[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2141 Considered and Passed Senate (CPS)]


109th CONGRESS
  1st Session
                                S. 2141

       To make improvements to the Federal Deposit Insurance Act


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 17, 2005

   Mr. Bennett (for himself and Mr. Schumer) introduced the following 
bill; which was read twice, considered, read the third time, and passed

_______________________________________________________________________

                                 A BILL


 
       To make improvements to the Federal Deposit Insurance Act.

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

SECTION. 1. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR 
              RECEIVERS OF DEPOSITORY INSTITUTIONS.

    (a) Definition of Securities Contract.--
            (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(ii)) is amended--
                    (A) in subclause (I)--
                            (i) by striking ``mortgage loan, or'' and 
                        inserting ``mortgage loan,''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such repurchase or reverse 
                        repurchase transaction is a `repurchase 
                        agreement', as defined in clause (v))'';
                    (B) in subclause (IV)--
                            (i) by inserting ``(including by 
                        novation)'' after ``the guarantee''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such settlement is in 
                        connection with any agreement or transaction 
                        referred to in subclauses (I) through (XII) 
                        (other than subclause (II))'';
                    (C) in subclause (IX), by striking ``or (VIII)'' 
                each place that term appears and inserting ``(VIII), 
                (IX), or (X)'';
                    (D) by redesignating subclauses (VI) through (X) as 
                subclauses (VIII) through (XII), respectively; and
                    (E) by inserting after subclause (V) the following:
                                    ``(VI) means any extension of 
                                credit for the clearance or settlement 
                                of securities transactions;
                                    ``(VII) means any loan transaction 
                                coupled with a securities collar 
                                transaction, any prepaid securities 
                                forward transaction, or any total 
                                return swap transaction coupled with a 
                                securities sale transaction;''.
            (2) Insured credit unions.--Section 207(c)(8)(D)(ii) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(ii)) is 
        amended--
                    (A) in subclause (I)--
                            (i) by striking ``mortgage loan, or'' and 
                        inserting ``mortgage loan,''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such repurchase or reverse 
                        repurchase transaction is a `repurchase 
                        agreement', as defined in clause (v))'';
                    (B) in subclause (IV)--
                            (i) by inserting ``(including by 
                        novation)'' after ``the guarantee''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such settlement is in 
                        connection with any agreement or transaction 
                        referred to in subclauses (I) through (XII) 
                        (other than subclause (II))'';
                    (C) in subclause (IX), by striking ``or (VIII)'' 
                each place that term appears and inserting ``(VIII), 
                (IX), or (X)'';
                    (D) by redesignating subclauses (VI) through (X) as 
                subclauses (VIII) through (XII), respectively; and
                    (E) by inserting after subclause (V) the following:
                                    ``(VI) means any extension of 
                                credit for the clearance or settlement 
                                of securities transactions;
                                    ``(VII) means any loan transaction 
                                coupled with a securities collar 
                                transaction, any prepaid securities 
                                forward transaction, or any total 
                                return swap transaction coupled with a 
                                securities sale transaction;''.
    (b) Definition of Forward Contract.--Section 11(e)(8)(D)(iv)(I) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)(I)) is 
amended by striking ``transaction, reverse repurchase transaction'' and 
inserting ``or reverse repurchase transaction (whether or not such 
repurchase or reverse repurchase transaction is a `repurchase 
agreement', as defined in clause (v))''.
    (c) Definition of Swap Agreement.--
            (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(vi)) is amended--
                    (A) in subclause (I)--
                            (i) by striking ``or precious metals'' and 
                        inserting ``, precious metals, or other 
                        commodity''; and
                            (ii) by striking ``or a weather swap, 
                        weather derivative, or weather option'' and 
                        inserting ``weather swap, option, future, or 
                        forward agreement; an emissions swap, option, 
                        future, or forward agreement; or an inflation 
                        swap, option, future, or forward agreement'';
                    (B) in subclause (II)--
                            (i) by inserting ``or other derivatives'' 
                        after ``dealings in the swap''; and
                            (ii) by striking ``future, or option'' and 
                        inserting ``future, option, or spot 
                        transaction''; and
                    (C) by striking ``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'' and inserting 
                ``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''.
            (2) Insured credit unions.--Section 207(c)(8)(D)(vi) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(vi)) is 
        amended--
                    (A) in subclause (I)--
                            (i) by striking ``or precious metals'' and 
                        inserting ``, precious metals, or other 
                        commodity''; and
                            (ii) by striking ``or a weather swap, 
                        weather derivative, or weather option'' and 
                        inserting ``weather swap, option, future, or 
                        forward agreement; an emissions swap, option, 
                        future, or forward agreement; or an inflation 
                        swap, option, future, or forward agreement'';
                    (B) in subclause (II)--
                            (i) by inserting ``or other derivatives'' 
                        after ``dealings in the swap''; and
                            (ii) by striking ``future, or option'' and 
                        inserting ``future, option, or spot 
                        transaction''; and
                    (C) by striking ``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'' and inserting 
                ``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. 2. CLARIFYING AMENDMENTS RELATING TO DEFINITION OF PERSON.

    (a) FDIC-Insured Depository Institutions Definition of Person.--
Section 11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)(8)(D)) is amended by adding at the end the following:
                    ``(ix) Person.--The term `person' includes any 
                governmental entity and any entity included in the 
                definition of the term `person' in section 1 of title 
                1, United States Code.''.
    (b) Insured Credit Unions Definition of Person.--Section 
207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) 
is amended by adding at the end the following:
                            ``(vii) Person.--The term `person' includes 
                        any governmental entity and any entity included 
                        in the definition of the term `person' in 
                        section 1 of title 1, United States Code.''.

SEC. 3. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.

    (a) 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) in each of subsections (a) and (f), by striking 
        ``paragraphs (8)(E), (8)(F), and (10)(B) of'' each place that 
        term appears; and
            (2) in subsection (a), by inserting ``terminated, 
        liquidated, accelerated, and'' after ``institutions shall be''.
    (b) 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) in each of subsections (a) and (h), by striking 
        ``paragraphs (8)(E), (8)(F), and (10)(B) of'' each place that 
        term appears; and
            (2) in subsection (a), by inserting ``terminated, 
        liquidated, accelerated, and'' after ``organization shall be''.

SEC. 4. CONFORMING AMENDMENTS.

    (a) Clarifying Definitions.--Title 11, United States Code, is 
amended--
            (1) in section 101--
                    (A) in paragraph (22)(A)--
                            (i) by striking ``(domestic or foreign)'' 
                        after ``an entity''; and
                            (ii) by inserting ``(whether or not a 
                        `customer', as defined in section 741)'' after 
                        ``custodian for a customer'';
                    (B) in paragraph (22A)--
                            (i) by striking ``on any day during the 
                        previous 15-month period'' each place it 
                        appears and inserting ``at such time or on any 
                        day during the 15-month period preceding the 
                        date of the filing of the petition''; and
                            (ii) by inserting ``(aggregated across 
                        counterparties)'' after ``principal amount 
                        outstanding'';
                    (C) in paragraph (25)(A)--
                            (i) by inserting ``, as defined in section 
                        761'' after ``commodity contract''; and
                            (ii) by striking ``repurchase transaction, 
                        reverse repurchase transaction,'' and inserting 
                        ``repurchase or reverse repurchase transaction 
                        (whether or not such repurchase or reverse 
                        repurchase transaction is a `repurchase 
                        agreement', as defined in this section)'';
                    (D) in paragraph (53B)(A)--
                            (i) in clause (i)--
                                    (I) in subclause (II), by striking 
                                ``or precious metals'' and inserting 
                                ``, precious metals, or other commodity 
                                agreement'';
                                    (II) in subclause (VII), by 
                                striking ``or'' at the end;
                                    (III) in subclause (VIII), by 
                                striking ``weather derivative, or 
                                weather option'' and inserting 
                                ``option, future, or forward 
                                agreement''; and
                                    (IV) by adding at the end the 
                                following:
                                    ``(IX) an emissions swap, option, 
                                future, or forward agreement; or
                                    ``(X) an inflation swap, option, 
                                future, or forward agreement;''; and
                            (ii) in clause (ii)--
                                    (I) in subclause (I), by inserting 
                                ``or other derivatives'' after 
                                ``dealings in the swap''; and
                                    (II) in subclause (II), by striking 
                                ``future, or option'' and inserting 
                                ``future, option, or spot 
                                transaction''; and
                    (E) in paragraph (53B)(B), by striking ``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'' and 
                inserting ``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'';
            (2) in section 362(b)--
                    (A) by striking paragraphs (6) and (7) and 
                inserting the following:
            ``(6) under subsection (a) of this section, of the exercise 
        by a commodity broker, forward contract merchant, stockbroker, 
        financial institution, financial participant, or securities 
        clearing agency of any contractual right (as defined in section 
        555 or 556) under any security agreement or arrangement or 
        other credit enhancement forming a part of or related to any 
        commodity contract, forward contract or securities contract, or 
        of any contractual right (as defined in section 555 or 556) to 
        offset or net out any termination value, payment amount, or 
        other transfer obligation arising under or in connection with 1 
        or more such contracts, including any master agreement for such 
        contracts;
            ``(7) under subsection (a) of this section, of the exercise 
        by a repo participant or financial participant of any 
        contractual right (as defined in section 559) under any 
        security agreement or arrangement or other credit enhancement 
        forming a part of or related to any repurchase agreement, or of 
        any contractual right (as defined in section 559) to offset or 
        net out any termination value, payment amount, or other 
        transfer obligation arising under or in connection with 1 or 
        more such agreements, including any master agreement for such 
        agreements;'';
                    (B) by striking paragraph (17) and inserting the 
                following:
            ``(17) under subsection (a) of this section, of the 
        exercise by a swap participant or financial participant of any 
        contractual right (as defined in section 560) under any 
        security agreement or arrangement or other credit enhancement 
        forming a part of or related to any swap agreement, or of any 
        contractual right (as defined in section 560) to offset or net 
        out any termination value, payment amount, or other transfer 
        obligation arising under or in connection with 1 or more such 
        agreements, including any master agreement for such 
        agreements;''; and
                    (C) by striking paragraph (27) and inserting the 
                following:
            ``(27) under subsection (a) of this section, of the 
        exercise by a master netting agreement participant of any 
        contractual right (as defined in section 555, 556, 559, or 560) 
        under any security agreement or arrangement or other credit 
        enhancement forming a part of or related to any master netting 
        agreement, or of any contractual right (as defined in section 
        555, 556, 559, or 560) to offset or net out any termination 
        value, payment amount, or other transfer obligation arising 
        under or in connection with 1 or more such master netting 
        agreements to the extent that such participant is eligible to 
        exercise such rights under paragraph (6), (7), or (17) for each 
        individual contract covered by the master netting agreement in 
        issue; and''; and
            (3) in section 741(7)(A)--
                    (A) in clause (i)--
                            (i) by striking ``mortgage loan or'' and 
                        inserting ``mortgage loan,''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such repurchase or reverse 
                        repurchase transaction is a `repurchase 
                        agreement', as defined in section 101)'';
                    (B) in clause (iii)--
                            (i) by inserting ``(including by 
                        novation)'' after ``the guarantee''; and
                            (ii) by inserting before the semicolon 
                        ``(whether or not such settlement is in 
                        connection with any agreement or transaction 
                        referred to in clauses (i) through (xi))'';
                    (C) in clause (viii), by striking ``or (vii)'' each 
                place it appears and inserting ``(vii), (viii), or 
                (ix)'';
                    (D) by redesignating clauses (v) through (ix) as 
                clauses (vii) through (xi), respectively; and
                    (E) by inserting after clause (iv) the following:
                                    ``(v) any extension of credit for 
                                the clearance or settlement of 
                                securities transactions;
                                    ``(vi) any loan transaction coupled 
                                with a securities collar transaction, 
                                any prepaid forward securities 
                                transaction, or any total return swap 
                                transaction coupled with a securities 
                                sale transaction;''.
    (b) Limitation of Avoidance Powers Under Master Netting 
Agreement.--Section 546 of title 11, United States Code, is amended--
            (1) in subsection (e)--
                    (A) by inserting ``(or for the benefit of)'' before 
                ``a commodity broker''; and
                    (B) by inserting ``or that is a transfer made by or 
                to (or for the benefit of) a commodity broker, forward 
                contract merchant, stockbroker, financial institution, 
                financial participant, or securities clearing agency, 
                in connection with a securities contract, as defined in 
                section 741(7), commodity contract, as defined in 
                section 761(4), or forward contract,'' after 
                ``securities clearing agency,'';
            (2) in subsection (f)--
                    (A) by striking ``that is a margin payment, as 
                defined in section 741 or 761 of this title, or 
                settlement payment, as defined in section 741 of this 
                title,''; and
                    (B) by inserting ``(or for the benefit of)'' before 
                ``a repo participant'';
            (3) in subsection (g), by inserting ``(or for the benefit 
        of)'' before ``a swap participant''; and
            (4) in subsection (j), by inserting ``(or for the benefit 
        of)'' after ``made by or to''.
    (c) SIPC Stay.--Section 5(b)(2)(C)(iii) of the Securities Investor 
Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)(iii)) is amended--
            (1) by inserting ``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),'' after ``rule or bylaw 
        of''; and
            (2) by striking ``or a securities clearance agency, a right 
        set forth in a bylaw of a clearing organization or contract 
        market'' and inserting ``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),''.
    (d) Savings Clause.--Title IX of the Bankruptcy Abuse Prevention 
and Consumer Protection Act of 2005 (Public Law 109-8, 119 Stat. 146) 
is amended by adding at the end the following:

``SEC. 912. SAVINGS CLAUSE.

    ``The meanings of terms used in this title are applicable for the 
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 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. 5. WALKAWAY CLAUSES.

    Section 11(e)(8)(G)) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(e)(8)(G)) is amended to read as follows:
                    ``(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, provided 
                        that any payment or delivery obligations 
                        otherwise due from a party pursuant to the 
                        qualified financial contract shall be suspended 
                        from the time that the receiver is appointed 
                        until the earlier of--
                                    ``(I) the time that such party 
                                receives notice that such contract has 
                                been transferred pursuant to 
                                subparagraph (A); or
                                    ``(II) 5:00 p.m. (eastern time) on 
                                the business day following the date of 
                                the appointment of the receiver.
                            ``(ii) Walkaway clause defined.--For 
                        purposes of this subparagraph, the term 
                        `walkaway clause' means any provision in a 
                        qualified financial contract that suspends, 
                        conditions, or extinguishes a payment 
                        obligation of a party in whole or in part or 
                        does not create a payment obligation of a party 
                        that would otherwise exist solely because of 
                        such party's status as a nondefaulting party in 
                        connection with the insured depository 
                        institution's insolvency or the appointment of 
                        or the exercise of rights or powers by a 
                        conservator or receiver, and not as a result of 
                        a party's exercise of any right to offset, 
                        setoff, or net obligations that exist under the 
                        contract, any other contract between those 
                        parties, or applicable law.''.

SEC. 6. EFFECTIVE DATE.

    (a) Effective Date.--This Act and the amendments made by this Act 
shall take effect on the date of enactment of this Act.
    (b) No Retroactive Application of Amendments.--The amendments made 
by this Act shall not apply to any cases commenced under title 11, 
United States Code, or appointments made under any Federal or State 
law, before the effective date of this Act.
                                 <all>