[Congressional Record Volume 155, Number 117 (Thursday, July 30, 2009)]
[Senate]
[Pages S8558-S8561]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORKER (for himself and Mr. Warner):
  S. 1540. A bill to provide for enhanced authority of the Federal 
Deposit Insurance Corporation to act as receiver for certain affiliates 
of depository institutions, and for other purposes; to the

[[Page S8559]]

Committee on Banking, Housing, and Urban Affairs.
  Mr. CORKER. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1540

       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 ``Resolution Reform Act of 
     2009''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to allow the Federal Deposit Insurance Corporation (in 
     this Act referred to as the ``Corporation'') to resolve the 
     holding companies, affiliates, and subsidiaries of failed or 
     failing insured depository institutions, consistent with the 
     statutory mission of the Corporation, recognizing that 
     depository institution holding companies serve as a source of 
     strength for their subsidiary institutions, and that their 
     affiliates and subsidiaries may provide critical services for 
     such institutions; and
       (2) to provide a clear and cohesive set of rules to address 
     the increasingly complex and interreliant business structures 
     in which insured depository institutions operate in order to 
     promote efficient and economical resolution.

     SEC. 3. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Affiliate.--The term ``affiliate'' has the same meaning 
     as in section 2(k) of the Bank Holding Company Act of 1956.
       (2) Bridge depository institution holding company.--The 
     term ``bridge depository institution holding company'' means 
     a new depository institution holding company organized by the 
     Corporation pursuant to section 53(b) of the Federal Deposit 
     Insurance Act.
       (3) Corporation.--The terms ``Corporation'' and ``Board'' 
     mean the Federal Deposit Insurance Corporation and the Board 
     of Directors thereof, respectively.
       (4) Covered affiliate or subsidiary.--The term ``covered 
     affiliate or subsidiary'' means any affiliate or subsidiary 
     of a depository institution holding company, or any 
     subsidiary of an insured depository institution that is a 
     subsidiary of that depository institution holding company, as 
     to which the Corporation is appointed receiver.
       (5) Covered depository institution holding company.--The 
     term ``covered depository institution holding company'' means 
     a depository institution holding company with one or more 
     affiliated or subsidiary insured depository institutions for 
     which grounds exist to appoint a receiver pursuant to section 
     11(c) of the Federal Deposit Insurance Act.
       (6) Foreign.--The term ``foreign'' means any country other 
     than the United States and includes any territory, 
     dependency, or possession of any country other than the 
     United States.
       (7) Insured depository institution.--The term ``insured 
     depository institution'' has the same meaning as section 
     3(c)(2) of the Federal Deposit Insurance Act.

     SEC. 4. HOLDING COMPANY RESOLUTION AMENDMENTS TO THE FEDERAL 
                   DEPOSIT INSURANCE ACT.

       The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
     is amended by adding at the end the following:

     ``SEC. 51. RESOLUTION OF COVERED DEPOSITORY INSTITUTION 
                   HOLDING COMPANIES, AFFILIATES, AND 
                   SUBSIDIARIES.

       ``(a) In General.--Notwithstanding any other provision of 
     Federal or State law, except section 52(c), it shall be the 
     responsibility of the Corporation to resolve depository 
     institution holding companies of failed or failing insured 
     depository institutions and the affiliates and subsidiaries 
     of a depository institution holding company, including any 
     subsidiary of an insured depository institution that is a 
     subsidiary of the depository institution holding company, 
     using the powers and authorities conferred upon it by this 
     Act.
       ``(b) Definitions.--For purposes of this section and 
     sections 52 and 53, the following definitions shall apply:
       ``(1) Bridge depository institution holding company.--The 
     term `bridge depository institution holding company' means a 
     new depository institution holding company organized by the 
     Corporation pursuant to section 53(b).
       ``(2) Covered affiliate or subsidiary.--The term `covered 
     affiliate or subsidiary' means any affiliate or subsidiary of 
     a depository institution holding company, or any subsidiary 
     of an insured depository institution that is a subsidiary of 
     that depository institution holding company, as to which the 
     Corporation is appointed receiver under section 52.
       ``(3) Covered depository institution holding company.--The 
     term `covered depository institution holding company' means a 
     depository institution holding company with one or more 
     affiliated or subsidiary insured depository institutions for 
     which grounds exist to appoint a receiver pursuant to section 
     11(c).
       ``(4) Functionally regulated affiliate or subsidiary.--The 
     term `functionally regulated affiliate or subsidiary' means 
     any company--
       ``(A) that is not a depository institution holding company 
     or a depository institution; and
       ``(B) that is--
       ``(i) a broker or dealer that is registered under the 
     Securities Exchange Act of 1934;
       ``(ii) a registered investment adviser, properly registered 
     by or on behalf of either the Securities and Exchange 
     Commission in accordance with the Investment Advisers Act of 
     1940, or any State, with respect to the investment advisory 
     activities of such investment adviser and activities 
     incidental to such investment advisory activities;
       ``(iii) an investment company that is registered under the 
     Investment Company Act of 1940;
       ``(iv) an insurance company that is subject to supervision 
     by a State insurance regulator, with respect to the insurance 
     activities of the insurance company and activities incidental 
     to such insurance activities; or
       ``(v) an entity that is subject to regulation by the 
     Commodity Futures Trading Commission, with respect to the 
     commodities activities of such entity and activities 
     incidental to such commodities activities.
       ``(5) Functional regulator.--The term `functional 
     regulator' means the Federal or State regulator responsible 
     for regulating the types of activities engaged in by the 
     depository institution holding company, its subsidiary 
     institutions, or other affiliates and subsidiaries. The 
     `functional regulators' are--
       ``(A) the Securities and Exchange Commission, if the 
     depository institution holding company, any subsidiary 
     institution, or other affiliate thereof, is a broker or 
     dealer registered with the Commission under section 15(b) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) in 
     conjunction with the authorities granted to the Securities 
     Investor Protection Corporation, as created by the Securities 
     Investor Protection Act in resolution of brokers or dealers;
       ``(B) the Commodity Futures Trading Commission, if the 
     depository institution holding company, its subsidiary 
     institution, or other affiliate thereof, is a futures 
     commission merchant or a commodity pool operator registered 
     with the Commodity Futures Trading Commission under the 
     Commodity Exchange Act; and
       ``(C) a State insurance commission or other board or 
     authority, if the depository institution holding company, or 
     an affiliate or subsidiary thereof, is an insurance company.

     ``SEC. 52. APPOINTMENT OF THE CORPORATION AS RECEIVER.

       ``(a) Depository Institution Holding Companies.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law, the law of any State, or the constitution of any 
     State, and subject to subsection (c), the Corporation shall 
     accept appointment, and shall act as the receiver of a 
     covered depository institution holding company upon such 
     appointment, in the manner provided in paragraph (2) or (3), 
     if the Corporation determines, in its sole discretion, that 
     such appointment will reduce the cost to the Deposit 
     Insurance Fund, and that grounds specified in subsection (f) 
     exist. If the Corporation determines that such appointment 
     will not reduce the cost to the Deposit Insurance Fund, the 
     Corporation may decline the appointment, as provided in 
     subsection (c).
       ``(2) Appointment by the appropriate federal banking 
     agency.--Whenever the appropriate Federal banking agency 
     appoints a receiver for a depository institution holding 
     company, the Federal banking agency shall tender the 
     appointment to the Corporation, and the Corporation shall 
     accept such appointment, unless the Corporation declines the 
     appointment, as provided in subsection (c).
       ``(3) Appointment of the corporation by the corporation.--
     The Board of Directors may appoint the Corporation as 
     receiver of a depository institution holding company, after 
     consultation with the appropriate Federal banking agency, if 
     the Board of Directors determines that, notwithstanding the 
     existence of grounds specified in subsection (f), the 
     appropriate Federal banking agency having supervision of a 
     covered depository institution holding company has declined 
     to appoint the Corporation as receiver.
       ``(4) Functionally regulated depository institution holding 
     companies.--When the appropriate Federal banking agency 
     appoints the Corporation as receiver of a covered depository 
     institution holding company, or the Board of Directors 
     appoints the Corporation as receiver of a covered depository 
     institution holding company, the appropriate Federal banking 
     agency or the Corporation shall consult with the covered 
     depository institution holding company's functional 
     regulator, if any.
       ``(b) Affiliates and Subsidiaries.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law, the law of any State, or the constitution of any 
     State, and subject to paragraph (2) and subsection (c), in 
     any case in which the Corporation is appointed under this 
     section as receiver for a depository institution holding 
     company, the Corporation may appoint itself as the receiver 
     of any affiliate or subsidiary of the insured depository 
     institution or depository institution holding company that is 
     incorporated or organized under the laws of any State, if the 
     Corporation determines that such action would facilitate the 
     orderly resolution of the insured depository institution or 
     depository institution holding company, and is consistent 
     with the purposes of this Act.
       ``(2) Functionally regulated subsidiaries.--The Corporation 
     shall consult with the appropriate Federal or State 
     functional

[[Page S8560]]

     regulator when the Corporation appoints itself as the 
     receiver of any functionally regulated affiliate or 
     subsidiary.
       ``(c) Bankruptcy or State Insurance Resolution Option.--
       ``(1) Bankruptcy grounds for declining appointment.--The 
     Corporation may decline to accept appointment for a covered 
     depository institution holding company, when, in its sole 
     discretion, the Corporation determines that the resolution of 
     that holding company would be better accomplished under title 
     11, of the United States Code, or under applicable State 
     insurance law.
       ``(2) Rulemaking required.--The Corporation shall, not 
     later than 180 days after the date of enactment of this 
     section, adopt regulations that establish criteria pursuant 
     to which the Corporation will make the determination 
     described in paragraph (1).
       ``(d) Separate Entities.--
       ``(1) In general.--Subject to paragraph (2), each separate 
     legal entity for which the Corporation is appointed receiver 
     shall constitute a separate receivership.
       ``(2) Applicability.--Paragraph (1) shall not apply to any 
     insured depository institution subsidiary for which the 
     Corporation has appointed itself as receiver.
       ``(e) Corporation Not Subject to Any Other Agency.--When 
     acting as the receiver pursuant to an appointment described 
     in subsection (a) or (b), the Corporation shall not be 
     subject to the direction or supervision of any other agency 
     or department of the United States or any State in the 
     exercise of its rights, powers, and privileges.
       ``(f) Grounds for Appointment.--The grounds for appointing 
     the Corporation as receiver of a depository institution 
     holding company, affiliate, or subsidiary are that one or 
     more grounds exist under section 11(c) to appoint a receiver 
     for one or more affiliated insured depository institutions.
       ``(g) Termination and Exclusion of Other Actions.--The 
     appointment of the Corporation as receiver for a depository 
     institution holding company or an insured depository 
     institution that is an affiliate or subsidiary of a 
     depository institution holding company shall immediately, and 
     by operation of law, terminate any case commenced with 
     respect to the depository institution holding company or any 
     affiliate or subsidiary under title 11, United States Code, 
     or any proceeding under any State insolvency law with respect 
     to the depository institution holding company or affiliate or 
     subsidiary. No such case or proceeding may be commenced with 
     respect to the depository institution holding company or any 
     affiliate or subsidiary of the insured depository institution 
     at any time while the Corporation acts as receiver of the 
     depository institution holding company or any affiliate or 
     subsidiary, without the written agreement of the Corporation.
       ``(h) Judicial Review.--
       ``(1) In general.--If the Corporation is appointed 
     (including the appointment of the Corporation by itself) as 
     receiver of a depository institution holding company under 
     subsection (a), the depository institution holding company 
     may, not later than 30 days thereafter, bring an action in 
     the United States district court for the judicial district in 
     which the home office of such depository institution holding 
     company is located, or in the United States District Court 
     for the District of Columbia, for an order requiring the 
     Corporation to be removed as the receiver (regardless of how 
     such appointment was made), and the court shall, upon the 
     merits, dismiss such action or direct the Corporation to be 
     removed as the receiver.
       ``(2) Other appointment.--If the Corporation appoints 
     itself as receiver of any affiliate or subsidiary of the 
     insured depository institution or depository institution 
     holding company under subsection (b), the affiliate or 
     subsidiary of the insured depository institution or 
     depository institution holding company may, not later than 30 
     days thereafter, bring an action in the United States 
     district court for the judicial district in which the home 
     office of such any affiliate or subsidiary of the insured 
     depository institution or depository institution holding 
     company is located, or in the United States District Court 
     for the District of Columbia, for an order requiring the 
     Corporation to be removed as the receiver, and the court 
     shall, upon the merits, dismiss such action or direct the 
     Corporation to be removed as the receiver.

     ``SEC. 53. POWERS AND DUTIES OF CORPORATION AS RECEIVER.

       ``(a) Rulemaking Authority of Corporation.--The Corporation 
     may prescribe such regulations as the Corporation determines 
     appropriate regarding the orderly resolution and conduct of 
     receiverships of covered depository institution holding 
     companies or any affiliate or subsidiary, in accordance with 
     section 52.
       ``(b) Receivership, Back-up Examination, and Enforcement 
     Powers.--Except as provided in subsections (c) and (e), the 
     Corporation shall have the same powers and rights to carry 
     out its duties with respect to depository institution holding 
     companies, or affiliates and subsidiaries, as the Corporation 
     has under sections 8(t), 10(b), 11, 12, 13(d), 13(e), 15, and 
     38, with adaptations made, in the sole discretion of the 
     Corporation, that are appropriate to the differences in form 
     and function among depository institution holding companies, 
     insured depository institutions, and their affiliates and 
     subsidiaries.
       ``(c) Authority To Obtain Credit.--
       ``(1) In general.--A bridge depository institution holding 
     company with respect to which the Corporation is the receiver 
     may obtain unsecured credit and issue unsecured debt.
       ``(2) Inability to obtain credit.--If a bridge depository 
     institution holding company is unable to obtain unsecured 
     credit or issue unsecured debt, the Corporation may authorize 
     the obtaining of credit or the issuance of debt by the bridge 
     depository holding company--
       ``(A) with priority over any or all of the obligations of 
     the bridge depository holding company;
       ``(B) secured by a lien on property of the bridge 
     depository holding company that is not otherwise subject to a 
     lien; or
       ``(C) secured by a junior lien on property of the bridge 
     depository holding company that is subject to a lien.
       ``(3) Limitation.--The Corporation may authorize the 
     obtaining of credit or the issuance of debt by a bridge 
     depository holding company that is secured by a senior or 
     equal lien on property of the bridge depository holding 
     company that is subject to a lien, only if--
       ``(A) the bridge depository holding company is unable to 
     otherwise obtain such credit or issue such debt; and
       ``(B) there is adequate protection of the interest of the 
     holder of the lien on the property with respect to which such 
     senior or equal lien is proposed to be granted.
       ``(d) Disposition of Certain Depository Institution Holding 
     Companies, Affiliates, and Subsidiaries.--Notwithstanding any 
     other provision of law (other than a conflicting provision of 
     this Act), the Corporation, in connection with the resolution 
     of any insured depository institution with respect to which 
     the Corporation has been appointed as receiver, shall--
       ``(1) in the case of any depository institution holding 
     company, or a covered affiliate or subsidiary for which the 
     Corporation is appointed receiver, that is a member of the 
     Securities Investor Protection Corporation (in this section 
     referred to as `SIPC'), coordinate with SIPC in the 
     liquidation, if any, of the company, to facilitate the 
     orderly and timely payment of claims under the Securities 
     Investor Protection Act; and
       ``(2) in the case of any other depository institution 
     holding company, or covered affiliate or subsidiary, that is 
     functionally regulated, coordinate with the appropriate 
     Federal or State functional regulator in the disposition of 
     the company, to facilitate the orderly and timely payment of 
     claims under applicable guaranty plans, including State 
     insurance guaranty plans.
       ``(e) Priority of Expenses and Unsecured Claims.--
       ``(1) In general.--Allowed claims (other than secured 
     claims to the extent of any such security) against a covered 
     depository institution holding company or any covered 
     affiliate or subsidiary that are proven to the satisfaction 
     of the receiver for such covered depository institution 
     holding company, affiliate, or subsidiary shall have priority 
     in the following order:
       ``(A) Administrative expenses of the receiver.
       ``(B) Any obligation of the covered depository institution 
     holding company, or covered affiliate or subsidiary, to the 
     Corporation.
       ``(C) Any general or senior liability of the covered 
     depository institution holding company, or covered affiliate 
     or subsidiary (which is not a liability described in 
     subparagraph (D) or (E)).
       ``(D) Any obligation subordinated to general creditors 
     which is not an obligation described in subparagraph (E).
       ``(E) Any obligation to shareholders, members, general 
     partners, limited partners, or other persons with interests 
     in the equity of the covered depository institution holding 
     company, or covered affiliate or subsidiary, arising as a 
     result of their status as shareholders, members, general 
     partners, limited partners, or other persons with interests 
     in the equity of the covered depository institution holding 
     company, or covered affiliate or subsidiary.
       ``(2) Creditors similarly situated.--All claimants of a 
     covered depository institution holding company, or covered 
     affiliate or subsidiary, that are similarly situated under 
     paragraph (1) shall be treated in a similar manner, except 
     that the receiver may take any action (including making 
     payments) that does not comply with this subsection, if--
       ``(A) the Corporation determines that such action is 
     necessary to maximize the value of the assets of the covered 
     depository institution holding company, or covered affiliate 
     or subsidiary, to maximize the present value return from the 
     sale or other disposition of the assets of the covered 
     depository institution holding company, or to minimize the 
     amount of any loss realized upon the sale or other 
     disposition of the assets of the covered depository holding 
     company, or covered affiliate or subsidiary; and
       ``(B) all claimants that are similarly situated under 
     paragraph (1) receive not less than the amount provided in 
     section 11(i)(2).
       ``(f) Rule of Construction.--Nothing in the Resolution 
     Reform Act is intended to supersede the administration of 
     claims under applicable State laws governing insurance 
     guaranty funds or the Securities Investor Protection Act of 
     1970.
       ``(g) Rulemaking.--The Federal Deposit Insurance 
     Corporation shall conduct a rulemaking to be completed within 
     180 days of enactment that will lay out specific guidelines 
     and priority of all secured and unsecured claims as well as 
     where the resources to satisfy those that will be satisfied 
     will be derived.''.

[[Page S8561]]

     SEC. 5. OTHER SPECIFIC MODIFICATIONS TO FEDERAL DEPOSIT 
                   INSURANCE CORPORATION AUTHORITY.

       (a) Recordkeeping.--Section 11(e)(8)(H) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1821(e)(8)(H)) is amended to 
     read as follows:
       ``(H) Recordkeeping.--The Corporation, after consultation 
     with the appropriate Federal banking agencies, may prescribe 
     regulations requiring that any insured depository institution 
     or depository institution holding company maintain such 
     records with respect to qualified financial contracts 
     (including market valuations) as the Corporation determines 
     to be necessary or appropriate to enable it to exercise its 
     rights and fulfill its obligations under this Act.''.
       (b) Golden Parachute Payments.--Section 
     18(k)(4)(A)(ii)(III) of the Federal Deposit Insurance Act (12 
     U.S.C. 1828(k)(4)(A)(ii)(III)) is amended--
       (1) by striking ``institution's'';
       (2) by inserting ``or covered company'' after ``insured 
     depository institution''; and
       (3) by inserting before the semicolon: ``, except that the 
     Corporation may define and make a determination of troubled 
     condition for any covered company that does not have an 
     appropriate Federal banking agency''.

     SEC. 6. CROSS-BORDER CLAIMS.

       (a) Purpose and Scope.--
       (1) Purpose.--The purpose of this section is to provide 
     effective mechanisms for dealing with cases of cross-border 
     insolvency, with the objectives of--
       (A) facilitating cooperation between the Corporation, 
     acting in its capacity as receiver of a covered depository 
     institution holding company or covered affiliate or 
     subsidiary of an insured depository institution and the 
     courts and other authorities of foreign countries involved in 
     cross-border insolvency cases; and
       (B) facilitating the orderly resolution of insured 
     depository institutions, covered depository institution 
     holding companies, or covered affiliates or subsidiaries, in 
     receivership.
       (2) Scope.--This section applies in any case in which--
       (A) the Corporation seeks assistance from a foreign court, 
     foreign representative, or foreign regulatory or supervisory 
     authority in connection with the resolution of a depository 
     institution holding company, or covered affiliate or 
     subsidiary thereof;
       (B) the assistance of the Corporation is sought by a 
     foreign court, foreign representative, or foreign regulatory 
     or supervisory authority in connection with a foreign 
     proceeding or with a resolution under this Act; or
       (C) a foreign proceeding and a case under this Act with 
     respect to the same covered depository institution holding 
     company, or covered affiliate or subsidiary, are pending 
     concurrently.
       (b) Coordination and Cooperation.--In regard to matters of 
     insolvency and insolvency proceedings, the Corporation may--
       (1) cooperate and coordinate with foreign courts, foreign 
     representatives, and foreign regulatory or supervisory 
     authorities, either directly or through a designated 
     representative, as the Corporation deems appropriate; and
       (2) communicate directly with, or to request information or 
     assistance directly from, foreign courts, foreign 
     representatives, and foreign regulatory or supervisory 
     authorities.
       (c) Claims by Foreign Representatives.--The Corporation, in 
     its capacity as receiver of a covered depository institution 
     holding company, or covered affiliate or subsidiary, may 
     allow a foreign administrator or representative to file 
     claims.
       (d) Coordination of Payments.--
       (1) Limitation.--Notwithstanding any other provision of 
     Federal law, a creditor who has received payment with respect 
     to a claim in a foreign insolvency proceeding may not receive 
     a payment for the same claim brought in a United States 
     insolvency proceeding under this Act against the same 
     depository institution, depository institution holding 
     company, or covered affiliate or subsidiary.
       (2) Subrogation.--A claimant in an insolvency proceeding 
     under this Act that has received payment on its claim shall 
     agree to the subrogation of the Corporation, to the extent of 
     such payment, to any claim or right of claim, arising from 
     the same loss.
       (e) Public Policy Exemption.--Nothing in this section 
     prevents the Corporation from refusing to take an action 
     governed by this section if the action would be contrary to 
     the public policy of the United States or if it would 
     increase losses to the Deposit Insurance Fund.

     SEC. 7. MISCELLANEOUS PROVISIONS.

       (a) Bankruptcy Code Amendments.--Section 109(b)(2) of title 
     11, United States Code, is amended by inserting before 
     ``homestead association'' the following: ``covered depository 
     institution holding company and covered affiliate or 
     subsidiary, as those terms are defined in section 51(b) of 
     the Federal Deposit Insurance Act (except if the Federal 
     Deposit Insurance Corporation exercises its authority under 
     section 52(c) of that Act),''.
       (b) Authority To Appoint Receiver.--
       (1) Federal reserve act.--Section 11(o) of the Federal 
     Reserve Act (12 U.S.C. 248(o)) is amended--
       (A) by striking ``The Board'' and inserting the following:
       ``(1) State member banks.--The Board''; and
       (B) by adding at the end the following:
       ``(2) Covered depository institution holding companies.--
     The Board may appoint the Federal Deposit Insurance 
     Corporation as receiver for a covered depository institution 
     holding company (as those terms are defined in section 51(b) 
     of the Federal Deposit Insurance Act) under section 52 of the 
     Federal Deposit Insurance Act.''.
       (2) Home owners' loan act.--Section 10 of the Home Owners' 
     Loan Act (12 U.S.C. 1467a) is amended--
       (A) by redesignating subsection (t) as subsection (u); and
       (B) by inserting after subsection (s) the following:
       ``(t) Appointment of FDIC as Receiver.--The Director may 
     appoint the Federal Deposit Insurance Corporation as receiver 
     for a covered depository institution holding company (as 
     those terms are defined in section 51(b) of the Federal 
     Deposit Insurance Act) under section 52 of the Federal 
     Deposit Insurance Act.''.
                                 ______