to stock of Lehman 
Brothers Holding, Inc., the purchase price of 
such stock shall be calculated based on the 
value of such stock at the close of trading on 
September 12, 2008; and 
‘‘(B) with respect to any other financial in-
strument, the purchase price shall be the prin-
cipal amount of such instrument. 
‘‘(b) 
SUBSTITUTION
OF
SECRETARY.—Notwith-
standing any other provision of this title, the Secretary 
shall be substituted for any local government from which 
the Secretary purchases any financial instrument pursu-
ant to subsection (a)(1) as a creditor in any proceeding 
under title 11, United States Code, pursuant to the peti-
tion filed on September 15, 2008, by Lehman Brothers 
Holdings Inc., and shall have the same standing in such 
proceedings with respect to other creditors as the local 
government for which the Secretary is substituted. 
‘‘(c) REPORTING REQUIREMENT.—Each local govern-
ment from which the Secretary makes purchases under 
subsection (a)(1) must issue a report to the Congress— 
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‘‘(1) stating how the local government used the 
funds received through such purchase; and 
‘‘(2) demonstrating job creation, retention, and 
economic activity equal to the difference between— 
‘‘(A) the amount of the funds received by 
the local government through such purchase; 
and 
‘‘(B) the amount of funds received by the 
Secretary by reason of being substituted as a 
creditor with respect to the instruments that 
are the basis of such purchases, pursuant to 
subsection (b). 
‘‘(d) RULEMAKING.—The Secretary shall issue such 
regulations as are necessary to carry out the provisions 
of this section. 
‘‘(e) LOCAL GOVERNMENT DEFINED.—For purposes 
of this section, the term ‘local government’ means any 
county, city, town, village, or other general purpose polit-
ical subdivision of a State.’’. 
(b) CLERICAL AMENDMENT.—The table of contents 
of the Emergency Economic Stabilization Act of 2008 is 
amended by inserting after the item relating to section 
136 the following: 
‘‘Sec. 137. Restitution for local governments.’’. 
Æ 
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