[Congressional Record Volume 155, Number 117 (Thursday, July 30, 2009)]
[Senate]
[Pages S8558-S8566]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      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.''.
                                 ______
                                 
      By Mr. DODD (for himself, Mr. Kennedy, Mrs. Murray, and Mr. 
        Lieberman):
  S. 1543. A bill to amend the Family and Medical Leave Act of 1993 and 
title 5, United States Code, to provide leave for family members of 
members of regular components of the Armed Forces, and leave to care 
for covered veterans, and for other purposes; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. DODD. Mr. President, I rise today to introduce The Supporting 
Military Families Act of 2009.
  The sacrifices made by our soldiers, sailors, airmen, Marines, and 
Coast Guard are matched only by those made by their families. When a 
loved one is serving abroad, and in cases where he or she returns 
wounded, it can take an immense emotional toll on a family.
  But it does not have to take an equally staggering economic toll.
  The bill I introduce today clarifies and improves upon provisions 
included in the National Defense Authorization Act of 2008, which 
provided important benefits for family members of our brave service men 
and women.
  More than 20 years ago, I began the effort to bring job protection to 
hard-working Americans so they wouldn't have to choose between the 
family they love and the job they need. This effort, after more than 
seven years, three presidents, and two vetoes, eventually led to the 
enactment of the Family Medical Leave Act, FMLA, which provides 12 
weeks of unpaid leave for eligible employees so they may care for a 
newborn or adopted child, their own serious illness, or that of a loved 
one. Since its passage, I have worked to expand this Act to cover more 
workers and to provide for paid leave, so that more employees can 
afford to take leave when necessary.
  We must also ensure that we care for the health and well-being of our 
war heroes, many of whom return from deployment with serious injuries 
and illnesses. Two years ago, I introduced legislation to provide up to 
6 months of FMLA leave for primary caregivers of servicemembers who 
suffer from a combat-related injury or illness. The FMLA currently 
provides three months of unpaid leave to a spouse, parent, or child 
acting as a caregiver for a person with a serious illness. However, 
some of those injured in service to our country rely on other family 
members or friends to care for them as they recover, and many of these 
injuries take longer than 3 months to heal from. That is why, following 
a recommendation of the President's Commission on Care for America's 
Returning Wounded Warriors, headed by former Senator Bob Dole and 
former Secretary of Health and Human Services Donna Shalala, I offered 
this legislation. It was included in the 2008 National Defense 
Authorization Act, along with another provision providing exigency 
leave for servicemembers' families, which allows the families of 
deployed servicemembers to take leave to manage their family or 
personal affairs.
  These two provisions were important steps toward giving our 
servicemembers and their families the support they need during 
extremely challenging times. The legislation I introduce today builds 
on those efforts and will accomplish three things. First, a number of 
service-related illnesses and injuries may not manifest themselves 
until after a servicemember has left the military, including traumatic 
brain injury and post traumatic stress disorder. This bill extends the 
annual 26 weeks of unpaid leave to family members of veterans for up to 
five years after a veteran leaves service, if the

[[Page S8562]]

veteran develops a service-related serious injury or illness that he or 
she needs time to recover from. Second, this legislation extends 
eligibility for exigency leave to those deployed to a foreign country, 
and not only in support of a contingency operation, in order to provide 
the benefit to all of those families who struggle with the challenges 
of a deployment. Finally, the DOL regulations limited access to 
exigency leave to Reserve and National Guard members only. This was not 
the intent of the initial legislation, and this bill extends exigency 
leave to cover all active duty members who are deployed to a foreign 
country.
  I am pleased that my colleagues Senators Kennedy, Lieberman, and 
Murray are joining me in introducing the Supporting Military Families 
Act of 2009.
                                 ______
                                 
      By Mr. REED (for himself, Mr. Bond, Mrs. Murray, Mr. Johnson, Mr. 
        Kerry, and Mr. Durbin):
  S. 1547. A bill to amend title 38, United States Code, and the United 
States Housing Act of 1937 to enhance and expand the assistance 
provided by the Department of Veterans Affairs and the Department of 
Housing and Urban Development to homeless veterans and veterans at risk 
of homelessness, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I introduce the Zero Tolerance for 
Veteran Homelessness Act. This comprehensive bill enhances and expands 
the assistance provided by the Department of Veterans Affairs and the 
Department of Housing and Urban Development to homeless veterans and 
veterans at risk of becoming homeless.
  It is one of our Nation's great tragedies that on any given night, 
131,000 veterans are homeless. The Department of Veterans Affairs 
estimates that more than 200,000 veterans experience homelessness each 
year and that nearly 1/5 of all homeless people in the United States 
are veterans. These numbers are expected to climb as our servicemembers 
fighting in Iraq and Afghanistan return home to face tough economic 
conditions.
  We know that veterans are often at greater risk of becoming homeless. 
Some return from deployments to discover that the skills they have 
honed in their military service can be difficult to transfer to jobs in 
the private sector. Others struggle with physical or mental wounds of 
war. Still others return to communities that lack safe, affordable 
housing.
  Our veterans have made great sacrifices to serve our country, and it 
is especially important to honor our commitment to them. The Department 
of Veterans Affairs is certainly a part of that commitment, providing 
benefits, medical care, support, and a sense of community to homeless 
veterans. However, a number of other federal agencies provide service 
to veterans, including the Department of Housing and Urban Development, 
and this legislation builds on that existing infrastructure.
  Many programs through HUD and the VA are already helping homeless 
veterans with transitional housing, health care and rehabilitation 
services, and employment assistance. However, a more comprehensive and 
coordinated approach would strengthen these programs and prevent more 
at-risk veterans from becoming homeless.
  That is why I have joined with my colleagues Senators Bond, Murray, 
and Johnson to introduce this much-needed legislation. The Zero 
Tolerance for Veterans Homelessness Act seeks to merge housing programs 
and support services for veterans from the start so that there is an 
integrated approach to address their risk of homelessness.
  First, this bill would create a new Homelessness Prevention program 
that would enable the VA to keep at-risk veterans in stable housing and 
offer increased assistance to veterans who have fallen into 
homelessness. Specifically, the VA could provide short-term rental 
assistance, housing relocation and stabilization services, services to 
resolve personal credit issues, payments for security deposits or 
utility costs, and assistance for moving costs. These up-front expenses 
can be the major obstacle that puts low-income or unemployed veterans 
at risk of becoming homeless. These homelessness prevention and rapid 
re-housing techniques have been successfully used in numerous 
communities to significantly reduce family homelessness, and this bill 
would give the VA resources to put these strategies into practice.
  Second, this bill would authorize additional housing vouchers through 
the HUD-Veterans Affairs Supportive Housing, VASH, program. This 
collaborative program provides homeless veterans with vouchers to rent 
apartments in the private rental market, as well as case management and 
clinical services at local VA medical centers. In this way, veterans 
receive the supportive housing they need to recover and thrive.
  The HUD-VASH program has grown in recent years. Twenty thousand 
vouchers were funded in the last two appropriations cycles, and 10,000 
more will likely be funded-in Fiscal Year 2010. However, more homeless 
veterans could benefit from this important resource. As such, the Zero 
Tolerance for Veterans Homelessness bill authorizes up to 10,000 
additional vouchers each year to reach a maximum of 60,000 vouchers by 
2013.
  Third, this legislation would make it easier for non-profits to apply 
for capital grants through the VA's grants and per diem program to 
build transitional housing and other facilities for veterans. This 
would streamline the process for non-profit organizations to be able to 
use financing from other sources to break ground on new housing 
construction. This is particularly important in the current economy, 
when non-profits are stretched and have to be more creative than ever 
to fund new capital projects.
  The Zero Tolerance for Veterans Homelessness Act would also create a 
Special Assistant for Veterans Affairs within HUD. The Special 
Assistant would ensure that veterans have access to HUD's existing 
programs and work to remove any barriers. The Special Assistant would 
also serve as a liaison between HUD and the VA, helping to connect and 
coordinate the services the two departments provide.
  Additionally, this legislation recognizes the need to measure 
progress of efforts to combat homelessness. It establishes a new 
Homeless Veterans Management Information System, to be developed by the 
VA, in consultation with HUD and the United States Interagency Council 
on Homelessness. This data collection system will be used to provide 
annual reports to Congress on the number of homeless veterans and they 
types of assistance they receive. This information will help illustrate 
how programs are performing and inform future policy.
  Finally, the bill would require the Secretary of Veterans Affairs, in 
consultation with other agencies, to analyze existing programs and 
develop a comprehensive plan with recommendations on how to end 
homelessness among veterans. Establishing a plan with appropriate 
benchmarks will enable the VA to more easily track progress towards 
this important goal.
  This bipartisan bill also complements a bill that I am cosponsoring 
with Senator Murray to enable programs at the VA and the Department of 
Labor to better serve homeless women veterans and homeless veterans 
with children.
  Only by working together, across the federal government and in 
partnership with non-profits and local housing authorities, will we be 
able to comprehensively help homeless veterans and reach those in 
danger of becoming homeless. We owe it to our veterans to ensure that 
they and their families have safe, affordable places to live and to 
provide the services and benefits they have earned. The nation's brave 
veterans deserve nothing less.
  I hope my colleagues will join in supporting this important, 
bipartisan legislation.
  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. 1547

       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 ``Zero Tolerance for Veterans 
     Homelessness Act of 2009''.

     SEC. 2. FINDINGS.

       Congress finds that--

[[Page S8563]]

       (1) veterans are at a greater risk of becoming homeless 
     than other people in the United States, because of 
     characteristics that include--
       (A) having employment-related skills that are unique to 
     military service and that can be difficult to transfer to the 
     civilian sector;
       (B) combat-related health issues;
       (C) earning minimal income or being unemployed; and
       (D) a shortage of safe, affordable housing;
       (2) the Department of Veterans Affairs estimates that--
       (A) 131,000 veterans are homeless on any given night;
       (B) more than 200,000 veterans experience homelessness each 
     year; and
       (C) veterans account for nearly \1/5\ of all homeless 
     people in the United States;
       (3) approximately 1,500,000 veterans, nearly 6.3 percent of 
     the veterans in the United States, have an income that falls 
     below the Federal poverty level, and approximately 634,000 
     veterans have an income below 50 percent of the Federal 
     poverty level;
       (4) the Department of Veterans Affairs is only adequately 
     funded to respond to the health, housing, and supportive 
     services needs of approximately \1/3\ of the veterans in the 
     United States; and
       (5) it is expected that significant increases in services 
     will be needed to serve the aging veterans of the Vietnam war 
     and members of the Armed Forces returning from Operation 
     Iraqi Freedom and Operation Enduring Freedom.

     SEC. 3. PROGRAM ON PREVENTION OF VETERAN HOMELESSNESS.

       (a) Program on Prevention of Veteran Homelessness.--
       (1) In general.--Subchapter VII of chapter 20 of title 38, 
     United States Code, is amended by adding at the end the 
     following new section:

     ``Sec. 2067. Prevention of veteran homelessness

       ``(a) Prevention of Veteran Homelessness.--Not later than 
     180 days after the date of the enactment of this section, the 
     Secretary shall establish a program within the Veterans 
     Benefits Administration to prevent veteran homelessness by--
       ``(1) identifying in a timely fashion any veteran who is 
     homeless or at imminent risk of becoming homeless; and
       ``(2) providing assistance sufficient to ensure that each 
     veteran identified under paragraph (1) does not become or 
     remain homeless.
       ``(b) Types of Assistance.--The assistance provided under 
     subsection (a)(2) may include the following:
       ``(1) The provision of short-term or medium-term rental 
     assistance.
       ``(2) Housing relocation and stabilization services, 
     including housing search, mediation, and outreach to property 
     owners.
       ``(3) Services to resolve personal credit issues that have 
     led to negative credit reports.
       ``(4) Assistance with paying security or utility deposits 
     and utility payments.
       ``(5) Assistance with covering costs associated with 
     moving.
       ``(6) A referral to a program of another department or 
     agency of the Federal Government.
       ``(7) Such other activities as the Secretary considers 
     appropriate to prevent veterans homelessness.
       ``(c) No Duplication of Services.--The Secretary may 
     provide assistance under subsection (a)(2) to a veteran 
     receiving supportive services from an eligible entity 
     receiving financial assistance under section 2044 of this 
     title only to the extent that the assistance provided under 
     subsection (a)(2) does not duplicate the supportive services 
     provided to such veteran by such entity.
       ``(d) Staffing.--The Secretary shall assign such employees 
     at such locations as the Secretary considers necessary to 
     carry out this section.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section 
     $50,000,000 for each of fiscal years 2010 through 2014.''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of chapter 20 of such title is amended by adding at 
     the end the following new item:

``2067. Prevention of veteran homelessness.''.

       (b) Responsibilities of Homeless Veterans Program 
     Coordinators.--Section 2003(a) of such title is amended--
       (1) in paragraph (3), by striking ``The housing'' and 
     inserting ``Any housing'';
       (2) by redesignating paragraph (7) as paragraph (8); and
       (3) by inserting after paragraph (6) the following new 
     paragraph (7):
       ``(7) The program under section 2067 of this title.''.
       (c) Report.--Not later than 180 days after the date of the 
     establishment of the program required by section 2067 of 
     title 38, United States Code, as added by paragraph (1), the 
     Secretary of Veterans Affairs shall submit to Congress a 
     report on the operation of such program.

     SEC. 4. ENHANCEMENT OF COMPREHENSIVE SERVICE PROGRAMS.

       (a) Enhancement of Grants.--Section 2011 of title 38, 
     United States Code, is amended--
       (1) in subsection (a), by striking ``Subject to the 
     availability of appropriations provided for such purpose, 
     the'' and inserting ``The'';
       (2) in subsection (b)(1)(A), by inserting ``new 
     construction,'' before ``expansion''; and
       (3) in subsection (c)--
       (A) in the first sentence, by striking ``A grant'' and 
     inserting ``(1) A grant'';
       (B) in the second sentence of paragraph (1), as designated 
     by subparagraph (A), by striking ``The amount'' and inserting 
     the following:
       ``(2) The amount''; and
       (C) by adding at the end the following new paragraph:
       ``(3)(A) The Secretary may not deny an application from an 
     entity that seeks a grant under this section to carry out a 
     project described in subsection (b)(1)(A) solely on the basis 
     that the entity proposes to use funding from other private or 
     public sources, if the entity demonstrates that a private 
     nonprofit organization will provide oversight and site 
     control for the project.
       ``(B) In this paragraph, the term `private nonprofit 
     organization' means the following:
       ``(i) An incorporated private institution, organization, or 
     foundation--
       ``(I) that has received, or has temporary clearance to 
     receive, tax-exempt status under paragraphs (2), (3), or (19) 
     of section 501(c) of the Internal Revenue Code of 1986;
       ``(II) for which no part of the net earnings of the 
     institution or foundation inures to the benefit of any 
     member, founder, or contributor of the institution or 
     foundation; and
       ``(III) that the Secretary determines is financially 
     responsible.
       ``(ii) A for-profit limited partnership or limited 
     liability company, the sole general partner of which is an 
     organization that is described by subclauses (I) through 
     (III) of clause (i).
       ``(iii) A corporation wholly owned and controlled by an 
     organization that is described by subclauses (I) through 
     (III) of clause (i).''.
       (b) Study and Report on Per Diem Payments.--
       (1) Study and development of payment method.--Not later 
     than one year after the date of the enactment of this Act, 
     the Secretary of Veterans Affairs shall--
       (A) complete a study of all matters relating to the method 
     used by the Secretary to make per diem payments under section 
     2012(a) of title 38, United States Code; and
       (B) develop an improved method for adequately reimbursing 
     recipients of grants under section 2011 of such title for 
     services furnished to homeless veterans.
       (2) Consideration.--In developing the method required by 
     paragraph (1)(B), the Secretary may consider payments and 
     grants received by recipients of grants described in such 
     paragraph from other departments and agencies of Federal and 
     local governments and from private entities.
       (3) Report.--Not later than one year after the date of the 
     enactment of this Act, the Secretary of Veterans Affairs 
     shall submit to Congress a report on--
       (A) the findings of the Secretary with respect to the study 
     required by subparagraph (A) of paragraph (1);
       (B) the method developed under subparagraph (B) of such 
     paragraph; and
       (C) any recommendations of the Secretary for revising the 
     method described in subparagraph (A) of such paragraph and 
     any legislative action the Secretary considers necessary to 
     implement such method.
       (c) Authorization of Appropriations.--Section 2013 of such 
     title is amended by striking ``subchapter $150,000,000'' and 
     all that follows through the period and inserting the 
     following: ``subchapter--
       ``(1) $200,000,000 for fiscal year 2010; and
       ``(2) such sums as may be necessary for each of fiscal 
     years 2011 through 2014.''.

     SEC. 5. HUD VETERANS AFFAIRS SUPPORTIVE HOUSING VOUCHERS.

       Section 8(o)(19) of the United States Housing Act of 1937 
     (42 U.S.C. 1437f(o)(19)) is amended to read as follows:
       ``(19) Rental vouchers for veterans affairs supported 
     housing program.--
       ``(A) Rental vouchers.--The Secretary shall make available 
     to public housing agencies described in subparagraph (C) the 
     amounts described in subparagraph (B), to provide rental 
     assistance through a supported housing program administered 
     in conjunction with the Department of Veterans Affairs.
       ``(B) Amount.--The amounts specified in this subparagraph 
     are the amounts necessary to ensure that--
       ``(i) not more than 30,000 vouchers for rental assistance 
     under this paragraph are outstanding at any one time during 
     fiscal year 2010;
       ``(ii) not more than 40,000 vouchers for rental assistance 
     under this paragraph are outstanding at any one time during 
     fiscal year 2011;
       ``(iii) not more than 50,000 vouchers for rental assistance 
     under this paragraph are outstanding at any one time during 
     fiscal year 2012; and
       ``(iv) not more than 60,000 vouchers for rental assistance 
     under this paragraph are outstanding at any one time during 
     fiscal year 2013 and each fiscal year thereafter.
       ``(C) Public housing agencies.--A public housing agency 
     described in this subparagraph is a public housing agency 
     that--
       ``(i) has a partnership with a Department of Veterans 
     Affairs medical center or an entity determined to be 
     appropriate by the Secretary of Veterans Affairs;
       ``(ii) is located in an area that the Secretary of Veterans 
     Affairs determines has a high concentration of veterans in 
     need of assistance;
       ``(iii) has demonstrated expertise in providing housing for 
     homeless individuals; and
       ``(iv) meets any other criteria that the Secretary, in 
     consultation with the Secretary of Veterans Affairs may 
     prescribe.

[[Page S8564]]

       ``(D) Case management.--The Secretary of Veterans Affairs 
     shall ensure that the case managers described in section 
     2003(b) of title 38, United States Code, provide appropriate 
     case management for each veteran who receives rental 
     assistance under this paragraph that--
       ``(i) assists the veteran in--

       ``(I) locating available housing;
       ``(II) working with the appropriate public housing agency;
       ``(III) accessing benefits and health services provided by 
     the Department of Veterans Affairs and other departments and 
     agencies of the Federal Government;
       ``(IV) negotiating with landlords; and
       ``(V) other areas, as the Secretary determines is necessary 
     to help the veteran maintain housing or avoid homelessness; 
     and

       ``(ii) ensures that a veteran with a severe disability, 
     including a veteran that has been homeless for a substantial 
     period of time, is referred to sufficient supportive services 
     to provide the veteran with stable housing, including--

       ``(I) mental health services, including treatment and 
     recovery support services;
       ``(II) substance abuse treatment and recovery support 
     services, including counseling, treatment planning, recovery 
     coaching, and relapse prevention;
       ``(III) integrated, coordinated treatment and recovery 
     support services for co-occurring disorders;
       ``(IV) health education, including referrals for medical 
     and dental care;
       ``(V) services designed to help individuals make progress 
     toward self-sufficiency and recovery, including job training, 
     assistance in seeking employment, benefits advocacy, money 
     management, life-skills training, self-help programs, and 
     engagement and motivational interventions;
       ``(VI) parental skills and family support; and
       ``(VII) other supportive services that promote an end to 
     chronic homelessness.''.

     SEC. 6. SPECIAL ASSISTANT FOR VETERANS AFFAIRS IN OFFICE OF 
                   SECRETARY OF HOUSING AND URBAN DEVELOPMENT.

       Section 4 of the Department of Housing and Urban 
     Development Act (42 U.S.C. 3533) is amended by adding at the 
     end the following new subsection:
       ``(g) Special Assistant for Veterans Affairs.--
       ``(1) Establishment.--There shall be in the Department a 
     Special Assistant for Veterans Affairs, who shall be in the 
     Office of the Secretary.
       ``(2) Appointment.--The Special Assistant for Veterans 
     Affairs shall be appointed by the Secretary, based solely on 
     merit and shall be covered under the provisions of title 5, 
     United States Code, governing appointments in the competitive 
     service.
       ``(3) Responsibilities.--The Special Assistant for Veterans 
     Affairs shall be responsible for--
       ``(A) ensuring that veterans have access to housing and 
     homeless assistance under each program of the Department 
     providing such assistance;
       ``(B) coordinating all programs and activities of the 
     Department relating to veterans; and
       ``(C) carrying out such other duties as may be assigned to 
     the Special Assistant by the Secretary or by law.''.

     SEC. 7. HOMELESS VETERANS MANAGEMENT INFORMATION SYSTEM.

       (a) In General.--Subchapter VII of chapter 20 of title 38, 
     United States Code, as amended by section 3(b), is further 
     amended by adding at the end the following new section:

     ``Sec. 2068. Homeless Veterans Management Information System

       ``(a) Method for Data Collection and Aggregation.--(1) Not 
     later than one year after the date of the enactment of this 
     section, the Secretary shall, in consultation with the 
     Special Assistant for Veterans Affairs of the Department of 
     Housing and Urban Development and the United States 
     Interagency Council on Homelessness established under section 
     201 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 
     11311), establish a method for the collection and aggregation 
     of data on homeless veterans participating in programs of the 
     Department of Veterans Affairs and the Department of Housing 
     and Urban Development, including the following:
       ``(A) The age, race, sex, disability status, marital status 
     of the veteran, income, employment history, and whether the 
     veteran is a parent.
       ``(B) If the veteran received housing assistance, the 
     number of days that the veteran resided in such housing, and 
     the type of housing in which the veteran resided.
       ``(C) If the veteran is no longer participating in a 
     program, the reason the veteran left the program.
       ``(2) The method required by paragraph (1) shall be 
     established in a manner that ensures that each veteran is 
     counted only once.
       ``(b) Annual Data Collection and Aggregation.--Not later 
     than one year after the method is established under 
     subsection (a), and annually thereafter, the Secretary shall 
     collect and aggregate data using the method established under 
     subsection (a).
       ``(c) Annual Reports.--Not later than two years after the 
     date of enactment of this section and annually thereafter, 
     the Secretary shall submit to Congress a report on the data 
     collected and aggregated under subsection (b).
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section--
       ``(1) $10,000,000 for fiscal year 2010; and
       ``(2) such sums as may be necessary for fiscal years 2011 
     through 2014.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 20 of such title is amended by adding at 
     the end the following new item:

``2068. Homeless Veterans Management Information System.''.

     SEC. 8. PLAN TO END VETERAN HOMELESSNESS.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Veterans Affairs 
     shall submit to Congress a comprehensive plan to end 
     homelessness among veterans that includes--
       (1) an analysis of programs of the Department of Veterans 
     Affairs and other departments and agencies of the Federal 
     Government that are designed to prevent homelessness among 
     veterans and assist veterans who are homeless;
       (2) an evaluation of whether and how partnerships between 
     the programs described in paragraph (1) would contribute to 
     ending homelessness among veterans;
       (3) recommendations for improving the programs described in 
     paragraph (1), creating partnerships between such programs, 
     or eliminating programs that are no longer effective;
       (4) recommendations for new programs to prevent and end 
     homelessness among veterans, including an estimation of the 
     cost of such programs;
       (5) a timeline for implementing the plan; and
       (6) such other information as the Secretary determines 
     necessary.
       (b) Consideration of Veterans Located in Rural Areas.--The 
     analysis, evaluation, and recommendations included in the 
     report required by subsection (a) shall include consideration 
     of the circumstances and requirements that are unique to 
     veterans located in rural areas.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Reed, and Mr. Kaufman):
  S. 1551. A bill to amend section 20 of the Securities Exchange Act of 
1934 to allow for a private civil action against a person that provides 
substantial assistance in violation of such Act; to the Committee on 
the Judiciary.
  Mr. SPECTER. Mr. President. I have sought recognition to urge support 
for the legislation I just introduced, the Liability for Aiding and 
Abetting Securities Violations Act of 2009. My legislation would 
overturn two errant decisions of the Supreme Court--Central Bank of 
Denver v. First Interstate Bank of Denver, 511 U.S. 164, 1994, and 
Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 522 
U.S. 148, 2008, by amending the Securities Exchange Act of 1934 to 
authorize a private right of action for aiding-and-abetting liability.
  The Act's main anti-fraud provision, Sec. 10(b), makes it ``unlawful 
for any person, directly or indirectly,'' to commit acts of fraud ``in 
connection with the purchase or sale of any security.'' Nearly fifty 
years ago the Court implied a private right of action under Sec. 10(b). 
The result was that investors could recover financial losses caused by 
violations of 10(b) and the companion regulation issued by the SEC 
commonly known as ``Rule 10b-5.''
  Until Central Bank, every circuit of the Federal Court of Appeals had 
concluded that Sec. 10(b)'s private right of action allowed recovery 
not only against the person who directly undertook a fraudulent act--
the so-called primary violator--but also anyone who aided and abetted 
him. A five-Justice majority in Central Bank, intent on narrowing 
Sec. 10(b)'s scope, held that its private right of action extended only 
to primary violators.
  When Congress debated the legislation that became the Private 
Securities Litigation Reform Act of 1995, PSLRA, then-SEC chairman 
Arthur Levitt and others urged Congress to overturn Central Bank. 
Congress declined to do so. The PSLRA authorized only the Securities 
and Exchange Commission, SEC, to bring aiding-and- abetting enforcement 
litigation.
  It is time for us to revisit that judgment. The massive frauds 
involving Enron, Refco, Tyco, Worldcom, and countless other lesser-
known companies during the last decade have taught us that a stock 
issuer's auditors, bankers, business affiliates, and lawyers--sometimes 
called ``secondary actors''--all too often actively participate in and 
enable the issuer's fraud. Federal Judge Gerald Lynch recently observed 
in a decision calling on Congress to reexamine Central Bank that 
secondary actors are sometimes ``deeply and indispensably implicated in 
wrongful conduct.'' In re Refco, Inc. Sec. Litig., 609 F. Supp. 2d. 
304, 318 n.15, S.D.N.Y.

[[Page S8565]]

2009. Professor John Coffee of Columbia Law School, a renowned expert 
on the regulation of the securities markets, has even laid much of the 
blame for the major corporate frauds of this decade on the 
``acquiescence'' of the ``outside professionals''--especially 
accountants, securities analysts, and corporate lawyers--responsible 
for ``preparing, verifying, or certifying corporate disclosures to the 
securities markets.'' Coffee, ``Gatekeeper Failure and Reform: The 
Challenge of Fashioning Relevant Reforms,'' 84 Boston University Law 
Review 301, 304, 2004.
  The immunity from suit that Central Bank confers on secondary actors 
has removed much-needed incentives for them to avoid complicity in and 
even help prevent securities fraud, and all too often left the victims 
of fraud uncompensated for their losses. Enforcement actions by the SEC 
have proved to be no substitute for suits by private plaintiffs. The 
SEC's litigating resources are too limited for the SEC to bring suit 
except in a small number of cases, and even when the SEC does bring 
suit, it cannot recover damages for the victims of fraud.
  Last year's decision in Stoneridge made matters still worse for 
defrauded investors. Central Bank had at least held open the 
possibility that secondary actors who themselves undertake fraudulent 
activities prescribed by Sec. 10(b) could be ``held liable as . . . 
primary violator[s].'' Stoneridge has largely foreclosed that 
possibility. A divided Court held that Sec. 10(b)'s private right of 
action did not ``reach'' two vendors of a cable company that entered 
into sham transactions with the company knowing that it would publicly 
report the transactions in order to inflate its stock price. The Court 
conceded that the suppliers engaged in fraudulent conduct prescribed by 
Sec. 10(b), but held that they were not liable in a private action 
because only the issuer, not they, communicated the transaction to the 
public. That remarkable conclusion put the Court at odds with even the 
Republican Chairman of the SEC.
  My legislative response would take the limited, but important, step 
amending of the Exchange Act to authorize a private right of action 
under Sec. 10(b) (and other, less commonly invoked, provisions of the 
Act) against a secondary actor who provides ``substantial assistance'' 
to a person who violates Sec. 10(b). Any suit brought under my proposed 
amendment would, of course, be subject to the heightened pleading 
standards, discovery-stay procedures, and other defendant-protective 
features of the PSLRA.
                                 ______
                                 
      By Mr. LIEBERMAN (for himself, Ms. Collins, Mrs. Feinstein, Mr. 
        Voinovich, Mr. Byrd, and Mr. Ensign):
  S. 1552. A bill to reauthorize the DC opportunity scholarship 
program, and for other purposes; read the first time.
  Mr. LIEBERMAN. Mr. President, I rise along with my colleagues, 
Senators Collins, Feinstein, Voinovich, Byrd and Ensign to introduce 
the Scholarships for Opportunity and Results Act, SOAR, which seeks to 
reauthorize the DC Opportunity Scholarship Program, OSP, also known as 
the DC voucher program. This important initiative offers scholarships 
to low-income students, especially those from failing schools, to 
attend better private schools. In doing so, the program gives parents 
of economically disadvantaged children a choice that's available to the 
more affluent, including many of us in Congress and in the White House. 
This program offers DC students a choice that has improved the quality 
of their education and lives; it is a program that works. I urge my 
colleagues in the Senate to support the reauthorization of this 
important program.
  Since 2003, Congress has supported a tri-sector approach to improving 
education in the District of Columbia. This has included funding the DC 
Opportunity Scholarship Program, which provides low income students in 
the District with scholarships of up to $7,500 to attend private 
schools, as well as new funding for ongoing efforts to reform and 
improve public schools and public charter schools in the District.
  Critics of this program argue that it takes away funds from public 
schools. This is simply not the case. I remind my colleagues that we 
intentionally designed the scholarship program to ensure that any 
funding for opportunity scholarships would not reduce funding for 
public schools. We provided additional new money for the DC Public 
Schools and for DC Public Charter Schools. We have not changed the 
three part-funding design of the initiative. The tri-partite funding is 
central to the compromise approach that originally brought Democrats 
and Republicans together in support of the Opportunity Scholarship 
Program. This bill preserves that important requirement. It is our 
intent that any funding for DC Opportunity Scholarships will result in 
continued additional new money in support of public charter and public 
schools.
  This funding mechanism is an important point as it reflects the goal 
of the Opportunity Scholarship Program: to be supportive of the reforms 
that are helping to improve education in the District of Columbia. 
There is absolutely no intention to undermine the public schools--quite 
to the contrary. But as Ronald Holassie, one of the students receiving 
a scholarship, told us at a recent hearing on the program before the 
Homeland Security and Governmental Affairs Committee: ``public schools 
in the District did not go bad over night and they won't get better 
over night.'' That's the point: despite having amongst the highest per 
pupil expenditure for public school districts in the country, the 
public school students in the District score at the bottom on national 
tests. Ronald and others cannot wait for reforms to take effect in the 
worst of DC's public schools. They deserve a good education today and 
the Opportunity Scholarships respond to that need.
  Much progress has been made in improving DC schools over the years 
but even school Chancellor Michelle Rhee admits that much remains to be 
done. According to the Washington Post, Chancellor Rhee was asked 
recently to give herself a grade for her efforts. She said she would 
give herself a failing grade as long as any children were in schools 
that were not providing a quality education. That's a modest answer 
that obscures the progress she has made. DC test scores are up in the 
most recent study of academic performance. Undoubtedly, we will see 
additional improvements in the years to come. Chancellor Rhee will 
continue to have my full support and I am confident that Ms. Rhee will 
soon be able to claim the ``A'' grade that I believe she already 
deserves. In the new bill, we have made the connection between the 
scholarship program and the ongoing reform effort more explicit. Our 
bill acknowledges an intent to reexamine the program when DC public 
school students are testing at the national average in reading and 
math.
  The bill also responds to early criticisms of the Opportunity 
Scholarships with some important changes. It requires all participating 
schools to have a valid certificate of occupancy and to ensure that 
teachers in core subjects have an appropriate college degree. It 
continues to target students from lower income families who are 
attending those DC schools most in need of improvement but it increases 
the tuition amounts slightly to levels consistent with the tuition 
charged at a typical participating school, and adds an inflation 
adjustment. The new amounts are still well below the per pupil cost of 
educating a child in the DC public schools. While we have kept the 
income ceiling for entry into the program unchanged, we have increased 
slightly the income ceiling for those already participating in the 
program to ensure that parents are not forced to choose between a 
modest raise in their income and the scholarship, or marriage and the 
scholarship.
  It is very important to recognize that the Opportunity Scholarship 
schools are producing impressive results. Opportunity Scholarship 
students attending private schools showed a five month advantage in 
reading levels compared to students attending public schools who 
applied but did not receive the scholarship, in the most recent study 
of the program conducted by the Department of Education's Institute of 
Education Sciences. The study showed significantly higher levels of 
parental satisfaction with regards to safety and the quality of the 
school for those in the program. The study has not yet even looked at 
the effect of the program on graduation rates and attrition though 
studies of other voucher programs indicate this impact could very well 
be significant. We will see those results in next year's study.

[[Page S8566]]

  It is also imperative to put the results of the program in context. 
Rarely are there statistically significant results with any educational 
innovations, particularly those targeted at low income students. Of the 
eleven recent educational innovations studied under the auspices of the 
Department of Education using the same rigorous testing designs, only 
three showed any statistically significant achievement results. The 
Opportunity Scholarship was one of the three. Dr. Patrick Wolf, an 
education specialist and the lead researcher in the IES study, 
testified at a recent hearing on the scholarship program that in his 
professional opinion the results were exceptional and warranted 
continued study of the program. According to Dr. Wolf, ``by 
demonstrating statistically significant impacts overall in reading 
based on an experimental evaluation, the DC OSP has met a tough 
standard for efficacy in serving low-income inner-city students.''
  Academic programs should be evaluated in terms of their impact on 
students' progress and achievement. In his speech before the Hispanic 
Chamber of Commerce earlier this year, President Obama laid down that 
marker as a guideline for considering which education programs should 
be funded. On that basis, it is clear that we should continue to fund 
the DC Opportunity Scholarship Program--a program that has been good 
for students, good for parents and even good for public and charter 
schools in the District. Let us do the right thing for kids in DC and 
reauthorize the DC Opportunity Scholarship Program.
  Mrs. FEINSTEIN. Mr. President, I am pleased to join Senator Lieberman 
and my Senate colleagues in introducing legislation to reauthorize the 
District of Columbia's pilot scholarship program for 5 more years.
  This important program currently provides scholarships to 1,700 low-
income children who attend 49 private schools in the District. The 
scholarships of up to $7,500 help these students pay for tuition and 
transportation expenses to school.
  However, if the program is not extended soon, children will not be 
able to continue their education at the schools of their choice.
  This legislation would:
  Extend the life of the District of Columbia's pilot scholarship 
program for five more years.
  Increase the program's funding to $20 million for fiscal year 2010 
and as may be necessary the following four years to allow new students 
to participate in the program and provide a higher scholarship.
  Increase the scholarship amount to $9,000 for children in 
kindergarten through 8th grade, and $11,000 for youngsters in high 
school--this amount is still lower than the $15,500 cost of educating a 
public school student in the District and will help low-income families 
afford the high cost of private school tuition.
  Protect low-income families whose children are already in the program 
from ``earning out'' of it by setting the maximum income level for them 
at 300 percent of the Federal poverty level, about $63,000 for a family 
of four.
  However, it maintains the current income eligibility requirement for 
students to enter the program of 185 percent of poverty, $41,000 for a 
family of four.
  It would improve evaluation by assessing students' college admission 
rates, school safety, and the reasons why parents choose to participate 
in program to better learn about its impact on children's lives and 
their families.
  It would give priority for awarding scholarships also to students 
whose household includes a sibling or other child already participating 
in the program.
  When students entered the program 5 years ago, they were performing 
in the bottom third on reading and math tests.
  Students are now improving academically--despite the many challenges 
that these children face outside the classroom living in some of the 
District's toughest neighborhoods.
  The most recent evaluation from this past April by the Education 
Department's Institute of Education Sciences found that although math 
test scores have not increased so far, there are significant gains 
being made in reading test scores.
  Specifically, pilot program students scored 4.5 points higher in 
reading on the SAT-9 national standardized test with a total score of 
635.4 when compared to the District's public school students' score of 
630.9.
  This means students are making gains in reading test scores by the 
equivalent of 3 months of additional schooling, and moved to the 35th 
percentile on the SAT-9 from the 33rd percentile where they were before 
entering the program.
  These youngsters still have much more catching up to do, but they are 
improving and this is important.
  I believe the results of the more comprehensive evaluation of student 
performance that will be released next spring are critical.
  Next year's evaluation will also include important data on the 
program's impact on students' college enrollment and how the District's 
public schools are changing in response to the pilot program.
  I would like to share two examples of how the program has helped to 
change the lives of the District's most disadvantaged youngsters and 
give them a chance to succeed.
  Shirley-Ann Tomdio is the 8th grade Valedictorian at Sacred Heart 
Middle School, located in the District's neighborhood of Columbia 
Heights.
  The scholarship allowed Shirley-Ann to attend Sacred Heart School for 
the past four years since 5th grade.
  She will be attending Georgetown Visitation in September for high 
school.
  She wants to go to college and become a surgeon.
  Shirley-Ann said at her 8th grade graduation speech this past June:

       The D.C. OSP [Opportunity Scholarship Program] is important 
     to me because without it I wouldn't be able to receive the 
     best education possible. It should continue so that my 
     brother, sister, and other students get the same chance. 
     Every child should get the chance to go to a good school.

  Oscar Machado is a graduate of Archbishop Carroll High School where 
he was on Honor Roll.
  Oscar is attending Mount Saint Mary's University in Maryland in the 
fall and plans to major in biology. He received three college 
scholarships that will cover nearly all of this tuition.
  He was in the pilot program for 4 years.
  At Archbishop Carroll High, he was President of the Robotics Team 
where he used pre-engineering skills to build robots, and also played 
the saxophone in the school band.
  When speaking of his experience as a D.C. Opportunity Scholarship 
recipient Oscar said:

       The scholarship was great. It gave me the opportunity to 
     attend a school I otherwise couldn't have attended.

  Oscar hopes that the same opportunity should be available to other 
students.
  We should listen to students like Oscar and Shirley-Ann, and continue 
to provide this important program to the District's neediest children.
  I look forward to working with my Senate colleagues to pass this 
legislation.

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