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SEC. 1502. CREDIT RISK RETENTION. 
(a) AMENDMENT.—The Securities Act of 1933 (15 
U.S.C. 77a et seq.) is amended by inserting after section 
28 the following new section: 
‘‘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 appropriate agencies shall 
prescribe regulations to require any creditor that 
makes a loan to retain an economic interest in a ma-
terial 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
ASSET- 
BACKED
SECURITIES.—The appropriate agencies 
shall prescribe regulations to require any securitizer 
of asset-backed securities 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 appropriate agencies may apply the 
risk retention requirements of this section to securitizers 
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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 make such loans or types of loans, if the 
agencies 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 
5 percent of the credit risk on any loan that is 
transferred, sold, or conveyed by such creditor or 
securitized by such securitizer except— 
‘‘(A) an appropriate agency may specify 
that the percentage of risk may be less than 5 
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percent of the credit risk, or exempt such cred-
itor or securitizer from the risk retention re-
quirement, if— 
‘‘(i) the credit underwriting by the 
creditor or the due diligence by the 
securitizer meets such standards as an ap-
propriate agency prescribes; and 
‘‘(ii) the loan that is transferred, sold, 
or conveyed by such creditor or securitized 
by such securitizer meets terms, condi-
tions, and characteristics that are deter-
mined by an appropriate agency to reflect 
loans with reduced credit risk, such as 
loans that meet certain interest rate 
thresholds, loans that are fully amortizing, 
and 
loans 
that 
are 
included 
in 
a 
securitization in which a third-party pur-
chaser specifically negotiates for the pur-
chase of the first-loss position and provides 
due diligence on all individual loans in the 
pool prior to the issuance of the asset- 
backed securities, and retains a first-loss 
position; and 
‘‘(B) an appropriate agency may specify 
that the percentage of risk may be more than 
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5 percent of the credit risk if the underwriting 
by the creditor or due diligence by the 
securitizer is insufficient; 
‘‘(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 appropriate agencies 
shall have authority to provide exemptions or adjust-
ments to the requirements of this section, including 
exemptions or adjustments relating to the percent-
age of risk retention required to be held and the 
hedging prohibition. 
‘‘(2) APPLICABLE
STANDARDS.—Any exemp-
tions or adjustments provided under paragraph (1) 
shall— 
‘‘(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-
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cess for consumers to credit on reasonable 
terms, or otherwise serve the public interest. 
‘‘(e) APPROPRIATE AGENCY DEFINED.—For pur-
poses of this section, the term ‘appropriate agency’ means 
any of the following agencies with regard to the respective 
loans and asset-backed securities: 
‘‘(1) BANKING AGENCIES.—The Federal bank-
ing agencies, the National Credit Union Administra-
tion Board, and the Commission, with respect to any 
loan or asset-backed security for which there is no 
appropriate agency under paragraph (2). 
‘‘(2) OTHER AGENCIES.— 
‘‘(A) With regard to any mortgage insured 
under title II of the National Housing Act, the 
Secretary of Housing and Urban Development. 
‘‘(B) With regard to any loan meeting the 
conforming loan standards of the Federal Na-
tional Mortgage Corporation or the Federal 
Home Loan Mortgage Corporation or any 
asset-backed security issued by either such cor-
poration, the Federal Housing Finance Agency. 
‘‘(C) With regard to any loan insured by 
the Rural Housing Service, the Rural Housing 
Service. 
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‘‘(f) JOINT APPROPRIATE AGENCY REGULATIONS.— 
All regulations prescribed by the agencies identified in 
subsection (e)(1) shall be prescribed jointly by such agen-
cies. 
‘‘(g) ENFORCEMENT.— 
‘‘(1) Compliance with the requirements imposed 
under this section 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 
section 25 or 25A of the Federal Reserve 
Act, bank holding companies, and subsidi-
aries of bank holding companies (other 
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than insured 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. 
‘‘(2) Except to the extent that enforcement of 
the requirements imposed under this section is spe-
cifically committed to some other Federal agency 
under paragraph (1), the Commission shall enforce 
such requirements. 
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‘‘(3) The authority of the Commission under 
this section shall be in addition to its existing au-
thority to enforce the securities laws. 
‘‘(h) EXCLUSIONS.—Notwithstanding any other pro-
vision of this section, the requirements of this section shall 
not apply to any loan— 
‘‘(1) insured, guaranteed, or administered by 
the Secretary of Education, the Secretary of Agri-
culture, the Secretary of Veterans Affairs, or the 
Small Business Administration; or 
‘‘(2) made, insured, guaranteed, or purchased 
by any person that is subject to the supervision of 
the Farm Credit Administration, including the Fed-
eral Agricultural Mortgage Corporation. 
‘‘(i) 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. 
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‘‘(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— 
‘‘(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.’’. 
(b) STUDY ON RISK RETENTION.— 
(1) STUDY.—The Board, in coordination and 
consultation with the Comptroller of the Currency, 
the Office of Thrift Supervision, the Federal Deposit 
Insurance Corporation, and the Securities and Ex-
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change Commission, shall conduct a study of the 
combined impact by each individual class of asset- 
backed security of— 
(A) the new credit risk retention require-
ments contained in the amendment made by 
subsection (a); and 
(B) the Financial Accounting Statements 
166 and 167 issued by the Financial Account-
ing Standards Board. 
(2) REPORT.—Not later than 90 days after the 
date of enactment of this title, the Board shall sub-
mit to Congress a report on the study conducted 
under paragraph (1). Such report shall include stat-
utory and regulatory recommendations for elimi-
nating any negative impacts on the continued viabil-
ity of the asset-backed securitization markets and on 
the availability of credit for new lending identified 
by the study conducted under paragraph (1). 
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 
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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 
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-
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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 
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. 
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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 
(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)’’. 
SEC. 1506. STUDY ON THE MACROECONOMIC EFFECTS OF 
RISK RETENTION REQUIREMENTS. 
(a) STUDY REQUIRED.—The Chairman of the Finan-
cial Services Oversight Council shall carry out a study on 
the macroeconomic effects of the risk retention require-
ments under this subtitle, and the amendments made by 
this subtitle, with emphasis placed on potential beneficial 
effects with respect to stabilizing the real estate market. 
Such study shall include— 
(1) an analysis of the effects of risk retention 
on real estate asset price bubbles, including a retro-
spective estimate of what fraction of real estate 
losses may have been averted had such requirements 
been in force in recent years; 
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(2) an analysis of the feasibility of minimizing 
real estate price bubbles by proactively adjusting the 
percentage of risk retention that must be borne by 
creditors and securitizers of real estate debt, as a 
function of regional or national market conditions; 
(3) a comparable analysis for proactively ad-
justing mortgage origination requirements; 
(4) an assessment of whether such proactive ad-
justments should be made by an independent regu-
lator, or in a formulaic and transparent manner; 
(5) an assessment of whether such adjustments 
should take place independently or in concert with 
monetary policy; and 
(6) recommendations for implementation and 
enabling legislation. 
(b) REPORT.—Not later than the end of the 180-day 
period beginning on the date of the enactment of this title, 
the Chairman of the Financial Services Oversight Council 
shall issue a report to the Congress containing any find-
ings and determinations made in carrying out the study 
required under subsection (a). 
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Subtitle G—Enhanced Dissolution 
Authority 
SEC. 1601. SHORT TITLE; PURPOSE. 
(a) SHORT TITLE.—This subtitle may be cited as the 
‘‘Dissolution Authority for Large, Interconnected Finan-
cial Companies Act of 2009’’. 
(b) PURPOSE.—The purpose of this subtitle is to pro-
tect the financial system of the United States in times of 
severe crisis by providing for the orderly resolution of 
large, interconnected financial companies whose failure 
could create, or increase, the risk of significant liquidity, 
credit, or other financial problems spreading among finan-
cial institutions or markets and thereby threaten the sta-
bility of the overall financial system of the United States. 
There shall be a strong presumption that resolution under 
the bankruptcy laws will remain the primary method of 
resolving financial companies, and the authorities con-
tained in this subtitle will only be used in the most exigent 
circumstances. 
SEC. 1602. DEFINITIONS. 
For purposes of this subtitle, the following definitions 
shall apply: 
(1) APPROPRIATE REGULATORY AGENCY.— 
(A) CORPORATION AND COMMISSION.—The 
term ‘‘appropriate regulatory agency’’ means— 
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(i) the Corporation; 
(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-
ties Exchange Act of 1934 (15 U.S.C. 
78o(b) (other than an insured depository 
institution)); and 
(iii) if the financial company or an af-
filiate of the financial company is an insur-
ance company (other than an insured de-
pository institution), the applicable State 
insurance authority of the State in which 
the insurance company is domiciled. 
(B) RULES
OF
CONSTRUCTION.—More 
than 1 agency may be an appropriate regu-
latory agency with respect to any given finan-
cial company. In such instances, the Commis-
sion shall be the appropriate regulatory agency 
for purposes of section 1603 if the largest sub-
sidiary of the financial company is a broker or 
dealer as measured by total assets as of the end 
of the previous calendar quarter, the applicable 
State insurance authority of the State in which 
the insurance company is domiciled shall be the 
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appropriate regulatory agency for purposes of 
section 1603 if the financial company is an in-
surance company or if the largest subsidiary of 
the financial company is an insurance company 
as measured by total assets as of the end of the 
previous calendar quarter, and otherwise the 
Corporation shall be the appropriate 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-
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)(v). 
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(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; 
(B) is— 
(i) any bank holding company as de-
fined in section 2(a) of the Bank Holding 
Company 
Act 
of 
1956 
(12 
U.S.C. 
1841(a)); 
(ii) any company that has been sub-
jected to stricter prudential regulation 
under section 1103; 
(iii) any insurance company; 
(iv) any company predominantly en-
gaged in activities that are financial in na-
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 activi-
ties that have been identified for stricter 
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prudential standards under section 1103 of 
this title; or 
(v) any subsidiary of companies de-
scribed in clauses (i) through (iv) (other 
than an insured depository institution or 
any broker or dealer registered with the 
Commission under section 15(b) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 
78o(b)) that is a member of the Securities 
Investor Protection Corporation); 
(C) that is not a Farm Credit System in-
stitution chartered under and subject to the 
provisions of the Farm Credit Act of 1971, as 
amended (12 U.S.C. 2001 et seq.); 
(D) that is not a Federal home loan bank, 
the Federal National Mortgage Association, or 
the Federal Home Loan Mortgage Corporation; 
and 
(E) is not an insured depository institution 
(as defined in section 3(c) of the Federal De-
posit Insurance act), a Federal credit union or 
a State-chartered credit union (as such terms 
are defined in section 101 of the Federal Credit 
Union Act), or a government-sponsored enter-
prise (as such term is defined in section 1004(f) 
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of the Financial Institutions Reform, Recovery 
and Enforcement Act of 1989 (12 U.S.C. 1811 
note)). 
(10) FUND.—The term ‘‘Fund’’ means the Sys-
temic Dissolution Fund established in accordance 
with section 1609(n). 
(11) INSURANCE COMPANY.—The term ‘‘insur-
ance company’’ means any entity covered by a State 
law designed specifically to deal with the rehabilita-
tion, liquidation, or insolvency of an insurance com-
pany. 
(12) SECRETARY.—The term ‘‘Secretary’’ shall 
mean the Secretary of the Treasury. 
(13) 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. 
(14) 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). 
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SEC. 1603. SYSTEMIC RISK DETERMINATION. 
(a) WRITTEN RECOMMENDATION OF THE FEDERAL 
RESERVE BOARD AND THE APPROPRIATE REGULATORY 
AGENCY.— 
(1) VOTE REQUIRED.— 
(A) IN GENERAL.—At the request of the 
Secretary, the Chairman of the Federal Reserve 
Board, or the appropriate regulatory agency, 
the Board and the appropriate regulatory agen-
cy shall, or on their own initiative the Board 
and the appropriate regulatory agency may, 
consider whether to make the written rec-
ommendation provided for in paragraph (2) 
with respect to a financial company. 
(B) TWO-THIRDS AGREEMENT.—Any rec-
ommendation under subparagraph (A) shall be 
made upon a vote of not less than two-thirds of 
the members of the Federal Reserve Board then 
serving and not less than two thirds of any 
members of the board or commission then serv-
ing of the appropriate regulatory agency, as ap-
plicable. 
(2) RECOMMENDATION REQUIRED.—Any writ-
ten recommendations made by the Federal Reserve 
Board and the appropriate regulatory agency under 
paragraph (1) shall contain the following: 
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(A) A description of the effect that the de-
fault of the financial company would have on 
economic conditions or financial stability in the 
United States. 
(B) A description of the effect that the de-
fault of the financial company would have on 
economic conditions or financial stability for 
low-income, minority, or underserved commu-
nities. 
(C) A recommendation regarding the na-
ture and the extent of actions that the Board 
and the appropriate regulatory agency rec-
ommend be taken under section 1604 regarding 
the financial company. 
(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 appropriate regulatory 
agency as provided for in subsection (a)(1), the Secretary 
(in consultation with the President) determines that— 
(1) the financial company is in default or is in 
danger of default; 
(2) the failure of the financial company and its 
dissolution under otherwise applicable Federal or 
State law would have serious adverse effects on fi-
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nancial 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 
shareholders in the financial company, 
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 1 or more 
actions specified in section 1604(c) in accordance with the 
requirements of that subsection, except that, prior to the 
Secretary or Corporation taking any action under section 
1604, the Federal Reserve Board or the appropriate Fed-
eral regulatory agency shall take action to avoid or miti-
gate potential adverse effects on low-income, minority, or 
underserved communities affected by the failure of such 
financial company. 
(c) DOCUMENTATION AND REVIEW.— 
(1) IN GENERAL.—The Secretary shall— 
(A) document any determination under 
subsection (b); and 
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(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 financial companies and their creditors, 
counterparties, and shareholders. 
(3) REPORT TO CONGRESS.—Within 48 hours 
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 and the Committee on the Judici-
ary of the Senate and the Committee on Financial 
Services and the Committee on the Judiciary of the 
House of Representatives. The notice shall include a 
description of the basis for the determination. 
(d) DEFAULT OR IN DANGER OF DEFAULT.—For 
purposes of subsection (b), a financial company shall be 
considered to be in default or in danger of default if any 
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of the following conditions exist, as determined in accord-
ance with that subsection: 
(1) A case has been, or likely will promptly be, 
commenced with respect to the financial company 
under title 11, United States Code. 
(2) The financial company is critically under-
capitalized, as such term has been or may be defined 
by the Federal Reserve Board. 
(3) The financial company has incurred, or is 
likely to incur, losses that will deplete all or substan-
tially all of its capital, and there is no reasonable 
prospect for the company to avoid such depletion 
without assistance under section 1604. 
(4) The assets of the financial company are, or 
are likely to be, less than its obligations to creditors 
and others. 
(5) The financial company is, or is likely to be, 
unable to pay its obligations (other than those sub-
ject to a bona fide dispute) in the normal course of 
business. 
SEC. 1604. DISSOLUTION; STABILIZATION. 
(a) APPOINTMENT OF RECEIVER.— 
(1) IN GENERAL.—Upon the Secretary making 
a determination in accordance with section 1603(b), 
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the Secretary shall appoint the Corporation as re-
ceiver for the covered financial company. 
(2) TIME
LIMIT
ON
RECEIVERSHIP
AUTHOR-
ITY.—Any appointment of the Corporation as re-
ceiver under paragraph (1) shall terminate on the 
date that is the end of the 1-year period beginning 
on the date such appointment is made. 
(3) EXTENSION
OF
TIME
LIMIT.—The time 
limit established in paragraph (2) may be extended 
by the Secretary for up to 1 additional year if— 
(A) the Corporation has not completed the 
dissolution of the company within the time pro-
vided in paragraph (2); and 
(B) the Secretary certifies in writing that 
continuation of the receivership is necessary— 
(i) to protect the best interests of the 
taxpayers of the United States; and 
(ii) to protect the stability of the fi-
nancial system and the economy of the 
United States. 
(4) FURTHER EXTENSION.—The time limit, as 
extended in paragraph (3), may be extended for up 
to 1 additional year if— 
(A) the conditions of paragraph (3) are 
met; and 
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(B) the Corporation submits a report to 
the Congress, no later than 60 days before the 
receivership will expire under the extended limit 
under paragraph (3), that describes in detail— 
(i) the basis for the determination by 
the Corporation that a second extension is 
necessary; and 
(ii) the specific plan of the Corpora-
tion for concluding the receivership before 
the end of the proposed additional year. 
(b) DISSOLUTION LIMITATIONS.— 
(1) IN GENERAL.—An insolvent financial com-
pany may be dissolved under this subtitle only if the 
failure and dissolution of such company under title 
11, United States Code, would be systemically desta-
bilizing, as determined by the appropriate Federal 
regulatory agencies and the Secretary of the Treas-
ury (in consultation with the President) in accord-
ance with section 1603(b). 
(2) LIQUIDATION.—A financial company that 
comes within coverage of this subtitle for dissolution 
shall be placed in liquidation, and the associated liq-
uidation costs shall be paid from the company’s as-
sets and borne by the shareholders and unsecured 
creditors of such company. 
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(3) ASSESSMENT
FOR
EXCESS
LIQUIDATION 
COSTS.—Any liquidation costs that exceed the 
amount of liquidated assets of the company shall be 
paid through assessments on large financial compa-
nies. 
(c) CONSULTATION.—The Corporation, as receiver— 
(1) shall consult with the regulators of the cov-
ered financial company and its covered subsidiaries 
for purposes of ensuring an orderly dissolution of 
the covered financial company; 
(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 dissolution 
process; 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)(v) and coordinate with such regu-
lators regarding the treatment of such solvent sub-
sidiaries and the separate dissolution of any such in-
solvent subsidiaries under other governmental au-
thority, as appropriate. 
(d) EMERGENCY STABILIZATION AFTER APPOINT-
MENT OF RECEIVER.—Upon the Secretary appointing the 
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Corporation as receiver under subsection (a), the Corpora-
tion may, in its corporate capacity and as an agency of 
the United States, with the approval of the Secretary and 
subject to the conditions in subsections (f) through (g), 
take the following actions under such terms and conditions 
that the Corporation and the Secretary jointly deem ap-
propriate: 
(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) 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. 
(5) Selling or transferring all, or any part 
thereof, of such acquired assets, liabilities, or obliga-
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tions of the covered financial company or any cov-
ered subsidiary. 
(e) TREATMENT OF INSURANCE COMPANIES AND IN-
SURANCE COMPANY SUBSIDIARIES.— 
(1) IN GENERAL.—Notwithstanding subsection 
(a), if an insurance company covered by a State law 
designed specifically to deal with the rehabilitation, 
liquidation or insolvency of an insurance company is 
a covered financial company or a subsidiary of a cov-
ered financial company, resolution of such insurance 
company, and any subsidiary of such company, will 
be conducted as provided under such State law. 
(2) EXCEPTION FOR COVERED SUBSIDIARIES.— 
The requirement of paragraph (1) shall not apply 
with respect to any covered subsidiary of such an in-
surance company, that is not itself an insurance 
company. 
(3) 
BACKUP
AUTHORITY.—Notwithstanding 
paragraph (1), with respect to a covered financial 
company described under paragraph (1), if, after the 
end of the 60-day period beginning on the date a de-
termination is made under section 1603(b) with re-
spect to such company, the appropriate regulatory 
agency has not filed the appropriate judicial action 
in the appropriate State court to place such com-
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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 
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 
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