229 
transfer of the assets and liabilities of such 
regulated entity, and 
‘‘(ii) the transfer includes any quali-
fied financial contract, 
the conservator or receiver shall notify any per-
son who is a party to any such contract of such 
transfer by 5:00 p.m. (eastern time) on the 
business day following the date of the appoint-
ment of the receiver in the case of a receiver-
ship, or the business day following such trans-
fer in the case of a conservatorship. 
‘‘(B) CERTAIN
RIGHTS
NOT
ENFORCE-
ABLE.— 
‘‘(i) RECEIVERSHIP.—A person who is 
a party to a qualified financial contract 
with a regulated entity may not exercise 
any right that such person has to termi-
nate, liquidate, or net such contract under 
paragraph (8)(A) of this subsection or sec-
tion 403 or 404 of the Federal Deposit In-
surance Corporation Improvement Act of 
1991, solely by reason of or incidental to 
the appointment of a receiver for the regu-
lated entity (or the insolvency or financial 
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230 
condition of the regulated entity for which 
the receiver has been appointed)— 
‘‘(I) until 5:00 p.m. (eastern 
time) on the business day following 
the date of the appointment of the re-
ceiver; or 
‘‘(II) after the person has re-
ceived notice that the contract has 
been transferred pursuant to para-
graph (9)(A). 
‘‘(ii) CONSERVATORSHIP.—A person 
who is a party to a qualified financial con-
tract with a regulated entity may not exer-
cise any right that such person has to ter-
minate, liquidate, or net such contract 
under paragraph (8)(E) of this subsection 
or section 403 or 404 of the Federal De-
posit Insurance Corporation Improvement 
Act of 1991, solely by reason of or inci-
dental to the appointment of a conservator 
for the regulated entity (or the insolvency 
or financial condition of the regulated enti-
ty for which the conservator has been ap-
pointed). 
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231 
‘‘(iii) NOTICE.—For purposes of this 
paragraph, the Agency as receiver or con-
servator of a regulated entity shall be 
deemed to have notified a person who is a 
party to a qualified financial contract with 
such regulated entity if the Agency has 
taken steps reasonably calculated to pro-
vide notice to such person by the time 
specified in subparagraph (A). 
‘‘(C) BUSINESS DAY DEFINED.—For pur-
poses of this paragraph, the term ‘business day’ 
means any day other than any Saturday, Sun-
day, or any day on which either the New York 
Stock Exchange or the Federal Reserve Bank 
of New York is closed. 
‘‘(11) DISAFFIRMANCE
OR
REPUDIATION
OF 
QUALIFIED
FINANCIAL
CONTRACTS.—In exercising 
the rights of disaffirmance or repudiation of a con-
servator or receiver with respect to any qualified fi-
nancial contract to which a regulated entity is a 
party, the conservator or receiver for such institution 
shall either— 
‘‘(A) disaffirm or repudiate all qualified fi-
nancial contracts between— 
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232 
‘‘(i) any person or any affiliate of 
such person; and 
‘‘(ii) the regulated entity in default; or 
‘‘(B) disaffirm or repudiate none of the 
qualified financial contracts referred to in sub-
paragraph (A) (with respect to such person or 
any affiliate of such person). 
‘‘(12) CERTAIN
SECURITY
INTERESTS
NOT 
AVOIDABLE.—No provision of this subsection shall 
be construed as permitting the avoidance of any le-
gally enforceable or perfected security interest in any 
of the assets of any regulated entity, except where 
such an interest is taken in contemplation of the in-
solvency of the regulated entity, or with the intent 
to hinder, delay, or defraud the regulated entity or 
the creditors of such regulated entity. 
‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
provision of a contract providing for termi-
nation, default, acceleration, or exercise of 
rights upon, or solely by reason of, insolvency 
or the appointment of a conservator or receiver, 
the conservator or receiver may enforce any 
contract or regulated entity bond entered into 
by the regulated entity. 
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233 
‘‘(B) CERTAIN RIGHTS NOT AFFECTED.— 
No provision of this paragraph may be con-
strued as impairing or affecting any right of the 
conservator or receiver to enforce or recover 
under a director’s or officer’s liability insurance 
contract or surety bond under other applicable 
law. 
‘‘(C) CONSENT REQUIREMENT.— 
‘‘(i) IN GENERAL.—Except as other-
wise provided under this section, no person 
may exercise any right or power to termi-
nate, accelerate, or declare a default under 
any contract to which a regulated entity is 
a party, or to obtain possession of or exer-
cise control over any property of the regu-
lated entity, or affect any contractual 
rights of the regulated entity, without the 
consent of the conservator or receiver, as 
appropriate, for a period of— 
‘‘(I) 45 days after the date of ap-
pointment of a conservator; or 
‘‘(II) 90 days after the date of 
appointment of a receiver. 
‘‘(ii) EXCEPTIONS.—This paragraph 
shall— 
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234 
‘‘(I) not apply to a director’s or 
officer’s liability insurance contract; 
‘‘(II) not apply to the rights of 
parties to any qualified financial con-
tracts under subsection (d)(8); and 
‘‘(III) not be construed as per-
mitting the conservator or receiver to 
fail to comply with otherwise enforce-
able provisions of such contracts. 
‘‘(14) SAVINGS
CLAUSE.—The meanings of 
terms used in this subsection are applicable for pur-
poses of this subsection only, and shall not be con-
strued or applied so as to challenge or affect the 
characterization, definition, or treatment of any 
similar terms under any other statute, regulation, or 
rule, including the Gramm-Leach-Bliley Act, the 
Legal Certainty for Bank Products Act of 2000, the 
securities laws (as that term is defined in section 
3(a)(47) of the Securities Exchange Act of 1934), 
and the Commodity Exchange Act. 
‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND 
FEDERAL HOME LOAN BANKS.—No provision of this 
subsection shall apply with respect to— 
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235 
‘‘(A) any extension of credit from any Fed-
eral home loan bank or Federal Reserve Bank 
to any regulated entity; or 
‘‘(B) any security interest in the assets of 
the regulated entity securing any such extension 
of credit. 
‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal law or the law of any State, and 
regardless of the method which the Agency deter-
mines to utilize with respect to a regulated entity in 
default or in danger of default, including trans-
actions authorized under subsection (i), this sub-
section shall govern the rights of the creditors of 
such regulated entity. 
‘‘(2) MAXIMUM LIABILITY.—The maximum li-
ability of the Agency, acting as receiver or in any 
other capacity, to any person having a claim against 
the receiver or the regulated entity for which such 
receiver is appointed shall equal the lesser of— 
‘‘(A) the amount such claimant would have 
received if the Agency had liquidated the assets 
and liabilities of such regulated entity without 
exercising the authority of the Agency under 
subsection (i) of this section; or 
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236 
‘‘(B) the amount of proceeds realized from 
the performance of contracts or sale of the as-
sets of the regulated entity. 
‘‘(f) LIMITATION
ON COURT ACTION.—Except as 
provided in this section or at the request of the Director, 
no court may take any action to restrain or affect the exer-
cise of powers or functions of the Agency as a conservator 
or a receiver. 
‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 
‘‘(1) IN GENERAL.—A director or officer of a 
regulated entity may be held personally liable for 
monetary damages in any civil action by, on behalf 
of, or at the request or direction of the Agency, 
which action is prosecuted wholly or partially for the 
benefit of the Agency— 
‘‘(A) acting as conservator or receiver of 
such regulated entity, or 
‘‘(B) acting based upon a suit, claim, or 
cause of action purchased from, assigned by, or 
otherwise conveyed by such receiver or conser-
vator, 
for gross negligence, including any similar conduct 
or conduct that demonstrates a greater disregard of 
a duty of care (than gross negligence) including in-
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237 
tentional tortious conduct, as such terms are defined 
and determined under applicable State law. 
‘‘(2) NO LIMITATION.—Nothing in this para-
graph shall impair or affect any right of the Agency 
under other applicable law. 
‘‘(h) DAMAGES.—In any proceeding related to any 
claim against a director, officer, employee, agent, attorney, 
accountant, appraiser, or any other party employed by or 
providing services to a regulated entity, recoverable dam-
ages determined to result from the improvident or other-
wise improper use or investment of any assets of the regu-
lated entity shall include principal losses and appropriate 
interest. 
‘‘(i) LIMITED-LIFE REGULATED ENTITIES.— 
‘‘(1) ORGANIZATION.— 
‘‘(A) PURPOSE.—If a regulated entity is in 
default, or if the Agency anticipates that a reg-
ulated entity will default, the Agency may orga-
nize a limited-life regulated entity with those 
powers and attributes of the regulated entity in 
default or in danger of default that the Director 
determines necessary, subject to the provisions 
of this subsection. The Director shall grant a 
temporary charter to the limited-life regulated 
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238 
entity, and the limited-life regulated entity shall 
operate subject to that charter. 
‘‘(B) AUTHORITIES.—Upon the creation of 
a limited-life regulated entity under subpara-
graph (A), the limited-life regulated entity 
may— 
‘‘(i) assume such liabilities of the reg-
ulated entity that is in default or in danger 
of default as the Agency may, in its discre-
tion, determine to be appropriate, provided 
that the liabilities assumed shall not exceed 
the amount of assets of the limited-life reg-
ulated entity; 
‘‘(ii) purchase such assets of the regu-
lated entity that is in default, or in danger 
of default, as the Agency may, in its dis-
cretion, determine to be appropriate; and 
‘‘(iii) perform any other temporary 
function which the Agency may, in its dis-
cretion, prescribe in accordance with this 
section. 
‘‘(2) CHARTER.— 
‘‘(A) 
CONDITIONS.—The 
Agency 
may 
grant a temporary charter if the Agency deter-
mines that the continued operation of the regu-
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239 
lated entity in default or in danger of default 
is in the best interest of the national economy 
and the housing markets. 
‘‘(B) TREATMENT AS BEING IN DEFAULT 
FOR CERTAIN PURPOSES.—A limited-life regu-
lated entity shall be treated as a regulated enti-
ty in default at such times and for such pur-
poses as the Agency may, in its discretion, de-
termine. 
‘‘(C) MANAGEMENT.—A limited-life regu-
lated entity, upon the granting of its charter, 
shall be under the management of a board of 
directors consisting of not fewer than 5 nor 
more than 10 members appointed by the Agen-
cy. 
‘‘(D) BYLAWS.—The board of directors of 
a limited-life regulated entity shall adopt such 
bylaws as may be approved by the Agency. 
‘‘(3) CAPITAL STOCK.—No capital stock need 
be paid into a limited-life regulated entity by the 
Agency. 
‘‘(4) INVESTMENTS.—Funds of a limited-life 
regulated entity shall be kept on hand in cash, in-
vested in obligations of the United States or obliga-
tions guaranteed as to principal and interest by the 
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240 
United States, or deposited with the Agency, or any 
Federal Reserve bank. 
‘‘(5) EXEMPT
STATUS.—Notwithstanding any 
other provision of Federal or State law, the limited- 
life regulated entity, its franchise, property, and in-
come shall be exempt from all taxation now or here-
after imposed by the United States, by any territory, 
dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority. 
‘‘(6) WINDING UP.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), unless Congress authorizes the sale 
of the capital stock of the limited-life regulated 
entity, not later than 2 years after the date of 
its organization, the Agency shall wind up the 
affairs of the limited-life regulated entity. 
‘‘(B) EXTENSION.—The Director may, in 
the discretion of the Director, extend the status 
of the limited-life regulated entity for 3 addi-
tional 1-year periods. 
‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) TRANSFER OF ASSETS AND LI-
ABILITIES.—The Agency, as receiver, may 
transfer any assets and liabilities of a reg-
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241 
ulated entity in default, or in danger of de-
fault, to the limited-life regulated entity in 
accordance with paragraph (1). 
‘‘(ii) SUBSEQUENT
TRANSFERS.—At 
any time after a charter is transferred to 
a limited-life regulated entity, the Agency, 
as receiver, may transfer any assets and li-
abilities of such regulated entity in default, 
or in danger in default, as the Agency 
may, in its discretion, determine to be ap-
propriate in accordance with paragraph 
(1). 
‘‘(iii) 
EFFECTIVE
WITHOUT
AP-
PROVAL.—The transfer of any assets or li-
abilities of a regulated entity in default, or 
in danger of default, transferred to a lim-
ited-life regulated entity shall be effective 
without any further approval under Fed-
eral or State law, assignment, or consent 
with respect thereto. 
‘‘(8) PROCEEDS.—To the extent that available 
proceeds from the limited-life regulated entity exceed 
amounts required to pay obligations, such proceeds 
may be paid to the regulated entity in default, or in 
danger of default. 
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242 
‘‘(9) POWERS.— 
‘‘(A) IN GENERAL.—Each limited-life regu-
lated entity created under this subsection shall 
have all corporate powers of, and be subject to 
the same provisions of law as, the regulated en-
tity in default or in danger of default to which 
it relates, except that— 
‘‘(i) the Agency may— 
‘‘(I) remove the directors of a 
limited-life regulated entity; and 
‘‘(II) fix the compensation of 
members of the board of directors and 
senior management, as determined by 
the Agency in its discretion, of a lim-
ited-life regulated entity; 
‘‘(ii) the Agency may indemnify the 
representatives for purposes of paragraph 
(1)(B), and the directors, officers, employ-
ees, and agents of a limited-life regulated 
entity on such terms as the Agency deter-
mines to be appropriate; and 
‘‘(iii) the board of directors of a lim-
ited-life regulated entity— 
‘‘(I) shall elect a chairperson who 
may also serve in the position of chief 
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243 
executive officer, except that such per-
son shall not serve either as chair-
person or as chief executive officer 
without the prior approval of the 
Agency; and 
‘‘(II) may appoint a chief execu-
tive officer who is not also the chair-
person, except that such person shall 
not serve as chief executive officer 
without the prior approval of the 
Agency. 
‘‘(B) STAY OF JUDICIAL ACTION.—Any ju-
dicial action to which a limited-life regulated 
entity becomes a party by virtue of its acquisi-
tion of any assets or assumption of any liabil-
ities of a regulated entity in default shall be 
stayed from further proceedings for a period of 
up to 45 days at the request of the limited-life 
regulated entity. Such period may be modified 
upon the consent of all parties. 
‘‘(10) OBTAINING OF CREDIT AND INCURRING 
OF DEBT.— 
‘‘(A) IN GENERAL.—The limited-life regu-
lated entity may obtain unsecured credit and 
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244 
incur unsecured debt in the ordinary course of 
business. 
‘‘(B) INABILITY
TO
OBTAIN
CREDIT.—If 
the limited-life regulated entity is unable to ob-
tain unsecured credit the Director may author-
ize the obtaining of credit or the incurring of 
debt— 
‘‘(i) with priority over any or all ad-
ministrative expenses; 
‘‘(ii) secured by a lien on property 
that is not otherwise subject to a lien; or 
‘‘(iii) secured by a junior lien on prop-
erty that is subject to a lien. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN
GENERAL.—The Director, 
after notice and a hearing, may authorize 
the obtaining of credit or the incurring of 
debt secured by a senior or equal lien on 
property that is subject to a lien (other 
than mortgages that collateralize the mort-
gage-backed securities issued or guaran-
teed by the regulated entity) only if— 
‘‘(I) the limited-life regulated en-
tity is unable to obtain such credit 
otherwise; and 
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245 
‘‘(II) there is adequate protection 
of the interest of the holder of the lien 
on the property which such senior or 
equal lien is proposed to be granted. 
‘‘(ii) BURDEN
OF
PROOF.—In any 
hearing under this subsection, the Director 
has the burden of proof on the issue of 
adequate protection. 
‘‘(D) AFFECT ON DEBTS AND LIENS.—The 
reversal or modification on appeal of an author-
ization under this paragraph to obtain credit or 
incur debt, or of a grant under this section of 
a priority or a lien, does not affect the validity 
of any debt so incurred, or any priority or lien 
so granted, to an entity that extended such 
credit in good faith, whether or not such entity 
knew of the pendency of the appeal, unless such 
authorization and the incurring of such debt, or 
the granting of such priority or lien, were 
stayed pending appeal. 
‘‘(11) ISSUANCE OF PREFERRED DEBT.—A lim-
ited-life regulated entity may, subject to the ap-
proval of the Director and subject to such terms and 
conditions as the Director may prescribe, issue 
notes, bonds, or other debt obligations of a class to 
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246 
which all other debt obligations of the limited-life 
regulated entity shall be subordinate in right and 
payment. 
‘‘(12) NO FEDERAL STATUS.— 
‘‘(A) AGENCY STATUS.—A limited-life reg-
ulated entity is not an agency, establishment, or 
instrumentality of the United States. 
‘‘(B) 
EMPLOYEE
STATUS.—Representa-
tives for purposes of paragraph (1)(B), interim 
directors, directors, officers, employees, or 
agents of a limited-life regulated entity are not, 
solely by virtue of service in any such capacity, 
officers or employees of the United States. Any 
employee of the Agency or of any Federal in-
strumentality who serves at the request of the 
Agency as a representative for purposes of 
paragraph (1)(B), interim director, director, of-
ficer, employee, or agent of a limited-life regu-
lated entity shall not— 
‘‘(i) solely by virtue of service in any 
such capacity lose any existing status as 
an officer or employee of the United States 
for purposes of title 5, United States Code, 
or any other provision of law; or 
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