206 
other assets of the issuer. A separate estate shall be 
created for each affected covered bond program. 
(2) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (1) shall be com-
prised of the cover pool (including over-collateraliza-
tion in the cover pool) that secures the covered bond. 
The cover pool shall be immediately and automati-
cally released to and held by the estate free and 
clear of any right, title, interest, or claim of the 
issuer or any conservator, receiver, liquidating agent, 
or trustee in bankruptcy for the issuer or any other 
assets of the issuer. The estate shall be fully liable 
on the covered bond and all other covered bonds and 
related obligations of the issuer (including obliga-
tions under related derivative transactions) that are 
secured by a perfected security interest in or other 
perfected lien on the cover pool when the estate is 
created. The estate shall not be liable on any obliga-
tion of the issuer that is not secured by a perfected 
security interest in or other perfected lien on the 
cover pool when the estate is created. No conser-
vator, receiver, liquidating agent, or trustee in bank-
ruptcy for the issuer may charge or assess the estate 
for any claim of the conservator, receiver, liquidating 
agent, or trustee in bankruptcy or the conservator-
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207 
ship, receivership, liquidating agency, or estate in 
bankruptcy and may not obtain or perfect a security 
interest in or other lien on the cover pool to secure 
such a claim. 
(3) RETENTION OF CLAIMS.—Any holder of a 
covered bond or related obligation for which an es-
tate has become liable under paragraph (2) shall re-
tain a claim against the issuer for any deficiency 
with respect to the covered bond or related obliga-
tion. If the issuer enters conservatorship, receiver-
ship, liquidation, or bankruptcy, any contingent 
claim for such a deficiency shall be allowed as a 
provable claim in the conservatorship, receivership, 
liquidating agency, or bankruptcy case. The contin-
gent claim shall be estimated by the conservator, re-
ceiver, liquidating agent, or bankruptcy court for 
purposes of allowing the claim as a provable claim 
if awaiting the fixing of the contingent claim would 
unduly delay the resolution of the conservatorship, 
receivership, liquidating agency, or bankruptcy case. 
(4) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(1), a residual interest in the estate shall be im-
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208 
mediately and automatically issued by operation 
of law to the issuer. 
(B) NATURE
OF
RESIDUAL
INTEREST.— 
The residual interest under subparagraph (A) 
shall— 
(i) be an exempted security as de-
scribed in section 355; 
(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(5) OBLIGATIONS OF ISSUER.— 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (1), the issuer shall— 
(i) transfer to or at the direction of 
the trustee for the estate all property of 
the estate that is in the possession or 
under the control of the issuer, including 
all tangible or electronic books, records, 
files, and other documents or materials re-
lating to the assets and liabilities of the es-
tate; and 
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209 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, 
continue servicing the applicable cover pool 
for 120 days after the creation of the es-
tate in return for a fair-market-value fee, 
as determined by the trustee in consulta-
tion with the applicable covered bond regu-
lator, that shall be payable from the estate 
as an administrative expense. 
(B) 
OBLIGATIONS
ABSOLUTE.—Neither 
the issuer, whether acting as debtor in posses-
sion or in any other capacity, nor any conser-
vator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of 
the issuer may disaffirm, repudiate, or reject 
the obligation to turn over property or to con-
tinue servicing the cover pool as provided in 
subparagraph (A). 
(c) DEFAULT
ON COVERED BONDS UPON CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CORPORATION
CONSERVATORSHIP
OR
RE-
CEIVERSHIP.— 
(A) IN GENERAL.—If the Corporation is 
appointed as conservator or receiver for an 
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210 
issuer of covered bonds before an uncured de-
fault results in the creation of an estate under 
subsection (b), the Corporation as conservator 
or receiver shall have an exclusive right, during 
the 1-year period beginning on the date of the 
appointment, to transfer any cover pool owned 
by the issuer in its entirety, together with all 
covered bonds and related obligations that are 
secured by a perfected security interest in or 
other perfected lien on the cover pool, to an-
other eligible issuer that meets all conditions 
and requirements specified in the related trans-
action documents. The Corporation as conser-
vator or receiver may not remove any asset 
from the cover pool, except to the extent other-
wise agreed by a transferee that has assumed 
the covered bond program pursuant to subpara-
graph (C). 
(B) OBLIGATIONS
DURING
1-YEAR
PE-
RIOD.—During the 1-year period described in 
subparagraph (A), the Corporation as conser-
vator or receiver shall fully and timely satisfy 
all monetary and nonmonetary obligations of 
the issuer under all covered bonds and the re-
lated transaction documents and shall fully and 
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211 
timely cure all defaults by the issuer (other 
than its conservatorship or receivership) under 
the applicable covered bond program, in each 
case, until the earlier of— 
(i) the transfer of the applicable cov-
ered bond program to another eligible 
issuer as provided in subparagraph (A); or 
(ii) the delivery to the Secretary, the 
applicable covered bond regulator, the ap-
plicable indenture trustee, and the applica-
ble covered bondholders of a written notice 
from the Corporation as conservator or re-
ceiver electing to cease further perform-
ance under the applicable covered bond 
program. 
(C) ASSUMPTION BY TRANSFEREE.—If the 
Corporation as conservator or receiver transfers 
a covered bond program to another eligible 
issuer within the 1-year period as provided in 
subparagraph (A), the transferee shall take 
ownership of the applicable cover pool and shall 
become fully liable on all covered bonds and re-
lated obligations of the issuer that are secured 
by a perfected security interest in or other per-
fected lien on the cover pool. 
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212 
(2) OTHER CIRCUMSTANCES.—An estate shall 
be immediately and automatically created by oper-
ation of law and shall exist and be administered sep-
arate and apart from an issuer of covered bonds and 
any conservatorship, receivership, liquidating agency, 
or estate in bankruptcy for the issuer or any other 
assets of the issuer, if— 
(A) a conservator, receiver, liquidating 
agent, or trustee in bankruptcy, other than the 
Corporation, is appointed for the issuer before 
an uncured default results in the creation of an 
estate under subsection (b); or 
(B) in the case of the appointment of the 
Corporation as conservator or receiver as de-
scribed in paragraph (1)(A), the Corporation as 
conservator or receiver— 
(i) does not complete the transfer of 
the applicable covered bond program to an-
other eligible issuer within the 1-year pe-
riod as provided in paragraph (1)(A); 
(ii) delivers to the Secretary, the ap-
plicable covered bond regulator, the appli-
cable indenture trustee, and the applicable 
covered bondholders a written notice elect-
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213 
ing to cease further performance under the 
applicable covered bond program; or 
(iii) fails to fully and timely satisfy all 
monetary and nonmonetary obligations of 
the issuer under the covered bonds and the 
related transaction documents or to fully 
and timely cure all defaults by the issuer 
(other than its conservatorship or receiver-
ship) under the applicable covered bond 
program. 
A separate estate shall be created for each affected 
covered bond program. 
(3) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (2) shall be com-
prised of the cover pool (including over-collateraliza-
tion in the cover pool) that secures the covered 
bonds. The cover pool shall be immediately and 
automatically released to and held by the estate free 
and clear of any right, title, interest, or claim of the 
issuer or any conservator, receiver, liquidating agent, 
or trustee in bankruptcy for the issuer or any other 
assets of the issuer. The estate shall be fully liable 
on the covered bonds and all other covered bonds 
and related obligations of the issuer (including obli-
gations under related derivative transactions) that 
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214 
are secured by a perfected security interest in or 
other perfected lien on the cover pool when the es-
tate is created. The estate shall not be liable on any 
obligation of the issuer that is not secured by a per-
fected security interest in or other perfected lien on 
the cover pool when the estate is created. No conser-
vator, receiver, liquidating agent, or trustee in bank-
ruptcy for the issuer may charge or assess the estate 
for any claim of the conservator, receiver, liquidating 
agent, or trustee in bankruptcy or the conservator-
ship, receivership, liquidating agency, or estate in 
bankruptcy and may not obtain or perfect a security 
interest in or other lien on the cover pool to secure 
such a claim. 
(4) CONTINGENT CLAIM.—Any contingent claim 
against an issuer for a deficiency with respect to a 
covered bond or related obligation for which an es-
tate has become liable under paragraph (3) shall be 
allowed as a provable claim in the conservatorship, 
receivership, liquidating agency, or bankruptcy case 
for the issuer. The contingent claim shall be esti-
mated by the conservator, receiver, liquidating 
agent, or bankruptcy court for purposes of allowing 
the claim as a provable claim if awaiting the fixing 
of the contingent claim would unduly delay the reso-
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215 
lution of the conservatorship, receivership, liqui-
dating agency, or bankruptcy case. 
(5) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(2), and regardless of whether any contingent 
claim described in paragraph (4) becomes fixed 
or is estimated, a residual interest in the estate 
shall be immediately and automatically issued 
by operation of law to the conservator, receiver, 
liquidating agent, or trustee in bankruptcy for 
the issuer. 
(B) NATURE
OF
RESIDUAL
INTEREST.— 
The residual interest under subparagraph (A) 
shall— 
(i) be an exempted security as de-
scribed in section 355; 
(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(6) OBLIGATIONS OF ISSUER.— 
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216 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (2), the issuer and its 
conservator, receiver, liquidating agent, or 
trustee in bankruptcy shall— 
(i) transfer to or at the direction of 
the trustee for the estate all property of 
the estate that is in the possession or 
under the control of the issuer or its con-
servator, receiver, liquidating agent, or 
trustee in bankruptcy, including all tan-
gible or electronic books, records, files, and 
other documents or materials relating to 
the assets and liabilities of the estate; and 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, 
continue servicing the applicable cover pool 
for 120 days after the creation of the es-
tate in return for a fair-market-value fee, 
as determined by the trustee in consulta-
tion with the applicable covered bond regu-
lator, that shall be payable from the estate 
as an administrative expense. 
(B) 
OBLIGATIONS
ABSOLUTE.—Neither 
the issuer, whether acting as debtor in posses-
sion or in any other capacity, nor any conser-
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emcdonald on DSK67QTVN1PROD with BILLS
217 
vator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of 
the issuer may disaffirm, repudiate, or reject 
the obligation to turn over property or to con-
tinue servicing the cover pool as provided in 
subparagraph (A). 
(d) ADMINISTRATION
AND RESOLUTION
OF ES-
TATES.— 
(1) 
TRUSTEE, 
SERVICER, 
AND
ADMINIS-
TRATOR.— 
(A) IN GENERAL.—Upon the creation of 
any estate under subsection (b)(1) or (c)(2), the 
applicable covered bond regulator shall— 
(i) appoint the trustee for the estate; 
(ii) appoint 1 or more servicers or ad-
ministrators for the cover pool held by the 
estate; and 
(iii) give the Secretary, the applicable 
indenture trustee, the applicable covered 
bondholders, and the owner of the residual 
interest written notice of the creation of 
the estate. 
(B) TERMS AND CONDITIONS OF APPOINT-
MENT.—All terms and conditions of any ap-
pointment under paragraph (1), including the 
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218 
terms and conditions relating to compensation, 
shall conform to the requirements of this sub-
title and the oversight program and otherwise 
shall be determined by the applicable covered 
bond regulator. 
(C) QUALIFICATION.—The applicable cov-
ered bond regulator may require the trustee or 
any servicer or administrator for an estate to 
post in favor of the United States, for the ben-
efit of the estate, a bond that is conditioned on 
the faithful performance of the duties of the 
trustee or the servicer or administrator. The 
covered bond regulator shall determine the 
amount of any bond required under this sub-
paragraph and the sufficiency of the surety on 
the bond. A proceeding on a bond required 
under this subparagraph may not be com-
menced after two years after the date on which 
the trustee or the servicer or administrator was 
discharged. 
(D) POWERS AND DUTIES OF TRUSTEE.— 
The trustee for an estate is the representative 
of the estate and, subject to the provisions of 
this subtitle, has capacity to sue and be sued. 
The trustee shall— 
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219 
(i) administer the estate in compliance 
with this subtitle, the oversight program, 
and the related transaction documents; 
(ii) be accountable for all property of 
the estate that is received by the trustee; 
(iii) make a final report and file a 
final account of the administration of the 
estate with the applicable covered bond 
regulator; and 
(iv) after the estate has been fully ad-
ministered, close the estate. 
(E) POWERS AND DUTIES OF SERVICER OR 
ADMINISTRATOR.—Any servicer or adminis-
trator for an estate— 
(i) shall— 
(I) collect, realize on (by liquida-
tion or other means), and otherwise 
manage the cover pool held by the es-
tate for the purpose of winding down 
the related cover bond program in 
compliance with this subtitle, the 
oversight program, and the related 
transaction documents and in a man-
ner consistent with maximizing the 
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emcdonald on DSK67QTVN1PROD with BILLS
220 
value and the proceeds of the cover 
pool; 
(II) deposit or invest all proceeds 
and funds received in compliance with 
this subtitle, the oversight program, 
and the related transaction documents 
and in a manner consistent with maxi-
mizing the net return to the estate, 
taking into account the safety of the 
deposit or investment; and 
(III) apply, or direct the trustee 
for the estate to apply, all proceeds 
and funds received and the net return 
on any deposit or investment to make 
distributions in compliance with para-
graphs (3) and (4); 
(ii) may borrow funds or otherwise ob-
tain credit, for the benefit of the estate, in 
compliance with paragraph (2) on a se-
cured or unsecured basis and on a priority, 
pari passu, or subordinated basis; 
(iii) shall, at the times and in the 
manner required by the applicable covered 
bond regulator, submit to the covered bond 
regulator, the Secretary, the applicable in-
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emcdonald on DSK67QTVN1PROD with BILLS
221 
denture trustee, the applicable covered 
bondholders, the owner of the residual in-
terest, and any other person designated by 
the covered bond regulator, reports that 
describe the activities of the servicer or ad-
ministrator on behalf of the estate, the 
performance of the cover pool held by the 
estate, and distributions made by the es-
tate; and 
(iv) shall assist the trustee in pre-
paring the final report and the final ac-
count of the administration of the estate. 
(F) SUPERVISION OF TRUSTEE, SERVICER, 
AND ADMINISTRATOR.—The applicable covered 
bond regulator shall supervise the trustee and 
any servicer or administrator for an estate. The 
covered bond regulator shall require that all re-
ports submitted under subparagraph (E)(iii) do 
not contain any untrue statement of a material 
fact and do not omit to state a material fact 
necessary in order to make the statements 
made, in light of the circumstances under which 
they are made, not misleading. 
(G) REMOVAL
AND
REPLACEMENT
OF 
TRUSTEE, SERVICER, AND ADMINISTRATOR.—If 
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222 
the covered bond regulator determines that it is 
in the best interests of an estate, the covered 
bond regulator may remove or replace the trust-
ee or any servicer or administrator for the es-
tate. The removal of the trustee or any servicer 
or administrator does not abate any pending ac-
tion or proceeding involving the estate, and any 
successor or other trustee, servicer, or adminis-
trator shall be substituted as a party in the ac-
tion or proceeding. 
(H) PROFESSIONALS.—The trustee or any 
servicer or administrator for an estate may em-
ploy 1 or more attorneys, accountants, apprais-
ers, auctioneers, or other professional persons 
to represent or assist the trustee or the servicer 
or administrator in carrying out its duties. The 
employment of any professional person and all 
terms and conditions of employment, including 
the terms and conditions relating to compensa-
tion, shall conform to the requirements of this 
subtitle and the oversight program and other-
wise shall be subject to the approval of the ap-
plicable covered bond regulator. 
(I) APPROVED FEES AND EXPENSES.—Un-
less otherwise provided in the applicable terms 
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223 
and conditions of appointment or employment, 
all approved fees and expenses of the trustee, 
any servicer or administrator, or any profes-
sional person employed by the trustee or any 
servicer or administrator shall be payable from 
the estate as administrative expenses. 
(J) ACTIONS BY OR ON BEHALF OF ES-
TATE.—The trustee or any servicer or adminis-
trator for an estate may commence or continue 
judicial, administrative, or other actions, in the 
name of the estate or in its own name on behalf 
of the estate, for the purpose of collecting, real-
izing on, or otherwise managing the cover pool 
held by the estate or exercising its other powers 
or duties on behalf of the estate. 
(K) ACTIONS AGAINST ESTATE.—No court 
may issue an attachment or execution on any 
property of an estate. Except at the request of 
the applicable covered bond regulator or as oth-
erwise provided in this subparagraph or sub-
paragraph (J), no court may take any action to 
restrain or affect the resolution of an estate 
under this subtitle. No person (including the 
applicable indenture trustee and any applicable 
covered bondholder) may commence or continue 
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224 
any judicial, administrative, or other action 
against the estate, the trustee, or any servicer 
or administrator or take any other act to affect 
the estate, the trustee, or any servicer or ad-
ministrator that is not expressly permitted by 
this subtitle, the oversight program, and the re-
lated transaction documents, except for a judi-
cial or administrative action to compel the re-
lease of funds that— 
(i) are available to the estate; 
(ii) are permitted to be distributed 
under this subtitle and the oversight pro-
gram; and 
(iii) are permitted and required to be 
distributed under the related transaction 
documents and any contracts executed by 
or on behalf of the estate. 
(L) SOVEREIGN
IMMUNITY.—Except in 
connection with a guarantee provided under 
paragraph (4) or any other contract executed 
by the applicable covered bond regulator under 
this section 354, the Secretary and the covered 
bond regulator shall be entitled to sovereign im-
munity in carrying out the provisions of this 
subtitle. 
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225 
(2) BORROWINGS AND CREDIT.— 
(A) IN GENERAL.—Any servicer or admin-
istrator for an estate created under subsection 
(b)(1) or (c)(2) may borrow funds or otherwise 
obtain credit, on behalf of and for the benefit 
of the estate, from any person in compliance 
with this paragraph (2) solely for the purpose 
of providing liquidity in the case of timing 
mismatches among the assets and the liabilities 
of the estate. Except with respect to an under-
writer, section 5 of the Securities Act of 1933, 
the Trust Indenture Act of 1939, and any State 
or local law requiring registration for an offer 
or sale of a security or registration or licensing 
of an issuer of, underwriter of, or broker or 
dealer in a security does not apply to the offer 
or sale under this paragraph (2) of a security 
that is not an equity security. 
(B) CONDITIONS.—A servicer or adminis-
trator may borrow funds or otherwise obtain 
credit under subparagraph (A)— 
(i) on terms affording the lender only 
claims or liens that are fully subordinated 
to the claims and interests of the applica-
ble indenture trustee and the applicable 
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226 
covered bondholders and all other claims 
against and interests in the estate, except 
for the residual interest, if the servicer or 
administrator certifies to the applicable 
covered bond regulator that, in the busi-
ness judgment of the servicer or adminis-
trator, the borrowing or credit is in the 
best interests of the estate and is expected 
to maximize the value and the proceeds of 
the cover pool held by the estate; or 
(ii) on terms affording the lender 
claims or liens that have priority over or 
are pari passu with the claims or interests 
of the applicable indenture trustee or the 
applicable covered bondholders or other 
claims against or interests in the estate, 
if— 
(I) the servicer or administrator 
certifies to the applicable covered 
bond regulator that, in the business 
judgment of the servicer or adminis-
trator, the borrowing or credit is in 
the best interests of the estate and is 
expected to maximize the value and 
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227 
the proceeds of the cover pool held by 
the estate; and 
(II) the applicable covered bond 
regulator authorizes the borrowing or 
credit. 
(C) LIMITED LIABILITY.—A servicer or ad-
ministrator shall not be liable for any error in 
business judgment when borrowing funds or 
otherwise obtaining credit under this paragraph 
(2) unless the servicer or administrator acted in 
bad faith or in willful disregard of its duties. 
(D) LIMITS ON BORROWINGS AND CRED-
IT.—Funds may not be borrowed or credit oth-
erwise obtained under subparagraph (A)— 
(i) for the purpose of investing in ad-
ditional portfolios of eligible assets through 
the issuance of new covered bonds; or 
(ii) otherwise for a purpose other than 
winding down the related covered bond 
program in compliance with this Act, the 
oversight program, and the related trans-
action documents. 
(E) STUDY ON BORROWINGS AND CRED-
IT.—The Comptroller General of the United 
States shall conduct a study on whether the 
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228 
Federal reserve banks should be authorized to 
lend funds or otherwise extend credit to an es-
tate under this paragraph (2) and, if so, what 
conditions and limits should be established to 
mitigate any risk that the United States Gov-
ernment could absorb credit losses on the cover 
pool held by the estate. The Comptroller Gen-
eral shall submit a report to the Committee on 
Banking, Housing, and Urban Affairs of the 
Senate and the Committee on Financial Serv-
ices of the House of Representatives on the re-
sults of the study not later than 6 months after 
the date of enactment of this Act. 
(3) DISTRIBUTIONS BY ESTATE.—All payments 
or other distributions by an estate shall be made at 
the times, in the amounts, and in the manner set 
forth in the covered bonds, the related transaction 
documents, and any contracts executed by or on be-
half of the estate in compliance with this subtitle 
and the oversight program. To the extent that the 
relative priority of the liabilities of the estate are not 
specified in or otherwise ascertainable from their 
terms, distributions shall be made on each distribu-
tion date under the covered bonds, the related trans-
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229 
action documents, or any contracts executed by or 
on behalf of the estate— 
(A) first, to pay accrued and unpaid super-
priority claims under paragraph (2)(B)(ii); 
(B) second, to pay accrued and unpaid ad-
ministrative expense claims under paragraph 
(1)(I), 
paragraph 
(2)(B)(ii), 
section 
354(b)(5)(A), or section 354(c)(6)(A); 
(C) third, to pay— 
(i) accrued and unpaid claims under 
the covered bonds and the related trans-
action documents according to their terms; 
and 
(ii) accrued and unpaid pari passu 
claims under paragraph (2)(B)(ii); and 
(D) fourth, to pay accrued and unpaid 
subordinated claims under paragraph (2)(B)(i). 
(4) DISTRIBUTIONS ON RESIDUAL INTEREST.— 
After all other claims against and interests in an es-
tate have been fully and irrevocably paid or 
defeased, the trustee shall or shall cause a servicer 
or administrator to distribute the remainder of the 
estate to or at the direction of the owner of the re-
sidual interest. No interim distribution on the resid-
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230 
ual interest may be made before that time, unless 
the applicable covered bond regulator— 
(A) approves the distribution after deter-
mining that all other claims against and inter-
ests in the estate will be fully, timely, and irrev-
ocably paid according to their terms; and 
(B) provides an indemnity, for the benefit 
of the estate, assuring that all other claims 
against and interests in the estate will be fully, 
timely, and irrevocably paid according to their 
terms. 
(5) CLOSING OF ESTATE.—After an estate has 
been fully administered, the trustee shall close the 
estate and, except as otherwise directed by the appli-
cable covered bond regulator, shall destroy all 
records of the estate. 
(6) NO LOSS TO TAXPAYERS.—Taxpayers shall 
bear no losses from the resolution of an estate under 
this subtitle. To the extent that the Secretary and 
the Corporation jointly determine that the Deposit 
Insurance Fund incurred actual losses that are high-
er because the covered bond program of an insured 
depository institution was subject to resolution 
under this subtitle rather than as part of the receiv-
ership of the institution under the Federal Deposit 
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231 
Insurance Act (12 U.S.C. 1811 et seq.), the Cor-
poration may exercise the powers available under 
section 7(b) of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(b)) to recover an amount equal to 
those losses after consulting with the Secretary. 
SEC. 355. SECURITIES LAW PROVISIONS. 
(a) EXISTING EXEMPTIONS APPLICABLE TO COV-
ERED BONDS.— 
(1) TREATMENT
OF
CERTAIN
BANKS
AND 
OTHER
ENTITIES.—Any covered bond issued or 
guaranteed by a bank or by an eligible issuer de-
scribed in section 352(9)(D) and sponsored solely by 
1 or more banks for the sole purpose of issuing cov-
ered bonds is and shall be treated as a security 
issued or guaranteed by a bank under section 
3(a)(2) of the Securities Act of 1933 (15 U.S.C. 
77c(a)(2)), section 3(c)(3) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–3(c)(3)), and sec-
tion 304(a)(4)(A) of the Trust Indenture Act of 
1939 (15 U.S.C. 77ddd(a)(4)(A)). No covered bond 
issued or guaranteed by a bank or by an eligible 
issuer described in section 352(9)(D) and sponsored 
solely by 1 or more banks for the sole purpose of 
issuing covered bonds shall be treated as an asset- 
backed security (as defined in section 3 of the Secu-
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232 
rities and Exchange Act of 1934 (15 U.S.C. 78c)). 
Each covered bond regulator for 1 or more banks 
shall adopt disclosure and reporting regulations for 
offers or sales of covered bonds by a bank or an eli-
gible issuer described in this paragraph. Such regu-
lations shall provide for uniform and consistent 
standards for such covered bond issuers, to the ex-
tent possible, and shall be consistent with existing 
regulations governing offers or sales of nonconvert-
ible debt. 
(2) TREATMENT
OF
CERTAIN
ASSOCIATIONS 
AND
COOPERATIVE
BANKS.—Any covered bond 
issued by an entity described in section 3(a)(5)(A) 
of 
the 
Securities 
Act 
of 
1933 
(15 
U.S.C. 
77c(a)(5)(A)) or by an eligible issuer described in 
section 352(9)(D) and sponsored solely by 1 or more 
such entities for the sole purpose of issuing covered 
bonds is and shall be treated as a security issued by 
such an entity under section 3(a)(5)(A) of the Secu-
rities Act of 1933 (15 U.S.C. 77c(a)(5)(A)), section 
3(c)(3) of the Investment Company Act of 1940 (15 
U.S.C. 80a-3(c)(3)), and section 304(a)(4)(A) of the 
Trust 
Indenture 
Act 
of 
1939 
(15 
U.S.C. 
77ddd(a)(4)(A)). No covered bond issued by an enti-
ty described in section 3(a)(5)(A) of the Securities 
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233 
Act of 1933 (15 U.S.C. 77c(a)(5)(A)) or by an eligi-
ble issuer described in section 352(9)(D) and spon-
sored solely by 1 or more such entities for the sole 
purpose of issuing covered bonds shall be treated as 
an asset-backed security (as defined in section 3 of 
the Securities and Exchange Act of 1934 (15 U.S.C. 
78c)). Each covered bond regulator for 1 or more 
entities described in section 3(a)(5)(A) of the Securi-
ties Act of 1933 (15 U.S.C. 77c(a)(5)(A)) shall 
adopt, as part of the securities regulations of the 
covered bond regulator, a separate scheme of reg-
istration, disclosure, and reporting obligations and 
exemptions for offers or sales of covered bonds that 
are described in this paragraph. Such regulations 
shall provide for uniform and consistent standards 
for such covered bond issuers, to the extent possible, 
and shall be consistent with regulations governing 
offers or sales of similar securities. 
(3) CONSTRUCTION.—No provision of this sub-
title, including paragraph (1) or (2), may be con-
strued or applied in a manner that impairs or limits 
any other exemption that is available under applica-
ble securities laws. 
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(b) EXEMPTIONS FOR ESTATES.—Any estate that is 
or may be created under section 354(b)(1) or 354(c)(2) 
shall be exempt from all securities laws but— 
(1) shall be subject to the reporting require-
ments established by the applicable covered bond 
regulator under section 354(d)(1)(E)(iii); and 
(2) shall succeed to any requirement of the 
issuer to file such periodic information, documents, 
and reports in respect of the covered bonds as speci-
fied in section 13(a) of the Securities and Exchange 
Act of 1934 (15 U.S.C. 78m(a)) or rules established 
by an appropriate Federal banking agency. 
(c) EXEMPTIONS FOR RESIDUAL INTERESTS.—Any 
residual interest in an estate that is or may be created 
under section 354(b)(1) or 354(c)(2) shall be exempt from 
all securities laws. 
SEC. 356. MISCELLANEOUS PROVISIONS. 
(a) DOMESTIC SECURITIES.—Section 106(a)(1) of 
the Secondary Mortgage Market Enhancement Act of 
1984 (15 U.S.C. 77r–1(a)(1)) is amended— 
(1) in subparagraph (C), by striking ‘‘or’’ at 
the end; 
(2) in subparagraph (D), by adding ‘‘or’’ at the 
end; and 
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235 
(3) by inserting after subparagraph (D) the fol-
lowing: 
‘‘(E) covered bonds (as defined in section 352 
of the United States Covered Bond Act of 2013),’’. 
(b) TAX TREATMENT
OF COVERED BOND PRO-
GRAMS.— 
(1) TREATMENT OF ESTATES CREATED UNDER 
COVERED BOND PROGRAMS.—Section 7701 of the 
Internal Revenue Code of 1986 is amended by redes-
ignating subsection (p) as subsection (q) and by in-
serting after subsection (o) the following new sub-
section: 
‘‘(p) TREATMENT
OF ESTATES CREATED UNDER 
COVERED BOND PROGRAMS.—For purposes of this title— 
‘‘(1) TREATMENT AS DISREGARDED ENTITY.— 
Any estate created with respect to a covered bond 
program— 
‘‘(A) shall not be treated as an entity sub-
ject to taxation separate from the owner of the 
residual interest with respect to such estate; 
and 
‘‘(B) shall be treated as a disregarded enti-
ty that is owned by the owner of such residual 
interest. 
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236 
‘‘(2) LIMITATIONS
ON
TREATMENT
AS
DIS-
REGARDED ENTITY.— 
‘‘(A) MAXIMUM
DURATION.—Paragraph 
(1) shall not apply with respect to an estate 
after the earlier of— 
‘‘(i) the end of the 30-year period be-
ginning on the date of the creation of such 
estate; or 
‘‘(ii) the end of the 180-day period be-
ginning on the date of the final payment 
on the last outstanding covered bond that 
is secured by the cover pool held by such 
estate. 
‘‘(B) RESTRICTIONS ON OWNER OF RESID-
UAL
INTEREST.—Paragraph (1) shall apply 
with respect to an estate for any period only 
if— 
‘‘(i) at no time during such period 
does more than one person hold a residual 
interest with respect to such estate; 
‘‘(ii) such person is— 
‘‘(I) subject to tax under subtitle 
A on the net income of such estate for 
the taxable year of such person which 
includes such period; or 
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237 
‘‘(II) a conservator, receiver, liq-
uidating agent, or trustee in bank-
ruptcy with respect to the issuer for 
such period; and 
‘‘(iii) such person is not a regulated 
investment company (as defined in section 
851) or real estate investment trust (as de-
fined in section 856) for the taxable year 
which includes such period. 
‘‘(3) TREATMENT AS CORPORATION.—With re-
spect to any period for which paragraph (1) does not 
apply to an estate created with respect to a covered 
bond program, such estate shall be treated as a cor-
poration. 
‘‘(4) COORDINATION
WITH
RULES
FOR
TAX-
ABLE MORTGAGE POOLS.—No portion of any estate 
created with respect to a covered bond program shall 
be treated as a taxable mortgage pool for purposes 
of subsection (i) during any period for which para-
graph (1) applies to such estate. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section, the terms ‘covered bond program’, ‘cover 
pool’, ‘estate’, and ‘residual interest’ shall each have 
the same respective meanings as when used for pur-
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238 
poses of the United States Covered Bond Act of 
2013. 
‘‘(6) CROSS REFERENCES.— 
‘‘(A) For nonrecognition with respect to 
certain transfers under covered bond programs, 
see section 1001(f). 
‘‘(B) For excise tax on estates created 
under covered bond programs by reason of de-
fault, see section 4475.’’. 
(2) TREATMENT
OF
CERTAIN
TRANSFERS 
UNDER COVERED BOND PROGRAMS.—Section 1001 
of such Code is amended by adding at the end the 
following new subsection: 
‘‘(f) CERTAIN TRANSFERS UNDER COVERED BOND 
PROGRAMS.— 
‘‘(1) IN GENERAL.—With respect to any cov-
ered bond program, none of the following shall be 
treated as a taxable exchange of a covered bond to 
a covered bond holder or to a notional principal con-
tract counterparty: 
‘‘(A) The transfer of all of the assets and 
liabilities of such program. 
‘‘(B) The creation of an estate with respect 
to such program. 
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239 
‘‘(C) The transfer of the residual interest 
in such estate. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘covered bond program’, ‘estate’, 
and ‘residual interest’ shall each have the same re-
spective meanings as when used for purposes of the 
United States Covered Bond Act of 2013.’’. 
(3) EXCISE TAX ON ESTATES CREATED UNDER 
COVERED
BOND
PROGRAMS
BY
REASON
OF
DE-
FAULT.— 
(A) IN
GENERAL.—Chapter 36 of such 
Code is amended by inserting after subchapter 
B the following new subchapter: 
‘‘Subchapter C—Tax on Certain Estates 
Created Under Covered Bond Programs 
‘‘Sec. 4475. Tax on estates created under covered bond programs by reason of 
default. 
‘‘SEC. 4475. TAX ON ESTATES CREATED UNDER COVERED 
BOND PROGRAMS BY REASON OF DEFAULT. 
‘‘(a) IMPOSITION OF TAX.—A tax is hereby imposed 
on the creation of an estate by operation of section 
354(b)(1) of the United States Covered Bond Act of 2013. 
‘‘(b) AMOUNT OF TAX.—The tax imposed under sub-
section (a) with respect to the creation of any estate shall 
be equal to 1 percent of the principal amount of the cov-
ered bonds secured by the cover pool with respect to such 
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240 
estate determined as of the close of the day before the 
creation of such estate. 
‘‘(c) BY WHOM PAID.—The tax imposed under sub-
section (a) shall be paid by the issuer of the covered bonds 
with respect to the covered bond program with respect to 
which the estate referred to in subsection (a) is created. 
‘‘(d) NO EFFECT ON COVER POOL.—The tax im-
posed under subsection (a) shall not reduce the assets of 
the cover pool and no liability for such tax shall attach 
to the estate or to the assets of the cover pool. 
‘‘(e) REFUND IN CASE OF BANKRUPTCY, ETC.—If an 
issuer liable for the tax imposed under subsection (a) en-
ters conservatorship, receivership, liquidation, or bank-
ruptcy during the 5-year period beginning on the date of 
the creation of the estate referred to in subsection (a), 
such liability shall be extinguished and any such tax paid 
shall refunded to the issuer immediately upon such event. 
‘‘(f) DEFINITIONS.—For purposes of this section, the 
terms ‘covered bond program’, ‘cover pool’, and ‘estate’ 
shall each have the same respective meanings as when 
used for purposes of the United States Covered Bond Act 
of 2013.’’. 
(B) CLERICAL AMENDMENT.—The table of 
subchapters for chapter 36 of such Code is 
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241 
amended by inserting after the item relating to 
subchapter B the following new item: 
‘‘SUBCHAPTER C—TAX ON CERTAIN ESTATES CREATED UNDER COVERED 
BOND PROGRAMS’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to estates created, and 
transfers made, after the date of the enactment of 
this Act. 
(c) STATE AND LOCAL TAXES.—The Secretary may 
promulgate regulations under this subtitle that are similar 
to the provisions of section 346 of title 11, United States 
Code, including regulations to provide that— 
(1) if an estate created under section 354(b)(1) 
or 354(c)(2) is not treated as an entity subject to 
taxation separate from the owner of the residual in-
terest for purposes of the Internal Revenue Code of 
1986 (26 U.S.C. 1 et seq.), no separate taxable enti-
ty shall be created with respect to the estate for pur-
poses of any State or local law imposing a tax on 
or measured by income; and 
(2) if a transfer or assumption of an asset or 
liability to or by an estate or an eligible issuer under 
section 354(b) or 354(c) does not cause or constitute 
an event in which gain or loss is recognized under 
section 1001 of the Internal Revenue Code of 1986 
(26 U.S.C. 1001), the transfer or assumption shall 
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242 
not cause or constitute a disposition for purposes of 
any provision assigning tax consequences to a dis-
position in connection with any State or local law 
imposing a tax on or measured by income. 
(d) NO CONFLICT.—The provisions of this subtitle 
shall apply, notwithstanding any provision of the Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.), title 11, 
United States Code, title II of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 
5381 et seq.), or any other provision of Federal law with 
respect to conservatorship, receivership, liquidation, or 
bankruptcy. No provision of the Federal Deposit Insur-
ance Act (12 U.S.C. 1811 et seq.), title 11, United States 
Code, title II of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5381 et seq.), or any 
other provision of Federal law with respect to conservator-
ship, receivership, liquidation, or bankruptcy may be con-
strued or applied in a manner that defeats or interferes 
with the purpose or operation of this subtitle. 
(e) ANNUAL REPORT TO CONGRESS.—The covered 
bond regulators shall, annually— 
(1) submit a joint report to the Congress de-
scribing the current state of the covered bond mar-
ket in the United States; and 
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243 
(2) testify on the current state of the covered 
bond market in the United States before the Com-
mittee on Financial Services of the House of Rep-
resentatives and the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate. 
TITLE IV—REMOVING BARRIERS 
TO NEW INVESTMENT 
SEC. 401. BASEL III IMPACT STUDY. 
(a) IN GENERAL.—The Board of Governors of the 
Federal Reserve System, the Federal Deposit Insurance 
Corporation, and the Office of the Comptroller of the Cur-
rency (in this section collectively referred to as the ‘‘Fed-
eral banking agencies’’) shall conduct an empirical study 
on the Regulatory Capital Rules finalized by the Board 
of Governors of the Federal Reserve on July 2, 2013 
(‘‘Final Rule’’) in accordance with subsection (b) and re-
lease a final report in accordance with subsection (d). 
(b) ISSUES TO BE STUDIED.—The study required 
under subsection (a) shall include— 
(1) the potential impact of the Final Rule on 
the financial services sector of the United States, 
and specifically covered financial institutions, includ-
ing changes to required capital levels in the aggre-
gate, per asset class and institution size; 
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(2) the long-term potential impact of the Final 
Rule, including changes to the current risk weight 
framework; 
(3) the potential cost and complexity of the 
Final Rule for covered financial institutions; 
(4) the potential indicators of covered financial 
institutions having to maintain higher leverage cap-
ital ratios and higher total risk-based capital ratios 
than non-covered financial institutions, and if such 
capital levels are commensurate with higher histor-
ical losses or greater risk; 
(5) whether the Final Rule will cause capital 
levels at covered financial institutions to fluctuate 
with more frequency or by greater amounts than the 
current capital rules and what, if any, safety and 
soundness issues such fluctuations raise for covered 
financial institutions or the financial system includ-
ing whether such fluctuations will make the United 
States financial system more or less safe than the 
current rules; 
(6) whether the Final Rule will result in the 
discontinuation of the use of certain risk manage-
ment tools by covered financial institutions and 
thereby undermine the safety and soundness of cov-
ered financial institutions and the financial system; 
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(7) the cumulative impact that the Final Rule 
will have on— 
(A) United States economic growth, in 
general, and specifically, on the Gross Domestic 
Product; 
(B) the availability and cost of credit, both 
generally and in low- and moderate-income 
areas; 
(C) the availability and cost of residential 
mortgages and home equity lines of credit, auto 
loans, student loans, and commercial loans, in-
cluding small business loans; and 
(D) regulatory capital levels, capital qual-
ity, asset quality, and risk management at cov-
ered financial institutions. 
(c) VOLUNTARY PARTICIPATION.—Any financial in-
stitution may voluntarily provide information for the study 
upon the request of the Federal banking agencies, but may 
not be required to provide such information. 
(d) FINAL REPORT.— 
(1) AVAILABILITY TO THE PUBLIC.—A final re-
port on the completed study required under sub-
section (a) shall be made available to the public for 
notice and comment for a period of not less than 90 
days. 
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(2) REPORT TO CONGRESS.—The Federal bank-
ing agencies shall issue a report to the Committee 
on Banking, Housing, and Urban Affairs of the Sen-
ate and the Committee on Financial Services of the 
House of Representatives, and testify before such 
committees, on the results of the study required 
under subsection (a) and a summary of the com-
ments received under paragraph (1). 
(3) REVIEW.—The Federal banking agencies 
shall review any comments submitted under para-
graphs (1) and (2) and considerations provided pur-
suant to paragraphs (1) and (2), and following such 
review, shall prescribe new rules, if appropriate, 
based on the results of the study and such com-
ments and considerations. Notwithstanding any 
other provision of law, a new rulemaking following 
such comment period shall include an additional 
comment period of not less than 90 days. 
(e) DELAY OF RULEMAKING.—The Final Rule may 
not take effect for a covered financial institution until the 
later of— 
(1) 2 years after the date of the enactment of 
this Act; and 
(2) 1 year after the promulgation of revised 
rules in accordance with subsection (d)(3) or a de-
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247 
termination by the Federal banking agencies that no 
revised rules are needed in accordance with that sub-
section, which shall be published in the Federal Reg-
ister. 
(f) DEFINITION OF COVERED FINANCIAL INSTITU-
TION.—For purposes of this section, the term ‘‘covered fi-
nancial institution’’ means any bank, thrift, bank holding 
company, and savings and loan holding company (as such 
terms are defined under section 3 of the Federal Deposit 
Insurance Act) other than a bank, thrift, bank holding 
company, or savings and loan holding company identified 
by the Financial Stability Board as a ‘‘global systemically 
important bank’’, as of the date of the enactment of this 
Act. 
SEC. 402. BASEL III LIQUIDITY COVERAGE RATIO AMEND-
MENTS. 
(a) IN GENERAL.—In implementing the Basel III Li-
quidity Coverage Ratio amendments, the Board of Gov-
ernors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, and the Office of the Comptroller 
of the Currency may not require, as a condition for status 
as a high quality liquid asset, that residential mortgage- 
backed securities be collateralized only by (or be 
collateralized by a certain percentage of) full recourse 
mortgage loans. 
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(b) DEFINITION.—The term ‘‘Basel III Liquidity 
Coverage Ratio amendments’’ means the amendments to 
the Liquidity Coverage Ratio endorsed by the Basel Com-
mittee on Banking Supervision on January 6, 2013. 
SEC. 403. DEFINITION OF POINTS AND FEES. 
(a) AMENDMENT TO SECTION 103 OF TILA.—Sec-
tion 103(bb)(4) of the Truth in Lending Act (15 U.S.C. 
1602(bb)(4)) is amended— 
(1) by striking ‘‘paragraph (1)(B)’’ and insert-
ing ‘‘paragraph (1)(A) and section 129C’’; 
(2) in subparagraph (A), by striking ‘‘except in-
terest or the time-price differential’’ and inserting 
the following: 
‘‘except— 
‘‘(i) interest and the time-price dif-
ferential; and 
‘‘(ii) the amount of any loan level 
price adjustment payment set by the Fed-
eral National Mortgage Association, the 
Federal Home Loan Mortgage Corpora-
tion, the Federal Housing Administration, 
or similar governmental entity or govern-
ment-sponsored enterprise’’; 
(3) by striking subparagraph (B) and inserting 
the following new subparagraph: 
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‘‘(B) all compensation paid directly by a 
consumer to a mortgage originator, including a 
mortgage originator that is also the creditor in 
a table-funded transaction, but not including 
compensation paid by a mortgage originator or 
a creditor to an individual employed by the 
mortgage originator or creditor’’; 
(4) in subparagraph (C)— 
(A) by inserting ‘‘and insurance’’ after 
‘‘taxes’’; 
(B) in clause (ii), by inserting ‘‘, except as 
retained by a creditor or its affiliate as a result 
of their participation in an affiliated business 
arrangement (as defined in section 2(7) of the 
Real Estate Settlement Procedures Act of 1974 
(12 U.S.C. 2602(7))’’ after ‘‘compensation’’; 
and 
(C) by striking clause (iii) and inserting 
the following: 
‘‘(iii) the charge is— 
‘‘(I) a bona fide third-party 
charge not retained by the mortgage 
originator, creditor, or an affiliate of 
the creditor or mortgage originator; or 
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‘‘(II) a charge set forth in section 
106(e)(1);’’; and 
(5) in subparagraph (D)— 
(A) by striking ‘‘accident,’’; and 
(B) by striking ‘‘or any payments’’ and in-
serting ‘‘and any payments’’. 
(b) AMENDMENT TO SECTION 129C OF TILA.—Sec-
tion 129C of the Truth in Lending Act (15 U.S.C. 1639c) 
is amended— 
(1) in subsection (a)(5)(C), by striking ‘‘103’’ 
and all that follows through ‘‘or mortgage origi-
nator’’ and inserting ‘‘103(bb)(4)’’; and 
(2) in subsection (b)(2)(C)(i), by striking ‘‘103’’ 
and all that follows through ‘‘or mortgage origi-
nator)’’ and inserting ‘‘103(bb)(4)’’. 
SEC. 404. EXCLUSION OF ISSUERS OF ASSET-BACKED SECU-
RITIES FROM COVERED FUNDS. 
Section 13(h)(2) of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1851(h)(2)) is amended— 
(1) by striking ‘‘ ‘private equity fund’ mean an 
issuer’’ and inserting the following: ‘‘ ‘private equity 
fund’— 
‘‘(A) mean an issuer’’; 
(2) by striking the period and inserting ‘‘; 
and’’; and 
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(3) by adding at the end the following: 
‘‘(B) does not include an issuer, if such 
issuer is described under subparagraph (A) 
solely because such issuer issues asset-backed 
securities (as such term is defined under section 
3(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a))).’’. 
SEC. 405. SUSPENSION OF REGULATION AB II RULE-
MAKING. 
Section 4 of the Securities Act of 1933 (15 U.S.C. 
77d) is amended— 
(1) by redesignating the two subsections fol-
lowing subsection (a) (each designated as subsection 
(b)) as subsections (c) and (d), respectively; and 
(2) by inserting after subsection (a) the fol-
lowing new subsection: 
‘‘(b) With respect to paragraphs (1) and (2) of sub-
section (a), or any rule or regulation promulgated there-
under or in furtherance thereof (including Rule 144, Rule 
144A and Rule 506), the Commission shall not condition 
the availability of the exemptions afforded by any such 
paragraph, rule, or regulation upon an issuer’s under-
taking to provide to investors, in connection with initial 
offers or sales or on an ongoing basis thereafter, the same 
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or substantially similar information as would be required 
in a transaction to which section 5 applies.’’. 
SEC. 406. EFFECTIVE DATE OF CERTAIN MORTGAGE RE-
FORM REGULATIONS. 
(a) IN GENERAL.—Section 1400(c) of the Dodd- 
Frank Wall Street Reform and Consumer Protection Act 
(15 U.S.C. 1601 note) is amended— 
(1) in paragraph (1), by amending subpara-
graph (B) to read as follows: 
‘‘(B) take effect 24 months after the 
issuance of the regulations in final form, or 
such later time as specified by regulation.’’; and 
(2) by striking paragraph (3). 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on the date of the enact-
ment of the Dodd-Frank Wall Street Reform and Con-
sumer Protection Act, as if included in such Act. 
SEC. 407. REPEAL OF CREDIT RISK RETENTION REGULA-
TIONS. 
(a) IN GENERAL.— 
(1) 
DODD-FRANK.—The 
Dodd-Frank 
Wall 
Street Reform and Consumer Protection Act (12 
U.S.C. 5301 et seq.) is amended— 
(A) by striking section 941; and 
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(B) in the table of contents for such Act, 
by striking the item relating to section 941. 
(2) SECURITIES EXCHANGE ACT OF 1934.—The 
Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) is amended— 
(A) in section 3(a), by striking paragraph 
(77) (relating to asset-backed security), as 
added by section 941(a) of the Dodd-Frank 
Wall Street Reform and Consumer Protection 
Act; and 
(B) by striking section 15G. 
(b) PROHIBITION ON RISK RETENTION AND PRE-
MIUM CAPTURE CASH RESERVE ACCOUNTS.—The Comp-
troller of the Currency, the Board of Governors of the 
Federal Reserve System, the Federal Deposit Insurance 
Corporation, the Bureau of Consumer Financial Protec-
tion, and the Securities and Exchange Commission may 
not issue any rule or regulation to require risk retention, 
the creation or maintenance of a premium capture cash 
reserve account, or any similar mechanism, unless directly 
authorized by an Act of Congress. 
(c) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on the date of the enact-
ment of the Dodd-Frank Wall Street Reform and Con-
sumer Protection Act, as if included in such Act. 
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254 
SEC. 408. MORTGAGES IN QUALIFIED SECURITIES. 
Section 129C of the Truth in Lending Act (15 U.S.C. 
1639c), as amended by section 411(1), is further amended 
by inserting after subsection (e) the following: 
‘‘(f) MORTGAGES IN QUALIFIED SECURITIES.—This 
section and any regulations promulgated under this sec-
tion do not apply to a mortgage serving as collateral for 
a qualified security, as such term is defined under section 
321 of the Protecting American Taxpayers and Home-
owners Act of 2013.’’. 
SEC. 409. MORTGAGE LOANS HELD IN PORTFOLIO. 
(a) HOME MORTGAGE DISCLOSURE ACT OF 1975.— 
Section 304(g) of the Home Mortgage Disclosure Act of 
1975 (12 U.S.C. 2803(g)) is amended— 
(1) in paragraph (1), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (2), by striking the period and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(3) made by the creditor, so long as such loan 
appears on the balance sheet of such creditor.’’. 
(b) TRUTH IN LENDING ACT.—The Truth in Lend-
ing Act (15 U.S.C. 1601 et seq.) is amended— 
(1) in section 129C (15 U.S.C. 1639c), as 
amended by section 408, by inserting after sub-
section (f) the following: 
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‘‘(g) MORTGAGE LOANS HELD IN PORTFOLIO.—This 
section and any regulations promulgated under this sec-
tion do not apply to a residential mortgage loan made by 
the creditor so long as such loan appears on the balance 
sheet of such creditor.’’; and 
(2) in section 129D (15 U.S.C. 1639d), by add-
ing at the end the following: 
‘‘(k) MORTGAGE LOANS HELD IN PORTFOLIO.—This 
section and any regulations promulgated under this sec-
tion do not apply to a residential mortgage loan made by 
the creditor so long as such loan appears on the balance 
sheet of such creditor.’’. 
SEC. 410. REPEAL OF CERTAIN MORTGAGE-RELATED PRO-
VISIONS. 
(a) REPEAL.—Sections 1413, 1431, and 1432 of the 
Dodd-Frank Wall Street Reform and Consumer Protec-
tion Act are hereby repealed, and the provisions of law 
amended or repealed by such sections are restored or re-
vived as if such sections had not been enacted. 
(b) CLERICAL AMENDMENT.—The table of contents 
for the Dodd-Frank Wall Street Reform and Consumer 
Protection Act is amended by striking the items relating 
to sections 1413, 1431, and 1432. 
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SEC. 411. AMENDMENTS TO THE TRUTH IN LENDING ACT. 
The Truth in Lending Act (15 U.S.C. 1601 et seq.) 
is amended— 
(1) in section 129 (15 U.S.C. 1639)— 
(A) in subsection (b)(3), by adding at the 
end the following: ‘‘The Bureau may not, by 
regulation or otherwise, prohibit a consumer 
from modifying or waiving the rights provided 
to the consumer under this subsection.’’; and 
(B) in subsection (u), by adding at the end 
the following: 
‘‘(4) ENSURING ACCESS TO COUNSELING SERV-
ICES FOR RURAL COMMUNITIES.—Certification de-
scribed under paragraph (1) may be provided by a 
person who operates an online or telephone-operated 
counseling service approved by the Secretary of 
Housing and Urban Development or by an online or 
telephone-operated counseling service operated by 
the Department of Housing and Urban Develop-
ment. 
‘‘(5) EFFECTIVE DATE.—Notwithstanding sec-
tion 1400(c) of the Mortgage Reform and Anti-Pred-
atory Lending Act, this subsection shall take effect 
after the end of the 1-year period beginning on the 
earlier of— 
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‘‘(A) the date on which the first online or 
telephone-operated counseling service is ap-
proved under paragraph (4); and 
‘‘(B) the date on which the Department of 
Housing and Urban Development begins pro-
viding online or telephone-operated counseling 
services described under paragraph (4).’’; 
(2) in section 129C (15 U.S.C. 1639c)— 
(A) in subsection (b)(2)(A)(viii), by strik-
ing ‘‘30’’ and inserting ‘‘40’’; 
(B) by striking subsections (c), (d), and 
(e); and 
(C) by redesignating subsections (f), (g), 
(h), and (i) as subsections (c), (d), (e), and (f), 
respectively; and 
(3) 
in 
section 
129E(k)(1) 
(15 
U.S.C. 
1639e(k)(1)) by inserting after ‘‘this section’’ the 
following: ‘‘, other than subsection (e),’’. 
SEC. 412. FINANCIAL INSTITUTIONS EXAMINATION FAIR-
NESS AND REFORM. 
(a) TIMELINESS OF EXAMINATION REPORTS.—The 
Federal Financial Institutions Examination Council Act of 
1978 (12 U.S.C. 3301 et seq.) is amended by adding at 
the end the following: 
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‘‘SEC. 1012. TIMELINESS OF EXAMINATION REPORTS. 
‘‘(a) IN GENERAL.— 
‘‘(1) FINAL EXAMINATION REPORT.—A Federal 
financial institutions regulatory agency shall provide 
a final examination report to a financial institution 
not later than 60 days after the later of— 
‘‘(A) the exit interview for an examination 
of the institution; or 
‘‘(B) the provision of additional informa-
tion by the institution relating to the examina-
tion. 
‘‘(2) EXIT INTERVIEW.—If a financial institu-
tion is not subject to a resident examiner program, 
the exit interview shall occur not later than the end 
of the 9-month period beginning on the commence-
ment of the examination, except that such period 
may be extended by the Federal financial institu-
tions regulatory agency by providing written notice 
to the institution and the Office of Examination 
Ombudsman describing with particularity the rea-
sons that a longer period is needed to complete the 
examination. 
‘‘(b) EXAMINATION MATERIALS.—Upon the request 
of a financial institution, the Federal financial institutions 
regulatory agency shall include with the final report an 
appendix listing all examination or other factual informa-
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tion relied upon by the agency in support of a material 
supervisory determination.’’. 
(b) EXAMINATION STANDARDS.— 
(1) IN GENERAL.—The Federal Financial Insti-
tutions Examination Council Act of 1978 is further 
amended by adding after section 1012 the following: 
‘‘SEC. 1013. EXAMINATION STANDARDS. 
‘‘(a) IN GENERAL.—In the examination of financial 
institutions— 
‘‘(1) a commercial loan shall not be placed in 
non-accrual status solely because the collateral for 
such loan has deteriorated in value; 
‘‘(2) a modified or restructured commercial loan 
shall be removed from non-accrual status if the bor-
rower demonstrates the ability to perform on such 
loan over a maximum period of 6 months, except 
that with respect to loans on a quarterly, semi-
annual, or longer repayment schedule such period 
shall be a maximum of 3 consecutive repayment pe-
riods; 
‘‘(3) a new appraisal on a performing commer-
cial loan shall not be required unless an advance of 
new funds is involved; 
‘‘(4) in classifying a commercial loan in which 
there has been deterioration in collateral value, the 
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amount to be classified shall be the portion of the 
deficiency relating to the decline in collateral value 
and repayment capacity of the borrower. 
‘‘(b) WELL CAPITALIZED INSTITUTIONS.—The Fed-
eral financial institutions regulatory agencies may not re-
quire a financial institution that is well capitalized to raise 
additional capital in lieu of an action prohibited under 
subsection (a). 
‘‘(c) CONSISTENT
LOAN
CLASSIFICATIONS.—The 
Federal financial institutions regulatory agencies shall de-
velop and apply identical definitions and reporting require-
ments for non-accrual loans.’’. 
(2) DEFINITION
OF
MATERIAL
SUPERVISORY 
DETERMINATION.—Section 309(f)(1)(A) of the Rie-
gle Community Development and Regulatory Im-
provement Act of 1994 (12 U.S.C. 4806(f)(1)(A)) is 
amended— 
(A) in clause (ii), by striking ‘‘and’’ at the 
end; and 
(B) by inserting after clause (iii) the fol-
lowing: 
‘‘(iv) any issue specifically listed in an 
exam report as a matter requiring atten-
tion by the institution’s management or 
board of directors; and’’. 
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261 
(c) EXAMINATION OMBUDSMAN.— 
(1) IN GENERAL.—The Federal Financial Insti-
tutions Examination Council Act of 1978 is further 
amended by adding after section 1013 the following: 
‘‘SEC. 1014. OFFICE OF EXAMINATION OMBUDSMAN. 
‘‘(a) ESTABLISHMENT.—There is established in the 
Council an Office of Examination Ombudsman. 
‘‘(b) HEAD OF OFFICE.—There is established the po-
sition of the Ombudsman, who shall serve as the head of 
the Office of Examination Ombudsman, and who shall be 
hired separately by the Council and shall be independent 
from any member agency of the Council. 
‘‘(c) STAFFING.—The Ombudsman is authorized to 
hire staff to support the activities of the Office of Exam-
ination Ombudsman. 
‘‘(d) DUTIES.—The Ombudsman shall— 
‘‘(1) receive and, at the Ombudsman’s discre-
tion, investigate complaints from financial institu-
tions, their representatives, or another entity acting 
on behalf of such institutions, concerning examina-
tions, examination practices, or examination reports; 
‘‘(2) hold meetings, at least once every three 
months and in locations designed to encourage par-
ticipation from all sections of the United States, 
with financial institutions, their representatives, or 
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262 
another entity acting on behalf of such institutions, 
to discuss examination procedures, examination 
practices, or examination policies; 
‘‘(3) review examination procedures of the Fed-
eral financial institutions regulatory agencies to en-
sure that the written examination policies of those 
agencies are being followed in practice and adhere to 
the standards for consistency established by the 
Council; 
‘‘(4) conduct a continuing and regular program 
of examination quality assurance for all examination 
types conducted by the Federal financial institutions 
regulatory agencies; 
‘‘(5) process any supervisory appeal initiated 
under section 1015 or section 309(e) of the Riegle 
Community Development and Regulatory Improve-
ment Act of 1994; and 
‘‘(6) report annually to the Committee on Fi-
nancial Services of the House of Representatives, the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate, and the Council, on the reviews car-
ried out pursuant to paragraphs (3) and (4), includ-
ing compliance with the requirements set forth in 
section 1012 regarding timeliness of examination re-
ports, and the Council’s recommendations for im-
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263 
provements in examination procedures, practices, 
and policies. 
‘‘(e) CONFIDENTIALITY.—The Ombudsman shall 
keep confidential all meetings, discussions, and informa-
tion provided by financial institutions.’’. 
(2) DEFINITION.—Section 1003 of the Federal 
Financial Institutions Examination Council Act of 
1978 is amended— 
(A) in paragraph (2), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (3), by adding ‘‘and’’ at 
the end; and 
(C) by adding at the end the following: 
‘‘(4) the term ‘Ombudsman’ means the Om-
budsman established under section 1014(a).’’. 
(d) RIGHT TO APPEAL BEFORE AN INDEPENDENT 
ADMINISTRATIVE LAW JUDGE.—The Federal Financial 
Institutions Examination Council Act of 1978 is further 
amended by adding after section 1014 the following: 
‘‘SEC. 1015. RIGHT TO APPEAL BEFORE AN INDEPENDENT 
ADMINISTRATIVE LAW JUDGE. 
‘‘(a) IN GENERAL.—A financial institution shall have 
the right to appeal a material supervisory determination 
contained in a final report of examination. 
‘‘(b) NOTICE.— 
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264 
‘‘(1) TIMING.—A financial institution seeking 
an appeal under this section shall file a written no-
tice with the Ombudsman within 60 days after re-
ceiving the final report or examination that is the 
subject of such appeal. 
‘‘(2) IDENTIFICATION
OF
DETERMINATION.— 
The written notice shall identify the material super-
visory determination that is the subject of the ap-
peal, and a statement of the reasons why the institu-
tion believes that the determination is incorrect or 
should otherwise be modified. 
‘‘(3) INFORMATION TO BE PROVIDED TO INSTI-
TUTION.—Any information relied upon by the agen-
cy in the final report that is not in the possession 
of the financial institution may be requested by the 
financial institution and shall be delivered promptly 
by the agency to the financial institution. 
‘‘(c) HEARING BEFORE INDEPENDENT ADMINISTRA-
TIVE LAW JUDGE.— 
‘‘(1) IN GENERAL.—The Ombudsman shall de-
termine the merits of the appeal on the record, after 
an opportunity for a hearing before an independent 
administrative law judge. 
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‘‘(2) HEARING PROCEDURES.—If a hearing is 
requested by the financial institution, the hearing 
shall— 
‘‘(A) take place not later than 60 days 
after the notice of the appeal was received by 
the Ombudsman; and 
‘‘(B) be conducted pursuant to the proce-
dures set forth under sections 556 and 557 of 
title 5, United States Code. 
‘‘(3) JUDGE RECOMMENDATION; STANDARD OF 
REVIEW.—In any hearing under this subsection— 
‘‘(A) the administrative law judge shall 
recommend to the Ombudsman what determina-
tion should be made; and 
‘‘(B) in making such recommendation, the 
administrative law judge shall not defer to the 
opinions of the examiner or agency, but shall 
independently determine the appropriateness of 
the agency’s decision based upon the relevant 
statutes, regulations, and other appropriate 
guidance. 
‘‘(d) FINAL DECISION.—A decision by the Ombuds-
man on an appeal under this section shall— 
‘‘(1) be made not later than 60 days after the 
record has been closed; and 
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266 
‘‘(2) be final agency action and shall bind the 
agency whose supervisory determination was the 
subject of the appeal and the financial institution 
making the appeal. 
‘‘(e) REPORT.—The Ombudsman shall report annu-
ally to the Committee on Financial Services of the House 
of Representatives, the Committee on Banking, Housing, 
and Urban Affairs of the Senate on actions taken on ap-
peals under this section, including the types of issues that 
financial institutions have appealed and the results of 
those appeals. In no case shall such a report contain infor-
mation about individual financial institutions or any con-
fidential or privileged information shared by financial in-
stitutions. 
‘‘(f) RETALIATION PROHIBITED.—A Federal finan-
cial institution’s regulatory agency may not— 
‘‘(1) retaliate against a financial institution, in-
cluding service providers, or any institution-affiliated 
party, for exercising appellate rights under this sec-
tion; or 
‘‘(2) delay or deny any agency action that 
would benefit a financial institution or any institu-
tion-affiliated party on the basis that an appeal 
under this section is pending under this section.’’. 
(e) ADDITIONAL AMENDMENTS.— 
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267 
(1) RIEGLE
COMMUNITY
DEVELOPMENT
AND 
REGULATORY IMPROVEMENT ACT OF 1994.—Section 
309 of the Riegle Community Development and Reg-
ulatory Improvement Act of 1994 (12 U.S.C. 4806), 
is amended— 
(A) in subsection (a), by inserting after 
‘‘appropriate Federal banking agency’’ the fol-
lowing: ‘‘, the Bureau of Consumer Financial 
Protection,’’; 
(B) in subsection (b)— 
(i) in paragraph (2), by striking ‘‘the 
appellant from retaliation by agency exam-
iners’’ and inserting ‘‘the insured deposi-
tory institution or insured credit union 
from retaliation by the agencies referred to 
in subsection (a)’’; and 
(ii) by adding at the end the following 
flush-left text: 
‘‘For purposes of this subsection and subsection (e), retal-
iation includes delaying consideration of, or withholding 
approval of, any request, notice, or application that other-
wise would have been approved, but for the exercise of the 
institution’s or credit union’s rights under this section.’’; 
and 
(C) in subsection (e)(2)— 
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(i) in subparagraph (B), by striking 
‘‘and’’ at the end; 
(ii) in subparagraph (C), by striking 
the period and inserting ‘‘; and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(D) ensure that appropriate safeguards 
exist for protecting the insured depository insti-
tution or insured credit union from retaliation 
by any agency referred to in subsection (a) for 
exercising its rights under this subsection.’’. 
(2) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 18(x) of the Federal Deposit Insurance Act (12 
U.S.C. 1828(x)) is amended by inserting ‘‘the Bu-
reau of Consumer Financial Protection,’’ before 
‘‘any Federal banking agency’’ each place such term 
appears. 
(3) FEDERAL
CREDIT
UNION
ACT.—Section 
205(j) of the Federal Credit Union Act (12 U.S.C. 
1785(j)) is amended by inserting ‘‘the Bureau of 
Consumer Financial Protection,’’ before ‘‘the Ad-
ministration’’ each place such term appears. 
(4) TECHNICAL
CORRECTIONS.—The Federal 
Financial Institutions Examination Council Act of 
1978 (12 U.S.C. 3301 et seq.) is amended— 
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(A) in section 1003(1), by striking ‘‘the 
Office of Thrift Supervision,’’; and 
(B) in section 1005, by striking ‘‘One- 
fifth’’ and inserting ‘‘One-fourth’’. 
SEC. 413. NOTICE OF JUNIOR MORTGAGE OR LIEN. 
With respect to the dwelling of a borrower that serves 
as security for a securitized senior mortgage loan, if the 
borrower enters into any credit transaction that would re-
sult in the creation of a new mortgage or other lien on 
such dwelling, the creditor of such new mortgage or other 
lien shall notify the servicer of the senior mortgage loan 
of the existence of the new mortgage or other lien. 
SEC. 414. LIMITATION ON MORTGAGES HELD BY LOAN 
SERVICERS. 
(a) LIMITATION.—Neither the servicer of a residen-
tial mortgage loan, nor any affiliate of such servicer, may 
own, or hold any interest in, any other residential mort-
gage loan that is secured by a mortgage, deed of trust, 
or other equivalent consensual security interest on the 
same dwelling or residential real property that is subject 
to the mortgage, deed of trust, or other security interest 
that secures the residential mortgage loan serviced by the 
servicer. 
(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
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(1) AFFILIATE.—The term ‘‘affiliate’’ has the 
meaning given such term under section 104(g) of 
the Gramm-Leach-Bliley Act (15 U.S.C. 6701(g)). 
(2) RESIDENTIAL MORTGAGE LOAN.—The term 
‘‘residential mortgage loan’’ means any consumer 
credit transaction that is secured by a mortgage, 
deed of trust, or other equivalent consensual security 
interest on a dwelling or on residential real property 
that includes a dwelling, other than a consumer 
credit transaction under an open end credit plan or 
an extension of credit relating to a plan described in 
section 101(53D) of title 11, United States Code. 
(3) SERVICER.—The term ‘‘servicer’’ has the 
meaning provided such term in section 129A of the 
Truth in Lending Act, except that such term in-
cludes a person who makes or holds a residential 
mortgage loan (including a pool of residential mort-
gage loans) if such person also services the loan. 
(c) INTERESTS.—For purposes of subsection (a), 
ownership of, or holding an interest in, a residential mort-
gage loan includes ownership of, or holding an interest 
in— 
(1) a pool of residential mortgage loans that 
contains such residential mortgage loan; or 
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(2) any security based on or backed by a pool 
of residential mortgage loans that contains such res-
idential mortgage loan. 
(d) EFFECTIVE DATE.—This section shall apply— 
(1) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated after the date of the enactment of this 
Act, on such date of enactment; and 
(2) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated on or before the date of the enactment of 
this Act, upon the expiration of the 12-month period 
beginning upon such date of enactment. 
TITLE V—MISCELLANEOUS 
PROVISIONS 
SEC. 501. PRESERVING ACCESS TO MANUFACTURED HOUS-
ING. 
(a) AMENDMENT TO MORTGAGE ORIGINATOR DEFI-
NITION.—Section 1401 of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act is amended, in 
paragraph (2)(C)(ii) of the matter proposed to be added 
to section 103 of the Truth in Lending Act, by striking 
‘‘an employee of a retailer of manufactured homes who 
is not described in clause (i) or (iii) of subparagraph (A) 
and who does not advise a consumer on loan terms (in-
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272 
cluding rates, fees, and other costs)’’ and inserting ‘‘a re-
tailer of manufactured or modular homes or its employees 
unless such retailer or its employees receive compensation 
or gain for engaging in activities described in subpara-
graph (A) that is in excess of any compensation or gain 
received in a comparable cash transaction’’. 
(b) TECHNICAL AMENDMENTS.—Section 1401 of the 
Dodd-Frank Wall Street Reform and Consumer Protec-
tion Act is amended, in the matter proposed to be added 
to section 103 of the Truth in Lending Act, by redesig-
nating subsection (cc) as subsection (dd). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the provisions 
of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act to which they relate. 
SEC. 502. COMMON SENSE ECONOMIC RECOVERY. 
(a) SHORT TITLE.—This section may be cited as the 
‘‘Common Sense Economic Recovery Act of 2013’’. 
(b) TREATMENT OF CERTAIN LOANS.— 
(1) IN GENERAL.—For purposes of determining 
capital requirements or measuring capital of an in-
sured depository institution under section 38 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831o) or 
any other provision of law or regulatory guidance, an 
insured depository institution that would otherwise 
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be required to treat a loan as a non-accrual loan 
may treat such loan as an accrual loan, if— 
(A) the loan is current; 
(B) during the previous 6-month period, no 
monthly payment on the loan has been more 
than 30 days delinquent; and 
(C) the payments on the loan are being 
made pursuant to the contractual terms of the 
loan agreement and any refinances and modi-
fications that are agreed to by all of the parties. 
(2) DEMONSTRATION OF ABILITY TO PERFORM 
ON
A
LOAN.—Notwithstanding paragraph (1), a 
modified or restructured loan may not be treated as 
a non-accrual loan if the borrower demonstrates the 
ability to perform on such a loan— 
(A) over a period of 6 months; or 
(B) with respect to a loan on a quarterly, 
semi-annual, or longer repayment schedule, over 
a period of 3 consecutive payments. 
(3) NO ADDITIONAL ADVERSE TREATMENT.— 
With respect to a loan held by an insured depository 
institution and treated as an accrual loan by reason 
of paragraph (1), an appropriate Federal banking 
agency may not impose any additional accounting 
requirements on such institution with respect to 
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such loan compared to the requirements that would 
otherwise have been placed on such institution with 
respect to such loan if such loan were not being 
treated as an accrual loan by reason of paragraph 
(1), if the result of such additional requirement 
would adversely impact the measurement of capital 
of the institution. 
(4) PROHIBITION ON THE RE-CLASSIFICATION 
OF
LOANS
BASED
SOLELY
ON
COLLATERAL 
VALUE.—An appropriate Federal banking agency 
may not require an insured depository institution to 
treat a loan as a non-accrual loan solely on the basis 
that the collateral of such loan has reduced in value. 
(5) PROVISIONS NOT APPLICABLE TO PUBLICLY 
TRADED INSTITUTIONS.—This subsection shall not 
apply with respect to any issuer of a security reg-
istered pursuant to section 12 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78l). 
(c) STUDY.— 
(1) IN
GENERAL.—The Financial Stability 
Oversight Council shall conduct a study of how best 
to prevent contradictory guidance from being issued 
by appropriate Federal banking agencies to insured 
depository institutions with respect to loan classifica-
tions and capital requirements. 
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(2) REPORT.—Not later than the end of the 60- 
day period beginning on the date of the enactment 
of this Act, the Financial Stability Oversight Council 
shall issue a report to the Congress containing— 
(A) all determinations and conclusions 
made by the Council in carrying out the study 
required under paragraph (1); and 
(B) legislative recommendations that the 
Council believe will prevent contradictory guid-
ance from being issued by appropriate Federal 
banking agencies to insured depository institu-
tions with respect to loan classifications and 
capital requirements. 
(d) DEFINITIONS.—For purposes of this section: 
(1) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘‘appropriate Federal banking agen-
cy’’— 
(A) has the meaning given such term 
under section 3 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813); and 
(B) means the National Credit Union Ad-
ministration Board, in the case of a credit 
union. 
(2) INSURED DEPOSITORY INSTITUTION.—The 
term ‘‘insured depository institution’’ means— 
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(A) an insured depository institution, as 
defined under section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813); and 
(B) a credit union. 
(e) SUNSET.—Effective after the end of the 2-year 
period beginning on the date of the enactment of this Act, 
this section shall cease to have any force or effect. 
SEC. 503. TECHNICAL AMENDMENTS TO FEDERAL HOME 
LOAN BANK ACT. 
(a) IN GENERAL.—Section 10 of the Federal Home 
Loan Bank Act (12 U.S.C. 1430) is amended— 
(1) in subsection (a)— 
(A) by redesignating paragraph (6) as 
paragraph (7); and 
(B) by inserting after paragraph (5) the 
following: 
‘‘(6) REPORT ON COLLATERAL.—The Director 
shall annually report to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of 
Representatives on the collateral pledged to the 
Banks, including an analysis of collateral by type 
and by Bank district.’’; 
(2) by striking subsection (g); and 
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(3) in subsection (j)(12), by striking subpara-
graphs (C) and (D). 
(b) INITIAL REPORT.—The Director of the Federal 
Housing Finance Agency shall make the first report re-
quired under section 10(a)(7) of the Federal Home Loan 
Bank Act, as added by subsection (a), not later than the 
end of the 180-day period beginning on the date of the 
enactment of this Act. 
SEC. 504. PRESERVATION OF ATTORNEY-CLIENT PRIVI-
LEGE 
FOR 
INFORMATION 
PROVIDED 
TO 
FHFA. 
Section 1317 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 
U.S.C.4517) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO 
AGENCY.— 
‘‘(1) IN GENERAL.—The submission by any per-
son of any information to the Agency for any pur-
pose in the course of any supervisory or regulatory 
process of the Agency shall not be construed as 
waiving, destroying, or otherwise affecting any privi-
lege such person may claim with respect to such in-
formation under Federal or State law as to any per-
son or entity other than such Agency. 
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‘‘(2) RULE OF CONSTRUCTION.—No provision 
of paragraph (1) may be construed as implying or 
establishing that— 
‘‘(A) any person waives any privilege appli-
cable to information that is submitted or trans-
ferred under any circumstance to which para-
graph (1) does not apply; or 
‘‘(B) any person would waive any privilege 
applicable to any information by submitting the 
information to the Agency, but for this sub-
section.’’. 
SEC. 505. FHFA LIAISON MEMBERSHIP IN FEDERAL FINAN-
CIAL INSTITUTIONS EXAMINATION COUNCIL. 
Section 1007 of the Federal Financial Institutions 
Examination Council Act of 1978 (12 U.S.C. 3306) is 
amended— 
(1) in the section heading, by inserting after 
‘‘STATE’’ the following: ‘‘AND FEDERAL HOUSING 
FINANCE AGENCY’’; 
(2) in the first sentence, by inserting after ‘‘fi-
nancial institutions’’ the following: ‘‘, and one rep-
resentative of the Federal Housing Finance Agen-
cy,’’; and 
(3) in the last sentence, by inserting ‘‘State’’ 
after ‘‘among the’’. 
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279 
SEC. 506. RECOGNITION OF FHFA ENFORCEMENT AUTHOR-
ITY WITH REGARD TO REGULATED ENTITIES. 
Section 1125(c) of the Financial Institution Reform, 
Recovery and Enforcement Act of 1989 (12 U.S.C. 
3354(c); as added by section 1473(q) of the Dodd Frank 
Wall Street Reform and Consumer Protection Act) is 
amended— 
(1) in paragraph (1), by striking ‘‘and’’ at the 
end; 
(2) by redesignating paragraph (2) as para-
graph (3); and 
(3) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) with respect to any regulated entity (as 
such term is defined in section 1303 of the Federal 
Housing Enterprises Financial Safety and Sound-
ness Act of 1992 (12 U.S.C. 4502)), the Federal 
Housing Finance Agency; and’’. 
SEC. 507. EXCEPTION FROM RIGHT TO FINANCIAL PRIVACY 
ACT FOR FHFA AS CONSERVATOR OR RE-
CEIVER. 
Section 1113(o) of the Right to Financial Privacy Act 
of 1978 (12 U.S.C. 3413(o)) is amended— 
(1) by striking ‘‘(o)’’ and inserting ‘‘(o)(1)’’; 
and 
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280 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) This title shall not apply to the examination by 
or disclosure to the Federal Housing Finance Agency or 
its employees or agents of financial records or information 
in the exercise of its supervisory or regulatory functions, 
including conservatorship and receivership functions, with 
respect to any regulated entity or other person partici-
pating in the conduct of the affairs thereof.’’. 
SEC. 508. TECHNICAL AMENDMENT TO FEDERAL HOUSING 
ENTERPRISES 
FINANCIAL 
SAFETY 
AND 
SOUNDNESS ACT OF 1992. 
Section 1368(d) of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4618(d)) is amended by striking ‘‘Committee on Banking, 
Finance and Urban Affairs’’ and inserting ‘‘Committee on 
Financial Services’’. 
SEC. 509. APPLICATION OF PRESUMPTION TO ENTERPRISE 
STREAMLINED REFINANCINGS. 
Section 129C(b)(3)(B)(ii) of the Truth in Lending 
Act (15 U.S.C. 1639c(b)(3)(B)(ii); as added by section 
1412 of the Dodd Frank Wall Street Reform and Con-
sumer Protection Act) is amended— 
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281 
(1) by inserting after ‘‘administer,’’ the fol-
lowing: ‘‘or that are owned or guaranteed by an enti-
ty regulated or supervised by such agency,’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(V) The Federal Housing Fi-
nance Agency, with regard to mort-
gages owned or guaranteed by an en-
tity regulated or supervised by such 
agency.’’. 
SEC. 510. FHFA AUTHORITY TO REGULATE AND EXAMINE 
CONTRACTUAL COUNTERPARTIES. 
Section 1317 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992, as amended 
by the preceding provisions of this Act, is further amended 
(12 U.S.C. 4517) by adding at the end the following new 
subsection: 
‘‘(k) REGULATION AND EXAMINATION OF CONTRAC-
TUAL COUNTERPARTIES.— 
‘‘(1) AUTHORITY.—When a regulated entity or 
the Office of Finance causes to be performed for 
itself, by contract or otherwise and whether on or off 
its premises, any services authorized to that regu-
lated entity or the Office of Finance by its author-
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282 
izing statute or the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992— 
‘‘(A) such performance shall be subject to 
regulation and examination by the Federal 
Housing Finance Agency to the same extent as 
if such services were being performed by the 
regulated entity or the Office of Finance itself 
on its own premises, and 
‘‘(B) the regulated entity or the Office of 
Finance shall notify the Director of the exist-
ence of the service relationship within thirty 
days after the making of such service contract 
or the performance of the service, whichever oc-
curs first. 
‘‘(2) REGULATIONS AND ORDERS.—The Direc-
tor may issue such regulations and orders as may be 
necessary to enable the Agency to administer and to 
carry out the purposes of this subsection and to pre-
vent evasions thereof.’’. 
SEC. 511. ELECTION OF DIRECTORS OF A MERGED FED-
ERAL HOME LOAN BANK. 
Section 7 of the Federal Home Loan Bank Act (12 
U.S.C. 1427) is amended— 
(1) in subsection (a)(1), by inserting ‘‘and sub-
section (d)’’ after ‘‘paragraphs (2) through (4)’’; 
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(2) in subsection (b)— 
(A) in the matter preceding paragraph 
(2)— 
(i) by striking ‘‘Each’’ and inserting 
‘‘(1)(A) Except as provided in subsection 
(d), each’’; 
(ii) by inserting ‘‘(B)’’ before ‘‘No 
person’’; 
(iii) by inserting ‘‘(C)’’ before ‘‘As 
used’’; and 
(iv) in the third sentence— 
(I) by striking ‘‘this subsection’’ 
and inserting ‘‘subparagraph (A)’’; 
and 
(II) by striking ‘‘home loan 
bank’’ and inserting ‘‘Home Loan 
Bank’’; and 
(B) in paragraph (2)(A)(ii), by inserting 
‘‘or subsection (d)(4), if applicable,’’ after 
‘‘paragraph (1)’’; 
(3) by striking subsections (c), (d), and (h); 
(4) by redesignating subsections (d), (e), (f), 
and (g) as subsections (e), (f), (g), and (h), respec-
tively; and 
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(5) by inserting after subsection (b) the fol-
lowing: 
‘‘(c) ALLOCATION
OF
MEMBER
DIRECTORSHIPS 
AMONG STATES IN BANK DISTRICT.— 
‘‘(1) DESIGNATION OF MEMBER LOCATION.— 
The Director shall designate the State in which each 
member of each Federal Home Loan Bank shall be 
deemed to be located for the purposes of this sub-
section and subsections (b) and (d), and may from 
time to time change any such designation. If the 
principal place of business of any Bank member is 
located in a State within the district of the Bank of 
which it is a member, the Director shall designate 
that State as the State in which the member shall 
be deemed to be located for those purposes. 
‘‘(2) 
STOCK-BASED
ALLOCATION
OF
DES-
IGNATED MEMBER DIRECTORSHIPS.—The number of 
member directorships designated as representing the 
members located in each separate State in a Federal 
Home Loan Bank district shall be determined by the 
Director in the approximate ratio of the percentage 
of the required stock, as prescribed by regulation of 
the Director, of the members located in that State 
at the end of the calendar year next preceding the 
date of the election to the total required stock, as so 
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determined, of all members of the Bank as of that 
same date. 
‘‘(3) LIMITATIONS
ON
STOCK-BASED
ALLOCA-
TIONS.—Except as provided in subsection (d), the 
following provisions shall apply to the allocation of 
member directorships among the States of a Bank 
district, notwithstanding the requirements of para-
graph (2): 
‘‘(A) In the case of each State, the number 
of member directorships designated as rep-
resenting the members located in that State 
shall not be less than one and shall not be more 
than six. 
‘‘(B) If at any time the number of member 
directorships designated as representing the 
members located in any State would not be at 
least equal to the total number of member di-
rectorships which, on December 31, 1960, were 
filled by officers or directors of members whose 
principal places of business were located in that 
State, the Director shall add to the board of di-
rectors of the Bank of the district in which that 
State is located such number of member direc-
torships, and shall so designate the directorship 
or directorships thus added, that the number of 
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member 
directorships 
designated 
as 
rep-
resenting the members located in that State will 
equal said total number. Any member director-
ship so added shall exist only until the expira-
tion of its first term. 
‘‘(d) BOARD SIZE, COMPOSITION, AND ELECTIONS 
FOR COMBINED BANKS.—Notwithstanding any other pro-
vision of this section, the following requirements shall 
apply to the size and composition of, and the election of 
directors to, the board of any Bank created as result of 
the combination of two or more Banks under section 26: 
‘‘(1) BOARD SIZE.—The management of a com-
bined Bank shall be vested in a board of 15 direc-
tors, or such lesser number as the Director deter-
mines appropriate, consistent with the safe and 
sound operation of the combined Bank. 
‘‘(2) BOARD MAKEUP.—The Director shall es-
tablish the respective number of member director-
ships and independent directorships for the board of 
the combined Bank such that— 
‘‘(A) member directors shall comprise at 
least the majority of the members of the board 
of directors; and 
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‘‘(B) independent directors shall comprise 
not fewer than 2⁄5 of the members of the board 
of directors. 
‘‘(3) ALLOCATION
OF
MEMBER
DIRECTOR-
SHIPS.—The Director shall allocate the member di-
rectorships of the board of a combined Bank among 
the States of the Bank district in accordance with 
the requirements of subsection (c)(2), except that— 
‘‘(A) no State shall be allocated more than 
two member directorships until every state has 
been allocated at least one member directorship; 
and 
‘‘(B) if, after the Director has allocated all 
but one of the member directorships, there re-
main any States to which no member director-
ship has yet been allocated, then the Director 
shall allocate the remaining member director-
ship to represent the members located in all of 
the States that have not otherwise been allo-
cated a member directorship. 
‘‘(4) ELECTION OF DIRECTORS.—The directors 
of a combined Bank shall be nominated and elected 
as provided in subsection (b), except that, in the 
case of a member directorship that has been des-
ignated as representing the members of two or more 
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States pursuant to paragraph (3)(B), the following 
requirements shall apply in lieu of those set forth in 
subsection (b)(1)(A): 
‘‘(A) The directorship shall be filled by a 
person who is an officer or director of a mem-
ber located in one of the States represented. 
‘‘(B) Each member located in each State 
represented shall be entitled to nominate an eli-
gible person to fill the directorship, and the 
member director shall be elected from persons 
so nominated by a plurality of the votes that 
those members may cast under subparagraph 
(C). 
‘‘(C) Each member located in each State 
represented may cast a number of votes equal 
to the number of shares of stock in the Bank 
required to be held by the member at the end 
of the calendar year next preceding the election, 
but not in excess of the average number of 
shares of stock in the Bank required to be held 
at the end of that year by the respective mem-
bers of the Bank located in those States. 
‘‘(5) INITIAL
DIRECTORS
FOR
NEWLY
COM-
BINED
BANKS.—The following requirements shall 
apply to the selection of the individuals to serve as 
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the initial directors of a combined Bank as of the ef-
fective date of the combination: 
‘‘(A) The terms of office of any directors 
of the combining Banks who do not become di-
rectors of the combined Bank shall terminate as 
of the effective date of the combination. 
‘‘(B) The individuals to serve as the initial 
directors of a newly combined Bank shall be 
chosen from among the incumbent directors of 
the predecessor Banks serving immediately 
prior to the effective date of the combination of 
those Banks and shall be— 
‘‘(i) as designated by the Director in 
the case of a Bank created from a com-
bination of two or more Banks pursuant to 
a reorganization under section 26(a); and 
‘‘(ii) as agreed upon among the merg-
ing Banks and approved by the Director in 
the case of a Bank created from a vol-
untary merger of two or more Banks pur-
suant to section 26(b). 
‘‘(C) Each initial director of the combined 
Bank shall be entitled to serve for the remain-
der of the term of office that the director had 
with the predecessor Bank. Terms served as a 
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director of a predecessor Bank shall be counted 
as being served as a director of the combined 
Bank for purposes of determining term limits 
under subsection (e)(3). 
‘‘(D) Beginning with the first election of 
directors occurring after the combination of the 
predecessor Banks, the Director shall adjust the 
term of any directorship of the combined Bank 
as necessary to achieve and maintain the stag-
gering of terms that is required under sub-
section (e)(2). 
‘‘(e) TERMS; RULES AND REGULATIONS GOVERNING 
NOMINATIONS AND ELECTIONS.— 
‘‘(1) TERMS.—Except as provided in paragraph 
(2), the term of each Federal Home Loan Bank di-
rector shall be 4 years. 
‘‘(2) ADJUSTMENT OF TERMS.—The Director 
shall adjust the terms of members from time to time 
as necessary to ensure that the terms of the mem-
bers of the board of directors are staggered with ap-
proximately 1⁄4 of the terms expiring each year. 
‘‘(3) TERM LIMITS.—If any person has been 
elected to each of three consecutive full terms as a 
director of a Federal Home Loan Bank and has 
served for all or part of each of those terms, that 
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person shall not be eligible for election to a director-
ship of that Bank for a term which begins earlier 
than two years after the expiration of the last expir-
ing of the three terms. 
‘‘(4) RULES
AND
REGULATIONS
GOVERNING 
NOMINATIONS
AND
ELECTIONS.—The Director is 
hereby authorized to prescribe such rules and regu-
lations as the Director may deem necessary or ap-
propriate for the nomination and election of direc-
tors of Federal Home Loan Banks, including, with-
out limitation on the generality of the foregoing, 
rules and regulations with respect to the breaking of 
ties and with respect to the inclusion of more than 
one directorship on a single ballot and the methods 
of voting and of determining the results of voting in 
such cases.’’; 
(6) in subsection (f), as so redesignated, by 
striking the first and second sentences; 
(7) in subsection (h), as so redesignated— 
(A) by striking ‘‘home loan bank’’ each 
place such term appears and inserting ‘‘Home 
Loan Bank’’; and 
(B) in paragraph (1), by striking ‘‘such 
bank’’ and ‘‘the bank’’ and inserting ‘‘such 
Bank’’ and ‘‘the Bank’’, respectively; 
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(8) in subsection (i)(1)— 
(A) by striking ‘‘bank’’ and inserting 
‘‘Bank’’; and 
(B) by striking ‘‘board’’ and inserting ‘‘Di-
rector’’; 
(9) in subsection (j), by striking ‘‘bank’’ and in-
serting ‘‘Bank’’; and 
(10) by striking the second subsection (l), as 
added by section 1202(8) of the Housing and Eco-
nomic Recovery Act of 2008. 
Æ 
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