[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3211 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 3211

 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

                            November 1, 2001

   Mr. Toomey (for himself, Mr. Leach, Mr. Kanjorski, Mr. Oxley, Mr. 
   LaFalce, and Mr. Baker) introduced the following bill; which was 
referred to the Committee on Financial Services, and in addition to the 
Committee on the Judiciary, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial 
Contracts Bankruptcy Reform Act of 2001''.
    (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. Bankruptcy code amendments.
Sec. 9. Recordkeeping requirements.
Sec. 10. Exemptions from contemporaneous execution requirement.
Sec. 11. Damage measure.
Sec. 12. SIPC stay.
Sec. 13. Asset-backed securitizations.
Sec. 14. Applicability of other sections to chapter 9.
Sec. 15. Effective date; application of amendments.
Sec. 16. Savings clause.

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) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)(D)) is amended--
            (1) by striking ``subsection--'' and inserting 
        ``subsection, the following definitions shall apply:''; and
            (2) in clause (i), 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, mortgage loan, 
                                interest, group or index, or option, 
                                and including any repurchase or reverse 
                                repurchase transaction on any such 
                                security, certificate of deposit, 
                                mortgage 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, 
                                mortgage 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), (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, 
                                including any guarantee or 
                                reimbursement obligation in connection 
                                with 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 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) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause, including 
                                any guarantee or reimbursement 
                                obligation in connection with 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 transaction, 
                                reverse repurchase transaction, 
                                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) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV), including any guarantee 
                                or reimbursement obligation in 
                                connection with any agreement or 
                                transaction referred to in any such 
                                subclause.''.
    (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 definition also 
                        applies to a reverse repurchase agreement)--
                                    ``(I) means an agreement, including 
                                related terms, which provides for the 
                                transfer of one 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, 
                                mortgage loans, or interests with a 
                                simultaneous agreement by such 
                                transferee to transfer to the 
                                transferor thereof certificates of 
                                deposit, eligible bankers' acceptances, 
                                securities, mortgage 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;
                                    ``(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 any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V), including any 
                                guarantee or reimbursement obligation 
                                in connection with any agreement or 
                                transaction referred to in any such 
                                subclause.
                        For purposes of this clause, the term 
                        `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.--Section 11(e)(8)(D)(vi) of 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 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 total return, credit 
                                spread or credit swap, option, future, 
                                or forward agreement; a commodity index 
                                or commodity swap, option, future, or 
                                forward agreement; or a weather swap, 
                                weather derivative, or weather option;
                                    ``(II) any agreement or transaction 
                                that is similar to any other agreement 
                                or transaction referred to in this 
                                clause and that is of a type that has 
                                been, is presently, or in the future 
                                becomes, the subject of recurrent 
                                dealings in the swap markets (including 
                                terms and conditions incorporated by 
                                reference in such agreement) and that 
                                is a forward, swap, future, or option 
                                on one or more rates, currencies, 
                                commodities, equity securities or other 
                                equity instruments, debt securities or 
                                other debt instruments, quantitative 
                                measures associated with an occurrence, 
                                extent of an occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic consequence, or 
                                economic or financial indices or 
                                measures of economic or financial risk 
                                or value;
                                    ``(III) any combination of 
                                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 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); 
                                and
                                    ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in subclause 
                                (I), (II), (III), (IV), or (V), 
                                including any guarantee or 
                                reimbursement obligation in connection 
                                with any agreement or transaction 
                                referred to in any such subclause.
                        Such term is applicable for purposes of this 
                        subsection only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other 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, the Gramm-Leach-Bliley Act, and the Legal 
                        Certainty for Bank Products Act of 2000.''.
    (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 institution'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)--
                    (A) by striking ``paragraph (10)'' and inserting 
                ``paragraphs (9) and (10)'';
                    (B) in clause (i), by striking ``to cause the 
                termination or liquidation'' and inserting ``such 
                person has to cause the termination, liquidation, or 
                acceleration''; and
                    (C) by striking clause (ii) and inserting the 
                following:
                            ``(ii) any right under any security 
                        agreement or arrangement or other credit 
                        enhancement related to one or more qualified 
                        financial contracts described in clause (i);''; 
                        and
            (2) in subparagraph (E), by striking clause (ii) and 
        inserting the following:
                            ``(ii) any right under any security 
                        agreement or arrangement or other credit 
                        enhancement related to one or more qualified 
                        financial contracts described in clause (i);''.
    (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended by 
inserting ``section 5242 of the Revised Statutes of the United States 
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 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 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 one 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 contracts and related claims and property 
                under 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 contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to one 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 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, property, and 
                credit enhancements pursuant to subparagraph (A)(i) and 
                such contract is cleared by or 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) Definitions.--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, as determined by 
                the Corporation by regulation to be a financial 
                institution, and the term `clearing organization' has 
                the same meaning as in section 402 of the Federal 
                Deposit Insurance Corporation Improvement Act of 
                1991.''.
    (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 in the material immediately following clause 
(ii) by striking ``the conservator'' and all that follows through the 
period 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 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 that such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) of this subsection or section 403 or 404 
                        of the Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a 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 that such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) of this subsection or section 403 or 404 
                        of the Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a conservator 
                        for the 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.--The following 
                institutions shall not be considered to be 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 
                paragraph (9):
                            ``(i) A bridge bank.
                            ``(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 the 
                                depository 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) 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).''; and
            (3) by adding at the end the following new paragraph:
            ``(17) Savings clause.--The meanings of terms used in this 
        subsection are applicable for purposes of this subsection only, 
        and shall not be construed or applied so as to challenge or 
        affect the characterization, definition, or treatment of any 
        similar terms under any other statute, regulation, or rule, 
        including the Gramm-Leach-Bliley Act, the Legal Certainty for 
        Bank Products Act of 2000, the securities laws (as that term is 
        defined in section 3(a)(47) of the Securities Exchange Act of 
        1934), and the Commodity Exchange Act.''.

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 
                        one 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 (2)--
                    (A) in subparagraph (A)(ii), by inserting before 
                the semicolon ``, or is exempt from such registration 
                by order of the Securities and Exchange Commission''; 
                and
                    (B) in subparagraph (B), by inserting before the 
                period ``, that has been granted an exemption under 
                section 4(c)(1) of the Commodity Exchange Act, or that 
                is a multilateral clearing organization (as defined in 
                section 408 of this Act)'';
            (2) 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;'';
            (3) in paragraph (11), by inserting before the period ``and 
        any other clearing organization with which such clearing 
        organization has a netting contract'';
            (4) 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 close out values relating to such 
                        obligations or entitlements) among the parties 
                        to the agreement; and''; and
            (5) 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 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 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 one 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 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 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 a clearing organization 
shall be netted in accordance with and subject to the conditions 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 one 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, 
Uninsured Federal Branches and Agencies, Certain Uninsured State Member 
Banks, and Edge Act Corporations.--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 407A; and
            (2) by inserting after section 406 the following new 
        section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS, 
              UNINSURED FEDERAL BRANCHES AND AGENCIES, CERTAIN 
              UNINSURED STATE MEMBER BANKS, AND EDGE ACT CORPORATIONS.

    ``(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, a corporation chartered 
under section 25A of the Federal Reserve Act, or an uninsured State 
member bank which operates, or operates as, a multilateral clearing 
organization pursuant to section 409 of this Act, except that for such 
purpose--
            ``(1) any reference to the `Corporation as receiver' or 
        `the receiver or the Corporation' shall refer to the receiver 
        appointed by the Comptroller of the Currency in the case of an 
        uninsured national bank or uninsured Federal branch or agency, 
or to the receiver appointed by the Board of Governors of the Federal 
Reserve System in the case of a corporation chartered under section 25A 
of the Federal Reserve Act or an uninsured State member bank;
            ``(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 
        appointed by the Comptroller of the Currency in the case of an 
        uninsured national bank or uninsured Federal branch or agency, 
        or to the receiver or conservator appointed by the Board of 
        Governors of the Federal Reserve System in the case of a 
        corporation chartered under section 25A of the Federal Reserve 
        Act or an uninsured State member bank; and
            ``(3) any reference to an `insured depository institution' 
        or `depository institution' shall refer to an uninsured 
        national bank, an uninsured Federal branch or Federal agency, a 
        corporation chartered under section 25A of the Federal Reserve 
        Act, or an uninsured State member bank which operates, or 
        operates as, a multilateral clearing organization pursuant to 
        section 409 of this Act.
    ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank, uninsured Federal branch or agency, a 
corporation chartered under section 25A of the Federal Reserve Act, or 
an uninsured State member bank which operates, or operates as, a 
multilateral clearing organization pursuant to section 409 of this Act, 
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 the 
        case of an uninsured national bank or uninsured Federal branch 
        or agency and the Board of Governors of the Federal Reserve 
        System in the case of a corporation chartered under section 25A 
        of the Federal Reserve Act, or an uninsured State member bank 
        that operates, or operates as, a multilateral clearing 
        organization pursuant to section 409 of this Act, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may each promulgate regulations solely to implement this 
        section.
            ``(2) Specific requirement.--In promulgating regulations, 
        limited solely to implementing paragraphs (8), (9), (10), and 
        (11) of section 11(e) of the Federal Deposit Insurance Act, the 
        Comptroller of the Currency and the Board of Governors of the 
        Federal Reserve System each 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. BANKRUPTCY CODE AMENDMENTS.

    (a) Definitions of Forward Contract, Repurchase Agreement, 
Securities Clearing Agency, Swap Agreement, Commodity Contract, and 
Securities Contract.--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:
                    ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                    ``(C) any option to enter into an 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 such 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under such master agreement that is 
                referred to in subparagraph (A), (B), or (C); or
                    ``(E) any security agreement or arrangement, or 
                other credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), including any guarantee or reimbursement 
                obligation by or to a forward contract merchant or 
                financial participant in connection with any agreement 
                or transaction referred to in any such subparagraph, 
                but not to exceed the damages in connection with any 
                such agreement or transaction, measured in accordance 
                with section 562 of this title;'';
                    (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and inserting ``at any time before'';
                    (C) by amending paragraph (47) to read as follows:
            ``(47) `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 one 
                        or more certificates of deposit, mortgage 
                        related securities (as defined in section 3 of 
                        the Securities Exchange Act of 1934), mortgage 
                        loans, interests in mortgage related securities 
                        or mortgage loans, eligible bankers' 
                        acceptances, qualified foreign government 
                        securities (defined as 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), 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, 
mortgage loans, or interests, with a simultaneous agreement by such 
transferee to transfer to the transferor thereof certificates of 
deposit, eligible bankers' acceptance, securities, mortgage loans, or 
interests of the kind described in this clause, at a date certain not 
later than 1 year after such transfer or on demand, against the 
transfer of funds;
                            ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                            ``(iii) an option to enter into an 
                        agreement or transaction referred to in clause 
                        (i) or (ii);
                            ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), or (iii), together with all 
                        supplements to any such master agreement, 
                        without regard to whether such master agreement 
                        provides for an agreement or transaction that 
                        is not a repurchase agreement under this 
                        paragraph, except that such master agreement 
                        shall be considered to be a repurchase 
                        agreement under this paragraph only with 
                        respect to each agreement or transaction under 
                        the master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                            ``(v) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), including any 
                        guarantee or reimbursement obligation by or to 
                        a repo participant or financial participant in 
                        connection with any agreement or transaction 
                        referred to in any such clause, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                    ``(B) does not include a repurchase obligation 
                under a participation in a commercial mortgage loan;'';
                    (D) in paragraph (48), by inserting ``, or exempt 
                from such registration under such section pursuant to 
                an order of the Securities and Exchange Commission,'' 
                after ``1934''; and
                    (E) by amending paragraph (53B) to read as follows:
            ``(53B) `swap agreement'--
                    ``(A) means--
                            ``(i) any agreement, including the terms 
                        and conditions incorporated by reference in 
                        such agreement, which is--
                                    ``(I) an interest rate swap, 
                                option, future, or forward agreement, 
                                including a rate floor, rate cap, rate 
                                collar, cross-currency rate swap, and 
                                basis swap;
                                    ``(II) a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement;
                                    ``(III) a currency swap, option, 
                                future, or forward agreement;
                                    ``(IV) an equity index or equity 
                                swap, option, future, or forward 
                                agreement;
                                    ``(V) a debt index or debt swap, 
                                option, future, or forward agreement;
                                    ``(VI) a total return, credit 
                                spread or credit swap, option, future, 
                                or forward agreement;
                                    ``(VII) a commodity index or a 
                                commodity swap, option, future, or 
                                forward agreement; or
                                    ``(VIII) a weather swap, weather 
                                derivative, or weather option;
                            ``(ii) any agreement or transaction that is 
                        similar to any other agreement or transaction 
                        referred to in this paragraph and that--
                                    ``(I) is of a type that has been, 
                                is presently, or in the future becomes, 
                                the subject of recurrent dealings in 
                                the swap markets (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                    ``(II) is a forward, swap, future, 
                                or option on one or more rates, 
                                currencies, commodities, equity 
                                securities, or other equity 
                                instruments, debt securities or other 
                                debt instruments, quantitative measures 
                                associated with an occurrence, extent 
                                of an occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic consequence, or 
                                economic or financial indices or 
                                measures of economic or financial risk 
                                or value;
                            ``(iii) any combination of agreements or 
                        transactions referred to in this subparagraph;
                            ``(iv) any option to enter into an 
                        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, 
                        and without regard to whether the master 
                        agreement contains an agreement or transaction 
                        that is not a swap agreement under this 
paragraph, except that the master agreement shall be considered to be a 
swap agreement under this paragraph only with respect to each agreement 
or transaction under the master agreement that is referred to in clause 
(i), (ii), (iii), or (iv); or
                            ``(vi) any security agreement or 
                        arrangement or other credit enhancement related 
                        to any agreements or transactions referred to 
                        in clause (i) through (v), including any 
                        guarantee or reimbursement obligation by or to 
                        a swap participant or financial participant in 
                        connection with any agreement or transaction 
                        referred to in any such clause, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                    ``(B) is applicable for purposes of this title 
                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, the Gramm-Leach-Bliley Act, and 
                the Legal Certainty for Bank Products Act of 2000;'';
            (2) in section 741(7), by striking paragraph (7) and 
        inserting the following:
            ``(7) `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, a group or index of securities, 
                        certificates of deposit, or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, mortgage loan, 
                        interest, group or index, or option, and 
                        including any repurchase or reverse repurchase 
                        transaction on any such security, certificate 
                        of deposit, mortgage 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 a settlement of 
                        cash, securities, certificates of deposit, 
                        mortgage loans or interests therein, group or 
                        index of securities, or mortgage loans or 
                        interests therein (including any interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, mortgage loan, 
                        interest, group or index, or option;
                            ``(iv) any margin loan;
                            ``(v) any other agreement or transaction 
                        that is similar to an 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 such master agreement shall be 
                        considered to be a securities contract under 
                        this subparagraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                            ``(ix) any security agreement or 
                        arrangement or other credit enhancement related 
                        to any agreement or transaction referred to in 
                        this subparagraph, including any guarantee or 
                        reimbursement obligation by or to a 
                        stockbroker, securities clearing agency, 
                        financial institution, or financial participant 
                        in connection with any agreement or transaction 
                        referred to in this subparagraph, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                    ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in 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:
                    ``(F) any other agreement or transaction that is 
                similar to an 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 an 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 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) any security agreement or arrangement or 
                other credit enhancement related to any agreement or 
                transaction referred to in this paragraph, including 
                any guarantee or reimbursement obligation by or to a 
                commodity broker or financial participant in connection 
                with any agreement or transaction referred to in this 
                paragraph, but not to exceed the damages in connection 
                with any such agreement or transaction, measured in 
                accordance with section 562 of this title;''.
    (b) Definitions of Financial Institution, Financial Participant, 
and Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
            (1) by striking paragraph (22) and inserting the following:
            ``(22) `financial institution' means--
                    ``(A) a Federal reserve bank, or an entity 
                (domestic or foreign) that is a commercial or savings 
                bank, industrial savings bank, savings and loan 
                association, trust company, or receiver or conservator 
                for such entity and, when any such Federal reserve 
                bank, receiver, conservator or entity is acting as 
                agent or custodian for a customer in connection with a 
                securities contract (as defined in section 741) such 
                customer; or
                    ``(B) in connection with a securities contract (as 
                defined in section 741) an investment company 
                registered under the Investment Company Act of 1940;'';
            (2) by inserting after paragraph (22) the following:
            ``(22A) `financial participant' means--
                    ``(A) an entity that, at the time it enters into a 
                securities contract, commodity contract, swap 
                agreement, repurchase agreement, or forward contract, 
                or at the time of the filing of the petition, has one 
                or more agreements or transactions described in 
                paragraph (1), (2), (3), (4), (5), or (6) of section 
                561(a) with the debtor or any other entity (other than 
                an affiliate) of a total gross dollar value of not less 
                than $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 
                not less than $100,000,000 (aggregated across 
                counterparties) in one 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; or
                    ``(B) a clearing organization (as defined in 
                section 402 of the Federal Deposit Insurance 
                Corporation Improvement Act of 1991);''; and
            (3) by striking paragraph (26) and inserting the following:
            ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity the business of which consists in whole or 
        in part of entering into forward contracts as or with merchants 
        in a commodity (as defined in section 761) 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;''.
    (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) `master netting agreement'--
                    ``(A) means an agreement providing for the exercise 
                of rights, including rights of netting, setoff, 
                liquidation, termination, acceleration, or close out, 
                under or in connection with one or more contracts that 
                are described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit enhancement 
                related to one or more of the foregoing, including any 
                guarantee or reimbursement obligation related to 1 or 
                more of the foregoing; and
                    ``(B) if the agreement contains provisions relating 
                to agreements or transactions that are not contracts 
                described in paragraphs (1) through (5) of section 
                561(a), shall be deemed to be a master netting 
                agreement only with respect to those agreements or 
                transactions that are described in any one or more of 
                paragraphs (1) through (5) of section 561(a);
            ``(38B) `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, under the control of,'' after ``held 
                by'';
                    (B) in paragraph (7), by inserting 
                ``, pledged to, under the control of,'' after ``held 
                by'';
                    (C) by striking paragraph (17) and inserting the 
                following:
            ``(17) under subsection (a), of the setoff by a swap 
        participant or financial participant of a mutual debt and claim 
        under or in connection with one or more swap agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with any swap agreement against any payment 
        due to the debtor from the swap participant or financial 
        participant under or in connection with any swap agreement or 
        against cash, securities, or other property held by, pledged 
        to, under the control of, or due from such swap participant or 
        financial participant to margin, guarantee, secure, or settle 
        any swap agreement;'';
                    (D) in paragraph (18) by striking the period at the 
                end 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 one or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
agreement subject to such agreements or against cash, securities, or 
other property held by, pledged to, under the control of, or due from 
such master netting agreement participant to margin, guarantee, secure, 
or settle such agreements or any contract or agreement subject to such 
agreements, to the extent that such participant is eligible to exercise 
such offset rights 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:
    ``(i) 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''; and
                    (C) by inserting ``or financial participant'' after 
                ``swap participant'' each place such term appears; and
            (2) by adding at the end the following:
    ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b) the trustee may not avoid a transfer made by or to a master 
netting agreement participant under or in connection with any master 
netting agreement or any individual contract covered thereby that is 
made before the commencement of the case, except under section 
548(a)(1)(A) and except to the extent that the trustee could otherwise 
avoid such a transfer made under an individual contract covered by such 
master netting agreement.''.
    (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'' at the end;
            (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 or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except that, with respect to a 
        transfer under any individual contract covered thereby, to the 
        extent that such master netting agreement participant otherwise 
        did not take (or is otherwise not deemed to have taken) such 
        transfer for value.''.
    (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 as follows:
``Sec. 555. 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 as follows:
``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
              commodities contract or forward contract'';
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''; and
            (3) in the second sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
        securities exchange, a national securities association, a 
        securities clearing agency, a contract market designated under 
        the Commodity Exchange Act, a derivatives transaction execution 
        facility registered under the Commodity Exchange Act, or a 
        board of trade (as defined in the Commodity Exchange Act) or in 
        a resolution of the governing board thereof and a right,''.
    (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 as follows:
``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
              repurchase agreement'';
            (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''; and
            (3) in the third sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
        securities exchange, a national securities association, a 
        securities clearing agency, a contract market designated under 
        the Commodity Exchange Act, a derivatives transaction execution 
        facility registered under the Commodity Exchange Act, or a 
        board of trade (as defined in the Commodity Exchange Act) or in 
        a resolution of the governing board thereof and a right,''.
    (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 as follows:
``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
              swap agreement'';
            (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of one or more swap agreements'';
            (3) by striking ``in connection with any swap agreement'' 
        and inserting ``in connection with the termination, 
        liquidation, or acceleration of one or more swap agreements''; 
        and
            (4) in the second sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
securities exchange, a national securities association, a securities 
clearing agency, a contract market designated under the Commodity 
Exchange Act, a derivatives transaction execution facility registered 
under the Commodity Exchange Act, or a board of trade (as defined in 
the Commodity Exchange Act) or in a resolution of the governing board 
thereof and a right,''.
    (k) Liquidation, Termination, Acceleration, or Offset Under a 
Master Netting Agreement and Across Contracts.--
            (1) In general.--Title 11, United States Code, is amended 
        by inserting after section 560 the following:
``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
              offset under a master netting agreement and across 
              contracts; proceedings under section 304
    ``(a) 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 one or more (or the 
termination, liquidation, or acceleration of one 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)(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) If a debtor is a commodity broker subject to subchapter IV of 
chapter 7--
            ``(A) a party may not net or offset an obligation to the 
        debtor arising under, or in connection with, a commodity 
        contract traded on or subject to the rules of a contract market 
        designated under the Commodity Exchange Act or a derivatives 
        transaction execution facility registered under the Commodity 
        Exchange Act against any claim arising under, or in connection 
        with, other instruments, contracts, or agreements listed in 
        subsection (a) except to the extent that the party has positive 
        net equity in the commodity accounts at the debtor, as 
        calculated under such subchapter; and
            ``(B) another commodity broker may not net or offset an 
        obligation to the debtor arising under, or in connection with, 
        a commodity contract entered into or held on behalf of a 
        customer of the debtor and traded on or subject to the rules of 
        a contract market designated under the Commodity Exchange Act 
        or a derivatives transaction execution facility registered 
        under the Commodity Exchange Act against any claim arising 
        under, or in connection with, other instruments, contracts, or 
        agreements listed in subsection (a).
    ``(3) No provision of subparagraph (A) or (B) of paragraph (2) 
shall prohibit the offset of claims and obligations that arise under--
            ``(A) a cross-margining agreement or similar arrangement 
        that has been approved by the Commodity Futures Trading 
        Commission or submitted to the Commodity Futures Trading 
        Commission under paragraph (1) or (2) of section 5c(c) of the 
        Commodity Exchange Act and has not been abrogated or rendered 
        ineffective by the Commodity Futures Trading Commission; or
            ``(B) any other netting agreement between a clearing 
        organization (as defined in section 761) and another entity 
        that has been approved by the Commodity Futures Trading 
        Commission.
    ``(c) As used in this section, the term `contractual right' 
includes a right set forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Exchange Act), a multilateral 
clearing organization (as defined in the Federal Deposit Insurance 
Corporation Improvement Act of 1991), a national securities exchange, a 
national securities association, a securities clearing agency, a 
contract market designated under the Commodity Exchange Act, a 
derivatives transaction execution facility registered under the 
Commodity Exchange Act, or a board of trade (as defined in the 
Commodity Exchange Act) 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.
    ``(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 under section 304, 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 case 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).''.
            (2) Conforming amendment.--The table of sections for 
        chapter 5 of title 11, United States Code, is amended by 
        inserting after the item relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
                            under a master netting agreement and across 
                            contracts; proceedings under section 
                            304.''.
    (l) Commodity Broker Liquidations.--Title 11, United States Code, 
is amended by inserting after section 766 the following:
``Sec. 767. Commodity broker liquidation and forward contract 
              merchants, commodity brokers, stockbrokers, financial 
              institutions, financial participants, 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, financial participant, 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.''.
    (m) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:
``Sec. 753. Stockbroker liquidation and forward contract merchants, 
              commodity brokers, stockbrokers, financial institutions, 
              financial participants, 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, financial 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.''.
    (n) Setoff.--Section 553 of title 11, United States Code, is 
amended--
            (1) in subsection (a)(2)(B)(ii), by inserting before the 
        semicolon the following: ``(except for a setoff of a kind 
        described in section 362(b)(6), 362(b)(7), 362(b)(17), 
        362(b)(19), 555, 556, 559, 560, or 561)'';
            (2) in subsection (a)(3)(C), by inserting before the period 
        the following: ``(except for a setoff of a kind described in 
        section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 
        559, 560, or 561 of this title)''; and
            (3) in subsection (b)(1), by striking ``362(b)(14),'' and 
        inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560, 561,''.
    (o) 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 sections 362(b)(7) and 546(f), by inserting ``or 
        financial participant'' after ``repo participant'' each place 
        such term appears;
            (3) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
            (4) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
            (5) in section 548(d)(2)(C), by inserting ``or financial 
        participant'' after ``repo participant'';
            (6) in section 548(d)(2)(D), by inserting ``or financial 
        participant'' after ``swap participant'';
            (7) in section 555--
                    (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                    (B) by striking the second sentence and inserting 
                the following: ``As used in this section, the term 
                `contractual right' includes a right set forth in a 
                rule or bylaw of a derivatives clearing organization 
                (as defined in the Commodity Exchange Act), a 
                multilateral clearing organization (as defined in the 
                Federal Deposit Insurance Corporation Improvement Act 
                of 1991), a national securities exchange, a national 
                securities association, a securities clearing agency, a 
                contract market designated under the Commodity Exchange 
                Act, a derivatives transaction execution facility 
                registered under the Commodity Exchange Act, or a board 
                of trade (as defined in the Commodity Exchange Act), 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'';
            (8) in section 556, by inserting ``, financial 
        participant,'' after ``commodity broker'';
            (9) in section 559, by inserting ``or financial 
        participant'' after ``repo participant'' each place such term 
        appears; and
            (10) in section 560, by inserting ``or financial 
        participant'' after ``swap participant''.
    (p) Conforming Amendments.--Title 11, United States Code, is 
amended--
            (1) in the table of sections for chapter 5--
                    (A) by amending the items relating to sections 555 
                and 556 to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
                            securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
                            commodities contract or forward 
                            contract.'';
                and
                    (B) by amending the items relating to sections 559 
                and 560 to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
                            repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
                            agreement.'';
                and
            (2) in the table of sections for chapter 7--
                    (A) by inserting after the item relating to section 
                766 the following:

``767. Commodity broker liquidation and forward contract merchants, 
                            commodity brokers, stockbrokers, financial 
                            institutions, financial participants, 
                            securities clearing agencies, swap 
                            participants, repo participants, and master 
                            netting agreement participants.'';
                and
                    (B) by inserting after the item relating to section 
                752 the following:

``753. Stockbroker liquidation and forward contract merchants, 
                            commodity brokers, stockbrokers, financial 
                            institutions, financial participants, 
                            securities clearing agencies, swap 
                            participants, repo participants, and master 
                            netting agreement participants.''.

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 by any insured depository 
                institution with respect to qualified financial 
                contracts (including market valuations) only if such 
                insured depository institution is in a troubled 
                condition (as such term is defined by the Corporation 
                pursuant to section 32).''.

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) one 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) In General.--Title 11, United States Code, is amended--
            (1) by inserting after section 561, as added by section 
        8(k) of this Act, the following:
``Sec. 562. Timing of damage measurement in connection with swap 
              agreements, securities contracts, forward contracts, 
              commodity contracts, repurchase agreements, and master 
              netting agreements
    ``(a) If the trustee rejects a swap agreement, securities contract 
(as defined in section 741), forward contract, commodity contract (as 
defined in section 761), repurchase agreement, or master netting 
agreement pursuant to section 365(a), or if a forward contract 
merchant, stockbroker, financial institution, securities clearing 
agency, repo participant, financial participant, master netting 
agreement participant, or swap participant liquidates, terminates, or 
accelerates such contract or agreement, damages shall be measured as of 
the earlier of--
            ``(1) the date of such rejection; or
            ``(2) the date or dates of such liquidation, termination, 
        or acceleration.
    ``(b) If there are not any commercially reasonable determinants of 
value as of any date referred to in paragraph (1) or (2) of subsection 
(a), damages shall be measured as of the earliest subsequent date or 
dates on which there are commercially reasonable determinants of value.
    ``(c) For the purposes of subsection (b), if damages are not 
measured as of the date or dates of rejection, liquidation, 
termination, or acceleration, and the forward contract merchant, 
stockbroker, financial institution, securities clearing agency, repo 
participant, financial participant, master netting agreement 
participant, or swap participant or the trustee objects to the timing 
of the measurement of damages--
            ``(1) the trustee, in the case of an objection by a forward 
        contract merchant, stockbroker, financial institution, 
        securities clearing agency, repo participant, financial 
        participant, master netting agreement participant, or swap 
        participant; or
            ``(2) the forward contract merchant, stockbroker, financial 
        institution, securities clearing agency, repo participant, 
        financial participant, master netting agreement participant, or 
        swap participant, in the case of an objection by the trustee,
has the burden of proving that there were no commercially reasonable 
determinants of value as of such date or dates.''; and
            (2) in the table of sections for chapter 5, by inserting 
        after the item relating to section 561 (as added by section 
        8(k)(2) of this Act) the following new item:

``562. Timing of damage measure in connection with swap agreements, 
                            securities contracts, forward contracts, 
                            commodity contracts, repurchase agreements, 
                            or master netting agreements.''.
    (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
            (1) by inserting ``(1)'' after ``(g)''; and
            (2) by adding at the end the following:
    ``(2) A claim for damages calculated in accordance with section 562 
of this title shall be allowed under subsection (a), (b), or (c), or 
disallowed under subsection (d) or (e), as if such claim had arisen 
before the date of the filing of the petition.''.

SEC. 12. 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) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by SIPC 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, as those terms are defined in 
                        sections 101, 741, and 761 of title 11, United 
                        States Code, to offset or net termination 
                        values, payment amounts, or other transfer 
                        obligations arising under or in connection with 
                        one or more of such contracts or agreements, or 
                        to foreclose on any cash collateral pledged by 
                        the debtor, whether or not with respect to one 
                        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, or disposition of, 
                        securities collateral pledged by the debtor, 
                        whether or not with respect to one 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) As used in this subparagraph, 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. 13. ASSET-BACKED SECURITIZATIONS.

    Section 541 of title 11, United States Code, is amended--
            (1) in subsection (b), by inserting after paragraph (5) the 
        following:
            ``(6) 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);''; and
            (2) by adding at the end the following new subsection:
    ``(e) For purposes of this section--
            ``(1) 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, 
        including, without limitation, all securities issued by 
        governmental units, at least one class or tranche of which was 
        rated investment grade by one or more nationally recognized 
        securities rating organizations, when the securities were 
        initially issued by an issuer;
            ``(2) the term `eligible asset' means--
                    ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                whether or not the same are in existence as of the date 
                of the transfer, including residential and commercial 
                mortgage loans, consumer receivables, trade 
                receivables, assets of governmental units, including 
                payment obligations relating to taxes, receipts, fines, 
                tickets, and other sources of revenue, and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any residual interest 
                in property subject to receivables included in such 
                financial assets plus any rights or other assets 
                designed to assure the servicing or timely distribution 
                of proceeds to security holders;
                    ``(B) cash; and
                    ``(C) securities, including without limitation, all 
                securities issued by governmental units;
            ``(3) the term `eligible entity' means--
                    ``(A) an issuer; or
                    ``(B) a trust, corporation, partnership, 
                governmental unit, limited liability company (including 
                a single member limited liability company), 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) the term `issuer' means a trust, corporation, 
        partnership, governmental unit, limited liability company 
        (including a single member limited liability company), 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; and
            ``(5) the term `transferred' means the debtor, under 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)(6) (whether or not reference is made 
        to this title or any section hereof), irrespective and 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. 14. APPLICABILITY OF OTHER SECTIONS TO 
              CHAPTER 9.

    Section 901(a) 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,''.

SEC. 15. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--This Act shall take effect on the date of 
enactment of this Act.
    (b) 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 on or 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.

SEC. 16. SAVINGS CLAUSE.

    The meanings of terms used in this Act are 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 similar terms under any other statute, regulation, or rule, 
including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
Products Act of 2000, the securities laws (as that term is defined in 
section 3(a)(47) of the Securities Exchange Act of 1934), and the 
Commodity Exchange Act.
                                 <all>