[Congressional Record Volume 157, Number 171 (Wednesday, November 9, 2011)]
[Senate]
[Pages S7296-S7302]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. ENZI (for himself, Mr. Durbin, Mr. Alexander, Mr. Johnson
of South Dakota, Mr. Boozman, Mr. Reed, Mr. Blunt, Mr.
Whitehouse, Mr. Corker, and Mr. Pryor):
S. 1832. A bill to restore States' sovereign rights to enforce State
and local sales and use tax laws, and for other purposes; to the
Committee on Finance.
Mr. ENZI. 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. 1832
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 ``Marketplace Fairness Act''.
SEC. 2. SENSE OF CONGRESS.
It is the sense of Congress that States should have the
ability to enforce their existing sales and use tax laws and
to treat similar sales transactions equally, without regard
to the manner in which the sale is transacted, and the
right to collect - or decide not to collect - taxes that are
already owed under State law.
SEC. 3. AUTHORIZATION TO REQUIRE COLLECTION OF SALES AND USE
TAXES.
(a) Streamlined Sales and Use Tax Agreement.--Each Member
State under the Streamlined Sales and Use Tax Agreement is
authorized to require all sellers not qualifying for a small
seller exception to collect and remit sales and use taxes
with respect to remote sales sourced to that Member State
pursuant to the provisions of the Streamlined Sales and Use
Tax Agreement. Such authority shall commence beginning no
earlier than the first day of the calendar quarter that is at
least 90 days after the date of the enactment of this Act.
(b) Alternative.--
(1) In general.--A State that is not a Member State under
the Streamlined Sales and Use Tax Agreement is authorized to
require all sellers not qualifying for the small seller
exception to collect and remit sales and use taxes with
respect to remote sales sourced to that State, but only if
the State adopts and implements minimum simplification
requirements. Such authority shall commence beginning no
earlier than the first day of the calendar quarter that is at
least 6 months after the date that the State enacts
legislation to implement each of the following minimum
simplification requirements:
(A) Provide--
(i) a single State-level agency to administer all sales and
use tax laws, including the collection and administration of
all State and applicable locality sales and use taxes for all
sales sourced to the State made by remote sellers,
(ii) a single audit for all State and local taxing
jurisdictions within that State, and
(iii) a single sales and use tax return to be used by
remote sellers and single and consolidated providers and to
be filed with the State-level agency.
(B) Provide a uniform sales and use tax base among the
State and the local taxing jurisdictions within the State.
(C) Require remote sellers and single and consolidated
providers to collect sales and use taxes pursuant to the
applicable destination rate, which is the sum of the
applicable State rate and any applicable rate for the local
jurisdiction into which the sale is made.
(D) Provide--
(i) adequate software and services to remote sellers and
single and consolidated providers that identifies the
applicable destination rate, including the State and local
sales tax rate (if any), to be applied on sales sourced to
the State, and
(ii) certification procedures for both single providers and
consolidated providers to make software and services
available to remote sellers, and hold such providers harmless
for any errors or omissions as a result of relying on
information provided by the State.
(E) Hold remote sellers using a single or consolidated
provider harmless for any errors and omissions by that
provider.
(F) Relieve remote sellers from liability to the State or
locality for collection of the incorrect amount of sales or
use tax, including any penalties or interest, if collection
of the improper amount is the result of relying on
information provided by the State.
(G) Provide remote sellers and single and consolidated
providers with 30 days notice of a rate change by any
locality in the State.
(2) Treatment of local rate changes.--For purposes of this
subsection, local rate changes may only be effective on the
first day of a calendar quarter. Failure to provide notice
under paragraph (1)(G) shall require the State and locality
to hold the remote seller or single or consolidated provider
harmless for collecting tax at the immediately preceding
effective rate during the 30-day period. Each State must
provide updated rate information as part of the software and
services required by paragraph (1)(D)
(c) Small Seller Exception.--A State shall be authorized to
require a remote seller, or a single or consolidated provider
acting on behalf of a remote seller, to collect sales or use
tax under this Act if the remote seller has gross annual
receipts in total remote sales in the United States in the
preceding calendar year exceeding $500,000. For purposes of
determining whether the threshold in this subsection is met,
the sales of all persons related within the meaning of
subsections (b) and (c) of section 267 or section 707(b)(1)
of the Internal Revenue Code of 1986 shall be aggregated.
SEC. 4. TERMINATION OF AUTHORITY.
The authority granted by this Act shall terminate on the
date that the highest court of competent jurisdiction makes a
final determination that the State no longer meets the
requirements of this Act, and the determination of such court
is no longer subject to appeal.
SEC. 5. LIMITATIONS.
(a) In General.--Nothing in this Act shall be construed
as--
(1) subjecting a seller or any other person to franchise,
income, occupation, or any other type of taxes, other than
sales and use taxes,
(2) affecting the application of such taxes, or
(3) enlarging or reducing State authority to impose such
taxes.
(b) No Effect on Nexus.--No obligation imposed by virtue of
the authority granted by this Act shall be considered in
determining whether a seller or any other person has a nexus
with any State for any tax purpose other than sales and use
taxes.
(c) Licensing and Regulatory Requirements.--Other than the
limitation set forth in subsection (a), and section 3,
nothing in this Act shall be construed as permitting or
prohibiting a State from--
(1) licensing or regulating any person,
(2) requiring any person to qualify to transact intrastate
business,
(3) subjecting any person to State taxes not related to the
sale of goods or services, or
(4) exercising authority over matters of interstate
commerce.
(d) No New Taxes.--Nothing in this Act shall be construed
as encouraging a State to impose sales and use taxes on any
goods or services not subject to taxation prior to the date
of the enactment of this Act.
(e) Intrastate Sales.--The provisions of this Act shall
only apply to remote sales and shall not apply to intrastate
sales or intrastate sourcing rules. States granted authority
under section 3(a) shall comply with the intrastate
provisions of the Streamlined Sales and Use Tax Agreement.
SEC. 6. DEFINITIONS AND SPECIAL RULES.
In this Act:
(1) Consolidated provider.--The term ``consolidated
provider'' means any person certified by a State who has the
rights and responsibilities for sales and use tax
administration, collection, remittance, and audits for
transactions serviced or processed for the sale of goods or
services made by remote sellers on an aggregated basis.
(2) Locality; local.--The terms ``locality'' and ``local''
refer to any political subdivision of a State.
(3) Member state.--The term ``Member State''--
(A) means a Member State as that term is used under the
Streamlined Sales and Use Tax Agreement as in effect on the
date of the enactment of this Act, and
(B) does not include any associate member under the
Streamlined Sales and Use Tax Agreement.
(4) Person.--The term ``person'' means an individual,
trust, estate, fiduciary, partnership, corporation, limited
liability company, or other legal entity, and a State or
local government.
(5) Remote sale.--The term ``remote sale'' means a sale of
goods or services attributed to a State with respect to which
a seller does not have adequate physical presence to
establish nexus under Quill Corp. v. North Dakota, 504 U.S.
298 (1992).
(6) Remote seller.--The term ``remote seller'' means a
person that makes remote sales.
(7) Single provider.--The term ``single provider'' means
any person certified by a State who has the rights and
responsibilities for sales and use tax administration,
collection, remittance, and audits for transactions serviced
or processed for the sale of goods or services made by remote
sellers.
(8) Sourced.--For purposes of a State granted authority
under section 3(b), the location to which a remote sale is
sourced refers to the location where the item sold is
received by the purchaser, based on the location indicated by
instructions for delivery that the purchaser furnishes to the
seller. When no delivery location is specified, the remote
sale is sourced to the customer's address that is either
known to the seller or, if not known, obtained by the seller
during the consummation of the transaction, including the
address of the customer's payment instrument if no other
address is available. If an address is unknown and a billing
address cannot be obtained, the remote sale is sourced to the
address of the seller from which the remote sale was made. A
State granted authority under section 3(a) shall comply with
the sourcing provisions of the Streamlined Sales and Use Tax
Agreement.
(9) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico,
[[Page S7297]]
Guam, American Samoa, the United States Virgin Islands, the
Commonwealth of the Northern Mariana Islands, and any other
territory or possession of the United States.
(10) Streamlined sales and use tax agreement.--The term
``Streamlined Sales and Use Tax Agreement'' means the multi-
State agreement with that title adopted on November 12, 2002,
as in effect on the date of the enactment of this Act and as
further amended from time to time.
SEC. 7. SEVERABILITY.
If any provision of this Act or the application of such
provision to any person or circumstance is held to be
unconstitutional, the remainder of this Act and the
application of the provisions of such to any person or
circumstance shall not be affected thereby.
______
By Mrs. HAGAN (for herself, Mr. Corker, Mr. Schumer, and Mr.
Crapo):
S. 1835. A bill to establish standards for covered bond programs and
a covered bond regulatory oversight program; and for other purposes; to
the Committee on Banking, Housing, and Urban Affairs.
Mrs. HAGAN. 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. 1835
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``United States Covered Bond
Act''.
SEC. 2. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Ancillary asset.--The term ``ancillary asset'' means--
(A) any interest rate or currency swap associated with 1 or
more eligible assets, substitute assets, or other assets in a
cover pool;
(B) any credit enhancement or liquidity arrangement
associated with 1 or more eligible assets, substitute assets,
or other assets in a cover pool;
(C) any guarantee, letter-of-credit right, or other
secondary obligation that supports any payment or performance
of 1 or more eligible assets, substitute assets, or other
assets in a cover pool; and
(D) any proceeds of, or other property incident to, 1 or
more eligible assets, substitute assets, or other assets in a
cover pool.
(2) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(3) Cover pool.--The term ``cover pool'' means a dynamic
pool of assets that is comprised of--
(A) in the case of any eligible issuer described in
subparagraph (A), (B), (C), (D), or (E) of paragraph (9)--
(i) 1 or more eligible assets from a single eligible asset
class; and
(ii) 1 or more substitute assets or ancillary assets; and
(B) in the case of any eligible issuer described in
paragraph (9)(F)--
(i) the covered bonds issued by each sponsoring eligible
issuer; and
(ii) 1 or more substitute assets or ancillary assets.
(4) Covered bond.--The term ``covered bond'' means any
recourse debt obligation of an eligible issuer that--
(A) has an original term to maturity of not less than 1
year;
(B) is secured by a perfected security interest in or other
perfected lien on a cover pool that is owned directly or
indirectly by the issuer of the obligation;
(C) is issued under a covered bond program that has been
approved by the applicable covered bond regulator;
(D) is identified in a register of covered bonds that is
maintained by the Secretary; and
(E) is not a deposit (as defined in section 3(l) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(l))).
(5) Covered bond program.--The term ``covered bond
program'' means any program of an eligible issuer under
which, on the security of a single cover pool, 1 or more
series of covered bonds may be issued.
(6) Covered bond regulator.--The term ``covered bond
regulator'' means--
(A) for any eligible issuer that is subject to the
jurisdiction of an appropriate Federal banking agency (as
defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q))), the appropriate Federal banking agency;
(B) for any eligible issuer that is described in paragraph
(9)(F), that is not subject to the jurisdiction of an
appropriate Federal banking agency, and that is sponsored by
only 1 eligible issuer, the covered bond regulator for the
sponsor;
(C) for any eligible issuer that is described in paragraph
(9)(F), that is not subject to the jurisdiction of an
appropriate Federal banking agency, and that is sponsored by
more than 1 eligible issuer, the covered bond regulator for
the sponsor whose covered bonds constitute the largest share
of the cover pool of the issuer; and
(D) for any other eligible issuer that is not subject to
the jurisdiction of an appropriate Federal banking agency,
the Board of Governors of the Federal Reserve System.
(7) Eligible asset.--The term ``eligible asset'' means--
(A) in the case of the residential mortgage asset class--
(i) any first-lien mortgage loan that is secured by 1-to-4
family residential property;
(ii) any mortgage loan that is insured under the National
Housing Act (12 U.S.C. 1701 et seq.); and
(iii) any loan that is guaranteed, insured, or made under
chapter 37 of title 38, United States Code;
(B) in the case of the commercial mortgage asset class, any
commercial mortgage loan (including any multifamily mortgage
loan);
(C) in the case of the public sector asset class--
(i) any security issued by a State, municipality, or other
governmental authority;
(ii) any loan made to a State, municipality, or other
governmental authority; and
(iii) any loan, security, or other obligation that is
insured or guaranteed, in full or substantially in full, by
the full faith and credit of the United States Government
(whether or not such loan, security, or other obligation is
also part of another eligible asset class);
(D) in the case of the auto asset class, any auto loan or
lease;
(E) in the case of the student loan asset class, any
student loan (whether guaranteed or nonguaranteed);
(F) in the case of the credit or charge card asset class,
any extension of credit to a person under an open-end credit
plan;
(G) in the case of the small business asset class, any loan
that is made or guaranteed under a program of the Small
Business Administration; and
(H) in the case of any other eligible asset class, any
asset designated by the Secretary, by rule and in
consultation with the covered bond regulators, as an eligible
asset for purposes of such class.
(8) Eligible asset class.--The term ``eligible asset
class'' means--
(A) a residential mortgage asset class;
(B) a commercial mortgage asset class;
(C) a public sector asset class;
(D) an auto asset class;
(E) a student loan asset class;
(F) a credit or charge card asset class;
(G) a small business asset class; and
(H) any other eligible asset class designated by the
Secretary, by rule and in consultation with the covered bond
regulators.
(9) Eligible issuer.--The term ``eligible issuer'' means--
(A) any insured depository institution and any subsidiary
of such institution;
(B) any bank holding company, any savings and loan holding
company, and any subsidiary of any of such companies;
(C) any broker or dealer that is registered under section
15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) and
is a member of the Securities Investor Protection
Corporation, and any subsidiary of such broker or dealer;
(D) any insurer that is supervised by a State insurance
regulator, and any subsidiary of such insurer;
(E) any nonbank financial company (as defined in section
102(a)(4) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5311(a)(4))) that is supervised by
the Board of Governors of the Federal Reserve System under
section 113 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5323), including any intermediate
holding company supervised as a nonbank financial company,
and any subsidiary of such a nonbank financial company; and
(F) any issuer that is sponsored by 1 or more eligible
issuers for the sole purpose of issuing covered bonds on a
pooled basis.
(10) Oversight program.--The term ``oversight program''
means the covered bond regulatory oversight program
established under section 3(a).
(11) Secretary.--The term ``Secretary'' means the Secretary
of the Department of the Treasury.
(12) Substitute asset.--The term ``substitute asset''
means--
(A) cash;
(B) any direct obligation of the United States Government,
and any security or other obligation whose full principal and
interest are insured or guaranteed by the full faith and
credit of the United States Government;
(C) any direct obligation of a United States Government
corporation or Government-sponsored enterprise of the highest
credit quality, and any other security or other obligation of
the highest credit quality whose full principal and interest
are insured or guaranteed by such corporation or enterprise,
except that the outstanding principal amount of these
obligations in any cover pool may not exceed an amount equal
to 20 percent of the outstanding principal amount of all
assets in the cover pool without the approval of the
applicable covered bond regulator;
(D) any other substitute asset designated by the Secretary,
by rule and in consultation with the covered bond regulators;
and
(E) any deposit account or securities account into which
only an asset described in subparagraph (A), (B), (C), or (D)
may be deposited or credited.
SEC. 3. REGULATORY OVERSIGHT OF COVERED BOND PROGRAMS
ESTABLISHED.
(a) Establishment.--
(1) In general.--Not later than 180 days after the date of
the enactment of this Act,
[[Page S7298]]
the Secretary shall, by rule and in consultation with the
covered bond regulators, establish a covered bond regulatory
oversight program that provides for--
(A) covered bond programs to be evaluated according to
reasonable and objective standards in order to be approved
under paragraph (2), including any additional eligibility
standards for eligible assets and any other criteria
determined appropriate by the Secretary to further the
purposes of this Act;
(B) covered bond programs to be maintained in a manner that
is consistent with this Act and safe and sound asset-
liability management and other financial practices; and
(C) any estate created under section 4 to be administered
in a manner that is consistent with maximizing the value and
the proceeds of the related cover pool in a resolution under
this Act.
(2) Approval of each covered bond program.--
(A) In general.--A covered bond shall be subject to this
Act only if the covered bond is issued by an eligible issuer
under a covered bond program that is approved by the
applicable covered bond regulator.
(B) Approval process.--Each covered bond regulator shall
apply the standards established by the Secretary under the
oversight program to evaluate a covered bond program that has
been submitted by an eligible issuer for approval. Each
covered bond regulator also shall take into account relevant
supervisory factors, including safety and soundness
considerations, in evaluating a covered bond program that has
been submitted for approval. Each covered bond regulator,
promptly after approving a covered bond program, shall
provide the Secretary with the name of the covered bond
program, the name of the eligible issuer, and all other
information reasonably requested by the Secretary in order to
update the registry under paragraph (3)(A). Each eligible
issuer, promptly after issuing a covered bond under an
approved covered bond program, shall provide the Secretary
with all information reasonably requested by the Secretary in
order to update the registry under paragraph (3)(B).
(C) Existing covered bond programs.--A covered bond
regulator may approve a covered bond program that is in
existence on the date of the enactment of this Act. Upon such
approval, each covered bond under the covered bond program
shall be subject to this Act, regardless of when the covered
bond was issued.
(D) Multiple covered bond programs permitted.--An eligible
issuer may have more than 1 covered bond program.
(E) Cease and desist authority.--The applicable covered
bond regulator may direct an eligible issuer to cease issuing
covered bonds under an approved covered bond program if the
covered bond program is not maintained in a manner that is
consistent with this Act and the oversight program and if,
after notice that is reasonable under the circumstances, the
issuer does not remedy all deficiencies identified by the
applicable covered bond regulator.
(F) Cap on the amount of outstanding covered bonds.--
(i) In general.--With respect to each eligible issuer that
submits a covered bond program for approval, the applicable
covered bond regulator shall set, consistent with safety and
soundness considerations and the financial condition of the
eligible issuer, the maximum amount, as a percentage of the
eligible issuer's total assets, of outstanding covered bonds
that the eligible issuer may issue.
(ii) Review of cap.--The applicable covered bond regulator
may, not more frequently than quarterly, review the
percentage set under clause (i) and, if safety and soundness
considerations or the financial condition of the eligible
issuer has changed, increase or decrease such percentage. Any
decrease made pursuant to this clause shall have no effect on
existing covered bonds issued by the eligible issuer.
(3) Registry.--Under the oversight program, the Secretary
shall maintain a registry that is published on a Web site
available to the public and that, for each covered bond
program approved by a covered bond regulator, contains--
(A) the name of the covered bond program, the name of the
eligible issuer, and all other information that the Secretary
considers necessary to adequately identify the covered bond
program and the eligible issuer; and
(B) all information that the Secretary considers necessary
to adequately identify all outstanding covered bonds issued
under the covered bond program (including the reports
described in paragraphs (3) and (4) of subsection (b)).
(4) Fees.--Each covered bond regulator may levy, on the
issuers of covered bonds under the primary supervision of
such covered bond regulator, reasonably apportioned fees that
such covered bond regulator considers necessary, in the
aggregate, to defray the costs of such covered bond regulator
carrying out the provisions of this Act. Such funds shall not
be construed to be Government funds or appropriated monies
and shall not be subject to apportionment for purposes of
chapter 15 of title 31, United States Code, or any other
provision of law.
(b) Minimum Over-Collateralization Requirements.--
(1) Requirements established.--The Secretary, by rule and
in consultation with the covered bond regulators, shall
establish minimum over-collateralization requirements for
covered bonds backed by each of the eligible asset classes.
The minimum over-collateralization requirements shall be
designed to ensure that sufficient eligible assets and
substitute assets are maintained in the cover pool to satisfy
all principal and interest payments on the covered bonds when
due through maturity and shall be based on the credit,
collection, and interest rate risks (excluding the liquidity
risks) associated with the eligible asset class.
(2) Asset coverage test.--The eligible assets and the
substitute assets in any cover pool shall be required, in the
aggregate, to meet at all times the applicable minimum over-
collateralization requirements.
(3) Monthly reporting.--On a monthly basis, each issuer of
covered bonds shall submit a report on whether the cover pool
that secures the covered bonds meets the applicable minimum
over-collateralization requirements to--
(A) the Secretary;
(B) the applicable covered bond regulator;
(C) the applicable indenture trustee;
(D) the applicable covered bondholders; and
(E) the applicable independent asset monitor.
(4) Independent asset monitor.--
(A) Appointment.--Each issuer of covered bonds shall
appoint the indenture trustee for the covered bonds, or
another unaffiliated entity, as an independent asset monitor
for the applicable cover pool.
(B) Duties.--An independent asset monitor appointed under
subparagraph (A) shall, on an annual or other more frequent
periodic basis determined by the Secretary under the
oversight program--
(i) verify whether the cover pool meets the applicable
minimum over-collateralization requirements; and
(ii) report to the Secretary, the applicable covered bond
regulator, the applicable indenture trustee, and the
applicable covered bondholders on whether the cover pool
meets the applicable minimum over-collateralization
requirements.
(C) Removal and replacement.--The independent asset monitor
appointed under subparagraph (A) may be removed and
replaced--
(i) by a covered bond regulator in any case in which such
action is in the best interest of the covered bond investors;
and
(ii) by covered bond holders who own a majority of the
outstanding principal amount of the covered bonds secured by
the applicable cover pool, at any time.
(5) No loss of status.--Covered bonds shall remain subject
to this Act regardless of whether the applicable cover pool
ceases to meet the applicable minimum over-collateralization
requirements.
(6) Failure to meet requirements.--
(A) In general.--If a cover pool fails to meet the
applicable minimum over-collateralization requirements, and
if the failure is not cured within the time specified in the
related transaction documents, the failure shall be an
uncured default for purposes of section 4(a).
(B) Notice required.--An issuer of covered bonds shall
promptly give the Secretary and the applicable covered bond
regulator written notice if the cover pool securing the
covered bonds fails to meet the applicable minimum over-
collateralization requirements, if the failure is cured
within the time specified in the related transaction
documents, or if the failure is not so cured.
(c) Requirements for Eligible Assets.--
(1) Requirements.--
(A) Loans.--A loan shall not qualify as an eligible asset
for so long as the loan is delinquent for more than 60
consecutive days.
(B) Securities.--A security shall not qualify as an
eligible asset for so long as the security does not meet any
credit-quality requirement under this Act.
(C) Origination.--An asset shall not qualify as an eligible
asset if the asset was not originated in compliance with any
rule or supervisory guidance of a Federal agency applicable
to the asset at the time of origination.
(D) No double pledge.--An asset shall not qualify as an
eligible asset for so long as the asset is subject to a prior
perfected security interest or other prior perfected lien
that has been granted in an unrelated transaction. Nothing in
this Act shall affect such a prior perfected security
interest or other prior perfected lien, and the rights of
such lien holders.
(2) Failure to meet requirements.--Subject to paragraph
(1)(D), if an asset in a cover pool does not satisfy any
applicable requirement described in paragraph (1) or any
other applicable standard or criterion described in this Act,
the oversight program, or the related transaction documents,
the asset shall not qualify as an eligible asset for purposes
of the asset coverage test described in subsection (b)(2). A
disqualified asset shall remain in the cover pool unless and
until removed by the issuer in compliance with the provisions
of this Act, the oversight program, and the related
transaction documents. No disqualified asset may be removed
from the cover pool after an estate has been created for the
related covered bond program under section 4(b)(1) or
4(c)(2), except in connection with the management of the
cover pool under section 4(d)(1)(E).
(d) Other Requirements.--
(1) Books and records of issuer.--Each issuer of covered
bonds shall clearly mark its books and records to identify
the assets that
[[Page S7299]]
comprise the cover pool securing the covered bonds.
(2) Schedule of eligible assets and substitute assets.--
Each issuer of covered bonds shall deliver to the applicable
indenture trustee and the applicable independent asset
monitor, on at least a monthly basis, a schedule that
identifies all eligible assets and substitute assets in the
cover pool securing the covered bonds.
(3) Single eligible asset class.--No cover pool described
in section 2(3)(A) may include eligible assets from more than
1 eligible asset class. No cover pool described in section
2(3)(B) may include covered bonds backed by more than 1
eligible asset class.
SEC. 4. RESOLUTION UPON DEFAULT OR INSOLVENCY.
(a) Uncured Default Defined.--For purposes of this section,
the term ``uncured default'' means a default on a covered
bond that has not been cured within the time, if any,
specified in the related transaction documents.
(b) Default on Covered Bonds Prior to Conservatorship,
Receivership, Liquidation, or Bankruptcy.--
(1) Creation of separate estate.--If an uncured default
occurs on a covered bond before the issuer of the covered
bond enters conservatorship, receivership, liquidation, or
bankruptcy, an estate shall be immediately and automatically
created by operation of law and shall exist and be
administered separate and apart from the issuer or any
subsequent conservatorship, receivership, liquidating agency,
or estate in bankruptcy for the issuer or any other assets of
the issuer. A separate estate shall be created for each
affected covered bond program.
(2) Assets and liabilities of estate.--Any estate created
under paragraph (1) shall be comprised of the cover pool
(including over-collateralization in the cover pool) that
secures the covered bond. The cover pool shall be immediately
and automatically released to and held by the estate free and
clear of any right, title, interest, or claim of the issuer
or any conservator, receiver, liquidating agent, or trustee
in bankruptcy for the issuer or any other assets of the
issuer. The estate shall be fully liable on the covered bond
and all other covered bonds and related obligations of the
issuer (including obligations under related derivative
transactions) that are secured by a perfected security
interest in or other perfected lien on the cover pool when
the estate is created. The estate shall not be liable on any
obligation of the issuer that is not secured by a perfected
security interest in or other perfected lien on the cover
pool when the estate is created. No conservator, receiver,
liquidating agent, or trustee in bankruptcy for the issuer
may charge or assess the estate for any claim of the
conservator, receiver, liquidating agent, or trustee in
bankruptcy or the conservatorship, receivership, liquidating
agency, or estate in bankruptcy and may not obtain or perfect
a security interest in or other lien on the cover pool to
secure such a claim.
(3) Retention of claims.--Any holder of a covered bond or
related obligation for which an estate has become liable
under paragraph (2) shall retain a claim against the issuer
for any deficiency with respect to the covered bond or
related obligation. If the issuer enters conservatorship,
receivership, liquidation, or bankruptcy, any contingent
claim for such a deficiency shall be allowed as a provable
claim in the conservatorship, receivership, liquidating
agency, or bankruptcy case. The contingent claim shall be
estimated by the conservator, receiver, liquidating agent, or
bankruptcy court for purposes of allowing the claim as a
provable claim if awaiting the fixing of the contingent claim
would unduly delay the resolution of the conservatorship,
receivership, liquidating agency, or bankruptcy case.
(4) Residual interest.--
(A) Issuance of residual interest.--Upon the creation of an
estate under paragraph (1), a residual interest in the estate
shall be immediately and automatically issued by operation of
law to the issuer.
(B) Nature of residual interest.--The residual interest
under subparagraph (A) shall--
(i) be an exempted security as described in section 5;
(ii) represent the right to any surplus from the cover pool
after the covered bonds and all other liabilities of the
estate have been fully and irrevocably paid; and
(iii) be evidenced by a certificate executed by the trustee
of the estate.
(5) Obligations of issuer.--
(A) In general.--After the creation of an estate under
paragraph (1), the issuer shall--
(i) transfer to or at the direction of the trustee for the
estate all property of the estate that is in the possession
or under the control of the issuer, including all tangible or
electronic books, records, files, and other documents or
materials relating to the assets and liabilities of the
estate; and
(ii) at the election of the trustee or a servicer or
administrator for the estate, continue servicing the
applicable cover pool for 120 days after the creation of the
estate in return for a fair-market-value fee, as determined
by the trustee in consultation with the applicable covered
bond regulator, that shall be payable from the estate as an
administrative expense.
(B) Obligations absolute.--Neither the issuer, whether
acting as debtor in possession or in any other capacity, nor
any conservator, receiver, liquidating agent, or trustee in
bankruptcy for the issuer or any other assets of the issuer
may disaffirm, repudiate, or reject the obligation to turn
over property or to continue servicing the cover pool as
provided in subparagraph (A).
(c) Default on Covered Bonds Upon Conservatorship,
Receivership, Liquidation, or Bankruptcy.--
(1) Corporation conservatorship or receivership.--
(A) In general.--If the Corporation is appointed as
conservator or receiver for an issuer of covered bonds before
an uncured default results in the creation of an estate under
subsection (b), the Corporation as conservator or receiver
shall have an exclusive right, during the 1-year period
beginning on the date of the appointment, to transfer any
cover pool owned by the issuer in its entirety, together with
all covered bonds and related obligations that are secured by
a perfected security interest in or other perfected lien on
the cover pool, to another eligible issuer that meets all
conditions and requirements specified in the related
transaction documents. The Corporation as conservator or
receiver may not remove any asset from the cover pool, except
to the extent otherwise agreed by a transferee that has
assumed the covered bond program pursuant to subparagraph
(C).
(B) Obligations during 1-year period.--During the 1-year
period described in subparagraph (A), the Corporation as
conservator or receiver shall fully and timely satisfy all
monetary and nonmonetary obligations of the issuer under all
covered bonds and the related transaction documents and shall
fully and timely cure all defaults by the issuer (other than
its conservatorship or receivership) under the applicable
covered bond program, in each case, until the earlier of--
(i) the transfer of the applicable covered bond program to
another eligible issuer as provided in subparagraph (A); or
(ii) the delivery to the Secretary, the applicable covered
bond regulator, the applicable indenture trustee, and the
applicable covered bondholders of a written notice from the
Corporation as conservator or receiver electing to cease
further performance under the applicable covered bond
program.
(C) Assumption by transferee.--If the Corporation as
conservator or receiver transfers a covered bond program to
another eligible issuer within the 1-year period as provided
in subparagraph (A), the transferee shall take ownership of
the applicable cover pool and shall become fully liable on
all covered bonds and related obligations of the issuer that
are secured by a perfected security interest in or other
perfected lien on the cover pool.
(2) Other circumstances.--An estate shall be immediately
and automatically created by operation of law and shall exist
and be administered separate and apart from an issuer of
covered bonds and any conservatorship, receivership,
liquidating agency, or estate in bankruptcy for the issuer or
any other assets of the issuer, if--
(A) a conservator, receiver, liquidating agent, or trustee
in bankruptcy, other than the Corporation, is appointed for
the issuer before an uncured default results in the creation
of an estate under subsection (b); or
(B) in the case of the appointment of the Corporation as
conservator or receiver as described in paragraph (1)(A), the
Corporation as conservator or receiver--
(i) does not complete the transfer of the applicable
covered bond program to another eligible issuer within the 1-
year period as provided in paragraph (1)(A);
(ii) delivers to the Secretary, the applicable covered bond
regulator, the applicable indenture trustee, and the
applicable covered bondholders a written notice electing to
cease further performance under the applicable covered bond
program; or
(iii) fails to fully and timely satisfy all monetary and
nonmonetary obligations of the issuer under the covered bonds
and the related transaction documents or to fully and timely
cure all defaults by the issuer (other than its
conservatorship or receivership) under the applicable covered
bond program.
A separate estate shall be created for each affected covered
bond program.
(3) Assets and liabilities of estate.--Any estate created
under paragraph (2) shall be comprised of the cover pool
(including over-collateralization in the cover pool) that
secures the covered bonds. The cover pool shall be
immediately and automatically released to and held by the
estate free and clear of any right, title, interest, or claim
of the issuer or any conservator, receiver, liquidating
agent, or trustee in bankruptcy for the issuer or any other
assets of the issuer. The estate shall be fully liable on the
covered bonds and all other covered bonds and related
obligations of the issuer (including obligations under
related derivative transactions) that are secured by a
perfected security interest in or other perfected lien on the
cover pool when the estate is created. The estate shall not
be liable on any obligation of the issuer that is not secured
by a perfected security interest in or other perfected lien
on the cover pool when the estate is created. No conservator,
receiver, liquidating agent, or trustee in bankruptcy for the
issuer may charge or assess the estate for any claim of the
conservator, receiver, liquidating agent, or trustee in
bankruptcy or the conservatorship, receivership, liquidating
agency, or estate in bankruptcy and may not
[[Page S7300]]
obtain or perfect a security interest in or other lien on the
cover pool to secure such a claim.
(4) Contingent claim.--Any contingent claim against an
issuer for a deficiency with respect to a covered bond or
related obligation for which an estate has become liable
under paragraph (3) shall be allowed as a provable claim in
the conservatorship, receivership, liquidating agency, or
bankruptcy case for the issuer. The contingent claim shall be
estimated by the conservator, receiver, liquidating agent, or
bankruptcy court for purposes of allowing the claim as a
provable claim if awaiting the fixing of the contingent claim
would unduly delay the resolution of the conservatorship,
receivership, liquidating agency, or bankruptcy case.
(5) Residual interest.--
(A) Issuance of residual interest.--Upon the creation of an
estate under paragraph (2), and regardless of whether any
contingent claim described in paragraph (4) becomes fixed or
is estimated, a residual interest in the estate shall be
immediately and automatically issued by operation of law to
the conservator, receiver, liquidating agent, or trustee in
bankruptcy for the issuer.
(B) Nature of residual interest.--The residual interest
under subparagraph (A) shall--
(i) be an exempted security as described in section 5;
(ii) represent the right to any surplus from the cover pool
after the covered bonds and all other liabilities of the
estate have been fully and irrevocably paid; and
(iii) be evidenced by a certificate executed by the trustee
of the estate.
(6) Obligations of issuer.--
(A) In general.--After the creation of an estate under
paragraph (2), the issuer and its conservator, receiver,
liquidating agent, or trustee in bankruptcy shall--
(i) transfer to or at the direction of the trustee for the
estate all property of the estate that is in the possession
or under the control of the issuer or its conservator,
receiver, liquidating agent, or trustee in bankruptcy,
including all tangible or electronic books, records, files,
and other documents or materials relating to the assets and
liabilities of the estate; and
(ii) at the election of the trustee or a servicer or
administrator for the estate, continue servicing the
applicable cover pool for 120 days after the creation of the
estate in return for a fair-market-value fee, as determined
by the trustee in consultation with the applicable covered
bond regulator, that shall be payable from the estate as an
administrative expense.
(B) Obligations absolute.--Neither the issuer, whether
acting as debtor in possession or in any other capacity, nor
any conservator, receiver, liquidating agent, or trustee in
bankruptcy for the issuer or any other assets of the issuer
may disaffirm, repudiate, or reject the obligation to turn
over property or to continue servicing the cover pool as
provided in subparagraph (A).
(d) Administration and Resolution of Estates.--
(1) Trustee, servicer, and administrator.--
(A) In general.--Upon the creation of any estate under
subsection (b)(1) or (c)(2), the applicable covered bond
regulator shall--
(i) appoint the trustee for the estate;
(ii) appoint 1 or more servicers or administrators for the
cover pool held by the estate; and
(iii) give the Secretary, the applicable indenture trustee,
the applicable covered bondholders, and the owner of the
residual interest written notice of the creation of the
estate.
(B) Terms and conditions of appointment.--All terms and
conditions of any appointment under paragraph (1), including
the terms and conditions relating to compensation, shall
conform to the requirements of this Act and the oversight
program and otherwise shall be determined by the applicable
covered bond regulator.
(C) Qualification.--The applicable covered bond regulator
may require the trustee or any servicer or administrator for
an estate to post in favor of the United States, for the
benefit of the estate, a bond that is conditioned on the
faithful performance of the duties of the trustee or the
servicer or administrator. The covered bond regulator shall
determine the amount of any bond required under this
subparagraph and the sufficiency of the surety on the bond. A
proceeding on a bond required under this subparagraph may not
be commenced after two years after the date on which the
trustee or the servicer or administrator was discharged.
(D) Powers and duties of trustee.--The trustee for an
estate is the representative of the estate and, subject to
the provisions of this Act, has capacity to sue and be sued.
The trustee shall--
(i) administer the estate in compliance with this Act, the
oversight program, and the related transaction documents;
(ii) be accountable for all property of the estate that is
received by the trustee;
(iii) make a final report and file a final account of the
administration of the estate with the applicable covered bond
regulator; and
(iv) after the estate has been fully administered, close
the estate.
(E) Powers and duties of servicer or administrator.--Any
servicer or administrator for an estate--
(i) shall--
(I) collect, realize on (by liquidation or other means),
and otherwise manage the cover pool held by the estate in
compliance with this Act, the oversight program, and the
related transaction documents and in a manner consistent with
maximizing the value and the proceeds of the cover pool;
(II) deposit or invest all proceeds and funds received in
compliance with this Act, the oversight program, and the
related transaction documents and in a manner consistent with
maximizing the net return to the estate, taking into account
the safety of the deposit or investment; and
(III) apply, or direct the trustee for the estate to apply,
all proceeds and funds received and the net return on any
deposit or investment to make distributions in compliance
with paragraphs (3) and (4);
(ii) may borrow funds or otherwise obtain credit, for the
benefit of the estate, in compliance with paragraph (2) on a
secured or unsecured basis and on a priority, pari passu, or
subordinated basis;
(iii) shall, at the times and in the manner required by the
applicable covered bond regulator, submit to the covered bond
regulator, the Secretary, the applicable indenture trustee,
the applicable covered bondholders, the owner of the residual
interest, and any other person designated by the covered bond
regulator, reports that describe the activities of the
servicer or administrator on behalf of the estate, the
performance of the cover pool held by the estate, and
distributions made by the estate; and
(iv) shall assist the trustee in preparing the final report
and the final account of the administration of the estate.
(F) Supervision of trustee, servicer, and administrator.--
The applicable covered bond regulator shall supervise the
trustee and any servicer or administrator for an estate. The
covered bond regulator shall require that all reports
submitted under subparagraph (E)(iii) do not contain any
untrue statement of a material fact and do not omit to state
a material fact necessary in order to make the statements
made, in light of the circumstances under which they are
made, not misleading.
(G) Removal and replacement of trustee, servicer, and
administrator.--If the covered bond regulator determines that
it is in the best interests of an estate, the covered bond
regulator may remove or replace the trustee or any servicer
or administrator for the estate. The removal of the trustee
or any servicer or administrator does not abate any pending
action or proceeding involving the estate, and any successor
or other trustee, servicer, or administrator shall be
substituted as a party in the action or proceeding.
(H) Professionals.--The trustee or any servicer or
administrator for an estate may employ 1 or more attorneys,
accountants, appraisers, auctioneers, or other professional
persons to represent or assist the trustee or the servicer or
administrator in carrying out its duties. The employment of
any professional person and all terms and conditions of
employment, including the terms and conditions relating to
compensation, shall conform to the requirements of this Act
and the oversight program and otherwise shall be subject to
the approval of the applicable covered bond regulator.
(I) Approved fees and expenses.--Unless otherwise provided
in the applicable terms and conditions of appointment or
employment, all approved fees and expenses of the trustee,
any servicer or administrator, or any professional person
employed by the trustee or any servicer or administrator
shall be payable from the estate as administrative expenses.
(J) Actions by or on behalf of estate.--The trustee or any
servicer or administrator for an estate may commence or
continue judicial, administrative, or other actions, in the
name of the estate or in its own name on behalf of the
estate, for the purpose of collecting, realizing on, or
otherwise managing the cover pool held by the estate or
exercising its other powers or duties on behalf of the
estate.
(K) Actions against estate.--No court may issue an
attachment or execution on any property of an estate. Except
at the request of the applicable covered bond regulator or as
otherwise provided in this subparagraph or subparagraph (J),
no court may take any action to restrain or affect the
resolution of an estate under this Act. No person (including
the applicable indenture trustee and any applicable covered
bondholder) may commence or continue any judicial,
administrative, or other action against the estate, the
trustee, or any servicer or administrator or take any other
act to affect the estate, the trustee, or any servicer or
administrator that is not expressly permitted by this Act,
the oversight program, and the related transaction documents,
except for a judicial or administrative action to compel the
release of funds that--
(i) are available to the estate;
(ii) are permitted to be distributed under this Act and the
oversight program; and
(iii) are permitted and required to be distributed under
the related transaction documents and any contracts executed
by or on behalf of the estate.
(L) Sovereign immunity.--Except in connection with a
guarantee provided under paragraph (4) or any other contract
executed by the applicable covered bond regulator under this
section 4, the Secretary and the covered bond regulator shall
be entitled to sovereign immunity in carrying out the
provisions of this Act.
(2) Borrowings and credit.--
[[Page S7301]]
(A) In general.--Any servicer or administrator for an
estate created under subsection (b)(1) or (c)(2) may borrow
funds or otherwise obtain credit, on behalf of and for the
benefit of the estate, from any person in compliance with
this paragraph (2) solely for the purpose of providing
liquidity in the case of timing mismatches among the assets
and the liabilities of the estate. Except with respect to an
underwriter, section 5 of the Securities Act of 1933, the
Trust Indenture Act of 1939, and any State or local law
requiring registration for an offer or sale of a security or
registration or licensing of an issuer of, underwriter of, or
broker or dealer in a security does not apply to the offer or
sale under this paragraph (2) of a security that is not an
equity security.
(B) Conditions.--A servicer or administrator may borrow
funds or otherwise obtain credit under subparagraph (A)--
(i) on terms affording the lender only claims or liens that
are fully subordinated to the claims and interests of the
applicable indenture trustee and the applicable covered
bondholders and all other claims against and interests in the
estate, except for the residual interest, if the servicer or
administrator certifies to the applicable covered bond
regulator that, in the business judgment of the servicer or
administrator, the borrowing or credit is in the best
interests of the estate and is expected to maximize the value
and the proceeds of the cover pool held by the estate; or
(ii) on terms affording the lender claims or liens that
have priority over or are pari passu with the claims or
interests of the applicable indenture trustee or the
applicable covered bondholders or other claims against or
interests in the estate, if--
(I) the servicer or administrator certifies to the
applicable covered bond regulator that, in the business
judgment of the servicer or administrator, the borrowing or
credit is in the best interests of the estate and is expected
to maximize the value and the proceeds of the cover pool held
by the estate; and
(II) the applicable covered bond regulator authorizes the
borrowing or credit.
(C) Limited liability.--A servicer or administrator shall
not be liable for any error in business judgment when
borrowing funds or otherwise obtaining credit under this
paragraph (2) unless the servicer or administrator acted in
bad faith or in willful disregard of its duties.
(D) Study on borrowings and credit.--The Comptroller
General of the United States shall conduct a study on whether
the Federal reserve banks should be authorized to lend funds
or otherwise extend credit to an estate under this paragraph
(2) and, if so, what conditions and limits should be
established to mitigate any risk that the United States
Government could absorb credit losses on the cover pool held
by the estate. The Comptroller General shall submit a report
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the
House of Representatives on the results of the study not
later than 6 months after the date of enactment of this Act.
(3) Distributions by estate.--All payments or other
distributions by an estate shall be made at the times, in the
amounts, and in the manner set forth in the covered bonds,
the related transaction documents, and any contracts executed
by or on behalf of the estate in compliance with this Act and
the oversight program. To the extent that the relative
priority of the liabilities of the estate are not specified
in or otherwise ascertainable from their terms, distributions
shall be made on each distribution date under the covered
bonds, the related transaction documents, or any contracts
executed by or on behalf of the estate--
(A) first, to pay accrued and unpaid superpriority claims
under paragraph (2)(B)(ii);
(B) second, to pay accrued and unpaid administrative
expense claims under paragraph (1)(I), paragraph (2)(B)(ii),
section 4(b)(5)(A), or section 4(c)(6)(A);
(C) third, to pay--
(i) accrued and unpaid claims under the covered bonds and
the related transaction documents according to their terms;
and
(ii) accrued and unpaid pari passu claims under paragraph
(2)(B)(ii); and
(D) fourth, to pay accrued and unpaid subordinated claims
under paragraph (2)(B)(i).
(4) Distributions on residual interest.--After all other
claims against and interests in an estate have been fully and
irrevocably paid or defeased, the trustee shall or shall
cause a servicer or administrator to distribute the remainder
of the estate to or at the direction of the owner of the
residual interest. No interim distribution on the residual
interest may be made before that time, unless the applicable
covered bond regulator--
(A) approves the distribution after determining that all
other claims against and interests in the estate will be
fully, timely, and irrevocably paid according to their terms;
and
(B) provides an indemnity, for the benefit of the estate,
assuring that all other claims against and interests in the
estate will be fully, timely, and irrevocably paid according
to their terms.
(5) Closing of estate.--After an estate has been fully
administered, the trustee shall close the estate and, except
as otherwise directed by the applicable covered bond
regulator, shall destroy all records of the estate.
(6) No loss to taxpayers.--Taxpayers shall bear no losses
from the resolution of an estate under this Act. To the
extent that the Secretary and the Corporation jointly
determine that the Deposit Insurance Fund incurred actual
losses that are higher because the covered bond program of an
insured depository institution was subject to resolution
under this Act rather than as part of the receivership of the
institution under the Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.), the Corporation may exercise the powers
available under section 7(b) of the Federal Deposit Insurance
Act (12 U.S.C. 1817(b)) to recover an amount equal to those
losses after consulting with the Secretary.
SEC. 5. SECURITIES LAW PROVISIONS.
(a) Securities Laws Treatment of Covered Bonds.--
(1) Treatment of certain banks and other entities.--
(A) Securities laws coverage.--A covered bond described in
subparagraph (C) is and shall be treated as a security issued
or guaranteed by a bank under section 3(a)(2) of the
Securities Act of 1933 (15 U.S.C. 77c(a)(2)), section 3(c)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-
3(c)(3)), and section 304(a)(4)(A) of the Trust Indenture Act
of 1939 (15 U.S.C. 77ddd(a)(4)(A)), as applicable.
(B) Securities exchange act of 1934 exemption.--No covered
bond described in subparagraph (C) shall be treated as an
asset-backed security, as that term is defined in section 3
of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or a
structured finance product, as that term is defined in
section 939F of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (15 U.S.C. 78o-9).
(C) Applicability.--A covered bond described in this
subparagraph is a covered bond that is--
(i) issued or guaranteed by a bank; or
(ii) issued by an eligible issuer described in section
2(9)(F) and sponsored solely by 1 or more banks for the sole
purpose of issuing covered bonds.
(D) Regulations.--Each covered bond regulator for 1 or more
banks shall adopt, as part of the securities regulations of
the covered bond regulator, a separate scheme of
registration, disclosure, and reporting obligations and
exemptions for offers or sales of covered bonds described in
subparagraph (C), which regulations shall--
(i) provide for uniform and consistent standards for such
covered bond issuers, with respect to any such covered bonds,
to the extent possible; and
(ii) be consistent with existing regulations governing
offers or sales of nonconvertible debt.
(2) Treatment of certain associations and cooperative
banks.--
(A) Securities laws coverage.--A covered bond described in
subparagraph (C) is and shall be treated as a security issued
by an entity under section 3(a)(5)(A) of the Securities Act
of 1933 (15 U.S.C. 77c(a)(5)(A)), section 3(c)(3) of the
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3)), and
section 304(a)(4)(A) of the Trust Indenture Act of 1939 (15
U.S.C. 77ddd(a)(4)(A)), as applicable.
(B) Securities exchange act of 1934 exemption.--No covered
bond described in subparagraph (C) shall be treated as an
asset-backed security, as that term is defined in section 3
of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or a
structured finance product, as that term is defined in
section 939F of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (15 U.S.C. 78o-9).
(C) Applicability.--A covered bond described in this
subparagraph is a covered bond that is--
(i) issued by an entity described in section 3(a)(5)(A) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(5)(A)); or
(ii) issued by an eligible issuer described in section
2(9)(F) and sponsored solely by 1 or more such entities for
the sole purpose of issuing covered bonds.
(D) Regulations.--Each covered bond regulator for 1 or more
entities described in section 3(a)(5)(A) of the Securities
Act of 1933 (15 U.S.C. 77c(a)(5)(A)) shall adopt, as part of
the securities regulations of the covered bond regulator, a
separate scheme of registration, disclosure, and reporting
obligations and exemptions for offers or sales of covered
bonds described in subparagraph (C), which regulations
shall--
(i) provide for uniform and consistent standards for such
covered bond issuers, with respect to any such covered bonds,
to the extent possible; and
(ii) shall be consistent with regulations governing offers
or sales of nonconvertible debt.
(3) Construction.--No provision of this Act, including
paragraph (1) or (2), may be construed or applied in a manner
that impairs or limits any other exemption that is available
under applicable securities laws.
(b) Exemptions for Estates.--Any estate that is or may be
created under section 4(b)(1) or 4(c)(2) shall be exempt from
all State and Federal securities laws, except that such
estate--
(1) shall be subject to all anti-fraud provisions of such
securities laws;
(2) shall be subject to the reporting requirements
established by the applicable covered bond regulator under
section 4(d)(1)(E)(iii); and
(3) shall succeed to any requirement of the issuer to file
such periodic information, documents, and reports in respect
of the covered bonds, as specified in section 13(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) or rules
established by an appropriate Federal banking agency.
[[Page S7302]]
(c) Exemptions for Residual Interests.--Any residual
interest in an estate that is or may be created under section
4(b)(1) or 4(c)(2) shall be exempt from all State and Federal
securities laws.
SEC. 6. MISCELLANEOUS PROVISIONS.
(a) Domestic Securities.--Section 106(a)(1) of the
Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C.
77r-1(a)(1)) is amended--
(1) in subparagraph (C), by striking ``or'' at the end;
(2) in subparagraph (D), by adding ``or'' at the end; and
(3) by inserting after subparagraph (D) the following:
``(E) covered bonds (as defined in section 2 of the United
States Covered Bond Act of 2011),''.
(b) No Conflict.--The provisions of this Act shall apply,
notwithstanding any provision of the Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.), title 11, United
States Code, title II of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5381 et seq.), or any
other provision of Federal law with respect to
conservatorship, receivership, liquidation, or bankruptcy. No
provision of the Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.), title 11, United States Code, title II of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (12
U.S.C. 5381 et seq.), or any other provision of Federal law
with respect to conservatorship, receivership, liquidation,
or bankruptcy may be construed or applied in a manner that
defeats or interferes with the purpose or operation of this
Act.
(c) Annual Report to Congress.--The covered bond regulators
shall, annually--
(1) submit a joint report to the Congress describing the
current state of the covered bond market in the United
States; and
(2) testify on the current state of the covered bond market
in the United States before the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
______
By Mr. BAUCUS (for himself, Mr. Boozman, and Mr. Pryor):
S. 1838. A bill to require the Secretary of Veterans Affairs to carry
out a pilot program on service dog training therapy, and for other
purposes; to the Committee on Veterans' Affairs.
Mr. BAUCUS. 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. 1838
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. DEPARTMENT OF VETERANS AFFAIRS PILOT PROGRAM ON
SERVICE DOG TRAINING.
(a) Pilot Program Required.--Not later than 120 days after
the date of the enactment of this Act, the Secretary of
Veterans Affairs shall commence a pilot program to assess the
feasibility and advisability of using service dog training
activities as components of integrated post-deployment mental
health and post-traumatic stress disorder rehabilitation
programs at Department of Veterans Affairs medical centers--
(1) to positively affect veterans with post-deployment
mental health conditions or post-traumatic stress disorder
symptoms; and
(2) to produce specially trained service dogs for veterans.
(b) Duration.--The Secretary shall carry out the pilot
program during the three-year period beginning on the date of
the commencement of the pilot program.
(c) Location.--
(1) In general.--The pilot program shall be carried out at
one Department of Veterans Affairs medical center selected by
the Secretary for such purpose other than in the Department
of Veterans Affairs Palo Alto health care system in Palo
Alto, California. In selecting medical centers for the pilot
program, the Secretary shall--
(A) ensure that the medical center selected--
(i) has an established mental health rehabilitation program
that includes a clinical focus on rehabilitation treatment of
post-deployment mental health disorder and post-traumatic
stress disorder; and
(ii) has a demonstrated capability and capacity to
incorporate service dog training activities into the
rehabilitation program; and
(B) shall review and consider using recommendations
published by experienced service dog trainers regulations in
the art and science of basic third-party dog training and
owner-training dogs with regard to space, equipment, and
methodologies.
(2) Participation of rural veterans.--In selecting a
medical center for the pilot program required under
subsection (a), the Secretary shall give special
consideration to Department of Veterans Affairs medical
centers that are located in States that the Secretary
considers rural or highly rural.
(d) Design of Pilot Program.--In carrying out the pilot
program, the Secretary shall--
(1) administer the program through the Department of
Veterans Affairs Patient Care Services Office as a
collaborative effort between the Rehabilitation Office and
the Office of Mental Health Services;
(2) ensure that the national pilot program lead of the
Patient Care Services Office has sufficient administrative
experience to oversee the pilot program site;
(3) ensure that dogs selected are healthy and age- and
temperament-appropriate for use in the pilot program;
(4) consider dogs residing in animal shelters or foster
homes for participation in the program if such dogs meet the
service dog candidate selection under this subsection;
(5) ensure that each dog selected for the pilot program--
(A) is taught all basic commands and behaviors;
(B) undergoes public access training; and
(C) receives training specifically tailored to address the
mental health conditions or disabilities of the veteran with
whom the dog is paired;
(6) provide professional support for all training under the
pilot program; and
(7) provide or refer participants to business courses for
managing a service dog training business.
(e) Veteran Participation.--Veterans diagnosed with post-
traumatic stress disorder or another post-deployment mental
health condition may volunteer to participate in the pilot
program.
(f) Hiring Preference.--In hiring service dog training
instructors for the pilot program, the Secretary shall give a
preference to veterans who have a post-traumatic stress
disorder or other mental health condition.
(g) Collection of Data.--
(1) In general.--The Secretary shall collect data on the
pilot program to determine the effectiveness of the pilot
program in positively affecting veterans with post-traumatic
stress disorder or other post-deployment mental health
condition symptoms and the feasibility and advisability of
expanding the pilot program to additional Department of
Veterans Affairs medical centers.
(2) Manner of collection.--Data described in paragraph (1)
shall be collected and analyzed using a scientific peer-
reviewed system, valid and reliable results-based research
methodologies, and instruments.
(h) Reports.--
(1) Annual reports.--
(A) In general.--Not later than one year after the date of
the commencement of the pilot program and annually thereafter
for the duration of the pilot program, the Secretary shall
submit to Congress a report on the pilot program.
(B) Elements.--Each such report required by subparagraph
(A) shall include the following:
(i) The number of veterans participating in the pilot
program.
(ii) A description of the services carried out by the
Secretary under the pilot program.
(iii) The effects that participating in the pilot program
has on veterans with post-traumatic stress disorder and post-
deployment adjustment symptoms.
(2) Final report.--At the conclusion of the pilot program,
the Secretary shall submit to Congress a final report that
includes recommendations with respect to the feasibility and
advisability of extending or expanding the pilot program.
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