110 HR 7223 IH: Price Stability Act of
U.S. House of Representatives
2008-09-29
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title and table of
contents
This Act may be cited
as the Free Market Protection Act of
2008
.
<enum>I</enum><header>Privatization of
Government-Sponsored Enterprises</header>
<section id="H60E8688C418C497E00F980779000DD1D" section-type="subsequent-section"><enum>101.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>Government-Sponsored
Enterprises Free Market Reform Act of 2008</short-title></quote>.</text>
</section><section id="H0000D78A1E4C4289981087E548E100DD"><enum>102.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this title, the following
definitions shall apply:</text>
<paragraph id="HEA591A58A62C4431834269002635A40"><enum>(1)</enum><header>Charter</header><text>The
term <term>charter</term> means—</text>
<subparagraph id="H62ADFD748BE24EC0816D72F995BF3ED9"><enum>(A)</enum><text>with respect to
the Federal National Mortgage Association, the Federal National Mortgage
Association Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1716">12 U.S.C. 1716 et seq.</external-xref>); and</text>
</subparagraph><subparagraph id="HC0C306F6BEBF4271BCF42D254DEE907B"><enum>(B)</enum><text>with respect to
the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage
Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1451">12 U.S.C. 1451 et seq.</external-xref>).</text>
</subparagraph></paragraph><paragraph id="HAF415E79227D42DBBB99D77988D045A0"><enum>(2)</enum><header>Director</header><text display-inline="yes-display-inline">The term <term>Director</term> means the
Director of the Federal Housing Finance Agency.</text>
</paragraph><paragraph id="H22899DD31A7C48678323B9D3FE5BC4EF"><enum>(3)</enum><header>Enterprise</header><text>The
term <term>enterprise</term> means—</text>
<subparagraph id="H0509A999EF6648628CE9F4344071BF29"><enum>(A)</enum><text>the Federal
National Mortgage Association; and</text>
</subparagraph><subparagraph id="H3183CBFF7FDC49638E8500DDF1D8E140"><enum>(B)</enum><text>the Federal Home
Loan Mortgage Corporation.</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H97B59A567F2F405DA21E158233DC841F"><enum>(4)</enum><header>Guarantee</header><text display-inline="yes-display-inline">The term <term>guarantee</term> means, with
respect to an enterprise, the credit support of the enterprise that is provided
by the Federal Government through its charter as a government-sponsored
enterprise.</text>
</paragraph></section><section id="H8E08C6A181D24E3085CC8B22FA160D5" section-type="subsequent-section"><enum>103.</enum><header>Termination of
current conservatorship</header>
<subsection id="HFBB0D3E63A1C4A5B995D11309C035916"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Upon the expiration
of the period referred to in subsection (b), the Director of the Federal
Housing Finance Agency shall determine, with respect to each enterprise, if the
enterprise is financially viable at that time and—</text>
<paragraph id="HC61D6C14D56F4A6B96F0395FBA6EC9D9"><enum>(1)</enum><text>if the Director
determines that the enterprise is financially viable, immediately take all
actions necessary to terminate the conservatorship for each of the enterprises;
or</text>
</paragraph><paragraph id="H672073812CC74413B1D1EC1B2FB4B4E2"><enum>(2)</enum><text display-inline="yes-display-inline">if the Director determines that the
enterprise is not financially viable, immediately appoint the Federal Housing
Finance Agency as receiver under section 1367 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 and carry out such
receivership under the authority of such section.</text>
</paragraph></subsection><subsection id="HA2C864FC44D6425BBF28002EFEF9B260"><enum>(b)</enum><header>Timing</header><text display-inline="yes-display-inline">The period referred to in this subsection
is, with respect to an enterprise—</text>
<paragraph id="HC1CF70469FC645EA881DA21ECF33907D"><enum>(1)</enum><text>except as provided
in paragraph (2), the 24-month beginning upon the date of the enactment of this
Act; or</text>
</paragraph><paragraph id="H569A417C83FC456FB971FB954C37279C"><enum>(2)</enum><text>if the Director
determines before the expiration of the period referred to in paragraph (1)
that the financial markets would be adversely affected without the extension of
such period under this paragraph with respect to that enterprise, the 30-month
period beginning upon the date of the enactment of this Act.</text>
</paragraph></subsection><subsection commented="no" id="H396B7686D57A4D0790B8EA791568FB9"><enum>(c)</enum><header>Financial
viability</header><text>The Director may not determine that an enterprise is
financially viable for purposes of subsection (a) if the Director determines
that any of the conditions for receivership set forth in paragraph (3) or (4)
of section 1367(a) of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4617">12 U.S.C. 4617(a)</external-xref>) exists at the time with respect to
the enterprise.</text>
</subsection></section><section id="H8022DF2EFD004057AA23BAEBB6E36CDA"><enum>104.</enum><header>Limitation of
enterprise authority upon emergence from conservatorship</header>
<subsection id="HB19837A5BAE64396AD386EBA7EDFD20"><enum>(a)</enum><header>Revised
authority</header><text>Upon the expiration of the period referred to in
section 103(b), if the Director makes the determination under section
103(a)(1), the following provisions shall take effect:</text>
<paragraph id="H42F1AC4E40BA4115A9E1E0BE4518A300"><enum>(1)</enum><header>Portfolio
limitations</header><text display-inline="yes-display-inline">Subtitle B of
title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4611
et seq.) is amended by adding at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="H8E8BB37ECEDE4563B82D5988D9F2B629" style="OLC">
<section id="HB0F1CA3BDCE14CB493AFA145AE79A12E"><enum>1369E.</enum><header>Restriction
on mortgage assets of enterprises</header>
<subsection id="HD6D6A151456A45ED932D867315285FC8"><enum>(a)</enum><header>Restriction</header><text display-inline="yes-display-inline">No enterprise shall own, as of any
applicable date in this subsection or thereafter, mortgage assets in excess
of—</text>
<paragraph id="H3C408067FB514C4CA93D7EB6FAC4BA8E"><enum>(1)</enum><text>upon the
expiration of the period referred to in section 103(b) of the
<short-title>Government-Sponsored Enterprises Free Market
Reform Act of 2008</short-title>, $850,000,000,000; or</text>
</paragraph><paragraph id="HA579F735E7374F45AED700FA57675648"><enum>(2)</enum><text>on December 31 of
each year thereafter, 80.0 percent of the aggregate amount of mortgage assets
of the enterprise as of December 31 of the immediately preceding calendar
year;</text>
</paragraph><continuation-text continuation-text-level="subsection">except
that in no event shall an enterprise be required under this section to own less
than $250,000,000,000 in mortgage assets.</continuation-text></subsection><subsection id="H635AA4D8FEC145B084E82FA47501FEFE"><enum>(b)</enum><header>Definition of
mortgage assets</header><text display-inline="yes-display-inline">For purposes
of this section, the term <term>mortgage assets</term> means, with respect to
an enterprise, assets of such enterprise consisting of mortgages, mortgage
loans, mortgage-related securities, participation certificates, mortgage-backed
commercial paper, obligations of real estate mortgage investment conduits and
similar assets, in each case to the extent such assets would appear on the
balance sheet of such enterprise in accordance with generally accepted
accounting principles in effect in the United States as of September 7, 2008
(as set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board from time to
time; and without giving any effect to any change that may be made after
September 7, 2008, in respect of Statement of Financial Accounting Standards
No. 140 or any similar accounting
standard).</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph display-inline="no-display-inline" id="HE5DE0A369D4D46FAAA7233CFD25E196D"><enum>(2)</enum><header>Increase in
minimum capital requirement</header><text display-inline="yes-display-inline">Section 1362 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4612">12 U.S.C. 4612</external-xref>), as
amended by section 1111 of the Housing and Economic Recovery Act of 2008
(<external-xref legal-doc="public-law" parsable-cite="pl/110/289">Public Law 110–289</external-xref>), is amended—</text>
<subparagraph id="H04A746AD339347659B94AC06F0C963C3"><enum>(A)</enum><text>in subsection (a),
by striking <quote>For purposes of this subtitle, the minimum capital level for
each enterprise shall be</quote> and inserting <quote>The minimum capital level
established under subsection (g) for each enterprise may not be lower
than</quote>;</text>
</subparagraph><subparagraph id="HCD03C7D4A76B4E0398626F29FCD68FDC"><enum>(B)</enum><text>in subsection
(c)—</text>
<clause id="H6B0A65FC55AD4B1300C8B819E4D679B"><enum>(i)</enum><text>by
striking <quote>subsections (a) and</quote> and inserting
<quote>subsection</quote>;</text>
</clause><clause id="H34350DC0A62C4A5C00E7AECDB6BF15F"><enum>(ii)</enum><text>by
striking <term>regulated entities</term> the first place such term appears and
inserting <term>Federal Home Loan Banks</term>;</text>
</clause><clause id="H4A1A5047ED644A4FA4D82120E4EF33AB"><enum>(iii)</enum><text>by
striking <quote>for the enterprises,</quote>;</text>
</clause><clause id="H19F2DD6EF0F54ED1BAED60074138DD22"><enum>(iv)</enum><text>by
striking <quote>, or for both the enterprises and the banks,</quote>;</text>
</clause><clause id="HCB315CFAF6BA45AEA2415500CCCF993"><enum>(v)</enum><text>by
striking <quote>the level specified in subsection (a) for the enterprises
or</quote>; and</text>
</clause><clause id="H2F5AE88AB433419E9E56B078FDA89CA4"><enum>(vi)</enum><text>by
striking <quote>the regulated entities operate</quote> and inserting
<quote>such banks operate</quote>;</text>
</clause></subparagraph><subparagraph id="HCB145601C13B45549155285F961EA7FE"><enum>(C)</enum><text>in subsection
(d)(1)—</text>
<clause id="H13DBF4D3795D4C258793D44C1BBC8DDC"><enum>(i)</enum><text>by
striking <quote>subsections (a) and</quote> and inserting
<quote>subsection</quote>; and</text>
</clause><clause id="H597A5CB5115946BF80E52E0586B3F301"><enum>(ii)</enum><text>by
striking <term>regulated entity</term> each place such term appears and
inserting <term>Federal home loan bank</term>;</text>
</clause></subparagraph><subparagraph id="H61C4E3888BEB4D738E03C5448D3F2454"><enum>(D)</enum><text display-inline="yes-display-inline">in subsection (e), by striking
<term>regulated entity</term> each place such term appears and inserting
<term>Federal home loan bank</term>;</text>
</subparagraph><subparagraph id="HADD143704AB848EDB6E66ECBF00811F"><enum>(E)</enum><text>in subsection
(f)—</text>
<clause id="H2A9BC46C72BA48918685E9AC5D27DA5F"><enum>(i)</enum><text>by
striking <quote>the amount of core capital maintained by the
enterprises,</quote>; and</text>
</clause><clause id="H1341EC32DF2B4A92ACDB028CD0002C4E"><enum>(ii)</enum><text>by
striking <quote>regulated entities</quote> and inserting <quote>banks</quote>;
and</text>
</clause></subparagraph><subparagraph id="H89ABF8079D1D45D0B7C9FE8869F660E3"><enum>(F)</enum><text>by adding at the
end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HD7315C8620BF466586C3A9F60162355C" style="OLC">
<subsection id="H581C4D46B7194BC0AAF11B464926E800"><enum>(g)</enum><header>Establishment of
revised minimum capital levels</header>
<paragraph id="H54614B287C6045E1BEB2007206B0F4BE"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Director shall
cause the enterprises to achieve and maintain adequate capital by establishing
minimum levels of capital for such the enterprises and by using such other
methods as the Director deems appropriate.</text>
</paragraph><paragraph id="H34696CB95C604F40BCC59E9C28297DC5"><enum>(2)</enum><header>Authority</header><text>The
Director shall have the authority to establish such minimum level of capital
for an enterprise in excess of the level specified under subsection (a) as the
Director, in the Director’s discretion, deems to be necessary or appropriate in
light of the particular circumstances of the enterprise.</text>
</paragraph></subsection><subsection id="H4461644C90004D88AAD25BE72DD263CD"><enum>(h)</enum><header>Failure To
maintain revised minimum capital levels</header>
<paragraph id="H1A297DD969684207A140CB0872C5A43"><enum>(1)</enum><header>Unsafe and
unsound practice or condition</header><text display-inline="yes-display-inline">Failure of a enterprise to maintain capital
at or above its minimum level as established pursuant to subsection (c) of this
section may be deemed by the Director, in his discretion, to constitute an
unsafe and unsound practice or condition within the meaning of this
title.</text>
</paragraph><paragraph id="HF508BFDD0B7D43699513BDD4F9DE1D82"><enum>(2)</enum><header>Directive to
achieve capital level</header>
<subparagraph id="H6ED629C97B0D45A3B68F33C10290C8CF"><enum>(A)</enum><header>Authority</header><text display-inline="yes-display-inline">In addition to, or in lieu of, any other
action authorized by law, including paragraph (1), the Director may issue a
directive to an enterprise that fails to maintain capital at or above its
required level as established pursuant to subsection (c) of this
section.</text>
</subparagraph><subparagraph id="HACBE82A8F11C4FEAB52400E137097F45"><enum>(B)</enum><header>Plan</header><text>Such
directive may require the enterprise to submit and adhere to a plan acceptable
to the Director describing the means and timing by which the enterprise shall
achieve its required capital level.</text>
</subparagraph><subparagraph id="HB71663BC0B7F4DB4858FE323E5673F4B"><enum>(C)</enum><header>Enforcement</header><text>Any
such directive issued pursuant to this paragraph, including plans submitted
pursuant thereto, shall be enforceable under the provisions of subtitle C of
this title to the same extent as an effective and outstanding order issued
pursuant to subtitle C of this title which has become final.</text>
</subparagraph></paragraph><paragraph id="HF69DC147FA5C438AAC7542C7C22B90FA"><enum>(3)</enum><header>Adherence to
plan</header>
<subparagraph id="HF3800771CF264CE2B616A5FB43FA52FF"><enum>(A)</enum><header>Consideration</header><text display-inline="yes-display-inline">The Director may consider such enterprise’s
progress in adhering to any plan required under this subsection whenever such
enterprise seeks the requisite approval of the Director for any proposal which
would divert earnings, diminish capital, or otherwise impede such enterprise’s
progress in achieving its minimum capital level.</text>
</subparagraph><subparagraph id="H57E02F4A952C461A8D628400111531CD"><enum>(B)</enum><header>Denial</header><text>The
Director may deny such approval where it determines that such proposal would
adversely affect the ability of the enterprise to comply with such
plan.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H3F76EC4E5B974570A6B986742B54231"><enum>(3)</enum><header>Repeal of
increases to conforming loan limits</header>
<subparagraph id="H7622D1588EFC4F99A576140083B4492E"><enum>(A)</enum><header>Repeal of
temporary increase in Economic Stimulus Act</header><text display-inline="yes-display-inline">Section 201 of the Economic Stimulus Act of
2008 (<external-xref legal-doc="public-law" parsable-cite="pl/110/185">Public Law 110–185</external-xref>) is hereby repealed.</text>
</subparagraph><subparagraph id="HFE21CFB86F0742B0AE39BDE84B006C20"><enum>(B)</enum><header>Repeal of
general limit and permanent high-cost area increase</header><text>Paragraph (2)
of section 302(b) of the Federal National Mortgage Association Charter Act (12
U.S.C. 1717(b)(2)) and paragraph (2) of section 305(a) of the Federal Home Loan
Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1454">12 U.S.C. 1454(a)(2)</external-xref>) are each amended to read as
such sections were in effect immediately before the enactment of the Housing
and Economic Recovery Act of 2008 (<external-xref legal-doc="public-law" parsable-cite="pl/110/289">Public Law 110–289</external-xref>).</text>
</subparagraph><subparagraph id="HB424F91F366C42C5A71B01B68512D300"><enum>(C)</enum><header>Repeal of new
housing price index</header><text display-inline="yes-display-inline">Section
1322 of the Federal Housing Enterprises Financial Safety and Soundness Act of
1992, as added by section 1124(d) of the Housing and Economic Recovery Act of
2008 (<external-xref legal-doc="public-law" parsable-cite="pl/110/289">Public Law 110–289</external-xref>), is hereby repealed.</text>
</subparagraph><subparagraph id="HA353D6C5B4E24B0D98368C079CAB4B17"><enum>(D)</enum><header>Repeal</header><text display-inline="yes-display-inline">Section 1124 of the Housing and Economic
Recovery Act of 2008 (<external-xref legal-doc="public-law" parsable-cite="pl/110/289">Public Law 110–289</external-xref>) is hereby repealed.</text>
</subparagraph><subparagraph id="HE9B88141B87044BF805EE4075F519B09"><enum>(E)</enum><header>Establishment of
conforming loan limit</header><text display-inline="yes-display-inline">For the
year in which the expiration of the period referred to in section 103(b) of
this title occurs, the limitations governing the maximum original principal
obligation of conventional mortgages that may be purchased by the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation,
referred to in section 302(b)(2) of the Federal National Mortgage Association
Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1717">12 U.S.C. 1717(b)(2)</external-xref>) and section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1454">12 U.S.C. 1454(a)(2)</external-xref>), respectively, shall be
considered to be—</text>
<clause id="H2787F952FCA945FE9CB54588266871F"><enum>(i)</enum><text display-inline="yes-display-inline">$417,000 for a mortgage secured by a
single-family residence,</text>
</clause><clause id="HCC0E15ABAAF348B5BCF6884787602D94"><enum>(ii)</enum><text>$533,850 for a
mortgage secured by a 2-family residence,</text>
</clause><clause id="H197038C8D9324CC2AC19D16700727122"><enum>(iii)</enum><text>$645,300 for a
mortgage secured by a 3-family residence, and</text>
</clause><clause id="H1F4E373BC1124EB0AF683D8E247BE6F2"><enum>(iv)</enum><text>$801,950 for a
mortgage secured by a 4-family residence,</text>
</clause><continuation-text continuation-text-level="subparagraph">and such
limits shall be adjusted effective each January 1 thereafter in accordance with
such sections 302(b)(2) and 305(a)(2).</continuation-text></subparagraph><subparagraph id="HC3543C1FAE3E4C07A418675392D68CEE"><enum>(F)</enum><header>Prohibition of
purchase of mortgages exceeding median area home price</header>
<clause id="HA79F9EDE1E074B078C8B008E79F22E6E"><enum>(i)</enum><header>Fannie
mae</header><text display-inline="yes-display-inline">Section 302(b)(2) of the
Federal National Mortgage Association Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1717">12 U.S.C. 1717(b)(2)</external-xref>) is
amended by adding at the end the following new sentence: <quote>Notwithstanding
any other provision of this title, the corporation may not purchase any
mortgage for a property having a principal obligation that exceeds the median
home price, for properties of the same size, for the area in which such
property subject to the mortgage is located.</quote>.</text>
</clause><clause id="HBB21F2D957F645008E7F46F2AD3F4C57"><enum>(ii)</enum><header>Freddie
mac</header><text display-inline="yes-display-inline">Section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1454">12 U.S.C. 1454(a)(2)</external-xref>) is amended by
adding at the end the following new sentence: <quote>Notwithstanding any other
provision of this title, the Corporation may not purchase any mortgage for a
property having a principal obligation that exceeds the median home price, for
properties of the same size, for the area in which such property subject to the
mortgage is located.</quote>.</text>
</clause></subparagraph></paragraph><paragraph id="H69A998F540EE49DDA6A703312600FF4B"><enum>(4)</enum><header>Requirement to
pay State and local taxes</header>
<subparagraph id="H7EA9108DB19D4A679CA8BDA744D82003"><enum>(A)</enum><header>Fannie
mae</header><text display-inline="yes-display-inline">Paragraph (2) of section
309(c) of the Federal National Mortgage Association Charter Act (12 U.S.C.
1723a(c)(2)) is amended—</text>
<clause id="H7A623449A2B849AC8CA66EDB9CE77B80"><enum>(i)</enum><text>by
striking <quote>shall be exempt from</quote> and inserting <quote>shall be
subject to</quote>; and</text>
</clause><clause id="HD01E3D1DA4D748BB8FD662C39B35D1C9"><enum>(ii)</enum><text>by
striking <quote>except that any</quote> and inserting <quote>and
any</quote>.</text>
</clause></subparagraph><subparagraph id="H2636D2B241F748E9AE5B85645F8E0301"><enum>(B)</enum><header>Freddie
mac</header><text display-inline="yes-display-inline">Section 303(e) of the
Federal Home Loan Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1452">12 U.S.C. 1452(e)</external-xref>) is
amended—</text>
<clause id="H600D15DA71E748A1BCF86E3F4B30B5AD"><enum>(i)</enum><text>by
striking <quote>shall be exempt from</quote> and inserting <quote>shall be
subject to</quote>; and</text>
</clause><clause id="H84C2E7D0A24042F6988DE6A6FB5DBBE9"><enum>(ii)</enum><text>by
striking <quote>except that any</quote> and inserting <quote>and
any</quote>.</text>
</clause></subparagraph></paragraph><paragraph id="H4C5307952DE1407E9C63623BD419ED5D"><enum>(5)</enum><header>Repeals relating
to registration of securities</header>
<subparagraph id="H18EC26211AF54ECD833B108D782D1465"><enum>(A)</enum><header>Fannie
Mae</header>
<clause id="H9B4A77D67CFE4832B67CE80024A428EF"><enum>(i)</enum><header>Mortgage-backed
securities</header><text display-inline="yes-display-inline">Section 304(d) of
the Federal National Mortgage Association Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1719">12 U.S.C. 1719(d)</external-xref>) is
amended by striking the fourth sentence.</text>
</clause><clause id="H40ACD7632E81476790747700CE3904ED"><enum>(ii)</enum><header>Subordinate
obligations</header><text>Section 304(e) of the Federal National Mortgage
Association Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1719">12 U.S.C. 1719(e)</external-xref>) is amended by striking the fourth
sentence.</text>
</clause></subparagraph><subparagraph id="H2456CB8AB3F84D13AEF022405B471DE3"><enum>(B)</enum><header>Freddie
Mac</header><text display-inline="yes-display-inline">Section 306 of the
Federal Home Loan Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1455">12 U.S.C. 1455</external-xref>) is amended by
striking subsection (g).</text>
</subparagraph></paragraph><paragraph id="HDFF72DCEC25440BF81D829C61EDAA64B"><enum>(6)</enum><header>Recoupment of
costs for Federal guarantee</header>
<subparagraph id="HDB55B07F90AD41C9A5030003951CEDA6"><enum>(A)</enum><header>Assessments</header><text display-inline="yes-display-inline">The Director of the Federal Housing Finance
Agency shall establish and collect from each enterprise assessments in the
amount determined under subparagraph (B). In determining the method and timing
for making such assessments, the Director shall take into consideration the
determinations and conclusions of the study under subsection (b) of this
section.</text>
</subparagraph><subparagraph id="H86374A668B4740D7B2D3D411C25BE2D3"><enum>(B)</enum><header>Determination of
costs of guarantee</header><text display-inline="yes-display-inline">Assessments under subparagraph (A) with
respect to an enterprise shall be in such amount as the Director determines
necessary to recoup to the Federal Government the full value of the benefit the
enterprise receives from the guarantee provided by the Federal Government for
the obligations and financial viability of the enterprise, based upon the
dollar value of such benefit in the market to such enterprise when not
operating under conservatorship or receivership. To determine such amount, the
Director shall establish a risk-based pricing mechanism as the Director
considers appropriate, taking into consideration the determinations and
conclusions of the study under subsection (b) of this section.</text>
</subparagraph><subparagraph id="HBB258390149249349E304E6413C8AB00"><enum>(C)</enum><header>Treatment of
recouped amounts</header><text>The Director shall cover into the general fund
of the Treasury any amounts received from assessments made under this
paragraph.</text>
</subparagraph></paragraph></subsection><subsection id="H5496981C314141339FB3BF3D00299E85"><enum>(b)</enum><header>GAO study
regarding recoupment of costs for Federal Government
guarantee</header><text>The Comptroller General of the United States shall
conduct a study to determine a risk-based pricing mechanism to accurately
determine the value of the benefit the enterprises receive from the guarantee
provided by the Federal Government for the obligations and financial viability
of the enterprises. Such study shall establish a dollar value of such benefit
in the market to each enterprise when not operating under conservatorship or
receivership, shall analyze various methods of the Federal Government assessing
a charge for such value received (including methods involving an annual fee or
a fee for each mortgage purchased or securitized), and shall make a
recommendation of the best such method for assessing such charge. Not later
than 12 months after the date of the enactment of this Act, the Comptroller
General shall submit to the Congress a report setting forth the determinations
and conclusions of such study.</text>
</subsection></section><section id="H09DF3794F17B4078A685E95BED0079E3"><enum>105.</enum><header>Requirement to
periodically renew charter until wind down and dissolution</header>
<subsection id="HF8393412D3C348F5B6CC3FC633F369D1"><enum>(a)</enum><header>Required
renewal; wind down and dissolution upon non-renewal</header><text display-inline="yes-display-inline">Upon the expiration of the 3-year period
that begins upon the expiration of the period referred to in section 103(b),
unless the charter of an enterprise is renewed pursuant to subsection (b) of
this section, section 106 (relating to wind down of operations and dissolution
of enterprise) shall apply to the enterprise.</text>
</subsection><subsection id="HD0C0BF3959A04FF38569B224E318613F"><enum>(b)</enum><header>Renewal
procedure</header>
<paragraph id="H1B6038058E964CD3A69F5BFD5483CD4F"><enum>(1)</enum><header>Application;
timing</header><text>The Director shall provide for each enterprise to apply to
the Director, before the expiration of the 3-year period under subsection (a),
for renewal of the charter of the enterprise.</text>
</paragraph><paragraph id="H4B99510AB55C426F856E9469CF3DFD3B"><enum>(2)</enum><header>Standard</header><text>The
Director shall approve the application of an enterprise for the renewal of the
charter of the enterprise if—</text>
<subparagraph id="H7A8B2633FE5E41A58F89FE822DFFF45"><enum>(A)</enum><text>the application
includes a certification by the enterprise that the enterprise is financially
sound and is complying with all provisions of, and amendments made by, section
104 of this title applicable to such enterprise; and</text>
</subparagraph><subparagraph id="H3AEE1A102FE14B1B9E5D76EDC828D100"><enum>(B)</enum><text>the Director
verifies that the certification made pursuant to subparagraph (A) is
accurate.</text>
</subparagraph></paragraph></subsection><subsection id="HA613B576C3EB4121B8E233636FCEBE9E"><enum>(c)</enum><header>Option To
reapply</header><text>Nothing in this section may be construed to require an
enterprise to apply under this section for renewal of the charter of the
enterprise.</text>
</subsection></section><section id="H193D76D6BBF24F7E81CB6C19BD7550A4"><enum>106.</enum><header>Required wind
down of operations and dissolution of enterprise</header>
<subsection id="H826AA2F0CC694634BA4831768C8FDDC3"><enum>(a)</enum><header>Applicability</header><text display-inline="yes-display-inline">This section shall apply to an
enterprise—</text>
<paragraph id="H4D11B20F0B0C48DBA0FBC7F015687C0"><enum>(1)</enum><text>upon the expiration
of the 3-year period referred to in such section 105(a), to the extent provided
in such section; and</text>
</paragraph><paragraph id="HB154F51B2CE14A0E96EC5C35C2E33B07"><enum>(2)</enum><text display-inline="yes-display-inline">if this section has not previously applied
to the enterprise, upon the expiration of the 6-year period that begins upon
the expiration of the period referred to in section 103(b).</text>
</paragraph></subsection><subsection id="H03B81841D9334C378393B82097C8CF7"><enum>(b)</enum><header>Wind
down</header><text display-inline="yes-display-inline">Upon the applicability
of this section to an enterprise, the Director and the Secretary of the
Treasury shall jointly take such action, and may prescribe such regulations and
procedures, as may be necessary to wind down the operations of an enterprise as
an entity chartered by the United States Government over the duration of the
10-year period beginning upon the applicability of this section to the
enterprise (pursuant to subsection (a)) in an orderly manner consistent with
this title and the ongoing obligations of the enterprise.</text>
</subsection><subsection id="H92984C2D6B314837986BD734DDCDFD00"><enum>(c)</enum><header>Division of
assets and liabilities; authority To establish holding corporation and
dissolution trust fund</header><text>The action and procedures required under
subsection (b)—</text>
<paragraph id="H137CFAF114BF43909820EB244CAEA726"><enum>(1)</enum><text>shall include the
establishment and execution of plans to provide for an equitable division and
distribution of assets and liabilities of the enterprise, including any
liability of the enterprise to the United States Government or a Federal
reserve bank that may continue after the end of the period described in
subsection(b); and</text>
</paragraph><paragraph id="HDEA5B4FCA95A4DBF00499030E3D61EA0"><enum>(2)</enum><text display-inline="yes-display-inline">may provide for establishment of—</text>
<subparagraph id="H7EC1BF10AADA4C8485E26E2BF603C582"><enum>(A)</enum><text>a holding
corporation organized under the laws of any State of the United States or the
District of Columbia for the purposes of the reorganization and restructuring
of the enterprise; and</text>
</subparagraph><subparagraph id="H6B8F125B4AD94C80B7A88E3781B94524"><enum>(B)</enum><text>one or more trusts
to which to transfer—</text>
<clause id="HC77E059CEF274960B586B047B6F7FEC8"><enum>(i)</enum><text>remaining debt
obligations of the enterprise, for the benefit of holders of such remaining
obligations; or</text>
</clause><clause id="H9F89E83158AD4473BBA463636E56A270"><enum>(ii)</enum><text>remaining
mortgages held for the purpose of backing mortgage-backed securities, for the
benefit of holders of such remaining securities.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HBAE45FC7AE5F40BC9EABE7361E62A336"><enum>(d)</enum><header>Repeal of
charter</header><text display-inline="yes-display-inline">Effective upon the
expiration of the 10-year period referred to in subsection (b) for an
enterprise, the charter for the enterprise is repealed, except that the
provisions of such charter in effect immediately before such repeal shall
continue to apply with respect to the rights and obligations of any holders of
outstanding debt obligations and mortgage-backed securities of the
enterprise.</text>
</subsection></section><enum>II</enum><header>Price
Stability</header>
<section id="HBD790CE0FD6044E4A8F036B697EE9F16" section-type="subsequent-section"><enum>201.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>Price Stability Act of
2008</short-title></quote> .</text>
</section><section id="H29D368CEEF9944A388876F6476C8C32F"><enum>202.</enum><header>Findings;
statement of policy</header>
<subsection id="HC847A9354E8D4DA0AADB6B39BEEE5BF8"><enum>(a)</enum><header>Findings</header><text display-inline="yes-display-inline">The Congress finds the following:</text>
<paragraph id="H8E6FFB5AB1D34F69A9003009E7EEC3D0"><enum>(1)</enum><text display-inline="yes-display-inline">Price stability is a prerequisite for
sustainable long-term economic growth, job creation, and moderate interest
rates.</text>
</paragraph><paragraph id="H7405C600C4134325A5F0256459A468E0"><enum>(2)</enum><text>Inflation erodes
the value of Americans’ income and savings.</text>
</paragraph><paragraph id="HD4AA7A2F9760465F9C831CED61BABA9E"><enum>(3)</enum><text>Inflation distorts
the pricing system and the efficient allocation of resources in the
economy.</text>
</paragraph><paragraph id="HCEC908567DC94DD9977C964BE43BD381"><enum>(4)</enum><text>Inflation makes
long-term planning difficult and raises the effective tax rate on capital,
thereby impeding investment.</text>
</paragraph><paragraph id="H9374A8BCCB94461384E31102C78DC04"><enum>(5)</enum><text>Through its
determination of monetary policy, the Board of Governors of the Federal Reserve
System is ultimately responsible for controlling the long-run rate of inflation
in the economy.</text>
</paragraph><paragraph id="H7B02D3D86EAD4846B695E7F5C131D11D"><enum>(6)</enum><text>The multiple
policy goals of the Full Employment and Balanced Growth Act of 1978 cause
confusion and ambiguity about the appropriate role and aims of monetary policy,
which can add to volatility in economic activity and financial markets.</text>
</paragraph><paragraph id="H431F13A85A334D4AB0A92888B8B00095"><enum>(7)</enum><text>There is a need
for the Congress to clarify the proper role of the Board of Governors of the
Federal Reserve System in economic policymaking, in order to achieve the best
environment for long-term economic growth and job creation.</text>
</paragraph><paragraph id="HC9741F7427E04D54992B83E5B8503072"><enum>(8)</enum><text>An explicit price
stability goal would promote transparency, accountability and credibility in
monetary policy.</text>
</paragraph><paragraph id="H159E81F9227B4B19B00549C8FF80FE6"><enum>(9)</enum><text>Price stability
should be the primary long-term goal of the Board of Governors of the Federal
Reserve.</text>
</paragraph></subsection><subsection id="HDD4C22E08A8D4029844E1694BCABC0D8"><enum>(b)</enum><header>Statement of
policy</header><text>It is the policy of the United States that—</text>
<paragraph id="H3DE12447BE5241CD80AB7E923BAB36C"><enum>(1)</enum><text>the principal
economic responsibilities of the Government are to establish and ensure an
environment that is conducive to both long-term economic growth and increases
in living standards, by establishing and maintaining free markets, low taxes,
respect for private property, and the stable, long-term purchasing power of the
United States currency; and</text>
</paragraph><paragraph id="HED77F7763E334E93A301BF4C27A54FAE"><enum>(2)</enum><text>the primary
long-term goal of the Board of Governors of the Federal Reserve System should
be to promote price stability.</text>
</paragraph></subsection></section><section id="H8E44523A542149C9A0E2C5C400BF539"><enum>203.</enum><header>Monetary
policy</header>
<subsection id="H5BE3987E58804C848F8DF7FB78B60615"><enum>(a)</enum><header>Amendment to the
<act-name parsable-cite="FRA">Federal Reserve
Act</act-name></header><text>Section 2A of the <act-name parsable-cite="FRA">Federal Reserve Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/12/225a">12 U.S.C. 225a</external-xref>) is amended
to read as follows:</text>
<quoted-block act-name="Federal Reserve Act" id="HB54B240BA09841CDB37008590053B762">
<section id="HE5AD2496CD0F4C879485268F2F111200"><enum>2A.</enum><header>Monetary
policy</header>
<subsection id="H00C6A383602C4176AC8731F468C6A10"><enum>(a)</enum><header>Price
stability</header><text>The Board and the Federal Open Market Committee
(hereafter in this section referred to as the <quote>Committee</quote>)
shall—</text>
<paragraph id="H5D102364369C4935A3D1B55400CEE575"><enum>(1)</enum><text>establish an
explicit numerical definition of the term <term>price stability</term>;
and</text>
</paragraph><paragraph id="HA55BE1B701B245DBA17D4BDF79E69645"><enum>(2)</enum><text>maintain a
monetary policy that effectively promotes long-term price stability.</text>
</paragraph></subsection><subsection id="H80E0DC758506441A00A8008568A6815B"><enum>(b)</enum><header>Market stability
and liquidity</header><text>Subsection (a) shall not be construed as a
limitation on the authority or responsibility of the Board—</text>
<paragraph id="H9F8BE0B638FC4DBBB0F176E967D27FB"><enum>(1)</enum><text display-inline="yes-display-inline">to provide liquidity to markets in the
event of a disruption that threatens the smooth functioning and stability of
the financial sector; or</text>
</paragraph><paragraph id="H5D9AD777E1A54CC2BD5100BA8117D8FD"><enum>(2)</enum><text>to serve as a
lender of last resort under this Act when the Board determines such action is
necessary.</text>
</paragraph></subsection><subsection id="HB80260A22C094F5E815D572D50B48C51"><enum>(c)</enum><header>Congressional
consultation</header><text>Not later than February 20 and July 20 of each year,
the Board shall consult with the Congress at semiannual hearings before the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives, about the
objectives and plans of the Board and the Committee with respect to achieving
and maintaining price stability.</text>
</subsection><subsection id="H7133F006ABF744B69C33E68EB2716E63"><enum>(d)</enum><header>Congressional
oversight</header><text>The Board shall, concurrent with each semiannual
hearing required by subsection (c), submit a written report to the Congress
containing—</text>
<paragraph id="H9430AEA520C74572BF691495947EB7AA"><enum>(1)</enum><text>numerical measures
to help assess the extent to which the Board and the Committee are achieving
and maintaining price stability in accordance with subsection (a);</text>
</paragraph><paragraph id="H983614421C564A428600D54695C277B6"><enum>(2)</enum><text>a description of
the intermediate variables used by the Board to gauge the prospects for
achieving the objective of price stability; and</text>
</paragraph><paragraph id="HFA27BA6115F3417B88ABEA85227200EF"><enum>(3)</enum><text>the definition, or
any modifications thereto, of the term <term>price stability</term> established
in accordance with subsection
(a)(1).</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5B4C7227CBFD4917943CF7C1B4DFCDB"><enum>(b)</enum><header>Compliance
estimate</header><text display-inline="yes-display-inline">Concurrent with the
first semiannual hearing required by section 2A(b) of the
<act-name parsable-cite="FRA">Federal Reserve Act</act-name> (as amended by
subsection (a) of this section) following the date of enactment of this Act,
the Board of Governors of the Federal Reserve System shall submit to the
Congress a written estimate of the length of time it will take for the Board
and the Federal Open Market Committee to fully achieve price stability. The
Board and the Committee shall take into account any potential short-term
effects on employment and output in complying with the goal of price
stability.</text>
</subsection></section><section id="HB7D6B37E40DC41F8BAA69464FD1F3372"><enum>204.</enum><header>Repeal of
obsolete provisions</header>
<subsection id="HCE23AE993E4D448587C5C4DCBCA871D3"><enum>(a)</enum><header>Full Employment
and Balanced Growth Act of 1978</header><text>The Full Employment and Balanced
Growth Act of 1978 (<external-xref legal-doc="usc" parsable-cite="usc/15/3101">15 U.S.C. 3101 et seq.</external-xref>) is hereby repealed.</text>
</subsection><subsection id="HB0F3FBDC8F7C4711BFA0C16000C1654B"><enum>(b)</enum><header>Employment Act
of 1946</header><text>The Employment Act of 1946 (<external-xref legal-doc="usc" parsable-cite="usc/15/1021">15 U.S.C. 1021 et seq.</external-xref>) is
amended—</text>
<paragraph id="H49AC6929EEFB4F21B9D896BAC572EA"><enum>(1)</enum><text>in
section 3 (<external-xref legal-doc="usc" parsable-cite="usc/15/1022">15 U.S.C. 1022</external-xref>)—</text>
<subparagraph id="HB741C90A28F14D3688900001D9FCFFEA"><enum>(A)</enum><text>in the section
heading, by striking <quote><header-in-text>and short-term economic goals and
policies</header-in-text></quote>;</text>
</subparagraph><subparagraph id="H4CE2E52C8ADE44C9BE74911D10D4FE27"><enum>(B)</enum><text>by striking
<quote>(a)</quote>; and</text>
</subparagraph><subparagraph id="HD4D98D02C1A94025A6EEFFEB4B7094F9"><enum>(C)</enum><text>by striking
<quote>in accord with section 11(c) of this Act</quote> and all that follows
through the end of the section and inserting <quote>in accordance with section
5(c).</quote>;</text>
</subparagraph></paragraph><paragraph id="H60A9D2141D7F46A193AE6EE4490053CC"><enum>(2)</enum><text>in section 9(b)
(<external-xref legal-doc="usc" parsable-cite="usc/15/1022f">15 U.S.C. 1022f(b)</external-xref>), by striking <quote>, the Full Employment and Balanced
Growth Act of 1978,</quote>;</text>
</paragraph><paragraph id="HC87D56C05B92444B904E6D2C5E00BAC1"><enum>(3)</enum><text>in section 10 (15
U.S.C. 1023)—</text>
<subparagraph id="HD12D389FE43C43568F9325B7D35B71F0"><enum>(A)</enum><text>in subsection (a),
by striking <quote>in the light of the policy declared in section
2</quote>;</text>
</subparagraph><subparagraph id="H7C40081508A74C3F9E2D83ABC89C1501"><enum>(B)</enum><text>in subsection
(e)(1), by striking <quote>section 9</quote> and inserting <quote>section
3</quote>; and</text>
</subparagraph><subparagraph id="H0EAC8AB7332F40FDB404D5E6C90050D2"><enum>(C)</enum><text>in the matter
immediately following paragraph (2) of subsection (e), by striking <quote>and
the Full Employment and Balanced Growth Act of 1978</quote>;</text>
</subparagraph></paragraph><paragraph id="H020F8CECA00C461CB588C445FA19291B"><enum>(4)</enum><text>by striking
section 2;</text>
</paragraph><paragraph id="HFCBB768BF88F4958942829BA533174E5"><enum>(5)</enum><text>by striking
sections 4, 5, 6, 7, and 8; and</text>
</paragraph><paragraph id="HF27B5A4CA5EC4C548CAC81ABAC91AC7B"><enum>(6)</enum><text>by redesignating
sections 3, 9, 10, and 11 as sections 2, 3, 4, and 5, respectively.</text>
</paragraph></subsection><subsection id="H622BC68937084242A9F857093875CFA7"><enum>(c)</enum><header>Congressional
Budget Act of 1974</header><text>Title III of the Congressional Budget Act of
1974 (<external-xref legal-doc="usc" parsable-cite="usc/2/631">2 U.S.C. 631 et seq.</external-xref>) is amended—</text>
<paragraph id="HAE7B3FEB0C594F2698A64281C324E2C1"><enum>(1)</enum><text>in section
301—</text>
<subparagraph id="H49350D6A5B094A10A1C2BE080A8F825"><enum>(A)</enum><text>in subsection (b),
by striking paragraph (1) and redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;</text>
</subparagraph><subparagraph id="H81FE69EAF05045708565D0A9A377EE00"><enum>(B)</enum><text>in subsection (d),
in the second sentence, by striking <quote>the fiscal policy</quote> and all
that follows through the end of the sentence and inserting <quote>fiscal
policy.</quote>;</text>
</subparagraph><subparagraph id="H0AE1DD48F4454A9EB103FA574B9E44E1"><enum>(C)</enum><text>in subsection
(e)(1), in the second sentence, by striking <quote>as to short-term and
medium-term goals</quote>; and</text>
</subparagraph><subparagraph id="HBF9CC30114174A96BBC0CE05DC63D2CE"><enum>(D)</enum><text>by striking
subsection (f) and inserting the following:</text>
<quoted-block id="H4F00ECE32D1A4F5CBC74611C94CFF743">
<subsection id="HD5B724ED79924A3AA5043541112476F5"><enum>(f)</enum><text>Repealed</text>
</subsection><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H3637C55503D54B569600ED0001F4A4BB"><enum>(2)</enum><text>in section
305—</text>
<subparagraph id="HF9F18DE84A9C4E54B3B495BCC76D8401"><enum>(A)</enum><text display-inline="yes-display-inline">in subsection (a)(3), by inserting before
the period at the end <quote>, as described in section 2 of the
<short-title>Price Stability Act of
2008</short-title></quote>;</text>
</subparagraph><subparagraph id="HACD80E6E7B8B45F796E5FE4680F76CFD"><enum>(B)</enum><text>in subsection
(a)(4)—</text>
<clause id="H85E4B7D5AB964F62A2FB929805558C12"><enum>(i)</enum><text display-inline="yes-display-inline">by striking <quote>House sets forth the
economic goals</quote> and all that follows through <quote>designed to
achieve,</quote> and inserting <quote>House of Representatives sets forth the
economic goals and policies, as described in section 2 of the
<short-title>Price Stability Act of
2008</short-title>,</quote>; and</text>
</clause><clause id="H953CA4DEC3ED46C1B04C3DAE91466DB3"><enum>(ii)</enum><text>by
striking <quote>such goals,</quote> and all that follows through the end of the
paragraph and inserting <quote>such goals and policies.</quote>;</text>
</clause></subparagraph><subparagraph id="H31853E225F7B496B9F7845DEB8389F2F"><enum>(C)</enum><text display-inline="yes-display-inline">in subsection (b)(3), by inserting before
the period at the end <quote>, as described in section 2 of the
<short-title>Price Stability Act of
2008</short-title></quote>; and</text>
</subparagraph><subparagraph id="HA22EA85B34004C238C649D2511F397F9"><enum>(D)</enum><text>in subsection
(b)(4)—</text>
<clause id="H0B8B56FF61C74451930424B477E6824B"><enum>(i)</enum><text display-inline="yes-display-inline">by striking <quote>goals (as</quote> and
all that follows through <quote>designed to achieve,</quote> and inserting
<quote>goals and policies, as described in section 2 of the
<short-title>Price Stability Act of
2008</short-title>,</quote>; and</text>
</clause><clause id="H8F9FCE80EA7148818C28DF3E75AF4D1B"><enum>(ii)</enum><text>by
striking <quote>such goals,</quote> and all that follows through the end of the
paragraph and inserting <quote>such goals and policies.</quote>.</text>
</clause></subparagraph></paragraph></subsection></section><enum>III</enum><header>Tax
Provisions</header>
<section id="HEB9B9CA7A5D64ED48F7E1E1360B1F1E4" section-type="subsequent-section"><enum>301.</enum><header>Temporary zero
percent capital gains rate for individuals and corporations</header>
<subsection id="H12341DC204D9472ABDEEBA87F3DE82A6"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subchapter A of
<external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end
the following new part:</text>
<quoted-block display-inline="no-display-inline" id="H40B56418F8DD43CA88EB9B6E3B6D273B" style="OLC">
<part id="H1992E150E3324B5FAF2EAA4216FC1C2F"><enum>VIII</enum><header>Temporary zero
percent capital gains rate for individuals and corporations</header>
<toc container-level="part-container" idref="H1992E150E3324B5FAF2EAA4216FC1C2F" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H3FA553C109244A3C97DF6D37C8B5E187" level="section">Sec. 59B. Temporary zero percent capital gains rate for
individuals and corporations.</toc-entry>
</toc>
<section id="H3FA553C109244A3C97DF6D37C8B5E187"><enum>59B.</enum><header>Temporary zero
percent capital gains rate for individuals and corporations</header>
<subsection id="H4A968A709D814F04B1F8A3CC8772109B"><enum>(a)</enum><header>Application to
individuals</header><text display-inline="yes-display-inline">In the case of a
specified recognition event occurring on or after September 22, 2008, and on or
before December 31, 2010—</text>
<paragraph id="HE9ADF803E72041C59EC5CCF52B34DD7"><enum>(1)</enum><header>In
general</header><text>Section 1(h)(1) shall be applied by substituting
<quote>shall not exceed a tax computed at the rates and in the same manner as
if this subsection had not been enacted on taxable income reduced by the net
capital gain.</quote> for <quote>shall not exceed</quote> and all that
follows.</text>
</paragraph><paragraph id="H337283B776B94D698E119D88ACCF13AF"><enum>(2)</enum><header>Alternative
minimum tax</header><text>Section 55(b)(3) shall be applied by substituting
<quote>shall not exceed the amount determined under such first sentence
computed at the rates and in the same manner as if this paragraph had not been
enacted on the taxable excess reduced by the net capital gain.</quote> for
<quote>shall not exceed</quote> and all that follows through the end of the
first sentence.</text>
</paragraph></subsection><subsection id="H15F7C10C243145C9ACCB3681048EA703"><enum>(b)</enum><header>Application to
corporations</header><text display-inline="yes-display-inline">In the case of a
specified recognition event occurring on or after September 22, 2008, and on or
before December 31, 2010—</text>
<paragraph id="H525514C2C14B4B8097CB5170F693EE53"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 1201 shall be
applied—</text>
<subparagraph id="H0C3B8364EBFB40099DF648EF80C8BA5E"><enum>(A)</enum><text>by substituting
<quote>0 percent</quote> for <quote>35 percent</quote> both places it appears,
and</text>
</subparagraph><subparagraph id="HBFD440B7F89C4A4387A11182DFAF894E"><enum>(B)</enum><text>by treating
<term>net capital gain</term> as having the meaning given such term by section
1(h)(11).</text>
</subparagraph></paragraph><paragraph id="HDDD8D1829D424D359BB2F63C8E16A845"><enum>(2)</enum><header>Alternative
minimum tax</header><text>For purposes of section 55, the amount determined
under subsection (b)(1)(B)(i) of such section shall not exceed the sum
of—</text>
<subparagraph id="H22C3923367184D30B79CD2DF636500D5"><enum>(A)</enum><text>the amount
determined under such subsection computed at the rates and in the same manner
as if this paragraph had not been enacted on the taxable excess reduced by the
net capital gain (as defined in section 1(h)(11)), plus</text>
</subparagraph><subparagraph id="H729E73B233C847FEA7A1BBD33B79BB00"><enum>(B)</enum><text>the amount
determined under section 1201.</text>
</subparagraph></paragraph></subsection><subsection id="H624CD0C769A64AA2A04D999D067442CA"><enum>(c)</enum><header>Technical
provisions</header><text display-inline="yes-display-inline">In the case of a
specified recognition event occurring on or after September 22, 2008, and on or
before December 31, 2010—</text>
<paragraph id="HC52492BF8F3C444FA3C62E4FA98BB096"><enum>(1)</enum><text>Section 1445(e)(1)
shall be applied by substituting <quote>0 percent</quote> for <quote>35 percent
(or, to the extent provided in regulations, 15 percent)</quote>.</text>
</paragraph><paragraph id="HDDFA94C4313543888C1B5BA158341FB8"><enum>(2)</enum><text>Section 1445(e)(2)
shall be applied by substituting <quote>0 percent</quote> for <quote>35
percent</quote>.</text>
</paragraph><paragraph id="HED163BECAB82430481E15D30672BEB0"><enum>(3)</enum><text>Section
7518(g)(6)(A) shall be applied by substituting <quote>0 percent</quote> for
<quote>15 percent (34 percent in the case of a corporation)</quote>.</text>
</paragraph><paragraph id="H42AAE9F80C5646429CAC076E9CE06697"><enum>(4)</enum><text>Section
607(h)(6)(A) of the Merchant Marine Act, 1936 shall be applied by substituting
<quote>0 percent</quote> for <quote>15 percent (34 percent in the case of a
corporation)</quote>.</text>
</paragraph></subsection><subsection id="H13CDA0D834BB475B9D8C6F7E8361E9CF"><enum>(d)</enum><header>Specified
recognition event</header><text>For purposes of this section, the term
<term>specified recognition event</term> means—</text>
<paragraph id="HB5C84D6011F54C26ACA815B5C6428984"><enum>(1)</enum><text>the sale or
exchange of a capital asset held for more than 1 year, and</text>
</paragraph><paragraph id="HAB441E6A174D4810AAA0EB916FA642C8"><enum>(2)</enum><text>the receipt of
qualified dividend income (as defined in section 1(h)(11)).</text>
</paragraph></subsection><subsection id="H581607B7181A49FF8BE1B39E59B60594"><enum>(e)</enum><header>Application to
transitional years</header><text>The Secretary shall issue regulations
providing appropriate transition rules for the application of the provisions of
this title referred to in subsections (a) or (b) for taxable years which
include September 22, 2008, or December 31,
2010.</text>
</subsection></section></part><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H80AA04F9427E40C4BE7F3F3620968C2C"><enum>(b)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">The table of parts
for subchapter A of chapter 1 of such Code is amended by adding at the end the
following new item:</text>
<quoted-block display-inline="no-display-inline" id="H86D30EEB3A2546FA815FE02C8D002194" style="OLC">
<toc container-level="quoted-block-container" idref="H40B56418F8DD43CA88EB9B6E3B6D273B" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H1992E150E3324B5FAF2EAA4216FC1C2F" level="part">Part VIII—Temporary zero percent capital gains rate for
individuals and
corporations</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H18E7E5A84D3144BE8F2EC31F4205612C"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="HB82E69438A8045BF92C0CEC7AFECFC8B"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years ending after September 22,
2008.</text>
</paragraph><paragraph id="HEDC4D18E85914DAB9F1F35EB008F22E5"><enum>(2)</enum><header>Withholding</header><text>Paragraphs
(1) and (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/59B">section 59B(c)</external-xref> of the Internal Revenue Code of 1986, as added by
this section, shall apply to dispositions and distributions after such
date.</text>
</paragraph></subsection></section><section display-inline="no-display-inline" id="HB086ADFF286A4384A304C6C24D32115E" section-type="subsequent-section"><enum>302.</enum><header>Indexing of certain
assets for purposes of determining gain or loss</header>
<subsection id="HF8CF1B0BCB504989A67BC27E2C4438"><enum>(a)</enum><header>In
General</header><text>Part II of subchapter O of chapter 1 (relating to basis
rules of general application) is amended by redesignating section 1023 as
section 1024 and by inserting after section 1022 the following new
section:</text>
<quoted-block id="H00D50D44BCE741C9830200E6391C1530" style="OLC">
<section id="H3080F0B657514543AB2176C25174949"><enum>1023.</enum><header>Indexing of
certain assets for purposes of determining gain or loss</header>
<subsection id="HC94640DA761848758F76FBD22DF6DF78"><enum>(a)</enum><header>General
rule</header>
<paragraph id="H26F5411AC9AA4F92BF90A1B18B028291"><enum>(1)</enum><header>Indexed basis
substituted for adjusted basis</header><text>Solely for purposes of determining
gain or loss on the sale or other disposition by a taxpayer (other than a
corporation) of an indexed asset which has been held for more than 3 years, the
indexed basis of the asset shall be substituted for its adjusted basis.</text>
</paragraph><paragraph id="H635A242EC50B4A08AC146595758735EF"><enum>(2)</enum><header>Exception for
depreciation, etc</header><text>The deductions for depreciation, depletion, and
amortization shall be determined without regard to the application of paragraph
(1) to the taxpayer or any other person.</text>
</paragraph><paragraph id="H7712767390F14162AA7299413B9EBBEA"><enum>(3)</enum><header>Written
documentation requirement</header><text>Paragraph (1) shall apply only with
respect to indexed assets for which the taxpayer has written documentation of
the original purchase price paid or incurred by the taxpayer to acquire such
asset.</text>
</paragraph></subsection><subsection id="HC5E09A315CC248BBA5208F872227D087"><enum>(b)</enum><header>Indexed
asset</header>
<paragraph id="H85753C3686394F168EDC3CAE5492A928"><enum>(1)</enum><header>In
general</header><text>For purposes of this section, the term <term>indexed
asset</term> means—</text>
<subparagraph id="HEA153D0475E84EC3A75FAE2C099E02FF"><enum>(A)</enum><text>common stock in a
C corporation (other than a foreign corporation), or</text>
</subparagraph><subparagraph id="H1B016839F3F043AE8615396245C58EC8"><enum>(B)</enum><text>tangible
property,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">which is a
capital asset or property used in the trade or business (as defined in section
1231(b)).</continuation-text></paragraph><paragraph id="H8960D9ABC7C04D08ADE2B10022F4FB2D"><enum>(2)</enum><header>Stock in certain
foreign corporations included</header><text>For purposes of this
section—</text>
<subparagraph id="H6A50AA072FD140AABFC99F954759B2B"><enum>(A)</enum><header>In
general</header><text>The term <term>indexed asset</term> includes common stock
in a foreign corporation which is regularly traded on an established securities
market.</text>
</subparagraph><subparagraph id="HB8DF2939491240A3BCB19ECF009FEF7C"><enum>(B)</enum><header>Exception</header><text>Subparagraph
(A) shall not apply to—</text>
<clause id="H236F667E90FF4040B72B800400869FF4"><enum>(i)</enum><text>stock of a foreign
investment company,</text>
</clause><clause id="HAB03DEE7E6D34508971BA56BFB493D99"><enum>(ii)</enum><text>stock in a
passive foreign investment company (as defined in section 1296),</text>
</clause><clause id="HEC85FDC222E04082BBEF78D53B91ECCC"><enum>(iii)</enum><text>stock in a
foreign corporation held by a United States person who meets the requirements
of section 1248(a)(2), and</text>
</clause><clause id="H4DE8A572B6FB48C490BC57BB9244623"><enum>(iv)</enum><text>stock in a foreign
personal holding company.</text>
</clause></subparagraph><subparagraph id="HEB55CC29A6004575A1C3D8A33DF729E"><enum>(C)</enum><header>Treatment of
American depository receipts</header><text>An American depository receipt for
common stock in a foreign corporation shall be treated as common stock in such
corporation.</text>
</subparagraph></paragraph></subsection><subsection id="H2F42259440184B7081E84E00089641A6"><enum>(c)</enum><header>Indexed
basis</header><text>For purposes of this section—</text>
<paragraph id="H93268D1B29B940BBADA6CB175DC07A"><enum>(1)</enum><header>General
rule</header><text>The indexed basis for any asset is—</text>
<subparagraph id="HFCD7DD566ECF4EE880E2CCD4E1A777B"><enum>(A)</enum><text>the adjusted basis
of the asset, increased by</text>
</subparagraph><subparagraph id="HC35026E8604741F9954933498F39B0DB"><enum>(B)</enum><text>the applicable
inflation adjustment.</text>
</subparagraph></paragraph><paragraph id="H2D6B052A02C94E6CBB3DB33600D898B9"><enum>(2)</enum><header>Applicable
inflation adjustment</header><text>The applicable inflation adjustment for any
asset is an amount equal to—</text>
<subparagraph id="H9B36F51E38D34389A415E125C822B29F"><enum>(A)</enum><text>the adjusted basis
of the asset, multiplied by</text>
</subparagraph><subparagraph id="H99391C9A55904397B4CD7B5565C12585"><enum>(B)</enum><text>the percentage (if
any) by which—</text>
<clause id="HA6BD06285C7F48AE9149F0B4655728DE"><enum>(i)</enum><text>the gross domestic
product deflator for the last calendar quarter ending before the asset is
disposed of, exceeds</text>
</clause><clause id="HAD41C20805524728B4EC2895CCFDBC1E"><enum>(ii)</enum><text>the gross
domestic product deflator for the last calendar quarter ending before the asset
was acquired by the taxpayer.</text>
</clause></subparagraph><continuation-text continuation-text-level="paragraph">The
percentage under subparagraph (B) shall be rounded to the nearest
<fraction>1/10</fraction> of 1 percentage point.</continuation-text></paragraph><paragraph id="H754B77A5EBA1419FB712B8DF7CA51E3"><enum>(3)</enum><header>Gross domestic
product deflator</header><text>The gross domestic product deflator for any
calendar quarter is the implicit price deflator for the gross domestic product
for such quarter (as shown in the last revision thereof released by the
Secretary of Commerce before the close of the following calendar
quarter).</text>
</paragraph></subsection><subsection id="HFE7348438A13409382EEBB95AE6C17FF"><enum>(d)</enum><header>Suspension of
holding period where diminished risk of loss; treatment of short sales</header>
<paragraph id="H97CA2824B5CA477684FB80F1697698C8"><enum>(1)</enum><header>In
general</header><text>If the taxpayer (or a related person) enters into any
transaction which substantially reduces the risk of loss from holding any
asset, such asset shall not be treated as an indexed asset for the period of
such reduced risk.</text>
</paragraph><paragraph id="HF6D309F071744C4F921B5C324F825FB9"><enum>(2)</enum><header>Short
sales</header>
<subparagraph id="HE09FC267A5F34C5900C185855100159B"><enum>(A)</enum><header>In
general</header><text>In the case of a short sale of an indexed asset with a
short sale period in excess of 3 years, for purposes of this title, the amount
realized shall be an amount equal to the amount realized (determined without
regard to this paragraph) increased by the applicable inflation adjustment. In
applying subsection (c)(2) for purposes of the preceding sentence, the date on
which the property is sold short shall be treated as the date of acquisition
and the closing date for the sale shall be treated as the date of
disposition.</text>
</subparagraph><subparagraph id="HF604B1388A844F339405920019243283"><enum>(B)</enum><header>Short sale
period</header><text>For purposes of subparagraph (A), the short sale period
begins on the day that the property is sold and ends on the closing date for
the sale.</text>
</subparagraph></paragraph></subsection><subsection id="HE1E04BCE7B3545219C234B3331C3F6A8"><enum>(e)</enum><header>Treatment of
regulated investment companies and real estate investment trusts</header>
<paragraph id="HA22631FF2F214E01AC017D7FBE883B64"><enum>(1)</enum><header>Adjustments at
entity level</header>
<subparagraph id="HB24374F06FED438389ACC3E973EF8D2E"><enum>(A)</enum><header>In
general</header><text>Except as otherwise provided in this paragraph, the
adjustment under subsection (a) shall be allowed to any qualified investment
entity (including for purposes of determining the earnings and profits of such
entity).</text>
</subparagraph><subparagraph id="H53ACAA91A61B4EF192E9E86700452DA1"><enum>(B)</enum><header>Exception for
corporate shareholders</header><text>Under regulations—</text>
<clause id="H15C33590E0814697B38CC38BEA4B9986"><enum>(i)</enum><text>in
the case of a distribution by a qualified investment entity (directly or
indirectly) to a corporation—</text>
<subclause id="H1295E74989344C6CB1234E964443E773"><enum>(I)</enum><text>the determination
of whether such distribution is a dividend shall be made without regard to this
section, and</text>
</subclause><subclause id="H827135CD91094561B79841A35879F374"><enum>(II)</enum><text>the amount
treated as gain by reason of the receipt of any capital gain dividend shall be
increased by the percentage by which the entity’s net capital gain for the
taxable year (determined without regard to this section) exceeds the entity’s
net capital gain for such year determined with regard to this section,
and</text>
</subclause></clause><clause id="H02858C8325904432A2CD56BF93867184"><enum>(ii)</enum><text>there shall be
other appropriate adjustments (including deemed distributions) so as to ensure
that the benefits of this section are not allowed (directly or indirectly) to
corporate shareholders of qualified investment entities.</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of the preceding sentence, any amount includible in gross income under
section 852(b)(3)(D) shall be treated as a capital gain dividend and an S
corporation shall not be treated as a corporation.</continuation-text></subparagraph><subparagraph id="HF7D24D1D02B2420EBED914A126B702D9"><enum>(C)</enum><header>Exception for
qualification purposes</header><text>This section shall not apply for purposes
of sections 851(b) and 856(c).</text>
</subparagraph><subparagraph id="HC050A351FE97405FAD398EA955D933C9"><enum>(D)</enum><header>Exception for
certain taxes imposed at entity level</header>
<clause id="H4C02968B69FE4FAB86EA00E873F218C0"><enum>(i)</enum><header>Tax on failure
to distribute entire gain</header><text>If any amount is subject to tax under
section 852(b)(3)(A) for any taxable year, the amount on which tax is imposed
under such section shall be increased by the percentage determined under
subparagraph (B)(i)(II). A similar rule shall apply in the case of any amount
subject to tax under paragraph (2) or (3) of section 857(b) to the extent
attributable to the excess of the net capital gain over the deduction for
dividends paid determined with reference to capital gain dividends only. The
first sentence of this clause shall not apply to so much of the amount subject
to tax under section 852(b)(3)(A) as is designated by the company under section
852(b)(3)(D).</text>
</clause><clause id="H27218B23EA164210BD1E0085F6450259"><enum>(ii)</enum><header>Other
taxes</header><text>This section shall not apply for purposes of determining
the amount of any tax imposed by paragraph (4), (5), or (6) of section
857(b).</text>
</clause></subparagraph></paragraph><paragraph id="H06B384F62C014A468D30403CBE642715"><enum>(2)</enum><header>Adjustments to
interests held in entity</header>
<subparagraph id="HAEE8005DE411426DA74849CB347CF5B6"><enum>(A)</enum><header>Regulated
investment companies</header><text>Stock in a regulated investment company
(within the meaning of section 851) shall be an indexed asset for any calendar
quarter in the same ratio as—</text>
<clause id="H44BBF2D10D68477580F842C4D900D106"><enum>(i)</enum><text>the average of the
fair market values of the indexed assets held by such company at the close of
each month during such quarter, bears to</text>
</clause><clause id="H0090E93BF01640BA806400CD9F3FA9C1"><enum>(ii)</enum><text>the average of
the fair market values of all assets held by such company at the close of each
such month.</text>
</clause></subparagraph><subparagraph id="HB1406788BBD84BD59BC6F949E1A2EB65"><enum>(B)</enum><header>Real estate
investment trusts</header><text>Stock in a real estate investment trust (within
the meaning of section 856) shall be an indexed asset for any calendar quarter
in the same ratio as—</text>
<clause id="HA206A6E728BD4E0890CAD7EEA2ADB27"><enum>(i)</enum><text>the
fair market value of the indexed assets held by such trust at the close of such
quarter, bears to</text>
</clause><clause id="H22E3C6146A4E46769BEEC382230100D0"><enum>(ii)</enum><text>the fair market
value of all assets held by such trust at the close of such quarter.</text>
</clause></subparagraph><subparagraph id="H28B6B519B9454AF6B18244B93906FB77"><enum>(C)</enum><header>Ratio of 80
percent or more</header><text>If the ratio for any calendar quarter determined
under subparagraph (A) or (B) would (but for this subparagraph) be 80 percent
or more, such ratio for such quarter shall be 100 percent.</text>
</subparagraph><subparagraph id="HB8144EA6C86244DFBCF6DF1FFFA2F0C5"><enum>(D)</enum><header>Ratio of 20
percent or less</header><text>If the ratio for any calendar quarter determined
under subparagraph (A) or (B) would (but for this subparagraph) be 20 percent
or less, such ratio for such quarter shall be zero.</text>
</subparagraph><subparagraph id="H64DEBC85E99243C6BACD496C27B4C0"><enum>(E)</enum><header>Look-thru of
partnerships</header><text>For purposes of this paragraph, a qualified
investment entity which holds a partnership interest shall be treated (in lieu
of holding a partnership interest) as holding its proportionate share of the
assets held by the partnership.</text>
</subparagraph></paragraph><paragraph id="HEB5FF7D851D741C19F9F7124CAC4C0C"><enum>(3)</enum><header>Treatment of
return of capital distributions</header><text>Except as otherwise provided by
the Secretary, a distribution with respect to stock in a qualified investment
entity which is not a dividend and which results in a reduction in the adjusted
basis of such stock shall be treated as allocable to stock acquired by the
taxpayer in the order in which such stock was acquired.</text>
</paragraph><paragraph id="H4D036A0846E44EB787DEAF142D62A770"><enum>(4)</enum><header>Qualified
investment entity</header><text>For purposes of this subsection, the term
<term>qualified investment entity</term> means—</text>
<subparagraph id="H8AB2AC34BCAB4583AF92E27162CB6BE6"><enum>(A)</enum><text>a regulated
investment company (within the meaning of section 851), and</text>
</subparagraph><subparagraph id="H81291405D6394D0AB2EE1CEC7C95B00"><enum>(B)</enum><text>a real estate
investment trust (within the meaning of section 856).</text>
</subparagraph></paragraph></subsection><subsection id="HC1008CD643674C04BC33E9FDA19EB23"><enum>(f)</enum><header>Other pass-thru
entities</header>
<paragraph id="H303B54AF9A444D528F255F784DD200F7"><enum>(1)</enum><header>Partnerships</header>
<subparagraph id="HB951A43A323F4077802292DB82ECDFB2"><enum>(A)</enum><header>In
general</header><text>In the case of a partnership, the adjustment made under
subsection (a) at the partnership level shall be passed through to the
partners.</text>
</subparagraph><subparagraph id="HBE60069A39C84040B9B99F9FA5FC9058"><enum>(B)</enum><header>Special rule in
the case of section 754 elections</header><text>In the case of a transfer of an
interest in a partnership with respect to which the election provided in
section 754 is in effect—</text>
<clause id="H3C215A21DF3446B900C6458EECB95D72"><enum>(i)</enum><text>the adjustment
under section 743(b)(1) shall, with respect to the transferor partner, be
treated as a sale of the partnership assets for purposes of applying this
section, and</text>
</clause><clause id="HB0D23857A600447BBF5D4E207CDFA932"><enum>(ii)</enum><text>with respect to
the transferee partner, the partnership’s holding period for purposes of this
section in such assets shall be treated as beginning on the date of such
adjustment.</text>
</clause></subparagraph></paragraph><paragraph id="H35915A844AF748488999A1D0DA0000BC"><enum>(2)</enum><header>S
corporations</header><text>In the case of an S corporation, the adjustment made
under subsection (a) at the corporate level shall be passed through to the
shareholders. This section shall not apply for purposes of determining the
amount of any tax imposed by section 1374 or 1375.</text>
</paragraph><paragraph id="HB99244CAA807446B80A100B6769BF26C"><enum>(3)</enum><header>Common trust
funds</header><text>In the case of a common trust fund, the adjustment made
under subsection (a) at the trust level shall be passed through to the
participants.</text>
</paragraph><paragraph id="H3A3F810C9030420AA0435C1FEAE57B91"><enum>(4)</enum><header>Indexing
adjustment disregarded in determining loss on sale of interest in
entity</header><text>Notwithstanding the preceding provisions of this
subsection, for purposes of determining the amount of any loss on a sale or
exchange of an interest in a partnership, S corporation, or common trust fund,
the adjustment made under subsection (a) shall not be taken into account in
determining the adjusted basis of such interest.</text>
</paragraph></subsection><subsection id="H3EBC68DA06514CC28B8992B0213D763C"><enum>(g)</enum><header>Dispositions
between related persons</header>
<paragraph id="H9B3AAE567B724DF7834244EB2068CFFD"><enum>(1)</enum><header>In
general</header><text>This section shall not apply to any sale or other
disposition of property between related persons except to the extent that the
basis of such property in the hands of the transferee is a substituted
basis.</text>
</paragraph><paragraph id="H60B4A6F5ABF6407381889100A19F64B9"><enum>(2)</enum><header>Related persons
defined</header><text>For purposes of this section, the term <term>related
persons</term> means—</text>
<subparagraph id="HEA8A909A47474B3A8BF7FA564E4BD2CE"><enum>(A)</enum><text>persons bearing a
relationship set forth in section 267(b), and</text>
</subparagraph><subparagraph id="HA956D5E86299429F94F62F1E022D8B90"><enum>(B)</enum><text>persons treated as
single employer under subsection (b) or (c) of section 414.</text>
</subparagraph></paragraph></subsection><subsection id="H6BFD67A44BEB4813B1323B70B2C61381"><enum>(h)</enum><header>Transfers To
increase indexing adjustment</header><text>If any person transfers cash, debt,
or any other property to another person and the principal purpose of such
transfer is to secure or increase an adjustment under subsection (a), the
Secretary may disallow part or all of such adjustment or increase.</text>
</subsection><subsection id="HF3F2417BD0254B59B370D197597F5CA3"><enum>(i)</enum><header>Special
rules</header><text>For purposes of this section—</text>
<paragraph id="HFA1343DB48704716AA1F19FE6FC261EC"><enum>(1)</enum><header>Treatment of
improvements, etc</header><text>If there is an addition to the adjusted basis
of any tangible property or of any stock in a corporation during the taxable
year by reason of an improvement to such property or a contribution to capital
of such corporation—</text>
<subparagraph id="H4AE236E055E043F7B16FBC66C34521BB"><enum>(A)</enum><text>such addition
shall never be taken into account under subsection (c)(1)(A) if the aggregate
amount thereof during the taxable year with respect to such property or stock
is less than $1,000, and</text>
</subparagraph><subparagraph id="H9E4325827687400E994470821B61C19C"><enum>(B)</enum><text>such addition
shall be treated as a separate asset acquired at the close of such taxable year
if the aggregate amount thereof during the taxable year with respect to such
property or stock is $1,000 or more.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">A rule
similar to the rule of the preceding sentence shall apply to any other portion
of an asset to the extent that separate treatment of such portion is
appropriate to carry out the purposes of this section.</continuation-text></paragraph><paragraph id="HAD041EF6599A473900D67EF00931371E"><enum>(2)</enum><header>Assets which are
not indexed assets throughout holding period</header><text>The applicable
inflation adjustment shall be appropriately reduced for periods during which
the asset was not an indexed asset.</text>
</paragraph><paragraph id="H349530C46BF343FF8148A7EE4C2C7C9E"><enum>(3)</enum><header>Treatment of
certain distributions</header><text>A distribution with respect to stock in a
corporation which is not a dividend shall be treated as a disposition.</text>
</paragraph><paragraph id="HA50004B4F27C420A94067E106878C7BE"><enum>(4)</enum><header>Section cannot
increase ordinary loss</header><text>To the extent that (but for this
paragraph) this section would create or increase a net ordinary loss to which
section 1231(a)(2) applies or an ordinary loss to which any other provision of
this title applies, such provision shall not apply. The taxpayer shall be
treated as having a long-term capital loss in an amount equal to the amount of
the ordinary loss to which the preceding sentence applies.</text>
</paragraph><paragraph id="HB894BD682DAA41749B773571F6B714C4"><enum>(5)</enum><header>Acquisition date
where there has been prior application of subsection
<enum-in-header>(a)(1)</enum-in-header> with respect to the
taxpayer</header><text>If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer, the date of
acquisition of such asset by the taxpayer shall be treated as not earlier than
the date of the most recent such prior application.</text>
</paragraph></subsection><subsection id="H8820F9F9BAFB4FF4BE46A255D050472"><enum>(j)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE793734CBF544CCCA0FAE8F91E5EC6BC"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for part II of subchapter O of
chapter 1 is amended by striking the item relating to section 1023 and by
inserting after the item relating to section 1022 the following new
item:</text>
<quoted-block id="H80C121CBED314C0BBAE15E97705B0088" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 1022. Indexing of certain assets for
purposes of determining gain or loss.</toc-entry>
<toc-entry level="section">Sec. 1023. Cross
references.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA19D9052F41A42C4ACA8844DAED26DF"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to sales and
other dispositions of indexed assets after the date of the enactment of this
Act, in taxable years ending after such date.</text>
</subsection></section><enum>IV</enum><header>FAIR VALUE
ACCOUNTING REFORM ACT</header>
<section id="idAE8E50CF680F4EA3AD49C90FA4705E9A"><enum>401.</enum><header>Findings and
Purpose</header>
<subsection id="id4F8962B8CCF040438AABB1A5512B1381"><enum>(a)</enum><header>Findings</header><text>The
Congress finds that—</text>
<paragraph id="idAB726177D9C3411C8B4A3CD38E8BA99F"><enum>(1)</enum><text>for many
purposes, fair value accounting requirements can inform and protect
investors;</text>
</paragraph><paragraph id="id895BEC660D044C06922A4C501F14DA18"><enum>(2)</enum><text>in periods of
market turmoil when there is an inactive market, fair value accounting
requirements can force financial institutions to write down the value of a
long-term, non-trading asset below its true economic value even though the cash
flow on the asset remains unimpaired and other indicia of value of the asset
reflect value consistent with the cash flow; and</text>
</paragraph><paragraph id="idFAB170623E7241ADAD4C2C5832B8BB28"><enum>(3)</enum><text>the application
of fair value accounting requirements on assets for which there is an inactive
market has the unintended effect of exacerbating economic downturns by reducing
the ability of financial institutions to provide credit to consumers and
businesses.</text>
</paragraph></subsection><subsection id="id4A8E9D794E304C358E237C66B979752C"><enum>(b)</enum><header>
Purpose</header><text>The purpose of this Act is to—</text>
<paragraph id="idCDCC59D0096941EDAE397EB5497F089F"><enum>(1)</enum><text>maintain the
ability of all financial institutions to provide credit in periods of market
stress;</text>
</paragraph><paragraph id="idA5BF1AE06C6943AD9E3637FA09A12744"><enum>(2)</enum><text>permit financial
institutions to maintain the economic value of long term, non-trading assets in
an inactive market; and</text>
</paragraph><paragraph id="id6C89DD6573F34525B2239164C758686D"><enum>(3)</enum><text>continue to
provide transparency to investors.</text>
</paragraph></subsection></section><section id="id887E3CB8F4644B52B947AEAE392FD2A3"><enum>402.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this legislation,
<term>long-term, non-trading assets</term> are defined as all instances in
which fair value measurement is required under U.S. Generally Accepted
Accounting Principles for which the company is not actively trading and for
which the company has the ability to hold those financial instruments for an
extended period of time.</text>
</section><section id="id478EB548D05343B28914AE5793C8FC95"><enum>403.</enum><header>Temporary
Suspension of Fair Value Accounting</header>
<subsection id="idD268AFE6C8F140A584364C2C06904E42"><enum>(a)</enum><header>In
General</header><text display-inline="yes-display-inline">Effective on the date
of enactment of the Troubled Asset Relief Act of 2008, the Securities and
Exchange Commission shall suspend the application of fair value reporting
standards to troubled assets held by financial institutions, as those terms are
defined in such Act. The suspension required by this subsection shall remain in
effect until the issuance of the guidance required in subsection (b). Until
such guidance is issued, the fair value of these assets should be estimated
using the best available information of the instrument’s value, including the
entity’s intended use of that asset, from the point of view of the holder of
that instrument.</text>
</subsection><subsection id="idF32ED458A6194E1D9D11A65E4A645844"><enum>(b)</enum><header>Guidance</header><text display-inline="yes-display-inline">Within 90 days of the date of enactment of
this Act, the Securities and Exchange Commission shall issue guidance on the
reporting requirements for long-term, non-trading assets during periods in
which there is no active market for such assets. Such guidance shall:</text>
<paragraph id="idAC275F66384B4BA1BDA31A46B4C16340"><enum>(1)</enum><text display-inline="yes-display-inline">define <quote>market participants</quote>
eligible for such guidance;</text>
</paragraph><paragraph id="id3E648AC72D7F4380B57672F99F068095"><enum>(2)</enum><text display-inline="yes-display-inline">define an inactive market which will
trigger such guidance;</text>
</paragraph><paragraph id="id0BE28277144C47C589BEF2936846B7A6"><enum>(3)</enum><text display-inline="yes-display-inline">specify a valuation method that reflects
the economic value of such assets; and</text>
</paragraph><paragraph id="idC3C80EF05AD74239933D3891F0FE9B1B"><enum>(4)</enum><text display-inline="yes-display-inline">determine the period in which such assets
should be evaluated under this method.</text>
</paragraph></subsection></section><section id="idDD821C0928CC46D8875041FF25E07F2B"><enum>404.</enum><header>GAO Analysis
of Fair Value Accounting</header>
<subsection id="idD2765E40176C4196A36009741DA9950C"><enum>(a)</enum><header>In
General</header><text display-inline="yes-display-inline">The General
Accountability Office shall prepare an analysis of the effect of fair value
accounting standards on financial institutions. Such analysis shall—</text>
<paragraph id="id17CCA0EDDB214A04966D02F80B1627C6"><enum>(1)</enum><text display-inline="yes-display-inline">describe the current impact of fair value
accounting on financial institutions during different economic cycles and under
different market conditions, including periods in which there is an inactive
market for long-term, non-trading assets held by such institutions;</text>
</paragraph><paragraph id="id83FC708ACA294B9C9872975245E8451E"><enum>(2)</enum><text display-inline="yes-display-inline">evaluate auditors’ practices and procedures
in reviewing the application of fair value accounting on long-term, non-trading
assets in an inactive market; and</text>
</paragraph><paragraph id="idCFABE920901245F6A7246728307766CD"><enum>(3)</enum><text display-inline="yes-display-inline">describe the impact of the Securities and
Exchange Commission’s application of fair value accounting, as prescribed by
such guidance required in Section 4 (b).</text>
</paragraph></subsection><subsection id="id47EF4642A0594F599654367D0A1C628D"><enum>(b)</enum><header>Timing</header><text display-inline="yes-display-inline">The analysis required by subsection (a)
shall be completed within 1 year of the date of enactment of this Act, and
shall be submitted to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing and Urban Affairs of the
Senate.</text>
</subsection></section><enum>V</enum><header>MORTGAGE-BACKED
SECURITIES</header>
<section id="H5B0C81FB49DB4F69B98304DB115F56B"><enum>501.</enum><header>The insurance of
mortgage-backed securities</header>
<subsection id="HC4BD12299D1A4B7CA0DB53EF53E900D8"><enum>(a)</enum><header>Mortgage-Backed
Security Insurance</header><text display-inline="yes-display-inline">Upon the
enactment of this Act, the timely payment of up to 100 percent of principal of
and interest on each mortgage-backed security held by a financial institution
on or before September 24, 2008 is hereby insured on such terms and conditions
as determined by the Secretary consistent with this title, as those terms are
defined in Section 111.</text>
</subsection><subsection id="H3A565E6F347A44E4008C5F897132C1F9"><enum>(b)</enum><header>Necessary
Actions</header><text display-inline="yes-display-inline">The Secretary is
authorized to take such actions as he deems necessary to carry out the
authorities in this title, including—</text>
<paragraph id="HBFFE6564E3A34D838DBC933C9C36F500"><enum>(1)</enum><text display-inline="yes-display-inline">appointing such employees as may be
required to carry out the authorities in this title and defining their
duties;</text>
</paragraph><paragraph id="H172CDDF6A66948B78DBC49C6CCF75DB3"><enum>(2)</enum><text display-inline="yes-display-inline">entering into contracts, including
contracts for the services of experts and consultants as authorized by section
3109 of title 5, United States Code, without regard to any other provision of
law regarding public contracts;</text>
</paragraph><paragraph id="H14442AB9FFCD4ACAA1284D2600093B38"><enum>(3)</enum><text display-inline="yes-display-inline">designating financial institutions as
financial agents of the Government, and they shall perform all such reasonable
duties related to this title as financial agents of the Government as may be
required of them;</text>
</paragraph><paragraph id="H1D3171EA55464D89825BA3BC30002586"><enum>(4)</enum><text display-inline="yes-display-inline">establishing vehicles that are authorized,
subject to supervision by the Secretary, to provide, and make payments on, the
insures referred to in subsection (a) and issue obligations; and</text>
</paragraph><paragraph id="H39138A0CB85947138DC851CB94B44E3D"><enum>(5)</enum><text display-inline="yes-display-inline">issuing such regulations and other guidance
as may be necessary or appropriate to define terms or carry out the authorities
of this title.</text>
</paragraph></subsection></section><section id="HE2023C8C6045459E9F7F9663FD0023B7"><enum>502.</enum><header>Considerations</header>
<subsection id="HA8A0A140D9F949F38655BBCD075F31DB"><enum>(a)</enum><header>Secretary
Consideration</header><text display-inline="yes-display-inline">In exercising
the authorities granted in this title, the Secretary shall take into
consideration means for—</text>
<paragraph id="HF568912FAEAC4EF1BB9887EEC82C91B9"><enum>(1)</enum><text display-inline="yes-display-inline">protecting the taxpayer;</text>
</paragraph><paragraph id="H425FE873D7E44EE4BAF51E7CEBBD6C87"><enum>(2)</enum><text display-inline="yes-display-inline">providing stability or preventing
disruption to the financial markets or banking system; and</text>
</paragraph><paragraph id="H70D83D71E9CC43C38E06B45B41834524"><enum>(3)</enum><text display-inline="yes-display-inline">taking appropriate steps to manage any
conflicts of interest in the hiring of contractors or advisors.</text>
</paragraph></subsection><subsection display-inline="no-display-inline" id="H5364C7929E16450E8D2B7583606DD617"><enum>(b)</enum><header>Rulemaking
Exemption</header><text display-inline="yes-display-inline">Any regulation
issued under the authority provided in this title shall not be subject to the
rulemaking provisions as set forth in <external-xref legal-doc="usc" parsable-cite="usc/5/553">section 553</external-xref> of title 5, United States
Code.</text>
</subsection></section><section id="HF1F15D99B52841DCB13483B144C77FC1"><enum>503.</enum><header>Insurance
premiums</header>
<subsection display-inline="no-display-inline" id="H1AE7F75C48FF419E9DEAF318DBE4D5D0"><enum>(a)</enum><header>Insurance
Premiums</header><text display-inline="yes-display-inline">The Secretary shall
collect premiums from each financial institution, as such term is defined in
section 111 of this title, in order to fund the Mortgage-Backed Securities Fund
established in section 105 and used to satisfy obligations incurred under this
title.</text>
</subsection><subsection id="HC39032FB6038490EAD93DCE627D929BD"><enum>(b)</enum><header>Premium
Collection</header><text display-inline="yes-display-inline">The premium
collected pursuant to subsection (a) shall be collected from each financial
institution notwithstanding such institution’s application, if any, for insures
set forth in section 101(a).</text>
</subsection><subsection id="H38004A754E1D4A8FBA41FB5C75990200"><enum>(c)</enum><header>Authority To
Base Insurance Premium on Product Risk</header><text display-inline="yes-display-inline">In establishing the insurance premium under
subsection (a), the Secretary may provide for variations in such rates
according to the credit risk associated with the mortgage-backed security held
by a financial institution as such term is defined in section 111.</text>
</subsection><subsection id="H1B59349EE97847CA85C9FF00987D77F3"><enum>(d)</enum><header> Sufficient
Level</header><text display-inline="yes-display-inline">The premium referred to
in subsection (a) shall be set by the Secretary at a level necessary to
maintain a level of funding in the Mortgage-Backed Securities Fund, as
established in section 104, sufficient to meet anticipated claims based upon
actuarial analysis.</text>
</subsection><subsection id="H5C6761A3782E4C84A2EB81AE5443F8A7"><enum>(e)</enum><header>Expiration</header><text display-inline="yes-display-inline">The Secretary may cease collecting premiums
set forth in subsection (a) if he determines the Mortgage-Backed Securities
Fund has sufficient reserves to meet anticipated claims as described in
subsection (d).</text>
</subsection></section><section id="H3818643C84FA4D1AADEB98A6F1A937C3"><enum>504.</enum><header>Mortgage-backed
securities fund</header>
<subsection id="H39536624C9EB4BB69896FAFB27F0064"><enum>(a)</enum><header>Collected
premiums</header><text display-inline="yes-display-inline">The Secretary shall
deposit premiums collected pursuant to section 103(a) of this title into the
Mortgage-Backed Securities Fund as established in subsection (b).</text>
</subsection><subsection id="H112137AD2CA04010B788A43F00590697"><enum>(b)</enum><header>Mortgage-backed
securities fund</header><text display-inline="yes-display-inline">There is
hereby established a Mortgage-Backed Securities Fund (in this title referred to
as the “Fund”).</text>
</subsection><subsection id="H9B6A60986B704827BA39AD72B322B3C"><enum>(c)</enum><header>Authority</header><text display-inline="yes-display-inline">Premiums deposited in the Fund pursuant to
subsection section (a) shall be invested in obligations of the United States,
or kept in cash on hand or on deposit, as necessary.</text>
</subsection><subsection id="H82066F64A0F949A883EE9F96EDE3EA7F"><enum>(d)</enum><header>Payments from
the fund</header><text display-inline="yes-display-inline">The Secretary shall
make payments from amounts deposited in the Fund to fulfill the obligations of
the insurance provided to financial institutions as set forth in section
101(a).</text>
</subsection><subsection id="HE7B0E395755C44FC8FB123A9951E9818"><enum>(e)</enum><header>Fund
sufficiency</header><text display-inline="yes-display-inline">The Secretary
shall increase insurance premiums if he determines, after consultation with the
Government Accountability Office, to a level sufficient to assure reserves in
the Fund will meet anticipated needs.</text>
</subsection><subsection id="H183CF221338942CCA9C48BFB0085FDF"><enum>(f)</enum><header>Transfer
authority</header><text display-inline="yes-display-inline">The Secretary of
the Treasury is authorized and directed to loan to the Fund, on such terms as
may be fixed by the Secretary, such funds as in the Secretary’s judgment are
from time to time required for purposes of this title.</text>
</subsection></section><section id="HDD5351B5B1594992B65CA5031CBA6AB"><enum>505.</enum><header>Payment of
insurance premiums</header>
<subsection id="H5D17E48C26684338B09D9012D7A3349F"><enum>(a)</enum><header>Payment and
subrogation</header><text display-inline="yes-display-inline">If a financial
institution that holds a mortgage-backed security on September 24, 2008, for
which insurance is provided pursuant to this title, is unable to make any
payment of principal of or interest on such security, the Secretary shall make
such payment as and when due, in cash, and upon such payment shall be
subrogated fully to the rights satisfied by such payment.</text>
</subsection><subsection id="HFC61BC2D0940402883C9E6C27115850"><enum>(b)</enum><header>Contract</header><text display-inline="yes-display-inline">The Secretary is hereby authorized, in
connection with any insurance under this title, whether before or after any
default, to provide by contract with the holder, referred to in subsection (a),
for the extinguishment, upon default by the holder, of any redemption,
equitable, legal, or other right, title, or interest of the holder in any
mortgage or mortgages constituting the trust or pool against which the
mortgage-backed securities insured under this title are issued; and with
respect to any issue of such insured securities, in the event of default and
pursuant otherwise to the terms of the contract, the mortgages that constitute
such trust or pool backing the security shall become the absolute property of
the U.S. Treasury, subject only to the unsatisfied rights of the holders of the
mortgage-backed securities based on and backed by such trust or pool.</text>
</subsection><subsection id="H9DDBDD9CB7E44E28B07208EA207D4F3F"><enum>(c)</enum><header>Limitation on
application of law</header><text display-inline="yes-display-inline">No State
or local law, and no Federal law, shall preclude or limit the exercise of the
Secretary’s—</text>
<paragraph id="id8BA8C0688FB2404587C6B3E539D5FD72"><enum>(1)</enum><text>power to contract
with the issuer on the terms set forth in subsection (b); or</text>
</paragraph><paragraph id="idA683387094D142CB9FD25F6631DE2C9F"><enum>(2)</enum><text>authorization to
enforce any such contract with the holder; or</text>
</paragraph><paragraph id="idF2ED814E852A411080E9BF7219BFF78B"><enum>(3)</enum><text>the rights, as
provided in subsection (b), in the mortgages constituting the trust or pool
against which such insured securities are issued.</text>
</paragraph></subsection><subsection id="H0D21E5EA59F14B6383E6126E6D28B6E"><enum>(d)</enum><header>Full faith and
credit</header><text display-inline="yes-display-inline">The full faith and
credit of the United States is pledged to the payment of all amounts which may
be required to be paid under any insurance under this title.</text>
</subsection></section><section id="H2209F0DFCE9C429E84F6DBF000C3E097"><enum>506.</enum><header>Funding</header><text display-inline="no-display-inline">For the purpose of the authorities granted
in this title, and for the costs of administering those authorities, the
Secretary may use funds from the amounts in the Mortgage-Backed Securities
Fund. Any funds expended from the Fund for actions authorized by this title,
including the payment of administrative expenses, shall be deemed appropriated
at the time of such expenditure.</text>
</section><section id="idBB8A759AA02249199AD3C2FC9C22BA01"><enum>507.</enum><header>Judicial
review and related matters</header>
<subsection id="idCD6161796E3742F48FCEC045D473B11C"><enum>(a)</enum><header>Judicial
review</header>
<paragraph id="idD0E77EA98C06435AB986F1B73DCF4FBE"><enum>(1)</enum><header>Standard</header><text>Actions
by the Secretary pursuant to the authority of this Act shall be subject to
<external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/7">chapter 7</external-xref> of title 5, United States Code, including that such final actions
shall be held unlawful and set aside if found to be arbitrary, capricious, an
abuse of discretion, or not in accordance with law.</text>
</paragraph><paragraph id="id7099A52F3EBA4EC7AA0226AC5833CDA3"><enum>(2)</enum><header>Limitations on
equitable relief</header>
<subparagraph id="id1DA6BA56526040FDBD745BE5127D9715"><enum>(A)</enum><header>Injunction</header><text>No
injunction or other form of equitable relief shall be issued against the
Secretary for actions pursuant to section 101, 102, 106, and 109, other than to
remedy a violation of the Constitution.</text>
</subparagraph><subparagraph id="id3E66F53D6B4648CF8AF71196E2E7E537"><enum>(B)</enum><header>Temporary
restraining order</header><text>Any request for a temporary restraining order
against the Secretary for actions pursuant to this Act shall be considered and
granted or denied by the court within 3 days of the date of the request.</text>
</subparagraph><subparagraph id="id575A42ADE001451BB440C40F6AB04FC8"><enum>(C)</enum><header>Preliminary
injunction</header><text>Any request for a preliminary injunction against the
Secretary for actions pursuant to this Act shall be considered and granted or
denied by the court on an expedited basis consistent with the provisions of
rule 65(b)(3) of the Federal Rules of Civil Procedure, or any successor
thereto.</text>
</subparagraph><subparagraph id="idF642CE58D98F42778D943696A19BDC91"><enum>(D)</enum><header>Permanent
injunction</header><text>Any request for a permanent injunction against the
Secretary for actions pursuant to this Act shall be considered and granted or
denied by the court on an expedited basis. Whenever possible, the court shall
consolidate trial on the merits with any hearing on a request for a preliminary
injunction, consistent with the provisions of rule 65(a)(2) of the Federal
Rules of Civil Procedure, or any successor thereto.</text>
</subparagraph></paragraph><paragraph id="idECB5D9E4A61F4CE694B56C18CCF76BA9"><enum>(3)</enum><header>Limitation on
actions by participating companies</header><text>No action or claims may be
brought against the Secretary by any person that divests its assets with
respect to its participation in a program under this Act, except as provided in
paragraph (1), other than as expressly provided in a written contract with the
Secretary.</text>
</paragraph><paragraph id="id94EFEEAD5BA14FED999AE4AD5C7B51A8"><enum>(4)</enum><header>Stays</header><text>Any
injunction or other form of equitable relief issued aginst the Secretary for
actions pursuant to section 101, 102, 106, and 109, shall be automatically
stayed. The stay shall be lifted unless the Secretary seeks a stay from a
higher court within 3 calendar days after the date on which the relief is
issued.</text>
</paragraph></subsection><subsection id="id820F05718FB94284B4EAF71EA06EEFA3"><enum>(b)</enum><header>Related
matters</header>
<paragraph id="id41F5FDC57A664985B750E83897C1819E"><enum>(1)</enum><header>Treatment of
homeowners' rights</header><text>The terms of any residential mortgage loan
that is part of any purchase by the Secretary under this Act shall remain
subject to all claims and defenses that would otherwise apply, notwithstanding
the exercise of authority by the Secretary under this Act.</text>
</paragraph><paragraph id="id9612137BBABA4126AA7C67DFDC3F45BD"><enum>(2)</enum><header>Savings
clause</header><text>Any exercise of the authority of the Secretary pursuant to
this Act shall not impair the claims or defenses that would otherwise apply
with respect to persons other than the Secretary. Except as established in any
contract, a servicer of pooled residential mortgages owes any duty to determine
whether the net present value of the payments on the loan, as modified, is
likely to be greater than the anticipated net recovery that would result from
foreclosure to all investors and holders of beneficial interests in such
investment, but not to any individual or groups of investors or beneficial
interest holders, and shall be deemed to act in the best interests of all such
investors or holders of beneficial interests if the servicer agrees to or
implements a modification or workout plan when the servicer takes reasonable
loss mitigation actions, including partial payments.</text>
</paragraph></subsection></section><section id="id3DA9B484F52C41F798013F1594A331E6"><enum>508.</enum><header>Credit
reform</header>
<subsection id="id1CC90A75369A421C971F624C1BBCF939"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subject to subsection
(b), the costs of insures made under this title shall be determined as provided
under the Federal Credit Reform Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/2/661">2 U.S.C. 661 et seq.</external-xref>), as
applicable.</text>
</subsection><subsection id="id7D18D492A4F24A66A82ABC9811625143"><enum>(b)</enum><header>Costs</header><text display-inline="yes-display-inline">For the purposes of Section 502(5) of the
Federal Credit Reform Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/2/661a">2 U.S.C. 661a(5)</external-xref>), the cost of each
guarantee of a mortgage-backed security under this title shall be calculated
by—</text>
<paragraph id="id7D2B1D1CA9BC498C81670664CFBB4DDE"><enum>(1)</enum><text display-inline="yes-display-inline">adjusting the discount rate in section
502(5)(E) (<external-xref legal-doc="usc" parsable-cite="usc/2/661a">2 U.S.C. 661a(5)(E)</external-xref>) for market risks; and</text>
</paragraph><paragraph id="idB7BB569D1DA94DF4B700E0DF9D0D0DA6"><enum>(2)</enum><text display-inline="yes-display-inline">using the difference between the current
estimate, consistent with subparagraph (b)(1) under the terms of the insured
mortgage-backed security and the current estimate consistent with subparagraph
(b)(1) under the terms of the insured.</text>
</paragraph></subsection></section><section id="id3AED7FA298BF48CD8B44B8DB134F7A16"><enum>509.</enum><header>Reports to
Congress</header><text display-inline="no-display-inline">Within 60 days of the
first exercise of the authority set forth in section 101(a), and semiannually
thereafter, the Secretary shall report to the Committees on the Budget,
Financial Services, and Ways and Means of the House of Representatives and the
Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of
the Senate with respect to the authorities exercised under this title and the
considerations required by section 102.</text>
</section><section id="id3D69E87EF5E94ADB99D54F45B590D76E"><enum>510.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this title, the following
definitions shall apply:</text>
<paragraph id="idFEB95FEF6F85465D90F568FF2F684B90"><enum>(1)</enum><header>Financial
Institution</header><text display-inline="yes-display-inline">The term
<term>financial institution</term> means any institution including, but not
limited to, banks, thrifts, credit unions, broker-dealers, insurance companies,
and the trustees administering mortgage-backed securities trusts, having
significant operations in the United States; and, upon the Secretary’s
determination in consultation with the Chairman of the Board of Governors of
the Federal Reserve, holds or has issued applicable mortgage-backed
securities.</text>
</paragraph><paragraph id="id2697FD0026C84A71A44678A83071BFFF"><enum>(2)</enum><header>Secretary</header><text display-inline="yes-display-inline">The term <term>Secretary</term> means the
Secretary of the Treasury.</text>
</paragraph><paragraph id="idDE9DC6FA8A6A4123A3B5E729801F21C9"><enum>(3)</enum><header>Mortgage-Backed
Security</header><text display-inline="yes-display-inline">The term
<term>mortgage-backed security</term> means securities, obligations, other
instruments, or other securities, other than those guaranteed by the Government
National Mortgage Association, as shall be based on and backed by a trust or
pool composed of mortgages that in each case was originated or issued on or
before September 24, 2008.</text>
</paragraph><paragraph id="id9EC0D2CB406D4DA29FEB2BE3A078AF70"><enum>(4)</enum><header>United
States</header><text display-inline="yes-display-inline">The term <term>United
States</term> means the States, territories, and possessions of the United
States and the District of Columbia.</text>
</paragraph></section><section id="idE0144482596846F3A9A21A5932EC75EC"><enum>511.</enum><header>Annual report
and audit by the government accountability office</header>
<subsection id="idF4C3A7E7F831464CA8CC07111951BAF5"><enum>(a)</enum><header>Annual Report
on the Mortgage-Backed Securities Fund</header><text display-inline="yes-display-inline">The Secretary shall annually submit to
Congress a full report of its operations, activities, budget, receipts, and
expenditures for the preceding 12-month period. The report shall include, with
respect to the Mortgage-Backed Securities Fund, an analysis of—</text>
<paragraph id="idE7511715CCE74172B6246480B2DA2C9A"><enum>(1)</enum><text display-inline="yes-display-inline">the current financial condition of such
fund;</text>
</paragraph><paragraph id="idFAF3A9FA8C854F3DA6D41B977023AAAB"><enum>(2)</enum><text display-inline="yes-display-inline">the purpose, effect, and estimated cost of
each resolution action taken for payment of insurance during the preceding
year;</text>
</paragraph><paragraph id="idA33D0B8007534D7DBEFE79638459BFE9"><enum>(3)</enum><text display-inline="yes-display-inline">the extent to which the actual costs
provided to, or for the benefit of, resulting from insurance during the
preceding year exceeded the estimated costs of such costs reported in a
previous year, as applicable;</text>
</paragraph><paragraph id="id192B45F64F504D808C84B4883F8DB4EA"><enum>(4)</enum><text display-inline="yes-display-inline">the exposure of the Mortgage-Backed
Securities Fund to changes in those economic factors most likely to affect the
condition of that Fund;</text>
</paragraph><paragraph id="id4247F14586B8450F9CA127348B46E5B5"><enum>(5)</enum><text display-inline="yes-display-inline">a current estimate of the resources needed
for the Mortgage-Backed Securities Fund to achieve the purposes of this
title;</text>
</paragraph><paragraph id="id396A45EF83794B758676745AFF87F55A"><enum>(6)</enum><text display-inline="yes-display-inline">an analysis of the sufficiency of the
premium collections, actual and projected, in meeting the costs of the Fund;
and</text>
</paragraph><paragraph id="id74E550DBC6B2420696FA8E2E723B3E25"><enum>(7)</enum><text display-inline="yes-display-inline">any findings, conclusions, and
recommendations for legislative and administrative actions considered
appropriate to future activities of the Mortgage-Backed Securities Fund.</text>
</paragraph></subsection><subsection id="id4863B8CCC6CE44A1AA023C9E35A06C1F"><enum>(b)</enum><header>Special
Report</header><text display-inline="yes-display-inline">Within 45 days of the
enactment of this Act, the Comptroller General shall provide to the committees
of Congress referred to in subsection (d), and other relevant committees, an
initial report on the Fund.</text>
</subsection><subsection id="id9B43FDD70BA543D2AA4FD28F3C8C86E3"><enum>(c)</enum><header>Annual Audit of
the Mortgage-Backed Securities Fund</header>
<paragraph id="id71F1EDD9C6144DADB848BA46DB3EFFFB"><enum>(1)</enum><header>Audit
required</header><text display-inline="yes-display-inline">The Comptroller
General shall audit annually the financial transactions of the Mortgage-Backed
Securities Fund (the “Fund”) in accordance with generally accepted Government
auditing standards.</text>
</paragraph><paragraph id="idBAC4905181B34A11B25989CC0AF43EF3"><enum>(2)</enum><header>Access to books
and records</header><text display-inline="yes-display-inline">All books,
records, accounts, reports, files, and property belonging to or used by the
Department of the Treasury that are directly related to the operations and
determination as to the amounts in the Fund, or by an independent certified
public accountant retained to audit the Fund's financial statements, shall be
made available to the Comptroller General.</text>
</paragraph></subsection><subsection id="idED333B6F305B4FEFB2B9EB1F8CEA71C6"><enum>(d)</enum><header>Report of the
Audit</header><text display-inline="yes-display-inline">A report of the audit
conducted under subsection (c) of this section shall be made by the Comptroller
General to the Congress not later than July 15th of the year following the year
covered by such audit. The report to the Congress shall set forth the scope of
the audit and shall include a statement of assets and liabilities and surplus
or deficit of the Fund; a statement of surplus or deficit analysis; a statement
of income and expenses; a statement of sources and application of funds and
such comments and information as may be deemed necessary to inform Congress,
together with such recommendations with respect thereto as the Comptroller
General may deem advisable. The report shall also show specifically any
program, expenditure, or other financial transaction or undertaking observed in
the course of the audit, which, in the opinion of the Comptroller General, has
been carried on or made without authority of law. A copy of each report shall
be furnished to the President, to the Secretary of the Treasury, and to
Committee on Banking, Housing, and Urban Affairs, the Committee on the Budget,
and the Committee on Finance of the Senate and the Committee on Financial
Services, the Committee on the Budget, and the Committee on Ways and Means of
the House of Representatives.</text>
</subsection><subsection id="idCA78CBB06EE84739ABCFAF838C368787"><enum>(e)</enum><header>Assistance in
Audit</header><text display-inline="yes-display-inline">For the purpose of
conducting such audit the Comptroller General is authorized in his discretion
to employ by contract, without regard to <external-xref legal-doc="usc" parsable-cite="usc/41/5">section 5</external-xref> of title 41 of the United
States Code, professional services of firms and organizations of certified
public accountants, with the concurrence of the Secretary, for temporary
periods or for special purposes.</text>
</subsection></section><enum>VI</enum><header>UNLEASHING
PRIVATE CAPITAL</header>
<section id="id5E81665B17FC45F08B7A5C89BCD2DF28"><enum>601.</enum><header>5-year
carryback of losses</header>
<subsection id="idD8589FFD7B544277A2F3541E4C37B7F3"><enum>(a)</enum><header>In
general</header><text>Subparagraph (H) of section 172(b)(1) of the Internal
Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id7D8FC966819C4AA78F30CD2840362AC4" style="OLC">
<subparagraph id="H5299F7544AFA4E95B678D6BF845D9668"><enum>(H)</enum><header>5-year carryback
of certain losses</header>
<clause id="HED70DF622AB1412EA493CC9C03A4A3B7"><enum>(i)</enum><header>Taxable years
ending during 2001 and 2002</header><text>In the case of a net operating loss
for any taxable year ending during 2001 or 2002, subparagraph (A)(i) shall be
applied by substituting <quote>5</quote> for <quote>2</quote> and subparagraph
(F) shall not apply.</text>
</clause><clause id="H5EE490FCE2174E9A9E1936DDC158323C"><enum>(ii)</enum><header>Taxable years
ending during 2007, 2008, and 2009</header><text>In the case of a net operating
loss for any taxable year ending during 2007, 2008, or 2009—</text>
<subclause id="H6957595913794DE68F9C7F26FB97C23E"><enum>(I)</enum><text>subparagraph
(A)(i) shall be applied by substituting <quote>5</quote> for
<quote>2</quote>;</text>
</subclause><subclause id="HB253C6487E6343BA8C1BA5A3F832E877"><enum>(II)</enum><text>subparagraph
(E)(ii) shall be applied by substituting <quote>4</quote> for <quote>2</quote>;
and</text>
</subclause><subclause id="HB652BBBE27454E63BE8D153770CA8700"><enum>(III)</enum><text>subparagraph (F)
shall not
apply.</text>
</subclause></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id078635CF8F8C4FCE8A3E58E2CA83F7F7"><enum>(b)</enum><header>Temporary
suspension of 90 percent limit on certain NOL carrybacks and
carryovers</header>
<paragraph id="H372461CDB5AC4FFB9338B39E00B2C2C"><enum>(1)</enum><header>In
general</header><text>Subclause (I) of section 56(d)(1)(A)(ii) of such Code is
amended—</text>
<subparagraph id="HF840E7AE9B414077909F23336300D172"><enum>(A)</enum><text>by inserting
<quote>and 2007, 2008, or 2009</quote> after <quote>2001 or 2002</quote>;
and</text>
</subparagraph><subparagraph id="H933464DA399C418DB8E5EAABC1E0E600"><enum>(B)</enum><text display-inline="yes-display-inline">by inserting <quote>and 2007, 2008, and
2009</quote> after <quote>2001 and 2002</quote>.</text>
</subparagraph></paragraph><paragraph id="HFDEC896AEDC54C48B39347AC00D4D41C"><enum>(2)</enum><header>Conforming
amendment</header><text>Subclause (I) of section 56(d)(1)(A)(i) of such Code is
amended by inserting <quote>amount of such</quote> before <quote>deduction
described in clause (ii)(I)</quote>.</text>
</paragraph></subsection><subsection display-inline="no-display-inline" id="HD6304EBE753C4242A8E3DD8F8471C0A8"><enum>(c)</enum><header>Anti-abuse
rules</header><text display-inline="yes-display-inline">The Secretary of the
Treasury or the Secretary’s designee shall prescribe such rules as are
necessary to prevent the abuse of the purposes of the amendments made by this
section, including antistuffing rules, antichurning rules (including rules
relating to sale-leasebacks), and rules similar to the rules under section 1091
of the Internal Revenue Code of 1986 relating to losses from wash sales.</text>
</subsection><subsection display-inline="no-display-inline" id="H4FE1F3BED7554D9584BAC6E39431DEC4"><enum>(d)</enum><header>Effective
dates</header>
<paragraph id="HF12BDCEDF0EA4C92A10400DC7A94D84"><enum>(1)</enum><header>Subsection
<enum-in-header>(a)</enum-in-header></header>
<subparagraph id="H50FB8AA2ADA94B06A5C4C67BBE2FF0D1"><enum>(A)</enum><header>In
general</header><text>Except as provided in subparagraph (B), the amendments
made by subsection (a) shall apply to net operating losses arising in taxable
years ending in 2007, 2008, or 2009.</text>
</subparagraph><subparagraph id="H1DB1FA6511B54C6598642E83292D2685"><enum>(B)</enum><header>Election</header><text>In
the case of any taxpayer with a net operating loss for a taxable year ending
during 2007 or 2008—</text>
<clause id="H0B49A7D1EE1443C1AF001373F463A428"><enum>(i)</enum><text>any
election made under <external-xref legal-doc="usc" parsable-cite="usc/26/172">section 172(b)(3)</external-xref> of the Internal Revenue Code of 1986 may
(notwithstanding such section) be revoked before October 15, 2009; and</text>
</clause><clause id="H02AE627E9B6F477B9E1BFF81B700D9F"><enum>(ii)</enum><text>any
election made under section 172(j) of such Code shall (notwithstanding such
section) be treated as timely made if made before October 15, 2009.</text>
</clause></subparagraph></paragraph><paragraph id="H79D1758E26EF420887BDF3CFCBB2D42"><enum>(2)</enum><header>Subsection
<enum-in-header>(b)</enum-in-header></header><text>The amendments made by
subsection (b) shall apply to taxable years ending after December 31,
2006.</text>
</paragraph></subsection></section><section id="H9D307096B28C413BA8D02706E32EC290" section-type="subsequent-section"><enum>602.</enum><header>Incentives to
reinvest foreign earnings in United States</header>
<subsection id="HD9A88E4EA0624C969FDFA156BDDE68A4"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 965 of the
Internal Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="idAB56DEFA00E14C4497D807FDA04B73BE" style="OLC">
<section id="H26DC506590ED4A8CA228DC8C3D5D938E"><enum>965.</enum><header>Deduction for
dividends received</header>
<subsection id="H7F5386D664534F09B53C97B5C6C31223"><enum>(a)</enum><header>Deduction</header>
<paragraph id="H532A55B81BFD4344B8382D33295BEBB8"><enum>(1)</enum><header>In
general</header><text>In the case of a corporation which is a United States
shareholder and for which the election under this section is in effect for the
taxable year, there shall be allowed as a deduction an amount equal to the
applicable percentage of cash dividends which are received during such taxable
year by such shareholder from controlled foreign corporations.</text>
</paragraph><paragraph id="HD0E8537945A3489D8ECEDBAB9E1EE282"><enum>(2)</enum><header>Applicable
percentage</header><text>For purposes of paragraph (1)—</text>
<subparagraph id="H27612247862E4C428BDEB616BAF2D7E6"><enum>(A)</enum><header>In
general</header><text>Except as provided by subparagraph (B), the term
<term>applicable percentage</term> means 85 percent.</text>
</subparagraph><subparagraph id="HE3F59DBB6EBD4DA39EF7D3412884B07B"><enum>(B)</enum><header>Distressed
debt</header><text>In the case of dividends received with respect to which the
requirements of subsection (b)(4)(B) are met, such term means 100
percent.</text>
</subparagraph></paragraph><paragraph id="H66D41FC0F0C540B8AD38507B366D00DA"><enum>(3)</enum><header>Dividends paid
indirectly from controlled foreign corporations</header><text>If, within the
taxable year for which the election under this section is in effect, a United
States shareholder receives a cash distribution from a controlled foreign
corporation which is excluded from gross income under section 959(a), such
distribution shall be treated for purposes of this section as a cash dividend
to the extent of any amount included in income by such United States
shareholder under section 951(a)(1)(A) as a result of any cash dividend during
such taxable year to—</text>
<subparagraph id="H497DC75FC8AE4C3CAE662C453DE4363E"><enum>(A)</enum><text>such controlled
foreign corporation from another controlled foreign corporation that is in a
chain of ownership described in section 958(a); or</text>
</subparagraph><subparagraph id="HAA5ACAFD7CC34107B537A4B605BD6E7"><enum>(B)</enum><text>any other
controlled foreign corporation in such chain of ownership, but only to the
extent of cash distributions described in section 959(b) which are made during
such taxable year to the controlled foreign corporation from which such United
States shareholder received such distribution.</text>
</subparagraph></paragraph></subsection><subsection id="HC1EAF2A9D64E43AF00ECB31F7600071B"><enum>(b)</enum><header>Limitations</header>
<paragraph id="H19E31D2E9A7C462399BE341BA1D8F9E"><enum>(1)</enum><header>In
general</header><text>The amount of dividends taken into account under
subsection (a) shall not exceed the greater of—</text>
<subparagraph id="H73B3A6AAEC8F4D9484D174A09F52B8D0"><enum>(A)</enum><text>$500,000,000;</text>
</subparagraph><subparagraph id="H74E1F305A1D94F88844DB24C5F96F398"><enum>(B)</enum><text>the amount shown
on the applicable financial statement as earnings permanently reinvested
outside the United States; or</text>
</subparagraph><subparagraph id="H9E06FB66DA874B84ACCA940040C79BDE"><enum>(C)</enum><text>in the case of an
applicable financial statement which fails to show a specific amount of
earnings permanently reinvested outside the United States and which shows a
specific amount of tax liability attributable to such earnings, the amount
equal to the amount of such liability divided by 0.35.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">The
amounts described in subparagraphs (B) and (C) shall be treated as being zero
if there is no such statement or such statement fails to show a specific amount
of such earnings or liability, as the case may be.</continuation-text></paragraph><paragraph id="H296CD28C134B48138BF0E24615A0034"><enum>(2)</enum><header>Dividends must be
extraordinary</header><text>The amount of dividends taken into account under
subsection (a) shall not exceed the excess (if any) of—</text>
<subparagraph id="H1D49F224D8CD4F41BDF1264D41BC3600"><enum>(A)</enum><text>the cash dividends
received during the taxable year by such shareholder from controlled foreign
corporations; over—</text>
</subparagraph><subparagraph id="HD051F4B141424655BD2E352905234198"><enum>(B)</enum><text>the sum of—</text>
<clause id="H693456E032D14A67BFF4EF35E2E97000"><enum>(i)</enum><text>the dividends
received during the base period year by such shareholder from controlled
foreign corporations;</text>
</clause><clause id="HE06777EF8CDC40D5A694EEDAA828FD41"><enum>(ii)</enum><text>the amounts
includible in such shareholder’s gross income for the base period year under
section 951(a)(1)(B) with respect to controlled foreign corporations;
and</text>
</clause><clause id="H1F43B239693C492994780043AACF0182"><enum>(iii)</enum><text>the amounts that
would have been included for the base period year but for section 959(a) with
respect to controlled foreign corporations.</text>
</clause><continuation-text continuation-text-level="subparagraph">The
amount taken into account under clause (iii) for the base period year shall not
include any amount which is not includible in gross income by reason of an
amount described in clause (ii) with respect to a prior taxable year. Amounts
described in subparagraph (B) for the base period year shall be such amounts as
shown on the most recent return filed for such year; except that amended
returns filed after June 30, 2007, shall not be taken into account.</continuation-text></subparagraph></paragraph><paragraph id="HDB47B0C06DB542F1B1929F19924200D3"><enum>(3)</enum><header>Reduction of
benefit if increase in related party indebtedness</header><text>The amount of
dividends which would (but for this paragraph) be taken into account under
subsection (a) shall be reduced by the excess (if any) of—</text>
<subparagraph id="H0EDC22DF6F054078AB8377B2BEF90000"><enum>(A)</enum><text>the amount of
indebtedness of the controlled foreign corporation to any related person (as
defined in section 954(d)(3)) as of the close of the taxable year for which the
election under this section is in effect; over</text>
</subparagraph><subparagraph id="H3F4FB59200804A6BAA689F3B75FCE9DF"><enum>(B)</enum><text>the amount of
indebtedness of the controlled foreign corporation to any related person (as so
defined) as of the close of September 26, 2008.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">All
controlled foreign corporations with respect to which the taxpayer is a United
States shareholder shall be treated as one controlled foreign corporation for
purposes of this paragraph. The Secretary may prescribe such regulations as may
be necessary or appropriate to prevent the avoidance of the purposes of this
paragraph, including regulations which provide that cash dividends shall not be
taken into account under subsection (a) to the extent such dividends are
attributable to the direct or indirect transfer (including through the use of
intervening entities or capital contributions) of cash or other property from a
related person (as so defined) to a controlled foreign corporation.</continuation-text></paragraph><paragraph id="H98006F6FE8CB4B50B2628DD59C01B3C"><enum>(4)</enum><header>Requirements</header>
<subparagraph id="H7970617E979147A8804B4F3E48823864"><enum>(A)</enum><header>Requirement to
invest in United States</header><text display-inline="yes-display-inline">Except as provided by subparagraph (B),
subsection (a) shall not apply to any dividend received by a United States
shareholder unless the amount of the dividend is invested in the United States
pursuant to a domestic reinvestment plan which—</text>
<clause id="H6DF794F9F30247B900F9B1F8E8EEE201"><enum>(i)</enum><text>is
approved by the taxpayer’s president, chief executive officer, or comparable
official before the payment of such dividend and subsequently approved by the
taxpayer’s board of directors, management committee, executive committee, or
similar body; and</text>
</clause><clause id="H9A5111E2B6124353B40062070002D700"><enum>(ii)</enum><text>provides for the
reinvestment of such dividend in the United States (other than as payment for
executive compensation), including as a source for the funding of worker hiring
and training, infrastructure, research and development, capital investments, or
the financial stabilization of the corporation for the purposes of job
retention or creation.</text>
</clause></subparagraph><subparagraph id="H316A084ADD814D49BCF64BD014401EC1"><enum>(B)</enum><header>Distressed
debt</header><text display-inline="yes-display-inline">The requirements of this
subparagraph are met if amounts repatriated are invested in distressed debt (as
defined by the Secretary) for at least 1 year.</text>
</subparagraph></paragraph></subsection><subsection id="H817FC0CE45214396BFFABAFB34DDC4BF"><enum>(c)</enum><header>Definitions and
special rules</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph id="H3EC042179E4B474D8E41DEE058005742"><enum>(1)</enum><header>Applicable
financial statement</header><text display-inline="yes-display-inline">The term
<term>applicable financial statement</term> means—</text>
<subparagraph id="H2D0FAA714E3F4C37A33273DBBE2EAE8"><enum>(A)</enum><text>with respect to a
United States shareholder which is required to file a financial statement with
the Securities and Exchange Commission (or which is included in such a
statement so filed by another person), the most recent audited annual financial
statement (including the notes which form an integral part of such statement)
of such shareholder (or which includes such shareholder)—</text>
<clause id="H56A2BBC326B8458188239401CBD0F6F7"><enum>(i)</enum><text>which was so filed
on or before June 30, 2007; and</text>
</clause><clause id="H3C29F9653BE641F889001502831DF6DA"><enum>(ii)</enum><text>which was
certified on or before June 30, 2007, as being prepared in accordance with
generally accepted accounting principles; and</text>
</clause></subparagraph><subparagraph id="HC5C943B1A2B640EB9814CA77BDC536E"><enum>(B)</enum><text>with respect to any
other United States shareholder, the most recent audited financial statement
(including the notes which form an integral part of such statement) of such
shareholder (or which includes such shareholder)—</text>
<clause id="H29645FF279AB48FC97E1009600C4CE08"><enum>(i)</enum><text>which was
certified on or before June 30, 2007, as being prepared in accordance with
generally accepted accounting principles; and</text>
</clause><clause id="HEDF30511807B4875A9B00553936D4558"><enum>(ii)</enum><text>which is used for
the purposes of a statement or report—</text>
<subclause id="H9C2EA2CA30E745B3B398AED4625100DC"><enum>(I)</enum><text>to
creditors;</text>
</subclause><subclause id="H45ECA9E93BC44E2393DF60E7544EA257"><enum>(II)</enum><text>to shareholders;
or</text>
</subclause><subclause id="HB818EA92A0D2449A0023BA387D005B43"><enum>(III)</enum><text>for any other
substantial nontax purpose.</text>
</subclause></clause></subparagraph></paragraph><paragraph id="H0661D2C5456345B39BB1516E00143848"><enum>(2)</enum><header>Base period
year</header>
<subparagraph commented="no" id="H9A3A530835C04CA8948F8DD07EB46B83"><enum>(A)</enum><header>In
general</header><text>The base period year is the first taxable year ending in
2007.</text>
</subparagraph><subparagraph id="H85BD7B9D17CE427CA030898F00E9B1C3"><enum>(B)</enum><header>Mergers,
acquisitions, etc</header>
<clause id="H0577584E98BE45F4B51EDA3DB46A0FF"><enum>(i)</enum><header>In
general</header><text>Rules similar to the rules of subparagraphs (A) and (B)
of section 41(f)(3) shall apply for purposes of this paragraph.</text>
</clause><clause id="HE809D5C070E94350AF7D13DC9FBBD400"><enum>(ii)</enum><header>Spin-offs,
etc</header><text>If there is a distribution to which section 355 (or so much
of section 356 as relates to section 355) applies during the base period year
and the controlled corporation (within the meaning of section 355) is a United
States shareholder—</text>
<subclause id="H1E966763B0214209897F8D1B9DA682C3"><enum>(I)</enum><text>the controlled
corporation shall be treated as being in existence during the period that the
distributing corporation (within the meaning of section 355) is in existence;
and</text>
</subclause><subclause id="HB3C8E8C1706F4B5F843C86D34679DD63"><enum>(II)</enum><text>for purposes of
applying subsection (b)(2) to the controlled corporation and the distributing
corporation, amounts described in subsection (b)(2)(B) which are received or
includible by the distributing corporation or controlled corporation (as the
case may be) before the distribution referred to in subclause (I) from a
controlled foreign corporation shall be allocated between such corporations in
proportion to their respective interests as United States shareholders of such
controlled foreign corporation immediately after such distribution.</text>
</subclause><continuation-text continuation-text-level="clause">Subclause
(II) shall not apply if neither the controlled corporation nor the distributing
corporation is a United States shareholder of such controlled foreign
corporation immediately after such distribution.</continuation-text></clause></subparagraph></paragraph><paragraph id="H6A8B9AA0D58B47C1BCCD56B4EF857B34"><enum>(3)</enum><header>Dividend</header><text>The
term <term>dividend</term> shall not include amounts includible in gross income
as a dividend under section 78, 367, or 1248. In the case of a liquidation
under section 332 to which section 367(b) applies, the preceding sentence shall
not apply to the extent the United States shareholder actually receives cash as
part of the liquidation.</text>
</paragraph><paragraph id="HB93DFEF13FCC466A95E6CD67F1ED62F1"><enum>(4)</enum><header>Coordination
with dividends received deduction</header><text>No deduction shall be allowed
under section 243 or 245 for any dividend for which a deduction is allowed
under this section.</text>
</paragraph><paragraph id="H540EB69FB4D7465598278D96CADBB38"><enum>(5)</enum><header>Controlled
groups</header>
<subparagraph id="H522F9CD5B7324064B0A188244FAC66C3"><enum>(A)</enum><header>In
general</header><text>All United States shareholders which are members of an
affiliated group filing a consolidated return under section 1501 shall be
treated as one United States shareholder.</text>
</subparagraph><subparagraph id="H233803B6B2F64A368567F94C62ACA976"><enum>(B)</enum><header>Application of
$500,000,000 limit</header><text display-inline="yes-display-inline">All
corporations which are treated as a single employer under section 52(a) shall
be limited to one $500,000,000 amount in subsection (b)(1)(A), and such amount
shall be divided among such corporations under regulations prescribed by the
Secretary.</text>
</subparagraph><subparagraph id="HB04FE34822D542D890232DBB0018D75F"><enum>(C)</enum><header>Permanently
reinvested earnings</header><text>If a financial statement is an applicable
financial statement for more than one United States shareholder, the amount
applicable under subparagraph (B) or (C) of subsection (b)(1) shall be divided
among such shareholders under regulations prescribed by the Secretary.</text>
</subparagraph></paragraph></subsection><subsection id="HED550356CC254BEEA8385CA9A3CC9194"><enum>(d)</enum><header>Denial of
foreign tax credit; denial of certain expenses</header>
<paragraph id="HB72F3A3141BA478F84FA001FAA7B268F"><enum>(1)</enum><header>Foreign tax
credit</header><text>No credit shall be allowed under section 901 for any taxes
paid or accrued (or treated as paid or accrued) with respect to the deductible
portion of—</text>
<subparagraph id="H3FE0D99E9A9042398E9B7E58EBEC764"><enum>(A)</enum><text>any dividend;
or</text>
</subparagraph><subparagraph id="H05636B701F734F5CB4C63C0351AF47D"><enum>(B)</enum><text>any amount
described in subsection (a)(2) which is included in income under section
951(a)(1)(A).</text>
</subparagraph><continuation-text continuation-text-level="paragraph">No
deduction shall be allowed under this chapter for any tax for which credit is
not allowable by reason of the preceding sentence.</continuation-text></paragraph><paragraph id="HE138C0A4D5614A9089B97C586004F055"><enum>(2)</enum><header>Expenses</header><text>No
deduction shall be allowed for expenses properly allocated and apportioned to
the deductible portion described in paragraph (1).</text>
</paragraph><paragraph id="H4D7BAAE61D5C4957A9CFFD8863B237C"><enum>(3)</enum><header>Deductible
portion</header><text display-inline="yes-display-inline">For purposes of
paragraph (1), unless the taxpayer otherwise specifies, the deductible portion
of any dividend or other amount is the amount which bears the same ratio to the
amount of such dividend or other amount as the amount allowed as a deduction
under subsection (a) for the taxable year bears to the amount described in
subsection (b)(2)(A) for such year.</text>
</paragraph><paragraph id="HB8987D88F8494AA0BB368930C702E550"><enum>(4)</enum><header>Coordination
with section 78</header><text>Section 78 shall not apply to any tax which is
not allowable as a credit under section 901 by reason of this
subsection.</text>
</paragraph></subsection><subsection id="H50CC28F15AEF4DA9A3C3642141B47172"><enum>(e)</enum><header>Increase in tax
on included amounts not reduced by credits, etc</header>
<paragraph id="H381801B8420D4C8981CCD63F7E0652BB"><enum>(1)</enum><header>In
general</header><text>Any tax under this chapter by reason of nondeductible CFC
dividends shall not be treated as tax imposed by this chapter for purposes of
determining—</text>
<subparagraph id="HCB552E41AD664D65AF3900732B4F50A9"><enum>(A)</enum><text>the amount of any
credit allowable under this chapter; or</text>
</subparagraph><subparagraph id="H4ABDFCDA93D5435F826F55B841CE36FB"><enum>(B)</enum><text>the amount of the
tax imposed by section 55.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Subparagraph (A) shall not apply to
the credit under section 53 or to the credit under section 27(a) with respect
to taxes which are imposed by foreign countries and possessions of the United
States and are attributable to such dividends.</continuation-text></paragraph><paragraph id="HD52ADACF39304A8CA1A6D6E9E75B9B00"><enum>(2)</enum><header>Limitation on
reduction in taxable income, etc</header>
<subparagraph id="H9C3BCA93B85B4F76BFF6824E19EF287F"><enum>(A)</enum><header>In
general</header><text>The taxable income of any United States shareholder for
any taxable year shall in no event be less than the amount of nondeductible CFC
dividends received during such year.</text>
</subparagraph><subparagraph id="HB214209044C84314A2A763A9FAD1A3E"><enum>(B)</enum><header>Coordination with
section 172</header><text>The nondeductible CFC dividends for any taxable year
shall not be taken into account—</text>
<clause id="H0470D03EBD3B48B8A3996E65C86C9DF3"><enum>(i)</enum><text>in
determining under section 172 the amount of any net operating loss for such
taxable year; and</text>
</clause><clause id="HC153FA57EFBE42B6A9F013B99B0B154"><enum>(ii)</enum><text>in
determining taxable income for such taxable year for purposes of the second
sentence of section 172(b)(2).</text>
</clause></subparagraph></paragraph><paragraph id="HCFC540D71CE24E8B91A45700217F286F"><enum>(3)</enum><header>Nondeductible
CFC dividends</header><text>For purposes of this subsection, the term
<term>nondeductible CFC dividends</term> means the excess of the amount of
dividends taken into account under subsection (a) over the deduction allowed
under subsection (a) for such dividends.</text>
</paragraph></subsection><subsection id="H735B790FCA92400CA06FA801807FA03F"><enum>(f)</enum><header>Election</header><text display-inline="yes-display-inline">The taxpayer may elect to apply this
section to—</text>
<paragraph id="HBF1F9A39B7F64652AD9539E9036C8F35"><enum>(1)</enum><text>the taxpayer’s
last taxable year which begins before the date of the enactment of this
section; or</text>
</paragraph><paragraph id="H3558FE8D3D8A48EFABBE8B4E9BD0F143"><enum>(2)</enum><text>the taxpayer’s
first taxable year which begins during the 1-year period beginning on such
date.</text>
</paragraph><continuation-text continuation-text-level="subsection">Such
election may be made for a taxable year only if made before the due date
(including extensions) for filing the return of tax for such taxable
year.</continuation-text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H0FA2CAB1BD3A4CA194AA12F60067A1DB"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The item in the
table of sections for subpart F of part III of subchapter N of chapter 1 of
such Code relating to section 965 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H468EB5DCC2014336B2DDDB2C1001F190" style="OLC">
<toc container-level="quoted-block-container" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H26DC506590ED4A8CA228DC8C3D5D938E" level="section">Sec. 965. Deduction for dividends
received.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H06DEA7A24E17493FA960E34D85C1A789"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years ending on or after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H92FDBDE9E78B4898AABF3271E2CD00CC" section-type="subsequent-section"><enum>603.</enum><header>Gain or loss from
sale or exchange of certain preferred stock</header>
<subsection id="HEA128A1DAEFD44A4B32EA2F27C7D7A0"><enum>(a)</enum><header>In
general</header><text>For purposes of the Internal Revenue Code of 1986, gain
or loss from the sale or exchange of any applicable preferred stock by any
applicable financial institution shall be treated as ordinary income or
loss.</text>
</subsection><subsection id="HDC7BA051AFA54241B2C69D307F3F1171"><enum>(b)</enum><header>Applicable
preferred stock</header><text>For purposes of this section, the term
<term>applicable preferred stock</term> means any stock—</text>
<paragraph id="HA24F745B256749A18208AB67A4F902AA"><enum>(1)</enum><text>which is preferred
stock in—</text>
<subparagraph id="H7AE51FEB29E44FD5921B4958F0517D00"><enum>(A)</enum><text>the Federal
National Mortgage Association, established pursuant to the Federal National
Mortgage Association Charter Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1716">12 U.S.C. 1716 et seq.</external-xref>), or</text>
</subparagraph><subparagraph id="HB3FE0A75C38C43138F254609397F3FA5"><enum>(B)</enum><text>the Federal Home
Loan Mortgage Corporation, established pursuant to the Federal Home Loan
Mortgage Corporation Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1451">12 U.S.C. 1451 et seq.</external-xref>), and</text>
</subparagraph></paragraph><paragraph id="HD6056D028FE949A3A9F0A5F1E258E172"><enum>(2)</enum><text>which—</text>
<subparagraph id="HE8B55E524C094C6D82DBC3FEAE1574E"><enum>(A)</enum><text>was held by the
applicable financial institution on September 6, 2008, or</text>
</subparagraph><subparagraph id="H5FA90FC8EF4D4ADE84A46D009CC600D1"><enum>(B)</enum><text>was sold or
exchanged by the applicable financial institution on or after January 1, 2008,
and before September 7, 2008.</text>
</subparagraph></paragraph></subsection><subsection id="HE596D14C0F9A46B88CA3B5009C1F38B"><enum>(c)</enum><header>Applicable
financial institution</header><text>For purposes of this section:</text>
<paragraph id="HB66C66344AB342728B22562C3BF92569"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the term
<term>applicable financial institution</term> means—</text>
<subparagraph id="H2E8EBCAFE3244B90B0BFC05423D831D"><enum>(A)</enum><text>a financial
institution referred to in section 582(c)(2) of the Internal Revenue Code of
1986, or</text>
</subparagraph><subparagraph id="H3573A9A54AB44891802E24BD23CF934E"><enum>(B)</enum><text>a depository
institution holding company (as defined in section 3(w)(1) of the Federal
Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813(w)(1)</external-xref>)).</text>
</subparagraph></paragraph><paragraph id="HB981FA8C32F0418391C3E3E5DFEDD46E"><enum>(2)</enum><header>Special rules
for certain sales</header><text>In the case of—</text>
<subparagraph id="H5AD3BA306ECB44079FF58584CC255EFF"><enum>(A)</enum><text>a sale or exchange
described in subsection (b)(2)(B), an entity shall be treated as an applicable
financial institution only if it was an entity described in subparagraph (A) or
(B) of paragraph (1) at the time of the sale or exchange, and</text>
</subparagraph><subparagraph id="H8D1865335F054329A398C0DD9F916504"><enum>(B)</enum><text>a sale or exchange
after September 6, 2008, of preferred stock described in subsection (b)(2)(A),
an entity shall be treated as an applicable financial institution only if it
was an entity described in subparagraph (A) or (B) of paragraph (1) at all
times during the period beginning on September 6, 2008, and ending on the date
of the sale or exchange of the preferred stock.</text>
</subparagraph></paragraph></subsection><subsection id="HD02FB61358A0436C91211793C9861561"><enum>(d)</enum><header>Special rule for
certain property not held on September 6, 2008</header><text>The Secretary of
the Treasury or the Secretary's delegate may extend the application of this
section to all or a portion of the gain or loss from a sale or exchange in any
case where—</text>
<paragraph id="H8637B8F718AF475F8EAF78FC2748011F"><enum>(1)</enum><text>an applicable
financial institution sells or exchanges applicable preferred stock after
September 6, 2008, which the applicable financial institution did not hold on
such date, but the basis of which in the hands of the applicable financial
institution at the time of the sale or exchange is the same as the basis in the
hands of the person which held such stock on such date, or</text>
</paragraph><paragraph id="HDB63DFF5477C4CF1981C995647BF6F2B"><enum>(2)</enum><text>the applicable
financial institution is a partner in a partnership which—</text>
<subparagraph id="H17A0F75C15EE48D9AC7E78C6D5D4D91"><enum>(A)</enum><text>held such stock on
September 6, 2008, and later sold or exchanged such stock, or</text>
</subparagraph><subparagraph id="H44EF30F72B2C48048862BADFDBE39801"><enum>(B)</enum><text>sold or exchanged
such stock during the period described in subsection (b)(2)(B).</text>
</subparagraph></paragraph></subsection><subsection id="HC5FDA0E9F4C849889C6586506FD62E5E"><enum>(e)</enum><header>Regulatory
authority</header><text>The Secretary of the Treasury or the Secretary's
delegate may prescribe such guidance, rules, or regulations as are necessary to
carry out the purposes of this section.</text>
</subsection><subsection id="H8084EC4ECA2940F680B050D1223F5163"><enum>(f)</enum><header>Effective
date</header><text>This section shall apply to sales or exchanges occurring
after December 31, 2007, in taxable years ending after such date.</text>
</subsection></section><enum>VII</enum><header>EXECUTIVE
COMPENSATION ADJUSTMENTS AND MISCELLANEOUS PROVISIONS</header>
<section id="id12E97B17ADB2451091B6820EB1415DD8"><enum>701.</enum><header>Compensation
adjustment</header>
<subsection id="id3F1DB3AFE1FD410A87A64A1B8A8F1EE1"><enum>(a)</enum><header>Compensation
adjustment due to government intervention</header>
<paragraph id="id3A850BAA44164A32B95266D25C911B12"><enum>(1)</enum><header>In
General</header><text>An officer of an institution shall pay to the Department
of the Treasury any amounts received by such officer during a year as a bonus
or other incentive-based or equity-based compensation from the institution
during—</text>
<subparagraph id="idBC2C4CBA3158468DB66E7C80FA8ECAFE"><enum>(A)</enum><text>a year in which
the institution is subject to a government intervention; and</text>
</subparagraph><subparagraph id="id01BCF5078EFD4D2282C6B959C03096C8"><enum>(B)</enum><text>the two years
prior to a year in which the institution is subject to a government
intervention.</text>
</subparagraph></paragraph><paragraph id="idBF211C5A3A014E00BD7BF3246CE61500"><enum>(2)</enum><header>Compensation
adjustment defined</header><text>For purposes of this subsection, and with
respect to an issuer, the term <term>government intervention</term>
means—</text>
<subparagraph id="idBEEC25552577475B91E96AA9737C337D"><enum>(A)</enum><text>the placement of
the issuer under conservatorship, receivership, or other assumption of the
management, governance, and control of the issuer by the Department of the
Treasury or the Board of Governors of the Federal Reserve; or</text>
</subparagraph><subparagraph id="idA3F039F4ED1D4B36B08AE3CF3BA6F93C"><enum>(B)</enum><text>an emergency loan
of public funds made to the issuer by the Department of the Treasury or the
Board of Governors of the Federal Reserve, if the Chairman of the Board of
Governors of the Federal Reserve determines that such a loan is necessary to
prevent the imminent failure of the issuer.</text>
</subparagraph></paragraph></subsection><subsection id="id079FE7E006FD4E57AC73D19A88029D0B"><enum>(b)</enum><header>Effective
Date</header><text>This compensation adjustment shall take effect on enactment
of this Act, and shall have no effect after September 30, 2009.</text>
</subsection></section><section id="id4C8F8CDA68C94E4CA8801C2BAFF7C3A2"><enum>702.</enum><header>Limitations on
GSE securitization authority</header><text display-inline="no-display-inline">Part 2 of subtitle A of the Federal Housing
Enterprise Financial Safety and Soundness Act of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4541">12 U.S.C. 4541 et seq.</external-xref>),
as amended by the Housing and Economic Recovery Act of 2008 (Public Law
110–289) is amended by adding at the end of the following new section:</text>
<quoted-block display-inline="no-display-inline" id="idD5AECC84161D483B81C6F91B36FFC2B2" style="OLC">
<section id="idFDBB7FB6998D4BC494AD97B972705575"><enum>1327.</enum><header>Limitations
on GSE securitization authority</header>
<subsection id="idCEB66A6BF984488BB09BA5E23405B672"><enum>(a)</enum><header>Prohibition</header><text>The
director shall, by regulation, prohibit each enterprise from issuing,
guaranteeing, or selling securities based on or backed by mortgages described
in subsection (b).</text>
</subsection><subsection id="id4F9170721C384D31840C53E27A072372"><enum>(b)</enum><header>Covered
mortgages</header><text>The mortgages described in this subsection are—</text>
<paragraph id="id096929F60BD0469C86CB84CA06553799"><enum>(1)</enum><text>mortgages
commonly known as Alt-A or Alternative A-paper mortgages, as defined by the
Director, which shall include mortgages that the Director determines to have an
increased level of credit risk due to borrower's not meeting traditional or
standard underwriting guidelines, including guidelines with respect to—</text>
<subparagraph id="idB7B09479BF3940CEB1E3A5A590771972"><enum>(A)</enum><text>documentation of
amount or source of income or assets;</text>
</subparagraph><subparagraph id="id41AB28B52D614EDE80602005033C6342"><enum>(B)</enum><text>debt-to-income
ratio;</text>
</subparagraph><subparagraph id="id44BEB3DC29594B839E11B47193EB4332"><enum>(C)</enum><text>assets and type
of property being financed;</text>
</subparagraph><subparagraph id="id9411B51B1F694AFFACC3ED9FA9C1FD5C"><enum>(D)</enum><text>credit
history;</text>
</subparagraph><subparagraph id="idBE10005D68FB40F88DE27C069441DA31"><enum>(E)</enum><text>loan-to-value
ratios; and</text>
</subparagraph><subparagraph id="id4DA1BA7F675F4174AE27C64D45EE817E"><enum>(F)</enum><text>occupancy of the
property being financed or borrower characteristics involved; and</text>
</subparagraph></paragraph><paragraph id="idF15B221461E84F1F9E1077A557A6062E"><enum>(2)</enum><text>mortgages having
characteristics that are not typical of the lending practices of the mortgages
that are made to comply with a provision of Federal or State law or
regulation.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="idAEC60A9211174934BE2A93E696446F8F"><enum>703.</enum><header>Financial
statement review</header>
<subsection id="id57F66E6D19F849089987890A90965FAB"><enum>(a)</enum><header>In
General</header><text>The Securities and Exchange Commission shall—</text>
<paragraph id="id4A8EFE075E394BA19E8B427A8386881F"><enum>(1)</enum><text>review any
financial statements required under section 13 of the Securities Exchange Act
of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78m">15 U.S.C. 78m</external-xref>) of any rescued issuer for the rescued issuer's fiscal
year 2005 and each succeeding fiscal year up to and including the fiscal year
in which such issuer became a rescued issuer; and</text>
</paragraph><paragraph id="idC2B2F48BB46A43E092B9BF4480D938DC"><enum>(2)</enum><text>examine each of
the audits that were the basis of such financial statements, and all the
supporting books, papers, correspondence, memoranda, or other records or
materials on which such audits were performed.</text>
</paragraph></subsection><subsection id="id74A9615CA0F64F2EB1CFAB3A01C0FEE8"><enum>(b)</enum><header>Additional
action</header><text>The Commission shall—</text>
<paragraph id="id37683AB647AE4F5F92D537F39AFD5A09"><enum>(1)</enum><text>if the Commission
determines there was a material misstatement made in any financial statement
reviewed under subsection (a), require the issuer to file with the Commission a
financial statement correcting such misstatement; and</text>
</paragraph><paragraph id="id82AC1D6C3E7D4923A1CFE64350B78347"><enum>(2)</enum><text>take all other
appropriate actions under the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.).</text>
</paragraph></subsection><subsection id="idB7A02F67C8994E77BF414424D2F0DCC6"><enum>(c)</enum><header>Definition</header><text>For
purposes of this section, the term <term>rescued issuer</term> means any issuer
(as such term is defined in section 3(a)(8) of the Securities Exchange Act of
1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(8)</external-xref>) that has received, prior to the date of 5 enactment
of this Act, Federal Government intervention through sale negotiation
assistance, loan guarantee, placement under conservatorship or receivership, or
other assumption of the management, governance, and control of the issuer by
the Department of the Treasury or the Board of Governors of the Federal
Reserve, an emergency loan of public funds made to the issuer by the Department
of the Treasury or the Board of Governors of the Federal Reserve, or other
similar Federal Government intervention.</text>
</subsection></section>