[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4884 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4884

To establish a covered bond regulatory oversight program, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 18, 2010

Mr. Garrett of New Jersey (for himself, Mr. Kanjorski, and Mr. Bachus) 
 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 a covered bond regulatory oversight program, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``United States Covered Bond Act of 
2010''.

SEC. 2. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Ancillary asset.--The term ``ancillary asset'' means, 
        with respect to any cover pool--
                    (A) any interest rate or currency swap associated 
                with any eligible asset, substitute asset, or other 
                ancillary asset in the cover pool;
                    (B) any credit enhancement or liquidity arrangement 
                associated with any eligible asset, substitute asset, 
                or other ancillary asset in the cover pool;
                    (C) any guarantee, letter-of-credit right, or other 
                secondary obligation that supports any payment or 
                performance on an eligible asset, substitute asset, or 
                other ancillary asset in the cover pool; and
                    (D) any proceeds of, or other property incident to, 
                any eligible asset, substitute asset, or other 
                ancillary asset in the cover pool.
            (2) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
            (3) Cover pool.--The term ``cover pool'' means a dynamic 
        pool of assets that is comprised of--
                    (A) 1 or more eligible assets from a single 
                eligible asset class;
                    (B) substitute assets, without limitation; and
                    (C) ancillary assets, without limitation.
            (4) Covered bond.--The term ``covered bond'' means any 
        senior recourse debt obligation of an eligible issuer that--
                    (A) has an original term to maturity of not less 
                than 1 year;
                    (B) is secured directly or indirectly by a 
                perfected security interest in a cover pool which is 
                owned directly or indirectly by the issuer of the 
                obligation;
                    (C) is issued under a covered bond program that has 
                been approved by the covered bond regulator and is 
                identified in a register of covered bonds maintained by 
                the covered bond regulator; and
                    (D) is not a deposit (as defined in section 3 of 
                the Federal Deposit Insurance Act).
            (5) Covered bond program.--The term ``covered bond 
        program'' means any of the programs of an eligible issuer under 
        which, on the security of a single cover pool, 1 or more series 
        or tranches of covered bonds may be issued.
            (6) Covered bond regulator.--The term ``covered bond 
        regulator'' means the Secretary of the Treasury or any officer 
        of the Department of the Treasury designated by the Secretary 
        for purposes of this Act.
            (7) Eligible asset.--The term ``eligible asset'' means any 
        of the following assets within a particular eligible asset 
        class:
                    (A) In the case of the residential mortgage asset 
                class--
                            (i) any first-lien mortgage loan that is 
                        secured by 1-to-4 family residential property 
                        and that is in compliance with supervisory 
                        guidance applicable at the time of loan 
                        origination;
                            (ii) any mortgage loan insured under the 
                        National Housing Act or any loan guaranteed, 
                        insured, or made under chapter 37 of title 38, 
                        United States Code; and
                            (iii) any residential mortgage-backed 
                        security of the highest investment grade that 
                        is backed by first-lien mortgage loans and any 
                        ancillary property (including any residential 
                        mortgage-backed security that is sponsored or 
                        issued by, or backed by first-lien mortgage 
                        loans originated or acquired by, the issuer of 
                        the covered bonds or any affiliate of such 
                        issuer), to the extent such securities do not 
                        exceed an amount equal to 20 percent of the 
                        outstanding principal amount of the assets in a 
                        cover pool.
                    (B) In the case of the home equity asset class--
                            (i) any home equity loan that is secured by 
                        1-to-4 family residential property and that is 
                        in compliance with supervisory guidance 
                        applicable at the time of loan origination; and
                            (ii) any asset-backed security of the 
                        highest investment grade that is backed by home 
                        equity loans and any ancillary property 
                        (including any asset-backed security that is 
                        sponsored or issued by, or backed by home 
                        equity loans originated or acquired by, the 
                        issuer of the covered bonds or any affiliate of 
                        such issuer), to the extent such securities do 
                        not exceed an amount equal to 20 percent of the 
                        outstanding principal amount of the assets in a 
                        cover pool.
                    (C) In the case of the commercial mortgage asset 
                class--
                            (i) any commercial mortgage loan (including 
                        any multifamily mortgage loan) that is in 
                        compliance with supervisory guidance applicable 
                        at the time of loan origination; and
                            (ii) any commercial mortgage-backed 
                        security of the highest investment grade that 
                        is backed by commercial mortgage loans 
                        (including multifamily mortgage loans) and any 
                        ancillary property (including any commercial 
                        mortgage-backed security that is sponsored or 
                        issued by, or backed by commercial mortgage 
                        loans originated or acquired by, the issuer of 
                        the covered bonds or any affiliate of such 
                        issuer), to the extent such securities do not 
                        exceed an amount equal to 20 percent of the 
                        outstanding principal amount of the assets in a 
                        cover pool.
                    (D) In the case of the public sector asset class--
                            (i) investment-grade securities issued by 1 
                        or more States or municipalities;
                            (ii) loans (excluding securities) made to 1 
                        or more States or municipalities; and
                            (iii) loans, securities, or other 
                        obligations that are insured or guaranteed, in 
                        full or substantially in full, by the full 
                        faith and credit of the United States (whether 
                        or not such loans, securities, or other 
                        obligations are also part of another eligible 
                        asset class).
                    (E) In the case of the auto asset class--
                            (i) any auto loan or lease that is in 
                        compliance with supervisory guidance applicable 
                        at the time of loan or lease origination; and
                            (ii) any asset-backed security of the 
                        highest investment grade that is backed by auto 
                        loans or leases and any ancillary property 
                        (including any asset-backed security sponsored 
                        or issued by, or backed by loans or leases 
                        originated or acquired by, the issuer of the 
                        covered bonds or any affiliate of such issuer), 
                        to the extent such securities do not exceed an 
                        amount equal to 20 percent of the outstanding 
                        principal amount of the assets in a cover pool.
                    (F) In the case of the student loan asset class--
                            (i) any student loan (whether guaranteed or 
                        nonguaranteed) that is in compliance with 
                        supervisory guidance applicable at the time of 
                        loan origination; and
                            (ii) any asset-backed security of the 
                        highest investment grade that is backed by 
                        student loans and any ancillary property 
                        (including any asset-backed security sponsored 
                        or issued by, or backed by loans originated or 
                        acquired by, the issuer of the covered bonds or 
                        any affiliate of such issuer), to the extent 
                        such securities do not exceed an amount equal 
                        to 20 percent of the outstanding principal 
                        amount of the assets in a cover pool.
                    (G) In the case of the credit or charge card asset 
                class--
                            (i) any credit or charge card loan that is 
                        in compliance with supervisory guidance 
                        applicable at the time of loan origination; and
                            (ii) any asset-backed security of the 
                        highest investment grade that is backed by 
                        credit or charge card loans and any ancillary 
                        property (including any asset-backed security 
                        sponsored or issued by, or backed by loans 
                        originated or acquired by, the issuer of the 
                        covered bonds or any affiliate of such issuer), 
                        to the extent such securities do not exceed an 
                        amount equal to 20 percent of the outstanding 
                        principal amount of the assets in a cover pool.
                    (H) In the case of the small business asset class--
                            (i) any loan made under a program 
                        established by the Small Business 
                        Administration (whether guaranteed or 
                        nonguaranteed); and
                            (ii) any asset-backed security of the 
                        highest investment grade that is backed by 
                        loans made under 1 or more programs established 
                        by the Small Business Administration and any 
                        ancillary property (including any asset-backed 
                        security sponsored or issued by, or backed by 
                        loans originated or acquired by, the issuer of 
                        the covered bonds or any affiliate of such 
                        issuer), to the extent such securities do not 
                        exceed an amount equal to 20 percent of the 
                        outstanding principal amount of the assets in a 
                        cover pool.
                    (I) In the case of any other eligible asset class 
                designated by the covered bond regulator, the assets 
                designated by the covered bond regulator for such 
                class.
            (8) Eligible asset class.--The term ``eligible asset 
        class'' means each of the following classes of assets:
                    (A) Residential mortgage asset class.
                    (B) Home equity asset class.
                    (C) Commercial mortgage asset class.
                    (D) Public sector asset class.
                    (E) Auto asset class.
                    (F) Student loan asset class.
                    (G) Credit or charge card asset class.
                    (H) Small business asset class.
                    (I) Such other eligible asset classes as may be 
                designated by the covered bond regulator.
            (9) Eligible issuer.--The term ``eligible issuer'' means--
                    (A) any insured depository institution (as defined 
                in section 3 of the Federal Deposit Insurance Act) and 
                any subsidiary of any such institution;
                    (B) any bank holding company (as defined in section 
                2 of the Bank Holding Company Act of 1956) or any 
                savings and loan holding company (as defined in section 
                10 of the Home Owners' Loan Act); and
                    (C) any issuing entity that is sponsored by 1 or 
                more eligible issuers for the sole purpose of issuing 
                covered bonds on a pooled basis.
            (10) Oversight program.--The term ``oversight program'' 
        means the covered bonds regulatory oversight program 
        established under section 3(a).
            (11) Substitute asset.--The term ``substitute asset'' 
        means--
                    (A) cash;
                    (B) any direct obligation of the United States 
                Government, and any security or other obligation whose 
                full principal and interest are insured or guaranteed 
                by the full faith and credit of the United States 
                Government;
                    (C) any direct obligation of a United States 
                Government corporation or Government-sponsored 
                enterprise of the highest investment grade, and any 
                other security or other obligation of the highest 
                investment grade whose full principal and interest are 
                insured or guaranteed by any such corporation or 
                enterprise (including any mortgage-backed security 
                issued, insured, or guaranteed by any such corporation 
                or enterprise);
                    (D) any overnight investment in Federal funds; and
                    (E) any deposit account or securities account into 
                which only substitute assets may be deposited or 
                credited.

SEC. 3. REGULATORY OVERSIGHT OF COVERED BOND PROGRAMS ESTABLISHED.

    (a) Establishment.--
            (1) In general.--The covered bond regulator shall issue 
        regulations establishing a covered bond regulatory oversight 
        program that meets the requirements of this section and that 
        provides for covered bond programs to be maintained in a manner 
        consistent with safe and sound banking practices.
            (2) Approval of each covered bond program.--
                    (A) Approval by covered bond regulator.--A covered 
                bond shall be subject to this Act only if such covered 
                bond is issued by an eligible issuer under a covered 
                bond program that is approved by the covered bond 
                regulator. An eligible issuer may have 1 or more 
                covered bond programs. The covered bond regulator may 
                approve a covered bond program that is already in 
                existence, and upon such approval, all covered bonds 
                under such covered bond program shall be subject to 
                this Act regardless of when the covered bonds are 
                issued.
                    (B) Consultation with any federal primary 
                regulator.--Before approving any covered bond program 
                of any eligible issuer, the covered bond regulator 
                shall consult with the primary Federal regulator, if 
                any, of such issuer.
            (3) Registry.--Under the oversight program, the covered 
        bond regulator shall maintain a registry on a Web site 
        available to the public containing the name of each approved 
        covered bond program and information on all outstanding covered 
        bonds issued under each approved covered bond program.
            (4) Fees.--The covered bond regulator shall levy fees on 
        issuers of covered bonds in an amount, in the aggregate, equal 
        to the costs of the covered bond regulator in carrying out the 
        provisions of this Act.
    (b) Minimum Over-Collateralization Requirements.--
            (1) Establishment required.--The covered bond regulator 
        from time to time shall establish minimum over-
        collateralization requirements for covered bonds backed by each 
        of the eligible asset classes based on the credit, collection, 
        and interest-rate risks, but not the liquidity risks, 
        associated with such eligible asset class.
            (2) Reliance on federal reserve system standards.--In 
        establishing requirements under paragraph (1), the covered bond 
        regulator may rely on over-collateralization levels required 
        for the same or similar asset classes by the Board of Governors 
        of the Federal Reserve System when extending credit to 
        depository institutions under the Federal Reserve Act.
            (3) Testing.--Each cover pool securing covered bonds shall 
        be required at all times to satisfy an asset-coverage test. The 
        asset-coverage test shall measure (as such term is defined by 
        the covered bond regulator) whether the eligible assets and the 
        substitute assets in a cover pool satisfy the minimum over-
        collateralization requirements established by the covered bond 
        regulator for covered bonds backed by the applicable eligible 
        asset class. Each issuer of covered bonds shall be required to 
        perform the asset-coverage test monthly on each of its cover 
        pools and to disclose the results to the primary Federal 
        regulator of such issuer, if any, the covered bond regulator, 
        and the applicable covered bondholders. Each issuer of covered 
        bonds also shall be required to appoint the indenture trustee 
        for such covered bonds or another unaffiliated entity as an 
        independent asset monitor for the applicable cover pool, and 
        such asset monitor shall be required, on an annual or more 
        frequent basis, to verify whether such cover pool satisfies the 
        asset-coverage test and to disclose the results to the primary 
        Federal regulator of such issuer, if any, the covered bond 
        regulator, and the applicable covered bondholders.
            (4) No loss of status.--Covered bonds shall remain subject 
        to this Act regardless of whether the applicable cover pool 
        ceases to satisfy the asset-coverage test at any time after 
        issuance. If a cover pool securing covered bonds fails to 
        satisfy the asset-coverage test and if such failure is not 
        cured within the time specified in the related transaction 
        documents, such failure shall constitute a default that results 
        in the creation of an estate under section 4.
    (c) Eligibility Requirements.--
            (1) Single eligible asset class.--No cover pool may include 
        eligible assets from more than one eligible asset class.
            (2) Ineligible assets.--A loan shall not qualify as an 
        eligible asset while such loan is delinquent for more than 60 
        consecutive days. A security shall not qualify as an eligible 
        asset while such security does not meet any investment-grade 
        requirement under this Act.
    (d) Other Requirements.--
            (1) Books and records of issuer.--Each issuer of covered 
        bonds shall clearly mark its books and records to identify the 
        assets that comprise the applicable cover pool.
            (2) Schedule of eligible assets and substitute assets.--
        Each issuer of covered bonds shall deliver to the applicable 
        indenture trustee, on at least a monthly basis, a schedule of 
        all eligible assets and substitute assets in the applicable 
        cover pool.

SEC. 4. DEFAULT AND INSOLVENCY.

    (a) Default on Covered Bonds Prior to Conservatorship, 
Receivership, Liquidation, or Bankruptcy.--
            (1) Creation of separate estate.--If an uncured default 
        occurs with respect to a covered bond before the issuer of such 
        covered bond enters conservatorship, receivership, liquidation, 
        or bankruptcy, an estate shall be automatically created by 
        operation of law and shall exist separate and apart from such 
        issuer or any subsequent conservatorship, receivership, 
        liquidating agency, or estate in bankruptcy for such issuer or 
        any of its other assets.
            (2) Assets and liabilities of estate.--Any estate created 
        under paragraph (1) shall be comprised of the applicable cover 
        pool, which shall be automatically released to and held by such 
        estate free and clear of any right, title, interest, or claim 
        of the issuer or any conservator, receiver, liquidating agent, 
        or trustee in bankruptcy for the issuer or any of its other 
        assets, and such estate shall be fully liable on all covered 
        bonds and related obligations of the issuer (including 
        obligations under related derivative transactions) that are 
        secured by such cover pool.
            (3) Retention of claims.--Any holder of a covered bond or 
        related obligation secured by a cover pool for which an estate 
        has been created under paragraph (1) shall retain a claim 
        against the issuer for any deficiency with respect to such 
        covered bond or related obligation.
            (4) Residual interest.--Upon the creation of an estate 
        under paragraph (1), a residual interest in such estate shall 
        be automatically issued by operation of law to the issuer. The 
        residual interest shall--
                    (A) be an exempted security as described in section 
                5;
                    (B) represent the right to any surplus from the 
                cover pool after the applicable covered bonds and all 
                other liabilities of such estate have been paid in 
                full; and
                    (C) be evidenced by a certificate executed by the 
                covered bond regulator as trustee of such estate.
            (5) Obligation of issuer.--After the creation of an estate 
        under paragraph (1), the issuer shall be obligated to cooperate 
        in effecting a transfer to the covered bond regulator or its 
        designee of all tangible or electronic books, records, files, 
        and other documents or materials relating to the assets and 
        liabilities of such estate and, at the election of the covered 
        bond regulator, shall continue servicing the cover pool for 120 
        days after the creation of such estate in return for a fair-
        market-value fee.
            (6) Trustee, servicer, and administrator.--
                    (A) In general.--The covered bond regulator shall--
                            (i) act as the trustee of any estate 
                        created under paragraph (1); and
                            (ii) appoint 1 or more servicers or 
                        administrators for the cover pool held by such 
                        estate.
                    (B) Powers and duties of servicer or 
                administrator.--Any servicer or administrator appointed 
                for an estate--
                            (i) shall collect, realize on (by 
                        liquidation or other means), and otherwise 
                        manage the cover pool held by such estate;
                            (ii) may borrow or otherwise procure funds 
                        for the benefit of such estate on a secured or 
                        unsecured basis;
                            (iii) shall invest and use the proceeds and 
                        funds received to make all remaining interest 
                        and principal payments on the applicable 
                        covered bonds according to their terms (or, if 
                        an acceleration or similar event occurs under 
                        the related transaction documents, at the times 
                        specified in such transaction documents) and to 
                        satisfy any other liabilities of such estate; 
                        and
                            (iv) shall, in the event of a liquidity 
                        constraint caused by a timing mismatch among 
                        the assets and the liabilities of an estate, 
                        pursue private market alternatives to provide 
                        the needed liquidity.
                    (C) Supervision of servicer or administrator.--The 
                covered bond regulator shall supervise any servicer or 
                administrator that is appointed for an estate and, if 
                in the best interests of the estate, may remove or 
                replace any servicer or administrator. Each servicer or 
                administrator for an estate, as and when required by 
                the covered bond regulator, shall deliver reports that 
                describe its activities on behalf of such estate and 
                the performance of the cover pool held by such estate. 
                All fees and expenses of any servicer or administrator 
                for an estate shall be approved by the covered bond 
                regulator and shall be paid from such estate.
    (b) Default on Covered Bonds Upon Conservatorship, Receivership, 
Liquidation, or Bankruptcy.--
            (1) FDIC conservatorship or receivership.--
                    (A) In general.--If the Corporation is appointed as 
                conservator or receiver for an issuer of covered bonds 
                before an uncured default results in the creation of an 
                estate under subsection (a), the Corporation as 
                conservator or receiver shall have an exclusive right, 
                for 15 days from the date of such appointment, to 
                transfer any cover pool owned by such issuer in its 
                entirety together with all covered bonds and related 
                obligations secured by such cover pool to another 
                eligible issuer that meets all conditions and 
                requirements specified in the related transaction 
                documents.
                    (B) Obligations during 15-day period.--During the 
                15-day period described in subparagraph (A), the 
                Corporation as conservator or receiver shall satisfy 
                all monetary and nonmonetary obligations of the issuer 
                under the covered bonds and the related transaction 
                documents until any transfer to another eligible issuer 
                is completed.
                    (C) Assumption by transferee.--If the Corporation 
                as conservator or receiver effects a transfer described 
                in subparagraph (A) within the 15-day period, the 
                transferee shall take ownership of the applicable cover 
                pool and shall become fully liable on all covered bonds 
                and related obligations of the issuer that are secured 
                by such cover pool.
            (2) Other circumstances.--If--
                    (A) a conservator, receiver, liquidating agent, or 
                trustee in bankruptcy, other than the Corporation, is 
                appointed for an issuer of covered bonds before an 
                uncured default results in the creation of an estate 
                under subsection (a); or
                    (B) in the case an issuer of covered bonds for 
                which the Corporation is appointed as conservator or 
                receiver as described in paragraph (1)(A), no transfer 
                by the Corporation as conservator or receiver is 
                completed within the 15-day period as described in such 
                paragraph, an estate shall be automatically created by 
                operation of law and shall exist separate and apart 
                from such issuer and the conservatorship, receivership, 
                liquidating agency, or estate in bankruptcy for such 
                issuer or any of its other assets.
            (3) Assets and liabilities of estate.--Any estate created 
        under paragraph (2) shall be comprised of the applicable cover 
        pool, which shall be automatically released to and held by such 
        estate free and clear of any right, title, interest, or claim 
        of the issuer or any conservator, receiver, liquidating agent, 
        or trustee in bankruptcy for the issuer or any of its other 
        assets, and such estate shall be fully liable on all covered 
        bonds and related obligations of the issuer (including 
        obligations under related derivative transactions) that are 
        secured by such cover pool.
            (4) Contingent claim.--Any contingent claim for a 
        deficiency with respect to a covered bond or related obligation 
        for which an estate has been created under paragraph (2) shall 
        be estimated by the conservator, receiver, liquidating agent, 
        or bankruptcy court for purposes of allowing such claim as a 
        provable claim if awaiting the fixing of that contingent claim 
        would unduly delay the resolution of the conservatorship, 
        receivership, liquidating agency, or bankruptcy case.
            (5) Residual interest.--Upon the creation of an estate 
        under paragraph (2), and regardless of whether any contingent 
        claim described in paragraph (4) becomes fixed or is estimated, 
        a residual interest in such estate shall be automatically 
        issued by operation of law to the conservator, receiver, 
        liquidating agent, or trustee in bankruptcy for the issuer. The 
        residual interest shall--
                    (A) be an exempted security as described in section 
                5;
                    (B) represent the right to any surplus from the 
                cover pool after the applicable covered bonds and all 
                other liabilities of such estate have been paid in 
                full; and
                    (C) be evidenced by a certificate executed by the 
                covered bond regulator as trustee of such estate.
            (6) Obligation of issuer.--After the creation of an estate 
        under paragraph (2), the issuer and its conservator, receiver, 
        liquidating agent, or trustee in bankruptcy shall transfer to 
        the covered bond regulator or its designee all tangible or 
        electronic books, records, files, and other documents or 
        materials relating to the assets and liabilities of such estate 
        and, at the election of the covered bond regulator (but subject 
        to any right of repudiation or rejection held by such 
        conservator, receiver, liquidating agent, or trustee in 
        bankruptcy), shall continue servicing the cover pool for 120 
        days after the creation of such estate in return for a fair-
        market-value fee.
            (7) Trustee, servicer, and administrator.--
                    (A) In general.--The covered bond regulator shall--
                            (i) act as the trustee of any estate 
                        created under paragraph (2); and
                            (ii) appoint 1 or more servicers or 
                        administrators for the cover pool held by such 
                        estate.
                    (B) Powers and duties of servicer or 
                administrator.--Any servicer or administrator appointed 
                for an estate--
                            (i) shall collect, realize on (by 
                        liquidation or other means), and otherwise 
                        manage the cover pool held by such estate;
                            (ii) may borrow or otherwise procure funds 
                        for the benefit of such estate on a secured or 
                        unsecured basis;
                            (iii) shall invest and use the proceeds and 
                        funds received to make all remaining interest 
                        and principal payments on the applicable 
                        covered bonds according to their terms (or, if 
                        an acceleration or similar event occurs under 
                        the related transaction documents, at the times 
                        specified in such transaction documents) and to 
                        satisfy any other liabilities of such estate; 
                        and
                            (iv) shall, in the event of a liquidity 
                        constraint caused by a timing mismatch among 
                        the assets and the liabilities of an estate, 
                        pursue private market alternatives to provide 
                        the needed liquidity.
                    (C) Supervision of servicer or administrator.--The 
                covered bond regulator shall supervise any servicer or 
                administrator that is appointed for an estate and, if 
                in the best interests of the estate, may remove or 
                replace any servicer or administrator. Each servicer or 
                administrator for an estate, as and when required by 
                the covered bond regulator, shall deliver reports that 
                describe its activities on behalf of such estate and 
                the performance of the cover pool held by such estate. 
                All fees and expenses of any servicer or administrator 
                for an estate shall be approved by the covered bond 
                regulator and shall be paid from such estate.

SEC. 5. SECURITIES LAW PROVISIONS.

    (a) Registration.--
            (1) Applicability to bank issuers.--Covered bonds that are 
        offered and sold to the public by a bank (or a subsidiary of a 
        bank) shall be--
                    (A) subject to--
                            (i) securities regulations issued by the 
                        primary Federal regulator of such bank; and
                            (ii) applicable antifraud rules; and
                    (B) exempt from all other Federal securities laws.
            (2) Applicability to issuers sponsored by 1 or more banks 
        with same regulator.--Covered bonds that are offered and sold 
        to the public by an issuing entity that is sponsored only by 1 
        or more banks with the same primary Federal regulator shall 
        be--
                    (A) subject to--
                            (i) securities regulations issued by such 
                        primary Federal regulator; and
                            (ii) applicable antifraud rules; and
                    (B) exempt from all other Federal securities laws.
            (3) Other issuers.--For covered bonds that are offered and 
        sold to the public by any other eligible issuer and that are 
        not otherwise exempted securities, the Securities and Exchange 
        Commission shall develop a streamlined registration scheme.
            (4) Extension of exemptions to separate estates.--Each 
        exemption described in paragraph (1) or (2) shall continue to 
        apply to any estate created under subsection (a) or (b) of 
        section 4 and to any residual interest in such estate.
    (b) Disclosure and Reporting.--
            (1) Applicability to bank issuers.--At a reasonable time 
        before the initial sale of a covered bond by a bank or a 
        subsidiary of a bank, such bank or subsidiary shall make 
        available to investors the information required by the 
        securities regulations issued by such bank's primary Federal 
        regulator and applicable antifraud rules.
            (2) Applicability to issuers sponsored by 1 or more banks 
        with same regulator.--At a reasonable time before the initial 
        sale of a covered bond by an issuing entity that is sponsored 
        only by 1 or more banks with the same primary Federal 
        regulator, such issuing entity shall make available to 
        investors the information required by the securities 
        regulations issued by such primary Federal regulator and 
        applicable antifraud rules.
            (3) Other issuers.--At a reasonable time before the initial 
        sale of a covered bond that is not an exempted security by any 
        other eligible issuer, such issuer shall make available to 
        investors the information required under the streamlined 
        approach established by the Securities and Exchange Commission 
        under paragraph (a)(3) and applicable antifraud rules.
            (4) Standards.--For each of the issuers described in 
        paragraphs (1) to (3), the content and frequency of reports to 
        investors shall be determined according to the same standards 
        that govern the initial information delivery requirement.

SEC. 6. MISCELLANEOUS PROVISIONS.

    (a) Domestic Securities.--Section 106(a)(1) of the Secondary 
Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(1)) is 
amended--
            (1) in subparagraph (C), by striking ``or'' at the end;
            (2) in subparagraph (D), by adding ``or'' at the end; and
            (3) by inserting after subparagraph (D) the following:
                    ``(E) covered bonds (as defined under section 2(3) 
                of the United States Covered Bond Act of 2010),''.
    (b) Real Estate Mortgage Investment Conduits.--Section 860G(a)(3) 
of the Internal Revenue Code of 1986 is amended--
            (1) in subparagraph (B), by striking ``and'' at the end;
            (2) in subparagraph (C), by striking the period and 
        inserting a comma; and
            (3) by inserting after subparagraph (C) the following:
                    ``(D) covered bonds secured by eligible assets from 
                the residential mortgage asset class, the home equity 
                asset class, or the commercial mortgage asset class 
                (within the meaning of section 2 of the United States 
                Covered Bond Act of 2010).''.
    (c) Tax Provisions.--Any estate created under subsection (a) or (b) 
of section 4 shall not be taxable as a separate entity. No transfer of 
any asset or liability to an estate under such subsections shall be a 
taxable event. The acquisition of any covered bond shall be treated as 
an acquisition of a security, and not as an interest in a loan or a 
lending transaction, for purposes of determining the character of any 
related trade or business activity of the acquirer or any asset held by 
such acquirer.
                                 <all>