Source: http://www.law.ttu.edu/lawlibrary/library/research/bapcpa_library/house-report-109-31-111-120.htm
Timestamp: 2014-03-08 04:03:37
Document Index: 286134631

Matched Legal Cases: ['Art. 11', 'Art. 12', 'Art. 14', 'Art. 14', 'Art. 16', 'Art. 17', 'Art. 20', 'Art. 20', 'Art. 20', 'Art. 21', 'Art. 21', 'Art. 22']

HOUSE REPORT 109-31 - Pages 111-120
ple an account receivable, by a foreign representative may proceed without commencement of a case or recognition under this chapter.
Sec. 1510. Limited jurisdiction. Section 1510, article 10 of the Model Law, is modeled on section 306 of the Bankruptcy Code. Although the language referring to conditional relief in section 306 is not included, the court has the power under section
1522 to attach appropriate conditions to any relief it may grant. Nevertheless, the authority in section 1522 is not intended to permit the imposition of jurisdiction over the foreign representative beyond the boundaries of the case under this chapter and any related actions the foreign representative may take, such as commencing a case under another chapter of this title.
Sec. 1511. Commencement of Case Under Section 301 or 303. This section reflects the intent of article 11 of the Model Law, but adds language that conforms to United States law or that is otherwise necessary in the United States given its many bankruptcy court districts and the importance of full information and coordination among them. 123 Article 11 does not distinguish between voluntary and involuntary proceedings, but seems to have implicitly assumed an involuntary proceeding. 124 Subsection 1(a)(2) goes farther and permits a voluntary filing, with its much simpler requirements, if the foreign proceeding that has been recognized is a main proceeding.
Sec. 1512. Participation of a foreign representative in a case under this title. This section tracks article 12 of the Model Law with a slight alteration to tie into United States procedural terminology. 125 The effect of this section is to make the recognized foreign representative a party in interest in any pending or later commenced United States bankruptcy case. 126 Throughout this chapter, the word "case" has been substituted for the word "proceeding" in the Model Law when referring to cases under the United States Bankruptcy Code, to conform to United States usage.
Sec. 1513. Access of foreign creditors to a case under this title. This section mandates nondiscriminatory or "national" treatment for foreign creditors, except as provided in subsection (b) and section 1514. It follows the intent of Model Law article
13, but the language required alteration to fit into the Bankruptcy Code. 127 The law as to priority for foreign claims that fit within a class given priority treatment under section 507 (for example, foreign employees or spouses) is unsettled. This section permits the continued development of case law on that subject and its general principle of national treatment should be an important factor to be considered. At a minimum, under this section, foreign claims must receive the treatment given to general unsecured
claims without priority, unless they are in a class of claims in which domestic creditors would also be subordinated. 128 The Model Law allows for an exception to the policy of nondiscrimination as to foreign revenue and other
123. See id. at 28, Art. 11.
124. Id. at 38, ��97-99.
125. Id. at 29, Art. 12.
126. Id. at 29, ��10-102.
127. Id. at 30, �103.
128. See id. at 30, �104.
public law claims. 129 Such claims (such as tax and Social Security claims) have been traditionally denied enforcement in the United States, inside and outside of bankruptcy. The Bankruptcy Code is silent on this point, so the rule is purely a matter of traditional case law. It is not clear if this policy should be maintained or modified, so this section leaves this question to developing case law. It also allows the Department of the Treasury to negotiate reciprocal arrangements with our tax treaty partners in this regard, although it does not mandate any restriction of the evolution of case law pending such negotiations.
Sec. 1514. Notification of foreign creditors concerning a case under title 11. This section ensures that foreign
creditors receive proper notice of cases in the United States. 130 As "foreign creditor" is not a defined term, foreign addresses are used as the distinguishing factor. The Federal Rules of Bankruptcy Procedure ("Rules") should be amended to conform to the requirements of this section, including a special form for initial notice to such creditors. In particular, the Rules must provide additional time for such creditors to file proofs of claim where appropriate and require the court to make specific orders in that regard in proper circumstances. The notice must specify that secured claims must be asserted, because in many countries such
claims are not affected by an insolvency proceeding and need not be filed. 131 If a foreign creditor has made an appropriate request for notice, it will receive notices in every instance where notices would be sent to other creditors who have made such requests. Subsection (d) replaces the reference to "a reasonable time period" in Model Law article 14(3)(a). 132 It makes clear that the Rules, local rules, and court orders must make appropriate adjustments in time periods and bar dates so that foreign creditors have a reasonable time within which to receive notice or take an action.
Sec. 1515. Application for recognition of a foreign proceeding. This section follows article 15 of the Model Law with minor changes. 133 The Rules will require amendment to provide forms for some or all of the documents mentioned in this section, to make necessary additions to Rules 1000 and 2002 to facilitate appropriate notices of the hearing on the petition for recognition, and to require filing of lists of creditors and other interested persons who should receive notices. Throughout the Model Law, the question of notice procedure is left to the law of the enacting state. 134
Sec. 1516. Presumptions concerning recognition. This section follows article 16 of the Model Law with minor changes. 135 Although sections 1515 and 1516 are designed to make recognition as simple and expedient as possible, the court may hear proof on any element stated. The ultimate burden as to each element is on the foreign representative, although the court is entitled to shift the burden to the extent indicated in section
1516. The word "proof" in subsection (3) has been changed to "evidence" to make it clearer using United
129. See id. at 31, �105.
130. See Model Law, Art. 14; Guide at 31-32, ��106-109.
131. Guide at 33, �111.
132. Id. at 31, Art. 14(3)(a).
133. Id. at 33.
134. See id. at 36, �121.
135. Id. at 36.
States terminology that the ultimate burden is on the foreign representative. 136 "Registered office" is the term used in the Model Law to refer to the place of incorporation or the equivalent for an entity that is not a natural person. 137 The presumption that the place of the registered office is also the center of the debtor's main interest is included for speed and convenience of proof where there is no serious controversy. Sec. 1517. Order granting recognition. This section closely tracks article 17 of the Model Law, with a few exceptions.
138 The decision to grant recognition is not dependent upon any findings about the nature of the foreign proceedings of the sort previously mandated by section 304(c) of the Bankruptcy Code. The requirements of this section, which incorporates the definitions in section 1502 and sections
101(23) and (24), are all that must be fulfilled to attain recognition. Reciprocity was specifically suggested as a requirement for
recognition on more than one occasion in the negotiations that resulted in the Model Law. It was rejected by overwhelming consensus each time. The United States was one of the leading countries opposing the inclusion of a reciprocity requirement. 139 In this regard, the Model Law conforms to section 304, which has no such requirement.
The drafters of the Model Law understood that only a main proceeding or a non-main proceeding meeting the standards of section
1502 (that is, one brought where the debtor has an establishment) were entitled to recognition under this section. The Model Law has been slightly modified to make this point clear by referring to the section 1502 definition of main and non-main proceedings, as well as to the general definition of a
foreign proceeding in section 101(23). A petition under section 1515 must show that proceeding is a main or a qualifying non-main proceeding in order to obtain recognition under this section.
Consistent with the position of various civil law representatives in the drafting of the Model Law, recognition creates a status with the effects set forth in section 1520, so those effects are not viewed as orders to be modified, as are orders granting relief under sections 1519 and
1521. Subsection (4) states the grounds for modifying or terminating recognition. On the other hand, the effects of
recognition (found in section 1520 and including an automatic stay) are subject to modification under section 362(d), made applicable by section 1520(2), which permits relief from the automatic stay of section 1520 for cause.
Paragraph 1(d) of section 17 of the Model Law has been omitted as an unnecessary requirement for United States purposes, because a petition submitted to the wrong court will be dismissed or transferred under other provisions of United States law. 140 The reference to section 350 refers to the routine closing of a case that has been completed and will invoke requirements including a final re-
136. Id. at 36, Art. 16(3).
138. Id. at 37.
139. Report of the Working Group on Insolvency Law on the Work of Its Twentieth Session (Vienna, 7-18 Oct. 1996), at 6, ��16-20.
140. Guide at 37, Art. 17(1)(d).
port from the foreign representative in such form as the Rules may provide or a court may order. 141
Sec. 1518. Subsequent information. This section follows the Model Law, except to eliminate the word "same," which is rendered unnecessary by the definition of "debtor" in section 1502, and to provide for a formal document to be filed with the court. 142 Judges in several jurisdictions, including the United States, have reported a need for a requirement of complete and candid reports to the court of all proceedings, worldwide, involving the debtor. This section will ensure that such information is provided to the court on a timely basis. Any failure to comply with this section will be subject to the sanctions available to the court for violations of the statute. The section leaves to the Rules the form of the required notice and related questions of notice to parties in interest, the time for filing, and the like.
Sec. 1519. Relief may be granted upon petition for recognition of a foreign proceeding. This section generally follows article 19 of the Model Law. 143 The bankruptcy court will have jurisdiction to grant emergency relief under Rule 7065 pending a hearing on the petition for recognition. This section does not expand or reduce the scope of section 105 as determined by cases under section 105 nor does it modify the sweep of sections 555 to 560. Subsection (d) precludes injunctive relief against police and regulatory action under section
1519, leaving section 105 as the only avenue for such relief. Subsection (e) makes clear that this section contemplates injunctive relief and that such relief is subject to specific rules and a body of jurisprudence. Subsection (f) was added to complement amendments to the Bankruptcy Code provisions dealing with financial contracts.
Sec. 1520. Effects of recognition of a foreign main proceeding. In general, this chapter sets forth all the relief that is available as a matter of right based upon recognition hereunder, although additional assistance may be provided under section 1507 and this chapter has no effect on any relief currently available under section 105. The stay created by article 20 of the Model Law is imported to chapter 15 from existing provisions of the Code. Subsection
(a)(1) combines subsections 1(a) and (b) of article 20 of the Model Law, because section 362 imposes the restrictions required by those two subsections as well as additional restrictions. 144
Subsections (a)(2) and (4) apply the Bankruptcy Code sections that impose the restrictions called for by subsection 1(c) of the Model Law. In both cases, the provisions are broader and more complete than those contemplated by the Model Law, but include all the restraints the Model Law provisions would impose. 145 As the foreign proceeding may or may not create an "estate" similar to that created in cases under this title, the restraints are applicable to actions against the debtor under section 362(a) and with respect to the property of the debtor under the remaining sections. The only property covered by this section is property within the
142. Id. at 39-40, ��133, 134.
143. Id. at 40.
144. Id. at 42, Art. 20 1(a), (b).
145. Id. at 42, 45.
territorial jurisdiction of the United States as defined in section 1502. To achieve effects on property of the
debtor which is not within the territorial jurisdiction of the United States, the foreign representative would have to commence a case under another chapter of this title.
By applying sections 361 and 362, subsection (a) makes applicable the United States exceptions and limitations to the restraints imposed on creditors, debtors, and other in a case under this title, as stated in article 20(2) of the Model Law. 146 It also introduces the concept of adequate protection provided in sections 362 and 363. These exceptions and limitations include those set forth in sections 362(b), (c) and (d). As a result, the court has the power to terminate the stay pursuant to section 362(d), for cause, including a failure of adequate protection. 147
Subsection (a)(2), by its reference to sections 363 and 552 adds to the powers of a foreign representative of a foreign main proceeding an automatic right to operate the debtor's business and exercise the power of a trustee under sections 363 and 542, unless the court orders otherwise. A foreign representative of a foreign main proceeding may need to continue a business operation to maintain value and granting that authority automatically will eliminate the risk of delay. If the court is uncomfortable about this authority in a particular situation, it can "order otherwise" as part of the order granting recognition.
Two special exceptions to the automatic stay are embodied in subsections (b) and (c). To preserve a claim in certain foreign countries, it may be necessary to commence an action. Subsection (b) permits the commencement of such an action, but would not allow for its further prosecution. Subsection (c) provides that there is no stay of the commencement of a full United States bankruptcy case. This essentially provides an escape hatch through which any entity, including the foreign representative, can flee into a full case. The full case, however, will remain subject to subchapters IV and V on cooperation and coordination of proceedings and to section 305 providing for stay or dismissal. Section 108 of the Bankruptcy Code provides the tolling protection intended by Model Law article 20(3), so no exception is necessary for claims that might be extinguished under United States law. 148
Sec. 1521. Relief that may be granted upon recognition of a foreign proceeding. This section follows article 21 of the Model Law, with detailed changes to conform to United States law. 149 The exceptions in subsection (a)(7) relate to avoiding powers. The
foreign representative's status as to such powers is governed by section 1523 below. The avoiding power in section 549 and the exceptions to that power are covered by section 1520(a)(2). The word "adequately" in the Model Law, articles 21(2) and 22(1), has been changed to "sufficiently" in sections 1521(b) and 1522(a) to avoid confusion with a very specialized legal term in United States bankruptcy, "adequate protection." 150 Subsection
(c) is designed to limit relief to assets having some direct connection with a non-main proceeding, for ex-
146. Id. at 42, Art. 20(2); 44, �� 148, 150.
147. Id. at 42, Art. 20(3); 44-45, �� 151 152.
149. Id. at 45-46, Art. 21.
150. Id. at 46, Art. 21(2); 47, Art. 22(1).
ample where they were part of an operating division in the jurisdiction of the non-main proceeding when they were fraudulently conveyed and then brought to the
United States. 151 Subsections (d), (e) and (f) are identical to those same subsections of section 1519. This section does not expand or reduce the scope of relief currently available in ancillary cases under sections 105 and 304 nor does it modify the sweep of sections 555 through 560.
Sec. 1522. Protection of creditors and other interested persons. This section follows article 22 of the Model Law with changes for United States usage and references to relevant Bankruptcy Code sections. 152 It gives the bankruptcy court broad latitude to mold relief to meet specific circumstances, including appropriate responses if it is shown that the foreign proceeding is seriously and unjustifiably injuring United States creditors. For a response to a showing that the conditions necessary to recognition did not actually exist or have ceased to exist, see section 1517. Concerning the change of "adequately" in the Model Law to "sufficiently" in this section, see section 1521. Subsection (d) is new and simply makes clear that Bankruptcy Code section
1104(d) shall apply to the appointment of an examiner appointed in a case under chapter 15 and such examiner shall be subject to certain duties and bonding requirements based on those imposed on trustees and examiners under other chapters of this title.
Sec. 1523. Actions to avoid acts detrimental to creditors. This section follows article 23 of the Model Law, with wording to fit it within procedure under this title. 153 It confers standing on a recognized foreign representative to assert an avoidance action but only in a pending case under another chapter of this title. The Model Law is not clear about whether it would grant standing in a recognized foreign proceeding if no full case were pending. This limitation reflects concerns raised by the United States delegation during the UNCITRAL debates that a simple grant of standing to bring avoidance actions neglects to address very difficult choice of law and forum issues. This limited grant of standing in section 1523 does not create or establish any legal right of avoidance nor does it create or imply any legal rules with respect to the choice of applicable law as to the avoidance of any
transfer of obligation. 154 The courts will determine the nature and extent of any such action and what national law may be applicable to such action.
Sec. 1524. Intervention by a foreign representative. The wording is the same as the Model Law, except for a few clarifying words. 155 This section gives the foreign representative whose foreign proceeding has been recognized the right to intervene in United States cases, state or federal, where the debtor is a party. Recognition being an act under Federal bankruptcy law, it must take effect in state as well as Federal courts. This section does not require substituting the foreign representative for the debtor, although that result may be appropriate in some circumstances.
151. See id. at 46-47, �� 158, 160.
152. Id. at 47.
153. Id. at 48-49.
154. See id. at 49, � 166.
155. Id. at 49.
Sec. 1525. Cooperation and direct communication between the court and foreign courts or foreign representatives. The wording of this provision is nearly identical to that of the Model Law. 156 The right of courts to communicate with other courts in worldwide insolvency cases is of central importance. This section authorizes courts to do so. This right must be exercised, however, with due regard to the rights of the parties. Guidelines for such communications are left to the Federal rules of bankruptcy procedure.
Sec. 1526 Cooperation and direct communication between the trustee and foreign courts or foreign representatives. This section closely tracks the Model Law. 157 The language in Model Law article 26 concerning the trustee's function was eliminated as unnecessary because it is always implied under United States law. The section authorizes the trustee, including a debtor in possession, to cooperate with other proceedings.
Sec. 1527. Forms of cooperation. This section is identical to the Model Law. 158 United States bankruptcy courts already engage in most of the forms of cooperation described here, but they now have explicit statutory authorization for acts like the approval of protocols of the sort used in cases. 159
Sec. 1528. Commencement of a case under title 11 after recognition of a foreign main proceeding. This section follows the Model Law, with specifics of United States law replacing the general clause at the end of the section to cover assets normally included within the jurisdiction of the United States courts in bankruptcy cases, except where assets are subject to the jurisdiction of another recognized proceeding. 160 In a full bankruptcy case, the United States bankruptcy court generally has jurisdiction over assets outside the
United States. Here that jurisdiction is limited where those assets are controlled by another recognized proceeding, if it is a main proceeding.
The court may use section 305 of this title to dismiss, stay, or limit a case as necessary to promote cooperation and coordination in a cross-border case. In addition, although the jurisdictional limitation applies only to United States bankruptcy cases commenced after recognition of a foreign proceeding, the court has ample authority under the next section and section 305 to exercise its discretion to dismiss, stay, or limit a United States case filed after a petition for recognition of a foreign main proceeding has been filed but before it has been approved, if recognition is ultimately granted.
Sec. 1529. Coordination of a case under title 11 and a foreign proceeding. This section follows the Model Law almost exactly, but subsection (4) adds a reference to section 305 to make it clear the bankruptcy court may continue to use that section, as under present law, to dismiss or suspend a United States case as part of coordination and cooperation with foreign proceedings. 161 This provision is consistent with United States policy to act ancillary to a foreign main proceeding whenever possible.
156. Id. at 50.
157. Id. at 51.
158. Guide at 51, 53.
159. See e.g., In re Maxwell Communication Corp., 93 F.2d 1036 (2d Cir. 1996).
160. Guide at 54-55.
161. Id. at 55-56.
Sec. 1530. Coordination of more than one foreign proceeding. This section follows article 30 of the Model Law exactly. 162 It ensures that a foreign main proceeding will be given primacy in the United States, consistent with the overall approach of the United States favoring assistance to foreign main proceedings. Sec. 1531. Presumption of insolvency based on recognition of a foreign main proceeding. This section follows the Model Law exactly, inserting a reference to the standard for an involuntary case under this title. 163 Where an insolvency proceeding has begun in the home country of the
debtor, and in the absence of contrary evidence, the foreign representative should not have to make a new showing that the debtor is in the sort of financial distress requiring a collective judicial remedy. The word "proof" in this provision here means "presumption." The presumption does not arise for any purpose outside this section. Sec. 1532. Rule of payment in concurrent proceeding. This section follows the Model Law exactly and is very similar to prior section 508(a), which is repealed. The Model Law language is somewhat clearer and broader than the equivalent language of prior section 508(a). 164
Sec. 802. Other Amendments to Titles 11 and 28, United States Code. Section 802(a) amends section 103 of the Bankruptcy Code to clarify the provisions of the Code that apply to chapter 15 and to specify which portions of chapter 15 apply in cases under other chapters of title 11. Section 802(b) amends the Bankruptcy Code's definitions of foreign proceeding and foreign representative in section 101. The new definitions are nearly identical to those contained in the Model Law but add to the phrase "under a law relating to insolvency" the words "or
debt adjustment." This addition emphasizes that the scope of the Model Law and chapter 15 is not limited to proceedings involving only debtors which are technically
insolvent, but broadly includes all proceedings involving debtors in severe financial distress, so long as those proceedings also meet the other criteria of section
101(24). 165
Section 802(c) amends section 157(b)(2) of title 28 to provide that proceedings under chapter 15 will be core proceedings while other amendments to title 28 provide that the United States trustee's standing extends to cases under chapter 15 and that the United States trustee's duties include acting in chapter 15 cases. Although the United States will continue to assert worldwide jurisdiction over property of a domestic or foreign debtor in a full bankruptcy case under chapters 7 and 13 of this title, subject to deference to
foreign proceedings under chapter 15 and section 305, the situation is different in a case commenced under chapter
15. There the United States is acting solely in an ancillary position, so jurisdiction over property is limited to that stated in chapter 15.
Section 802(d) amends section 109 of the Bankruptcy Code to permit
recognition of foreign proceedings involving foreign insurance companies and involving foreign banks which do not have a branch or agency in the
United States (as defined in 12 U.S.C.
162. Id. at 57.
163. Id. at 58.
164. Id. at 59.
165. Id. at 51-52, 71.
3101). While a foreign bank not subject to United States regulation will be eligible for chapter 15 as a consequence of the amendment to section
109, section 303 prohibits the commencement of a full involuntary case against such a foreign bank unless the bank is a debtor in a
While section 304 is repealed and replaced by chapter 15, access to the jurisprudence which developed under section 304 is preserved in the context of new section 1507. On deciding whether to grant the additional assistance contemplated by section
1507, the court must consider the same factors specified in former section 304. The venue provisions for cases ancillary to foreign proceedings have been amended to provide a hierarchy of choices beginning with principal place of business in the United States, if any. If there is no principal place of business in the
United States, but there is litigation against a debtor, then the district in which the litigation is pending would be the appropriate venue. In any other case, venue must be determined with reference to the interests of justice and the convenience of the parties.
TITLE IX. FINANCIAL CONTRACT PROVISIONS
Sec. 901. Treatment of Certain Agreements by Conservators of Receivers of Insured Depository Institutions. Subsections
(a) through (f) of section 901 of the Act amend the definitions of "qualified financial contract," "securities contract," "commodity contract," "forward contract," "repurchase agreement" and "swap agreement" contained in the Federal Deposit Insurance Act (FDIA) and the Federal Credit Union Act (FCUA) to make them consistent with the definitions in the Bankruptcy Code and to reflect the enactment of the Commodity Futures Modernization Act of 2000 (CFMA). It is intended that the legislative history and case law surrounding those terms, to the date of this amendment, be incorporated into the legislative history of the FDIA and the FCUA.
Subsection (b) amends the definition of "securities contract" expressly to encompass margin loans, to clarify the coverage of securities options and to clarify the coverage of repurchase and reverse repurchase transactions. The inclusion of "margin loans" in the definition is intended to encompass only those loans commonly known in the securities industry as "margin loans," such as credit permitted in a margin account under the Federal Reserve Board's Regulation T (whether or not effected in that account) or arrangements where a financial intermediary�a stockbroker, financial institution, financial participant, or securities agency�extends credit in connection with the purchase, sale, carrying, or trading of securities. "Margin loans" do not include, however, other loans that happen to be secured by securities collateral. The reference in subsection (b) to a "guarantee by or to any securities clearing agency" is intended to cover other arrangements, such as novation, that have an effect similar to a guarantee. The reference to a "loan" of a
security in the definition is intended to apply to loans of securities, whether or not for a "permitted purpose" under margin regulations. The reference to "repurchase and reverse repurchase transactions" is intended to eliminate any inquiry under the qualified financial contract provisions of the FDIA or FCUA as to whether a repurchase or reverse repurchase transaction is a purchase and sale transaction or a secured financing. Repurchase and reverse re-
purchase transactions meeting certain criteria are already covered under the definition of "repurchase agreement" in the FDIA (and a regulation of the Federal Deposit Insurance Corporation (FDIC)). Repurchase and reverse repurchase transactions on all securities (including, for example, equity securities, asset-backed securities, corporate bonds and commercial paper) are included under the definition of "securities contract." Subsection (b) also specifies that purchase, sale and repurchase obligations under a participation in a commercial mortgage loan do not constitute "securities contracts." While a contract for the purchase, sale or repurchase of a participation may constitute a "securities contract," the purchase, sale or repurchase obligation embedded in a participation agreement does not make that agreement a "securities contract."
A number of terms used in the qualified financial contract provisions, but not defined therein, are intended to have the meanings set forth in the analogous provisions of the Bankruptcy Code or Federal Deposit Insurance Corporation Improvement Act ("FDICIA"), such as, for example, "securities clearing agency." The term "person," however, is not intended to be so interpreted. Instead, "person" is intended to have the meaning set forth in section 1 of title 1 of the United States Code.
Section 901(c) amends with respect the definition of "commodity contract" in section 11(e)(8)(D)(iii) of the FDIA and in section 207(c)(8)(D)(iii) of the FCUA. Section 901(d) amends section 11(e)(8)(D)(iv) of the FDIA and section 207(c)(8)(D)(iv) of the FCUA with respect to the definition of a "forward contract."
Subsection (e) amends the definition of "repurchase agreement" in the FDIA and the FCUA to codify the substance of the FDIC's 1995 regulation defining repurchase agreement to include those on qualified foreign government securities. 166 The term "qualified foreign government securities" is defined to include those that are direct obligations of, or fully guaranteed by, central governments of members of the Organization for Economic Cooperation and Development (OECD), as determined by rule, of the appropriate Federal banking agency. Subsection (e) reflects developments in the repurchase agreement markets, which increasingly use foreign government securities as the underlying asset. The securities are limited to those issued by or guaranteed by full members of the OECD, as well as countries that have concluded special lending arrangements with the International Monetary Fund associated with the Fund's General Arrangements to Borrow.
Subsection (e) also amends the definition of "repurchase agreement" to include those on mortgage-related securities, mortgage loans and interests therein, and expressly to include principal and interest-only U.S. government and agency securities as securities that can be the subject of a "repurchase agreement." The reference in the definition to United States government- and agency-issued or fully guaranteed securities is intended to include obligations issued or guaranteed by Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) as well as all obligations eligible for purchase by Federal Reserve banks under the similar language of section 14(b) of the Federal Reserve Act. This amendment is not intended to affect the status of repos involving securities or
166. See 12 C.F.R. Sec. 360.5.