219 
‘‘(i) IN
GENERAL.—Notwithstanding 
paragraph (11) or any other Federal or 
State laws relating to the avoidance of pref-
erential or fraudulent transfers, the Agency, 
whether acting as such or as conservator or 
receiver of a regulated entity, may not 
avoid any transfer of money or other prop-
erty in connection with any qualified finan-
cial contract with a regulated entity. 
‘‘(ii) EXCEPTION FOR CERTAIN TRANS-
FERS.—Clause (i) shall not apply to any 
transfer of money or other property in con-
nection with any qualified financial con-
tract with a regulated entity if the Agency 
determines that the transferee had actual 
intent to hinder, delay, or defraud such reg-
ulated entity, the creditors of such regulated 
entity, or any conservator or receiver ap-
pointed for such regulated entity. 
‘‘(D) CERTAIN
CONTRACTS
AND
AGREE-
MENTS DEFINED.—In this subsection: 
‘‘(i) 
QUALIFIED
FINANCIAL
CON-
TRACT.—The term ‘qualified financial con-
tract’ means any securities contract, com-
modity contract, forward contract, repur-
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chase agreement, swap agreement, and any 
similar agreement that the Agency deter-
mines by regulation, resolution, or order to 
be a qualified financial contract for pur-
poses of this paragraph. 
‘‘(ii) 
SECURITIES
CONTRACT.—The 
term ‘securities contract’— 
‘‘(I) means a contract for the pur-
chase, sale, or loan of a security, a cer-
tificate of deposit, a mortgage loan, or 
any interest in a mortgage loan, a 
group or index of securities, certificates 
of deposit, or mortgage loans or inter-
ests therein (including any interest 
therein or based on the value thereof) 
or any option on any of the foregoing, 
including any option to purchase or 
sell any such security, certificate of de-
posit, mortgage loan, interest, group or 
index, or option, and including any re-
purchase or reverse repurchase trans-
action on any such security, certificate 
of deposit, mortgage loan, interest, 
group or index, or option; 
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221 
‘‘(II) does not include any pur-
chase, sale, or repurchase obligation 
under a participation in a commercial 
mortgage loan unless the Agency deter-
mines by regulation, resolution, or 
order to include any such agreement 
within the meaning of such term; 
‘‘(III) means any option entered 
into on a national securities exchange 
relating to foreign currencies; 
‘‘(IV) means the guarantee by or 
to any securities clearing agency of 
any settlement of cash, securities, cer-
tificates of deposit, mortgage loans or 
interests therein, group or index of se-
curities, certificates of deposit, or mort-
gage loans or interests therein (includ-
ing any interest therein or based on 
the value thereof) or option on any of 
the foregoing, including any option to 
purchase or sell any such security, cer-
tificate of deposit, mortgage loan, in-
terest, group or index, or option; 
‘‘(V) means any margin loan; 
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222 
‘‘(VI) means any other agreement 
or transaction that is similar to any 
agreement or transaction referred to in 
this clause; 
‘‘(VII) means any combination of 
the agreements or transactions referred 
to in this clause; 
‘‘(VIII) means any option to enter 
into any agreement or transaction re-
ferred to in this clause; 
‘‘(IX) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause (I), 
(III), (IV), (V), (VI), (VII), or (VIII), 
together with all supplements to any 
such master agreement, without regard 
to whether the master agreement pro-
vides for an agreement or transaction 
that is not a securities contract under 
this clause, except that the master 
agreement shall be considered to be a 
securities contract under this clause 
only with respect to each agreement or 
transaction under the master agree-
ment that is referred to in subclause 
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223 
(I), (III), (IV), (V), (VI), (VII), or 
(VIII); and 
‘‘(X) means any security agree-
ment or arrangement or other credit 
enhancement related to any agreement 
or transaction referred to in this 
clause, including any guarantee or re-
imbursement obligation in connection 
with any agreement or transaction re-
ferred to in this clause. 
‘‘(iii) 
COMMODITY
CONTRACT.—The 
term ‘commodity contract’ means— 
‘‘(I) with respect to a futures com-
mission merchant, a contract for the 
purchase or sale of a commodity for fu-
ture delivery on, or subject to the rules 
of, a contract market or board of trade; 
‘‘(II) with respect to a foreign fu-
tures commission merchant, a foreign 
future; 
‘‘(III) with respect to a leverage 
transaction merchant, a leverage trans-
action; 
‘‘(IV) with respect to a clearing 
organization, a contract for the pur-
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224 
chase or sale of a commodity for future 
delivery on, or subject to the rules of, 
a contract market or board of trade 
that is cleared by such clearing organi-
zation, or commodity option traded on, 
or subject to the rules of, a contract 
market or board of trade that is 
cleared by such clearing organization; 
‘‘(V) with respect to a commodity 
options dealer, a commodity option; 
‘‘(VI) any other agreement or 
transaction that is similar to any 
agreement or transaction referred to in 
this clause; 
‘‘(VII) any combination of the 
agreements or transactions referred to 
in this clause; 
‘‘(VIII) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(IX) a master agreement that 
provides for an agreement or trans-
action referred to in subclause (I), (II), 
(III), (IV), (V), (VI), (VII), or (VIII), 
together with all supplements to any 
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225 
such master agreement, without regard 
to whether the master agreement pro-
vides for an agreement or transaction 
that is not a commodity contract 
under this clause, except that the mas-
ter agreement shall be considered to be 
a commodity contract under this clause 
only with respect to each agreement or 
transaction under the master agree-
ment that is referred to in subclause 
(I), (II), (III), (IV), (V), (VI), (VII), or 
(VIII); or 
‘‘(X) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in this clause, 
including any guarantee or reimburse-
ment obligation in connection with 
any agreement or transaction referred 
to in this clause. 
‘‘(iv) FORWARD CONTRACT.—The term 
‘forward contract’ means— 
‘‘(I) a contract (other than a com-
modity contract) for the purchase, sale, 
or transfer of a commodity or any 
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226 
similar good, article, service, right, or 
interest which is presently or in the fu-
ture becomes the subject of dealing in 
the forward contract trade, or product 
or byproduct thereof, with a maturity 
date more than 2 days after the date 
the contract is entered into, including, 
a repurchase transaction, reverse re-
purchase 
transaction, 
consignment, 
lease, swap, hedge transaction, deposit, 
loan, option, allocated transaction, 
unallocated transaction, or any other 
similar agreement; 
‘‘(II) any combination of agree-
ments or transactions referred to in 
subclauses (I) and (III); 
‘‘(III) any option to enter into 
any agreement or transaction referred 
to in subclause (I) or (II); 
‘‘(IV) a master agreement that 
provides for an agreement or trans-
action referred to in subclauses (I), 
(II), or (III), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
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227 
agreement provides for an agreement 
or transaction that is not a forward 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a forward contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to in 
subclause (I), (II), or (III); or 
‘‘(V) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in subclause (I), 
(II), (III), or (IV), including any 
guarantee or reimbursement obligation 
in connection with any agreement or 
transaction referred to in any such 
subclause. 
‘‘(v) REPURCHASE
AGREEMENT.—The 
term ‘repurchase agreement’ (which defini-
tion also applies to a reverse repurchase 
agreement)— 
‘‘(I) means an agreement, includ-
ing related terms, which provides for 
the transfer of one or more certificates 
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228 
of deposit, mortgage-related securities 
(as such term is defined in the Securi-
ties Exchange Act of 1934), mortgage 
loans, interests in mortgage-related se-
curities or mortgage loans, eligible 
bankers’ acceptances, qualified foreign 
government securities or securities that 
are direct obligations of, or that are 
fully guaranteed by, the United States 
or any agency of the United States 
against the transfer of funds by the 
transferee of such certificates of de-
posit, eligible bankers’ acceptances, se-
curities, mortgage loans, or interests 
with a simultaneous agreement by such 
transferee to transfer to the transferor 
thereof certificates of deposit, eligible 
bankers’ acceptances, securities, mort-
gage loans, or interests as described 
above, at a date certain not later than 
1 year after such transfers or on de-
mand, against the transfer of funds, or 
any other similar agreement; 
‘‘(II) does not include any repur-
chase obligation under a participation 
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229 
in a commercial mortgage loan unless 
the Agency determines by regulation, 
resolution, or order to include any such 
participation within the meaning of 
such term; 
‘‘(III) means any combination of 
agreements or transactions referred to 
in subclauses (I) and (IV); 
‘‘(IV) means any option to enter 
into any agreement or transaction re-
ferred to in subclause (I) or (III); 
‘‘(V) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause (I), 
(III), or (IV), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
agreement provides for an agreement 
or transaction that is not a repurchase 
agreement under this clause, except 
that the master agreement shall be con-
sidered to be a repurchase agreement 
under this subclause only with respect 
to each agreement or transaction under 
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230 
the master agreement that is referred to 
in subclause (I), (III), or (IV); and 
‘‘(VI) means any security agree-
ment or arrangement or other credit 
enhancement related to any agreement 
or transaction referred to in subclause 
(I), (III), (IV), or (V), including any 
guarantee or reimbursement obligation 
in connection with any agreement or 
transaction referred to in any such 
subclause. 
For purposes of this clause, the term ‘quali-
fied foreign government security’ means a 
security that is a direct obligation of, or 
that is fully guaranteed by, the central gov-
ernment of a member of the Organization 
for Economic Cooperation and Development 
(as determined by regulation or order 
adopted by the appropriate Federal banking 
authority). 
‘‘(vi) SWAP
AGREEMENT.—The term 
‘swap agreement’ means— 
‘‘(I) any agreement, including the 
terms and conditions incorporated by 
reference in any such agreement, which 
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231 
is an interest rate swap, option, future, 
or forward agreement, including a rate 
floor, rate cap, rate collar, cross-cur-
rency rate swap, and basis swap; a 
spot, same day-tomorrow, tomorrow- 
next, forward, or other foreign ex-
change or precious metals agreement; a 
currency swap, option, future, or for-
ward agreement; an equity index or eq-
uity swap, option, future, or forward 
agreement; a debt index or debt swap, 
option, future, or forward agreement; a 
total return, credit spread or credit 
swap, option, future, or forward agree-
ment; a commodity index or com-
modity swap, option, future, or for-
ward agreement; or a weather swap, 
weather derivative, or weather option; 
‘‘(II) any agreement or trans-
action that is similar to any other 
agreement or transaction referred to in 
this clause and that is of a type that 
has been, is presently, or in the future 
becomes, the subject of recurrent deal-
ings in the swap markets (including 
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232 
terms and conditions incorporated by 
reference in such agreement) and that 
is a forward, swap, future, or option 
on one or more rates, currencies, com-
modities, equity securities or other eq-
uity instruments, debt securities or 
other debt instruments, quantitative 
measures associated with an occur-
rence, extent of an occurrence, or con-
tingency associated with a financial, 
commercial, or economic consequence, 
or economic or financial indices or 
measures of economic or financial risk 
or value; 
‘‘(III) any combination of agree-
ments or transactions referred to in 
this clause; 
‘‘(IV) any option to enter into 
any agreement or transaction referred 
to in this clause; 
‘‘(V) a master agreement that pro-
vides for an agreement or transaction 
referred to in subclause (I), (II), (III), 
or (IV), together with all supplements 
to any such master agreement, without 
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233 
regard to whether the master agreement 
contains an agreement or transaction 
that is not a swap agreement under 
this clause, except 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 agree-
ment 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. 
Such term is applicable for purposes of this 
subsection only and shall not be construed 
or applied so as to challenge or affect the 
characterization, definition, or treatment of 
any swap agreement under any other stat-
ute, regulation, or rule, including the Secu-
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234 
rities Act of 1933, the Securities Exchange 
Act of 1934, the Public Utility Holding 
Company Act of 1935, the Trust Indenture 
Act of 1939, the Investment Company Act of 
1940, the Investment Advisers Act of 1940, 
the Securities Investor Protection Act of 
1970, the Commodity Exchange Act, the 
Gramm-Leach-Bliley Act, and the Legal 
Certainty for Bank Products Act of 2000. 
‘‘(vii) TREATMENT OF MASTER AGREE-
MENT
AS
ONE
AGREEMENT.—Any master 
agreement for any contract or agreement de-
scribed in any preceding clause of this sub-
paragraph (or any master agreement for 
such master agreement or agreements), to-
gether with all supplements to such master 
agreement, shall be treated as a single 
agreement and a single qualified financial 
contract. If a master agreement contains 
provisions relating to agreements or trans-
actions that are not themselves qualified fi-
nancial contracts, the master agreement 
shall be deemed to be a qualified financial 
contract only with respect to those trans-
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235 
actions that are themselves qualified finan-
cial 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 enti-
ty’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 acceleration 
of any qualified financial contract with a 
regulated entity in a conservatorship based 
upon a default under such financial con-
tract which is enforceable under applicable 
noninsolvency law; 
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236 
‘‘(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 financial 
contracts. 
‘‘(F) CLARIFICATION.—No provision of law 
shall be construed as limiting the right or power 
of the Agency, or authorizing any court or agen-
cy to limit or delay, in any manner, the right 
or power of the Agency to transfer any qualified 
financial contract in accordance with para-
graphs (9) and (10) of this subsection or to dis-
affirm or repudiate any such contract in accord-
ance with subsection (d)(1) of this section. 
‘‘(G) WALKAWAY
CLAUSES
NOT
EFFEC-
TIVE.— 
‘‘(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 
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237 
shall be enforceable in a qualified financial 
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 cal-
culation of a value of a party’s position or 
an amount due to or from 1 of the parties 
in accordance with its terms upon termi-
nation, 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 
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; 
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238 
‘‘(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 sub-
paragraph (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 trans-
fer of the assets and liabilities of such regu-
lated entity, and 
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239 
‘‘(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 busi-
ness day following the date of the appointment 
of the receiver in the case of a receivership, or the 
business day following such transfer 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 terminate, 
liquidate, or net such contract under para-
graph (8)(A) of this subsection or section 
403 or 404 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991, sole-
ly by reason of or incidental to the appoint-
ment of a receiver for the regulated entity 
(or the insolvency or financial condition of 
the regulated entity for which the receiver 
has been appointed)— 
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240 
‘‘(I) until 5:00 p.m. (eastern time) 
on the business day following the date 
of the appointment of the receiver; or 
‘‘(II) after the person has received 
notice that the contract has been trans-
ferred pursuant to paragraph (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 Deposit 
Insurance Corporation Improvement Act of 
1991, solely by reason of or incidental to the 
appointment of a conservator for the regu-
lated entity (or the insolvency or financial 
condition of the regulated entity for which 
the conservator has been appointed). 
‘‘(iii) NOTICE.—For purposes of this 
paragraph, the Agency as receiver or conser-
vator of a regulated entity shall be deemed 
to have notified a person who is a party to 
a qualified financial contract with such reg-
ulated entity if the Agency has taken steps 
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241 
reasonably calculated to provide notice to 
such person by the time specified in sub-
paragraph (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 conser-
vator or receiver with respect to any qualified finan-
cial contract to which a regulated entity is a party, 
the conservator or receiver for such institution shall 
either— 
‘‘(A) disaffirm or repudiate all qualified fi-
nancial contracts between— 
‘‘(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). 
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242 
‘‘(12) CERTAIN SECURITY INTERESTS NOT AVOID-
ABLE.—No provision of this subsection shall be con-
strued as permitting the avoidance of any legally en-
forceable or perfected security interest in any of the 
assets of any regulated entity, except where such an 
interest is taken in contemplation of the insolvency of 
the regulated entity, or with the intent to hinder, 
delay, or defraud the regulated entity or the creditors 
of such regulated entity. 
‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.— 
‘‘(A) IN
GENERAL.—Notwithstanding any 
provision of a contract providing for termi-
nation, default, acceleration, or exercise of rights 
upon, or solely by reason of, insolvency or the 
appointment of a conservator or receiver, the 
conservator or receiver may enforce any contract 
or regulated entity bond entered into by the regu-
lated entity. 
‘‘(B) CERTAIN RIGHTS NOT AFFECTED.—No 
provision of this paragraph may be construed as 
impairing or affecting any right of the conser-
vator or receiver to enforce or recover under a di-
rector’s or officer’s liability insurance contract or 
surety bond under other applicable law. 
‘‘(C) CONSENT REQUIREMENT.— 
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‘‘(i) IN GENERAL.—Except as otherwise 
provided under this section, no person may 
exercise any right or power to terminate, 
accelerate, or declare a default under any 
contract to which a regulated entity is a 
party, or to obtain possession of or exercise 
control over any property of the regulated 
entity, or affect any contractual rights of 
the regulated entity, without the consent of 
the conservator or receiver, as appropriate, 
for a period of— 
‘‘(I) 45 days after the date of ap-
pointment of a conservator; or 
‘‘(II) 90 days after the date of ap-
pointment 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 permit-
ting the conservator or receiver to fail 
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to comply with otherwise enforceable 
provisions of such contracts. 
‘‘(14) SAVINGS CLAUSE.—The meanings of terms 
used in this subsection are applicable for purposes of 
this subsection only, and shall not be construed or ap-
plied 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 Securi-
ties Exchange Act of 1934), and the Commodity Ex-
change Act. 
‘‘(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 
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regardless of the method which the Agency determines 
to utilize with respect to a regulated entity in default 
or in danger of default, including transactions au-
thorized under subsection (i), this subsection shall 
govern the rights of the creditors of such regulated en-
tity. 
‘‘(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 re-
ceiver is appointed shall equal the lesser of— 
‘‘(A) the amount such claimant would have 
received if the Agency had liquidated the assets 
and liabilities of such regulated entity without 
exercising the authority of the Agency under sub-
section (i) of this section; or 
‘‘(B) the amount of proceeds realized from 
the performance of contracts or sale of the assets 
of the regulated entity. 
‘‘(f) LIMITATION ON COURT ACTION.—Except as pro-
vided in this section or at the request of the Director, no 
court may take any action to restrain or affect the exercise 
of powers or functions of the Agency as a conservator or 
a receiver. 
‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 
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246 
‘‘(1) IN GENERAL.—A director or officer of a reg-
ulated entity may be held personally liable for mone-
tary damages in any civil action by, on behalf of, or 
at the request or direction of the Agency, which action 
is prosecuted wholly or partially for the benefit of the 
Agency— 
‘‘(A) acting as conservator or receiver of 
such regulated entity, or 
‘‘(B) acting based upon a suit, claim, or 
cause of action purchased from, assigned by, or 
otherwise conveyed by such receiver or conser-
vator, 
for gross negligence, including any similar conduct or 
conduct that demonstrates a greater disregard of a 
duty of care (than gross negligence) including inten-
tional 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 otherwise 
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improper use or investment of any assets of the regulated 
entity shall include principal losses and appropriate inter-
est. 
‘‘(i) LIMITED-LIFE REGULATED ENTITIES.— 
‘‘(1) ORGANIZATION.— 
‘‘(A) PURPOSE.—If a regulated entity is in 
default, or if the Agency anticipates that a regu-
lated entity will default, the Agency may orga-
nize a limited-life regulated entity with those 
powers and attributes of the regulated entity in 
default or in danger of default that the Director 
determines necessary, subject to the provisions of 
this subsection. The Director shall grant a tem-
porary charter to the limited-life regulated enti-
ty, and the limited-life regulated entity shall op-
erate 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 regu-
lated 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 
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the amount of assets of the limited-life regu-
lated 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 discre-
tion, determine to be appropriate; and 
‘‘(iii) perform any other temporary 
function which the Agency may, in its dis-
cretion, prescribe in accordance with this 
section. 
‘‘(2) CHARTER.— 
‘‘(A) CONDITIONS.—The Agency may grant 
a temporary charter if the Agency determines 
that the continued operation of the regulated en-
tity 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 entity 
in default at such times and for such purposes 
as the Agency may, in its discretion, determine. 
‘‘(C) MANAGEMENT.—A limited-life regu-
lated entity, upon the granting of its charter, 
shall be under the management of a board of di-
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rectors consisting of not fewer than 5 nor more 
than 10 members appointed by the Agency. 
‘‘(D) BYLAWS.—The board of directors of a 
limited-life regulated entity shall adopt such by-
laws as may be approved by the Agency. 
‘‘(3) CAPITAL STOCK.—No capital stock need be 
paid into a limited-life regulated entity by the Agen-
cy. 
‘‘(4) INVESTMENTS.—Funds of a limited-life reg-
ulated entity shall be kept on hand in cash, invested 
in obligations of the United States or obligations 
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 en-
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tity, not later than 2 years after the date of its 
organization, the Agency shall wind up the af-
fairs of the limited-life regulated entity. 
‘‘(B) EXTENSION.—The Director may, in 
the discretion of the Director, extend the status 
of the limited-life regulated entity for 3 addi-
tional 1-year periods. 
‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) TRANSFER OF ASSETS AND LIABIL-
ITIES.—The Agency, as receiver, may trans-
fer any assets and liabilities of a regulated 
entity in default, or in danger of default, to 
the limited-life regulated entity in accord-
ance 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 liabil-
ities of such regulated entity in default, or 
in danger in default, as the Agency may, in 
its discretion, determine to be appropriate 
in accordance with paragraph (1). 
‘‘(iii) 
EFFECTIVE
WITHOUT
AP-
PROVAL.—The transfer of any assets or li-
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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 Federal 
or State law, assignment, or consent with 
respect thereto. 
‘‘(8) PROCEEDS.—To the extent that available 
proceeds from the limited-life regulated entity exceed 
amounts required to pay obligations, such proceeds 
may be paid to the regulated entity in default, or in 
danger of default. 
‘‘(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 enti-
ty in default or in danger of default to which it 
relates, except that— 
‘‘(i) the Agency may— 
‘‘(I) remove the directors of a lim-
ited-life regulated entity; and 
‘‘(II) fix the compensation of 
members of the board of directors and 
senior management, as determined by 
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252 
the Agency in its discretion, of a lim-
ited-life regulated entity; 
‘‘(ii) the Agency may indemnify the 
representatives for purposes of paragraph 
(1)(B), and the directors, officers, employ-
ees, and agents of a limited-life regulated 
entity on such terms as the Agency deter-
mines to be appropriate; and 
‘‘(iii) the board of directors of a lim-
ited-life regulated entity— 
‘‘(I) shall elect a chairperson who 
may also serve in the position of chief 
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 Agen-
cy; 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 with-
out the prior approval of the Agency. 
‘‘(B) STAY OF JUDICIAL ACTION.—Any judi-
cial action to which a limited-life regulated enti-
ty becomes a party by virtue of its acquisition 
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253 
of any assets or assumption of any liabilities of 
a regulated entity in default shall be stayed from 
further proceedings for a period of up to 45 days 
at the request of the limited-life regulated entity. 
Such period may be modified upon the consent 
of all parties. 
‘‘(10) OBTAINING OF CREDIT AND INCURRING OF 
DEBT.— 
‘‘(A) IN GENERAL.—The limited-life regu-
lated entity may obtain unsecured credit and 
incur unsecured debt in the ordinary course of 
business. 
‘‘(B) INABILITY TO OBTAIN CREDIT.—If the 
limited-life regulated entity is unable to obtain 
unsecured credit the Director may authorize the 
obtaining of credit or the incurring of debt— 
‘‘(i) with priority over any or all ad-
ministrative expenses; 
‘‘(ii) secured by a lien on property that 
is not otherwise subject to a lien; or 
‘‘(iii) secured by a junior lien on prop-
erty that is subject to a lien. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN GENERAL.—The Director, after 
notice and a hearing, may authorize the ob-
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254 
taining of credit or the incurring of debt se-
cured by a senior or equal lien on property 
that is subject to a lien (other than mort-
gages that collateralize the mortgage-backed 
securities issued or guaranteed by the regu-
lated entity) only if— 
‘‘(I) the limited-life regulated en-
tity is unable to obtain such credit oth-
erwise; and 
‘‘(II) there is adequate protection 
of the interest of the holder of the lien 
on the property which such senior or 
equal lien is proposed to be granted. 
‘‘(ii) BURDEN
OF
PROOF.—In any 
hearing under this subsection, the Director 
has the burden of proof on the issue of ade-
quate protection. 
‘‘(D) EFFECT ON DEBTS AND LIENS.—The 
reversal or modification on appeal of an author-
ization under this paragraph to obtain credit or 
incur debt, or of a grant under this section of a 
priority or a lien, does not affect the validity of 
any debt so incurred, or any priority or lien so 
granted, to an entity that extended such credit in 
good faith, whether or not such entity knew of 
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255 
the pendency of the appeal, unless such author-
ization and the incurring of such debt, or the 
granting of such priority or lien, were stayed 
pending appeal. 
‘‘(11) ISSUANCE OF PREFERRED DEBT.—A lim-
ited-life regulated entity may, subject to the approval 
of the Director and subject to such terms and condi-
tions as the Director may prescribe, issue notes, 
bonds, or other debt obligations of a class to which all 
other debt obligations of the limited-life regulated en-
tity shall be subordinate in right and payment. 
‘‘(12) NO FEDERAL STATUS.— 
‘‘(A) AGENCY STATUS.—A limited-life regu-
lated entity is not an agency, establishment, or 
instrumentality of the United States. 
‘‘(B) EMPLOYEE
STATUS.—Representatives 
for purposes of paragraph (1)(B), interim direc-
tors, directors, officers, employees, or agents of a 
limited-life regulated entity are not, solely by 
virtue of service in any such capacity, officers or 
employees of the United States. Any employee of 
the Agency or of any Federal instrumentality 
who serves at the request of the Agency as a rep-
resentative for purposes of paragraph (1)(B), in-
terim director, director, officer, employee, or 
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