[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 958 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 958

To amend certain banking and securities laws with respect to financial 
                               contracts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 4, 1999

  Mr. Bennett introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To amend certain banking and securities laws with respect to financial 
                               contracts.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial 
Institutions Insolvency Improvement Act of 1999''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Treatment of certain agreements by conservators or receivers of 
                            insured depository institutions.
Sec. 3. Authority of the Corporation with respect to failed and failing 
                            institutions.
Sec. 4. Amendments relating to transfers of qualified financial 
                            contracts.
Sec. 5. Amendments relating to disaffirmance or repudiation of 
                            qualified financial contracts.
Sec. 6. Clarifying amendment relating to master agreements.
Sec. 7. Federal Deposit Insurance Corporation Improvement Act of 1991.
Sec. 8. Recordkeeping requirements.
Sec. 9. Exemptions from contemporaneous execution requirement.
Sec. 10. SIPC stay.
Sec. 11. Federal Reserve collateral requirements.
Sec. 12. Effective date; application of amendments.

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, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                the foregoing, including any option to 
                                purchase or sell any such security, 
                                certificate of deposit, loan, interest, 
                                group or index, or option;
                                    ``(II) does not include any 
                                purchase, sale, or repurchase 
                                obligation under a participation in a 
                                commercial mortgage loan unless the 
                                Corporation determines by regulation, 
                                resolution, or order to include any 
                                such agreement within the meaning of 
                                such term;
                                    ``(III) means any option entered 
                                into on a national 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 interests therein, 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 (other than subclause 
                                (II));
                                    ``(VII) means any combination of 
                                the agreements or transactions referred 
                                to in this clause (other than subclause 
                                (II));
                                    ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause (other than 
                                subclause (II));
                                    ``(IX) means a master agreement 
                                that provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                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), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                    ``(X) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in this clause 
                                (other than subclause (II)).''.
    (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 contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                    ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                    ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                    ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                    ``(VIII) any option to enter into 
                                any agreement or transaction referred 
                                to in this clause;
                                    ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), 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 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 that is more than 2 days 
                                after the date on which the contract is 
                                entered into, including a repurchase 
                                agreement, reverse 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 clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                    ``(V) 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 and Reverse 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; reverse 
                        repurchase agreement.--The terms `repurchase 
                        agreement' and `reverse repurchase agreement'--
                                    ``(I) mean 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 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 in this subclause, at a date certain that is not later 
than 1 year after the date of such transfers or on demand, against the 
transfer of funds, or any other similar agreement;
                                    ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the 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 (IV);
                                    ``(IV) means any option to enter 
                                into any agreement or transaction 
                                referred to in subclause (I) or (III);
                                    ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this clause, 
                                except that the master agreement shall 
                                be 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), (III), or (IV); and
                                    ``(VI) means a security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V).
                        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'--
                                    ``(I) means any agreement, 
                                including the terms and conditions 
                                incorporated by reference in any such 
                                agreement, that is--
                                            ``(aa) an interest rate 
                                        swap, option, future, or 
                                        forward agreement, including a 
                                        rate floor, rate cap, rate 
                                        collar, cross-currency rate 
                                        swap, and basis swap;
                                            ``(bb) a spot, same day-
                                        tomorrow, tomorrow-next, 
                                        forward, or other foreign 
                                        exchange or precious metals 
                                        agreement;
                                            ``(cc) a currency swap, 
                                        option, future, or forward 
                                        agreement;
                                            ``(dd) an equity index or 
                                        equity swap, option, future, or 
                                        forward agreement;
                                            ``(ee) a debt index or debt 
                                        swap, option, future, or 
                                        forward agreement;
                                            ``(ff) a credit spread or 
                                        credit swap, option, future, or 
                                        forward agreement; or
                                            ``(gg) a commodity index or 
                                        commodity swap, option, future, 
                                        or forward agreement;
                                    ``(II) means any agreement or 
                                transaction that is 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 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) means any combination of 
                                agreements or transactions referred to 
                                in this clause;
                                    ``(IV) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                    ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV);
                                    ``(VI) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreements 
                                or transactions referred to in 
                                subparagraph (I), (II), (III), or (IV); 
                                and
                                    ``(VII) is applicable for purposes 
                                of this Act only, and shall not be 
                                construed or applied so as to challenge 
                                or affect the characterization, 
                                definition, or treatment of any swap 
                                agreement under any other 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 depository institutions'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 striking clause (ii) of subparagraph (A) and 
        inserting the following:
                            ``(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); 
                        or''; and
            (4) by striking clause (ii) of subparagraph (E) and 
        inserting the following:
                            ``(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); 
                        or''.
    (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 (e)(10)''; and
            (2) by adding at the end the following:
                    ``(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) or 
                to disaffirm or repudiate any such contract in 
                accordance with subsection (e)(1).
                    ``(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 by'' after ``the 
appointment of''.

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 or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                            ``(ii) transfer none of the qualified 
                        financial contracts, claims, property, or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                    ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contract and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for the 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 contract, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements, or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                    ``(C) Transfer of contract subject to the rules of 
                a clearing organization.--If a conservator or receiver 
                transfers any qualified financial contract and related 
                claims, property, and credit enhancements 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 paragraph, 
                the term `financial institution' means a broker or 
                dealer, a depository institution, a futures commission 
                merchant, or any other institution that the Corporation 
                determines, 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 striking the flush material immediately 
following clause (ii) and inserting the following:
                ``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 amended--
            (1) by redesignating subparagraph (B) as subparagraph (D); 
        and
            (2) by inserting after subparagraph (A) the following:
                    ``(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 section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991, solely by reason of or incidental to 
                        the appointment of a conservator for the 
                        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 
                        paragraph, 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).
                    ``(C) Treatment of bridge banks.--A financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or that is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                subsection (e)(9) does not include--
                            ``(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 amended--
            (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively;
            (2) in paragraph (8)(C)(i), by striking ``(11)'' and 
        inserting ``(12)'';
            (3) in paragraph (8)(E), by striking ``(12)'' and inserting 
        ``(13)''; and
            (4) by inserting after paragraph (10) the following new 
        paragraph:
            ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the right to disaffirm or repudiate 
        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 striking subparagraph (C) (as redesignated) 
                and inserting the following:
                    ``(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 inserting before the period ``and 
        any other clearing organization with which such clearing 
        organization has a netting contract'';
            (3) in paragraph (14)(A), by striking clause (i) and 
        inserting the following:
                            ``(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 striking subsection (a) and inserting the following:
    ``(a) General Rule.--Notwithstanding any other provision of Federal 
or State 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 1970, 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 (except as 
provided in section 561(b)(2) of title 11, United States Code).''; 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 (except as provided 
in section 561(b)(2) of title 11, United States Code) 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 1970).''.
    (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 striking subsection (a) and inserting the following:
    ``(a) General Rule.--Notwithstanding any other provision of Federal 
or State 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 1970) 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 the clearing organization 
shall be netted in accordance with, and subject to the conditions of, 
the terms of any applicable netting contract (except as provided in 
section 561(b)(2) of title 11, United States Code).''; 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 
(except as provided in section 561(b)(2) of title 11, United States 
Code) 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 1970).''.
    (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 
by adding at the end the following:

``SEC. 408. 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), (10), 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 that for such 
purpose--
            ``(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 that 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 
meanings as in section 1(b) of the International Banking Act of 
1978.''.

SEC. 8. 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. 9. 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.--
                    ``(A) In general.--An agreement described in 
                subparagraph (B) shall not be deemed to be invalid 
                pursuant to paragraph (1)(B) solely on the basis--
                            ``(i) that the agreement was not executed 
                        contemporaneously with the acquisition of the 
                        collateral; or
                            ``(ii) of any pledge, delivery, or 
                        substitution of the collateral made in 
                        accordance with the agreement.
                    ``(B) Agreement described.--An agreement is 
                described in this subparagraph if it is an agreement to 
                provide for the lawful collateralization of--
                            ``(i) 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;
                            ``(ii) securities deposited under section 
                        345(b)(2) of title 11, United States Code;
                            ``(iii) extensions of credit, including an 
                        overdraft, from a Federal reserve bank or 
                        Federal home loan bank; or
                            ``(iv) 1 or more qualified financial 
                        contracts (as defined in section 
                        11(e)(8)(D)).''.

SEC. 10. SIPC STAY.

    Section 5(b)(2) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78eee(b)(2)) is amended by adding at the end the following 
new subparagraph:
                    ``(C) Exception from stay.--
                            ``(i) In general.--Notwithstanding section 
                        362 of title 11, United States Code, neither 
                        the filing of an application under subsection 
                        (a)(3) of this section nor any order or decree 
                        obtained by SIPC from the court shall operate 
                        as a stay of any contractual right 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, United States Code, 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) Stays on foreclosure.--
                        Notwithstanding clause (i), an application, 
                        order, or decree described therein 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, securities sold by the debtor 
                        under a repurchase agreement or securities lent 
                        under a securities lending agreement.
                            ``(iii) Definition.--As used in this 
                        section, the term `contractual right' 
                        includes--
                                    ``(I) a right set forth in a rule 
                                or bylaw of a national securities 
                                exchange, a national securities 
                                association, or a securities clearing 
                                agency;
                                    ``(II) a right set forth in a bylaw 
                                of a clearing organization or contract 
                                market or in a resolution of the 
                                governing board thereof; and
                                    ``(III) a right, whether or not in 
                                writing, arising under common law, 
                                under law merchant, or by reason of 
                                normal business practice.''.

SEC. 11. FEDERAL RESERVE COLLATERAL REQUIREMENTS.

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

SEC. 12. 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 and the amendments made by this Act 
shall take effect on the date of 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>