153 
‘‘(ii) submitted a plan to the Board 
for approval to cease the activity or correct 
the condition in a timely manner (which 
shall not exceed 1 year); and 
‘‘(B) implemented procedures that are rea-
sonably adapted to avoid the reoccurrence of 
such condition or activity. 
‘‘(4) SUBSECTION
CEASES
TO
APPLY
UNDER 
CERTAIN
CIRCUMSTANCES.—This subsection shall 
cease to apply to any company described in para-
graph (1) if such company— 
‘‘(A) registers as a bank holding company 
under section 2(a) of this Act; 
‘‘(B) immediately upon such registration, 
complies with all of the requirements of this 
chapter, and regulations prescribed by the 
Board pursuant to this chapter, including the 
nonbanking restrictions of this section; and 
‘‘(C) does not, at the time of such registra-
tion, control banks in more than one State, the 
acquisition of which would be prohibited by sec-
tion 3(d) of this Act if an application for such 
acquisition by such company were filed under 
section 3(a) of this Act. 
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154 
‘‘(5) INFORMATION REQUIREMENT.—Each com-
pany described in paragraph (1) shall, within 60 
days after the date of enactment of the Financial 
Stability Improvement Act of 2009, provide the 
Board with the name and address of such company, 
the name and address of each bank such company 
controls, and a description of each such bank’s ac-
tivities. 
‘‘(6) 
EXAMINATIONS
AND
REPORTS.—The 
Board may, from time to time, examine a company 
described in paragraph (1) or a bank controlled by 
such a company, and may require reports under 
oath from a company described in paragraph (1), 
and appropriate officers or directors of such com-
pany, in each case solely for purposes of assuring 
compliance with the provisions of this subsection and 
enforcing such compliance. 
‘‘(7) LIMITED ENFORCEMENT.— 
‘‘(A) IN
GENERAL.—In addition to any 
other power of the Board, the Board may en-
force compliance with the provisions of this sub-
section which are applicable to any company de-
scribed in paragraph (1), and any bank con-
trolled by such company, under section 8 of the 
Federal Deposit Insurance Act, and such com-
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155 
pany or bank shall be subject to such section 
(for such purposes) in the same manner and to 
the same extent as if such company were a 
bank holding company. 
‘‘(B) APPLICATION OF OTHER ACT.—Any 
violation of this subsection by any company de-
scribed in paragraph (1) or any bank controlled 
by such a company, may also be treated as a 
violation of the Federal Deposit Insurance Act 
for purposes of subparagraph (A). 
‘‘(C) NO
EFFECT
ON
OTHER
AUTHOR-
ITY.—No provision of this paragraph shall be 
construed as limiting any authority of the 
Board or any other Federal agency under any 
other provision of law.’’. 
(c) SECTION SIX HOLDING COMPANIES.—The Bank 
Holding Company Act (12 U.S.C. 1841 et seq.) is amend-
ed by inserting after section 5 the following new section: 
‘‘SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES. 
‘‘(a) ESTABLISHMENT, PURPOSE
AND
REQUIRE-
MENTS OF SPECIAL PURPOSE HOLDING COMPANIES.— 
‘‘(1) REQUIREMENT.—A special purpose hold-
ing company (hereafter in this section referred to as 
a ‘section 6 holding company’) shall be established 
and maintained by a company— 
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156 
‘‘(A) described in section 4(f)(1) as re-
quired by section 4(f)(2)(D) of this Act; 
‘‘(B) described in section 4(p)(1) as re-
quired by section 4(p)(2)(A) of this Act; or 
‘‘(C) that— 
‘‘(i) is subject to heightened pruden-
tial standards under Subtitle B of the Fi-
nancial Stability Improvement Act of 
2009; 
‘‘(ii) is not— 
‘‘(I) a bank holding company, or 
‘‘(II) subject to the Bank Hold-
ing Company Act by reason of section 
8(a) of the International Banking Act 
of 1978 (12 U.S.C. 3106(a)); and 
‘‘(iii) directly or indirectly controlled 
shares or engaged in activities that did 
not, on the date the company is first sub-
ject to heightened prudential standards 
pursuant to subtitle B of the Financial 
Stability Improvement Act of 2009, comply 
with the activity or investment restrictions 
on financial holding companies in section 4 
in accordance with regulations prescribed 
by the Board. 
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157 
‘‘(2) PURPOSE.— 
‘‘(A) A company that is required to form 
a section 6 holding company shall conduct all of 
its activities that are determined to be financial 
in nature or incidental thereto under section 
4(k) and shall hold any shares of a bank or in-
sured depository institution controlled by such 
company, through the section 6 holding com-
pany, unless the Board specifically determines 
otherwise in accordance with paragraph (6). 
‘‘(B) A section 6 holding company shall be 
prohibited from conducting any activities or in-
vesting in any companies other than those per-
missible for a financial holding company under 
section 4, unless the Board specifically deter-
mines otherwise in accordance with paragraph 
(6). 
‘‘(3) REGISTRATION.— 
‘‘(A) A section 6 holding company required 
to be established by a company described in 
subparagraph (1)(A) shall be established, and 
such company shall register with the Board as 
a bank holding company, pursuant to the re-
quirements in section 4(f). 
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158 
‘‘(B) A section 6 holding company required 
to be established by a company described in 
subparagraph (1)(B) shall be established, and 
such company shall register with the Board as 
a bank holding company, pursuant to the re-
quirements in section 4(p). 
‘‘(C) A section 6 holding company required 
to be established by a company described in 
paragraph (1)(C) shall be— 
‘‘(i) established, and such company 
shall register with the Board, as a bank 
holding company within 90 days after such 
company or such company’s parent holding 
company has been notified by the Board 
that such company is subject to heightened 
prudential standards under Subtitle B of 
the Financial Stability Improvement Act of 
2009, unless the Board grants an exten-
sion of such period for compliance which 
shall not exceed 180 additional days; 
‘‘(ii) treated as a financial holding 
company under this Act; and 
‘‘(iii) subject to the authority of the 
Board to enforce compliance with the pro-
visions of this section under section 8 of 
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159 
the Federal Deposit Insurance Act in the 
same manner and to the same extent as if 
such company were a bank holding com-
pany. 
‘‘(4) RULE OF CONSTRUCTION.—For purposes 
of this section, designation of an already established 
intermediate holding company that will serve as the 
section 6 holding company shall satisfy the require-
ment to establish a section 6 holding company, pro-
vided that such existing intermediate holding com-
pany complies with all other provisions applicable to 
a section 6 holding company. 
‘‘(5) LIMITATIONS ON AUTHORITY OF COMMER-
CIAL PARENT.—A company that is not a bank hold-
ing company or treated as a bank holding company 
pursuant to section 8(a) of the International Bank 
Act of 1978 that has been notified that it is an iden-
tified financial holding company, pursuant to sub-
title A of the Financial Stability Improvement Act of 
2009, shall— 
‘‘(A) not be deemed to be, or treated as, a 
bank holding company, solely because of its 
ownership or control of a section 6 holding com-
pany; and 
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160 
‘‘(B) not be subject to this Act, except for 
such provisions as are explicitly made applicable 
in this section. 
‘‘(6) BOARD AUTHORITY.— 
‘‘(A) RULES AND EXEMPTIONS.—In addi-
tion to any other authority of the Board, the 
Board may, at its discretion, prescribe rules 
and regulations or issue orders regarding: 
‘‘(i) the establishment and operation 
of section 6 holding companies; 
‘‘(ii) exemptions from the requirement 
to conduct all activities that are financial 
or incidental thereto, as defined in section 
4(k), through the section 6 holding com-
pany if such exemption— 
‘‘(I) would not threaten the safe-
ty and soundness of the section 6 
holding company or any subsidiary of 
the section 6 holding company; 
‘‘(II) would not increase systemic 
risk or threaten the stability of the 
overall financial system; and 
‘‘(III) would not result in unfair 
competitive advantage to the parent 
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161 
company of such section 6 holding 
company; and 
‘‘(iii) exemptions from the affiliate 
transaction requirements of subsection (b) 
if such exemption— 
‘‘(I) is consistent with the pur-
poses of this section, and section 23A 
and section 23B of the Federal Re-
serve Act; 
‘‘(II) would not threaten the 
safety and soundness of the section 6 
holding company or any subsidiary of 
the section 6 holding company; 
‘‘(III) would not increase sys-
temic risk or threaten the stability of 
the overall financial system; and 
‘‘(IV) would not result in unfair 
competitive advantage to the parent 
company of such section 6 holding 
company. 
‘‘(B) PARENT
COMPANY
REPORTS.—The 
Board may, from time to time, require reports 
under oath from a company that controls a sec-
tion 6 holding company, and appropriate offi-
cers or directors of such company, solely for 
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162 
purposes of ensuring compliance with the provi-
sions of this section (including assessing the 
company’s ability to serve as a source of finan-
cial strength pursuant to subsection (g)) and 
enforcing such compliance. 
‘‘(C) LIMITED
PARENT
COMPANY
EN-
FORCEMENT.— 
‘‘(i) IN GENERAL.—In addition to any 
other power of the Board, the Board may 
enforce compliance with the provisions of 
this subsection which are applicable to any 
company described in paragraph (1), and 
any bank controlled by such company, 
under section 8 of the Federal Deposit In-
surance Act and such company or bank 
shall be subject to such section (for such 
purposes) in the same manner and to the 
same extent as if such company were a 
bank holding company. 
‘‘(ii) APPLICATION OF OTHER ACT.— 
Any violation of this subsection by any 
company that controls a section 6 holding 
company or any bank controlled by such a 
company, may also be treated as a viola-
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163 
tion of the Federal Deposit Insurance Act 
for purposes of clause (i). 
‘‘(iii) NO EFFECT ON OTHER AUTHOR-
ITY.—No provision of this subparagraph 
shall be construed as limiting any author-
ity of the Board or any other Federal 
agency under any other provision of law. 
‘‘(b) 
RESTRICTIONS
ON
AFFILIATE
TRANS-
ACTIONS.— 
‘‘(1) SECTION 23A AND 23B APPLICABILITY.— 
‘‘(A) IN GENERAL.—Transactions between 
a section 6 holding company established under 
this section (including any subsidiary of such 
company) and any affiliate of such company 
that is not a subsidiary of the section 6 holding 
company shall be subject to the restrictions and 
limitations contained in section 23A and section 
23B of the Federal Reserve Act as if the sec-
tion 6 holding company were a member bank. 
‘‘(B) COVERED TRANSACTIONS.— 
‘‘(i) A depository institution controlled 
by a section 6 holding company may not 
engage in a covered transaction (as defined 
in section 23A(b)(7) of the Federal Re-
serve Act) with any affiliate that is not the 
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164 
section 6 holding company or a subsidiary 
of the section 6 holding company. 
‘‘(ii) For purposes of this subpara-
graph (B), any transaction by a depository 
institution controlled by a section 6 hold-
ing company with any person shall be 
deemed to be a transaction with an affil-
iate that is not the section 6 holding com-
pany or a subsidiary of the section 6 hold-
ing company to the extent that the pro-
ceeds of the transaction are used for the 
benefit of, or transferred to, that affiliate. 
‘‘(2) RULE OF CONSTRUCTION.—No provision 
of this subsection shall be construed as exempting 
any subsidiary insured depository institution of a 
section 6 holding company from compliance with sec-
tion 23A or 23B of the Federal Reserve Act with re-
spect to each affiliate of such institution (as defined 
in section 23A or 23B of the Federal Reserve Act), 
including any affiliate that is the section 6 holding 
company or subsidiary of the section 6 holding com-
pany. 
‘‘(c) TYING PROVISIONS.—A company that directly or 
indirectly controls a section 6 holding company shall be— 
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165 
‘‘(1) treated as a bank holding company for 
purposes of section 106 of the Bank Holding Com-
pany Act Amendments of 1970 and section 22(h) of 
the Federal Reserve Act and any regulation pre-
scribed under any such section; and 
‘‘(2) subject to the restrictions of section 106 of 
the Bank Holding Company Act Amendments of 
1970, in connection with any transaction involving 
the products or services of such company or affiliate 
and those of a bank affiliate, as if such company or 
affiliate were a bank and such bank were a sub-
sidiary of a bank holding company. 
‘‘(d) CROSS MARKETING RESTRICTIONS APPLICABLE 
TO COMMERCIAL ACTIVITIES.— 
‘‘(1) IN GENERAL.—A section 6 holding com-
pany shall not— 
‘‘(A) offer or market, directly or through 
any arrangement, any product or service of an 
affiliate that is not a subsidiary of the section 
6 holding company; or 
‘‘(B) permit any of the products or services 
of the section 6 holding company or any sub-
sidiary thereof to be offered or marketed, di-
rectly or through any arrangement, by or 
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166 
through any affiliate that is not a subsidiary of 
the section 6 holding company. 
‘‘(2) BOARD
AUTHORITY
TO
GRANT
EXEMP-
TIONS.—The Board may grant exemptions from the 
restrictions in this subsection if— 
‘‘(A) the arrangement does not violate sec-
tion 106 of the Bank Holding Company Act 
Amendments of 1970; and 
‘‘(B) the Board determines that the ar-
rangement is in the public interest, does not 
undermine the separation of banking and com-
merce, and is consistent with the safety and 
soundness of the section 6 holding company. 
‘‘(e) FINANCIAL
HOLDING
COMPANY
REQUIRE-
MENTS.—A section 6 holding company shall be subject 
to— 
‘‘(1) the conditions for engaging in expanded fi-
nancial activities in section 4(l); and 
‘‘(2) the provisions applicable to financial hold-
ing companies that fail to meet certain requirements 
in section 4(m). 
‘‘(f) INDEPENDENCE OF SECTION 6 HOLDING COM-
PANY.— 
‘‘(1) No less than 25 percent of the members 
of the board of directors of a section 6 holding com-
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167 
pany, and each subsidiary of a section 6 holding 
company shall be independent of the parent com-
pany of the section 6 holding company and any sub-
sidiary of such parent company. For purposes of this 
subsection, a director shall be independent of the 
parent company if such person is not currently serv-
ing, and has not within the previous two-year period 
served, as a director, officer, or employee of any af-
filiate of the section 6 holding company that is not 
a subsidiary of the section 6 holding company. 
‘‘(2) No executive officer of a section 6 holding 
company or any subsidiary of a section 6 holding 
company may serve as a director, officer, or em-
ployee of an affiliate of the section 6 holding com-
pany that is not a subsidiary of the section 6 holding 
company. 
‘‘(3) The Board shall issue regulations that re-
quire effective legal and operational separation of 
the functions of a section 6 holding company from 
its affiliates that are not subsidiaries of such section 
6 holding company. 
‘‘(g) SOURCE OF STRENGTH.—A company that di-
rectly or indirectly controls a section 6 holding company 
shall serve as a source of financial strength to its sub-
sidiary section 6 holding company.’’. 
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168 
(d) CONFORMING CHANGES.—Section 4(h) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1843(h)), 
is amended— 
(1) in paragraph (1), by striking ‘‘subpara-
graph (D), (F), (G), or (H)’’ and inserting ‘‘sub-
paragraph (C) or (D)’’; and 
(2) in paragraph (2), by striking ‘‘subpara-
graph (D), (F), (G), or (H)’’ and inserting ‘‘sub-
paragraph (C) or (D)’’. 
SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS 
BANK HOLDING COMPANIES. 
Section 5 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844) is amended by inserting at the end the 
following new subsection: 
‘‘(h) CONVERSION TO BANK HOLDING COMPANY BY 
OPERATION OF LAW.— 
‘‘(1) CONVERSION BY OPERATION OF LAW.—A 
company that, on the day before the date of enact-
ment of the Financial Stability Improvement Act of 
2009, was not a bank holding company but which, 
by reason of sections 4(p) and 6 becomes a bank 
holding company by operation of law, shall register 
as a bank holding company with the Board in ac-
cordance with section 5(a) within 90 days of the 
date of enactment of that Act. 
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169 
‘‘(2) COMPLIANCE WITH BANK HOLDING COM-
PANY ACT.—With respect to any company described 
in paragraph (1), the Board may grant temporary 
exemptions or provide other appropriate temporary 
relief to permit such company to implement meas-
ures necessary to comply with the requirements 
under the Bank Holding Company Act.’’. 
SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLD-
ING COMPANIES; REGULATION OF FUNCTION-
ALLY REGULATED SUBSIDIARIES. 
(a) REPORTS OF BANK HOLDING COMPANIES.—Sec-
tions 5(c)(1) (A) and (B) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1844(c)(1) (A) and (B)) are 
amended to read as follows: 
‘‘(A) IN GENERAL.—The Board, from time 
to time, may require a bank holding company 
and any subsidiary of such company to submit 
reports under oath that the Board determines 
are necessary or appropriate for the Board to 
carry out the purposes of this chapter, prevent 
evasions thereof, and monitor compliance by the 
company or subsidiary with the applicable pro-
visions of law. 
‘‘(B) USE OF EXISTING REPORTS.— 
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170 
‘‘(i) IN GENERAL.—The Board shall, 
to the fullest extent possible, use: 
‘‘(I) reports that a bank holding 
company or any subsidiary of such 
company has been required to provide 
to other Federal or State regulatory 
agencies; 
‘‘(II) information that is other-
wise required to be reported publicly; 
and 
‘‘(III) externally audited financial 
statements. 
‘‘(ii) AVAILABILITY.—A bank holding 
company or a subsidiary of such company 
shall promptly provide to the Board, at the 
request of the Board, a report referred to 
in clause (i)(I).’’. 
(b) FUNCTIONALLY REGULATED SUBSIDIARY.—Sec-
tion 5(c)(1) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844(c)(1)) is amended by inserting at the end 
the following new subparagraph: 
‘‘(C) DEFINITION.—For purposes of this 
subsection and section 6, the term ‘functionally 
regulated subsidiary’ means any subsidiary 
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171 
(other than a depository institution) of a bank 
holding company that is— 
‘‘(i) a broker or dealer registered with 
the Securities and Exchange Commission 
under the Securities Exchange Act of 
1934, for which the Securities and Ex-
change Commission is the Federal regu-
latory agency; 
‘‘(ii) an investment company reg-
istered with the Securities and Exchange 
Commission under the Investment Com-
pany Act of 1940, for which the Securities 
and Exchange Commission is the Federal 
regulatory agency; 
‘‘(iii) an investment adviser registered 
with the Securities and Exchange Commis-
sion under the Investment Advisers Act of 
1940, for which the Securities and Ex-
change Commission is the Federal regu-
latory agency, with respect to the invest-
ment advisory activities of such investment 
adviser and activities incidental to such in-
vestment advisory activities; and 
‘‘(iv) a futures commission merchant, 
commodity trading advisor, and commodity 
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172 
pool operator registered with the Com-
modity 
Futures 
Trading 
Commission 
under the Commodity Exchange Act, for 
which the Commodity Futures Trading 
Commission is the Federal regulatory 
agency, with respect to the commodities 
activities of such entity and activities inci-
dental to such commodities activities.’’. 
(c) EXAMINATIONS
OF BANK HOLDING COMPA-
NIES.—Sections 5(c)(2) (A) and (B) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1844(c)(2) (A) and (B)) 
are amended to read as follows: 
‘‘(A) IN GENERAL.—The Board may make 
examinations of a bank holding company and 
any subsidiary of such a company to carry out 
the purposes of this chapter, prevent evasions 
thereof, and monitor compliance by the com-
pany or subsidiary with applicable provisions of 
law. 
‘‘(B) FUNCTIONALLY REGULATED AND DE-
POSITORY
INSTITUTION
SUBSIDIARIES.—The 
Board shall, to the fullest extent possible, use 
reports of examination of functionally regulated 
subsidiaries and subsidiary depository institu-
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173 
tions made by other Federal or State regulatory 
authorities.’’. 
(d) REGULATION OF FINANCIAL HOLDING COMPA-
NIES.—Section 5(c)(2) of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1844(c)) is amended by striking sub-
paragraphs (C), (D), and (E). 
(e) AUTHORITY TO REGULATE FUNCTIONALLY REG-
ULATED
SUBSIDIARIES
OF
BANK
HOLDING
COMPA-
NIES.—The Bank Holding Company Act of 1956 (12 
U.S.C. 1841 et seq.) is amended by striking section 10A 
(12 U.S.C. 1848a). 
SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COM-
PANIES TO REMAIN WELL CAPITALIZED AND 
WELL MANAGED. 
Section 4(l)(1) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(l)(1)) is amended— 
(1) in subparagraph (B), by striking ‘‘and’’; 
(2) by redesignating subparagraph (C) as sub-
paragraph (D); 
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph: 
‘‘(C) the bank holding company is well 
capitalized and well managed; and’’; and 
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174 
(4) in subparagraph (D) (as so redesignated) 
by striking clause (ii) and inserting the following 
new clause: 
‘‘(i) a certification that the company 
meets the requirements of subparagraphs 
(A) through (C).’’. 
SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS. 
(a) BANK HOLDING COMPANY ACT OF 1956 AMEND-
MENT.—Section 3(d)(1)(A) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended— 
(1) by striking ‘‘adequately capitalized’’ and in-
serting ‘‘well capitalized’’; and 
(2) by striking ‘‘adequately managed’’ and in-
serting ‘‘well managed’’. 
(b) FEDERAL DEPOSIT INSURANCE ACT AMEND-
MENT.—Section 44(b)(4)(B) of the Federal Deposit In-
surance Act (12 U.S.C. 1831u(b)(4)(B)) is amended to 
read as follows: 
‘‘(B) the responsible agency determines 
that the resulting bank will be well capitalized 
and well managed upon the consummation of 
the transaction.’’. 
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175 
SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK 
TRANSACTIONS WITH AFFILIATES. 
(a) Section 23A of the Federal Reserve Act (12 
U.S.C. 371c) is amended— 
(1) in subsection (b)(1), by striking subpara-
graph (D) and inserting the following new subpara-
graph: 
‘‘(D) any investment fund with respect to 
which a member bank or affiliate thereof is an 
investment adviser; and’’; 
(2) in subsection (b)(7)(A), by inserting ‘‘(in-
cluding a purchase of assets subject to an agreement 
to repurchase)’’ after ‘‘affiliate’’; 
(3) in subsection (b)(7)(C), by striking ‘‘, in-
cluding assets subject to an agreement to repur-
chase,’’; 
(4) in subsection (b)(7)(D)— 
(A) by inserting ‘‘or other debt obliga-
tions’’ after ‘‘acceptance of securities’’, and 
(B) by striking ‘‘or’’ after the semicolon; 
(5) in subsection (b)(7), by inserting at the end 
the following new subparagraphs: 
‘‘(F) any securities borrowing and lending 
transactions with an affiliate to the extent that 
the transactions create credit exposure of the 
member bank to the affiliate; or 
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176 
‘‘(G) current and potential future credit 
exposure to the affiliate on derivative trans-
actions with the affiliate;’’; 
(6) in subsection (c)(1), by striking ‘‘at the 
time of the transaction,’’ and inserting ‘‘at all 
times’’; 
(7) in subsection (c)— 
(A) by striking paragraph (2); 
(B) by redesignating paragraphs (3), (4), 
and (5) as paragraphs (2), (3), and (4), respec-
tively; 
(8) in subsection (c)(3) (as so redesignated by 
paragraph (7)), by inserting ‘‘or other debt obliga-
tions’’ after ‘‘securities’’; 
(9) in subsection (f)(2), by inserting at the end 
the following: ‘‘The Board may not, by regulation or 
order, grant an exemption under this section unless 
the Board obtains the concurrence of the Chairman 
of the Federal Deposit Insurance Corporation.’’; and 
(10) in subsection (f)— 
(A) by redesignating paragraph (3) as 
paragraph (4); and 
(B) and inserting after paragraph (2) the 
following new paragraph: 
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‘‘(3) CONCURRENCE OF THE COMPTROLLER OF 
THE CURRENCY.—With respect to a transaction or 
relationship involving a national bank or Federal 
savings association, the Board may not grant an ex-
emption under this section unless the Board obtains 
the concurrence of the Comptroller of the Currency 
(in addition to obtaining the concurrence of the 
Chairman of the Federal Deposit Insurance Cor-
poration under paragraph (2)).’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.— 
Section 23B(e) of the Federal Reserve Act (12 U.S.C. 
371–1(e)), is amended by inserting at the end the fol-
lowing new paragraph: 
‘‘(3) The Board may not grant an exemption or 
exclusion under this section unless the Board ob-
tains the concurrence of the Chairman of the Fed-
eral Deposit Insurance Corporation.’’. 
SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS 
WITH FINANCIAL SUBSIDIARIES. 
Section 23A(e) of the Federal Reserve Act (12 U.S.C. 
371c(e)) is amended— 
(1) by striking paragraph (3); and 
(2) by redesignating paragraph (4) as para-
graph (3). 
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SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPO-
SURE ON DERIVATIVE TRANSACTIONS, RE-
PURCHASE AGREEMENTS, REVERSE REPUR-
CHASE 
AGREEMENTS, 
AND 
SECURITIES 
LENDING AND BORROWING TRANSACTIONS. 
Section 5200 of the Revised Statutes of the United 
States (12 U.S.C. 84) is amended— 
(1) in subsection (b)(1), by striking ‘‘shall in-
clude all direct or indirect’’ and all that follows in 
that paragraph through ‘‘commitment;’’ and insert-
ing: ‘‘shall include— 
‘‘(A) all direct or indirect advances of 
funds to a person made on the basis of any ob-
ligation of that person to repay the funds or re-
payable from specific property pledged by or on 
behalf of the person; 
‘‘(B) to the extent specified by the Comp-
troller of the Currency, such term shall also in-
clude any liability of a national banking associa-
tion to advance funds to or on behalf of a per-
son pursuant to a contractual commitment; and 
‘‘(C) credit exposure to a person arising 
from a derivative transaction, repurchase agree-
ment, reverse repurchase agreement, securities 
lending transaction, or securities borrowing 
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179 
transaction between the national banking asso-
ciation and the person;’’; 
(2) in subsection (b)(2) by striking the period 
at the end and inserting ‘‘; and’’; 
(3) in subsection (b), by inserting after para-
graph (2) the following new paragraph: 
‘‘(3) the term ‘derivative transaction’ means 
any transaction that is a contract, agreement, swap, 
warrant, note, or option that is based, in whole or 
in part, on the value of, any interest in, or any 
quantitative measure or the occurrence of any event 
relating to, one or more commodities, securities, cur-
rencies, interest or other rates, indices, or other as-
sets.’’; and 
(4) in subsection (d), by inserting after para-
graph (2) the following new paragraph: 
‘‘(3) The Comptroller of the Currency shall pre-
scribe rules to administer and carry out the pur-
poses of this section with respect to credit exposures 
arising from any derivative transaction, repurchase 
agreement, reverse repurchase agreement, securities 
lending transaction, or securities borrowing trans-
action. Rules required to be prescribed under this 
paragraph (3) shall take effect, in final form, not 
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180 
later than 180 days after the date of enactment of 
the Financial Stability Improvement Act of 2009.’’. 
SEC. 1309. APPLICATION OF NATIONAL BANK LENDING LIM-
ITS TO INSURED STATE BANKS. 
Section 18 of the Federal Deposit Insurance Act (12 
U.S.C. 1828) is amended by adding at the end a new sub-
section: 
‘‘(y) APPLICATION OF LENDING LIMITS TO INSURED 
STATE BANKS.—Section 84 of this title shall apply to 
every insured depository institution in the same manner 
and to the same extent as if the insured depository institu-
tion were a national banking association.’’. 
SEC. 1310. RESTRICTION ON CONVERSIONS OF TROUBLED 
BANKS. 
(a) CONVERSION OF A NATIONAL BANKING ASSOCIA-
TION TO A STATE BANK.—The National Bank Consolida-
tion and Merger Act (12 U.S.C. 215 et seq.) is amended 
by redesignating section 7 as section 8 and by inserting 
after section 6 the following: 
‘‘SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS. 
‘‘A national bank may not convert to a State bank 
during any period of time in which it is subject to a Cease 
and Desist order, memorandum of understanding, or other 
enforcement action entered into with or issued by the 
Comptroller of the Currency.’’ 
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181 
(b) CONVERSION OF A STATE BANK TO A NATIONAL 
BANK.—Section 5154 of the Revised Statutes (12 U.S.C. 
35) is amended by adding at the end the following new 
sentence: ‘‘The Comptroller of the Currency shall not ap-
prove the conversion of a State bank to a national bank 
during any period of time in which the State bank is sub-
ject to a Cease and Desist order, memorandum of under-
standing, or other enforcement action entered into or 
issued by a State bank supervisor, the Federal Deposit 
Insurance Corporation, the Board of Governors of the 
Federal Reserve System or a Federal Reserve Bank.’’. 
SEC. 1311. LENDING LIMITS TO INSIDERS. 
Section 22(h)(9)(D)(ii) of the Federal Reserve Act 
(12 U.S.C. 375b(h)(9)(D)(ii)) is amended by inserting ‘‘, 
except that a member bank shall be deemed to have ex-
tended credit to a person if the member bank has credit 
exposure to the person arising from a derivative trans-
action, repurchase agreement, reverse repurchase agree-
ment, securities lending transaction, or securities bor-
rowing transaction between the member bank and the per-
son.’’ before the period at the end. 
SEC. 1312. LIMITATIONS ON PURCHASES OF ASSETS FROM 
INSIDERS. 
(a) Section 18 of the Federal Deposit Insurance Act 
(12 U.S.C. 1828) is amended by inserting after subsection 
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182 
(y) (as added by section 1408) the following new sub-
section: 
‘‘(z) GENERAL PROHIBITION.—An insured depository 
institution shall not purchase an asset from, or sell an 
asset to, one of its executive officers, directors, or principal 
shareholders or any related interest of such person (as 
such terms are defined in 22(h) of Federal Reserve Act) 
unless the transaction is on market terms and, if the 
transaction represents more than 10 percent of the insti-
tution’s capital stock and surplus, the transaction has 
been approved in advance by a majority of the institution’s 
board of directors (with interested directors of the insured 
depository institution not participating in the approval of 
the transaction).’’. 
(b) FDIC RULEMAKING AUTHORITY.—The Federal 
Deposit Insurance Corporation may prescribe rules to im-
plement the requirements of section (a). 
(c) AMENDMENTS
TO
THE
FEDERAL
RESERVE 
ACT.—Section 22 of the Federal Reserve Act (12 U.S.C. 
375) is amended by striking subsection (d). 
SEC. 1313. RULES REGARDING CAPITAL LEVELS OF BANK 
HOLDING COMPANIES. 
Section 5(b) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1844(b)) is amended by inserting ‘‘, in-
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183 
cluding regulations relating to the capital levels of bank 
holding companies’’ before the period at the end. 
SEC. 1314. ENHANCEMENTS TO FACTORS TO BE CONSID-
ERED IN CERTAIN ACQUISITIONS. 
(a) BANK ACQUISITIONS.—Section 3(c) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1842(c)) is 
amended by inserting at the end the following new para-
graph: 
‘‘(7) FINANCIAL STABILITY.—In every case, the 
Board shall take into consideration the extent to 
which the proposed acquisition, merger, or consolida-
tion may pose risk to the stability of the United 
States financial system or the economy of the 
United States.’’. 
(b) NONBANK ACQUISITIONS.— 
(1) Section 4(j)(2)(A) of the Bank Holding 
Company is amended by— 
(A) striking ‘‘or’’ before ‘‘unsound banking 
practices’’; and 
(B) inserting before the period at the end 
‘‘, or risk to the stability of the United States 
financial system or the economy of the United 
States’’. 
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184 
(2) Section 4(k)(6) of the Bank Holding Com-
pany Act is amended by striking subparagraph (B) 
and inserting the following new subparagraph: 
‘‘(B) A financial holding company may 
commence any activity or acquire any company, 
pursuant to paragraph (4) or any regulation 
prescribed or order issued under paragraph (5), 
without prior approval of the Board, except— 
‘‘(i) for a transaction in which the 
total assets to be acquired by the financial 
holding company exceed $25 billion; and 
‘‘(ii) as provided in subsection (j) with 
regard to the acquisition of a savings asso-
ciation.’’. 
(c) BANK MERGER ACT TRANSACTIONS.—Section 
8(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(c)(5)) is amended by— 
(1) striking ‘‘and’’ before ‘‘the convenience and 
needs of the community to be served’’; and 
(2) inserting before the period at the end ‘‘, and 
the risk to the stability of the United States finan-
cial system and the economy of the United States’’. 
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185 
SEC. 1315. ELIMINATION OF ELECTIVE INVESTMENT BANK 
HOLDING COMPANY FRAMEWORK. 
Section 17 of the Securities Exchange Act of 1934 
(15 U.S.C. 78q) is amended by striking subsection (i) and 
redesignating the following subsections accordingly. 
SEC. 1316. EXAMINATION FEES FOR LARGE BANK HOLDING 
COMPANIES. 
The Bank Holding Company Act is amended by add-
ing a new section 5A: 
‘‘SEC. 5A. EXAMINATION FEES. 
‘‘The Board of Governors of the Federal Reserve Sys-
tem or the Federal Reserve Banks shall assess fees on 
bank holding companies with total consolidated assets of 
$10 billion or more. Such fees shall be sufficient to defray 
the cost of the examination of such bank holding compa-
nies.’’. 
Subtitle E—Payment, Clearing, and 
Settlement Supervision 
SEC. 1401. SHORT TITLE. 
This subtitle may be cited as the ‘‘Payment, Clearing, 
and Settlement Supervision Act of 2009’’. 
SEC. 1402. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds the following: 
(1) The proper functioning of the financial mar-
kets is dependent upon safe and efficient arrange-
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186 
ments for the clearing and settlement of payment, 
securities and other financial transactions. 
(2) Financial market utilities that conduct or 
support multilateral payment, clearing, or settlement 
activities may reduce risks for their participants and 
the broader financial system, but such utilities may 
also concentrate and create new risks and thus must 
be well designed and operated in a safe and sound 
manner. 
(3) Payment, clearing and settlement activities 
conducted by financial institutions also present im-
portant risks to the participating financial institu-
tions and to the financial system. 
(4) Enhancements to the regulation and super-
vision of systemically important financial market 
utilities and the conduct of systemically important 
payment, clearing, and settlement activities by finan-
cial institutions are necessary to provide consistency, 
to promote robust risk management and safety and 
soundness, to reduce systemic risks, and to support 
the stability of the broader financial system. 
(b) PURPOSES.—The purposes of this subtitle are to 
mitigate systemic risk in the financial system and promote 
financial stability by— 
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(1) authorizing the Board of Governors of the 
Federal Reserve System to prescribe uniform stand-
ards for the management of risks by systemically 
important financial market utilities and for the con-
duct of systemically important payment, clearing 
and settlement activities by financial institutions; 
(2) providing for appropriate supervision and 
enforcement of such risk management standards for 
systemically important financial market utilities and 
payment, clearing, and settlement activities; and 
(3) strengthening the liquidity of systemically 
important financial market utilities. 
SEC. 1403. DEFINITIONS. 
For purposes of this subtitle, the following definitions 
shall apply: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means 
any company that controls, is controlled by, or is 
under common control with another company. 
(2) APPROPRIATE
FINANCIAL
REGULATOR.— 
The term ‘‘appropriate financial regulator’’ means 
the following: 
(A) The Comptroller of the Currency, with 
respect to— 
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188 
(i) any national banks or a Federal 
branch or Federal agency of a foreign 
bank; and 
(ii) after the functions of the Director 
of the Office of Thrift Supervision are 
transferred under subtitle C, any Federal 
savings association. 
(B) the Board of Directors of the Corpora-
tion, with respect to— 
(i) any insured State nonmember 
bank or any insured branch of a foreign 
bank (other than a Federal branch); and 
(ii) after the functions of the Director 
of the Office of Thrift Supervision are 
transferred under subtitle C, any State 
savings association. 
(C) The Director of the Office of Thrift 
Supervision, with respect to any savings asso-
ciation and any savings and loan holding com-
pany, until the functions of the Director of the 
Office of Thrift Supervision are transferred 
under subtitle C. 
(D) The Board, with respect to— 
(i) any State member bank; 
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189 
(ii) any branch or agency of a foreign 
bank (other than any Federal branch, Fed-
eral agency, or insured State branch of a 
foreign bank); 
(iii) any commercial lending company 
owned or controlled by a foreign bank; 
(iv) any organization operating under 
section 25 or 25A of the Federal Reserve 
Act (12 U.S.C. 601 et seq. or 611 et seq.); 
(v) any bank holding company and 
any nondepository subsidiary of a bank 
holding company (other than any broker, 
dealer, investment company, or investment 
adviser registered with the Securities and 
Exchange Commission, or any futures 
commission merchant, commodity trading 
advisor, or commodity pool operator reg-
istered with the Commodity Futures Trad-
ing Commission); and 
(vi) after the functions of the Director 
of Thrift Supervision are transferred under 
subtitle C, any savings and loan holding 
company and any non-depository sub-
sidiary of a savings and loan holding com-
pany (other than any broker, dealer, in-
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vestment company, or investment adviser 
registered with the Securities and Ex-
change Commission, or any futures com-
mission merchant, commodity trading advi-
sor, or commodity pool operator registered 
with the Commodity Futures Trading 
Commission). 
(E) The National Credit Union Adminis-
tration Board, with respect to any insured cred-
it union under the Federal Credit Union Act 
(12 U.S.C. 1751 et seq.). 
(F) The Securities and Exchange Commis-
sion, with respect to— 
(i) any broker or dealer registered 
with the Securities and Exchange Commis-
sion under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.); 
(ii) any investment company reg-
istered with the Securities and Exchange 
Commission under the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–1 et 
seq.); and 
(iii) any investment adviser registered 
with the Securities and Exchange Commis-
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191 
sion under the Investment Advisers Act of 
1940 (15 U.S.C. 80b–1 et seq.). 
(G) The Commodity Futures Trading 
Commission, with respect to futures commission 
merchants, commodity trading advisors, and 
commodity pool operators registered with the 
Commodity Futures Trading Commission under 
the Commodity Exchange Act (7 U.S.C. 1 et 
seq.). 
(H) The State insurance authority of the 
State in which an insurance company is domi-
ciled, with respect to any financial institution 
engaged in providing insurance under State in-
surance law. 
(I) The Board, with respect to any other 
financial institution engaged in an identified ac-
tivity. 
(3) BOARD.—The term ‘‘Board’’ means the 
Board of Governors of the Federal Reserve System. 
(4) CORPORATION.—The term ‘‘Corporation’’ 
means the Federal Deposit Insurance Corporation. 
(5) FINANCIAL
INSTITUTION.—The term ‘‘fi-
nancial institution’’ means an entity other than a fi-
nancial market utility that is— 
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(A) a depository institution (as defined in 
section 3 of the Federal Deposit Insurance Act) 
(12 U.S.C. 1813); 
(B) a branch or agency of a foreign bank 
(as defined in section 1(b) of the International 
Banking Act of 1978) (12 U.S.C. 3101); 
(C) an organization operating under sec-
tion 25 or 25A of the Federal Reserve Act (12 
U.S.C. 601 et seq. and 611 et seq.); 
(D) a credit union (as defined in section 
101 of the Federal Credit Union Act) (12 
U.S.C. 1752); 
(E) a broker or dealer (as defined in sec-
tion 3 of the Securities Exchange Act of 1934) 
(15 U.S.C. 78c); 
(F) an investment company (as defined in 
section 3 of the Investment Company Act of 
1940) (15 U.S.C. 80a–3); 
(G) an insurance company (as defined in 
section 2 of the Investment Company Act of 
1940) (15 U.S.C. 80a–2); 
(H) an investment adviser (as defined in 
section 202 of the Investment Advisers Act of 
1940) (15 U.S.C. 80b–2); 
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193 
(I) a futures commission merchant, com-
modity trading advisor, or commodity pool oper-
ator (as defined in section 1a of the Commodity 
Exchange Act) (7 U.S.C. 1a); and 
(J) any company engaged in activities that 
are financial in nature or incidental to a finan-
cial activity, as described in section 4 of the 
Bank Holding Company Act of 1956 (12 
U.S.C. 1843(k)). 
(6) FINANCIAL
MARKET
UTILITY.—The term 
‘‘financial market utility’’ means any person that 
manages or operates a multilateral system for the 
purpose of transferring, clearing, or settling pay-
ments, securities, or other financial transactions 
among financial institutions or between financial in-
stitutions and the person. 
(7) IDENTIFIED ACTIVITY.—The term ‘‘identi-
fied activity’’ means a payment, clearing, or settle-
ment activity that the Council has identified as sys-
temically important under section 1404. 
(8) IDENTIFIED FINANCIAL MARKET UTILITY.— 
The term ‘‘identified financial market utility’’ means 
a financial market utility that the Council has iden-
tified as systemically important under section 1404. 
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194 
(9) PAYMENT, CLEARING, OR SETTLEMENT AC-
TIVITY.— 
(A) IN
GENERAL.—The term ‘‘payment, 
clearing, or settlement activity’’ means one of 
the following activities carried out by one or 
more financial institutions after the parties to 
a financial transaction agree to the transaction 
to facilitate the completion of the financial 
transaction: the calculation and communication 
of unsettled financial transactions between fi-
nancial institutions; netting or aggregating of 
financial transactions; provision and mainte-
nance of trade, contract, or instrument infor-
mation; the management of risks associated 
with unsettled financial transactions; trans-
mittal and storage of payment instructions; 
movement of funds; final settlement of financial 
transactions; and other similar activities that 
the Board may determine by rule or order. 
‘‘Payment, clearing, or settlement activity’’ does 
not include, among other things, activities in-
clusive of or prior to trade execution. 
(B) FINANCIAL TRANSACTION.—For pur-
poses of subparagraph (A), the term ‘‘financial 
transaction’’ means a funds transfer, securities 
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195 
contract, contract of sale of a commodity for fu-
ture delivery, forward contract, repurchase 
agreement, swap agreement, foreign exchange 
contract, financial derivatives contract, and any 
similar transaction that the Board determines, 
by rule or order, to be a financial transaction 
for purposes of this subtitle. 
(10) PERSON.—The term ‘‘person’’ means any 
corporation, company, association, firm, partnership, 
society, joint stock company, or other legal entity 
other than a natural person. 
(11) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of the Treasury. 
(12) STATE.—The term ‘‘State’’ means any 
State, commonwealth, territory, or possession of the 
United States, the District of Columbia, the Com-
monwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, American Samoa, Guam, 
or the United States Virgin Islands. 
(13) SUPERVISORY
AGENCY.—The term ‘‘Su-
pervisory Agency’’ means the Federal agency that 
has primary jurisdiction over an identified financial 
market utility under Federal banking, securities, or 
commodity futures laws, including— 
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(A) the Securities and Exchange Commis-
sion, with respect to an identified financial mar-
ket utility that is a clearing agency registered 
with the Securities and Exchange Commission; 
(B) the Commodity Futures Trading Com-
mission, with respect to an identified financial 
market utility that is a derivatives clearing or-
ganization registered with the Commodity Fu-
tures Trading Commission; 
(C) the Board of Directors of the Corpora-
tion, with respect to an identified financial mar-
ket utility that is— 
(i) an insured State nonmember bank 
or an insured branch of a foreign bank; 
and 
(ii) after the functions of the Director 
of the Office of Thrift Supervision are 
transferred under subtitle C, a State sav-
ings association; 
(D) the Comptroller of the Currency, with 
respect to an identified financial market utility 
that is— 
(i) a national bank or a Federal 
branch (other than an insured branch) or 
a Federal agency of a foreign bank; and 
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(ii) after the functions of the Director 
of the Office of Thrift Supervision are 
transferred under subtitle C, a Federal 
savings association; 
(E) the Board, with respect to an identi-
fied financial market utility that is— 
(i) a State member bank; 
(ii) a branch or agency of a foreign 
bank (other than any Federal branch, Fed-
eral agency, or insured State branch of a 
foreign bank); 
(iii) a commercial lending company 
owned or controlled by a foreign bank; 
(iv) an organization operating under 
section 25 or 25A of the Federal Reserve 
Act (12 U.S.C. 601 et seq. or 611 et seq.); 
(v) a bank holding company and any 
non-depository subsidiary of a bank hold-
ing company (other than any broker, deal-
er, investment company, or investment ad-
viser registered with the Securities and Ex-
change Commission, or any futures com-
mission merchant, commodity trading advi-
sor, or commodity pool operator registered 
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with the Commodity Futures Trading 
Commission); and 
(vi) after the functions of the Director 
of the Office of Thrift Supervision are 
transferred under subtitle C, any savings 
and loan holding company and any non-de-
pository subsidiary of a savings and loan 
holding company (other than any broker, 
dealer, investment company, or investment 
adviser registered with the Securities and 
Exchange Commission, or any futures 
commission merchant, commodity trading 
advisor, or commodity pool operator reg-
istered with the Commodity Futures Trad-
ing Commission); and 
(F) the Director of the Office of Thrift Su-
pervision, with respect to an identified financial 
market utility that is a savings association or a 
savings and loan holding company, until the 
functions of the Director of the Office of Thrift 
Supervision are transferred under subtitle C. 
If a financial market utility is subject to supervision 
by more than one agency listed in paragraphs (A) 
through (F), and those agencies cannot agree which 
has primary jurisdiction, the Council shall decide 
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which agency is the Supervisory Agency for purposes 
of this subtitle. 
(14) SYSTEMICALLY IMPORTANT AND SYSTEMIC 
IMPORTANCE.—The terms ‘‘systemically important’’ 
and ‘‘systemic importance’’ mean a situation in 
which the failure of or a disruption to the func-
tioning of a financial market utility or the conduct 
of a payment, clearing, or settlement activity could 
create, or increase, the risk of significant liquidity, 
credit, or other problems spreading among financial 
institutions or markets and thereby threaten the sta-
bility of the financial system. 
SEC. 1404. IDENTIFICATION OF SYSTEMICALLY IMPORTANT 
FINANCIAL MARKET UTILITIES AND PAY-
MENT, CLEARING, AND SETTLEMENT ACTIVI-
TIES. 
(a) IN GENERAL.—The Council shall, at its own ini-
tiative or at the request of the Board, consider whether 
to identify a financial market utility or a payment, clear-
ing, or settlement activity as systemically important. 
(b) CRITERIA FOR IDENTIFICATION.—The Council 
shall identify a financial market utility or payment, clear-
ing, or settlement activity if the Council determines that 
such financial market utility or activity is, or is likely to 
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become, systemically important, based on consideration of 
the following: 
(1) The aggregate monetary value of the trans-
actions processed by the financial market utility or 
carried out through the payment, clearing, or settle-
ment activity. 
(2) The aggregate exposure of counterparties to 
the financial market utility. 
(3) The relationship, interdependencies, or 
other interactions of the financial market utility or 
payment, clearing, or settlement activity with other 
financial market utilities or payment, clearing, or 
settlement activities. 
(4) The effect that the failure of or a disruption 
to the financial market utility or payment, clearing, 
or settlement activity would have on critical markets, 
financial institutions, or the broader financial sys-
tem. 
(5) Any other factors that the Council deems 
appropriate. 
(c) PERIODIC REVIEW AND RESCISSION OF IDENTI-
FICATIONS.—The Council shall, at its own initiative or at 
the request of the Board— 
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(1) review periodically whether a financial mar-
ket utility or a payment, clearing, or settlement ac-
tivity continues to be systemically important; and 
(2) rescind identification of a financial market 
utility or a payment, clearing, or settlement activity 
that it determines no longer should be identified. 
(d) PROCEDURE FOR IDENTIFYING OR RESCINDING 
A SYSTEMICALLY IMPORTANT IDENTIFICATION.— 
(1) CONSULTATION.—Before making any deter-
mination under this section, the Council shall con-
sult with the Board, and in the case of a determina-
tion regarding identification or rescission of identi-
fication of a financial market utility, the Council 
shall consult with the relevant Supervisory Agency. 
(2) NOTICE AND OPPORTUNITY FOR CONSIDER-
ATION OF WRITTEN MATERIALS.— 
(A) IN GENERAL.—The Board shall, in an 
executive capacity on behalf of the Council, pro-
vide notice to a financial market utility or, in 
the case of a payment, clearing, or settlement 
activity, financial institutions, that the Council 
is considering whether to identify or cease to 
identify such financial market utility or such 
payment, clearing, or settlement activity, in-
cluding an explanation of the basis of the Coun-
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cil’s consideration, and provide such financial 
market utilities or financial institutions 30 days 
to submit written materials to inform the Coun-
cil’s decision. The Council shall make its deci-
sion, and the Board shall notify the financial 
market utility or financial institutions of the 
Council’s decision, within 60 days of the due 
date for such written materials. 
(B) EMERGENCY EXCEPTION.—The Coun-
cil may waive or modify the requirements of 
subparagraph (A) if the Council determines 
that the waiver or modification is necessary or 
appropriate to prevent or mitigate an imme-
diate threat to financial stability posed by the 
financial market utility or the payment, clear-
ing, or settlement activity. The Board shall, in 
an executive capacity on behalf of the Council, 
notify the financial market utility concerned or, 
in the case of a payment, clearing, or settle-
ment activity, financial institutions, as soon as 
practicable, which shall be no later than 24 
hours after the waiver or modification in the 
case of a financial market utility. 
(3) FORM OF NOTIFICATION.—The Board shall, 
in an executive capacity on behalf of the Council, 
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provide notice of a decision under this section re-
garding— 
(A) a financial market utility to such fi-
nancial market utility by order; and 
(B) a payment, clearing, or settlement ac-
tivity to financial institutions by posting a no-
tice on the Board’s Web site and by publishing 
a notice in the Federal Register. 
SEC. 1405. STANDARDS FOR SYSTEMICALLY IMPORTANT FI-
NANCIAL MARKET UTILITIES AND PAYMENT, 
CLEARING, OR SETTLEMENT ACTIVITIES. 
(a) BOARD REQUIREMENT TO PRESCRIBE STAND-
ARDS.—The Board shall, by regulation or order and in 
consultation with the Council and relevant supervisory 
agencies, prescribe or issue risk management standards 
governing the operations of identified financial market 
utilities and the conduct of identified activities by financial 
institutions, taking into consideration relevant inter-
national standards and existing prudential requirements 
applicable to such financial market utilities and payment, 
clearing, or settlement activities. 
(b) OBJECTIVES AND PRINCIPLES.—The objectives 
and principles for the risk management standards pre-
scribed under subsection (a) shall be to— 
(1) promote robust risk management; 
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(2) promote safety and soundness; 
(3) reduce systemic risks; and 
(4) support the stability of the broader financial 
system. 
(c) SCOPE.— 
(1) IN
GENERAL.—The standards prescribed 
under subsection (a) may address areas such as risk 
management policies and procedures; margin and 
collateral requirements; participant or counterparty 
default policies and procedures; the ability to com-
plete timely clearing and settlement of financial 
transactions; capital and financial resource require-
ments for identified financial market utilities; and 
other areas that the Board determines, by rule or 
order, are necessary to achieve the objectives and 
principles in subsection (b). 
(2) INTERACTION
WITH
EXISTING
STAND-
ARDS.—The standards prescribed under this section 
may— 
(A) be different than existing standards 
that address the same or similar subject areas; 
and 
(B) may address subject areas that are not 
covered by existing regulations. 
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(3) THRESHOLD LEVEL.—The standards pre-
scribed under subsection (a) governing the conduct 
of identified activities shall, where appropriate, es-
tablish a threshold as to the level or significance of 
engagement in the activity at which a financial insti-
tution will become subject to the standards with re-
spect to that activity. 
(4) CATEGORIZATION
AND
TIERING.—In pre-
scribing or issuing standards under subsection (a) 
governing the conduct of identified activities and the 
operations of identified financial market utilities, the 
Board shall, where appropriate, differentiate among 
identified financial market utilities and identified ac-
tivities by taking into consideration their risk, com-
plexity, leverage, frequency and dollar amount, inter-
connectedness to the financial system, and any other 
factors the Board deems appropriate. 
(d) COMPLIANCE REQUIRED.—Identified financial 
market utilities and financial institutions engaged in iden-
tified activities shall conduct their operations in compli-
ance with the applicable risk management standards pre-
scribed by the Board. 
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SEC. 1406. OPERATIONS AND CHANGES TO RULES, PROCE-
DURES, OR OPERATIONS OF IDENTIFIED FI-
NANCIAL MARKET UTILITIES. 
(a) REFERENCE.—For purposes of paragraphs (b) 
and (c), all references to the phrase ‘‘Supervisory Agency 
or the Board’’ mean ‘‘Supervisory Agency or, in the ab-
sence of a Supervisory Agency, the Board’’. 
(b) ADVANCE NOTICE OF PROPOSED CHANGES.— 
(1) ADVANCE NOTICE REQUIRED.—Subject to 
subsection (c), an identified financial market utility 
shall provide at least 60 days advance notice to the 
Supervisory Agency or the Board of any proposed 
change to its rules, procedures, or operations that 
could, as defined in rules of the Board, materially 
affect the nature or level of risks presented by the 
identified financial market utility. 
(2) TERMS AND STANDARDS PRESCRIBED BY 
THE BOARD.—The Board shall prescribe regulations 
that define and describe the standards for deter-
mining when notice is required to be provided under 
paragraph (1). 
(3) CONSULTATION AND AVOIDANCE OF DUPLI-
CATION.—In prescribing regulations under para-
graph (2), the Board shall— 
(A) consult with the Commodity Futures 
Trading Commission and the Securities and 
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Exchange Commission regarding the extent to 
which the regulations of those agencies already 
require advance notice of rule, procedural, or 
operational changes; and 
(B) seek to avoid duplicative requirements 
under this section whenever possible. 
(4) CONTENTS OF NOTICE.—Any notice of a 
proposed change provided by an identified financial 
market utility under paragraph (1) shall describe— 
(A) the nature of the change; 
(B) any expected effects on risks to the 
identified financial market utility, its partici-
pants, or the market; and 
(C) the manner in which the identified fi-
nancial market utility plans to manage any 
identified risks. 
(5) ADDITIONAL
INFORMATION.—The Super-
visory Agency or the Board may require an identi-
fied financial market utility to provide any informa-
tion necessary to assess— 
(A) the effect the proposed change would 
have on the nature or level of risks associated 
with the identified financial market utility’s 
payment, clearing, or settlement activities; and 
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(B) the sufficiency of any proposed risk 
management techniques. 
(6) NOTICE OF OBJECTION.—The Supervisory 
Agency or the Board will notify the identified finan-
cial market utility of any objection regarding the 
proposed change before the end of the 60-day period 
beginning on the later of— 
(A) the date that the notice of the pro-
posed change is received; or 
(B) the date any further information re-
quested for consideration of the notice is re-
ceived. 
(7) CHANGE NOT ALLOWED IF OBJECTION.—An 
identified financial market utility shall not imple-
ment a change to which the Supervisory Agency or 
Board has an objection. 
(8) CHANGE ALLOWED IF NO OBJECTION WITH-
IN 60 DAYS.—An identified financial market utility 
may implement a change if it has not received an 
objection to the proposed change before the end of 
the 60-day period beginning on the later of— 
(A) the date that the Supervisory Agency 
or the Board receives the notice of proposed 
change; or 
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(B) the date the Supervisory Agency or the 
Board receives any further information that the 
Supervisory Agency or the Board requests for 
consideration of the notice. 
(9) REVIEW EXTENSION FOR NOVEL OR COM-
PLEX ISSUES.— 
(A) IN GENERAL.—The Supervisory Agen-
cy or the Board may, during the 60-day review 
period, extend the review period for an addi-
tional 60 days for proposed changes that raise 
novel or complex issues, subject to the Super-
visory Agency or the Board providing the iden-
tified financial market utility with prompt writ-
ten notice of the extension. 
(B) EXTENSION
OF
OTHER
TIME
PERI-
ODS.—Any time period referred to under para-
graphs (6) and (8) shall be extended by the 
amount of any extension of time under clause 
(A). 
(10) CHANGE ALLOWED EARLIER IF NOTIFIED 
OF NO OBJECTION.—An identified financial market 
utility may implement a change in less than 60 days 
from the date of receipt of the notice of proposed 
change by the Supervisory Agency or the Board, or 
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the date the Supervisory Agency or the Board re-
ceives any further information it requested, if— 
(A) the Supervisory Agency or the Board 
notifies the identified financial market utility in 
writing that it does not object to the proposed 
change; and 
(B) authorizes the identified financial mar-
ket utility to implement the change on an ear-
lier date, subject to any conditions imposed by 
the Supervisory Agency or the Board. 
(c) EMERGENCY CHANGES.— 
(1) IN GENERAL.—An identified financial mar-
ket utility may implement a change that would oth-
erwise require advance notice under this subsection 
if it determines that— 
(A) an emergency exists; and 
(B) immediate implementation of the 
change is necessary for the identified financial 
market utility to continue to provide its services 
in a safe and sound manner. 
(2) NOTICE REQUIRED WITHIN 24 HOURS.—Any 
identified financial market utility that implements a 
change pursuant to a determination under para-
graph (1) shall provide notice of such an emergency 
change to its Supervisory Agency or the Board as 
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soon as practicable, which shall be no later than 24 
hours after implementation of the change. 
(3) CONTENTS
OF
EMERGENCY
NOTICE.—In 
addition to the information required under sub-
section (b) for any change requiring an advance no-
tice, the notice under paragraph (2) of an emergency 
change must describe— 
(A) the nature of the emergency; and 
(B) the reason the change was necessary 
for the identified financial market utility to con-
tinue to provide its services in a safe and sound 
manner. 
(4) MODIFICATION OR RESCISSION OF CHANGE 
MAY BE REQUIRED.—The Supervisory Agency or the 
Board may require a modification or a rescission of 
any change of which the Supervisory Agency or the 
Board receives notice under this subsection if the 
Supervisory Agency or the Board finds that the 
change is not consistent with the purposes of this 
subtitle or any regulations, orders, or standards pre-
scribed, issued, or established by the Board here-
under. 
(d) COORDINATION BETWEEN AGENCIES AND THE 
BOARD.—In the case of an identified financial market 
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utility that has a Supervisory Agency other than the 
Board, the Supervisory Agency shall— 
(1) provide the Board concurrently with a com-
plete copy of any notice, request, or other informa-
tion such agency issues, submits, or receives under 
this subsection with respect to such utility; and 
(2) consult with the Board before taking any 
action on or completing any review of a change pro-
posed by an identified financial market utility. 
SEC. 1407. EXAMINATION OF AND ENFORCEMENT ACTIONS 
AGAINST IDENTIFIED FINANCIAL MARKET 
UTILITIES. 
(a) EXAMINATION.—Notwithstanding any other pro-
vision of law and subject to subsection (d), the Supervisory 
Agency shall conduct examinations of an identified finan-
cial market utility at least annually in order to inform 
itself of— 
(1) the nature of the operations of, and the 
risks borne by, the identified financial market util-
ity; 
(2) the financial and operational risks presented 
by the identified financial market utility to financial 
institutions, critical markets, or the broader finan-
cial system; 
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(3) the resources and capabilities of the identi-
fied financial market utility to monitor and control 
such risks; 
(4) the safety and soundness of the identified 
financial market utility; and 
(5) the identified financial market utility’s com-
pliance with this subtitle and the rules and orders 
prescribed by the Board under this subtitle. 
(b) SERVICE PROVIDERS.— 
(1) Whenever a service integral to the operation 
of an identified financial market utility is performed 
for the identified financial market utility by another 
entity, whether an affiliate or non-affiliate and 
whether on or off the premises of the identified fi-
nancial market utility, the Supervisory Agency may 
examine whether the provision of that service is in 
compliance with applicable law, rules, orders, and 
standards to the same extent as if the identified fi-
nancial market utility were performing the service 
on its own premises. 
(c) ENFORCEMENT.—Except as provided in sub-
sections (e) and (g), an identified financial market utility 
shall be subject to the provisions of subsections (b) 
through (n) of section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818) in the same manner and to the same 
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extent as if the identified financial market utility were an 
insured depository institution for which the Supervisory 
Agency is the appropriate Federal banking agency as de-
fined in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813). 
(d) BOARD INVOLVEMENT IN EXAMINATIONS.— 
(1) BOARD
CONSULTATION
ON
EXAMINATION 
PLANNING.—The Supervisory Agency shall consult 
with the Board regarding the scope and methodology 
of any examination conducted under subsections (a) 
and (b). 
(2) BOARD PARTICIPATION IN EXAMINATION.— 
The Board may, in its discretion, participate in any 
examination led by a Supervisory Agency and con-
ducted under subsections (a) and (b). 
(e) BOARD ENFORCEMENT RECOMMENDATIONS.— 
(1) RECOMMENDATION.—The Board may at 
any time recommend to the Supervisory Agency that 
it take enforcement action against an identified fi-
nancial market utility. The recommendation shall be 
in writing and shall provide a detailed analysis sup-
porting the Board’s recommendation. 
(2) CONSIDERATION.—The Supervisory Agency 
shall consider the Board’s recommendation and sub-
mit a response to the Board within 30 days. 
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(3) MEDIATION.—If the Supervisory Agency re-
jects, in whole or in the part, the Board’s rec-
ommendation, then the Council shall mediate be-
tween the parties and encourage them to reach 
agreement on whether an enforcement action should 
be brought, and if so by which agency. 
(4) ENFORCEMENT
ACTION.—If the Super-
visory Agency fails to respond to the Board’s rec-
ommendation in accordance with paragraph (2), if 
the Supervisory Agency reaches agreement with the 
Board that the Board should take an enforcement 
action, or if the Supervisory Agency rejects the 
Board’s recommendation and the Council is unable 
to resolve the dispute under paragraph (3), then the 
Board may exercise the enforcement authority ref-
erenced in subsection (c) as if it were the Super-
visory Agency and take enforcement action against 
the identified financial market utility. 
(f) IDENTIFIED
FINANCIAL
MARKET
UTILITIES 
WITHOUT A SUPERVISORY AGENCY.—In the case of an 
identified financial market utility that is not under the pri-
mary jurisdiction of a Supervisory Agency, the Board shall 
have examination and enforcement authority under sub-
sections (a) through (c) with respect to the identified fi-
nancial market utility and any service providers in the 
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same manner and to the same extent as if the Board were 
the Supervisory Agency. 
(g) EMERGENCY ENFORCEMENT ACTIONS BY THE 
BOARD.— 
(1) IMMINENT RISK OF SUBSTANTIAL HARM.— 
The Board may, after consulting with the Super-
visory Agency, take enforcement action against an 
identified financial market utility if the Board has 
reasonable cause to believe that— 
(A) either— 
(i) an action engaged in, or con-
templated by, an identified financial mar-
ket utility (including any change proposed 
by the identified financial market utility to 
its rules, procedures, or operations that 
would otherwise be subject to section 
1406(b) or (c)); or 
(ii) the condition of an identified fi-
nancial market utility, poses an imminent 
risk of substantial harm to financial insti-
tutions, critical markets, or the broader fi-
nancial system; and 
(B) the imminent risk of substantial harm 
precludes the Board’s use of the procedures in 
subsection (e). 
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(2) ENFORCEMENT AUTHORITY.—The Board is 
authorized to take action under paragraph (1) 
against an identified financial market utility as if 
the identified financial market utility were an in-
sured depository institution for which the Board is 
the appropriate Federal banking agency as defined 
in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813). 
(3) PROMPT NOTICE TO SUPERVISORY AGENCY 
OF
ENFORCEMENT
ACTION.—Within 24 hours of 
taking an enforcement action under this subsection, 
the Board shall provide written notice to the identi-
fied financial market utility’s Supervisory Agency 
containing a detailed analysis of the Board’s action, 
with supporting documentation included. 
SEC. 1407. EXAMINATION OF AND ENFORCEMENT ACTIONS 
AGAINST IDENTIFIED FINANCIAL MARKET 
UTILITIES. 
(a) EXAMINATION.—Notwithstanding any other pro-
vision of law and subject to subsection (d), the Supervisory 
Agency shall conduct examinations of an identified finan-
cial market utility at least annually in order to inform 
itself of— 
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(1) the nature of the operations of, and the 
risks borne by, the identified financial market util-
ity; 
(2) the financial and operational risks presented 
by the identified financial market utility to financial 
institutions, critical markets, or the broader finan-
cial system; 
(3) the resources and capabilities of the identi-
fied financial market utility to monitor and control 
such risks; 
(4) the safety and soundness of the identified 
financial market utility; and 
(5) the identified financial market utility’s com-
pliance with this subtitle and the rules and orders 
prescribed by the Board under this subtitle. 
(b) SERVICE PROVIDERS.—Whenever a service inte-
gral to the operation of an identified financial market util-
ity is performed for the identified financial market utility 
by another entity, whether an affiliate or nonaffiliate and 
whether on or off the premises of the identified financial 
market utility, the Supervisory Agency may examine 
whether the provision of that service is in compliance with 
applicable law, rules, orders, and standards to the same 
extent as if the identified financial market utility were per-
forming the service on its own premises. 
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(c) ENFORCEMENT.—Except as provided in sub-
sections (e) and (g), an identified financial market utility 
shall be subject to the provisions of subsections (b) 
through (n) of section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818) in the same manner and to the same 
extent as if the identified financial market utility were an 
insured depository institution for which the Supervisory 
Agency is the appropriate Federal banking agency as de-
fined in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813). 
(d) BOARD INVOLVEMENT IN EXAMINATIONS.— 
(1) BOARD
CONSULTATION
ON
EXAMINATION 
PLANNING.—The Supervisory Agency shall consult 
with the Board regarding the scope and methodology 
of any examination conducted under subsections (a) 
and (b). 
(2) BOARD PARTICIPATION IN EXAMINATION.— 
The Board may, in its discretion, participate in any 
examination led by a Supervisory Agency and con-
ducted under subsections (a) and (b). 
(e) BOARD ENFORCEMENT RECOMMENDATIONS.— 
(1) RECOMMENDATION.—The Board may at 
any time recommend to the Supervisory Agency that 
it take enforcement action against an identified fi-
nancial market utility. The recommendation shall be 
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220 
in writing and shall provide a detailed analysis sup-
porting the Board’s recommendation. 
(2) CONSIDERATION.—The Supervisory Agency 
shall consider the Board’s recommendation and sub-
mit a response to the Board within 30 days. 
(3) MEDIATION.—If the Supervisory Agency re-
jects, in whole or in the part, the Board’s rec-
ommendation, then the Council shall mediate be-
tween the parties and encourage them to reach 
agreement on whether an enforcement action should 
be brought, and if so by which agency. 
(4) ENFORCEMENT
ACTION.—If the Super-
visory Agency fails to respond to the Board’s rec-
ommendation in accordance with paragraph (2), if 
the Supervisory Agency reaches agreement with the 
Board that the Board should take an enforcement 
action, or if the Supervisory Agency rejects the 
Board’s recommendation and the Council is unable 
to resolve the dispute under paragraph (3), then the 
Board may exercise the enforcement authority ref-
erenced in subsection (c) as if it were the Super-
visory Agency and take enforcement action against 
the identified financial market utility. 
(f) IDENTIFIED
FINANCIAL
MARKET
UTILITIES 
WITHOUT A SUPERVISORY AGENCY.—In the case of an 
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221 
identified financial market utility that is not under the pri-
mary jurisdiction of a Supervisory Agency, the Board shall 
have examination and enforcement authority under sub-
sections (a) through (c) with respect to the identified fi-
nancial market utility and any service providers in the 
same manner and to the same extent as if the Board were 
the Supervisory Agency. 
(g) EMERGENCY ENFORCEMENT ACTIONS BY THE 
BOARD.— 
(1) IMMINENT RISK OF SUBSTANTIAL HARM.— 
The Board may, after consulting with the Super-
visory Agency, take enforcement action against an 
identified financial market utility if the Board has 
reasonable cause to believe that— 
(A) either— 
(i) an action engaged in, or con-
templated by, an identified financial mar-
ket utility (including any change proposed 
by the identified financial market utility to 
its rules, procedures, or operations that 
would otherwise be subject to section 
1406(b) or (c)); or 
(ii) the condition of an identified fi-
nancial market utility, poses an imminent 
risk of substantial harm to financial insti-
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222 
tutions, critical markets, or the broader fi-
nancial system; and 
(B) the imminent risk of substantial harm 
precludes the Board’s use of the procedures in 
subsection (e). 
(2) ENFORCEMENT AUTHORITY.—The Board is 
authorized to take action under paragraph (1) 
against an identified financial market utility as if 
the identified financial market utility were an in-
sured depository institution for which the Board is 
the appropriate Federal banking agency as defined 
in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813). 
(3) PROMPT NOTICE TO SUPERVISORY AGENCY 
OF
ENFORCEMENT
ACTION.—Within 24 hours of 
taking an enforcement action under this subsection, 
the Board shall provide written notice to the identi-
fied financial market utility’s Supervisory Agency 
containing a detailed analysis of the Board’s action, 
with supporting documentation included. 
SEC. 1408. EXAMINATION OF AND ENFORCEMENT ACTIONS 
AGAINST FINANCIAL INSTITUTIONS SUBJECT 
TO STANDARDS FOR IDENTIFIED ACTIVITIES. 
(a) EXAMINATION.—The appropriate financial regu-
lator shall periodically conduct examinations of a financial 
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223 
institution that is subject to the standards prescribed by 
the Board for an identified activity in order to inform the 
appropriate financial regulator of the following: 
(1) the nature and scope of the identified activi-
ties engaged in by the financial institution; 
(2) the financial and operational risks the iden-
tified activities engaged in by the financial institu-
tion may pose to the safety and soundness of the fi-
nancial institution; 
(3) the financial and operational risks the iden-
tified activities engaged in by the financial institu-
tion may pose to other financial institutions, critical 
markets, or the broader financial system; 
(4) the resources available to and the capabili-
ties of the financial institution to monitor and con-
trol the risks described in paragraphs (2) and (3); 
and 
(5) the financial institution’s compliance with 
this subtitle and the rules and orders prescribed by 
the Board under this subtitle. 
(b) ENFORCEMENT.—The appropriate financial regu-
lator shall take such actions that it deems necessary to 
ensure that a financial institution that is subject to the 
standards prescribed by the Board for an identified activ-
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224 
ity complies with this subtitle and the rules and orders 
prescribed by the Board under this subtitle. 
(c) TECHNICAL ASSISTANCE.—The Board shall con-
sult with and provide such technical assistance as may be 
required by the appropriate financial regulators to ensure 
that the Board’s rules and orders prescribed under this 
subtitle are interpreted and applied in as consistent and 
uniform a manner as practicable. 
(d) DELEGATION.— 
(1) EXAMINATION.— 
(A) REQUEST
TO
BOARD.—The appro-
priate financial regulator may request the 
Board to conduct, or to participate in, an exam-
ination of a financial institution subject to the 
standards prescribed by the Board for an iden-
tified activity in order to assess the financial in-
stitution’s compliance with this subtitle or the 
Board’s rules or orders prescribed under this 
subtitle. 
(B) EXAMINATION BY BOARD.—Upon re-
ceipt of an appropriate written request, the 
Board will conduct the examination under such 
terms and conditions to which the Board and 
the appropriate financial regulator mutually 
agree. 
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225 
(2) ENFORCEMENT.— 
(A) REQUEST TO BOARD.—An appropriate 
financial regulator may request the Board to 
enforce this subtitle or the rules or orders pre-
scribed by the Board under this subtitle against 
a financial institution subject to the standards 
prescribed by the Board for an identified activ-
ity. 
(B) ENFORCEMENT BY BOARD.—Upon re-
ceipt of an appropriate written request, the 
Board shall— 
(i) determine whether an enforcement 
action is warranted; and 
(ii) if so, it shall enforce compliance 
with this subtitle or the rules or orders 
prescribed by the Board under this sub-
title. 
(C) ENFORCEMENT AUTHORITY.—For pur-
poses of carrying out subparagraph (B), the 
Board shall have authority under subsections 
(b) through (n) of section 8 of the Federal De-
posit Insurance Act with respect to a financial 
institution in the same manner and to the same 
extent as if the financial institution were an in-
sured depository institution for which the Board 
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226 
is the appropriate Federal banking agency (as 
defined in section 3 of such Act). 
(e) BACK-UP AUTHORITY OF THE BOARD.— 
(1) EXAMINATION AND ENFORCEMENT.—Not-
withstanding any other provision of law, the Board 
may— 
(A) conduct an examination of any finan-
cial institution that is subject to the standards 
prescribed by the Board for an identified activ-
ity; and 
(B) enforce the provisions of this subtitle 
or any rules or orders prescribed by the Board 
under this subtitle against any financial institu-
tion subject to the standards prescribed by the 
Board for an identified activity. 
(2) LIMITATIONS.— 
(A) EXAMINATION.—The Board may exer-
cise the authority described in paragraph (1)(A) 
only if the Board has— 
(i) reasonable cause to believe that a 
financial institution is not in compliance 
with this subtitle or the rules or orders 
prescribed by the Board under this subtitle 
with respect to an identified activity; 
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227 
(ii) notified, in writing, the appro-
priate financial regulator of its belief under 
clause (i) with supporting documentation 
included; 
(iii) requested the appropriate finan-
cial regulator to conduct a prompt exam-
ination of the financial institution; and 
(iv) either— 
(I) not been afforded a reason-
able opportunity to participate in an 
examination of the financial institu-
tion by the appropriate financial regu-
lator within 30 days after the date of 
the Board’s notification under clause 
(ii); or 
(II) reasonable cause to believe 
that the financial institution’s non-
compliance with this subtitle or the 
rules or orders prescribed by the 
Board under this subtitle poses a sub-
stantial risk to other financial institu-
tions, critical markets, or the broader 
financial system, subject to the Board 
affording the appropriate financial 
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228 
regulator a reasonable opportunity to 
participate in the examination. 
(B) ENFORCEMENT.—The Board may ex-
ercise the authority described in paragraph 
(1)(B) only if the Board has— 
(i) reasonable cause to believe that a 
financial institution is not in compliance 
with this subtitle or the rules or orders 
prescribed by the Board under this subtitle 
with respect to an identified activity; 
(ii) notified, in writing, the appro-
priate financial regulator of its belief under 
clause (i) with supporting documentation 
included and with a recommendation that 
the appropriate financial regulator take 
one or more specific enforcement actions 
against the financial institution; and 
(iii) either— 
(I) not been notified, in writing, 
by the appropriate financial regulator 
of the commencement of an enforce-
ment action recommended by the 
Board against the financial institution 
within 30 days from the date of the 
notification under clause (ii); or 
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229 
(II) reasonable cause to believe 
that the financial institution’s non-
compliance with this subtitle or the 
rules or orders prescribed by the 
Board under this subtitle poses a sub-
stantial risk to other financial institu-
tions, critical markets, or the broader 
financial system, subject to the Board 
notifying the appropriate financial 
regulator of the Board’s enforcement 
action. 
(3) ENFORCEMENT
PROVISIONS.—The Board 
shall have authority under subsections (b) through 
(n) of section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818) with respect to a financial in-
stitution subject to the standards prescribed by the 
Board for an identified activity in the same manner 
and to the same extent as if the financial institution 
were an insured depository institution for which the 
Board is the appropriate Federal banking agency (as 
defined in section 3 of such Act). 
SEC. 1409. PROVISION OF INFORMATION, REPORTS, OR 
RECORDS. 
(a) INFORMATION TO ASSESS SYSTEMIC IMPOR-
TANCE.— 
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230 
(1) FINANCIAL MARKET UTILITIES.—The Coun-
cil is authorized to require any financial market util-
ity to submit such information as the Council may 
require for the purpose of assessing whether that fi-
nancial market utility is systemically important if 
the Council has reasonable cause to believe that the 
financial market utility meets the standards for sys-
temic importance set out in section 1404 of this sub-
title. 
(2) FINANCIAL INSTITUTIONS ENGAGED IN PAY-
MENT, CLEARING, OR
SETTLEMENT
ACTIVITIES.— 
The Council is authorized to require any financial 
institution to submit such information as the Coun-
cil may require for the purpose of assessing whether 
any payment, clearing, or settlement activity en-
gaged in or supported by a financial institution is 
systemically important if the Council has reasonable 
cause to believe that the activity meets the standards 
for systemic importance set out in section 1404 of 
this subtitle. 
(b) REPORTING AFTER IDENTIFICATION.— 
(1) IDENTIFIED
FINANCIAL
MARKET
UTILI-
TIES.—The Board may require an identified finan-
cial market utility to submit reports or data to the 
Board in such frequency and form as deemed nec-
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231 
essary by the Board in order to assess the safety 
and soundness of the utility and the systemic risk 
that the utility’s operations pose to the financial sys-
tem. 
(2) FINANCIAL INSTITUTIONS SUBJECT TO THE 
STANDARDS
PRESCRIBED
BY
THE
BOARD.—The 
Board may require 1 or more financial institutions 
subject to the standards prescribed by the Board for 
an identified activity to submit, in such frequency 
and form as deemed necessary by the Board, reports 
and data to the Board solely with respect to the con-
duct of the identified activity and solely to assess 
whether— 
(A) any regulation, order, standard, or 
guideline prescribed by the Board with respect 
to the identified activity appropriately address 
the risks to the financial system presented by 
such activity; and 
(B) the financial institutions are in compli-
ance with this subtitle and the rules and orders 
prescribed by the Board under this subtitle with 
respect to the identified activity. 
(c) COORDINATION WITH APPROPRIATE FEDERAL 
SUPERVISORY AGENCY.— 
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232 
(1) ADVANCE COORDINATION.—Before directly 
requesting any material information from, or impos-
ing reporting or recordkeeping requirements on, any 
financial market utility or any financial institution 
engaged in a payment, clearing, or settlement activ-
ity, the Council and the Board shall coordinate with 
the Supervisory Agency for a financial market utility 
or the appropriate financial regulator for a financial 
institution to determine if the information is avail-
able from or may be obtained by the agency in the 
form, format, or detail required by the Council or 
the Board. 
(2) SUPERVISORY REPORTS.—Notwithstanding 
any other provision of law, the Supervisory Agencies, 
the appropriate financial regulators, the Council, 
and the Board are authorized to disclose to each 
other a copy of the relevant portion of any examina-
tion report or similar report regarding any financial 
market utility or any financial institution engaged in 
payment, clearing, or settlement activities. 
(d) TIMING OF RESPONSE FROM APPROPRIATE FED-
ERAL SUPERVISORY AGENCY.—If the information, report, 
records, or data requested by the Council or the Board 
under subsection (c)(1) are not provided in full by the Su-
pervisory Agency or the appropriate financial regulator 
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233 
within 30 days after the date on which the material is 
requested, the Council or the Board may request the infor-
mation or impose recordkeeping or reporting requirements 
directly on such persons as provided in subsections (a) and 
(b) with notice to the Supervisory Agency or the appro-
priate financial regulator. 
(e) SHARING OF INFORMATION.— 
(1) MATERIAL
CONCERNS.—Notwithstanding 
any other provision of law, the Council, the Board, 
the appropriate financial regulator, and any Super-
visory Agency are authorized to— 
(A) promptly notify each other of material 
concerns about an identified financial market 
utility or any financial institution subject to the 
standards prescribed by the Board for an iden-
tified activity; and 
(B) share appropriate reports, information 
or data relating to such concerns. 
(2) OTHER.—Notwithstanding any other provi-
sion of law, the Council or the Board may, under 
such terms and conditions it deems appropriate and 
subject to reasonable assurances of confidentiality, 
provide confidential supervisory information and 
other information obtained under this subtitle to 
other persons it deems appropriate, including the 
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234 
Secretary, State financial institution supervisory 
agencies, foreign financial supervisors, foreign cen-
tral banks, and foreign finance ministries. 
(f) PRIVILEGE
MAINTAINED.—The Council, the 
Board, the appropriate financial regulator, the Super-
visory Agency, and any financial market utility or finan-
cial institution providing reports or data under this section 
shall not be deemed to have waived any privilege applicable 
to those reports or data, or any portion thereof, by pro-
viding the reports or data to the other party or by permit-
ting the reports or data, or any copies thereof, to be used 
by the other party. 
(g) DISCLOSURE EXEMPTION.— 
(1) IN GENERAL.—Information obtained by the 
Board under this section and any materials prepared 
by the Board in connection with its supervision of 
identified financial market utilities and identified ac-
tivities, shall be confidential supervisory information 
exempt from disclosure under section 552 of title 5, 
United States Code. 
(2) For purposes of section 552 of title 5, 
United States Code, this subsection shall be consid-
ered a statute described in subsection (b)(3) of sec-
tion 552. 
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235 
SEC. 1410. RULEMAKING. 
The Board is authorized to prescribe such rules and 
issue such orders as may be necessary to administer and 
carry out the purposes of this subtitle and prevent eva-
sions thereof. 
SEC. 1411. OTHER AUTHORITY. 
The authorities granted to agencies under this sub-
title are in addition to any rulemaking, examination, en-
forcement, or other authorities that those agencies may 
have under other law and in no way shall be construed 
to limit such other authority, except that any standards 
imposed by the Board under section 1405 shall supersede 
any less stringent requirements established under other 
authority to the extent of any conflict. 
SEC. 1412. EFFECTIVE DATE. 
This subtitle is effective as of the date of enactment. 
Subtitle F—Improvements to the 
Asset-backed 
Securitization 
Process 
SEC. 1501. SHORT TITLE. 
This subtitle may be cited as the ‘‘Credit Risk Reten-
tion Act of 2009’’. 
SEC. 1502. CREDIT RISK RETENTION. 
The Securities Act of 1933 (15 U.S.C. 77a et seq.) 
is amended by inserting after section 28 the following new 
section: 
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236 
‘‘SEC. 29. CREDIT RISK RETENTION. 
‘‘(a) IN GENERAL.— 
‘‘(1) INTEREST
IN
LOANS
MADE
BY
CREDI-
TORS.—Within 180 days of the date of the enact-
ment of this section, the Federal banking agencies 
and the Commission shall jointly prescribe regula-
tions to require any creditor that makes a loan to 
retain an economic interest in a material portion of 
the credit risk of any such loan that the creditor 
transfers, sells, or conveys to a third party, including 
for the purpose of including such loan in a pool of 
loans backing an issuance of asset-backed securities. 
‘‘(2) 
INTEREST
IN
ASSETS
BACKING 
ASSETBACKED
SECURITIES.—The Federal banking 
agencies and the Commission shall prescribe regula-
tions to require any securitizer of asset-backed secu-
rities that are backed by assets not described in 
paragraph (1) to retain an economic interest in a 
material portion of any such asset used to back an 
issuance of securities. 
‘‘(b) ALTERNATIVE RISK RETENTION FOR CREDIT 
SECURITIZERS.—The Federal banking agencies and the 
Commission may jointly apply the risk retention require-
ments of this section to securitizers of loans or particular 
types of loans in addition to or in substitution for any 
or all of the requirements that apply to creditors that 
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237 
make such loans or types of loans, if the agencies jointly 
determine that applying the requirements to such 
securitizers would— 
‘‘(1) be consistent with helping to ensure high 
quality underwriting standards for creditors, taking 
into account other applicable laws, regulations, and 
standards; and 
‘‘(2) facilitate appropriate risk management 
practices by such creditors, improve access of con-
sumers to credit on reasonable terms, or otherwise 
serve the public interest. 
‘‘(c) STANDARDS
FOR REGULATION.—Regulations 
prescribed under subsections (a) and (b) shall— 
‘‘(1) prohibit a creditor or securitizer from di-
rectly or indirectly hedging or otherwise transferring 
the credit risk such creditor or securitizer is required 
to retain under the regulations; 
‘‘(2) require a creditor or securitizer to retain 
10 percent of the credit risk on any loan that is 
transferred, sold, or conveyed by such creditor or 
securitized by such securitizer except— 
‘‘(A) if the Federal banking agencies and 
the Commission determine the credit under-
writing by the creditor or the due diligence by 
the securitizer meets such standards as the 
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238 
Federal banking agencies and the Commission 
shall specify, the percentage of risk retention 
may be less than 10 percent of the credit risk, 
but in no case less than 5 percent of credit risk; 
and 
‘‘(B) if the Federal banking agencies and 
the Commission determine the underwriting by 
the creditor or due diligence by the securitizer 
is insufficient, the percentage of risk retention 
may be higher than 10 percent; 
‘‘(3) specify that the credit risk retained must 
be no less at risk for loss than the average of the 
credit risk not so retained; and 
‘‘(4) set the minimum duration of the required 
risk retention. 
‘‘(d) EXEMPTIONS AND ADJUSTMENTS.— 
‘‘(1) IN GENERAL.—The Federal banking agen-
cies and the Commission shall have authority to 
jointly provide exemptions or adjustments to the re-
quirements of this section, including exemptions or 
adjustments relating to the 10 percent risk retention 
threshold and the hedging prohibition. 
‘‘(2) APPLICABLE
STANDARDS.—Any exemp-
tions or adjustments provided under paragraph (1) 
shall— 
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239 
‘‘(A) be consistent with the purpose of en-
suring high quality underwriting standards for 
creditors, taking into account other applicable 
laws, regulations, or standards; and 
‘‘(B) facilitate appropriate risk manage-
ment practices by such creditors, improve ac-
cess for consumers to credit on reasonable 
terms, or otherwise serve the public interest. 
‘‘(e) ENFORCEMENT.— 
‘‘(1) Compliance with the requirements imposed 
under this subchapter shall be enforced under— 
‘‘(A) section 8 of the Federal Deposit In-
surance Act (12 U.S.C. 1818), in the case of— 
‘‘(i) national banks, and Federal 
branches and Federal agencies of foreign 
banks, by the Office of the Comptroller of 
the Currency; 
‘‘(ii) member banks of the Federal 
Reserve System (other than national 
banks), branches and agencies of foreign 
banks (other than Federal branches, Fed-
eral agencies, and insured State branches 
of foreign banks), commercial lending com-
panies owned or controlled by foreign 
banks, and organizations operating under 
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section 25 or 25(a) of the Federal Reserve 
Act (12 U.S.C. 601 et seq., 611 et seq.), 
bank holding companies, and subsidiaries 
of bank holding companies (other than in-
sured depository institutions), by the 
Board; and 
‘‘(iii) banks insured by the Federal 
Deposit Insurance Corporation (other than 
members of the Federal Reserve System) 
and insured State branches of foreign 
banks, by the Board of Directors of the 
Federal Deposit Insurance Corporation; 
‘‘(B) section 8 of the Federal Deposit In-
surance Act (12 U.S.C. 1818), by the Director 
of the Office of Thrift Supervision, in the case 
of a savings association the deposits of which 
are insured by the Federal Deposit Insurance 
Corporation and a savings and loan holding 
company and to any subsidiary (other than a 
bank or subsidiary of that bank); and 
‘‘(C) the Federal Credit Union Act (12 
U.S.C. 1751 et seq.), by the National Credit 
Union Administration Board with respect to 
any Federal credit union. 
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241 
‘‘(2) Except to the extent that enforcement of 
the requirements imposed under this subchapter is 
specifically committed to some other Government 
agency under subparagraph (1), the Commission 
shall enforce such requirements. 
‘‘(3) The authority of the Commission under 
this section shall be in addition to its existing au-
thority to enforce the securities laws. 
‘‘(f) DEFINITIONS.—For purposes of this section: 
‘‘(1) The term ‘asset-backed security’ has the 
meaning given such term in section 229.1101(c) of 
title 17, Code of Federal Regulations, or any suc-
cessor thereto. 
‘‘(2) The term ‘Federal banking agencies’ 
means the Board of Governors of the Federal Re-
serve System, the Office of the Comptroller of the 
Currency, the Office of Thrift Supervision, and the 
Federal Deposit Insurance Corporation. 
‘‘(3) The term ‘insured depository institution’ 
has the meaning given such term in section 3(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 
1813(c)). 
‘‘(4) The term ‘securitization vehicle’ means a 
trust, corporation, partnership, limited liability enti-
ty, special purpose entity, or other structure that— 
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‘‘(A) is the issuer, or is created by the 
issuer, of pass-through certificates, participa-
tion certificates, asset-backed securities, or 
other similar securities backed by a pool of as-
sets that includes loans; and 
‘‘(B) holds such loans. 
‘‘(5) The term ‘securitizer’ means the person 
that transfers, conveys, or assigns, or causes the 
transfer, conveyance, or assignment of, loans, includ-
ing through a special purpose vehicle, to any 
securitization vehicle, excluding any trustee that 
holds such loans for the benefit of the securitization 
vehicle.’’. 
SEC. 1503. PERIODIC AND OTHER REPORTING UNDER THE 
SECURITIES EXCHANGE ACT OF 1934 FOR 
ASSET-BACKED SECURITIES. 
Section 15(d) of Securities Exchange Act of 1934 (15 
U.S.C. 78o(d)) is amended— 
(1) by inserting ‘‘, other than securities of any 
class of asset-backed security (as defined in section 
229.1101(c) of title 17, Code of Federal Regula-
tions, or any successor thereto),’’ after ‘‘securities of 
each class’’; 
(2) by inserting at the end the following: ‘‘The 
Commission may by rules and regulations provide 
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for the suspension or termination of the duty to file 
under this subsection for any class of issuer of asset- 
backed security upon such terms and conditions and 
for such period or periods as it deems necessary or 
appropriate in the public interest or for the protec-
tion of investors. The Commission may, for the pur-
poses of this subsection, classify issuers and pre-
scribe requirements appropriate for each class of 
issuer of asset-backed security.’’; and 
(3) by inserting after the fifth sentence the fol-
lowing: ‘‘The Commission shall adopt regulations 
under this subsection requiring each issuer of an 
asset-backed security to disclose, for each tranche or 
class of security, information regarding the assets 
backing that security. In adopting regulations under 
this subsection, the Commission shall set standards 
for the format of the data provided by issuers of an 
asset-backed security, which shall, to the extent fea-
sible, facilitate comparison of such data across secu-
rities in similar types of asset classes. The Commis-
sion shall require issuers of asset-backed securities 
at a minimum to disclose asset-level or loan-level 
data necessary for investors to independently per-
form due diligence. Asset-level or loan-level data 
shall include data with unique identifiers relating to 
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loan brokers or originators, the nature and extent of 
the compensation of the broker or originator of the 
assets backing the security, and the amount of risk 
retention of the originator or the securitizer of such 
assets.’’. 
SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSET- 
BACKED OFFERINGS. 
The Commission shall prescribe regulations on the 
use of representations and warranties in the asset-backed 
securities market that— 
(1) require credit rating agencies to include in 
reports accompanying credit ratings a description of 
the representations, warranties, and enforcement 
mechanisms available to investors and how they dif-
fer from representations, warranties, and enforce-
ment mechanisms in similar issuances; and 
(2) require disclosure on fulfilled repurchase re-
quests across all trusts aggregated by originator, so 
that investors may identify asset originators with 
clear underwriting deficiencies. 
SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURI-
TIES ACT OF 1933. 
(a) IN GENERAL.—Section 4 of the Securities Act of 
1933 (15 U.S.C. 77d) is amended— 
(1) by striking paragraph (5); and 
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245 
(2) by redesignating paragraph (6) as para-
graph (5). 
(b) 
CONFORMING
AMENDMENT.—Section 
3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 
‘‘4(6)’’ and inserting ‘‘4(5)’’. 
Subtitle G—Enhanced Resolution 
Authority 
SEC. 1601. SHORT TITLE. 
This subtitle may be cited as the ‘‘Resolution Author-
ity for Large, Interconnected Financial Companies Act of 
2009’’. 
SEC. 1602. DEFINITIONS. 
For purposes of this subtitle, the following definitions 
shall apply: 
(1) 
APPROPRIATE
FEDERAL
REGULATORY 
AGENCY.— 
(A) CORPORATION AND COMMISSION.—The 
term ‘‘appropriate Federal regulatory agency’’ 
means— 
(i) the Corporation; and 
(ii) the Commission, if the financial 
company, or an affiliate thereof, is a 
broker or dealer registered with the Com-
mission under section 15(b) of the Securi-
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246 
ties Exchange Act of 1934 (15 U.S.C. 
78o(b) (other than an insured depository 
institution)). 
(B) RULES
OF
CONSTRUCTION.—More 
than 1 agency may be an appropriate Federal 
regulatory agency with respect to any given fi-
nancial company. In such instances, the Com-
mission shall be the appropriate Federal regu-
latory agency for purposes of section 1603 if 
the largest subsidiary of the financial company 
is a broker or dealer as measured by total as-
sets as of the end of the previous calendar 
quarter, and otherwise the Corporation shall be 
the appropriate Federal regulatory agency for 
purposes of section 1603. 
(2) BRIDGE FINANCIAL COMPANY.—The term 
‘‘bridge financial company’’ means a new financial 
company organized in accordance with section 
1609(h) by the Corporation. 
(3) COMMISSION.—The term ‘‘Commission’’ 
means the Securities and Exchange Commission. 
(4) CORPORATION.—The term ‘‘Corporation’’ 
means the Federal Deposit Insurance Corporation. 
(5) COVERED FINANCIAL COMPANY.—The term 
‘‘covered financial company’’ means a financial com-
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pany for which a determination has been made pur-
suant to and in accordance with section 1603(b). 
(6) COVERED SUBSIDIARY.—The term ‘‘covered 
subsidiary’’ means a subsidiary covered in paragraph 
(9)(B)(iv) of this section. 
(7) CUSTOMER
PROPERTY.—The term ‘‘cus-
tomer property’’ has the meaning ascribed to it in 
the Securities Investor Protection Act of 1970. 
(8) FEDERAL
RESERVE
BOARD.—The term 
‘‘Federal Reserve Board’’ means the Board of Gov-
ernors of the Federal Reserve System. 
(9) FINANCIAL COMPANY.—The term ‘‘financial 
company’’ means any company that— 
(A) is incorporated or organized under 
Federal law or the laws of any State; and 
(B) is— 
(i) a bank holding company as defined 
in section 2(a) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(a)); 
(ii) any identified financial holding 
company, as defined in section 1000(b)(5), 
that has been subjected to heightened pru-
dential regulation; 
(iii) any company predominantly en-
gaged in activities that are financial in na-
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ture or incidental thereto for purposes of 
section 4(k) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843(k)) or that 
have been identified for heightened pruden-
tial standards under section 1106 of this 
title; or 
(iv) any subsidiary of companies de-
scribed in clauses (i) through (iii) (other 
than an insured depository institution, any 
broker or dealer registered with the Com-
mission under section 15(b) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 
78o(b)) that is a member of the Securities 
Investor Protection Corporation, or an in-
surance company). 
(10) FUND.—The term ‘‘Fund’’ means the Sys-
temic Resolution Fund established in accordance 
with section 1609(n). 
(11) IDENTIFIED
FINANCIAL
HOLDING
COM-
PANY.—The term ‘‘identified financial holding com-
pany’’ means a financial company that is subject to 
heightened prudential standards, as defined in sec-
tion 1000(b)(5) of this Act. 
(12) INSURANCE COMPANY.—The term ‘‘insur-
ance company’’ means a domestic insurance com-
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249 
pany, as that term is defined for purposes of title 11 
of the United States Code. 
(13) SECRETARY.—The term ‘‘Secretary’’ shall 
mean the Secretary of the Treasury. 
(14) STATE.—The term ‘‘State’’ means any 
State, commonwealth, territory, or possession of the 
United States, the District of Columbia, the Com-
monwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, American Samoa, Guam, 
and the United States Virgin Islands. 
(15) CERTAIN OTHER TERMS.—The terms ‘‘af-
filiate’’, ‘‘company’’, ‘‘control’’, ‘‘deposit’’, ‘‘deposi-
tory institution’’, ‘‘foreign bank’’, ‘‘insured deposi-
tory institution’’, and ‘‘subsidiary’’ have the same 
meanings as in section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813). 
SEC. 1603. SYSTEMIC RISK DETERMINATION. 
(a) WRITTEN RECOMMENDATION OF THE FEDERAL 
RESERVE BOARD AND THE APPROPRIATE FEDERAL REG-
ULATORY AGENCY.— 
(1) VOTE REQUIRED.—At the request of the 
Secretary or the Chairman of the Federal Reserve 
Board or, in cases where an financial company has 
a broker or dealer as its largest subsidiary as meas-
ured by total assets as of the end of the previous 
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calendar quarter, the Commission, the Federal Re-
serve Board and the appropriate Federal regulatory 
agency shall, or on their own initiative the Federal 
Reserve Board and the appropriate Federal regu-
latory agency may, consider whether to make the 
written recommendation provided for in paragraph 
(2) with respect to a financial company that is an 
identified financial holding company, which rec-
ommendation shall be made upon a vote of not less 
than two-thirds of the members of the Federal Re-
serve Board then serving and two-thirds of the mem-
bers of the board or of the commission then serving 
of the appropriate Federal regulatory agency, as ap-
plicable. 
(2) RECOMMENDATION REQUIRED.—Any writ-
ten recommendations made by the Federal Reserve 
Board and the appropriate Federal regulatory agen-
cy under paragraph (1) shall contain the following: 
(A) A description of the effect that the de-
fault of the identified financial holding company 
would have on economic conditions or financial 
stability in the United States. 
(B) A recommendation regarding the na-
ture and the extent of actions that the Board 
and the appropriate Federal regulatory agency 
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251 
recommend be taken under section 1604 re-
garding the identified financial holding com-
pany. 
(b) DETERMINATION BY THE SECRETARY.—Notwith-
standing any other provision of Federal law or the law 
of any State, if, upon the written recommendation of the 
Federal Reserve Board and the board of directors or com-
mission of the appropriate Federal regulatory agency as 
provided for in subsection (a)(1), the Secretary (in con-
sultation with the President) determines that— 
(1) the identified financial holding company is 
in default or is in danger of default; 
(2) the failure of the identified financial holding 
company and its resolution under otherwise applica-
ble Federal or State law would have serious adverse 
effects on financial stability or economic conditions 
in the United States; and 
(3) any action under section 1604 would avoid 
or mitigate such adverse effects, taking into consid-
eration the effectiveness of the action in mitigating 
potential adverse effects on the financial system or 
economic conditions, the cost to the general fund of 
the Treasury, and the potential to increase moral 
hazard on the part of creditors, counterparties, and 
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252 
shareholders in the identified financial holding com-
pany, 
then the Secretary must take action under section 
1604(a), the Corporation must act in accordance with sec-
tion 1604(b), and the Corporation may take one or more 
actions specified in section 1604(c) in accordance with the 
requirements of that subsection. 
(c) DOCUMENTATION AND REVIEW.— 
(1) IN GENERAL.—The Secretary shall— 
(A) document any determination under 
subsection (b); and 
(B) retain the documentation for review 
under paragraph (2). 
(2) GAO REVIEW.—The Comptroller General of 
the United States shall review and report to the 
Congress on any determination under subsection (b), 
including— 
(A) the basis for the determination; 
(B) the purpose for which any action was 
taken pursuant thereto; and 
(C) the likely effect of the determination 
and such action on the incentives and conduct 
of identified financial holding companies and 
their creditors, counterparties, and share-
holders. 
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253 
(3) REPORT TO CONGRESS.—Within 30 days 
after a determination is made under subsection (b), 
the Secretary shall provide written notice of the de-
termination to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Committee 
on Financial Services of the House of Representa-
tives. The notice shall include a description of the 
basis for the determination. 
(d) DEFAULT OR IN DANGER OF DEFAULT.—For 
purposes of subsection (b), an identified financial holding 
company shall be considered to be in default or in danger 
of default if any of the following conditions exist, as deter-
mined in accordance with that subsection: 
(1) A case has been, or likely will promptly be, 
commenced with respect to the identified financial 
holding company under title 11, United States Code. 
(2) The identified financial holding company is 
critically undercapitalized, as such term has been or 
may be defined by the Federal Reserve Board. 
(3) The identified financial holding company 
has incurred, or is likely to incur, losses that will de-
plete all or substantially all of its capital, and there 
is no reasonable prospect for the company to avoid 
such depletion without assistance under section 
1604. 
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254 
(4) The identified financial holding company’s 
assets are, or are likely to be, less than its obliga-
tions to creditors and others. 
(5) The identified financial holding company is, 
or is likely to be, unable to pay its obligations (other 
than those subject to a bona fide dispute) in the nor-
mal course of business. 
SEC. 1604. RESOLUTION; STABILIZATION. 
(a) APPOINTMENT OF RECEIVER.—Upon the Sec-
retary making a determination in accordance with section 
1603(b), the Secretary shall appoint the Corporation as 
receiver or qualified receiver for the covered financial com-
pany. There shall be a strong presumption that the Sec-
retary will appoint the Corporation as receiver. The pre-
sumption may be overcome only if the Secretary, the Fed-
eral Reserve Board, and the Corporation agree that the 
appointment of a qualified receiver is necessary to avoid 
or mitigate serious adverse effects on financial stability. 
(b) CONSULTATION.—The Corporation, as receiver or 
qualified receiver— 
(1) shall consult with the regulators of the cov-
ered financial company and its covered subsidiaries 
for purposes of ensuring an orderly resolution of the 
covered financial company; 
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255 
(2) may consult with, or under section 
1609(a)(1)(B)(v) or section 1609(a)(1)(K) acquire 
services of, any outside experts as appropriate to in-
form and aid the Corporation in the resolution proc-
ess; and 
(3) shall consult with the primary regulators of 
any subsidiaries of the covered financial company 
that are not covered subsidiaries as described in sec-
tion 1602(9)(B)(iv) and coordinate with such regu-
lators regarding the treatment of such solvent sub-
sidiaries and the separate resolution of any such in-
solvent subsidiaries under other governmental au-
thority, as appropriate. 
(c) EMERGENCY STABILIZATION AFTER APPOINT-
MENT OF RECEIVER OR QUALIFIED RECEIVER.—Upon 
the Secretary appointing the Corporation as receiver or 
qualified receiver under subsection (a), the Corporation 
may, in its corporate capacity and as an agency of the 
United States, with the approval of the Secretary and sub-
ject to the conditions in subsections (d) through (e), take 
the following actions under such terms and conditions that 
the Corporation and the Secretary jointly deem appro-
priate: 
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256 
(1) Making loans to, or purchasing any debt ob-
ligation of, the covered financial company or any 
covered subsidiary. 
(2) Purchasing assets of the covered financial 
company or any covered subsidiary directly or 
through an entity established by the Corporation for 
such purpose. 
(3) Assuming or guaranteeing the obligations of 
the covered financial company or any covered sub-
sidiary to one or more third parties. 
(4) Acquiring any type of equity interest or se-
curity of the covered financial company or any cov-
ered subsidiary. 
(5) Taking a lien on any or all assets of the 
covered financial company or any covered subsidiary, 
including a first priority lien on all unencumbered 
assets of the company or any covered subsidiary to 
secure repayment of any transactions conducted 
under this subsection. 
(6) Selling or transferring all, or any part 
thereof, of such acquired assets, liabilities, obliga-
tions, equity interests or securities of the covered fi-
nancial company or any covered subsidiary. 
(d) MANDATORY TERMS AND CONDITIONS FOR ALL 
STABILIZATION ACTIONS.—The Corporation as receiver or 
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257 
qualified receiver is authorized to take the stabilization ac-
tions listed in subsection (c) only if— 
(1) the Secretary and the Corporation deter-
mine that such action is necessary for the purpose 
of financial stability and not for the purpose of pre-
serving the covered financial company; 
(2) the Corporation ensures that the share-
holders of a covered financial company do not re-
ceive payment until after all other claims are fully 
paid; 
(3) the Corporation ensures that unsecured 
creditors bear losses; and 
(4) the Corporation ensures that management 
responsible for the failed condition of the covered fi-
nancial company is removed (if such management 
has not already been removed at the time the Cor-
poration is appointed as receiver or qualified re-
ceiver). 
(e) RECOUPMENT OF FUNDS EXPENDED FOR SYS-
TEMIC STABILIZATION PURPOSES.—Amounts expended 
from the Fund by the Corporation under this section shall 
be repaid in full to the Fund from the following sources: 
(1) RESOLUTION
PROCESS.—Amounts attrib-
utable to— 
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258 
(A) the proceeds of the sale of, or income 
from, the assets of the covered financial com-
pany; and 
(B) the proceeds of the transfer of any se-
curities obtained under subsection (c). 
(2) INDUSTRY
ASSESSMENTS.—If the sources 
described in paragraph (1) are insufficient to repay 
the amount of the stabilization action in full, the dif-
ference shall be recouped through assessments on fi-
nancial companies in accordance with section 
1609(o). 
SEC. 1605. JUDICIAL REVIEW. 
If a receiver or qualified receiver is appointed, the 
covered financial company may, not later than 30 days 
thereafter, bring an action in the United States district 
court for the judicial district in which the home office of 
such covered financial company is located, or in the United 
States District Court for the District of Columbia, for an 
order requiring that the receiver or qualified receiver be 
removed, and the court shall, upon the merits, dismiss 
such action or direct the receiver or qualified receiver to 
be removed. Review of such an action shall be limited to 
the appointment of a receiver or qualified receiver under 
section 1604. 
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259 
SEC. 1606. DIRECTORS NOT LIABLE FOR ACQUIESCING IN 
APPOINTMENT OF RECEIVER OR QUALIFIED 
RECEIVER. 
The members of the board of directors (or body per-
forming similar functions) of a covered financial company 
shall not be liable to the covered financial company’s 
shareholders or creditors for acquiescing in or consenting 
in good faith to— 
(1) the Secretary’s appointment of the Corpora-
tion as receiver or qualified receiver for the covered 
financial company under section 1604; or 
(2) an acquisition, combination, or transfer of 
assets or liabilities under section 1609. 
SEC. 1607. TERMINATION AND EXCLUSION OF OTHER AC-
TIONS. 
The Corporation’s acting as receiver or qualified re-
ceiver for a covered financial company under this title 
shall immediately, and by operation of law, terminate any 
case commenced with respect to the covered financial com-
pany under title 11, United States Code, or any pro-
ceeding under any State insolvency law with respect to the 
covered financial company, and no such case or proceeding 
may be commenced with respect to the covered financial 
company at any time while the Corporation acts as re-
ceiver or qualified receiver for the covered financial com-
pany. 
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SEC. 1608. RULEMAKING. 
The Corporation may prescribe such rules or regula-
tions it considers necessary or appropriate to implement 
the provisions of this title. 
SEC. 1609 POWERS AND DUTIES OF CORPORATION. 
(a) POWERS AND AUTHORITIES.— 
(1) GENERAL POWERS.— 
(A) SUCCESSOR TO COVERED FINANCIAL 
COMPANY.—The Corporation shall, upon ap-
pointment as receiver or qualified receiver for a 
covered financial company under section 1604, 
and by operation of law, succeed to— 
(i) all rights, titles, powers, and privi-
leges of the covered financial company, and 
of any stockholder, member, officer, or di-
rector of such institution with respect to 
the covered financial company and the as-
sets of the covered financial company; and 
(ii) title to the books, records, and as-
sets of any previous receiver or other legal 
custodian of such covered financial com-
pany. 
(B) OPERATE
THE
COVERED
FINANCIAL 
COMPANY.—The Corporation as receiver or 
qualified receiver for a covered financial com-
pany may— 
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(i) take over the assets of and operate 
the covered financial company with all the 
powers of the members or shareholders, 
the directors, and the officers of the cov-
ered financial company and conduct all 
business of the covered financial company; 
(ii) collect all obligations and money 
due the covered financial company; 
(iii) perform all functions of the cov-
ered financial company in the name of the 
covered financial company; 
(iv) preserve and conserve the assets 
and property of the covered financial com-
pany; and 
(v) provide by contract for assistance 
in fulfilling any function, activity, action, 
or duty of the Corporation as receiver or 
qualified receiver. 
(C) FUNCTIONS OF COVERED FINANCIAL 
COMPANY’S OFFICERS, DIRECTORS, AND SHARE-
HOLDERS.— 
(i) IN
GENERAL.—The Corporation 
may provide for the exercise of any func-
tion by any member or stockholder, direc-
tor, or officer of any covered financial com-
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262 
pany for which the Corporation has been 
appointed as receiver or qualified receiver 
under this section. 
(ii) PRESUMPTION.—There shall be a 
strong presumption that the Corporation, 
as receive or qualified receiver, will remove 
management responsible for the failed con-
dition of the covered financial company (if 
such management has not already been re-
moved at the time the Corporation is ap-
pointed as receiver or qualified receiver). 
(D) POWERS OF AND DURATION AS QUALI-
FIED RECEIVER.— 
(i) IN
GENERAL.—The Corporation 
may, as qualified receiver, and subject to 
all legally enforceable and perfected secu-
rity interests in the assets of the covered 
financial company, take such action as 
may be— 
(I) necessary to put the covered 
financial company in a sound and sol-
vent condition; and 
(II) appropriate to carry on the 
business of the covered financial com-
pany and preserve and conserve the 
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assets and property of the covered fi-
nancial company. 
(ii) DURATION.—The status of the 
Corporation as qualified receiver shall ter-
minate at the end of the 2-year period fol-
lowing the date of its appointment as 
qualified receiver, unless the Corporation, 
with the approval of the Secretary and the 
Federal Reserve Board, terminates the 
qualified receivership before the end of the 
2-year period. At the end of the two-year 
period, the qualified receivership shall be-
come a receivership with the Corporation 
as receiver. 
(iii) EXTENSION
OF
QUALIFIED
RE-
CEIVERSHIP.—The Corporation may, with 
the approval of the Secretary and the Fed-
eral Reserve Board, extend the qualified 
receivership for 3 additional 1-year periods 
beyond the initial two-year period if nec-
essary to promote financial stability. 
(E) ADDITIONAL POWERS AS RECEIVER.— 
The Corporation may, as receiver, and subject 
to all legally enforceable and perfected security 
interests, place the covered financial company 
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in liquidation and proceed to realize upon the 
assets of the covered financial company in such 
manner as the Corporation deems appropriate, 
including through the sale of assets, the trans-
fer of assets to a bridge financial company es-
tablished under subsection (h), or the exercise 
of any other rights or privileges granted to the 
receiver under this section. 
(F) ORGANIZATION OF NEW COMPANIES.— 
The Corporation as receiver may organize a 
bridge financial company under subsection (h). 
(G) MERGER; TRANSFER OF ASSETS AND 
LIABILITIES.— 
(i) IN
GENERAL.—Subject to clause 
(ii), the Corporation as receiver or quali-
fied receiver may— 
(I) merge the covered financial 
company with another company; or 
(II) transfer any asset or liability 
of the covered financial company (in-
cluding assets and liabilities associ-
ated with any trust or custody busi-
ness) without obtaining any approval, 
assignment, or consent with respect to 
such transfer. 
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(ii) FEDERAL
AGENCY
APPROVAL; 
ANTITRUST REVIEW.— 
(I) IN
GENERAL.—If a trans-
action described in clause (i) requires 
approval by a Federal agency, the 
transaction may not be consummated 
before the 5th calendar day after the 
date of approval by the Federal agen-
cy responsible for such approval with 
respect thereto. If, in connection with 
any such approval, a report on com-
petitive factors is required, the Fed-
eral agency responsible for such ap-
proval shall promptly notify the Attor-
ney General of the proposed trans-
action and the Attorney General shall 
provide the required report within 10 
days of the request. If a filing is re-
quired under the Hart Scott-Rodino 
Antitrust Improvements Act of 1976 
with the Department of Justice or the 
Federal Trade Commission, the wait-
ing period shall expire not later than 
the 30th day following such filing not-
withstanding any other provision of 
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Federal law or any attempt by any 
Federal agency to extend such waiting 
period, and no further request for in-
formation by any Federal agency shall 
be permitted. 
(II) EMERGENCY.—If the Sec-
retary in consultation with the Chair-
man of the Federal Reserve Board 
has found that the Corporation must 
act immediately to prevent the prob-
able failure of 1 or more of the cov-
ered financial companies involved, the 
approvals and filings referred to in 
subclause (I) shall not be required 
and the transactions may be con-
summated immediately by the Cor-
poration. 
(H) PAYMENT OF VALID OBLIGATIONS.— 
The Corporation, as receiver or qualified re-
ceiver, shall, to the extent funds are available, 
pay all valid obligations of the covered financial 
company that are due and payable at the time 
of the appointment of the Corporation as re-
ceiver or qualified receiver in accordance with 
the prescriptions and limitations of this title. 
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(I) SUBPOENA AUTHORITY.— 
(i) IN
GENERAL.—The Corporation 
may, for purposes of carrying out any 
power, authority, or duty with respect to a 
covered financial company (including deter-
mining any claim against the covered fi-
nancial company and determining and real-
izing upon any asset of any person in the 
course of collecting money due the covered 
financial company), exercise any power es-
tablished under section 8(n) of the Federal 
Deposit Insurance Act as if the covered fi-
nancial company were an insured deposi-
tory institution. 
(ii) RULE
OF
CONSTRUCTION.—This 
section shall not be construed as limiting 
any rights that the Corporation, in any ca-
pacity, might otherwise have to exercise 
any powers described in clause (i) under 
any other provision of law. 
(J) INCIDENTAL POWERS.—The Corpora-
tion, as receiver or qualified receiver, may— 
(i) exercise all powers and authorities 
specifically granted to receivers or qualified 
receivers under this section and such inci-
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dental powers as shall be necessary to 
carry out such powers; and 
(ii) take any action authorized by this 
section, which the Corporation determines 
is in the best interests of the covered fi-
nancial company, its customers, its credi-
tors, its counterparties, or the stability of 
the financial system. 
(K) UTILIZATION OF PRIVATE SECTOR.— 
In carrying out its responsibilities in the man-
agement and disposition of assets from a cov-
ered financial company, the Corporation, as re-
ceiver or qualified receiver, may utilize the serv-
ices of private persons, including real estate and 
loan portfolio asset management, property man-
agement, auction marketing, legal, and broker-
age services, if such services are available in the 
private sector and the Corporation determines 
utilization of such services is practicable, effi-
cient, and cost effective. 
(L) SHAREHOLDERS AND CREDITORS OF 
COVERED
FINANCIAL
COMPANY.—Notwith-
standing any other provision of law, the Cor-
poration as receiver or qualified receiver for a 
covered financial company pursuant to this sec-
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tion and its succession, by operation of law, to 
the rights, titles, powers, and privileges de-
scribed in subparagraph (A) shall terminate all 
rights and claims that the stockholders and 
creditors of the covered financial company may 
have against the assets of the covered financial 
company or the Corporation arising out of their 
status as stockholders or creditors, except for 
their right to payment, resolution, or other sat-
isfaction of their claims, as permitted under 
this section. The Corporation shall ensure that 
shareholders and unsecured creditors bear 
losses, consistent with the priority of claims 
provision s in section 1609(b). 
(M) COORDINATION WITH FOREIGN FINAN-
CIAL
AUTHORITIES.—The Corporation as re-
ceiver or qualified receiver for a covered finan-
cial company shall coordinate with the appro-
priate foreign financial authorities regarding 
the resolution of subsidiaries of the covered fi-
nancial company that are established in a coun-
try other than the United States. 
(2) AUTHORITY OF CORPORATION TO DETER-
MINE CLAIMS.— 
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(A) IN GENERAL.—The Corporation may, 
as receiver, determine claims in accordance with 
the requirements of this subsection and regula-
tions prescribed under paragraph (3). 
(B) NOTICE
REQUIREMENTS.—The re-
ceiver, in any case involving the liquidation or 
winding up of the affairs of a covered financial 
company, shall— 
(i) promptly publish a notice to the 
covered financial company’s creditors to 
present their claims, together with proof, 
to the receiver by a date specified in the 
notice which shall be not less than 90 days 
after the publication of such notice; and 
(ii) republish such notice approxi-
mately 1 month and 2 months, respec-
tively, after the publication under clause 
(i). 
(C) MAILING
REQUIRED.—The receiver 
shall mail a notice similar to the notice pub-
lished under subparagraph (B)(i) at the time of 
such publication to any creditor shown on the 
covered financial company’s books— 
(i) at the creditor’s last address ap-
pearing in such books; or 
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271 
(ii) upon discovery of the name and 
address of a claimant not appearing on the 
covered financial company’s books, within 
30 days after the discovery of such name 
and address. 
(3) RULEMAKING AUTHORITY RELATING TO DE-
TERMINATION OF CLAIMS.— 
(A) IN GENERAL.—Subject to subsection 
(b), the Corporation shall prescribe rules and 
regulations regarding the allowance or disallow-
ance of claims by the Corporation and providing 
for administrative determination of claims and 
review of such determination. 
(B) EXISTING
RULES.—The Corporation 
may elect to use the regulations adopted pursu-
ant to the provisions of section 11 of the Fed-
eral Deposit Insurance Act with respect to the 
determination of claims for a covered financial 
company as if the covered financial company 
were an insured depository institution. 
(4) PROCEDURES
FOR
DETERMINATION
OF 
CLAIMS.— 
(A) DETERMINATION PERIOD.— 
(i) IN GENERAL.—Before the end of 
the 180-day period beginning on the date 
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any claim against a covered financial com-
pany is filed with the Corporation as re-
ceiver, the Corporation shall determine 
whether to allow or disallow the claim and 
shall notify the claimant of any determina-
tion with respect to such claim. 
(ii) EXTENSION OF TIME.—The period 
described in clause (i) may be extended by 
a written agreement between the claimant 
and the Corporation. 
(iii) MAILING
OF
NOTICE
SUFFI-
CIENT.—The requirements of clause (i) 
shall be deemed to be satisfied if the notice 
of any determination with respect to any 
claim is mailed to the last address of the 
claimant which appears— 
(I) on the covered financial com-
pany’s books; 
(II) in the claim filed by the 
claimant; or 
(III) in documents submitted in 
proof of the claim. 
(iv) CONTENTS
OF
NOTICE
OF
DIS-
ALLOWANCE.—If any claim filed under 
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clause (i) is disallowed, the notice to the 
claimant shall contain— 
(I) a statement of each reason 
for the disallowance; and 
(II) the procedures available for 
obtaining agency review of the deter-
mination to disallow the claim or judi-
cial determination of the claim. 
(B) ALLOWANCE OF PROVEN CLAIM.—The 
Corporation shall allow any claim received on or 
before the date specified in the notice published 
under paragraph (2)(B)(i) by the Corporation 
from any claimant which is proved to the satis-
faction of the Corporation. 
(C) DISALLOWANCE
OF
CLAIMS
FILED 
AFTER END OF FILING PERIOD.— 
(i) IN GENERAL.—Except as provided 
in clause (ii), claims filed after the date 
specified in the notice published under 
paragraph (2)(B)(i) shall be disallowed 
and such disallowance shall be final. 
(ii) CERTAIN
EXCEPTIONS.—Clause 
(i) shall not apply with respect to any 
claim filed by any claimant after the date 
specified in the notice published under 
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paragraph (2)(B)(i) and such claim may 
be considered by the receiver if— 
(I) the claimant did not receive 
notice of the appointment of the re-
ceiver in time to file such claim before 
such date; and 
(II) such claim is filed in time to 
permit payment of such claim. 
(D) AUTHORITY TO DISALLOW CLAIMS.— 
(i) IN
GENERAL.—The Corporation 
may disallow any portion of any claim by 
a creditor or claim of security, preference, 
or priority which is not proved to the satis-
faction of the Corporation. 
(ii) PAYMENTS TO LESS THAN FULLY 
SECURED
CREDITORS.—In the case of a 
claim of a creditor against a covered finan-
cial company which is secured by any prop-
erty or other asset of such covered finan-
cial company, the receiver— 
(I) may treat the portion of such 
claim which exceeds an amount equal 
to the fair market value of such prop-
erty or other asset as an unsecured 
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claim against the covered financial 
company; and 
(II) may not make any payment 
with respect to such unsecured por-
tion of the claim other than in connec-
tion with the disposition of all claims 
of unsecured creditors of the covered 
financial company. 
(iii) EXCEPTIONS.—No provision of 
this paragraph shall apply with respect 
to— 
(I) any extension of credit from 
any Federal Reserve bank, or the Cor-
poration, to any covered financial 
company; or 
(II) subject to clause (ii), any le-
gally enforceable or perfected security 
interest in the assets of the covered fi-
nancial company securing any such 
extension of credit. 
(E) NO JUDICIAL REVIEW OF DETERMINA-
TION PURSUANT TO SUBPARAGRAPH (D).—No 
court may review the Corporation determination 
pursuant to subparagraph (D) to disallow a 
claim. 
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276 
(F) LEGAL EFFECT OF FILING.— 
(i) 
STATUTE
OF
LIMITATION 
TOLLED.—For purposes of any applicable 
statute of limitations, the filing of a claim 
with the Corporation shall constitute a 
commencement of an action. 
(ii) NO
PREJUDICE
TO
OTHER
AC-
TIONS.—Subject to paragraph (9), the fil-
ing of a claim with the Corporation shall 
not prejudice any right of the claimant to 
continue any action which was filed before 
the appointment of the Corporation as re-
ceiver for the covered financial company. 
(5) PROVISION FOR JUDICIAL DETERMINATION 
OF CLAIMS.— 
(A) IN GENERAL.—Before the end of the 
60-day period beginning on the earlier of— 
(i) the end of the period described in 
paragraph (4)(A)(i) (or, if extended by 
agreement of the Corporation and the 
claimant, the period described in para-
graph (4)(A)(ii)) with respect to any claim 
against a covered financial company for 
which the Corporation is receiver; or 
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277 
(ii) the date of any notice of disallow-
ance of such claim pursuant to paragraph 
(4)(A)(i), 
the claimant may file suit on a claim (or con-
tinue an action commenced before the appoint-
ment of the receiver) in the district or terri-
torial court of the United States for the district 
within which the covered financial company’s 
principal place of business is located or the 
United States District Court for the District of 
Columbia (and such court shall have jurisdic-
tion to hear such claim). 
(B) STATUTE
OF
LIMITATIONS.—If any 
claimant fails to file suit on such claim (or con-
tinue an action commenced before the appoint-
ment of the receiver) before the end of the 60- 
day period described in subparagraph (A), the 
claim shall be deemed to be disallowed (other 
than any portion of such claim which was al-
lowed by the receiver) as of the end of such pe-
riod, such disallowance shall be final, and the 
claimant shall have no further rights or rem-
edies with respect to such claim. 
(6) EXPEDITED DETERMINATION OF CLAIMS.— 
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278 
(A) 
ESTABLISHMENT
REQUIRED.—The 
Corporation shall establish a procedure for ex-
pedited relief outside of the routine claims proc-
ess established under paragraph (4) for claim-
ants who— 
(i) allege the existence of legally valid 
and enforceable or perfected security inter-
ests in assets of any covered financial com-
pany for which the Corporation has been 
appointed as receiver; and 
(ii) allege that irreparable injury will 
occur if the routine claims procedure is fol-
lowed. 
(B) DETERMINATION PERIOD.—Before the 
end of the 90-day period beginning on the date 
any claim is filed in accordance with the proce-
dures established pursuant to subparagraph 
(A), the Corporation shall— 
(i) determine— 
(I) whether to allow or disallow 
such claim; or 
(II) whether such claim should be 
determined pursuant to the proce-
dures established pursuant to para-
graph (4); and 
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279 
(ii) notify the claimant of the deter-
mination, and if the claim is disallowed, 
provide a statement of each reason for the 
disallowance and the procedure for obtain-
ing judicial determination. 
(C) PERIOD
FOR
FILING
OR
RENEWING 
SUIT.—Any claimant who files a request for ex-
pedited relief shall be permitted to file a suit, 
or to continue such a suit filed before the ap-
pointment of the Corporation as receiver, seek-
ing a determination of the claimant’s rights 
with respect to such security interest after the 
earlier of— 
(i) the end of the 90-day period begin-
ning on the date of the filing of a request 
for expedited relief; or 
(ii) the date the Corporation denies 
the claim. 
(D) STATUTE OF LIMITATIONS.—If an ac-
tion described in subparagraph (C) is not filed, 
or the motion to renew a previously filed suit is 
not made, before the end of the 30-day period 
beginning on the date on which such action or 
motion may be filed in accordance with sub-
paragraph (B), the claim shall be deemed to be 
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disallowed as of the end of such period (other 
than any portion of such claim which was al-
lowed by the receiver), such disallowance shall 
be final, and the claimant shall have no further 
rights or remedies with respect to such claim. 
(E) LEGAL EFFECT OF FILING.— 
(i) 
STATUTE
OF
LIMITATION 
TOLLED.—For purposes of any applicable 
statute of limitations, the filing of a claim 
with the receiver shall constitute a com-
mencement of an action. 
(ii) NO
PREJUDICE
TO
OTHER
AC-
TIONS.—Subject to paragraph (9), the fil-
ing of a claim with the receiver shall not 
prejudice any right of the claimant to con-
tinue any action which was filed before the 
appointment of the Corporation as receiver 
for the covered financial company. 
(7) AGREEMENTS AGAINST INTEREST OF THE 
RECEIVER.—No agreement that tends to diminish or 
defeat the interest of the Corporation as receiver in 
any asset acquired by the receiver under this section 
shall be valid against the receiver unless such agree-
ment is in writing and executed by an authorized of-
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281 
ficer or representative of the covered financial com-
pany. 
(8) PAYMENT OF CLAIMS.— 
(A) IN GENERAL.—The Corporation as re-
ceiver may, in its discretion and to the extent 
funds are available, pay creditor claims, in such 
manner and amounts as are authorized under 
this section, which are— 
(i) allowed by the receiver; 
(ii) approved by the Corporation pur-
suant to a final determination pursuant to 
paragraph (6); or 
(iii) determined by the final judgment 
of any court of competent jurisdiction. 
(B) 
PAYMENT
OF
DIVIDENDS
ON 
CLAIMS.—The receiver may, in the receiver’s 
sole discretion and to the extent otherwise per-
mitted by this section, pay dividends on proven 
claims at any time, and no liability shall attach 
to the Corporation (in the Corporation’s capac-
ity as receiver), by reason of any such payment, 
for failure to pay dividends to a claimant whose 
claim is not proved at the time of any such pay-
ment. 
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282 
(C) RULEMAKING
AUTHORITY
OF
COR-
PORATION.—The Corporation may prescribe 
such rules, including definitions of terms, as it 
deems appropriate to establish a single uniform 
interest rate for, or to make payments of post 
insolvency interest to creditors holding proven 
claims against the receivership estates of a cov-
ered financial company following satisfaction by 
the receiver of the principal amount of all cred-
itor claims. 
(9) SUSPENSION OF LEGAL ACTIONS.— 
(A) IN GENERAL.—After the appointment 
of the Corporation as receiver or qualified re-
ceiver for a covered financial company, the Cor-
poration may request a stay for a period not to 
exceed— 
(i) 45 days, in the case of any quali-
fied receiver; and 
(ii) 90 days, in the case of any re-
ceiver, 
in any noncriminal judicial action or proceeding 
to which such covered financial company is or 
becomes a party. 
(B) GRANT OF STAY BY ALL COURTS RE-
QUIRED.—Upon receipt of a request by the Cor-
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poration pursuant to subparagraph (A) for a 
stay of any non-criminal judicial action or pro-
ceeding in any court with jurisdiction of such 
action or proceeding, the court shall grant such 
stay as to all parties. 
(10) ADDITIONAL RIGHTS AND DUTIES.— 
(A) PRIOR
FINAL
ADJUDICATION.—The 
Corporation 
shall 
abide 
by 
any 
final 
unappealable judgment of any court of com-
petent jurisdiction which was rendered before 
the appointment of the Corporation as receiver 
or qualified receiver. 
(B) RIGHTS
AND
REMEDIES
OF
RE-
CEIVER.—In the event of any appealable judg-
ment, the Corporation as receiver or qualified 
receiver shall— 
(i) have all the rights and remedies 
available to the covered financial company 
(before the appointment of the receiver or 
qualified receiver under section 1604) and 
the Corporation, including but not limited 
to removal to Federal court and all appel-
late rights; and 
(ii) not be required to post any bond 
in order to pursue such remedies. 
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(C) NO ATTACHMENT OR EXECUTION.—No 
attachment or execution may issue by any court 
upon assets in the possession of the receiver. 
(D) LIMITATION ON JUDICIAL REVIEW.— 
Except as otherwise provided in this subsection, 
no court shall have jurisdiction over— 
(i) any claim or action for payment 
from, or any action seeking a determina-
tion of rights with respect to, the assets of 
any covered financial company for which 
the Corporation has been appointed re-
ceiver, including any assets which the Cor-
poration may acquire from itself as such 
receiver; or 
(ii) any claim relating to any act or 
omission of such covered financial company 
or the Corporation as receiver. 
(E) DISPOSITION
OF
ASSETS.—In exer-
cising any right, power, privilege, or authority 
as receiver or qualified receiver in connection 
with any covered financial company for which 
the Corporation is acting as receiver or quali-
fied receiver under this section, the Corporation 
shall, to the greatest extent practicable, conduct 
its operations in a manner which— 
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(i) maximizes the net present value 
return from the sale or disposition of such 
assets; 
(ii) minimizes the amount of any loss 
realized in the resolution of cases; 
(iii) minimizes the cost to the general 
fund of the Treasury; 
(iv) mitigates the potential for serious 
adverse effects to the financial system and 
the U.S. economy; 
(v) ensures timely and adequate com-
petition and fair and consistent treatment 
of offerors; and 
(vi) prohibits discrimination on the 
basis of race, sex, or ethnic groups in the 
solicitation and consideration of offers. 
(11) STATUTE OF LIMITATIONS FOR ACTIONS 
BROUGHT BY RECEIVER.— 
(A) IN
GENERAL.—Notwithstanding any 
provision of any contract, the applicable statute 
of limitations with regard to any action brought 
by the Corporation as receiver or qualified re-
ceiver shall be— 
(i) in the case of any contract claim, 
the longer of— 
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(I) the 6-year period beginning 
on the date the claim accrues; or 
(II) the period applicable under 
State law; and 
(ii) in the case of any tort claim, the 
longer of— 
(I) the 3-year period beginning 
on the date the claim accrues; or 
(II) the period applicable under 
State law. 
(B) DETERMINATION
OF
THE
DATE
ON 
WHICH
A
CLAIM
ACCRUES.—For purposes of 
subparagraph (A), the date on which the stat-
ute of limitations begins to run on any claim 
described in such subparagraph shall be the 
later of— 
(i) the date of the appointment of the 
Corporation as receiver or qualified re-
ceiver under this title; or 
(ii) the date on which the cause of ac-
tion accrues. 
(C) REVIVAL OF EXPIRED STATE CAUSES 
OF ACTION.— 
(i) IN GENERAL.—In the case of any 
tort claim described in clause (ii) for which 
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the statute of limitation applicable under 
State law with respect to such claim has 
expired not more than 5 years before the 
appointment of the Corporation as receiver 
or qualified receiver, the Corporation may 
bring an action as receiver or qualified re-
ceiver on such claim without regard to the 
expiration of the statute of limitation ap-
plicable under State law. 
(ii) 
CLAIMS
DESCRIBED.—A 
tort 
claim referred to in clause (i) is a claim 
arising from fraud, intentional misconduct 
resulting in unjust enrichment, or inten-
tional misconduct resulting in substantial 
loss to the covered financial company. 
(12) FRAUDULENT TRANSFERS.— 
(A) IN GENERAL.—The Corporation, as re-
ceiver or qualified receiver for any covered fi-
nancial company, may avoid a transfer of any 
interest of an institution affiliated party, or any 
person who the Corporation determines is a 
debtor of the covered financial company, in 
property, or any obligation incurred by such 
party or person, that was made within 5 years 
of the date on which the Corporation was ap-
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pointed receiver or qualified receiver if such 
party or person voluntarily or involuntarily 
made such transfer or incurred such liability 
with the intent to hinder, delay, or defraud the 
covered financial company or the Corporation. 
(B) RIGHT OF RECOVERY.—To the extent 
a transfer is avoided under subparagraph (A), 
the Corporation may recover, for the benefit of 
the covered financial company, the property 
transferred or, if a court so orders, the value of 
such property (at the time of such transfer) 
from— 
(i) the initial transferee of such trans-
fer or the institution-affiliated party or 
person for whose benefit such transfer was 
made; or 
(ii) any immediate or mediate trans-
feree of any such initial transferee. 
(C) RIGHTS
OF
TRANSFEREE
OR
OBLI-
GEE.—The Corporation may not recover under 
subparagraph (B)— 
(i) any transfer that takes for value, 
including satisfaction or securing of a 
present or antecedent debt, in good faith, 
or 
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(ii) any immediate or mediate good 
faith transferee of such transferee. 
(D) RIGHTS UNDER THIS SUBSECTION.— 
The rights of the Corporation as receiver or 
qualified receiver of a covered financial com-
pany under this subsection shall be superior to 
any rights of a trustee or any other party 
(other than any party which is a Federal agen-
cy) under title 11, United States Code. 
(E) DEFINITION.—For purposes of this 
subsection, the term ‘‘institution affiliated 
party’’ means— 
(i) any director, officer, employee, or 
controlling stockholder of, or agent for, a 
covered financial company; 
(ii) any shareholder, consultant, joint 
venture partner, and any other person as 
determined by the Corporation (by regula-
tion or otherwise) who participates in the 
conduct of the affairs of a covered finan-
cial company; and 
(iii) any independent contractor (in-
cluding any attorney, appraiser, or ac-
countant) who knowingly or recklessly par-
ticipates in— 
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(I) any violation of any law or 
regulation; 
(II) any breach of fiduciary duty; 
or 
(III) any unsafe or unsound 
practice, 
which caused or is likely to cause more 
than a minimal financial loss to, or a sig-
nificant adverse effect on, the covered fi-
nancial company. 
(13) ATTACHMENT OF ASSETS AND OTHER IN-
JUNCTIVE RELIEF.—Subject to paragraph (14), any 
court of competent jurisdiction may, at the request 
of the Corporation, issue an order in accordance 
with rule 65 of the Federal Rules of Civil Procedure, 
including an order placing the assets of any person 
designated by the Corporation under the control of 
the court and appointing a trustee to hold such as-
sets. 
(14) STANDARDS.— 
(A) SHOWING.—Rule 65 of the Federal 
Rules of Civil Procedure shall apply with re-
spect to any proceeding under paragraph (13) 
without regard to the requirement of such rule 
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that the applicant show that the injury, loss, or 
damage is irreparable and immediate. 
(B) STATE PROCEEDING.—If, in the case 
of any proceeding in a State court, the court 
determines that rules of civil procedure avail-
able under the laws of such State provide sub-
stantially similar protections to such party’s 
right to due process as rule 65 (as modified 
with respect to such proceeding by subpara-
graph (A)), the relief sought by the Corporation 
pursuant to paragraph (14) may be requested 
under the laws of such State. 
(15) TREATMENT
OF
CLAIMS
ARISING
FROM 
BREACH OF CONTRACTS EXECUTED BY THE COR-
PORATION AS RECEIVER OR QUALIFIED RECEIVER.— 
Notwithstanding any other provision of this sub-
section, any final and unappealable judgment for 
monetary damages entered against the Corporation 
as receiver or qualified receiver for a covered finan-
cial company for the breach of an agreement exe-
cuted or approved by the Corporation after the date 
of its appointment shall be paid as an administrative 
expense of the receiver or the qualified receiver. 
Nothing in this paragraph shall be construed to limit 
the power of a receiver or qualified receiver to exer-
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cise any rights under contract or law, including to 
terminate, breach, cancel, or otherwise discontinue 
such agreement. 
(16) ACCOUNTING
AND
RECORDKEEPING
RE-
QUIREMENTS.— 
(A) IN GENERAL.—The Corporation as re-
ceiver or qualified receiver shall, consistent with 
the accounting and reporting practices and pro-
cedures established by the Corporation, main-
tain a full accounting of each qualified receiver-
ship, receivership, or other disposition of any 
covered financial company. 
(B) ANNUAL ACCOUNTING OR REPORT.— 
With respect to each receivership or qualified 
receivership to which the Corporation was ap-
pointed, the Corporation shall make an annual 
accounting or report, as appropriate, available 
to the Secretary and the Comptroller General of 
the United States. 
(C) AVAILABILITY OF REPORTS.—Any re-
port prepared pursuant to subparagraph (B) 
shall be made available by the Corporation upon 
request to any member of the public. 
(D) RECORDKEEPING REQUIREMENT.— 
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(i) IN GENERAL.—Except as provided 
in clause (ii), after the end of the 6-year 
period beginning on the date the Corpora-
tion is appointed as receiver of a covered 
financial company the Corporation may de-
stroy any records of such covered financial 
company which the Corporation, in the 
Corporation’s discretion, determines to be 
unnecessary unless directed not to do so by 
a court of competent jurisdiction or gov-
ernmental agency, or prohibited by law. 
(ii) OLD RECORDS.—Notwithstanding 
clause (i), the Corporation may destroy 
records of a covered financial company 
which are at least 10 years old as of the 
date on which the Corporation is appointed 
as the receiver of such company in accord-
ance with clause (i) at any time after such 
appointment is final, without regard to the 
6-year period of limitation contained in 
clause (i). 
(b) PRIORITY
OF
EXPENSES
AND
UNSECURED 
CLAIMS.— 
(1) IN GENERAL.—Unsecured claims against a 
covered financial company, or the receiver for such 
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covered financial company under this section, that 
are proven to the satisfaction of the receiver shall 
have priority in the following order: 
(A) Administrative expenses of the re-
ceiver. 
(B) Any amounts owed to the United 
States, unless the United States agrees or con-
sents otherwise. 
(C) Any other general or senior liability of 
the covered financial company (which is not a 
liability described under subparagraph (D) or 
(E)). 
(D) Any obligation subordinated to general 
creditors (which is not an obligation described 
under subparagraph (E)). 
(E) Any obligation to shareholders, mem-
bers, general partners, limited partners or other 
persons with interests in the equity of the cov-
ered financial company arising as a result of 
their status as shareholders, members, general 
partners, limited partners or other persons with 
interests in the equity of the covered financial 
company. 
(2) 
POST-RECEIVERSHIP
FINANCING
PRI-
ORITY.—In the event that the Corporation as re-
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ceiver is unable to obtain unsecured credit for the 
covered financial company from commercial sources, 
the Corporation as receiver may obtain credit or 
incur debt on the part of the covered financial com-
pany which shall have priority over any or all admin-
istrative expenses of the receiver under paragraph 
(1)(A). 
(3) CLAIMS OF THE UNITED STATES.—Unse-
cured claims of the United States shall, at a min-
imum, have a higher priority than liabilities of the 
covered financial company that count as regulatory 
capital. 
(4) CREDITORS
SIMILARLY
SITUATED.—All 
claimants of a covered financial company that are 
similarly situated under paragraph (1) shall be 
treated in a similar manner, except that the receiver 
may take any action (including making payments) 
that does not comply with this subsection, if— 
(A) the Corporation determines that such 
action is necessary to maximize the value of the 
assets of the covered financial company, to 
maximize the present value return from the sale 
or other disposition of the assets of the covered 
financial company, to minimize the amount of 
any loss realized upon the sale or other disposi-
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tion of the assets of the covered financial com-
pany, or to contain or address serious adverse 
effects on financial stability or the U.S. econ-
omy; and 
(B) all claimants that are similarly situ-
ated under paragraph (1) receive not less than 
the amount provided in subsection (d)(2). 
(5) SECURED CLAIMS UNAFFECTED.—This sub-
section shall not affect secured claims, except to the 
extent that the security is insufficient to satisfy the 
claim and then only with regard to the difference be-
tween the claim and the amount realized from the 
security. 
(6) DEFINITIONS.—As used in this subsection, 
the term ‘‘administrative expenses of the receiver’’ 
includes— 
(A) the actual, necessary costs and ex-
penses incurred by the receiver in preserving 
the assets of a covered financial company or liq-
uidating or otherwise resolving the affairs of a 
covered financial company for which the Cor-
poration has been appointed as receiver; and 
(B) any obligations that the receiver deter-
mines are necessary and appropriate to facili-
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tate the smooth and orderly liquidation or other 
resolution of the covered financial company. 
(c) PROVISIONS RELATING TO CONTRACTS ENTERED 
INTO BEFORE APPOINTMENT OF RECEIVER OR QUALI-
FIED RECEIVER.— 
(1) AUTHORITY TO REPUDIATE CONTRACTS.— 
In addition to any other rights a receiver or quali-
fied receiver may have, the Corporation as receiver 
or qualified receiver for any covered financial com-
pany may disaffirm or repudiate any contract or 
lease— 
(A) to which the covered financial company 
is a party; 
(B) the performance of which the receiver 
or qualified receiver, in the receiver’s or quali-
fied receiver’s discretion, determines to be bur-
densome; and 
(C) the disaffirmance or repudiation of 
which the receiver or qualified receiver deter-
mines, in the receiver’s or qualified receiver’s 
discretion, will promote the orderly administra-
tion of the covered financial company’s affairs. 
(2) TIMING OF REPUDIATION.—The receiver or 
qualified receiver appointed for any covered financial 
company under section 1604 shall determine wheth-
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er or not to exercise the rights of repudiation under 
this subsection within a reasonable period following 
such appointment. 
(3) CLAIMS
FOR
DAMAGES
FOR
REPUDI-
ATION.— 
(A) IN
GENERAL.—Except as otherwise 
provided in subparagraph (C) and paragraphs 
(4), (5), and (6), the liability of the receiver or 
qualified receiver for the disaffirmance or repu-
diation of any contract pursuant to paragraph 
(1) shall be— 
(i) limited to actual direct compen-
satory damages; and 
(ii) determined as of— 
(I) the date of the appointment 
of the receiver or qualified receiver; or 
(II) in the case of any contract 
or agreement referred to in paragraph 
(8), the date of the disaffirmance or 
repudiation of such contract or agree-
ment. 
(B) NO
LIABILITY
FOR
OTHER
DAM-
AGES.—For purposes of subparagraph (A), the 
term ‘‘actual direct compensatory damages’’ 
does not include— 
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(i) punitive or exemplary damages; 
(ii) damages for lost profits or oppor-
tunity; or 
(iii) damages for pain and suffering. 
(C) MEASURE OF DAMAGES FOR REPUDI-
ATION OF QUALIFIED FINANCIAL CONTRACTS.— 
In the case of any qualified financial contract 
or agreement to which paragraph (8) applies, 
compensatory damages shall be— 
(i) deemed to include normal and rea-
sonable costs of cover or other reasonable 
measures of damages utilized in the indus-
tries for such contract and agreement 
claims; and 
(ii) paid in accordance with this sub-
section and subsection (d) except as other-
wise specifically provided in this sub-
section. 
(4) LEASES UNDER WHICH THE COVERED FI-
NANCIAL COMPANY IS THE LESSEE.— 
(A) IN GENERAL.—If the receiver or quali-
fied receiver disaffirms or repudiates a lease 
under which the covered financial company was 
the lessee, the receiver or qualified receiver 
shall not be liable for any damages (other than 
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damages determined pursuant to subparagraph 
(B)) for the disaffirmance or repudiation of 
such lease. 
(B) 
PAYMENTS
OF
RENT.—Notwith-
standing subparagraph (A), the lessor under a 
lease to which such subparagraph applies 
shall— 
(i) be entitled to the contractual rent 
accruing before the later of the date— 
(I) the notice of disaffirmance or 
repudiation is mailed; or 
(II) the disaffirmance or repudi-
ation becomes effective, unless the les-
sor is in default or breach of the 
terms of the lease; 
(ii) have no claim for damages under 
any acceleration clause or other penalty 
provision in the lease; and 
(iii) have a claim for any unpaid rent, 
subject to all appropriate offsets and de-
fenses, due as of the date of the appoint-
ment which shall be paid in accordance 
with this subsection and subsection (d). 
(5) LEASES UNDER WHICH THE COVERED FI-
NANCIAL COMPANY IS THE LESSOR.— 
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(A) IN GENERAL.—If the receiver or quali-
fied receiver repudiates an unexpired written 
lease of real property of the covered financial 
company under which the covered financial 
company is the lessor and the lessee is not, as 
of the date of such repudiation, in default, the 
lessee under such lease may either— 
(i) treat the lease as terminated by 
such repudiation; or 
(ii) remain in possession of the lease-
hold interest for the balance of the term of 
the lease unless the lessee defaults under 
the terms of the lease after the date of 
such repudiation. 
(B) PROVISIONS APPLICABLE TO LESSEE 
REMAINING
IN
POSSESSION.—If any lessee 
under a lease described in subparagraph (A) re-
mains in possession of a leasehold interest pur-
suant to clause (ii) of such subparagraph— 
(i) the lessee— 
(I) shall continue to pay the con-
tractual rent pursuant to the terms of 
the lease after the date of the repudi-
ation of such lease; and 
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(II) may offset against any rent 
payment which accrues after the date 
of the repudiation of the lease, any 
damages which accrue after such date 
due to the nonperformance of any ob-
ligation of the covered financial com-
pany under the lease after such date; 
and 
(ii) the receiver or qualified receiver 
shall not be liable to the lessee for any 
damages arising after such date as a result 
of the repudiation other than the amount 
of any offset allowed under clause (i)(II). 
(6) CONTRACTS FOR THE SALE OF REAL PROP-
ERTY.— 
(A) IN GENERAL.—If the receiver or quali-
fied receiver repudiates any contract (which 
meets the requirements of subsection (a)(7)) for 
the sale of real property and the purchaser of 
such real property under such contract is in 
possession and is not, as of the date of such re-
pudiation, in default, such purchaser may ei-
ther— 
(i) treat the contract as terminated by 
such repudiation; or 
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(ii) remain in possession of such real 
property. 
(B) PROVISIONS
APPLICABLE
TO
PUR-
CHASER
REMAINING
IN
POSSESSION.—If any 
purchaser of real property under any contract 
described in subparagraph (A) remains in pos-
session of such property pursuant to clause (ii) 
of such subparagraph— 
(i) the purchaser— 
(I) shall continue to make all 
payments due under the contract after 
the date of the repudiation of the con-
tract; and 
(II) may offset against any such 
payments any damages which accrue 
after such date due to the non-
performance (after such date) of any 
obligation of the covered financial 
company under the contract; and 
(ii) the receiver or qualified receiver 
shall— 
(I) not be liable to the purchaser 
for any damages arising after such 
date as a result of the repudiation 
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other than the amount of any offset 
allowed under clause (i)(II); 
(II) deliver title to the purchaser 
in accordance with the provisions of 
the contract; and 
(III) have no obligation under 
the contract other than the perform-
ance required under subclause (II). 
(C) ASSIGNMENT AND SALE ALLOWED.— 
(i) IN GENERAL.—No provision of this 
paragraph shall be construed as limiting 
the right of the receiver or qualified re-
ceiver to assign the contract described in 
subparagraph (A) and sell the property 
subject to the contract and the provisions 
of this paragraph. 
(ii) NO LIABILITY AFTER ASSIGNMENT 
AND SALE.—If an assignment and sale de-
scribed in clause (i) is consummated, the 
receiver or qualified receiver shall have no 
further liability under the contract de-
scribed in subparagraph (A) or with re-
spect to the real property which was the 
subject of such contract. 
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305 
(7) PROVISIONS APPLICABLE TO SERVICE CON-
TRACTS.— 
(A) SERVICES
PERFORMED
BEFORE
AP-
POINTMENT.—In the case of any contract for 
services between any person and any covered fi-
nancial company for which the Corporation has 
been appointed receiver or qualified receiver, 
any claim of such person for services performed 
before the appointment of the receiver or quali-
fied receiver shall be— 
(i) a claim to be paid in accordance 
with subsections (a), (b) and (d); and 
(ii) deemed to have arisen as of the 
date the receiver or qualified receiver was 
appointed. 
(B) SERVICES
PERFORMED
AFTER
AP-
POINTMENT AND PRIOR TO REPUDIATION.—If, 
in the case of any contract for services de-
scribed in subparagraph (A), the receiver or 
qualified receiver accepts performance by the 
other person before the receiver or qualified re-
ceiver makes any determination to exercise the 
right of repudiation of such contract under this 
section— 
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306 
(i) the other party shall be paid under 
the terms of the contract for the services 
performed; and 
(ii) the amount of such payment shall 
be treated as an administrative expense of 
the receivership or qualified receivership. 
(C) ACCEPTANCE
OF
PERFORMANCE
NO 
BAR TO SUBSEQUENT REPUDIATION.—The ac-
ceptance by any receiver or qualified receiver of 
services referred to in subparagraph (B) in con-
nection with a contract described in such sub-
paragraph shall not affect the right of the re-
ceiver or qualified receiver to repudiate such 
contract under this section at any time after 
such performance. 
(8) CERTAIN
QUALIFIED
FINANCIAL
CON-
TRACTS.— 
(A) RIGHTS OF PARTIES TO CONTRACTS.— 
Subject to paragraphs (9) and (10) of this sub-
section and notwithstanding any other provision 
of this section (other than subsection (a)(7)), 
any other Federal law, or the law of any State, 
no person shall be stayed or prohibited from ex-
ercising— 
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307 
(i) any right such person has to cause 
the termination, liquidation, or acceleration 
of any qualified financial contract with a 
covered financial company which arises 
upon the appointment of the Corporation 
as receiver for such covered financial com-
pany at any time after such appointment; 
(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 
(iii) any right to offset or net out any 
termination value, payment amount, or 
other transfer obligation arising under or 
in connection with 1 or more contracts and 
agreements described in clause (i), includ-
ing any master agreement for such con-
tracts or agreements. 
(B) APPLICABILITY
OF
OTHER
PROVI-
SIONS.—Subsection (a)(9) shall apply in the 
case of any judicial action or proceeding 
brought against any receiver referred to in sub-
paragraph (A), or the covered financial com-
pany for which such receiver was appointed, by 
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308 
any party to a contract or agreement described 
in subparagraph (A)(i) with such company. 
(C) CERTAIN
TRANSFERS
NOT
AVOID-
ABLE.— 
(i) IN
GENERAL.—Notwithstanding 
paragraph (11), section 5242 of the Re-
vised Statutes of the United States or any 
other provision of Federal or State law re-
lating to the avoidance of preferential or 
fraudulent 
transfers, 
the 
Corporation, 
whether acting as such or as receiver or 
qualified receiver of a covered financial 
company, may not avoid any transfer of 
money or other property in connection with 
any qualified financial contract with a cov-
ered financial company. 
(ii) EXCEPTION FOR CERTAIN TRANS-
FERS.—Clause (i) shall not apply to any 
transfer of money or other property in con-
nection with any qualified financial con-
tract with a covered financial company if 
the Corporation determines that the trans-
feree had actual intent to hinder, delay, or 
defraud such company, the creditors of 
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309 
such company, or any receiver or qualified 
receiver appointed for such company. 
(D) CERTAIN
CONTACTS
AND
AGREE-
MENTS DEFINED.—For purposes of this sub-
section, the following definitions shall apply: 
(i) 
QUALIFIED
FINANCIAL
CON-
TRACT.—The term ‘‘qualified financial 
contract’’ means any securities contract, 
commodity contract, forward contract, re-
purchase agreement, swap agreement, and 
any similar agreement that the Corpora-
tion determines by regulation, resolution, 
or order to be a qualified financial contract 
for purposes of this paragraph. 
(ii) 
SECURITIES
CONTRACT.—The 
term ‘‘securities contract’’— 
(I) means a contract for the pur-
chase, sale, or loan of a security, a 
certificate of deposit, a mortgage loan, 
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 
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310 
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 (whether or not such 
repurchase 
or 
reverse 
repurchase 
transaction is a ‘‘repurchase agree-
ment,’’ as defined in clause (v)); 
(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 (in-
cluding by novation) by or to any se-
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311 
curities clearing agency of any settle-
ment of cash, securities, certificates of 
deposit, mortgage loans or interests 
therein, group or index of securities, 
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 security, 
certificate of deposit, mortgage loan, 
interest, group or index, or option 
(whether or not such settlement is in 
connection with any agreement or 
transaction referred to in subclauses 
(I) through (XII) (other than sub-
clause (II)); 
(V) means any margin loan; 
(VI) means any extension of 
credit for the clearance or settlement 
of securities transactions; 
(VII) means any loan transaction 
coupled with a securities collar trans-
action, any prepaid securities forward 
transaction, or any total return swap 
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312 
transaction coupled with a securities 
sale transaction; 
(VIII) means any other agree-
ment or transaction that is similar to 
any agreement or transaction referred 
to in this clause; 
(IX) means any combination of 
the agreements or transactions re-
ferred to in this clause; 
(X) means any option to enter 
into any agreement or transaction re-
ferred to in this clause; 
(XI) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause 
(I), (III), (IV), (V), (VI), (VII), 
(VIII), (IX), or (X), 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 
securities contract under this clause, 
except that the master agreement 
shall be considered to be a securities 
contract under this clause only with 
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313 
respect to each agreement or trans-
action under the master agreement 
that is referred to in subclause (I), 
(III), (IV), (V), (VI), (VII), (VIII), 
(IX), or (X); and 
(XII) 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. 
(iii) 
COMMODITY
CONTRACT.—The 
term ‘‘commodity contract’’ means— 
(I) with respect to a futures com-
mission 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; 
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314 
(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; 
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315 
(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, 
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316 
including any guarantee or reimburse-
ment obligation in connection with 
any agreement or transaction referred 
to in this clause. 
(iv) FORWARD CONTRACT.—The term 
‘‘forward contract’’ means— 
(I) a contract (other than a com-
modity 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 or reverse 
repurchase transaction (whether or 
not such repurchase or reverse repur-
chase transaction is a ‘‘repurchase 
agreement’’, as defined in clause (v)), 
consignment, 
lease, 
swap, 
hedge 
transaction, deposit, loan, option, allo-
cated transaction, unallocated trans-
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317 
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 ar-
rangement or other credit enhance-
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318 
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. 
(v) REPURCHASE
AGREEMENT.—The 
term ‘‘repurchase agreement’’ (which defi-
nition 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 (which 
for purposes of this clause shall mean 
a security that is a direct obligation 
of, or that is fully guaranteed by, the 
central government of a member of 
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319 
the Organization for Economic Co-
operation and Development as deter-
mined by regulation or order adopted 
by the Federal Reserve Board) or se-
curities 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-
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320 
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 
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321 
(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. 
(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, precious metals, or 
other commodity agreement; a cur-
rency swap, option, future, or forward 
agreement; an equity index or equity 
swap, option, future, or forward 
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324 
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. 
(vii) DEFINITIONS RELATING TO DE-
FAULT.—When used in this paragraph and 
paragraph (10)— 
(I) The term ‘‘default’’ shall 
mean, with respect to a covered finan-
cial company, any adjudication or 
other official determination by any 
court of competent jurisdiction, or 
other public authority pursuant to 
which a conservator, receiver, or other 
legal custodian is appointed; and 
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