245
‘‘(V) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), 
(II), (III), or (IV), together with all 
supplements to any such master 
agreement, without regard to whether 
the master agreement contains an 
agreement or transaction that is not a 
swap agreement under this clause, ex-
cept that the master agreement shall 
be considered to be a swap agreement 
under this clause only with respect to 
each agreement or transaction under 
the master agreement that is referred 
to in subclause (I), (II), (III), or (IV); 
and 
‘‘(VI) any security agreement or 
arrangement or other credit enhance-
ment related to any agreements or 
transactions referred to in subclause 
(I), (II), (III), (IV), or (V), including 
any guarantee or reimbursement obli-
gation in connection with any agree-
ment or transaction referred to in any 
such subclause.
246
Such term is applicable for purposes of 
this subsection only and shall not be con-
strued or applied so as to challenge or af-
fect the characterization, definition, or 
treatment of any swap agreement under 
any other statute, regulation, or rule, in-
cluding the Securities Act of 1933, the Se-
curities Exchange Act of 1934, the Public 
Utility Holding Company Act of 1935, the 
Trust Indenture Act of 1939, the Invest-
ment Company Act of 1940, the Invest-
ment Advisers Act of 1940, the Securities 
Investor Protection Act of 1970, the Com-
modity Exchange Act, the Gramm-Leach-
Bliley Act, and the Legal Certainty for 
Bank Products Act of 2000. 
‘‘(vii) 
TREATMENT
OF
MASTER 
AGREEMENT
AS
ONE
AGREEMENT.—Any 
master agreement for any contract or 
agreement described in any preceding 
clause of this subparagraph (or any master 
agreement for such master agreement or 
agreements), together with all supplements 
to such master agreement, shall be treated 
as a single agreement and a single quali-
247
fied financial contract. If a master agree-
ment contains provisions relating to agree-
ments or transactions that are not them-
selves qualified financial contracts, the 
master agreement shall be deemed to be a 
qualified financial contract only with re-
spect to those transactions that are them-
selves qualified financial contracts. 
‘‘(viii) TRANSFER.—The term ‘trans-
fer’ means every mode, direct or indirect, 
absolute or conditional, voluntary or invol-
untary, of disposing of or parting with 
property or with an interest in property, 
including retention of title as a security in-
terest and foreclosure of the regulated en-
tity’s equity of redemption. 
‘‘(E) CERTAIN PROTECTIONS IN EVENT OF 
APPOINTMENT
OF
CONSERVATOR.—Notwith-
standing any other provision of this Act (other 
than paragraph (13) of this subsection), any 
other Federal law, or the law of any State, no 
person shall be stayed or prohibited from exer-
cising—
‘‘(i) any right such person has to 
cause the termination, liquidation, or accel-
248
eration of any qualified financial contract 
with a regulated entity in a conservator-
ship based upon a default under such fi-
nancial contract which is enforceable under 
applicable noninsolvency law; 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement relating to one or more such 
qualified financial contracts; or 
‘‘(iii) any right to offset or net out 
any termination values, payment amounts, 
or other transfer obligations arising under 
or in connection with such qualified finan-
cial contracts. 
‘‘(F) CLARIFICATION.—No provision of law 
shall be construed as limiting the right or 
power of the Agency, or authorizing any court 
or agency to limit or delay, in any manner, the 
right or power of the Agency to transfer any 
qualified financial contract in accordance with 
paragraphs (9) and (10) of this subsection or to 
disaffirm or repudiate any such contract in ac-
cordance with subsection (d)(1) of this section. 
‘‘(G) WALKAWAY
CLAUSES
NOT
EFFEC-
TIVE.—
249
‘‘(i) IN
GENERAL.—Notwithstanding 
the provisions of subparagraphs (A) and 
(E), and sections 403 and 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991, no walkaway 
clause shall be enforceable in a qualified fi-
nancial contract of a regulated entity in 
default. 
‘‘(ii) WALKAWAY CLAUSE DEFINED.—
For purposes of this subparagraph, the 
term ‘walkaway clause’ means a provision 
in a qualified financial contract that, after 
calculation of a value of a party’s position 
or an amount due to or from 1 of the par-
ties in accordance with its terms upon ter-
mination, liquidation, or acceleration of the 
qualified financial contract, either does not 
create a payment obligation of a party or 
extinguishes a payment obligation of a 
party in whole or in part solely because of 
such party’s status as a nondefaulting 
party. 
‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON-
TRACTS.—In making any transfer of assets or liabil-
ities of a regulated entity in default which includes
250
any qualified financial contract, the conservator or 
receiver for such regulated entity shall either—
‘‘(A) transfer to 1 person—
‘‘(i) all qualified financial contracts 
between any person (or any affiliate of 
such person) and the regulated entity in 
default; 
‘‘(ii) all claims of such person (or any 
affiliate of such person) against such regu-
lated entity under any such contract (other 
than any claim which, under the terms of 
any such contract, is subordinated to the 
claims of general unsecured creditors of 
such regulated entity); 
‘‘(iii) all claims of such regulated enti-
ty against such person (or any affiliate of 
such person) under any such contract; and 
‘‘(iv) all property securing or any 
other credit enhancement for any contract 
described in clause (i) or any claim de-
scribed in clause (ii) or (iii) under any 
such contract; or 
‘‘(B) transfer none of the financial con-
tracts, claims, or property referred to under
251
subparagraph (A) (with respect to such person 
and any affiliate of such person). 
‘‘(10) NOTIFICATION OF TRANSFER.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the conservator or receiver for a 
regulated entity in default makes any 
transfer of the assets and liabilities of such 
regulated entity, and 
‘‘(ii) the transfer includes any quali-
fied financial contract, 
the conservator or receiver shall notify any per-
son who is a party to any such contract of such 
transfer by 5:00 p.m. (eastern time) on the 
business day following the date of the appoint-
ment of the receiver in the case of a receiver-
ship, or the business day following such trans-
fer in the case of a conservatorship. 
‘‘(B) CERTAIN
RIGHTS
NOT
ENFORCE-
ABLE.—
‘‘(i) RECEIVERSHIP.—A person who is 
a party to a qualified financial contract 
with a regulated entity may not exercise 
any right that such person has to termi-
nate, liquidate, or net such contract under 
paragraph (8)(A) of this subsection or sec-
252
tion 403 or 404 of the Federal Deposit In-
surance Corporation Improvement Act of 
1991, solely by reason of or incidental to 
the appointment of a receiver for the regu-
lated entity (or the insolvency or financial 
condition of the regulated entity for which 
the receiver has been appointed)—
‘‘(I) until 5:00 p.m. (eastern 
time) on the business day following 
the date of the appointment of the re-
ceiver; or 
‘‘(II) after the person has re-
ceived notice that the contract has 
been transferred pursuant to para-
graph (9)(A). 
‘‘(ii) CONSERVATORSHIP.—A person 
who is a party to a qualified financial con-
tract with a regulated entity may not exer-
cise any right that such person has to ter-
minate, liquidate, or net such contract 
under paragraph (8)(E) of this subsection 
or section 403 or 404 of the Federal De-
posit Insurance Corporation Improvement 
Act of 1991, solely by reason of or inci-
dental to the appointment of a conservator
253
for the regulated entity (or the insolvency 
or financial condition of the regulated enti-
ty for which the conservator has been ap-
pointed). 
‘‘(iii) NOTICE.—For purposes of this 
paragraph, the Agency as receiver or con-
servator of a regulated entity shall be 
deemed to have notified a person who is a 
party to a qualified financial contract with 
such regulated entity if the Agency has 
taken steps reasonably calculated to pro-
vide notice to such person by the time 
specified in subparagraph (A). 
‘‘(C) BUSINESS DAY DEFINED.—For pur-
poses of this paragraph, the term ‘business day’ 
means any day other than any Saturday, Sun-
day, or any day on which either the New York 
Stock Exchange or the Federal Reserve Bank 
of New York is closed. 
‘‘(11) DISAFFIRMANCE
OR
REPUDIATION
OF 
QUALIFIED
FINANCIAL
CONTRACTS.—In exercising 
the rights of disaffirmance or repudiation of a con-
servator or receiver with respect to any qualified fi-
nancial contract to which a regulated entity is a
254
party, the conservator or receiver for such institution 
shall either—
‘‘(A) disaffirm or repudiate all qualified fi-
nancial contracts between—
‘‘(i) any person or any affiliate of 
such person; and 
‘‘(ii) the regulated entity in default; or 
‘‘(B) disaffirm or repudiate none of the 
qualified financial contracts referred to in sub-
paragraph (A) (with respect to such person or 
any affiliate of such person). 
‘‘(12) CERTAIN
SECURITY
INTERESTS
NOT 
AVOIDABLE.—No provision of this subsection shall 
be construed as permitting the avoidance of any le-
gally enforceable or perfected security interest in any 
of the assets of any regulated entity, except where 
such an interest is taken in contemplation of the in-
solvency of the regulated entity, or with the intent 
to hinder, delay, or defraud the regulated entity or 
the creditors of such regulated entity. 
‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.—
‘‘(A) IN GENERAL.—Notwithstanding any 
provision of a contract providing for termi-
nation, default, acceleration, or exercise of 
rights upon, or solely by reason of, insolvency
255
or the appointment of a conservator or receiver, 
the conservator or receiver may enforce any 
contract or regulated entity bond entered into 
by the regulated entity. 
‘‘(B) CERTAIN RIGHTS NOT AFFECTED.—
No provision of this paragraph may be con-
strued as impairing or affecting any right of the 
conservator or receiver to enforce or recover 
under a director’s or officer’s liability insurance 
contract or surety bond under other applicable 
law. 
‘‘(C) CONSENT REQUIREMENT.—
‘‘(i) IN GENERAL.—Except as other-
wise provided under this section, no person 
may exercise any right or power to termi-
nate, accelerate, or declare a default under 
any contract to which a regulated entity is 
a party, or to obtain possession of or exer-
cise control over any property of the regu-
lated entity, or affect any contractual 
rights of the regulated entity, without the 
consent of the conservator or receiver, as 
appropriate, for a period of—
‘‘(I) 45 days after the date of ap-
pointment of a conservator; or
256
‘‘(II) 90 days after the date of 
appointment of a receiver. 
‘‘(ii) EXCEPTIONS.—This paragraph 
shall—
‘‘(I) not apply to a director’s or 
officer’s liability insurance contract; 
‘‘(II) not apply to the rights of 
parties to any qualified financial con-
tracts under subsection (d)(8); and 
‘‘(III) not be construed as per-
mitting the conservator or receiver to 
fail to comply with otherwise enforce-
able provisions of such contracts. 
‘‘(14) SAVINGS
CLAUSE.—The meanings of 
terms used in this subsection are applicable for pur-
poses of this subsection only, and shall not be con-
strued or applied so as to challenge or affect the 
characterization, definition, or treatment of any 
similar terms under any other statute, regulation, or 
rule, including the Gramm-Leach-Bliley Act, the 
Legal Certainty for Bank Products Act of 2000, the 
securities laws (as that term is defined in section 
3(a)(47) of the Securities Exchange Act of 1934), 
and the Commodity Exchange Act.
257
‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND 
FEDERAL HOME LOAN BANKS.—No provision of this 
subsection shall apply with respect to—
‘‘(A) any extension of credit from any Fed-
eral home loan bank or Federal Reserve Bank 
to any regulated entity; or 
‘‘(B) any security interest in the assets of 
the regulated entity securing any such extension 
of credit. 
‘‘(e) VALUATION OF CLAIMS IN DEFAULT.—
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal law or the law of any State, and 
regardless of the method which the Agency deter-
mines to utilize with respect to a regulated entity in 
default or in danger of default, including trans-
actions authorized under subsection (i), this sub-
section shall govern the rights of the creditors of 
such regulated entity. 
‘‘(2) MAXIMUM LIABILITY.—The maximum li-
ability of the Agency, acting as receiver or in any 
other capacity, to any person having a claim against 
the receiver or the regulated entity for which such 
receiver is appointed shall equal the lesser of—
‘‘(A) the amount such claimant would have 
received if the Agency had liquidated the assets
258
and liabilities of such regulated entity without 
exercising the authority of the Agency under 
subsection (i) of this section; or 
‘‘(B) the amount of proceeds realized from 
the performance of contracts or sale of the as-
sets of the regulated entity. 
‘‘(f) LIMITATION
ON COURT ACTION.—Except as 
provided in this section or at the request of the Director, 
no court may take any action to restrain or affect the exer-
cise of powers or functions of the Agency as a conservator 
or a receiver. 
‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.—
‘‘(1) IN GENERAL.—A director or officer of a 
regulated entity may be held personally liable for 
monetary damages in any civil action by, on behalf 
of, or at the request or direction of the Agency, 
which action is prosecuted wholly or partially for the 
benefit of the Agency—
‘‘(A) acting as conservator or receiver of 
such regulated entity, or 
‘‘(B) acting based upon a suit, claim, or 
cause of action purchased from, assigned by, or 
otherwise conveyed by such receiver or conser-
vator,
259
for gross negligence, including any similar conduct 
or conduct that demonstrates a greater disregard of 
a duty of care (than gross negligence) including in-
tentional tortious conduct, as such terms are defined 
and determined under applicable State law. 
‘‘(2) NO LIMITATION.—Nothing in this para-
graph shall impair or affect any right of the Agency 
under other applicable law. 
‘‘(h) DAMAGES.—In any proceeding related to any 
claim against a director, officer, employee, agent, attorney, 
accountant, appraiser, or any other party employed by or 
providing services to a regulated entity, recoverable dam-
ages determined to result from the improvident or other-
wise improper use or investment of any assets of the regu-
lated entity shall include principal losses and appropriate 
interest. 
‘‘(i) LIMITED-LIFE REGULATED ENTITIES.—
‘‘(1) ORGANIZATION.—
‘‘(A) PURPOSE.—If a regulated entity is in 
default, or if the Agency anticipates that a reg-
ulated entity will default, the Agency may orga-
nize a limited-life regulated entity with those 
powers and attributes of the regulated entity in 
default or in danger of default that the Director 
determines necessary, subject to the provisions
260
of this subsection. The Director shall grant a 
temporary charter to the limited-life regulated 
entity, and the limited-life regulated entity shall 
operate subject to that charter. 
‘‘(B) AUTHORITIES.—Upon the creation of 
a limited-life regulated entity under subpara-
graph (A), the limited-life regulated entity 
may—
‘‘(i) assume such liabilities of the reg-
ulated entity that is in default or in danger 
of default as the Agency may, in its discre-
tion, determine to be appropriate, provided 
that the liabilities assumed shall not exceed 
the amount of assets of the limited-life reg-
ulated entity; 
‘‘(ii) purchase such assets of the regu-
lated entity that is in default, or in danger 
of default, as the Agency may, in its dis-
cretion, determine to be appropriate; and 
‘‘(iii) perform any other temporary 
function which the Agency may, in its dis-
cretion, prescribe in accordance with this 
section. 
‘‘(2) CHARTER.—
261
‘‘(A) 
CONDITIONS.—The 
Agency 
may 
grant a temporary charter if the Agency deter-
mines that the continued operation of the regu-
lated entity in default or in danger of default 
is in the best interest of the national economy 
and the housing markets. 
‘‘(B) TREATMENT AS BEING IN DEFAULT 
FOR CERTAIN PURPOSES.—A limited-life regu-
lated entity shall be treated as a regulated enti-
ty in default at such times and for such pur-
poses as the Agency may, in its discretion, de-
termine. 
‘‘(C) MANAGEMENT.—A limited-life regu-
lated entity, upon the granting of its charter, 
shall be under the management of a board of 
directors consisting of not fewer than 5 nor 
more than 10 members appointed by the Agen-
cy. 
‘‘(D) BYLAWS.—The board of directors of 
a limited-life regulated entity shall adopt such 
bylaws as may be approved by the Agency. 
‘‘(3) CAPITAL STOCK.—No capital stock need 
be paid into a limited-life regulated entity by the 
Agency.
262
‘‘(4) INVESTMENTS.—Funds of a limited-life 
regulated entity shall be kept on hand in cash, in-
vested in obligations of the United States or obliga-
tions guaranteed as to principal and interest by the 
United States, or deposited with the Agency, or any 
Federal Reserve bank. 
‘‘(5) EXEMPT
STATUS.—Notwithstanding any 
other provision of Federal or State law, the limited-
life regulated entity, its franchise, property, and in-
come shall be exempt from all taxation now or here-
after imposed by the United States, by any territory, 
dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority. 
‘‘(6) WINDING UP.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), unless Congress authorizes the sale 
of the capital stock of the limited-life regulated 
entity, not later than 2 years after the date of 
its organization, the Agency shall wind up the 
affairs of the limited-life regulated entity. 
‘‘(B) EXTENSION.—The Director may, in 
the discretion of the Director, extend the status 
of the limited-life regulated entity for 3 addi-
tional 1-year periods. 
‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.—
263
‘‘(A) IN GENERAL.—
‘‘(i) TRANSFER OF ASSETS AND LI-
ABILITIES.—The Agency, as receiver, may 
transfer any assets and liabilities of a reg-
ulated entity in default, or in danger of de-
fault, to the limited-life regulated entity in 
accordance with paragraph (1). 
‘‘(ii) SUBSEQUENT
TRANSFERS.—At 
any time after a charter is transferred to 
a limited-life regulated entity, the Agency, 
as receiver, may transfer any assets and li-
abilities of such regulated entity in default, 
or in danger in default, as the Agency 
may, in its discretion, determine to be ap-
propriate in accordance with paragraph 
(1). 
‘‘(iii) 
EFFECTIVE
WITHOUT
AP-
PROVAL.—The transfer of any assets or li-
abilities of a regulated entity in default, or 
in danger of default, transferred to a lim-
ited-life regulated entity shall be effective 
without any further approval under Fed-
eral or State law, assignment, or consent 
with respect thereto.
264
‘‘(8) PROCEEDS.—To the extent that available 
proceeds from the limited-life regulated entity exceed 
amounts required to pay obligations, such proceeds 
may be paid to the regulated entity in default, or in 
danger of default. 
‘‘(9) POWERS.—
‘‘(A) IN GENERAL.—Each limited-life regu-
lated entity created under this subsection shall 
have all corporate powers of, and be subject to 
the same provisions of law as, the regulated en-
tity in default or in danger of default to which 
it relates, except that—
‘‘(i) the Agency may—
‘‘(I) remove the directors of a 
limited-life regulated entity; and 
‘‘(II) fix the compensation of 
members of the board of directors and 
senior management, as determined by 
the Agency in its discretion, of a lim-
ited-life regulated entity; 
‘‘(ii) the Agency may indemnify the 
representatives for purposes of paragraph 
(1)(B), and the directors, officers, employ-
ees, and agents of a limited-life regulated
265
entity on such terms as the Agency deter-
mines to be appropriate; and 
‘‘(iii) the board of directors of a lim-
ited-life regulated entity—
‘‘(I) shall elect a chairperson who 
may also serve in the position of chief 
executive officer, except that such per-
son shall not serve either as chair-
person or as chief executive officer 
without the prior approval of the 
Agency; and 
‘‘(II) may appoint a chief execu-
tive officer who is not also the chair-
person, except that such person shall 
not serve as chief executive officer 
without the prior approval of the 
Agency. 
‘‘(B) STAY OF JUDICIAL ACTION.—Any ju-
dicial action to which a limited-life regulated 
entity becomes a party by virtue of its acquisi-
tion of any assets or assumption of any liabil-
ities of a regulated entity in default shall be 
stayed from further proceedings for a period of 
up to 45 days at the request of the limited-life