[Congressional Record Volume 152, Number 123 (Wednesday, September 27, 2006)]
[House]
[Pages H7598-H7601]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               FINANCIAL NETTING IMPROVEMENTS ACT OF 2006

  Mr. McHENRY. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 5585) to improve the netting process for financial 
contracts, and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 5585

       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 Netting 
     Improvements Act of 2006''.

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

       (a) Definition of Securities Contract.--
       (1) FDIC-insured depository institutions.--Section 
     11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(ii)) is amended--
       (A) in subclause (I)--
       (i) by striking ``mortgage loan, or'' and inserting 
     ``mortgage loan,''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such repurchase or reverse repurchase transaction is a 
     `repurchase agreement', as defined in clause (v))'';
       (B) in subclause (IV)--
       (i) by inserting ``(including by novation)'' after ``the 
     guarantee''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such settlement is in connection with any agreement or 
     transaction referred to in subclauses (I) through (XII) 
     (other than subclause (II))'';
       (C) in subclause (IX), by striking ``or (VIII)'' each place 
     such term appears and inserting ``(VIII), (IX), or (X)'';
       (D) by redesignating subclauses (VI), (VII), (VIII), (IX), 
     and (X) as subclauses (VIII), (IX), (X), (XI), and (XII), 
     respectively; and
       (E) by inserting after subclause (V) the following new 
     subparagraphs:

       ``(VI) means any extension of credit for the clearance or 
     settlement of securities transactions;
       ``(VII) means any loan transaction coupled with a 
     securities collar transaction, any prepaid securities forward 
     transaction, or any total return swap transaction coupled 
     with a securities sale transaction;''.

       (2) Insured credit unions.--Section 207(c)(8)(D)(ii) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(ii)) is 
     amended--
       (A) in subclause (I)--
       (i) by striking ``mortgage loan, or'' and inserting 
     ``mortgage loan,''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such repurchase or reverse repurchase transaction is a 
     `repurchase agreement', as defined in clause (v))'';
       (B) in subclause (IV)--
       (i) by inserting ``(including by novation)'' after ``the 
     guarantee''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such settlement is in connection with any agreement or 
     transaction referred to in subclauses (I) through (XII) 
     (other than subclause (II))'';
       (C) in subclause (IX), by striking ``or (VIII)'' each place 
     such term appears and inserting ``(VIII), (IX), or (X)'';
       (D) by redesignating subclauses (VI), (VII), (VIII), (IX), 
     and (X) as subclauses (VIII), (IX), (X), (XI), and (XII), 
     respectively; and
       (E) by inserting after subclause (V) the following new 
     subparagraphs:

       ``(VI) means any extension of credit for the clearance or 
     settlement of securities transactions;
       ``(VII) means any loan transaction coupled with a 
     securities collar transaction, any prepaid securities forward 
     transaction, or any total return swap transaction coupled 
     with a securities sale transaction;''.

       (b) Definition of Forward Contract.--
       (1) FDIC-insured depository institutions.--Section 
     11(e)(8)(D)(iv)(I) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(iv)(I)) is amended by striking 
     ``transaction, reverse repurchase transaction'' and inserting 
     ``or reverse repurchase transaction (whether or not such 
     repurchase or reverse repurchase transaction is a `repurchase 
     agreement', as defined in clause (v))''.
       (2) Insured credit unions.--Section 207(c)(8)(D)(iv)(I) of 
     the Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(iv)(I)) 
     is amended by striking ``transaction, reverse repurchase 
     transaction'' and inserting ``or reverse repurchase 
     transaction (whether or not such repurchase or reverse 
     repurchase transaction is a `repurchase agreement', as 
     defined in clause (v))''.
       (c) Definition of Swap Agreement.--
       (1) FDIC-insured depository institutions.--Section 
     11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(vi)) is amended--
       (A) in subclause (I)--
       (i) by striking ``or precious metals'' and inserting ``, 
     precious metals, or other commodity''; and
       (ii) by striking ``or a weather swap, weather derivative, 
     or weather option'' and inserting ``weather swap, option, 
     future, or forward agreement; an emissions swap, option, 
     future, or forward agreement; or an inflation swap, option, 
     future, or forward agreement'';
       (B) in subclause (II)--
       (i) by inserting ``or other derivatives'' after ``dealings 
     in the swap''; and
       (ii) by striking ``future, or option'' and inserting 
     ``future, option, or spot transaction''; and
       (C) by striking ``the Securities Act of 1933, the 
     Securities Exchange Act of 1934, the Public Utility Holding 
     Company Act of 1935, the Trust Indenture Act of 1939, the 
     Investment Company Act of 1940, the Investment Advisers Act 
     of 1940, the Securities Investor Protection Act of 1970, the 
     Commodity Exchange Act, the Gramm-Leach-Bliley Act, and the 
     Legal Certainty for Bank Products Act of 2000'' and inserting 
     ``the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
     Products Act of 2000, the securities laws (as such term is 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934) and the Commodity Exchange Act''.
       (2) Insured credit unions.--Section 207(c)(8)(D)(vi) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(vi)) is 
     amended--
       (A) in subclause (I)--
       (i) by striking ``or precious metals'' and inserting ``, 
     precious metals, or other commodity''; and
       (ii) by striking ``or a weather swap, weather derivative, 
     or weather option'' and inserting ``weather swap, option, 
     future, or forward agreement; an emissions swap, option, 
     future, or forward agreement; or an inflation swap, option, 
     future, or forward agreement'';
       (B) in subclause (II)--
       (i) by inserting ``or other derivatives'' after ``dealings 
     in the swap''; and
       (ii) by striking ``future, or option'' and inserting 
     ``future, option, or spot transaction''; and
       (C) by striking ``the Securities Act of 1933, the 
     Securities Exchange Act of 1934, the Public Utility Holding 
     Company Act of 1935, the Trust Indenture Act of 1939, the 
     Investment Company Act of 1940, the Investment Advisers Act 
     of 1940, the Securities Investor Protection Act of 1970, the 
     Commodity Exchange Act, the Gramm-Leach-Bliley Act, and the 
     Legal Certainty for Bank Products Act of 2000'' and inserting 
     ``the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
     Products Act of 2000, the securities laws (as such term is 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934) and the Commodity Exchange Act''.

     SEC. 3. CLARIFYING AMENDMENTS RELATING TO DEFINITION OF 
                   PERSON.

       (a) FDIC-INSURED Depository Institutions Definition of 
     Person.--Section 11(e)(8)(D) of the Federal Deposit Insurance

[[Page H7599]]

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

     SEC. 4. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT 
                   OF 1991.

       (a) Enforceability of Bilateral Netting Contracts.--Section 
     403 of the Federal Deposit Insurance Corporation Improvement 
     Act of 1991 (12 U.S.C. 4403) is amended--
       (1) in each of subsections (a) and (f), by striking 
     ``paragraphs (8)(E), (8)(F), and (10)(B) of'' each place such 
     term appears; and
       (2) in subsection (a), by inserting ``terminated, 
     liquidated, accelerated, and'' after ``institutions shall 
     be''.
       (b) Enforceability of Clearing Organization Netting 
     Contracts.--Section 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4404) is 
     amended--
       (1) in each of subsections (a) and (h), by striking 
     ``paragraphs (8)(E), (8)(F), and (10)(B) of'' each place such 
     term appears; and
       (2) in subsection (a), by inserting ``terminated, 
     liquidated, accelerated, and'' after ``organization shall 
     be''.

     SEC. 5. CONFORMING AMENDMENTS.

       (a) Clarifying Definitions.--Title 11, United States Code, 
     is amended--
       (1) in section 101--
       (A) in paragraph (22)(A)--
       (i) by striking ``(domestic or foreign)'' after ``an 
     entity''; and
       (ii) by inserting ``(whether or not a `customer', as 
     defined in section 741)'' after ``custodian for a customer'';
       (B) in paragraph (22A)--
       (i) by striking ``on any day during the previous 15-month 
     period'' each place it appears and inserting ``at such time 
     or on any day during the 15-month period preceding the date 
     of the filing of the petition''; and
       (ii) by inserting ``(aggregated across counterparties)'' 
     after ``principal amount outstanding'';
       (C) in paragraph (25)(A)--
       (i) by inserting ``, as defined in section 761'' after 
     ``commodity contract''; and
       (ii) by striking ``repurchase transaction, reverse 
     repurchase transaction,'' and inserting ``repurchase or 
     reverse repurchase transaction (whether or not such 
     repurchase or reverse repurchase transaction is a `repurchase 
     agreement', as defined in this section)'';
       (D) in paragraph (53B)(A)--
       (i) in clause (i)--

       (I) in subclause (II), by striking ``or precious metals'' 
     and inserting ``, precious metals, or other commodity'';
       (II) in subclause (VII), by striking ``or'' at the end;
       (III) in subclause (VIII), by striking ``weather 
     derivative, or weather option'' and inserting ``option, 
     future, or forward agreement''; and
       (IV) by adding at the end the following:
       ``(IX) an emissions swap, option, future, or forward 
     agreement; or
       ``(X) an inflation swap, option, future, or forward 
     agreement;''; and

       (ii) in clause (ii)--

       (I) in subclause (I), by inserting ``or other derivatives'' 
     after ``dealings in the swap''; and
       (II) in subclause (II), by striking ``future, or option'' 
     and inserting ``future, option, or spot transaction''; and

       (E) in paragraph (53B)(B), by striking ``the Securities Act 
     of 1933, the Securities Exchange Act of 1934, the Public 
     Utility Holding Company Act of 1935, the Trust Indenture Act 
     of 1939, the Investment Company Act of 1940, the Investment 
     Advisers Act of 1940, the Securities Investor Protection Act 
     of 1970, the Commodity Exchange Act, the Gramm-Leach-Bliley 
     Act, and the Legal Certainty for Bank Products Act of 2000'' 
     and inserting ``the Gramm-Leach-Bliley Act, the Legal 
     Certainty for Bank Products Act of 2000, the securities laws 
     (as such term is defined in section 3(a)(47) of the 
     Securities Exchange Act of 1934) and the Commodity Exchange 
     Act'';
       (2) in section 362(b)--
       (A) by striking paragraphs (6) and (7) and inserting the 
     following:
       ``(6) under subsection (a) of this section, of the exercise 
     by a commodity broker, forward contract merchant, 
     stockbroker, financial institution, financial participant, or 
     securities clearing agency of any contractual right (as 
     defined in section 555 or 556) under any security agreement 
     or arrangement or other credit enhancement forming a part of 
     or related to any commodity contract, forward contract or 
     securities contract, or of any contractual right (as defined 
     in section 555 or 556) to offset or net out any termination 
     value, payment amount, or other transfer obligation arising 
     under or in connection with 1 or more such contracts, 
     including any master agreement for such contracts;
       ``(7) under subsection (a) of this section, of the exercise 
     by a repo participant or financial participant of any 
     contractual right (as defined in section 559) under any 
     security agreement or arrangement or other credit enhancement 
     forming a part of or related to any repurchase agreement, or 
     of any contractual right (as defined in section 559) to 
     offset or net out any termination value, payment amount, or 
     other transfer obligation arising under or in connection with 
     1 or more such agreements, including any master agreement for 
     such agreements;'';
       (B) by striking paragraph (17) and inserting the following:
       ``(17) under subsection (a) of this section, of the 
     exercise by a swap participant or financial participant of 
     any contractual right (as defined in section 560) under any 
     security agreement or arrangement or other credit enhancement 
     forming a part of or related to any swap agreement, or of any 
     contractual right (as defined in section 560) to offset or 
     net out any termination value, payment amount, or other 
     transfer obligation arising under or in connection with 1 or 
     more such agreements, including any master agreement for such 
     agreements;''; and
       (C) by striking paragraph (27) and inserting the following:
       ``(27) under subsection (a) of this section, of the 
     exercise by a master netting agreement participant of any 
     contractual right (as defined in section 555, 556, 559, or 
     560) under any security agreement or arrangement or other 
     credit enhancement forming a part of or related to any master 
     netting agreement, or of any contractual right (as defined in 
     section 555, 556, 559, or 560) to offset or net out any 
     termination value, payment amount, or other transfer 
     obligation arising under or in connection with 1 or more such 
     master netting agreements to the extent that such participant 
     is eligible to exercise such rights under paragraph (6), (7), 
     or (17) for each individual contract covered by the master 
     netting agreement in issue; and''; and
       (3) in section 741(7)(A)--
       (A) in clause (i)--
       (i) by striking ``mortgage loan or'' and inserting 
     ``mortgage loan,''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such repurchase or reverse repurchase transaction is a 
     `repurchase agreement', as defined in section 101)'';
       (B) in clause (iii)--
       (i) by inserting ``(including by novation)'' after ``the 
     guarantee''; and
       (ii) by inserting before the semicolon ``(whether or not 
     such settlement is in connection with any agreement or 
     transaction referred to in clauses (i) through (xi))'';
       (C) in clause (viii), by striking ``or (vii)'' each place 
     it appears and inserting ``(vii), (viii), or (ix)'';
       (D) by redesignating clauses (v) through (ix) as clauses 
     (vii) through (xi), respectively; and
       (E) by inserting after clause (iv) the following:

       ``(v) any extension of credit for the clearance or 
     settlement of securities transactions;
       ``(vi) any loan transaction coupled with a securities 
     collar transaction, any prepaid forward securities 
     transaction, or any total return swap transaction coupled 
     with a securities sale transaction;''.

       (b) Limitation of Avoidance Powers Under Master Netting 
     Agreement.--Section 546 of title 11, United States Code, is 
     amended--
       (1) in subsection (e)--
       (A) by inserting ``(or for the benefit of)'' before ``a 
     commodity broker''; and
       (B) by inserting ``or that is a transfer made by or to (or 
     for the benefit of) a commodity broker, forward contract 
     merchant, stockbroker, financial institution, financial 
     participant, or securities clearing agency, in connection 
     with a securities contract, as defined in section 741(7), 
     commodity contract, as defined in section 761(4), or forward 
     contract,'' after ``securities clearing agency,'';
       (2) in subsection (f)--
       (A) by striking ``that is a margin payment, as defined in 
     section 741 or 761 of this title, or settlement payment, as 
     defined in section 741 of this title,''; and
       (B) by inserting ``(or for the benefit of)'' before ``a 
     repo participant'';
       (3) in subsection (g), by inserting ``(or for the benefit 
     of)'' before ``a swap participant''; and
       (4) in subsection (j), by inserting ``(or for the benefit 
     of)'' after ``made by or to''.
       (c) SIPC Stay.--Section 5(b)(2)(C)(iii) of the Securities 
     Investor Protection Act of 1970 (15 U.S.C. 
     78eee(b)(2)(C)(iii)) is amended--
       (1) by inserting ``a derivatives clearing organization (as 
     defined in the Commodity Exchange Act), a multilateral 
     clearing organization (as defined in the Federal Deposit 
     Insurance Corporation Improvement Act of 1991),'' after 
     ``rule or bylaw of''; and
       (2) by striking ``or a securities clearance agency, a right 
     set forth in a bylaw of a clearing organization or contract 
     market'' and inserting ``a securities clearing agency, a 
     contract market designated under the Commodity Exchange Act, 
     a derivatives transaction execution facility registered under 
     the Commodity Exchange Act, or a board of trade (as defined 
     in the Commodity Exchange Act),''.
       (d) Savings Clause.--Title IX of the Bankruptcy Abuse 
     Prevention and Consumer Protection Act of 2005 (Public Law 
     109-8, 119 Stat. 146) is amended by adding at the end the 
     following:

     ``SEC. 912. SAVINGS CLAUSE.

       ``The meanings of terms used in this title are applicable 
     for the purposes of this title only, and shall not be 
     construed or applied so as to challenge or affect the 
     characterization, definition, or treatment of any similar

[[Page H7600]]

     terms under any other statute, regulation, or rule, including 
     the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 
     Products Act of 2000, the securities laws (as such term is 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934), and the Commodity Exchange Act.''.

     SEC. 6. WALKAWAY CLAUSES.

       (a) FDIC-Insured Depository Institutions.--Section 
     11(e)(8)(G) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(G)) is amended by striking clause (ii) and 
     inserting the following new clauses:
       ``(ii) Limited suspension of certain obligations.--In the 
     case of a qualified financial contract referred to in clause 
     (i), any payment or delivery obligations otherwise due from a 
     party pursuant to the qualified financial contract shall be 
     suspended from the time the receiver is appointed until the 
     earlier of--

       ``(I) the time such party receives notice that such 
     contract has been transferred pursuant to subparagraph (A); 
     or
       ``(II) 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver.

       ``(iii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means any provision 
     in a qualified financial contract that suspends, conditions, 
     or extinguishes a payment obligation of a party, in whole or 
     in part, or does not create a payment obligation of a party 
     that would otherwise exist, solely because of such party's 
     status as a nondefaulting party in connection with the 
     insolvency of an insured depository institution that is a 
     party to the contract or the appointment of or the exercise 
     of rights or powers by a conservator or receiver of such 
     depository institution, and not as a result of a party's 
     exercise of any right to offset, setoff, or net obligations 
     that exist under the contract, any other contract between 
     those parties, or applicable law.''.
       (b) Insured Credit Unions.--Section 207(c)(8)(G) of the 
     Federal Credit Union Act 12 U.S.C. 1787(c)(8)(G)) is amended 
     by striking clause (ii) and inserting the following new 
     clauses:
       ``(ii) Limited suspension of certain obligations.--In the 
     case of a qualified financial contract referred to in clause 
     (i), any payment or delivery obligations otherwise due from a 
     party pursuant to the qualified financial contract shall be 
     suspended from the time the liquidating agent is appointed 
     until the earlier of--

       ``(I) the time such party receives notice that such 
     contract has been transferred pursuant to subparagraph (A); 
     or
       ``(II) 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the liquidating 
     agent.

       ``(iii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means any provision 
     in a qualified financial contract that suspends, conditions, 
     or extinguishes a payment obligation of a party, in whole or 
     in part, or does not create a payment obligation of a party 
     that would otherwise exist, solely because of such party's 
     status as a nondefaulting party in connection with the 
     insolvency of an insured credit union or the appointment of 
     or the exercise of rights or powers by a conservator or 
     liquidating agent of such credit union, and not as a result 
     of a party's exercise of any right to offset, setoff, or net 
     obligations that exist under the contract, any other contract 
     between those parties, or applicable law.''.

     SEC. 7. COMPENSATION OF CHAPTER 7 TRUSTEES; CHAPTER 7 FILING 
                   FEES.

       (a) Amendments to Title 11 of the United States Code.--
       (1) Compensation of chapter 7 trustees.--Section 330(b)(1) 
     of title 11, United States Code, is amended--
       (A) by striking ``$45'' and inserting ``$100'', and
       (B) by inserting before the period at the end the 
     following:

     ``, except that such amount shall be adjusted by the amount 
     (if any) of such filing fee waived under the 2d sentence of 
     section 1930(f)(1) of title 28''.
       (2) Related amendments.--Section 330(b) of title 11, United 
     States Code, is amended--
       (A) by striking ``(1)'', and
       (B) by striking paragraph (2).
       (b) Amendments to Title 28 of the United States Code.--
       (1) Chapter 7 filing fee.--Section 1930 of title 28 of the 
     United States Code, as amended by section 10101 of Public Law 
     109-171, is amended--
       (A) in subsection (a)(1)(A) by striking ``$245'' and 
     inserting ``$300'', and
       (B) in subsection (f)(1) by inserting after the 1st 
     sentence the following:

       ``Under the procedures prescribed by the Judicial 
     Conference of the United States, the district court or the 
     bankruptcy court shall waive $40 of the filing fee required 
     by subsection (a) in a case under chapter 7 of title 11 for 
     an individual if the court determines that such individual 
     has income not less than 150 percent, and not more than 175 
     percent, of the income official poverty line (as defined by 
     the Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981) applicable to a family of the 
     size involved.''.
       (2) United states trustee fund.--Section 589a(b)(1)(A) of 
     title 28, United States Code, is amended by striking ``40.46 
     percent of the fees collected under section 1930(a)(1)(A)'' 
     and inserting ``29.67 percent of the sum of the amount of 
     fees collected under section 1930(a)(1)(A) and the amount of 
     fees waived under the 2d sentence of section 1930(f)(1)''.
       (c) Related Amendment Regarding Collections and Deposits of 
     Miscellaneous Bankruptcy Fees.--Section 406(b) of the 
     Judiciary Appropriations Act, 1990 (28 U.S.C. 1931 note) is 
     amended by striking ``28.87 percent of the fees collected 
     under section 1930(a)(1)(A) of that title'' and inserting 
     ``21.17 percent of the sum of the amount of fees collected 
     under section 1930(a)(1)(A) of that title and the amount of 
     fees waived under the 2d sentence of section 1930(f)(1) of 
     that title''.
       (d) Conforming Amendment.--Section 10101(a) of Public Law 
     109-171 is amended by striking paragraph (2).
       (e) Effective Date; Application of Amendments.--The 
     amendments made by this section shall take effect 120 days 
     after the date of the enactment of this Act and shall not 
     apply with respect to cases commenced under title 11 of the 
     United States Code before the date such amendments take 
     effect.

     SEC. 8. SCOPE OF APPLICATION.

       Subject to section 7(e), the amendments made by this Act 
     shall not apply to any cases commenced under title 11, United 
     States Code, or appointments made under any Federal or State 
     law, before the date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
North Carolina (Mr. McHenry) and the gentlewoman from Florida (Ms. 
Wasserman Schultz) each will control 20 minutes.
  The Chair recognizes the gentleman from North Carolina.
  Mr. McHENRY. Madam Speaker, I certainly appreciate the opportunity to 
speak about the Financial Netting Improvement Act of 2006, a piece of 
legislation that I, along with my colleague from Florida, Debbie 
Wasserman Schultz, have sponsored and have brought through the 
committee process to the floor here today.
  I first want to commend both the chairman of the Financial Services 
Committee, Mike Oxley, for his leadership on this important issue, as 
well as the ranking Democrat, Barney Frank of Massachusetts, for his 
leadership and support on this issue as well.
  It is certainly an interesting opportunity, Madam Speaker, for a 
freshman Member of the House to be on this floor and sponsoring a piece 
of legislation with a colleague from across the aisle who is also a 
freshman.
  And it is also personally interesting to me because, on the opening 
day of Congress, we were described as the Yin and the Yang of the 109th 
Congress. At that point, I thought it would be an interesting 
opportunity to sponsor legislation with what USA Today deemed my polar 
opposite.
  While we may be opposites on a number of issues, we do have similar 
values, and that is the value of good government. We do serve on the 
Financial Services Committee together as well. And she, as well as I, 
had the conversation earlier on that it would be exciting for us to 
sponsor legislation together. This is a wonderful opportunity. I want 
to thank her for her friendship and help.
  Having said those things about her, some of her liberal colleagues 
may find her suspect. But I would say that she has been a fantastic 
leader for the other party and a strong legislator here in the House as 
well as her previous experience in Florida.
  The Financial Netting Improvement Act of 2006 makes technical changes 
to the netting and financial contracts safe harbor provisions of the 
Federal Deposit Insurance Act, the Federal Credit Union Act, the 
Federal Deposit Insurance Corporation Improvement Act, and the 
Bankruptcy Code.
  Broadly speaking, these safe harbor provisions allow certain types of 
creditors to exercise their self-help rights to terminate defined 
financial market contracts like swap agreements and exercise their 
offset rights and choose on how to deal with the foreclosure on 
collateral free from the power of a receiver or bankruptcy trustee that 
would otherwise impair the exercise of those rights.
  Certainly after explaining the bill, it is a technical bill; and, 
broadly speaking, this is a necessarily technical correction that the 
other side of the aisle, as well as our side of the aisle, the 
President's Working Group on Financial Markets and all of the 
stakeholders have come to agreement on. I look very much forward to the 
House approving this measure tonight.

                              {time}  1945

  Madam Speaker, I reserve the balance of my time.

[[Page H7601]]

  Ms. WASSERMAN SCHULTZ. Madam Speaker, I yield myself as much time as 
I may consume, and first, let me thank Chairman Oxley and Ranking 
Member Frank for their stalwart leadership on this and many other 
issues that have come before the Financial Services Committee in the 
109th Congress. Chairman Oxley has heard us say many times, but we will 
truly miss him after he retires. I believe that the combined leadership 
that he and my good friend, Ranking Member Frank, have displayed have 
set the tone for the rest of us on the Financial Services Committee, as 
well as the staff.
  I, too, am pleased to stand here with my good friend and fellow 
freshman colleague, the gentleman from North Carolina (Mr. McHenry). I 
made the mistake of telling him that I was going to try to have a 
little bit of fun in the back and forth here, and I think I could best 
characterize our professional relationship as being the odd couple. So 
it is a great day that we have the opportunity to come together on this 
netting legislation.
  I can tell you that we want to make sure on our side that Ranking 
Member Frank has suggested that we make sure the people understand that 
even though we have the next generation of Members managing the time on 
this bill, people should understand we are not high school kids. We are 
actually real live Members of Congress, you and I, and came here like 
everybody else.
  I am pleased to join Mr. McHenry as an original cosponsor of H.R. 
5585, and I am very pleased that we were able to come together on 
legislation because we have talked about that for a long time.
  We could not have brought this bill to the floor without the support 
of the House Judiciary Committee on which I also sit, and I want to 
especially thank Subcommittee Ranking Member Mel Watt for working with 
us, also a gentleman from North Carolina, and for agreeing to help us 
move this bill forward.
  As you know, as the gentleman from North Carolina has said, netting 
is simply the manner in which debts and credits are calculated between 
parties, and it is a critically important tool to unravel complex 
financial transactions which have, until now, been denied to our 
Nation's financial institutions.
  This is in spite of broad-based, bipartisan support. In fact, the 
origin of this legislation is grounded in the collapse of the infamous 
hedge fund, Long Term Capital Management, after which former Federal 
Reserve Board Chairman Alan Greenspan implored Congress to pass the 
netting provision. Netting was also supported by the former Clinton and 
the current Bush administrations.
  The primary goal of our legislation is to minimize systemic risks in 
situations when the procedure for resolving a single insolvency could 
trigger other failures elsewhere in the market.
  H.R. 5585 protects the rights of market participants to terminate 
complex financial agreements. It also ensures that the Federal 
Government, like private entity creditors, will be able to enforce and 
net out qualified contracts with financial institutions during 
insolvency proceedings.
  Additionally, this bill includes a fee increase provision in order to 
pay bankruptcy trustees.
  I want to thank my good friend and colleague Congressman Watt for 
working us with. At his request, this bill was modified in two 
respects, and as a result of those modifications, Madam Speaker, more 
debtors will be eligible for the fee waiver.
  However, the fundamental issue before to us today is support for 
netting provisions in the bankruptcy settlement of major market 
participants.
  I encourage my colleagues to support this bill, and I ask our 
colleagues in the Senate to act on this before the end of the 109th 
Congress. This bill would codify commonsense business practices. These 
provisions have a long bipartisan legislative history in Congress, 
which continues today.
  It is a privilege to work with Mr. McHenry, and there is no reason 
for us to stall any further. I know you join me in urging the Senate to 
take action on this bill after we do.
  Madam Speaker, I reserve the balance of my time.


                             General Leave

  Mr. McHENRY. Madam Speaker, I ask unanimous consent that all Members 
have 5 legislative days within which to revise and extend their remarks 
on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  Mr. McHENRY. Madam Speaker, I am prepared to yield back. I have no 
further speakers on this side, but before I close, I simply want to 
commend my colleague from Florida. It has been a delight working with 
her and resolving some of the more technical issues in this piece of 
legislation that popped up late in the committee process, but she was 
very adept at handling those issues, and I want to thank her for her 
leadership.
  Ms. WASSERMAN SCHULTZ. Madam Speaker, I, too, have no further 
requests for time, and I want to reiterate the comments of my colleague 
from North Carolina. It has been a pleasure to work with him, and I 
look forward to this being the first of many opportunities to do that.
  Mr. CANNON. Mr. Speaker, the Committee on the Judiciary recognizes 
that the courts, United States Trustees, and chapter 7 trustees have 
responsibilities in all chapter 7 cases, including cases where the 
filing fees are waived under 28 U.S.C. section 1930(f). The bill before 
the House would amend the act to permit a court to waive an additional 
$40 of the filing fee designated for payment to the trustee, under 
specified circumstances. This would be in addition to provisions under 
current law that permit a court to waive the entire filing fee for 
qualified low income debtors under specified circumstances. The 
committee is aware that such waivers could have an impact on the 
courts, the United States Trustees, and chapter 7 trustees. 
Accordingly, the courts and U.S. Trustees should closely monitor the 
impact of such waivers on those entities dependent on fee income and 
should report to the Congress.
  Ms. WASSERMAN SCHULTZ. Madam Speaker, I yield back the balance of my 
time.
  Mr. McHENRY. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from North Carolina (Mr. McHenry) that the House suspend the 
rules and pass the bill, H.R. 5585, 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.

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