[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4393 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4393

 To revise the banking and bankruptcy insolvency laws with respect to 
   the termination and netting of financial contracts, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 4, 1998

Mr. Leach (for himself and Mr. LaFalce) introduced the following bill; 
which was referred to the Committee on Banking and Financial Services, 
and in addition to the Committees on the Judiciary, and Commerce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To revise the banking and bankruptcy insolvency laws with respect to 
   the termination and netting of financial contracts, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Contract Netting 
Improvement Act of 1998''.

SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR RECEIVERS OF 
              INSURED DEPOSITORY INSTITUTIONS.

    (a) Definition of Qualified Financial Contract.--Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)(D)(i)) is amended by inserting ``, resolution or order'' 
after ``any similar agreement that the Corporation determines by 
regulation''.
    (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, 
                                or any mortgage loan, mortgage related 
                                security (as defined in section 
                                3(a)(41) of the Securities Exchange Act 
                                of 1934) or interest therein, including 
                                an option for the purchase or sale of a 
                                security, certificate of deposit, or 
                                group or index of securities (including 
                                any interest therein or based on the 
                                value thereof) or any option entered 
                                into on a national securities exchange 
                                relating to foreign currencies, or the 
                                guarantee of any settlement of cash or 
                                securities by or to a securities 
                                clearing agency, or any other similar 
                                agreement;
                                    ``(II) does not include any 
                                participation in or servicing agreement 
                                for a commercial mortgage loan unless 
                                the Corporation determines by 
                                regulation, resolution, or order to 
                                include any such participation 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, 
                                certificates of deposit, mortgage loans 
                                or interest therein, or group or index 
                                of securities, certificates of deposit, 
                                or mortgage loans or interests therein 
                                (including 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, 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 combination 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), (II), (III), (IV), (V), (VI) or 
                                (VII), together with all supplements to 
                                any such master agreement, without 
                                regard to whether the master agreement 
                                provides 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 agreement that is referred to in 
                                subclause (I), (II), (III), (IV), (V), 
                                (VI) or (VII); and
                                    ``(X) means any security agreement 
                                or arrangement or other credit 
                                enhancement related 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:
                            ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                    ``(I) with respect to a futures 
                                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 foreign 
                                futures commission merchant, a foreign 
                                future;
                                    ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                    ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contact market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contact 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 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII) or (VIII), together with 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement 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 subclause (I), 
                                (II), (III), (IV), (V), (VI), (VII) or 
                                (VIII); or
                                    ``(X) a security agreement 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 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 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 agreement, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, option, 
                                allocated transaction, unallocated 
                                transaction, or any other similar 
                                agreement;
                                    ``(II) any combination of 
                                agreements 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 
                                transaction referred to in subclauses 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement 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 paragraph only with respect 
                                to each agreement or transaction under 
                                the master agreement that is referred 
                                to in subclause (I), (II) or (III); or
                                    ``(V) a security agreement 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 Agreement.--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 follows:
                            ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which also applies to a 
                        reverse repurchase agreement)--
                                    ``(I) means an agreement, including 
                                related terms, that provides for the 
                                transfer of certificates of deposit, 
                                mortgage-related securities (as such 
                                term is defined in section 3(a)(41) of 
                                the Securities Exchange Act of 1934), 
                                any mortgage loan, and any interest in 
                                any mortgage loan, eligible bankers' 
                                acceptances, qualified foreign 
                                government securities or securities 
                                that are direct obligations of, or that 
                                are fully guaranteed as to principal 
                                and interest by, the United States or 
                                any agency of the United States against 
                                the transfer of funds by the 
transferee of such certificates of deposit, eligible bankers' 
acceptances, or securities with a simultaneous agreement by such 
transferee to transfer to the transferor thereof certificates of 
deposit, mortgage-related securities, and mortgage loan, and any 
interest in any mortgage loan, eligible bankers' acceptances, or 
securities as described above, at a date certain not later than 1 year 
after such transfers or on demand, against the transfer of funds, or 
any other similar agreement;
                                    ``(II) does not include any 
                                participation in a commercial mortgage 
                                loan unless the Corporation 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 (III);
                                    ``(IV) means any option to enter 
                                into any agreement or transaction 
                                referred to in subclause (I) or (II);
                                    ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II) or (III), together with all 
                                supplements, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this 
                                section, except that the master 
                                agreement shall be considered to be a 
                                repurchase agreement under this 
                                subclause only with respect to each 
                                agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II) or (III); and
                                    ``(VI) means a security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV).
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security 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.--The Federal Deposit Insurance 
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, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward or other foreign 
                                exchange agreement; a currency swap, 
                                option, future, or forward agreement; 
                                an equity index or equity swap, option, 
                                future, or forward agreement; a debt 
                                index or debt swap, option, future, or 
                                forward agreement; a credit swap, 
                                option, future, or forward agreement; a 
                                commodity swap, option, future, or 
                                forward agreement or any other similar 
                                agreement;
                                    ``(II) an agreement or transaction 
                                similar to any other agreement or 
                                transaction referred to in this clause 
                                that is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap agreement market (including terms 
                                and conditions incorporated by 
                                reference in such agreement) and that 
                                is a forward, swap, future, or option 
                                on 1 or more rates, currencies, 
                                commodities, equity securities or other 
                                equity instruments, debt securities or 
                                other debt instruments, or economic 
                                indices 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 transaction referred to in 
                                this clause;
                                    ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is 
                                described in any of those subclauses, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                only with respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (II), (III), or (IV); and
                                    ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in 
                                subparagraph (I), (II), (III), or (IV).
                        Such term shall not be construed or applied so 
                        as to challenge or affect the characterization, 
                        definition, or treatment of any swap agreement 
                        or any instrument defined as a swap agreement 
                        herein, under any other statute, regulation, or 
rule, including the Securities 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, and the regulations promulgated by 
the Securities and Exchange Commission or the Commodity Futures Trading 
Commission.''.
    (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is 
amended to read as follows:
                            ``(viii) Transfer.--The term `transfer' 
                        means every mode, direct or indirect, absolute 
                        or conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the debtor's equity of redemption.''.
    (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 ``paragraphs (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 acceleration'';
            (3) by amending subparagraph (A)(ii) to read as follows:
                            ``(ii) any right under any security 
                        agreement or arrangement or other credit 
                        enhancement related to 1 or more qualified 
                        financial contracts described in clause (i);''; 
                        and
            (4) by amending subparagraph (E)(ii) to read as follows:
                            ``(ii) any right under any security 
                        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 (12 U.S.C. 91) or any 
other Federal or State law relating to the avoidance of preferential or 
fraudulent transfers,'' before ``the Corporation''.

SEC. 3. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND FAILING 
              INSTITUTIONS.

    (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 subsection, subsection (d)(9)'' and inserting 
        ``other than subsections (d)(9) and (d)(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 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with subsection (e)(1) of this 
                section.
                    ``(G) Walkaway clauses not effective.--
                            ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                            ``(ii) Walkaway clause defined.--For 
                        purposes of this subparagraph, the term 
                        `walkaway clause' means a provision in a 
                        qualified financial contract that, after 
                        calculation of a value of a party's position or 
                        an amount due to or from 1 of the parties in 
                        accordance with its terms upon termination, 
                        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.''.
    (b) Technical and Conforming Amendment.--Section 11(e)(12)(A) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amended 
by inserting ``or the exercise of rights or powers'' after ``the 
appointment''.

SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
              CONTRACTS.

    (a) Transfers of Qualified Financial Contracts to Financial 
Institutions.--Section 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 depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                            ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
which is otherwise the subject of a bankruptcy 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 person or 
                                any affiliate of such person against 
                                such depository institution 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 
                                institution);
                                    ``(III) all claims of such 
                                depository institution against such 
                                person or any affiliate of such person 
                                under any such contract; and
                                    ``(IV) all property securing any 
                                claim described in subclause (II) or 
                                (III) under any such contract, or any 
                                other credit enhancement for any 
                                contract described in clause (I); or
                            ``(ii) transfer none of the qualified 
                        financial contracts, claims, or property 
                        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 transferring any qualified 
                financial contracts and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, the contractual rights of the parties to such 
                qualified financial contracts are enforceable 
                substantially to the same extent as permitted under 
                this section.
                    ``(C) Transfer of contracts subject to the rules of 
                a clearing organization.--In the event that a 
                conservator or receiver transfers any qualified 
                financial contract and related claims and property 
                pursuant to subparagraph (A)(i) and such contract is 
                subject to the rules of a clearing organization, the 
                clearing organization shall not be required to accept 
                the transferee as a member by virtue of the transfer.
                    ``(D) Definition.--For purposes of this section, 
                the term `financial institution' means a broker or 
                dealer, a depository institution, a futures commission 
                merchant, or any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.''.
    (b) Notice to Qualified Financial Contract Counterparties.--Section 
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(10)(A)) is amended by amending 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 Treatment of Bridge Banks.--Section 
11(e)(10) of 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 enforceable.--
                            ``(i) Receivership.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        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 Corporation 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 condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                    ``(I) until 5:00 p.m. (eastern 
                                time) on the business day following the 
                                date of the appointment of the 
                                receiver; or
                                    ``(II) after the person has 
                                received notice that the contract has 
                                been transferred pursuant to paragraph 
                                (9)(A).
                            ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) or sections 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 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the conservator has been 
                        appointed).
                            ``(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 qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
the time specified in subparagraph (A) of this subsection.
                    ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                subsection (e)(9)--
                            ``(i) a bridge bank; or
                            ``(ii) a depository institution organized 
                        by the Corporation, for which a conservator is 
                        appointed either--
                                    ``(I) immediately upon the 
                                organization of the institution; or
                                    ``(II) at the time of a purchase 
                                and assumption transaction between such 
                                institution and the Corporation as 
                                receiver for a depository institution 
                                in default.''.

SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
              QUALIFIED FINANCIAL CONTRACTS.

    Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)) is further amended--
            (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively; and
            (2) by inserting after paragraph (10) the following new 
        paragraph:
            ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                    ``(A) disaffirm or repudiate all qualified 
                financial contracts between--
                            ``(i) any person or any affiliate of such 
                        person; and
                            ``(ii) the depository institution in 
                        default; or
                    ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''.

SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

    Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(8)(D)(vii)) is amended to read as follows:
                            ``(vii) Treatment of master agreement as 1 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract. If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.

    (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4402) is amended--
            (1) in paragraph (6)--
                    (A) by redesignating subparagraphs (B) through (D) 
                as subparagraphs (C) through (E), respectively;
                    (B) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System if the national bank or State member bank is not 
                eligible to make application to become an insured bank 
                under section 5 of the Federal Deposit Insurance 
                Act;''; and
                    (C) by amending subparagraph (C) (as redesignated) 
                to read as follows:
                    ``(C) a branch or agency of a foreign bank, a 
                foreign bank and any branch or agency of the foreign 
                bank, or the foreign bank that established the branch 
                or agency, as those terms are defined in section 1(b) 
                of the International Banking Act of 1978;'';
            (2) in paragraph (11), by adding before the period ``and 
        any other clearing organization with which such clearing 
        organization has a netting contract'';
            (3) by amending paragraph (14)(A)(i) to read as follows:
                            ``(i) means a contract or agreement between 
                        2 or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or closeout values relating to such obligations 
                        or entitlements) among the parties to the 
                        agreement; and''; and
            (4) by adding at the end the following new paragraph:
            ``(15) Payment.--The term `payment' means a payment of 
        United States dollars, another currency, or a composite 
        currency, and a noncash delivery, including a payment or 
        delivery to liquidate an unmatured obligation.''.
    (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C. 4403) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) General Rule.--Notwithstanding any other provision of State 
or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act or any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1971, the covered contractual payment obligations and the 
covered contractual payment entitlements between any 2 financial 
institutions shall be netted in accordance with, and subject to the 
conditions of, the terms of any applicable netting contract.''; and
            (2) by adding at the end the following new subsection:
    ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 financial institutions 
shall be enforceable in accordance with their terms and shall not be 
stayed, avoided, or otherwise limited by any State or Federal law 
(other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of 
the Federal Deposit Insurance Act and section 5(b)(2) of the Securities 
Investor Protection Act of 1971).''.
    (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C. 4404) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) General Rule.--Notwithstanding any other provision of State 
or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1971, the covered contractual payment obligations and the 
covered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organization 
shall be netted in accordance with and subject to the conditions of any 
applicable netting contract.''; and
            (2) by adding at the end the following new subsection:
    ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 members of a clearing 
organization shall be enforceable in accordance with their terms and 
shall not be stayed, avoided, or otherwise limited by any State or 
Federal law other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and section 5(b)(2) 
of the Securities Investor Protection Act of 1971.''.
    (d) Enforceability of Contracts With Uninsured National Banks and 
Uninsured Federal Branches and Agencies.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.) is 
amended--
            (1) by redesignating section 407 as section 408; and
            (2) by adding after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
              UNINSURED FEDERAL BRANCHES AND AGENCIES.

    ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), and (11) of section 11(e) of the Federal Deposit 
Insurance Act shall apply to an uninsured national bank or uninsured 
Federal branch or Federal agency except--
            ``(1) any reference to the `Corporation as receiver' or 
        `the receiver or the Corporation' shall refer to the receiver 
        of an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency;
            ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator of 
        an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency; 
        and
            ``(3) any reference to an `insured depository institution' 
        or `depository institution' shall refer to an uninsured 
        national bank or an uninsured Federal branch or Federal agency.
    ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank or uninsured Federal branch or agency shall be 
determined in the same manner and subject to the same limitations that 
apply to receivers and conservators of insured depository institutions 
under section 11(e) of the Federal Deposit Insurance Act.
    ``(c) Regulatory Authority.--
            ``(1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may promulgate regulations to implement this section.
            ``(2) Specific requirement.--In promulgating regulations to 
        implement this section, the Comptroller of the Currency shall 
        ensure that the regulations generally are consistent with the 
        regulations and policies of the Federal Deposit Insurance 
        Corporation adopted pursuant to the Federal Deposit Insurance 
        Act.
    ``(d) Definitions.--For purposes of this section, the terms 
`Federal branch', `Federal agency', and `foreign bank' have the same 
meaning as in section 1(b) of the International Banking Act.''.

SEC. 8. BANKRUPTCY CODE AMENDMENTS.

    (a) Definitions of Swap Agreement, Securities Contract, Forward 
Contract, Commodity Contract, and Repurchase Agreement.--Title 11, 
United States Code, is amended--
            (1) in section 101--
                    (A) in paragraph (25)--
                            (i) by striking ``means a contract'' and 
                        inserting ``means--
                    ``(A) a contract'';
                            (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                            (iii) by adding at the end the following 
                        new subparagraphs:
                    ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                    ``(C) any option to enter into any agreement or 
                transaction referred to in subparagraph (A) or (B);
                    ``(D) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B) or (C), together with all supplements to any 
                such master agreement, without regard to whether the 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that the master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under the master agreement that is referred 
                to in subparagraph (A), (B) or (C); or
                    ``(E) a security agreement or arrangement or other 
                credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C) 
                or (D);'';
                    (B) by amending paragraph (47) to read as follows:
            ``(47) the term `repurchase agreement' (which definition 
        also applies to a reverse repurchase agreement)--
                    ``(A) means--
                            ``(i) an agreement, including related 
                        terms, which provides for the transfer of 1 or 
                        more certificates of deposit, mortgage-related 
                        securities (as such term is defined in the 
                        Securities Exchange Act of 1934), mortgage 
                        loans, interests in mortgage-related securities 
                        or mortgage loans, eligible bankers' 
                        acceptances, qualified foreign government 
                        securities or securities that are direct 
                        obligations of, or that are fully guaranteed as 
                        to principal and interest by, the United States 
                        or any agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, loans or interests 
                        with a simultaneous agreement 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 demand, against the transfer of funds; or 
                        any other similar agreement; and
                            ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                            ``(iii) any option to enter into any 
                        agreement or transaction referred to in clause 
                        (i) or (ii);
                            ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clauses (i), (ii) or (iii), together with all 
                        supplements, without regard to whether the 
                        master agreement provides for an agreement or 
                        transaction that is not a repurchase agreement 
                        under this subparagraph, except that the master 
                        agreement shall be considered to be a 
                        repurchase agreement under this subparagraph 
                        only with respect to each agreement or 
                        transaction under the master agreement that is 
                        referred to in clause (i), (ii) or (iii); or
                            ``(v) a security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in clauses 
                        (i), (ii), (iii) or (iv); and
                    ``(B) does not include any repurchase obligation 
                under a participation in a commercial mortgage loan,
        and, for purposes of this paragraph, the term `qualified 
        foreign government security' means a security 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.''; and
                    (C) by amending paragraph (53B) to read as follows:
            ``(53B) the term `swap agreement'--
                    ``(A) means--
                            ``(i) any agreement, including the terms 
                        and conditions incorporated by reference in any 
                        such agreement, which is an interest rate swap, 
                        option, future, or forward agreement, including 
                        a rate floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a spot, 
                        same day-tomorrow, tomorrow-next, forward, or 
                        other foreign exchange or precious metals 
                        agreement; a currency swap, option, future, or 
                        forward agreement; an equity index or equity 
                        swap, option, future, or forward agreement; a 
                        debt index or debt swap, option, future, or 
                        forward agreement; a credit spread or credit 
                        swap, option, future, or forward agreement; a 
                        commodity index or commodity swap, option, 
                        future, or forward agreement;
                            ``(ii) any agreement similar to any other 
                        agreement or transaction referred to in this 
                        subparagraph that--
                                    ``(I) is presently, or in the 
                                future becomes, regularly entered into 
                                in the swap agreement market (including 
                                terms and conditions incorporated by 
                                reference therein); and
                                    ``(II) is a forward, swap, future, 
                                or option on 1 or more rates, 
                                currencies, commodities, equity 
                                securities or other equity instruments, 
debt securities or other debt instruments, or economic indices or 
measures of economic risk or value;
                            ``(iii) any combination of agreements or 
                        transactions referred to in this subparagraph;
                            ``(iv) any option to enter into any 
                        agreement or transaction referred to in this 
                        subparagraph;
                            ``(v) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), or (iv), together with 
                        all supplements to any such master agreement, 
                        without regard to whether the master agreement 
                        contains an agreement or transaction that is 
                        described in any of such clause, except that 
                        the master agreement shall be considered to be 
                        a swap agreement only with respect to each 
                        agreement or transaction under the master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), or (iv); or
                    ``(C) is applicable for purposes of this title only 
                and shall not be construed or applied to challenge or 
                affect the characterization, definition, or treatment 
                of any swap agreement or any instrument defined as a 
                swap agreement herein, under any other statute, 
                regulation, or rule, including the Securities 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, and the regulations prescribed 
                by the Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.'';
            (2) by amending section 741(7) to read as follows:
            ``(7) the term `securities contract'--
                    ``(A) means--
                            ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, or a group or index of securities, 
                        certificates of deposit, or mortgage loans or 
                        interests therein (including 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, 
                        certificate of deposit, loan, interest, group 
                        or index or option;
                            ``(ii) any option entered into on a 
                        national securities exchange relating to 
                        foreign currencies;
                            ``(iii) the guarantee by or to any 
                        securities clearing agency of any settlement of 
                        cash, securities, certificates of deposit, 
                        mortgage loans or interest therein, or group or 
                        index of securities, certificates of deposit, 
                        or mortgage loans or interests therein 
                        (including 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, certificate of deposit, 
                        loan, interest, group or index or option;
                            ``(iv) any margin loan;
                            ``(v) any other agreement or transaction 
                        that is similar to any agreement or transaction 
                        referred to in this subparagraph;
                            ``(vi) any combination of the agreements or 
                        transactions referred to in this subparagraph;
                            ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        subparagraph;
                            ``(viii) a master agreement that provides 
                        for an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this subparagraph, 
                        except that the master agreement shall be 
                        considered to be a securities contract under 
                        this subparagraph only with respect to each 
                        agreement or transaction under the master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); and
                            ``(ix) any security agreement or 
                        arrangement or other credit enhancement related 
                        to any agreement or transaction referred to in 
                        this subparagraph; and
                    ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in or 
                servicing agreement for a commercial mortgage loan.''; 
                and
            (3) in section 761(4)--
                    (A) by striking ``or'' at the end of subparagraph 
                (D); and
                    (B) by adding at the end the following new 
                subparagraphs:
                    ``(F) any other agreement or transaction that is 
                similar to any agreement or transaction referred to in 
                this paragraph;
                    ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                    ``(H) any option to enter into any agreement or 
                transaction referred to in this paragraph;
                    ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G) or (H), together with 
                all supplements to any such master agreement, without 
                regard to whether the master agreement provides for an 
                agreement or transaction that is not a commodity 
                contract under this paragraph, except that the master 
agreement shall be considered to be a commodity contract under this 
paragraph only with respect to each agreement or transaction under the 
master agreement that is referred to in subparagraph (A), (B), (C), 
(D), (E), (F), (G) or (H); or
                    ``(J) a security agreement or arrangement or other 
                credit enhancement related to any agreement or 
                transaction referred to in this paragraph;''.
    (b) Definitions of Financial Institution, Financial Participant, 
and Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
            (1) by amending paragraph (22) to read as follows:
            ``(22) the term `financial institution' means a Federal 
        reserve bank, or a person that is a commercial or savings bank, 
        industrial savings bank, savings and loan association, trust 
        company, or receiver or conservator for such person and, when 
        any such Federal reserve bank, receiver, or conservator or 
        person acting as agent or custodian for a customer in 
        connection with a securities contract, as defined in section 
        741(7) of this title, such customer;'';
            (2) by inserting after paragraph (22) the following new 
        paragraph:
            ``(22A) the term `financial participant' means any entity 
        that, at the time it enters into a securities contract, 
        commodity contract or forward contract, or at the time of the 
        filing of the petition, has 1 or more agreements or 
        transactions that is described in section 561(a)(2) with the 
        debtor or any other entity (other than an affiliate) of a total 
        gross dollar value of at least $1,000,000,000 in notional or 
        actual principal amount outstanding on any day during the 
        previous 15-month period, or has gross mark-to-market positions 
        of at least $100,000,000 (aggregated across counterparties) in 
        1 or more such agreements or transactions with the debtor or 
        any other entity (other than an affiliate) on any day during 
        the previous 15-month period;''; and
            (3) by amending paragraph (26) to read as follows:
            ``(26) the term `forward contract merchant' means a Federal 
        reserve bank, or a person whose business consists in whole or 
        in part of entering into forward contracts as or with merchants 
        or in a commodity, as defined or in section 761(8) of this 
        title, or any similar good, article, service, right, or 
        interest which is presently or in the future becomes the 
        subject of dealing or in the forward contract trade;''.
    (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
            ``(38A) the term `master netting agreement' means an 
        agreement providing for the exercise of rights, including 
        rights of netting, setoff, liquidation, termination, 
        acceleration, or closeout, under or in connection with 1 or 
        more contracts that are described in any 1 or more of 
        paragraphs (1) through (5) of section 561(a), or any security 
        agreement or arrangement or other credit enhancement related to 
        1 or more of the foregoing. If a master netting agreement 
        contains provisions relating to agreements or transactions that 
        are not contracts described in paragraphs (1) through (5) of 
        section 561(a), the master netting agreement shall be deemed to 
        be a master netting agreement only with respect to those 
        agreements or transactions that are described in any 1 or more 
        of the paragraphs (1) through (5) of section 561(a);
            ``(38B) the term `master netting agreement participant' 
        means an entity that, at any time before the filing of the 
        petition, is a party to an outstanding master netting agreement 
        with the debtor;''.
    (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-Stay.--
            (1) In general.--Section 362(b) of title 11, United States 
        Code, is amended--
                    (A) in paragraph (6), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                    (B) in paragraph (7), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                    (C) by amending paragraph (17) to read as follows:
            ``(17) under subsection (a), of the setoff by a swap 
        participant of any mutual debt and claim under or in connection 
        with 1 or more swap agreements that constitute the setoff of a 
        claim against the debtor for any payment due from the debtor 
        under or in connection with any swap agreement against any 
        payment due to the debtor from the swap participant under or in 
        connection with any swap agreement or against cash, securities, 
        or other property of the debtor held by, pledged to, and under 
        the control of, or due from such swap participant to guarantee, 
        secure, or settle any swap agreement;'';
                    (D) in paragraph (18), by striking the period and 
                inserting ``; or''; and
                    (E) by inserting after paragraph (18) the following 
                new paragraph:
            ``(19) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with 1 or more master netting agreements to 
        the extent such participant could offset the claim under 
        paragraph (6), (7), or (17) for each individual contract 
        covered by the master netting agreement in issue.''.
            (2) Limitation.--Section 362 of title 11, United States 
        Code, is amended by adding at the end the following new 
        subsection:
    ``(i) Limitation.--The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), (7), (17), or 
(19) of subsection (b) shall not be stayed by any order of a court or 
administrative agency in any proceeding under this title.''.
    (e) Limitation of Avoidance Powers Under Master Netting 
Agreement.--Section 546 of title 11, United States Code, is amended--
            (1) in subsection (g) (as added by section 103 of Public 
        Law 101-311)--
                    (A) by striking ``under a swap agreement'';
                    (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement'';
            (2) by redesignating subsection (g) (as added by section 
        222(a) of Public Law 103-394) as subsection (i); and
            (3) by inserting before subsection (i) (as redesignated) 
        the following new subsection:
    ``(h) Notwithstanding sections 544, 545, 547, 548(a)(2), and 548(b) 
of this title, to the extent that under subsection (e), (f), or (g), 
the trustee may not avoid a transfer made by or to a master netting 
agreement participant under or in connection with each individual 
contract covered by any master netting agreement that is made before 
the commencement of the case, the trustee may not avoid a transfer made 
by or to such master netting agreement participant under or in 
connection with the master netting agreement in issue, except under 
section 548(a)(1) of this title.''.
    (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
            (1) in subparagraph (C), by striking ``and'';
            (2) in subparagraph (D), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(E) a master netting agreement participant that 
                receives a transfer in connection with a master netting 
                agreement takes for value to the extent of such 
                transfer, but only to the extent that such participant 
                would take for value under paragraph (B), (C), or (D) 
                for each individual contract covered by the master 
                netting agreement in issue.''.
    (g) Termination or Acceleration of Securities Contracts.--Section 
555 of title 11, United States Code, is amended--
            (1) by amending the section heading to read ``Contractual 
        right to liquidate, terminate, or accelerate a securities 
        contract''; and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
            (1) by amending the section heading to read ``Contractual 
        right to liquidate, terminate, or accelerate a commodities 
        contract or forward contract''; and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
            (1) by amending the section heading to read ``Contractual 
        right to liquidate, terminate, or accelerate a repurchase 
        agreement''; and
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
    (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
            (1) by amending the section heading to read ``Contractual 
        right to liquidate, terminate, or accelerate a swap 
        agreement''; and
            (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of 1 or more swap agreements''; and
            (3) by striking ``in connection with any swap agreement'' 
        and inserting ``in connection with the termination, 
        liquidation, or acceleration of 1 or more swap agreements''.
    (k) Liquidation, Termination, Acceleration, or Offset Under a 
Master Netting Agreement and Across Contracts.--Title 11, United States 
Code, is amended by inserting after section 560 the following new 
section:
``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
              offset under a master netting agreement and across 
              contracts
    ``(a) In General.--Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified in 
section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset, or net termination values, payment 
amounts or other transfer obligations arising under or in connection 
with the termination, liquidation, or acceleration of 1 or more--
            ``(1) securities contracts, as defined in section 741(7);
            ``(2) commodity contracts, as defined in section 761(4);
            ``(3) forward contracts;
            ``(4) repurchase agreements;
            ``(5) swap agreements; or
            ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
    ``(b) Exception.--
            ``(1) A party may exercise a contractual right described in 
        subsection (a) to terminate, liquidate, or accelerate only to 
        the extent that such party could exercise such a right under 
        section 555, 556, 559, or 560 for each individual contract 
        covered by the master netting agreement in issue.
            ``(2)(A) A party may not exercise a contractual right 
        described in subsection (a) to offset or to net obligations 
        arising under, or in connection with, a commodity contract 
        against obligations arising under, or in connection with, any 
        instrument listed in subsection (a) if the obligations are not 
        mutual.
            ``(B) If a debtor is a commodity broker subject to 
        subchapter IV of chapter 7 of this title, a party may not net 
        or offset an obligation to the debtor arising under, or in 
        connection with, a commodity contract against any claim arising 
        under, or in connection with, other instruments listed in 
        subsection (a) if the party has no positive net equity in the 
        commodity account at the debtor, as calculated under subchapter 
        IV.
    ``(c) Definition.--As used in this section, the term `contractual 
right' includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a securities 
clearing agency, a right set forth in a bylaw of a clearing 
organization or contract market or in a resolution of the governing 
board thereof, and a right whether or not evidenced in writing arising 
under common law, under law merchant, or by reason of normal business 
practice.''.
    (l) Municipal Bankruptcies.--Section 901 of title 11, United States 
Code, is amended--
            (1) by inserting ``, 555, 556'' after ``553''; and
            (2) by inserting ``, 559, 560, 561, 562'' after ``557''.
    (m) Ancillary Proceedings.--Section 304 of title 11, United States 
Code, is amended by adding at the end the following new subsection:
    ``(d) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master netting agreements shall apply 
in a case ancillary to a foreign proceeding under this section or any 
other section of this title so that enforcement of contractual 
provisions of such contracts and agreements in accordance with their 
terms will not be stayed or otherwise limited by operation of any 
provision of this title or by order of a court in any proceeding under 
this title, and to limit avoidance powers to the same extent as in a 
proceeding under chapter 7 or 11 of this title (such enforcement not to 
be limited based on the presence or absence of assets of the debtor in 
the United States).''.
    (n) Commodity Broker Liquidations.--Title 11, United States Code, 
is amended by inserting after section 766 the following new section:
``Sec. 767. Commodity broker liquidation and forward contract 
              merchants, commodity brokers, stockbrokers, financial 
              institutions, securities clearing agencies, swap 
              participants, repo participants, and master netting 
              agreement participants
    ``Notwithstanding any other provision of this title, the exercise 
of rights by a forward contract merchant, commodity broker, 
stockbroker, financial institution, securities clearing agency, swap 
participant, repo participant, or master netting agreement participant 
under this title shall not affect the priority of any unsecured claim 
it may have after the exercise of such rights or affect the provisions 
of this subchapter IV regarding customer property or distributions.''.
    (o) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following new section:
``Sec. 753. Stockbroker liquidation and forward contract merchants, 
              commodity brokers, stockbrokers, financial institutions, 
              securities clearing agencies, swap participants, repo 
              participants, and master netting agreement participants
    ``Notwithstanding any other provision of this title, the exercise 
of rights by a forward contract merchant, commodity broker, 
stockbroker, financial institution, securities clearing agency, swap 
participant, repo participant, or master netting agreement participant 
under this title shall not affect the priority of any unsecured claim 
it may have after the exercise of rights or affect the provisions of 
this subchapter regarding customer property or distributions.''.
    (p) Setoff.--Section 553 of title 11, United States Code, is 
amended--
            (1) in subsection (a)(3)(C), by inserting ``(except for a 
        setoff of a kind described in section 362(b)(6), 362(b)(7), 
        362(b)(17), 555, 556, 559, 560, or 561 of this title)'' before 
        the period; and
            (2) in subsection (b)(1), by striking ``362(b)(14),'' and 
        inserting ``362(b)(17), 555, 556, 559, 560, 561''.
    (q) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
            (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant'';
            (2) in section 546(e), by inserting ``financial 
        participant'' after ``financial institution,'';
            (3) in section 548(d)(2)(B), by inserting ``financial 
        participant'' after ``financial institution,'';
            (4) in section 555--
                    (A) by inserting ``financial participant'' after 
                ``financial institution,''; and
                    (B) by inserting before the period ``, a right set 
                forth in a bylaw of a clearing organization or contract 
                market or in a resolution of the governing board 
                thereof, and a right, whether or not in writing, 
                arising under common law, under law merchant, or by 
                reason of normal business practice''; and
            (5) in section 556, by inserting ``, financial 
        participant'' after ``commodity broker''.
    (r) Technical and Conforming Amendment.--Section 104 of title 11, 
United States Code, is amended by adding at the end the following new 
subsection:
    ``(c) Exception For Certain Defined Terms.--No adjustments shall be 
made under this section to the dollar amounts set forth in the 
definition of the term `financial participant' in section 101(22A).''.

SEC. 9. RECORDKEEPING REQUIREMENTS.

    Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping with respect to qualified 
                financial contracts (including market valuations) by 
                insured depository institutions.''.

SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.

    Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(e)(2)) is amended to read as follows:
            ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                    ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                    ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                    ``(C) extensions of credit, including any 
                overdraft, from a Federal reserve bank or Federal home 
                loan bank; or
                    ``(D) 1 or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 11. DAMAGE MEASURE.

    (a) Title 11, United States Code, is amended by inserting after 
section 561 (as added by section 7(k)) the following new section:
``Sec. 562. Damage measure in connection with swap agreements, 
              securities contracts, forward contracts, commodity 
              contracts, repurchase agreements, or master netting 
              agreements
    ``If the trustee rejects a swap agreement, securities contract as 
defined in section 741 of this title, forward contract, repurchase 
agreement, or master netting agreement pursuant to section 365(a) of 
this title, or if a forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo participant, master 
netting agreement participant, or swap participant liquidates, 
terminates, or accelerates any such contract or agreement, damages 
shall be measured as of the earlier of--
            ``(1) the date of such rejection; or
            ``(2) the date of such liquidation, termination, or 
        acceleration.''.
    (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
            (1) by designating the existing text as paragraph (1); and
            (2) by adding at the end the following new paragraph:
            ``(2) A claim for damages calculated in accordance with 
        section 562 of this title shall be allowed under subsection 
        (a),(b), or (c) of this section or disallowed under subsection 
        (d) or (e) of this section as if such claim had arisen before 
        the date of the filing of the petition.''.

SEC. 12. ASSET-BACKED SECURITIZATIONS.

    Section 541 of title 11, United States Code, is amended--
            (1) in subsection (b), by striking ``or'' at the end of 
        paragraph (4);
            (2) by redesignating paragraph (5) of subsection (b) as 
        paragraph (6);
            (3) by inserting after paragraph (4) of subsection (b) the 
        following new paragraph:
            ``(5) any eligible asset (or proceeds thereof), to the 
        extent that such eligible asset was transferred by the debtor, 
        before the date of commencement of the case, to an eligible 
        entity in connection with an asset-backed securitization, 
        except to the extent such asset (or proceeds or value thereof) 
        may be recovered by the trustee under section 550 by virtue of 
        avoidance under section 548(a); or''; and
            (4) by adding at the end the following new subsection:
    ``(e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Asset-backed securitization.--The term `asset-backed 
        securitization' means a transaction in which eligible assets 
        transferred to an eligible entity are used as the source of 
        payment on securities, the most senior of which are rated 
        investment grade by 1 or more nationally recognized securities 
        rating organizations, issued by an issuer;
            ``(2) Eligible asset.--The term `eligible asset' means--
                    ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                including residential and commercial mortgage loans, 
                consumer receivables, trade receivables, and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any rights or other 
                assets designed to assure the servicing or timely 
                distribution of proceeds to security holders;
                    ``(B) cash; and
                    ``(C) securities.
            ``(3) Eligible entity.--The term `eligible entity' means--
                    ``(A) an issuer; or
                    ``(B) a trust, corporation, partnership, or other 
                entity engaged exclusively in the business of acquiring 
                and transferring eligible assets directly or indirectly 
                to an issuer and taking actions ancillary thereto;
            ``(4) Issuer.--The term `issuer' means a trust, 
        corporation, partnership, or other entity engaged exclusively 
        in the business of acquiring and holding eligible assets, 
        issuing securities backed by eligible assets, and taking 
        actions ancillary thereto.
            ``(5) Transferred.--The term `transferred' means the 
        debtor, pursuant to a written agreement, represented and 
        warranted that eligible assets were sold, contributed, or 
otherwise conveyed with the intention of removing them from the estate 
of the debtor pursuant to subsection (b)(5), irrespective, without 
limitation of--
                    ``(A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or in any 
                securities issued by the issuer;
                    ``(B) whether the debtor had an obligation to 
                repurchase or to service or supervise the servicing of 
                all or any portion of such eligible assets; or
                    ``(C) the characterization of such sale, 
                contribution, or other conveyance for tax, accounting, 
                regulatory reporting, or other purposes.''.

SEC. 13. SIPC STAY.

    Section 5(b)(2) of the Securities Investor Protection Act of 1971 
(15 U.S.C. 78eee(b)(2)) is amended by adding after subparagraph (B) the 
following new subparagraph:
                    ``(C) Exception from stay.--
                            ``(i) Notwithstanding section 362 of title 
                        11, neither the filing of an application under 
                        subsection (a)(3) nor any order or decree 
                        obtained by Securities Investor Protection 
                        Corporation from the court shall operate as a 
                        stay of any contractual rights of a creditor to 
                        liquidate, terminate, or accelerate a 
                        securities contract, commodity contract, 
                        forward contract, repurchase agreement, swap 
                        agreement, or master netting agreement, each as 
                        defined in title 11, to offset or net 
                        termination values, payment amounts, or other 
                        transfer obligations arising under or in 
                        connection with 1 or more of such contracts or 
                        agreements, or to foreclose on any cash 
                        collateral pledged by the debtor whether or not 
                        with respect to 1 or more of such contracts or 
                        agreements.
                            ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on securities 
                        collateral pledged by the debtor, whether or 
                        not with respect to 1 or more of such contracts 
                        or agreements, or securities sold by the debtor 
                        under a repurchase agreement.
                            ``(iii) As used in this section, the term 
                        `contractual right' includes a right set forth 
                        in a rule or bylaw of a national securities 
                        exchange, a national securities association, or 
                        a securities clearing agency, a right set forth 
                        in a bylaw of a clearing organization or 
                        contract market or in a resolution of the 
                        governing board thereof, and a right, whether 
                        or not in writing, arising under common law, 
                        under law merchant, or by reason of normal 
                        business practice.''.

SEC. 14. FEDERAL RESERVE COLLATERAL REQUIREMENTS.

    The 2d sentence of the 2d undesignated paragraph of section 16 of 
the Federal Reserve Act (12 U.S.C. 412) is amended by striking 
``acceptances acquired under section 13 of this Act'' and inserting 
``acceptances acquired under section 10A, 10B, 13, or 13A of this 
Act''.

SEC. 15. SEVERABILITY; EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Severability.--If any provision of this Act or any amendment 
made by this Act, or the application of any such provision or amendment 
to any person or circumstance, is held to be unconstitutional, the 
remaining provisions of and amendments made by this Act and the 
application of such other provisions and amendments to any person or 
circumstance shall not be affected thereby.
    (b) Effective Date.--This Act shall take effect on the date of the 
enactment of this Act.
    (c) Application of Amendments.--The amendments made by this Act 
shall apply with respect to cases commenced or appointments made under 
any Federal or State law after the date of enactment of this Act, but 
shall not apply with respect to cases commenced or appointments made 
under any Federal or State law before the date of enactment of this 
Act.
                                 <all>