200 
portionment for purposes of chapter 15 of title 31, 
United States Code, or any other provision of law. 
(b) MINIMUM OVER-COLLATERALIZATION REQUIRE-
MENTS.— 
(1) REQUIREMENTS ESTABLISHED.—The Sec-
retary, by rule and in consultation with the covered 
bond regulators, shall establish minimum over- 
collateralization requirements for covered bonds 
backed by each of the eligible asset classes. The min-
imum over-collateralization requirements shall be de-
signed to ensure that sufficient eligible assets and 
substitute assets are maintained in the cover pool to 
satisfy all principal and interest payments on the 
covered bonds when due through maturity and shall 
be based on the credit, collection, and interest rate 
risks (excluding the liquidity risks) associated with 
the eligible asset class. 
(2) ASSET COVERAGE TEST.—The eligible as-
sets and the substitute assets in any cover pool shall 
be required, in the aggregate, to meet at all times 
the applicable minimum over-collateralization re-
quirements. 
(3) MONTHLY
REPORTING.—On a monthly 
basis, each issuer of covered bonds shall submit a re-
port on whether the cover pool that secures the cov-
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ered bonds meets the applicable minimum over- 
collateralization requirements to— 
(A) the Secretary; 
(B) the applicable covered bond regulator; 
(C) the applicable indenture trustee; 
(D) the applicable covered bondholders; 
and 
(E) the applicable independent asset mon-
itor. 
(4) INDEPENDENT ASSET MONITOR.— 
(A) APPOINTMENT.—Each issuer of cov-
ered bonds shall appoint the indenture trustee 
for the covered bonds, or another unaffiliated 
entity, as an independent asset monitor for the 
applicable cover pool. 
(B) DUTIES.—An independent asset mon-
itor appointed under subparagraph (A) shall, on 
an annual or other more frequent periodic basis 
determined by the Secretary under the over-
sight program— 
(i) verify whether the cover pool meets 
the applicable minimum over-collateraliza-
tion requirements; and 
(ii) report to the Secretary, the appli-
cable covered bond regulator, the applica-
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ble indenture trustee, and the applicable 
covered bondholders on whether the cover 
pool meets the applicable minimum over- 
collateralization requirements. 
(5) NO LOSS OF STATUS.—Covered bonds shall 
remain subject to this subtitle regardless of whether 
the applicable cover pool ceases to meet the applica-
ble minimum over-collateralization requirements. 
(6) FAILURE TO MEET REQUIREMENTS.— 
(A) IN GENERAL.—If a cover pool fails to 
meet the applicable minimum over-collateraliza-
tion requirements, and if the failure is not 
cured within the time specified in the related 
transaction documents, the failure shall be an 
uncured default for purposes of section 354(a). 
(B) NOTICE REQUIRED.—An issuer of cov-
ered bonds shall promptly give the Secretary 
and the applicable covered bond regulator writ-
ten notice if the cover pool securing the covered 
bonds fails to meet the applicable minimum 
over-collateralization requirements, if the failure 
is cured within the time specified in the related 
transaction documents, or if the failure is not 
so cured. 
(c) REQUIREMENTS FOR ELIGIBLE ASSETS.— 
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203 
(1) REQUIREMENTS.— 
(A) LOANS.—A loan shall not qualify as an 
eligible asset for so long as the loan is delin-
quent for more than 60 consecutive days. 
(B) SECURITIES.—A security shall not 
qualify as an eligible asset for so long as the se-
curity does not meet any credit-quality require-
ment under this subtitle. 
(C) ORIGINATION.—An asset shall not 
qualify as an eligible asset if the asset was not 
originated in compliance with any rule or super-
visory guidance of a Federal agency applicable 
to the asset at the time of origination. 
(D) NO DOUBLE PLEDGE.—An asset shall 
not qualify as an eligible asset for so long as 
the asset is subject to a prior perfected security 
interest or other prior perfected lien that has 
been granted in an unrelated transaction. Noth-
ing in this subtitle shall affect such a prior per-
fected security interest or other prior perfected 
lien, and the rights of such lien holders. 
(2) FAILURE TO MEET REQUIREMENTS.—Sub-
ject to paragraph (1)(D), if an asset in a cover pool 
does not satisfy any applicable requirement de-
scribed in paragraph (1) or any other applicable 
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204 
standard or criterion described in this subtitle, the 
oversight program, or the related transaction docu-
ments, the asset shall not qualify as an eligible asset 
for purposes of the asset coverage test described in 
subsection (b)(2). A disqualified asset shall remain 
in the cover pool unless and until removed by the 
issuer in compliance with the provisions of this sub-
title, the oversight program, and the related trans-
action documents. No disqualified asset may be re-
moved from the cover pool after an estate has been 
created for the related covered bond program under 
section 354(b)(1) or 354(c)(2), except in connection 
with the management of the cover pool under section 
354(d)(1)(E). 
(d) OTHER REQUIREMENTS.— 
(1) BOOKS AND RECORDS OF ISSUER.—Each 
issuer of covered bonds shall clearly mark its books 
and records to identify the assets that comprise the 
cover pool securing the covered bonds. 
(2) SCHEDULE OF ELIGIBLE ASSETS AND SUB-
STITUTE
ASSETS.—Each issuer of covered bonds 
shall deliver to the applicable indenture trustee and 
the applicable independent asset monitor, on at least 
a monthly basis, a schedule that identifies all eligible 
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assets and substitute assets in the cover pool secur-
ing the covered bonds. 
(3) SINGLE ELIGIBLE ASSET CLASS.—No cover 
pool described in section 352(3)(A) may include eli-
gible assets from more than 1 eligible asset class. No 
cover poll described in section 2(3)(B) may include 
covered bonds backed by more than 1 eligible asset 
class. 
SEC. 354. RESOLUTION UPON DEFAULT OR INSOLVENCY. 
(a) UNCURED DEFAULT DEFINED.—For purposes of 
this section, the term ‘‘uncured default’’ means a default 
on a covered bond that has not been cured within the time, 
if any, specified in the related transaction documents. 
(b) DEFAULT ON COVERED BONDS PRIOR TO CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CREATION OF SEPARATE ESTATE.—If an 
uncured default occurs on a covered bond before the 
issuer of the covered bond enters conservatorship, 
receivership, liquidation, or bankruptcy, an estate 
shall be immediately and automatically created by 
operation of law and shall exist and be administered 
separate and apart from the issuer or any subse-
quent conservatorship, receivership, liquidating agen-
cy, or estate in bankruptcy for the issuer or any 
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