[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2589 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 2589

  To establish the Office of Public Finance in the Department of the 
  Treasury to make available Federal reinsurance for insurers of tax-
                        exempt municipal bonds.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 2009

 Mr. Cleaver (for himself, Mr. Himes, Mr. Frank of Massachusetts, Mr. 
Baca, Mr. Moran of Virginia, Mr. Andrews, and Mr. Connolly of Virginia) 
 introduced the following bill; which was referred to the Committee on 
Financial Services, and in addition to the Committee on Ways and Means, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To establish the Office of Public Finance in the Department of the 
  Treasury to make available Federal reinsurance for insurers of tax-
                        exempt municipal bonds.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Municipal Bond Insurance Enhancement 
Act of 2009''.

SEC. 2. OFFICE OF PUBLIC FINANCE AND FEDERAL REINSURANCE FOR INSURERS 
              OF TAX-EXEMPT MUNICIPAL BONDS.

    (a) In General.--Subchapter I of chapter 3 of title 31, United 
States Code, is amended by adding at the end the following new section:

``SEC. 314. THE OFFICE OF PUBLIC FINANCE.

    ``(a) Establishment and Personnel.--
            ``(1) Establishment.--There is hereby established in the 
        Department of the Treasury an office to be known as the `Office 
        of Public Finance' (in this section referred to as the 
        `Office').
            ``(2) Director; staffing.--The Secretary of the Treasury 
        shall appoint the Director of the Office, as well as such other 
        staff as the Secretary believes necessary for the Office to 
        carry out its duties under this Act.
    ``(b) Federal Reinsurance for Insurers of Tax-Exempt Municipal 
Bonds.--
            ``(1) Establishment.--The Director of the Office of Public 
        Finance shall carry out a program under this subsection to 
        provide reinsurance for insured losses of qualified municipal 
        bond insurers.
            ``(2) Qualified municipal bond insurers.--Reinsurance 
        coverage under this subsection may be made available only for 
        an insurer, including an insurer that is an affiliate of 
        another entity--
                    ``(A) that is licensed or admitted to engage in the 
                business, in any State, of providing insurance for the 
                payment of principal and interest due under--
                            ``(i) any municipal bond; or
                            ``(ii) any bond, note, security, or other 
                        debt obligation issued by a special purpose 
                        corporation, trust, or other entity to finance 
                        a project serving a substantial public purpose; 
                        and
                    ``(B) that has, as of the date of purchase of 
                reinsurance coverage under this subsection--
                            ``(i) a corporate or other governing 
                        charter that prohibits the insurer from 
                        providing coverage for risks other than the 
                        risks specified in subparagraph (A) and such 
                        bonds issued by public purpose issuers or 
                        ultimate obligors as are not inconsistent with 
                        the intent of Municipal Bond Insurance 
                        Enhancement Act of 2009 and as may be approved 
                        generally or specifically by the Director of 
                        the Office of Public Finance or the relevant 
                        insurance regulator; or
                            ``(ii) entered into an agreement with the 
                        Director to only provide coverage for the risks 
                        specified in clause (i).
                A qualified municipal bond insurer shall not be 
                precluded from retaining or performing any obligations 
                in place prior to entering into such an agreement with 
                the Office.
            ``(3) Terms of reinsurance.--Reinsurance coverage under 
        this subsection shall be subject to the following requirements:
                    ``(A) Premiums.--The Director shall establish and 
                collect risk-based premiums for such coverage. Premium 
                charges under this subparagraph shall be established in 
                amounts that are sufficient, but do not exceed, the 
                minimum amounts necessary to cover the costs (as such 
                term is defined in section 502 of the Federal Credit 
                Reform Act of 1990 (2 U.S.C. 661(a)) of such 
                reinsurance coverage and to cover administrative costs 
                of the Secretary that are associated with the program 
                for such coverage.
                    ``(B) Others.--The Director shall establish such 
                other terms for such coverage as the Director 
                determines are appropriate to provide additional 
                capacity in the market for insurance of State and local 
                bonds in the most cost-efficient manner.
            ``(4) Program limit.--The aggregate par value of bonds, 
        notes, security, and other debt obligations for which 
        reinsurance is provided under the program under this subsection 
        in any of fiscal years 2010 through 2014 may not exceed 
        $50,000,000,000.
            ``(5) Authorization of appropriations.--There is authorized 
        to be appropriated such sums as may be necessary for 
        administrative costs of carrying out the program under this 
        subsection during the first 12 months of the operation of such 
        program.
            ``(6) Divestment.--Not later than the expiration of the 5-
        year period beginning on the date of the enactment of this Act, 
        the Secretary of the Treasury shall--
                    ``(A) establish and submit to the Congress a plan 
                providing for the sale of the reinsurance assets 
                acquired under the program under this subsection, 
                except that any such sale shall not reduce the credit 
                rating of bonds insured under such program or the 
                relevant qualified municipal bond insurer through the 
                submission of offers to purchase such assets; and
                    ``(B) implement such plan, including soliciting 
                offers for the purchase of such operations.
            ``(7) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Insured loss.--The term `insured loss' means 
                any loss resulting from any municipal bond that is 
                covered by insurance provided by a qualified municipal 
                bond insurer.
                    ``(B) Municipal bond.--The term `municipal bond' 
                means any bond, note, security, or other debt 
                obligation issued by any State or political subdivision 
                thereof, or by any other entity eligible to issue bonds 
                treated as a State or local bond (as such term is 
                defined in section 103(c) of the Internal Revenue Code 
                of 1986 and the regulations issued thereunder)
                    ``(C) Qualified municipal bond insurer.--The term 
                `qualified municipal bond insurer' means an insurer 
                that meets the requirements in paragraph (2) for 
                reinsurance coverage under this subsection.''.
    (b) Clerical Amendment.--The table of sections for subchapter I of 
chapter 3 of title 31, United States Code, is amended by adding at the 
end the following:

``314. The Office of Public Finance.''.

SEC. 3. REINSURANCE BY OFFICE OF PUBLIC FINANCE NOT TREATED AS FEDERAL 
              GUARANTEE UNDER TAX EXEMPT BOND REQUIREMENTS.

    (a) In General.--Subparagraph (A) of section 149(b)(3) of the 
Internal Revenue Code of 1986 is amended by striking ``or'' at the end 
of clause (ii), by striking the period at the end of clause (iii) and 
inserting ``, or'', and by adding at the end the following new clause:
                            ``(iv) any guarantee by the Office of 
                        Public Finance.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
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