279
the end of the 1-year period beginning on the
date of the enactment of this Act, the Board
of Governors of the Federal Reserve System
and the Secretary of the Treasury shall each
submit a report to the Congress within 15
days after the end of such period containing
an explanation of why such regulations were
not prescribed in final form by the end of
such period.
TITLE II—FINANCIAL CONTRACT
NETTING IMPROVEMENT
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Financial
Contract Netting Improvement Act of 2000’’.
SEC. 202. TREATMENT OF CERTAIN AGREEMENTS BY CON-
SERVATORS OR RECEIVERS OF INSURED DE-
POSITORY INSTITUTIONS.
(a) DEFINITION
OF
QUALIFIED
FINANCIAL
CONTRACT.—Section 11(e)(8)(D)(i) of the Fed-
eral 
Deposit 
Insurance 
Act 
(12 
U.S.C.
1821(e)(8)(D)(i)) is amended by inserting ‘‘,
resolution or order’’ after ‘‘any similar agree-
ment that the Corporation determines by reg-
ulation’’.
280
(b) DEFINITION OF SECURITIES CONTRACT.—
Section 11(e)(8)(D)(ii) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is
amended to read as follows:
‘‘(ii) SECURITIES
CONTRACT.—
The term ‘securities contract’—
‘‘(I) means a contract for
the purchase, sale, or loan of
a security, a certificate of de-
posit, a mortgage loan, or any
interest in a mortgage loan, a
group or index of securities,
certificates 
of 
deposit, 
or
mortgage loans or interests
therein (including any inter-
est therein or based on the
value thereof) or any option
on any of the foregoing, in-
cluding any option to pur-
chase or sell any such secu-
rity, 
certificate 
of 
deposit,
loan, interest, group or index,
or option;
‘‘(II) does not include any
purchase, sale, or repurchase
281
obligation under a participa-
tion in a commercial mort-
gage loan unless the Corpora-
tion determines 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 se-
curities exchange relating to
foreign currencies;
‘‘(IV) means the guarantee
by or to any securities clear-
ing agency of any settlement
of cash, securities, certificates
of deposit, mortgage loans or
interests therein, group or
index of securities, certifi-
cates of deposit, or mortgage
loans or interests therein (in-
cluding any interest therein
or based on the value thereof)
or option on any of the fore-
going, including any option to
purchase or sell any such se-
282
curity, certificate of deposit,
loan, interest, group or index,
or option;
‘‘(V) means any margin
loan;
‘‘(VI) 
means 
any 
other
agreement or transaction that
is similar to any agreement or
transaction referred to in this
clause;
‘‘(VII) means any combina-
tion of the agreements or
transactions referred to in
this clause;
‘‘(VIII) means any option
to enter into any agreement
or transaction referred 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 sup-
plements to any such master
283
agreement, without regard to
whether the master agree-
ment provides for an agree-
ment 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 agreement
that is referred to in sub-
clause (I), (III), (IV), (V), (VI),
(VII), or (VIII); and
‘‘(X) means any security
agreement or arrangement or
other credit enhancement re-
lated to any agreement or
transaction referred to in this
clause.’’.
(c) DEFINITION OF COMMODITY CONTRACT.—
Section 11(e)(8)(D)(iii) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is
amended to read as follows:
284
‘‘(iii) COMMODITY
CONTRACT.—
The term ‘commodity contract’
means—
‘‘(I) with respect to a fu-
tures commission merchant, a
contract for the purchase or
sale of a commodity for future
delivery on, or subject to the
rules of, a contract market or
board of trade;
‘‘(II) with respect to a for-
eign futures commission mer-
chant, a foreign future;
‘‘(III) with respect to a le-
verage transaction merchant,
a leverage transaction;
‘‘(IV) with respect to a
clearing organization, a con-
tract for the purchase or sale
of a commodity for future de-
livery on, or subject to the
rules of, a contract market or
board of trade that is cleared
by such clearing organization,
or commodity option traded
285
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 com-
modity options dealer, a com-
modity option;
‘‘(VI) any other agreement
or transaction that is similar
to any agreement or trans-
action referred to in this
clause;
‘‘(VII) any combination of
the 
agreements 
or 
trans-
actions referred to in this
clause;
‘‘(VIII) any option to enter
into any agreement or trans-
action referred to in this
clause;
‘‘(IX) a master agreement
that provides for an agree-
ment or transaction referred
to in subclause (I), (II), (III),
(IV), (V), (VI), (VII), or (VIII),
286
together with all supplements
to any such master agree-
ment, 
without 
regard 
to
whether the master agree-
ment provides for an agree-
ment or transaction that is
not 
a 
commodity 
contract
under this clause, except that
the master agreement shall be
considered to be a commodity
contract under this clause
only with respect to each
agreement 
or 
transaction
under the master agreement
that is referred to in sub-
clause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII); or
‘‘(X) any security agree-
ment or arrangement or other
credit enhancement related to
any agreement or transaction
referred to in this clause.’’.
(d) DEFINITION OF FORWARD CONTRACT.—
Section 11(e)(8)(D)(iv) of the Federal Deposit
287
Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is
amended to read as follows:
‘‘(iv) FORWARD CONTRACT.—The
term ‘forward contract’ means—
‘‘(I) a contract (other than
a commodity contract) for the
purchase, sale, or transfer of
a commodity or any similar
good, article, service, right, or
interest which is presently or
in the future becomes the sub-
ject of dealing in the forward
contract trade, or product or
byproduct thereof, with a ma-
turity date more than 2 days
after the date the contract is
entered into, including a re-
purchase transaction, reverse
repurchase transaction, con-
signment, lease, swap, hedge
transaction, deposit, loan, op-
tion, 
allocated 
transaction,
unallocated 
transaction, 
or
any other similar agreement;
288
‘‘(II) any combination of
agreements 
or 
transactions
referred to in subclauses (I)
and (III);
‘‘(III) any option to enter
into any agreement or trans-
action referred to in sub-
clause (I) or (II);
‘‘(IV) a master agreement
that provides for an agree-
ment or transaction referred
to in subclause (I), (II), or
(III), together with all supple-
ments to any such master
agreement, without regard to
whether the master agree-
ment provides for an agree-
ment or transaction that is
not a forward contract under
this clause, except that the
master agreement shall be
considered to be a forward
contract under this clause
only with respect to each
agreement 
or 
transaction
289
under the master agreement
that is referred to in sub-
clause (I), (II), or (III); or
‘‘(V) any security agree-
ment or arrangement or other
credit enhancement related to
any agreement or transaction
referred to in subclause (I),
(II), (III), or (IV).’’.
(e) DEFINITION
OF
REPURCHASE
AGREE-
MENT.—Section 11(e)(8)(D)(v) of the Federal
Deposit 
Insurance 
Act 
(12 
U.S.C.
1821(e)(8)(D)(v)) is amended to read as fol-
lows:
‘‘(v) REPURCHASE AGREEMENT.—
The term ‘repurchase agreement’
(which definition also applies to
the 
term 
‘reverse 
repurchase
agreement’)—
‘‘(I) means an agreement,
including 
related 
terms,
which provides for the trans-
fer of 1 or more certificates of
deposit, mortgage-related se-
curities (as such term is de-
290
fined in the Securities Ex-
change Act of 1934), mortgage
loans, interests in mortgage-
related securities or mortgage
loans, eligible bankers’ ac-
ceptances, qualified foreign
government securities or se-
curities that are direct obliga-
tions of, or that are fully guar-
anteed by, the United States
or any agency of the United
States against the transfer of
funds by the transferee of
such certificates of deposit, el-
igible bankers’ acceptances,
securities, loans, or interests
with a simultaneous agree-
ment by such transferee to
transfer 
to 
the 
transferor
thereof certificates of deposit,
eligible bankers’ acceptances,
securities, loans, or interests
as described above, at a date
certain not later than 1 year
after such transfers or on de-
291
mand, against the transfer of
funds, or any other similar
agreement;
‘‘(II) does not include any
repurchase obligation under a
participation in a commercial
mortgage loan unless the Cor-
poration determines by regu-
lation, resolution, or order to
include any such participa-
tion within the meaning of
such term;
‘‘(III) means any combina-
tion of agreements or trans-
actions referred to in sub-
clauses (I) and (IV);
‘‘(IV) means any option to
enter into any agreement or
transaction referred to in sub-
clause (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
292
supplements to any such mas-
ter agreement, without regard
to whether the master agree-
ment provides for an agree-
ment or transaction that is
not a repurchase agreement
under this clause, except that
the master agreement shall be
considered to be a repurchase
agreement under this sub-
clause only with respect to
each 
agreement 
or 
trans-
action 
under 
the 
master
agreement that is referred to
in subclause (I), (III), or (IV);
and
‘‘(VI) means any security
agreement or arrangement or
other credit enhancement re-
lated to any agreement or
transaction referred to in sub-
clause (I), (III), (IV), or (V).
For purposes of this clause, the
term ‘qualified foreign govern-
ment security’ means a security
293
that is a direct obligation of, or
that is fully guaranteed by, the
central government of a member
of the Organization for Economic
Cooperation and Development (as
determined 
by 
regulation 
or
order adopted by the appropriate
Federal banking authority).’’.
(f) DEFINITION OF SWAP AGREEMENT.—Sec-
tion 11(e)(8)(D)(vi) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is
amended to read as follows:
‘‘(vi) SWAP
AGREEMENT.—The
term ‘swap agreement’ means—
‘‘(I) any agreement, in-
cluding the terms and condi-
tions 
incorporated 
by 
ref-
erence in any such agree-
ment, which is an interest
rate swap, option, future, or
forward agreement, including
a rate floor, rate cap, rate col-
lar, cross-currency rate swap,
and basis swap; a spot, same
day-tomorrow, 
tomorrow-
294
next, forward, or other for-
eign exchange or precious
metals agreement; a currency
swap, option, future, or for-
ward agreement; an equity
index or equity swap, option,
future, or forward agreement;
a debt index or debt swap, op-
tion, future, or forward agree-
ment; a credit spread or cred-
it swap, option, future, or for-
ward agreement; a commodity
index or commodity swap, op-
tion, future, or forward agree-
ment; or a weather swap,
weather 
derivative, 
or 
a
weather option;
‘‘(II) 
any 
agreement 
or
transaction 
similar 
to 
any
other 
agreement 
or 
trans-
action referred to in this
clause that is presently, or in
the future becomes, regularly
entered into in the swap mar-
ket (including terms and con-
295
ditions incorporated by ref-
erence in such agreement)
and that is a forward, swap,
future, or option on 1 or more
rates, 
currencies, 
commod-
ities, 
equity 
securities 
or
other 
equity 
instruments,
debt securities or other debt
instruments, or economic in-
dices or measures of economic
risk or value;
‘‘(III) any combination of
agreements 
or 
transactions
referred to in this clause;
‘‘(IV) any option to enter
into any agreement or trans-
action referred to in this
clause;
‘‘(V) a master agreement
that provides for an agree-
ment or transaction referred
to in subclause (I), (II), (III),
or (IV), together with all sup-
plements to any such master
agreement, without regard to
296
whether the master agree-
ment 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 trans-
action 
under 
the 
master
agreement that is referred to
in subclause (I), (II), (III), or
(IV); and
‘‘(VI) any security agree-
ment or arrangement or other
credit enhancement related to
any 
agreements 
or 
trans-
actions referred to in sub-
paragraph (I), (II), (III), (IV),
or (V).
Such term is applicable for pur-
poses of this title only and shall
not be construed or applied so as
to challenge or affect the charac-
terization, definition, or treat-
297
ment of any swap agreement
under any other statute, regula-
tion, or rule, including the Securi-
ties Act of 1933, the Securities Ex-
change 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 Advis-
ers Act of 1940, the Securities In-
vestor Protection Act of 1970, the
Commodity Exchange Act, and
the regulations promulgated by
the Securities and Exchange Com-
mission or the Commodity Fu-
tures Trading Commission.’’.
(g) 
DEFINITION
OF
TRANSFER.—Section
11(e)(8)(D)(viii) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is
amended to read as follows:
‘‘(viii) 
TRANSFER.—The 
term
‘transfer’ means every mode, di-
rect or indirect, absolute or con-
ditional, voluntary or involun-
tary, of disposing of or parting
298
with property or with an interest
in property, including retention
of title as a security interest and
foreclosure 
of 
the 
depository
institutions’s equity of redemp-
tion.’’.
(h) TREATMENT
OF QUALIFIED FINANCIAL
CONTRACTS.—Section 11(e)(8) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is
amended—
(1) in subparagraph (A), by striking
‘‘paragraph (10)’’ and inserting ‘‘para-
graphs (9) and (10)’’;
(2) in subparagraph (A)(i), by striking
‘‘to cause the termination or liquidation’’
and inserting ‘‘such person has to cause
the termination, liquidation, or accelera-
tion’’;
(3) by amending subparagraph (A)(ii)
to read as follows:
‘‘(ii) any right under any secu-
rity agreement or arrangement or
other credit enhancement related
to 1 or more qualified financial
299
contracts described in clause (i);’’;
and
(4) by amending subparagraph (E)(ii)
to read as follows:
‘‘(ii) any right under any secu-
rity agreement or arrangement or
other credit enhancement related
to 1 or more qualified financial
contracts described in clause (i);’’.
(i) 
AVOIDANCE
OF
TRANSFERS.—Section
11(e)(8)(C)(i) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended by
inserting ‘‘section 5242 of the Revised Statutes
of the United States (12 U.S.C. 91) or any other
Federal or State law relating to the avoidance
of preferential or fraudulent transfers,’’ be-
fore ‘‘the Corporation’’.
SEC. 203. AUTHORITY OF THE CORPORATION WITH RE-
SPECT TO FAILED AND FAILING INSTITU-
TIONS.
(a) IN GENERAL.—Section 11(e)(8) of the
Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)) is amended—
(1) in subparagraph (E), by striking
‘‘other than paragraph (12) of this sub-
300
section, subsection (d)(9)’’ and inserting
‘‘other 
than 
subsections 
(d)(9) 
and
(e)(10)’’; and
(2) by adding at the end the following
new subparagraphs:
‘‘(F) CLARIFICATION.—No provision
of law shall be construed as limiting
the right or power of the Corpora-
tion, or authorizing any court or
agency to limit or delay, in any man-
ner, the right or power of the Cor-
poration to transfer any qualified fi-
nancial contract in accordance with
paragraphs (9) and (10) of this sub-
section or to disaffirm or repudiate
any such contract in accordance with
paragraph (1).
‘‘(G) WALKAWAY
CLAUSES
NOT
EF-
FECTIVE.—
‘‘(i) 
IN
GENERAL.—Notwith-
standing the provisions of sub-
paragraphs (A) and (E), and sec-
tions 403 and 404 of the Federal
Deposit 
Insurance 
Corporation
Improvement 
Act 
of 
1991, 
no
301
walkaway clause shall be enforce-
able in a qualified financial con-
tract of an insured depository in-
stitution in default.
‘‘(ii) 
WALKAWAY
CLAUSE
DE-
FINED.—For purposes of this sub-
paragraph, 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 parties in ac-
cordance with its terms upon ter-
mination, liquidation, or accelera-
tion of the qualified financial con-
tract, either does not create a
payment obligation of a party or
extinguishes a payment obliga-
tion of a party in whole or in part
solely because of such party’s sta-
tus as a nondefaulting party.’’.
(b) TECHNICAL
AND CONFORMING AMEND-
MENT.—Section 11(e)(12)(A) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(e)(12)(A))
302
is amended by inserting ‘‘or the exercise of
rights or powers’’ after ‘‘the appointment’’.
SEC. 204. AMENDMENTS RELATING TO TRANSFERS OF
QUALIFIED FINANCIAL CONTRACTS.
(a) TRANSFERS
OF
QUALIFIED
FINANCIAL
CONTRACTS TO FINANCIAL INSTITUTIONS.—Sec-
tion 11(e)(9) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(9)) is amended to read
as follows:
‘‘(9) TRANSFER OF QUALIFIED FINANCIAL
CONTRACTS.—
‘‘(A) IN GENERAL.—In making any
transfer of assets or liabilities of a de-
pository institution in default which
includes any qualified financial con-
tract, the conservator or receiver for
such 
depository 
institution 
shall
either—
‘‘(i) transfer to 1 financial in-
stitution, other than a financial
institution for which a conser-
vator, receiver, trustee in bank-
ruptcy, or other legal custodian
has been appointed or which is
303
otherwise the subject of a bank-
ruptcy or insolvency proceeding—
‘‘(I) all qualified financial
contracts between any person
or any affiliate of such person
and the depository institution
in default;
‘‘(II) all claims of such per-
son or any affiliate of such
person against such deposi-
tory institution under any
such contract (other than any
claim which, under the terms
of any such contract, is subor-
dinated to the claims of gen-
eral unsecured creditors of
such institution);
‘‘(III) all claims of such de-
pository 
institution 
against
such person or any affiliate of
such person under any such
contract; and
‘‘(IV) all property securing
or any other credit enhance-
ment for any contract de-
304
scribed in subclause (I) or any
claim described in subclause
(II) or (III) under any such
contract; or
‘‘(ii) 
transfer 
none 
of 
the
qualified 
financial 
contracts,
claims, property or other credit
enhancement 
referred 
to 
in
clause (i) (with respect to such
person and any affiliate of such
person).
‘‘(B) TRANSFER
TO
FOREIGN
BANK,
FOREIGN
FINANCIAL
INSTITUTION, 
OR
BRANCH OR AGENCY OF A FOREIGN BANK
OR
FINANCIAL
INSTITUTION.—In trans-
ferring any qualified financial con-
tracts and related claims and prop-
erty pursuant to subparagraph (A)(i),
the conservator or receiver for such
depository institution shall not make
such transfer to a foreign bank, finan-
cial institution organized under the
laws of a foreign country, or a branch
or agency of a foreign bank or finan-
cial institution unless, under the law
305
applicable to such bank, financial in-
stitution, branch or agency, to the
qualified financial contracts, and to
any netting contract, any security
agreement or arrangement or other
credit enhancement related to 1 or
more qualified financial contracts,
the contractual rights of the parties
to such qualified financial contracts,
netting 
contracts, 
security 
agree-
ments or arrangements, or other
credit enhancements are enforceable
substantially to the same extent as
permitted under this section.
‘‘(C) TRANSFER OF CONTRACTS SUB-
JECT TO THE RULES OF A CLEARING OR-
GANIZATION.—In the event that a con-
servator or receiver transfers any
qualified financial contract and re-
lated claims, property and credit en-
hancements 
pursuant 
to 
subpara-
graph (A)(i) and such contract is sub-
ject to the rules of a clearing organi-
zation, the clearing organization shall
not be required to accept the trans-
306
feree as a member by virtue of the
transfer.
‘‘(D) DEFINITION.—For purposes of
this section, the term ‘financial insti-
tution’ means a broker or dealer, a
depository institution, a futures com-
mission merchant, or any other insti-
tution as determined by the Corpora-
tion by regulation to be a financial in-
stitution.’’.
(b) NOTICE TO QUALIFIED FINANCIAL CON-
TRACT COUNTERPARTIES.—Section 11(e)(10)(A)
of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(10)(A)) is amended by amend-
ing the flush material following clause (ii) to
read as follows: ‘‘the conservator or receiver
shall notify any person 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 appointment of the receiver,
in the case of a receivership, or the business
day following such transfer, in the case of a
conservatorship.’’.
(c) RIGHTS AGAINST RECEIVER AND TREAT-
MENT OF BRIDGE BANKS.—Section 11(e)(10) of
307
the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(10)) is further amended—
(1) by redesignating subparagraph
(B) as subparagraph (D); and
(2) by inserting after subparagraph
(A) the following new subparagraphs:
‘‘(B) CERTAIN RIGHTS NOT ENFORCE-
ABLE.—
‘‘(i) RECEIVERSHIP.—A person
who is a party to a qualified fi-
nancial contract with an insured
depository institution may not ex-
ercise any right such person has
to terminate, liquidate, or net
such contract under paragraph
(8)(A) or section 403 or 404 of the
Federal Deposit Insurance Cor-
poration Improvement Act of 1991
solely by reason of or incidental
to the appointment of a receiver
for the depository institution (or
the insolvency or financial condi-
tion of the depository institution
for which the receiver has been
appointed)—
308
‘‘(I) until 5:00 p.m. (east-
ern time) on the business day
following the date of the ap-
pointment of the receiver; or
‘‘(II) after the person has
received notice that the con-
tract has been transferred
pursuant to paragraph (9)(A).
‘‘(ii) CONSERVATORSHIP.—A per-
son who is a party to a qualified
financial contract with an in-
sured depository institution may
not exercise any right such per-
son has to terminate, liquidate, or
net such contract under para-
graph (8)(E) or section 403 or 404
of the Federal Deposit Insurance
Corporation Improvement Act of
1991, solely by reason of or inci-
dental to the appointment of a
conservator for the depository in-
stitution (or the insolvency or fi-
nancial condition of the deposi-
tory institution for which the con-
servator has been appointed).
309
‘‘(iii) NOTICE.—For purposes of
this subsection, the Corporation
as receiver or conservator of an
insured 
depository 
institution
shall be deemed to have notified a
person who is a party to a quali-
fied financial contract with such
depository institution if the Cor-
poration has taken steps reason-
ably calculated to provide notice
to such person by the time speci-
fied in subparagraph (A) of this
subsection.
‘‘(C) 
TREATMENT
OF
BRIDGE
BANKS.—The 
following 
institutions
shall not be considered a financial in-
stitution for which a conservator, re-
ceiver, trustee in bankruptcy, or
other legal custodian has been ap-
pointed or which is otherwise the
subject of a bankruptcy or insolvency
proceeding for purposes of paragraph
(9)—
‘‘(i) a bridge bank; or