[Congressional Record Volume 146, Number 134 (Tuesday, October 24, 2000)]
[House]
[Pages H10690-H10698]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           FINANCIAL CONTRACT NETTING IMPROVEMENT ACT OF 2000

  Mr. LEACH. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 1161) to revise the banking and bankruptcy insolvency laws with 
respect to the termination and netting of financial contracts, and for 
other purposes, as amended.
  The Clerk read as follows:

                               H.R. 1161

       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 ``Financial Contract Netting 
     Improvement Act of 2000''.

     SEC. 2. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR 
                   RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

       (a) Definition of Qualified Financial Contract.--Section 
     11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(i)) is amended by inserting ``, 
     resolution or order'' after ``any similar agreement that the 
     Corporation determines by regulation''.
       (b) Definition of Securities Contract.--Section 
     11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows:
       ``(ii) Securities contract.--The term `securities 
     contract'--

       ``(I) means a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan, or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit, or mortgage loans or interests 
     therein (including any interest therein or based on the value 
     thereof) or any option on any of the foregoing, including any 
     option to purchase or sell any such security, certificate of 
     deposit, loan, interest, group or index, or option;
       ``(II) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan unless the Corporation determines by regulation, 
     resolution, or order to include any such agreement within the 
     meaning of such term;
       ``(III) means any option entered into on a national 
     securities exchange relating to foreign currencies;
       ``(IV) means the guarantee by or to any securities clearing 
     agency of any settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, certificates of deposit, or mortgage loans or 
     interests therein (including any interest therein or based on 
     the value thereof) or option on any of the foregoing, 
     including any option to purchase or sell any such security, 
     certificate of deposit, loan, interest, group or index, or 
     option;
       ``(V) means any margin loan;
       ``(VI) means any other agreement or transaction that is 
     similar to any agreement or transaction referred to in this 
     clause;
       ``(VII) means any combination of the agreements or 
     transactions referred to in this clause;
       ``(VIII) means any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     (IV), (V), (VI), (VII), or (VIII), together with all 
     supplements to any such master agreement, without regard to 
     whether the master agreement provides for an agreement or 
     transaction that is not a securities contract under this 
     clause, except that the master agreement shall be considered 
     to be a securities contract under this clause only with 
     respect to each agreement or transaction under the master 
     agreement that is referred to in subclause (I), (III), (IV), 
     (V), (VI), (VII), or (VIII); and
       ``(X) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this clause.''.

       (c) Definition of Commodity Contract.--Section 
     11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:
       ``(iii) Commodity contract.--The term `commodity contract' 
     means--

       ``(I) with respect to a futures commission merchant, a 
     contract for the purchase or sale of a commodity for future 
     delivery on, or subject to the rules of, a contract market or 
     board of trade;
       ``(II) with respect to a foreign futures commission 
     merchant, a foreign future;
       ``(III) with respect to a leverage transaction merchant, a 
     leverage transaction;
       ``(IV) with respect to a clearing organization, a contract 
     for the purchase or sale of a commodity for future delivery 
     on, or subject to the rules of, a contract market or board of 
     trade that is cleared by such clearing organization, or 
     commodity option traded on, or subject to the rules of, a 
     contract market or board of trade that is cleared by such 
     clearing organization;
       ``(V) with respect to a commodity options dealer, a 
     commodity option;
       ``(VI) any other agreement or transaction that is similar 
     to any agreement or transaction referred to in this clause;
       ``(VII) any combination of the agreements or transactions 
     referred to in this clause;
       ``(VIII) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), (IV), 
     (V), (VI), (VII), or (VIII), together with all supplements to 
     any such master agreement, without regard to whether the 
     master agreement provides for an agreement or transaction 
     that is not a commodity contract under this clause, except 
     that the master agreement shall be considered to be a 
     commodity contract under this clause only with respect to 
     each agreement or transaction under the master agreement that 
     is referred to in subclause (I), (II), (III), (IV), (V), 
     (VI), (VII), or (VIII); or
       ``(X) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause.''.

       (d) Definition of Forward Contract.--Section 
     11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
       ``(iv) Forward contract.--The term `forward contract' 
     means--

       ``(I) a contract (other than a commodity contract) for the 
     purchase, sale, or transfer of a commodity or any similar 
     good, article, service, right, or interest which is presently 
     or in the future becomes the subject of dealing in the 
     forward contract trade, or product or byproduct thereof, with 
     a maturity date more than 2 days after the date the contract 
     is entered into, including a repurchase transaction, reverse 
     repurchase transaction, consignment, lease, swap, hedge 
     transaction, deposit, loan, option, allocated transaction, 
     unallocated transaction, or any other similar agreement;
       ``(II) any combination of agreements or transactions 
     referred to in subclauses (I) and (III);
       ``(III) any option to enter into any agreement or 
     transaction referred to in subclause (I) or (II);
       ``(IV) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), or (III), 
     together with all supplements to any such master agreement, 
     without regard to whether the master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this clause, except that the master agreement shall be 
     considered to be a forward contract under this clause only 
     with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     or (III); or
       ``(V) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV).''.

       (e) Definition of Repurchase Agreement.--Section 
     11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows:
       ``(v) Repurchase agreement.--The term `repurchase 
     agreement' (which definition also applies to the term 
     `reverse repurchase agreement')--

       ``(I) means an agreement, including related terms, which 
     provides for the transfer of 1 or more certificates of 
     deposit, mortgage-related securities (as such term is defined 
     in the Securities Exchange Act of 1934), mortgage loans, 
     interests in mortgage-related securities or mortgage loans, 
     eligible bankers' acceptances, qualified foreign government 
     securities or securities that are direct obligations of, or 
     that are fully guaranteed by, the United States or any agency 
     of the United States against the transfer of funds by the 
     transferee of such certificates of deposit, eligible bankers' 
     acceptances, securities, loans, or interests with a 
     simultaneous agreement by such transferee to transfer to the 
     transferor thereof certificates of deposit, eligible bankers' 
     acceptances, securities, loans, or interests as described 
     above, at a date certain not later than 1 year after such 
     transfers or on demand, against the transfer of funds, or any 
     other similar agreement;
       ``(II) does not include any repurchase obligation under a 
     participation in a commercial mortgage loan unless the 
     Corporation determines by regulation, resolution, or order to 
     include any such participation within the meaning of such 
     term;
       ``(III) means any combination of agreements or transactions 
     referred to in subclauses (I) and (IV);
       ``(IV) means any option to enter into any agreement or 
     transaction referred to in subclause (I) or (III);
       ``(V) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     or (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     provides for an agreement or transaction that is not a 
     repurchase agreement under this clause, except that the 
     master agreement shall be considered to be a repurchase 
     agreement under this subclause only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subclause (I), (III), or (IV); and
       ``(VI) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V).

[[Page H10691]]

     For purposes of this clause, the term `qualified foreign 
     government security' means a security that is a direct 
     obligation of, or that is fully guaranteed by, the central 
     government of a member of the Organization for Economic 
     Cooperation and Development (as determined by regulation or 
     order adopted by the appropriate Federal banking 
     authority).''.
       (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(vi) 
     of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)(vi)) is amended to read as follows:
       ``(vi) Swap agreement.--The term `swap agreement' means--

       ``(I) any agreement, including the terms and conditions 
     incorporated by reference in any such agreement, which is an 
     interest rate swap, option, future, or forward agreement, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, and basis swap; a spot, same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, future, or forward 
     agreement; an equity index or equity swap, option, future, or 
     forward agreement; a debt index or debt swap, option, future, 
     or forward agreement; a credit spread or credit swap, option, 
     future, or forward agreement; a commodity index or commodity 
     swap, option, future, or forward agreement; or a weather 
     swap, weather derivative, or a weather option;
       ``(II) any agreement or transaction similar to any other 
     agreement or transaction referred to in this clause that is 
     presently, or in the future becomes, regularly entered into 
     in the swap market (including terms and conditions 
     incorporated by reference in such agreement) and that is a 
     forward, swap, future, or option on 1 or more rates, 
     currencies, commodities, equity securities or other equity 
     instruments, debt securities or other debt instruments, or 
     economic indices or measures of economic risk or value;
       ``(III) any combination of agreements or transactions 
     referred to in this clause;
       ``(IV) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(V) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), or 
     (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     contains an agreement or transaction that is not a swap 
     agreement under this clause, except that the master agreement 
     shall be considered to be a swap agreement under this clause 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     (III), or (IV); and
       ``(VI) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in subparagraph (I), (II), (III), (IV), or (V).

     Such term is applicable for purposes of this title only and 
     shall not be construed or applied so as to challenge or 
     affect the characterization, definition, or treatment of any 
     swap agreement under any other statute, regulation, or rule, 
     including the Securities Act of 1933, the Securities Exchange 
     Act of 1934, the Public Utility Holding Company Act of 1935, 
     the Trust Indenture Act of 1939, the Investment Company Act 
     of 1940, the Investment Advisers Act of 1940, the Securities 
     Investor Protection Act of 1970, the Commodity Exchange Act, 
     and the regulations promulgated by the Securities and 
     Exchange Commission or the Commodity Futures Trading 
     Commission.''.
       (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of 
     the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)(viii)) is amended to read as follows:
       ``(viii) Transfer.--The term `transfer' means every mode, 
     direct or indirect, absolute or conditional, voluntary or 
     involuntary, of disposing of or parting with property or with 
     an interest in property, including retention of title as a 
     security interest and foreclosure of the depository 
     institutions's equity of redemption.''.
       (h) Treatment of Qualified Financial Contracts.--Section 
     11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)) is amended--
       (1) in subparagraph (A), by striking ``paragraph (10)'' and 
     inserting ``paragraphs (9) and (10)'';
       (2) in subparagraph (A)(i), by striking ``to cause the 
     termination or liquidation'' and inserting ``such person has 
     to cause the termination, liquidation, or acceleration'';
       (3) by amending subparagraph (A)(ii) to read as follows:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to 1 or more 
     qualified financial contracts described in clause (i);''; and
       (4) by amending subparagraph (E)(ii) to read as follows:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to 1 or more 
     qualified financial contracts described in clause (i);''.
       (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 
     amended by inserting ``section 5242 of the Revised Statutes 
     of the United States (12 U.S.C. 91) or any other Federal or 
     State law relating to the avoidance of preferential or 
     fraudulent transfers,'' before ``the Corporation''.

     SEC. 3. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED 
                   AND FAILING INSTITUTIONS.

       (a) In General.--Section 11(e)(8) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
       (1) in subparagraph (E), by striking ``other than paragraph 
     (12) of this subsection, subsection (d)(9)'' and inserting 
     ``other than subsections (d)(9) and (e)(10)''; and
       (2) by adding at the end the following new subparagraphs:
       ``(F) Clarification.--No provision of law shall be 
     construed as limiting the right or power of the Corporation, 
     or authorizing any court or agency to limit or delay, in any 
     manner, the right or power of the Corporation to transfer any 
     qualified financial contract in accordance with paragraphs 
     (9) and (10) of this subsection or to disaffirm or repudiate 
     any such contract in accordance with paragraph (1).
       ``(G) Walkaway clauses not effective.--
       ``(i) In general.--Notwithstanding the provisions of 
     subparagraphs (A) and (E), and sections 403 and 404 of the 
     Federal Deposit Insurance Corporation Improvement Act of 
     1991, no walkaway clause shall be enforceable in a qualified 
     financial contract of an insured depository institution in 
     default.
       ``(ii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means a provision in 
     a qualified financial contract that, after calculation of a 
     value of a party's position or an amount due to or from 1 of 
     the parties in accordance with its terms upon termination, 
     liquidation, or acceleration of the qualified financial 
     contract, either does not create a payment obligation of a 
     party or extinguishes a payment obligation of a party in 
     whole or in part solely because of such party's status as a 
     nondefaulting party.''.
       (b) Technical and Conforming Amendment.--Section 
     11(e)(12)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(12)(A)) is amended by inserting ``or the exercise of 
     rights or powers'' after ``the appointment''.

     SEC. 4. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED 
                   FINANCIAL CONTRACTS.

       (a) Transfers of Qualified Financial Contracts to Financial 
     Institutions.--Section 11(e)(9) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as 
     follows:
       ``(9) Transfer of qualified financial contracts.--
       ``(A) In general.--In making any transfer of assets or 
     liabilities of a depository institution in default which 
     includes any qualified financial contract, the conservator or 
     receiver for such depository institution shall either--
       ``(i) transfer to 1 financial institution, other than a 
     financial institution for which a conservator, receiver, 
     trustee in bankruptcy, or other legal custodian has been 
     appointed or which is otherwise the subject of a bankruptcy 
     or insolvency proceeding--

       ``(I) all qualified financial contracts between any person 
     or any affiliate of such person and the depository 
     institution in default;
       ``(II) all claims of such person or any affiliate of such 
     person against such depository institution under any such 
     contract (other than any claim which, under the terms of any 
     such contract, is subordinated to the claims of general 
     unsecured creditors of such institution);
       ``(III) all claims of such depository institution against 
     such person or any affiliate of such person under any such 
     contract; and
       ``(IV) all property securing or any other credit 
     enhancement for any contract described in subclause (I) or 
     any claim described in subclause (II) or (III) under any such 
     contract; or

       ``(ii) transfer none of the qualified financial contracts, 
     claims, property or other credit enhancement referred to in 
     clause (i) (with respect to such person and any affiliate of 
     such person).
       ``(B) Transfer to foreign bank, foreign financial 
     institution, or branch or agency of a foreign bank or 
     financial institution.--In transferring any qualified 
     financial contracts and related claims and property pursuant 
     to subparagraph (A)(i), the conservator or receiver for such 
     depository institution shall not make such transfer to a 
     foreign bank, financial institution organized under the laws 
     of a foreign country, or a branch or agency of a foreign bank 
     or financial institution unless, under the law applicable to 
     such bank, financial institution, branch or agency, to the 
     qualified financial contracts, and to any netting contract, 
     any security agreement or arrangement or other credit 
     enhancement related to 1 or more qualified financial 
     contracts, the contractual rights of the parties to such 
     qualified financial contracts, netting contracts, security 
     agreements or arrangements, or other credit enhancements are 
     enforceable substantially to the same extent as permitted 
     under this section.
       ``(C) Transfer of contracts subject to the rules of a 
     clearing organization.--In the event that a conservator or 
     receiver transfers any qualified financial contract and 
     related claims, property and credit enhancements pursuant to 
     subparagraph (A)(i) and such contract is subject to the rules 
     of a clearing organization, the clearing organization shall 
     not be required to accept the transferee as a member by 
     virtue of the transfer.
       ``(D) Definition.--For purposes of this section, the term 
     `financial institution' means a broker or dealer, a 
     depository institution, a futures commission merchant, or any 
     other institution as determined by the Corporation by 
     regulation to be a financial institution.''.
       (b) Notice to Qualified Financial Contract 
     Counterparties.--Section 11(e)(10)(A) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(10)(A)) is amended by 
     amending the flush material following clause (ii) to read as 
     follows: ``the conservator or receiver shall notify any 
     person who is a party to any such contract of such transfer 
     by 5:00 p.m. (eastern time) on the business day following the 
     date of the appointment of the receiver, in the case of a 
     receivership, or the business day following such transfer, in 
     the case of a conservatorship.''.
       (c) Rights Against Receiver and Treatment of Bridge 
     Banks.--Section 11(e)(10) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(e)(10)) is further amended--
       (1) by redesignating subparagraph (B) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (A) the following new 
     subparagraphs:

[[Page H10692]]

       ``(B) Certain rights not enforceable.--
       ``(i) Receivership.--A person who is a party to a qualified 
     financial contract with an insured depository institution may 
     not exercise any right such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(A) or 
     section 403 or 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 solely by reason of or 
     incidental to the appointment of a receiver for the 
     depository institution (or the insolvency or financial 
     condition of the depository institution for which the 
     receiver has been appointed)--

       ``(I) until 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver; or
       ``(II) after the person has received notice that the 
     contract has been transferred pursuant to paragraph (9)(A).

       ``(ii) Conservatorship.--A person who is a party to a 
     qualified financial contract with an insured depository 
     institution may not exercise any right such person has to 
     terminate, liquidate, or net such contract under paragraph 
     (8)(E) or section 403 or 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991, solely by reason of or 
     incidental to the appointment of a conservator for the 
     depository institution (or the insolvency or financial 
     condition of the depository institution for which the 
     conservator has been appointed).
       ``(iii) Notice.--For purposes of this subsection, the 
     Corporation as receiver or conservator of an insured 
     depository institution shall be deemed to have notified a 
     person who is a party to a qualified financial contract with 
     such depository institution if the Corporation has taken 
     steps reasonably calculated to provide notice to such person 
     by the time specified in subparagraph (A) of this subsection.
       ``(C) Treatment of bridge banks.--The following 
     institutions shall not be considered a financial institution 
     for which a conservator, receiver, trustee in bankruptcy, or 
     other legal custodian has been appointed or which is 
     otherwise the subject of a bankruptcy or insolvency 
     proceeding for purposes of paragraph (9)--
       ``(i) a bridge bank; or
       ``(ii) a depository institution organized by the 
     Corporation, for which a conservator is appointed either--

       ``(I) immediately upon the organization of the institution; 
     or
       ``(II) at the time of a purchase and assumption transaction 
     between such institution and the Corporation as receiver for 
     a depository institution in default.''.

     SEC. 5. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION 
                   OF QUALIFIED FINANCIAL CONTRACTS.

       (a) In General.--Section 11(e) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)) is further amended--
       (1) by redesignating paragraphs (11) through (15) as 
     paragraphs (12) through (16), respectively; and
       (2) by inserting after paragraph (10) the following new 
     paragraph:
       ``(11) Disaffirmance or repudiation of qualified financial 
     contracts.--In exercising the rights of disaffirmance or 
     repudiation of a conservator or receiver with respect to any 
     qualified financial contract to which an insured depository 
     institution is a party, the conservator or receiver for such 
     institution shall either--
       ``(A) disaffirm or repudiate all qualified financial 
     contracts between--
       ``(i) any person or any affiliate of such person; and
       ``(ii) the depository institution in default; or
       ``(B) disaffirm or repudiate none of the qualified 
     financial contracts referred to in subparagraph (A) (with 
     respect to such person or any affiliate of such person).''.
       (b) Technical and Conforming Amendments.--Section 11(e)(8) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)), 
     as amended by section 2(i), is further amended in 
     subparagraph (C)(i), by striking ``(11)'' and inserting 
     ``(12)''.

     SEC. 6. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

       Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as 
     follows:
       ``(vii) Treatment of master agreement as 1 agreement.--Any 
     master agreement for any contract or agreement described in 
     any preceding clause of this subparagraph (or any master 
     agreement for such master agreement or agreements), together 
     with all supplements to such master agreement, shall be 
     treated as a single agreement and a single qualified 
     financial contract. If a master agreement contains provisions 
     relating to agreements or transactions that are not 
     themselves qualified financial contracts, the master 
     agreement shall be deemed to be a qualified financial 
     contract only with respect to those transactions that are 
     themselves qualified financial contracts.''.

     SEC. 7. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT 
                   OF 1991.

       (a) Definitions.--Section 402 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991 (12 U.S.C. 
     4402) is amended--
       (1) in paragraph (2)--
       (A) by inserting ``or exempt from such registration 
     pursuant to an order of the Securities and Exchange 
     Commission'' before the semicolon at the end of subparagraph 
     (A)(ii); and
       (B) by inserting ``or that has been granted an exemption 
     pursuant to section 4(c)(1) of such Act'' before the period 
     at the end of subparagraph (B);
       (2) in paragraph (6)--
       (A) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E), respectively;
       (B) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) an uninsured national bank or an uninsured State bank 
     that is a member of the Federal Reserve System if the 
     national bank or State member bank is not eligible to make 
     application to become an insured bank under section 5 of the 
     Federal Deposit Insurance Act;''; and
       (C) by amending subparagraph (C) (as redesignated) to read 
     as follows:
       ``(C) a branch or agency of a foreign bank, a foreign bank 
     and any branch or agency of the foreign bank, or the foreign 
     bank that established the branch or agency, as those terms 
     are defined in section 1(b) of the International Banking Act 
     of 1978;'';
       (3) in paragraph (11), by adding before the period ``and 
     any other clearing organization with which such clearing 
     organization has a netting contract'';
       (4) by amending paragraph (14)(A)(i) to read as follows:
       ``(i) means a contract or agreement between two or more 
     financial institutions, clearing organizations, or members 
     that provides for netting present or future payment 
     obligations or payment entitlements (including liquidation or 
     closeout values relating to such obligations or entitlements) 
     among the parties to the agreement; and''; and
       (5) by adding at the end the following new paragraph:
       ``(15) Payment.--The term `payment' means a payment of 
     United States dollars, another currency, or a composite 
     currency, and a noncash delivery, including a payment or 
     delivery to liquidate an unmatured obligation.''.
       (b) Enforceability of Bilateral Netting Contracts.--Section 
     403 of the Federal Deposit Insurance Corporation Improvement 
     Act of 1991 (12 U.S.C. 4403) is amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) General Rule.--Notwithstanding any other provision of 
     State or Federal law (other than paragraphs (8)(E), (8)(F), 
     and (10)(B) of section 11(e) of the Federal Deposit Insurance 
     Act or any order authorized under section 5(b)(2) of the 
     Securities Investor Protection Act of 1970), the covered 
     contractual payment obligations and the covered contractual 
     payment entitlements between any two financial institutions 
     shall be netted in accordance with, and subject to the 
     conditions of, the terms of any applicable netting contract 
     (except as provided in section 561(b)(2) of title 11, United 
     States Code).''; and
       (2) by adding at the end the following new subsection:
       ``(f) Enforceability of Security Agreements.--The 
     provisions of any security agreement or arrangement or other 
     credit enhancement related to 1 or more netting contracts 
     between any two financial institutions shall be enforceable 
     in accordance with their terms (except as provided in section 
     561(b)(2) of title 11, United States Code) and shall not be 
     stayed, avoided, or otherwise limited by any State or Federal 
     law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
     section 11(e) of the Federal Deposit Insurance Act and 
     section 5(b)(2) of the Securities Investor Protection Act of 
     1970).''.
       (c) Enforceability of Clearing Organization Netting 
     Contracts.--Section 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4404) is 
     amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) General Rule.--Notwithstanding any other provision of 
     State or Federal law (other than paragraphs (8)(E), (8)(F), 
     and (10)(B) of section 11(e) of the Federal Deposit Insurance 
     Act and any order authorized under section 5(b)(2) of the 
     Securities Investor Protection Act of 1970), the covered 
     contractual payment obligations and the covered contractual 
     payment entitlements of a member of a clearing organization 
     to and from all other members of a clearing organization 
     shall be netted in accordance with and subject to the 
     conditions of any applicable netting contract (except as 
     provided in section 561(b)(2) of title 11, United States 
     Code).''; and
       (2) by adding at the end the following new subsection:
       ``(h) Enforceability of Security Agreements.--The 
     provisions of any security agreement or arrangement or other 
     credit enhancement related to 1 or more netting contracts 
     between any two members of a clearing organization shall be 
     enforceable in accordance with their terms (except as 
     provided in section 561(b)(2) of title 11, United States 
     Code) and shall not be stayed, avoided, or otherwise limited 
     by any State or Federal law (other than paragraphs (8)(E), 
     (8)(F), and (10)(B) of section 11(e) of the Federal Deposit 
     Insurance Act and section 5(b)(2) of the Securities Investor 
     Protection Act of 1970).''.
       (d) Enforceability of Contracts With Uninsured National 
     Banks and Uninsured Federal Branches and Agencies.--The 
     Federal Deposit Insurance Corporation Improvement Act of 1991 
     (12 U.S.C. 4401 et seq.) is amended--
       (1) by redesignating section 407 as section 407A; and
       (2) by adding after section 406 the following new section:

     ``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL 
                   BANKS AND UNINSURED FEDERAL BRANCHES AND 
                   AGENCIES.

       ``(a) In General.--Notwithstanding any other provision of 
     law, paragraphs (8), (9), (10), and (11) of section 11(e) of 
     the Federal Deposit Insurance Act shall apply to an uninsured 
     national bank or uninsured Federal branch or Federal agency 
     except--
       ``(1) any reference to the `Corporation as receiver' or 
     `the receiver or the Corporation' shall refer to the receiver 
     of an uninsured national bank or uninsured Federal branch or 
     Federal agency appointed by the Comptroller of the Currency;

[[Page H10693]]

       ``(2) any reference to the `Corporation' (other than in 
     section 11(e)(8)(D) of such Act), the `Corporation, whether 
     acting as such or as conservator or receiver', a `receiver', 
     or a `conservator' shall refer to the receiver or conservator 
     of an uninsured national bank or uninsured Federal branch or 
     Federal agency appointed by the Comptroller of the Currency; 
     and
       ``(3) any reference to an `insured depository institution' 
     or `depository institution' shall refer to an uninsured 
     national bank or an uninsured Federal branch or Federal 
     agency.
       ``(b) Liability.--The liability of a receiver or 
     conservator of an uninsured national bank or uninsured 
     Federal branch or agency shall be determined in the same 
     manner and subject to the same limitations that apply to 
     receivers and conservators of insured depository institutions 
     under section 11(e) of the Federal Deposit Insurance Act.
       ``(c) Regulatory Authority.--
       ``(1) In general.--The Comptroller of the Currency, in 
     consultation with the Federal Deposit Insurance Corporation, 
     may promulgate regulations to implement this section.
       ``(2) Specific requirement.--In promulgating regulations to 
     implement this section, the Comptroller of the Currency shall 
     ensure that the regulations generally are consistent with the 
     regulations and policies of the Federal Deposit Insurance 
     Corporation adopted pursuant to the Federal Deposit Insurance 
     Act.
       ``(d) Definitions.--For purposes of this section, the terms 
     `Federal branch', `Federal agency', and `foreign bank' have 
     the same meaning as in section 1(b) of the International 
     Banking Act.''.

     SEC. 8. BANKRUPTCY CODE AMENDMENTS.

       (a) Definitions of Forward Contract, Repurchase Agreement, 
     Securities Clearing Agency, Swap Agreement, Commodity 
     Contract, and Securities Contract.--Title 11, United States 
     Code, is amended--
       (1) in section 101--
       (A) in paragraph (25)--
       (i) by striking ``means a contract'' and inserting 
     ``means--
       ``(A) a contract'';
       (ii) by striking ``, or any combination thereof or option 
     thereon;'' and inserting ``, or any other similar 
     agreement;''; and
       (iii) by adding at the end the following:
       ``(B) any combination of agreements or transactions 
     referred to in subparagraphs (A) and (C);
       ``(C) any option to enter into an agreement or transaction 
     referred to in subparagraph (A) or (B);
       ``(D) a master agreement that provides for an agreement or 
     transaction referred to in subparagraph (A), (B), or (C), 
     together with all supplements to any such master agreement, 
     without regard to whether such master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this paragraph, except that such master agreement shall 
     be considered to be a forward contract under this paragraph 
     only with respect to each agreement or transaction under such 
     master agreement that is referred to in subparagraph (A), (B) 
     or (C); or
       ``(E) any security agreement or arrangement, or other 
     credit enhancement related to any agreement or transaction 
     referred to in subparagraph (A), (B), (C), or (D), but not to 
     exceed the actual value of such contract on the date of the 
     filing of the petition;'';
       (B) in paragraph (46), by striking ``on any day during the 
     period beginning 90 days before the date of'' and inserting 
     ``at any time before'';
       (C) by amending paragraph (47) to read as follows:
       ``(47) `repurchase agreement' (which definition also 
     applies to a `reverse repurchase agreement')--
       ``(A) means--
       ``(i) an agreement, including related terms, which provides 
     for the transfer of 1 or more certificates of deposit, 
     mortgage-related securities (as defined in the Securities 
     Exchange Act of 1934), mortgage loans, interests in mortgage-
     related securities or mortgage loans, eligible bankers' 
     acceptances, qualified foreign government securities, or 
     securities that are direct obligations of, or that are fully 
     guaranteed by, the United States or any agency of the United 
     States against the transfer of funds by the transferee of 
     such certificates of deposit, eligible bankers' acceptances, 
     securities, loans, or interests, with a simultaneous 
     agreement by such transferee to transfer to the transferor 
     thereof certificates of deposit, eligible bankers' 
     acceptance, securities, loans, or interests of the kind 
     described above, at a date certain not later than 1 year 
     after such transfer or on demand, against the transfer of 
     funds;
       ``(ii) any combination of agreements or transactions 
     referred to in clauses (i) and (iii);
       ``(iii) an option to enter into an agreement or transaction 
     referred to in clause (i) or (ii);
       ``(iv) a master agreement that provides for an agreement or 
     transaction referred to in clause (i), (ii), or (iii), 
     together with all supplements to any such master agreement, 
     without regard to whether such master agreement provides for 
     an agreement or transaction that is not a repurchase 
     agreement under this paragraph, except that such master 
     agreement shall be considered to be a repurchase agreement 
     under this paragraph only with respect to each agreement or 
     transaction under the master agreement that is referred to in 
     clause (i), (ii), or (iii); or
       ``(v) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in clause (i), (ii), (iii), or (iv), but not to exceed the 
     actual value of such contract on the date of the filing of 
     the petition; and
       ``(B) does not include a repurchase obligation under a 
     participation in a commercial mortgage loan,

     and, for purposes of this paragraph, the term `qualified 
     foreign government security' means a security that is a 
     direct obligation of, or that is fully guaranteed by, the 
     central government of a member of the Organization for 
     Economic Cooperation and Development;'';
       (D) in paragraph (48) by inserting ``or exempt from such 
     registration under such section pursuant to an order of the 
     Securities and Exchange Commission'' after ``1934''; and
       (E) by amending paragraph (53B) to read as follows:
       ``(53B) `swap agreement'--
       ``(A) means--
       ``(i) any agreement, including the terms and conditions 
     incorporated by reference in such agreement, which is an 
     interest rate swap, option, future, or forward agreement, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, and basis swap; a spot, same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, future, or forward 
     agreement; an equity index or an equity swap, option, future, 
     or forward agreement; a debt index or a debt swap, option, 
     future, or forward agreement; a credit spread or a credit 
     swap, option, future, or forward agreement; a commodity index 
     or a commodity swap, option, future, or forward agreement; or 
     a weather swap, weather derivative, or weather option;
       ``(ii) any agreement or transaction similar to any other 
     agreement or transaction referred to in this paragraph that--

       ``(I) is presently, or in the future becomes, regularly 
     entered into in the swap market (including terms and 
     conditions incorporated by reference therein); and
       ``(II) is a forward, swap, future, or option on 1 or more 
     rates, currencies, commodities, equity securities, or other 
     equity instruments, debt securities or other debt 
     instruments, or economic indices or measures of economic risk 
     or value;

       ``(iii) any combination of agreements or transactions 
     referred to in this paragraph;
       ``(iv) any option to enter into an agreement or transaction 
     referred to in this paragraph;
       ``(v) a master agreement that provides for an agreement or 
     transaction referred to in clause (i), (ii), (iii), or (iv), 
     together with all supplements to any such master agreement, 
     and without regard to whether the master agreement contains 
     an agreement or transaction that is not a swap agreement 
     under this paragraph, except that the master agreement shall 
     be considered to be a swap agreement under this paragraph 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in clause (i), (ii), 
     (iii), or (iv); or
       ``(B) any security agreement or arrangement or other credit 
     enhancement related to any agreements or transactions 
     referred to in subparagraph (A), but not to exceed the actual 
     value of such contract on the date of the filing of the 
     petition; and
       ``(C) is applicable for purposes of this title only and 
     shall not be construed or applied so as to challenge or 
     affect the characterization, definition, or treatment of any 
     swap agreement under any other statute, regulation, or rule, 
     including the Securities Act of 1933, the Securities Exchange 
     Act of 1934, the Public Utility Holding Company Act of 1935, 
     the Trust Indenture Act of 1939, the Investment Company Act 
     of 1940, the Investment Advisers Act of 1940, the Securities 
     Investor Protection Act of 1970, the Commodity Exchange Act, 
     and the regulations prescribed by the Securities and Exchange 
     Commission or the Commodity Futures Trading Commission.'';
       (2) by amending section 741(7) to read as follows:
       ``(7) `securities contract'--
       ``(A) means--
       ``(i) a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit or mortgage loans or interests 
     therein (including an interest therein or based on the value 
     thereof), or option on any of the foregoing, including an 
     option to purchase or sell any such security, certificate of 
     deposit, loan, interest, group or index, or option;
       ``(ii) any option entered into on a national securities 
     exchange relating to foreign currencies;
       ``(iii) the guarantee by or to any securities clearing 
     agency of a settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, or mortgage loans or interests therein 
     (including any interest therein or based on the value 
     thereof), or option on any of the foregoing, including an 
     option to purchase or sell any such security, certificate of 
     deposit, loan, interest, group or index, or option;
       ``(iv) any margin loan;
       ``(v) any other agreement or transaction that is similar to 
     an agreement or transaction referred to in this paragraph;
       ``(vi) any combination of the agreements or transactions 
     referred to in this paragraph;
       ``(vii) any option to enter into any agreement or 
     transaction referred to in this paragraph;
       ``(viii) a master agreement that provides for an agreement 
     or transaction referred to in clause (i), (ii), (iii), (iv), 
     (v), (vi), or (vii), together with all supplements to any 
     such master agreement, without regard to whether the master 
     agreement provides for an agreement or transaction that is 
     not a securities contract under this paragraph, except that 
     such master agreement shall be considered to be a securities 
     contract under this paragraph only with respect to each 
     agreement or transaction under such master agreement that is 
     referred to in clause (i), (ii), (iii), (iv), (v), (vi), or 
     (vii); or
       ``(ix) any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this paragraph, but not to exceed the actual 
     value of such contract on the date of the filing of the 
     petition; and

[[Page H10694]]

       ``(B) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan.''; and
       (3) in section 761(4)--
       (A) by striking ``or'' at the end of subparagraph (D); and
       (B) by adding at the end the following:
       ``(F) any other agreement or transaction that is similar to 
     an agreement or transaction referred to in this paragraph;
       ``(G) any combination of the agreements or transactions 
     referred to in this paragraph;
       ``(H) any option to enter into an agreement or transaction 
     referred to in this paragraph;
       ``(I) a master agreement that provides for an agreement or 
     transaction referred to in subparagraph (A), (B), (C), (D), 
     (E), (F), (G), or (H), together with all supplements to such 
     master agreement, without regard to whether the master 
     agreement provides for an agreement or transaction that is 
     not a commodity contract under this paragraph, except that 
     the master agreement shall be considered to be a commodity 
     contract under this paragraph only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subparagraph (A), (B), (C), (D), (E), (F), 
     (G), or (H); or
       ``(J) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this paragraph, but not to exceed the actual value of 
     such contract on the date of the filing of the petition;''.
       (b) Definitions of Financial Institution, Financial 
     Participant, and Forward Contract Merchant.--Section 101 of 
     title 11, United States Code, is amended--
       (1) by striking paragraph (22) and inserting the following 
     new paragraph:
       ``(22) the term `financial institution'--
       ``(A) means a Federal reserve bank or an entity (domestic 
     or foreign) that is a commercial or savings bank, industrial 
     savings bank, savings and loan association, trust company, a 
     bank or a corporation organized under section 25A of the 
     Federal Reserve Act and, when any such bank or entity is 
     acting as agent or custodian for a customer in connection 
     with a securities contract, as defined in section 741, such 
     customer; and
       ``(B) includes any person described in subparagraph (A) 
     which operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991;'';
       (2) by inserting after paragraph (22) the following:
       ``(22A) `financial participant' means an entity that, at 
     the time it enters into a securities contract, commodity 
     contract or forward contract, or at the time of the filing of 
     the petition, has 1 or more agreements or transactions 
     described in paragraph (1), (2), (3), (4), (5), or (6) of 
     section 561(a) with the debtor or any other entity (other 
     than an affiliate) of a total gross dollar value of at least 
     $1,000,000,000 in notional or actual principal amount 
     outstanding on any day during the previous 15-month period, 
     or has gross mark-to-market positions of at least 
     $100,000,000 (aggregated across counterparties) in 1 or more 
     such agreement or transaction with the debtor or any other 
     entity (other than an affiliate) on any day during the 
     previous 15-month period;''; and
       (3) by amending paragraph (26) to read as follows:
       ``(26) `forward contract merchant' means a Federal reserve 
     bank, or an entity whose business consists in whole or in 
     part of entering into forward contracts as or with merchants 
     or in a commodity, as defined or in section 761, or any 
     similar good, article, service, right, or interest which is 
     presently or in the future becomes the subject of dealing or 
     in the forward contract trade;''.
       (c) Definition of Master Netting Agreement and Master 
     Netting Agreement Participant.--Section 101 of title 11, 
     United States Code, is amended by inserting after paragraph 
     (38) the following new paragraphs:
       ``(38A) `master netting agreement' means an agreement 
     providing for the exercise of rights, including rights of 
     netting, setoff, liquidation, termination, acceleration, or 
     closeout, under or in connection with 1 or more contracts 
     that are described in any 1 or more of paragraphs (1) through 
     (5) of section 561(a), or any security agreement or 
     arrangement or other credit enhancement related to 1 or more 
     of the foregoing. If a master netting agreement contains 
     provisions relating to agreements or transactions that are 
     not contracts described in paragraphs (1) through (5) of 
     section 561(a), the master netting agreement shall be deemed 
     to be a master netting agreement only with respect to those 
     agreements or transactions that are described in any 1 or 
     more of the paragraphs (1) through (5) of section 561(a);
       ``(38B) `master netting agreement participant' means an 
     entity that, at any time before the filing of the petition, 
     is a party to an outstanding master netting agreement with 
     the debtor;''.
       (d) Swap Agreements, Securities Contracts, Commodity 
     Contracts, Forward Contracts, Repurchase Agreements, and 
     Master Netting Agreements Under the Automatic-Stay.--
       (1) In general.--Section 362(b) of title 11, United States 
     Code, is amended--
       (A) in paragraph (6), by inserting ``, pledged to and under 
     the control of,'' after ``held by'';
       (B) in paragraph (7), by inserting ``, pledged to and under 
     the control of,'' after ``held by'';
       (C) by amending paragraph (17) to read as follows:
       ``(17) under subsection (a), of the setoff by a swap 
     participant of a mutual debt and claim under or in connection 
     with 1 or more swap agreements that constitutes the setoff of 
     a claim against the debtor for any payment or other transfer 
     of property due from the debtor under or in connection with 
     any swap agreement against any payment due to the debtor from 
     the swap participant under or in connection with any swap 
     agreement or against cash, securities, or other property held 
     by, pledged to and under the control of, or due from such 
     swap participant to margin, guarantee, secure, or settle any 
     swap agreement;'';
       (D) in paragraph (18) by striking the period at the end and 
     inserting ``; or''; and
       (E) by inserting after paragraph (18) the following new 
     paragraph:
       ``(19) under subsection (a), of the setoff by a master 
     netting agreement participant of a mutual debt and claim 
     under or in connection with 1 or more master netting 
     agreements or any contract or agreement subject to such 
     agreements that constitutes the setoff of a claim against the 
     debtor for any payment or other transfer of property due from 
     the debtor under or in connection with such agreements or any 
     contract or agreement subject to such agreements against any 
     payment due to the debtor from such master netting agreement 
     participant under or in connection with such agreements or 
     any contract or agreement subject to such agreements or 
     against cash, securities, or other property held by, pledged 
     to and under the control of, or due from such master netting 
     agreement participant to margin, guarantee, secure, or settle 
     such agreements or any contract or agreement subject to such 
     agreements, to the extent such participant is eligible to 
     exercise such offset rights under paragraph (6), (7), or (17) 
     for each individual contract covered by the master netting 
     agreement in issue.''.
       (2) Limitation.--Section 362 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(i) Limitation.--The exercise of rights not subject to 
     the stay arising under subsection (a) pursuant to paragraph 
     (6), (7), or (17), or (32) of subsection (b) shall not be 
     stayed by any order of a court or administrative agency in 
     any proceeding under this title.''.
       (e) Limitation of Avoidance Powers Under Master Netting 
     Agreement.--Section 546 of title 11, United States Code, is 
     amended--
       (1) in subsection (g) (as added by section 103 of Public 
     Law 101-311)--
       (A) by striking ``under a swap agreement''; and
       (B) by striking ``in connection with a swap agreement'' and 
     inserting ``under or in connection with any swap agreement''; 
     and
       (2) by adding at the end the following:
       ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), 
     and 548(b), the trustee may not avoid a transfer made by or 
     to a master netting agreement participant under or in 
     connection with any master netting agreement or any 
     individual contract covered thereby that is made before the 
     commencement of the case, except under section 548(a)(1)(A), 
     and except to the extent the trustee could otherwise avoid 
     such a transfer made under an individual contract covered by 
     such master netting agreement.''.
       (f) Fraudulent Transfers of Master Netting Agreements.--
     Section 548(d)(2) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (C), by striking ``and'';
       (2) in subparagraph (D), by striking the period and 
     inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(E) a master netting agreement participant that receives 
     a transfer in connection with a master netting agreement or 
     any individual contract covered thereby takes for value to 
     the extent of such transfer, except, with respect to a 
     transfer under any individual contract covered thereby, to 
     the extent such master netting agreement participant 
     otherwise did not take (or is otherwise not deemed to have 
     taken) such transfer for value.''.
       (g) Termination or Acceleration of Securities Contracts.--
     Section 555 of title 11, United States Code, is amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 555. Contractual right to liquidate, terminate, or 
       accelerate a securities contract'';

     and
       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''.
       (h) Termination or Acceleration of Commodities or Forward 
     Contracts.--Section 556 of title 11, United States Code, is 
     amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 556. Contractual right to liquidate, terminate, or 
       accelerate a commodities contract or forward contract'';

     and
       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''.
       (i) Termination or Acceleration of Repurchase Agreements.--
     Section 559 of title 11, United States Code, is amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 559. Contractual right to liquidate, terminate, or 
       accelerate a repurchase agreement'';

     and
       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''.
       (j) Liquidation, Termination, or Acceleration of Swap 
     Agreements.--Section 560 of title 11, United States Code, is 
     amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 560. Contractual right to liquidate, terminate, or 
       accelerate a swap agreement'';

       (2) in the first sentence, by striking ``termination of a 
     swap agreement'' and inserting ``liquidation, termination, or 
     acceleration of 1 or more swap agreements''; and

[[Page H10695]]

       (3) by striking ``in connection with any swap agreement'' 
     and inserting ``in connection with the termination, 
     liquidation, or acceleration of 1 or more swap agreements''.
       (k) Liquidation, Termination, Acceleration, or Offset Under 
     a Master Netting Agreement and Across Contracts.--(1) Title 
     11, United States Code, is amended by inserting after section 
     560 the following:

     ``Sec. 561. Contractual right to terminate, liquidate, 
       accelerate, or offset under a master netting agreement and 
       across contracts

       ``(a) In General.--Subject to subsection (b), the exercise 
     of any contractual right, because of a condition of the kind 
     specified in section 365(e)(1), to cause the termination, 
     liquidation, or acceleration of or to offset or net 
     termination values, payment amounts or other transfer 
     obligations arising under or in connection with 1 or more (or 
     the termination, liquidation, or acceleration of 1 or more)--
       ``(1) securities contracts, as defined in section 741(7);
       ``(2) commodity contracts, as defined in section 761(4);
       ``(3) forward contracts;
       ``(4) repurchase agreements;
       ``(5) swap agreements; or
       ``(6) master netting agreements,
     shall not be stayed, avoided, or otherwise limited by 
     operation of any provision of this title or by any order of a 
     court or administrative agency in any proceeding under this 
     title.
       ``(b) Exception.--
       ``(1) A party may exercise a contractual right described in 
     subsection (a) to terminate, liquidate, or accelerate only to 
     the extent that such party could exercise such a right under 
     section 555, 556, 559, or 560 for each individual contract 
     covered by the master netting agreement in issue.
       ``(2) If a debtor is a commodity broker subject to 
     subchapter IV of chapter 7--
       ``(A) a party may not net or offset an obligation to the 
     debtor arising under, or in connection with, a commodity 
     contract against any claim arising under, or in connection 
     with, other instruments, contracts, or agreements listed in 
     subsection (a), except to the extent the party has positive 
     net equity in the commodity accounts at the debtor, as 
     calculated under such subchapter; and
       ``(B) another commodity broker may not net or offset an 
     obligation to the debtor arising under, or in connection 
     with, a commodity contract entered into or held on behalf of 
     a customer of the debtor against any claim arising under, or 
     in connection with, other instruments, contracts, or 
     agreements listed in subsection (a).
       ``(c) Rule of Application.--Subparagraphs (A) and (B) of 
     subsection (b)(2) shall not be construed as prohibiting the 
     offset of claims and obligations arising pursuant to--
       ``(1) a cross-margining arrangement that has been approved 
     by the Commodity Futures Trading Commission or that has been 
     submitted to such Commission pursuant to section 5a(a)(12) of 
     the Commodity Exchange Act and has been permitted to go into 
     effect; or
       ``(2) another netting arrangement, between a clearing 
     organization (as defined in section 761) and another entity, 
     that has been approved by the Commodity Futures Trading 
     Commission.
       ``(d) Definition.--As used in this section, the term 
     `contractual right' includes a right set forth in a rule or 
     bylaw of a national securities exchange, a national 
     securities association, or a securities clearing agency, a 
     right set forth in a bylaw of a clearing organization or 
     contract market or in a resolution of the governing board 
     thereof, and a right, whether or not evidenced in writing, 
     arising under common law, under law merchant, or by reason of 
     normal business practice.''.
       (2) Conforming amendment.--The table of sections of chapter 
     5 of title 11, United States Code, is amended by inserting 
     after the item relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
              under a master netting agreement and across contracts.''.
       (l) Municipal Bankruptcies.--Section 901(a) of title 11, 
     United States Code, is amended--
       (1) by inserting ``555, 556,'' after ``553,''; and
       (2) by inserting ``559, 560, 561, 562,'' after ``557,''.
       (m) Ancillary Proceedings.--Section 304 of title 11, United 
     States Code, is amended by adding at the end the following 
     new subsection:
       ``(d) Any provisions of this title relating to securities 
     contracts, commodity contracts, forward contracts, repurchase 
     agreements, swap agreements, or master netting agreements 
     shall apply in a case ancillary to a foreign proceeding under 
     this section or any other section of this title so that 
     enforcement of contractual provisions of such contracts and 
     agreements in accordance with their terms will not be stayed 
     or otherwise limited by operation of any provision of this 
     title or by order of a court in any proceeding under this 
     title, and to limit avoidance powers to the same extent as in 
     a proceeding under chapter 7 or 11 (such enforcement not to 
     be limited based on the presence or absence of assets of the 
     debtor in the United States).''.
       (n) Commodity Broker Liquidations.--Title 11, United States 
     Code, is amended by inserting after section 766 the 
     following:

     ``Sec. 767. Commodity broker liquidation and forward contract 
       merchants, commodity brokers, stockbrokers, financial 
       institutions, financial participants, securities clearing 
       agencies, swap participants, repo participants, and master 
       netting agreement participants

       ``Notwithstanding any other provision of this title, the 
     exercise of rights by a forward contract merchant, commodity 
     broker, stockbroker, financial institution, financial 
     participant, securities clearing agency, swap participant, 
     repo participant, or master netting agreement participant 
     under this title shall not affect the priority of any 
     unsecured claim it may have after the exercise of such 
     rights.''.
       (o) Stockbroker Liquidations.--Title 11, United States 
     Code, is amended by inserting after section 752 the 
     following:

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

       ``Notwithstanding any other provision of this title, the 
     exercise of rights by a forward contract merchant, commodity 
     broker, stockbroker, financial institution, securities 
     clearing agency, swap participant, repo participant, 
     financial participant, or master netting agreement 
     participant under this title shall not affect the priority of 
     any unsecured claim it may have after the exercise of such 
     rights.''.
       (p) Setoff.--Section 553 of title 11, United States Code, 
     is amended--
       (1) in subsection (a)(3)(C), by inserting ``(except for a 
     setoff of a kind described in section 362(b)(6), 362(b)(7), 
     362(b)(17), 362(b)(32), 555, 556, 559, 560 or 561)'' before 
     the period; and
       (2) in subsection (b)(1), by striking ``362(b)(14)'' and 
     inserting ``362(b)(17), 362(b)(32), 555, 556, 559, 560, 
     561''.
       (q) Securities Contracts, Commodity Contracts, and Forward 
     Contracts.--Title 11, United States Code, is amended--
       (1) in section 362(b)(6), by striking ``financial 
     institutions,'' each place such term appears and inserting 
     ``financial institution, financial participant'';
       (2) in section 546(e), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (3) in section 548(d)(2)(B), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (4) in section 555--
       (A) by inserting ``financial participant,'' after 
     ``financial institution,''; and
       (B) by inserting before the period at the end ``, a right 
     set forth in a bylaw of a clearing organization or contract 
     market or in a resolution of the governing board thereof, and 
     a right, whether or not in writing, arising under common law, 
     under law merchant, or by reason of normal business 
     practice''; and
       (5) in section 556, by inserting ``, financial 
     participant'' after ``commodity broker''.
       (r) Conforming Amendments.--Title 11, United States Code, 
     is amended--
       (1) in the table of sections of chapter 5--
       (A) by amending the items relating to sections 555 and 556 
     to read as follows:

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

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

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

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

     SEC. 9. RECORDKEEPING REQUIREMENTS.

       Section 11(e)(8) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)) is amended by adding at the end the 
     following new subparagraph:
       ``(H) Recordkeeping requirements.--The Corporation, in 
     consultation with the appropriate Federal banking agencies, 
     may prescribe regulations requiring more detailed 
     recordkeeping with respect to qualified financial contracts 
     (including market valuations) by insured depository 
     institutions.''.

     SEC. 10. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION 
                   REQUIREMENT.

       Section 13(e)(2) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(e)(2)) is amended to read as follows:
       ``(2) Exemptions from contemporaneous execution 
     requirement.--An agreement to provide for the lawful 
     collateralization of--
       ``(A) deposits of, or other credit extension by, a Federal, 
     State, or local governmental entity, or of any depositor 
     referred to in section 11(a)(2), including an agreement to 
     provide collateral in lieu of a surety bond;
       ``(B) bankruptcy estate funds pursuant to section 345(b)(2) 
     of title 11, United States Code;
       ``(C) extensions of credit, including any overdraft, from a 
     Federal reserve bank or Federal home loan bank; or
       ``(D) 1 or more qualified financial contracts, as defined 
     in section 11(e)(8)(D),

     shall not be deemed invalid pursuant to paragraph (1)(B) 
     solely because such agreement was

[[Page H10696]]

     not executed contemporaneously with the acquisition of the 
     collateral or because of pledges, delivery, or substitution 
     of the collateral made in accordance with such agreement.''.

     SEC. 11. DAMAGE MEASURE.

       (a) In General.--Title 11, United States Code, is amended--
       (1) by inserting after section 561 the following:

     ``Sec. 562. Damage measure in connection with swap 
       agreements, securities contracts, forward contracts, 
       commodity contracts, repurchase agreements, or master 
       netting agreements

       ``If the trustee rejects a swap agreement, securities 
     contract as defined in section 741, forward contract, 
     commodity contract (as defined in section 761) repurchase 
     agreement, or master netting agreement pursuant to section 
     365(a), or if a forward contract merchant, stockbroker, 
     financial institution, securities clearing agency, repo 
     participant, financial participant, master netting agreement 
     participant, or swap participant liquidates, terminates, or 
     accelerates such contract or agreement, damages shall be 
     measured as of the earlier of--
       ``(1) the date of such rejection; or
       ``(2) the date of such liquidation, termination, or 
     acceleration.''; and
       (2) in the table of sections of chapter 5 by inserting 
     after the item relating to section 561 the following:

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

     SEC. 12. SIPC STAY.

       Section 5(b)(2) of the Securities Investor Protection Act 
     of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding after 
     subparagraph (B) the following new subparagraph:
       ``(C) Exception from stay.--
       ``(i) Notwithstanding section 362 of title 11, United 
     States Code, neither the filing of an application under 
     subsection (a)(3) nor any order or decree obtained by the 
     Securities Investor Protection Corporation from the court 
     shall operate as a stay of any contractual rights of a 
     creditor to liquidate, terminate, or accelerate a securities 
     contract, commodity contract, forward contract, repurchase 
     agreement, swap agreement, or master netting agreement, each 
     as defined in title 11 United States Code, to offset or net 
     termination values, payment amounts, or other transfer 
     obligations arising under or in connection with 1 or more of 
     such contracts or agreements, or to foreclose on any cash 
     collateral pledged by the debtor whether or not with respect 
     to 1 or more of such contracts or agreements.
       ``(ii) Notwithstanding clause (i), such application, order, 
     or decree may operate as a stay of the foreclosure on or 
     disposition of securities collateral pledged by the debtor, 
     whether or not with respect to 1 or more of such contracts or 
     agreements, securities sold by the debtor under a repurchase 
     agreement or securities lent under a securities lending 
     agreement.
       ``(iii) As used in this section, the term `contractual 
     right' includes a right set forth in a rule or bylaw of a 
     national securities exchange, a national securities 
     association, or a securities clearing agency, a right set 
     forth in a bylaw of a clearing organization or contract 
     market or in a resolution of the governing board thereof, and 
     a right, whether or not in writing, arising under common law, 
     under law merchant, or by reason of normal business 
     practice.''.

     SEC. 13. ASSET-BACKED SECURITIZATIONS.

       Section 541 of title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) by striking ``or'' at the end of paragraph (4)(B)(ii);
       (B) by redesignating paragraph (5) as paragraph (6); and
       (C) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) any eligible asset (or proceeds thereof), to the 
     extent that such eligible asset was transferred by the debtor 
     before the date of commencement of the case, to an eligible 
     entity in connection with an asset-backed securitization, 
     except to the extent such asset (or proceeds or value 
     thereof) may be recovered by the trustee under section 550 by 
     virtue of avoidance under section 548(a)(1); or''; and
       (2) by adding at the end the following new subsection:
       ``(e) For purposes of this section, the following 
     definitions shall apply:
       ``(1) the term `asset-backed securitization' means a 
     transaction in which eligible assets transferred to an 
     eligible entity are used as the source of payment on 
     securities, including all securities issued by governmental 
     units, at least 1 class or tranche of which is rated 
     investment grade by 1 or more nationally recognized 
     securities rating organizations, when the securities are 
     initially issued by an issuer;
       ``(2) the term `eligible asset' means--
       ``(A) financial assets (including interests therein and 
     proceeds thereof), either fixed or revolving, whether or not 
     such assets are in existence as of the date of the transfer, 
     including residential and commercial mortgage loans, consumer 
     receivables, trade receivables, assets of governmental units 
     (including payment obligations relating to taxes, receipts, 
     fines, tickets, and other sources of revenue), and lease 
     receivables, that, by their terms, convert into cash within a 
     finite time period, plus any residual interest in property 
     subject to receivables included in such financial assets plus 
     any rights or other assets designed to assure the servicing 
     or timely distribution of proceeds to security holders;
       ``(B) cash; and
       ``(C) securities, including all securities issued by 
     governmental units.
       ``(3) the term `eligible entity' means--
       ``(A) an issuer; or
       ``(B) a trust, corporation, partnership, governmental unit, 
     limited liability company (including a single member limited 
     liability company), or other entity engaged exclusively in 
     the business of acquiring and transferring eligible assets 
     directly or indirectly to an issuer and taking actions 
     ancillary thereto;
       ``(4) the term `issuer' means a trust, corporation, 
     partnership, governmental unit, limited liability company 
     (including a single member limited liability company), or 
     other entity engaged exclusively in the business of acquiring 
     and holding eligible assets, issuing securities backed by 
     eligible assets, and taking actions ancillary thereto; and
       ``(5) the term `transferred' means the debtor, pursuant to 
     a written agreement, represented and warranted that eligible 
     assets were sold, contributed, or otherwise conveyed with the 
     intention of removing them from the estate of the debtor 
     pursuant to subsection (b)(5) (whether or not reference is 
     made to this title or any section of this title), 
     irrespective, without limitation, of--
       ``(A) whether the debtor directly or indirectly obtained or 
     held an interest in the issuer or in any securities issued by 
     the issuer;
       ``(B) whether the debtor had an obligation to repurchase or 
     to service or supervise the servicing of all or any portion 
     of such eligible assets; or
       ``(C) the characterization of such sale, contribution, or 
     other conveyance for tax, accounting, regulatory reporting, 
     or other purposes.''.

     SEC. 14. APPLICATION OF AMENDMENTS.

       The amendments made by this Act shall apply with respect to 
     cases commenced or appointments made under any Federal or 
     State law after the date of the enactment of this Act, but 
     shall not apply with respect to cases commenced or 
     appointments made under any Federal or State law before the 
     date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Iowa (Mr. Leach) and the gentleman from Texas (Mr. Bentsen) each will 
control 20 minutes.
  The Chair recognizes the gentleman from Iowa (Mr. Leach).
  Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the provisions of this bill, the Financial Contract 
Netting Improvement Act, are not new to the House. They were approved 
in the 105th Congress and again this year as part of the bankruptcy 
reform legislation. But because of the uncertainty whether a bankruptcy 
bill can become law, it is important to move this legislation on its 
own.
  After all, if a major derivatives player were to become insolvent, 
cascading effects on the economy could too easily ensue. What this 
change in law accomplishes is the orderly unwinding of contracts in a 
timely, indeed almost immediate basis, in the event of a bankruptcy 
circumstance. If, on the other hand, the derivatives contracts of a 
company that declares bankruptcy become tied up on a lengthy basis in 
bankruptcy court proceedings, the financial system could be 
destabilized.
  This is the case in part because of the timing but in larger part 
because of the difference between the growing size of derivatives 
contracts and their netted value, the latter being quantumly smaller 
and more manageable.
  Without liquidation procedures of this nature, delays in the handling 
of these contracts could spread to financial problems of one 
derivatives firm to other companies which could be required to make 
payments on the other side of a deal, but unable to immediately collect 
on the other side.
  This legislation, which has bipartisan sponsorship and is strongly 
supported by both the Federal Reserve and the Treasury, may not seem 
important in good times. But if there is a downturn in the economy or a 
wrench in world politics, its provisions become self-evidently 
imperative.
  In closing, I would like to thank the chairman of the Committee on 
the Judiciary and the chairman of the Committee on Commerce, the 
gentleman from Illinois (Mr. Hyde) and the gentleman from Virginia (Mr. 
Bliley), for their cooperation in allowing this bill to come to the 
floor today. I include for the Record an exchange of letters between 
the Committee on Banking and these committees.
  I would also again like to thank the minority, particularly the 
gentleman

[[Page H10697]]

from New York (Mr. LaFalce) and the gentleman from Texas (Mr. Bentsen), 
whose expertise in these areas is second to none on the committee.

                                         House of Representatives,


                                        Committee on Commerce,

                                Washington, DC, September 6, 2000.
     Hon. Jim Leach,
     Chairman, Committee on Banking and Financial Services, 
         Washington, DC.
       Dear Jim: I am writing with regard to your committee's 
     recent action on H.R. 1161, the Financial Contract Netting 
     Improvement Act of 1999. As you know, the Committee on 
     Commerce was named as an additional committee of jurisdiction 
     upon the bill's introduction based upon its jurisdiction over 
     securities and exchanges pursuant to Rule X of the Rules of 
     the House of Representatives.
       Because of the importance of this legislation, I recognize 
     your desire to bring it before the House in an expeditious 
     manner, and I will not exercise the Committee's right to 
     further consideration of this legislation. By agreeing to 
     waive its consideration of the bill, however, the Committee 
     on Commerce does not waive its jurisdiction of H.R. 1161. In 
     addition, the Committee on Commerce reserves its authority to 
     seek conferees on any provisions of the bill that are within 
     its jurisdiction during any House-Senate conference that may 
     be convened on this or similar legislation. I appreciate your 
     commitment to support any request by the Commerce Committee 
     for conferees on H.R. 1161 or similar legislation.
       I request that you include a copy of this letter and your 
     response in your committee report on the bill and as part of 
     the Record during consideration of the legislation on the 
     House floor.
       Thank you for your attention to these matters.
           Sincerely,
                                                       Tom Bliley,
     Chairman.
                                  ____

         House of Representatives, Committee on Banking and 
           Financial Services
                                Washington, DC, September 7, 2000.
     Hon. Tom Bliley,
     Chairman, Committee on Commerce, Washington, DC.
       Dear Tom: I have received your letter concerning H.R. 1161, 
     which the Committee on Banking and Financial Services on July 
     27, 2000, voted to favorably report to the House. In your 
     letter you indicate that the Committee on Commerce would 
     agree not to seek further consideration of H.R. 1161. I 
     appreciate your cooperation in this matter and understand 
     that the Commerce Committee's jurisdictional interest in this 
     legislation is not prejudiced by such cooperation. Pursuant 
     to your request I will include a copy of your letter and my 
     response in the report to accompany H.R. 1161.
       Thanks again for your assistance.
           Sincerely,
                                                   James A. Leach,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                                Washington, DC, September 7, 2000.
     Hon. James A. Leach,
     Chairman, Committee on Banking and Financial Services, House 
         of Representatives, Washington, DC.
       Dear Chairman Leach: I am writing in regard to H.R. 1161, 
     the Financial Contract Netting Improvement Act of 1999. As 
     you know, the Committee on the Judiciary was named as an 
     additional committee of jurisdiction upon the introduction of 
     H.R. 1161 pursuant to its jurisdiction over bankruptcy law 
     under Rule X of the Rules of the House. The Judiciary 
     Committee has jurisdictional interests in sections 8, 11, 13 
     and 15 of this bill.
       The Judiciary Committee has no substantive objection to 
     H.R. 1161 as ordered to be reported by your Committee on July 
     27, 2000. It is my understanding that the bill as ordered 
     reported is substantively similar to Title X of H.R. 833, the 
     Bankruptcy Reform Act of 1999, which the House passed, as 
     amended, on May 5, 1999. Therefore, in view of the 
     substantively similar language and in the interest of 
     expeditiously moving H.R. 1161 forward, the Judiciary 
     Committee will agree to be discharged from further 
     consideration of H.R. 1161. By agreeing not to exercise its 
     jurisdiction, the Judiciary Committee does not waive its 
     jurisdictional interest in this bill or similar legislation. 
     This agreement is based on the understanding that the 
     Judiciary Committee's jurisdiction will be protected through 
     the appointment of conferees should H.R. 1161 or a similar 
     bill go to conference. Further, I request that a copy of this 
     letter be included in the Congressional Record as part of the 
     floor debate on this bill.
       I appreciate your consideration of our interest in this 
     bill and look forward to working with you to secure its 
     passage.
           Sincerely yours,
                                                    Henry J. Hyde,
     Chairman.
                                  ____

         House of Representatives, Committee on Banking and 
           Financial Services,
                                Washington, DC, September 7, 2000.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Henry: This letter responds to your correspondence, 
     dated September 7, 2000, concerning H.R. 1161, the Financial 
     Contract Netting Improvement Act of 1999, which was jointly 
     referred to the Committee on Banking and Financial Services 
     and the Committee on the Judiciary.
       I agree that the bill contains matter within the Judiciary 
     Committee's jurisdiction and I appreciate your Committee's 
     willingness to be discharged from further consideration of 
     H.R. 1161 so that we may proceed to the floor.
       Pursuant to your request, a copy of your letter will be 
     included in the Congressional Record during consideration of 
     H.R. 1161.
           Sincerely,
                                                   James A. Leach,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Mr. BENTSEN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I want to commend the efforts of the chairman, the 
gentleman from Iowa (Mr. Leach), as well as the gentleman from New York 
(Mr. LaFalce), the ranking member, to insist that this crucial 
legislation come to the floor of the House today.
  I also want to thank the chairman and ranking members of the two 
committees of jurisdiction, the Committee on Commerce and the Committee 
on the Judiciary, for their roles in discharging H.R. 1161 for today's 
suspension calendar.
  I do not believe there is any contention over the measure's 
substance. The House, as the chairman pointed out, has enacted this 
legislation in the past. The Committee on Banking has reported the bill 
three times in this Congress and once in the 105th Congress.
  This is a bill that would enact into law a priority recommendation of 
the President's Working Group on financial markets.

                              {time}  1745

  The absence of controversy should not give a false impression of a 
lack of urgency. Last Friday, in an unusual joint letter the Secretary 
of the Treasury, Mr. Summers, and the Federal Reserve Chairman, Mr. 
Greenspan, wrote the majority and minority leadership of both Houses 
urging adoption of H.R. 1161 during the remaining days of this 
Congress; and I might add that we just received the statement of 
administration policy strongly supporting passage of H.R. 1161, and 
states that this is something that, as I stated, the President's 
Working Group on Financial Markets favored which included not only the 
Secretary of the Treasury and the chairman of the Federal Reserve but 
also the chairman of the Securities and Exchange Commission and the 
Commodities Futures Trading Commission.
  The chairman of the Federal Reserve and the Secretary, in their 
letter to the leadership of the Congress, said this bill would reduce 
the likelihood that incidents such as the near collapse of long-term 
capital management in September 1998 would pose a broader threat to our 
financial system.
  Some in this Chamber might not vividly recall the long-term capital 
management incident, but it sent shudders through the financial world 
and could have easily destabilized the world's financial system. The 
Federal Reserve salvaged the company and luckily the rescue it 
orchestrated kept the system afloat. I do not believe, however, the 
American financial system should be dependent upon luck.
  Last week, the House approved a conceptually related bill when it 
reauthorized the Commodity Exchange Act on the suspension vote by 377-
4. That bill, in part, provided legal certainty for swaps among healthy 
institutions. This bill provides legal certainty for what is owed when 
an institution becomes terminal. By all reports, the difficulty in 
transmitting this measure to the President is not in this House. It is 
in the other Chamber. Substance, again, is not the impediment. Rather, 
in the other body this bill is entangled in another highly 
controversial piece of legislation which some in that Chamber are 
refusing to unbundle in order to pass the content of H.R. 1161. Failing 
to enact this legislation this year is to take a huge risk with 
domestic and international finance and the stability of our financial 
markets.
  I hope that risk and the House action today will send a powerful 
signal to the other body that it must pass this legislation, and I 
trust that they will do so.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 4 minutes to the distinguished 
gentlewoman from New Jersey (Mrs. Roukema).

[[Page H10698]]

  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. Mr. Speaker, I rise in strong support of H.R. 1161. I 
want to associate myself with the statements of the chairman with 
respect to the benefits of this legislation.
  Clearly, the primary purpose is to minimize the systemic risk that is 
evident in our Nation's financial system. The bill serves to minimize 
that risk that would occur when a counterparty to a derivatives 
contract becomes insolvent. This legislation amends our banking and 
bankruptcy insolvency laws to allow netting to fulfill the contracts of 
the financial and over-the-counter derivatives instruments that are 
often traded among large financial institutions.
  Mr. Speaker, this bill should have strong bipartisan support, as it 
has in the past and it should here today. It must be said that in the 
last Congress, the Committee on Banking and Financial Services reported 
this kind of legislation out and it included netting provisions; and 
additionally, as has been noted, this Congress included these 
provisions in a bankruptcy bill. While I strongly support the enactment 
of comprehensive bankruptcy reform this year, it is my understanding 
that that does not seem possible because of some concerns on the Senate 
side, not well founded in my opinion but nevertheless concerns; but I 
am most grateful to the chairman for bringing this component of the 
bill before us so that we can pass this important bill and deal with 
the netting provisions.
  Finally, Mr. Speaker, I want to acknowledge and commend the chairman 
of our Committee on Banking and Financial Services for his exceptional 
leadership. Not only did we get the landmark and historic financial 
modernization bill through under his leadership, but evidently here 
tonight we are passing two additional excellent pieces of legislation.
  Mr. BENTSEN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I just want to say, and this may be the only bill I have 
ever managed with the chairman of the committee, I want to associate 
myself with the remarks of the gentleman from New York (Mr. LaFalce) on 
the previous bill in honoring the chairman on his work. I have had the 
honor to serve with him for 6 years on the Committee on Banking and 
Financial Services while he has been the chairman. He has been both a 
worthy teacher and supporter and adversary and has always been very 
kind to me, and his leadership is to be respected.
  Mr. Speaker, I yield back the balance of my time.
  Mr. LEACH. Mr. Speaker, I thank the gentleman from Texas (Mr. 
Bentsen), and I would only again reciprocate by saying how much I have 
appreciated working with him, and I would urge support for this very 
important legislation.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Thornberry). The question is on the 
motion offered by the gentleman from Iowa (Mr. Leach) that the House 
suspend the rules and pass the bill, H.R. 1161, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________