[Congressional Record Volume 161, Number 115 (Wednesday, July 22, 2015)]
[Senate]
[Pages S5456-S5468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

                                 ______
                                 
      By Mr. REID (for himself and Mr. Heller):
  S. 1825. A bill to require the Secretary of Energy to obtain the 
consent of affected State and local governments before making an 
expenditure from the Nuclear Waste Fund for a nuclear waste repository; 
to the Committee on Energy and Natural Resources.
  Mr. REID. 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. 1825

       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 ``Nuclear Waste Informed 
     Consent Act''.

     SEC. 2. DEFINITIONS.

       In this Act, the terms ``affected Indian tribe'', 
     ``affected unit of local government'', ``Commission'', 
     ``high-level radioactive waste'', ``repository'', ``spent 
     nuclear fuel'', and ``unit of general local government'' have 
     the meanings given the terms in section 2 of the Nuclear 
     Waste Policy Act of 1982 (42 U.S.C. 10101).

     SEC. 3. CONSENT BASED APPROVAL.

       (a) In General.--The Secretary may not make an expenditure 
     from the Nuclear Waste Fund for the costs of the activities 
     described in paragraphs (4) and (5) of section 302(d) of the 
     Nuclear Waste Policy Act of 1982 (42 U.S.C. 10222(d)) unless 
     the Secretary has entered into an agreement to host a 
     repository with--
       (1) the Governor of the State in which the repository is 
     proposed to be located;
       (2) each affected unit of local government;
       (3) any unit of general local government contiguous to the 
     affected unit of local government if spent nuclear fuel or 
     high-level radioactive waste will be transported through that 
     unit of general local government for disposal at the 
     repository; and
       (4) each affected Indian tribe.
       (b) Conditions on Agreement.--Any agreement to host a 
     repository under this Act--
       (1) shall be in writing and signed by all parties;
       (2) shall be binding on the parties; and
       (3) shall not be amended or revoked except by mutual 
     agreement of the parties.
                                 ______
                                 
      By Ms. COLLINS (for herself, Mr. Warner, Ms. Mikulski, Mr. Coats, 
        Ms. Ayotte, and Mrs. McCaskill):
  S. 1828. A bill to strengthen the ability of the Secretary of 
Homeland Security to detect and prevent intrusions against, and to use 
countermeasures to protect, government agency information systems and 
for other purposes; to the Committee on Homeland Security and 
Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today to introduce the Federal 
Information Security Management Act of 2015. I am very pleased that 
Senator Warner, Senator Mikulski, Senator Coats, Senator Ayotte, and 
Senator McCaskill are joining me in this bipartisan effort to 
strengthen cyber security in Federal agencies. I very much appreciate 
their input into this bill and their support.
  The cyber attack that stole sensitive personal data from millions of 
current, former, and retired Federal employees from the poorly secured 
databases at the Office of Personnel Management

[[Page S5457]]

underscores the extraordinary vulnerability of our Federal computer 
networks, but for the more than 21 million Americans affected and 
indeed for our country, the threat from this theft continues. Whether 
it is the risk to the individual of identity theft or the impact on our 
Nation of the compromise of the identity of those dealing with 
classified information or the potential for espionage or blackmail, the 
threat remains extremely serious.
  Worst of all, better security of computer networks at OPM might well 
have prevented this terrible breach. The negligence of OPM officials 
who ignored repeated warnings over years from the inspector general 
that its networks were vulnerable is inexcusable. As the FBI Director 
testified before the Intelligence Committee during an open session 
earlier this month, this breach is a huge deal and represents a 
treasure trove of information for potential adversaries.
  But this cyber attack also points to a broader problem, and that is 
the glaring gap in the process for protecting sensitive information in 
Federal civilian agencies. Thus, we join together today to introduce 
this bipartisan bill.
  Our bill would strengthen the security of the networks of Federal 
civilian agencies by taking five important steps:
  First, our bill would allow the Secretary of Homeland Security to 
operate intrusion detection and prevention capabilities on all Federal 
agencies on the dot-gov domain without waiting for a request from every 
single agency.
  Today, if an agency is uncooperative with DHS or simply does not want 
to make cyber security a priority, there is little that can be done to 
strengthen that agency's vulnerable network. I have visited the center 
at DHS that monitors some of the civilian networks. You could see the 
attempted intrusions in real time. Yet, I was told by some of the 
officials there that when they call the chief information official of 
that agency, sometimes the answer is very lackadaisical, almost 
indifferent. That cannot be allowed to continue.
  Second, our bill directs the Secretary of Homeland Security to 
conduct risk assessments of any network within the dot-gov domain. This 
provision would ensure that no Federal agency can be unaware if it is 
operating an insufficiently secured network and thus jeopardizing 
sensitive data.
  Third, our bill would allow the Secretary of Homeland Security to 
operate defensive countermeasures on these networks once a cyber threat 
has been detected. Currently, DHS can deploy technical assistance to 
agencies to diagnose and mitigate cyber threats only at that agency's 
discretion, and sometimes there are legal impediments for doing so.
  Fourth, our bill would strengthen and streamline the authorities that 
Congress gave to DHS last year to issue binding operational directives 
to Federal agencies, especially to respond to substantial cyber 
security threats or in an emergency where an intrusion is underway.
  Finally, while DHS oversees the protection of Federal civilian 
networks, the Office of Management and Budget has the ultimate 
responsibility to enforce governmentwide cyber security standards for 
civilian agencies. Our bill would require OMB to report to Congress 
annually on the extent to which OMB has exercised its existing 
authority to enforce governmentwide cyber security standards.
  Congress has already given the OMB the authority, for example, to 
recommend increases or decreases in an agency's funding or to exercise 
administrative control over information resources if such actions could 
increase the degree of compliance with cyber security standards. But I 
regret to say that the evidence that OMB has actually exercised this 
authority is pretty slim.
  The primary problem our bill would solve is that DHS has the mandate 
to protect the civilian Federal networks, but it has only limited 
authority to do so. Now, as the Presiding Officer is well aware, this 
approach stands in stark contrast to how the National Security Agency 
defends the dot-mil domain.
  By the way, our legislation does not affect the dot-mil domain--which 
covers the Department of Defense and our intelligence agencies--in any 
way. The Director of the NSA has the responsibility to protect the dot-
mil domain, but he also has the authority from the Secretary of Defense 
to monitor all DOD networks and to deploy countermeasures when 
necessary. If the Director deems that an agency's network is insecure, 
he can shut it down. Contrast that to the inspector general at OPM, who 
last fall issued a report saying that OPM ought to shut down parts of 
its network because it was so insecure, and nothing happened. OPM 
didn't take any action and DHS lacked the authority to do so. That 
stands in sharp contrast to how we protect our defense and intelligence 
agencies' networks. As a result, our military and intelligence networks 
are better protected from foreign adversaries than our civilian 
agencies' networks.
  Although the Secretary of Homeland Security is tasked with a similar 
responsibility to protect Federal civilian networks, he has far less 
authority to accomplish that task. Yet--think about it--Federal 
civilian agencies such as OPM, the IRS, the Social Security 
Administration, Medicare, and the Patent Office are the repositories of 
vast quantities of sensitive, personal, and economic data belonging to 
the American people. We have to do a better job of protecting that data 
as well.
  When the Intelligence Committee on which I served asked the current 
Director of NSA how we might improve the protection of the dot-gov 
domain, he emphasized the importance of providing the authority 
commensurate with the responsibility for protecting civilian agency 
networks.
  The Secretary of Homeland Security, Jeh Johnson, similarly said that 
obtaining clear, congressional authorization for DHS to deploy 
protective capabilities to secure civilian agencies' networks is one of 
his priorities.
  I heard the same message from his predecessor, Secretary Janet 
Napolitano, when I was the ranking member of the homeland security 
committee in 2012.
  By the way, that year former Senator Joe Lieberman and I urged our 
colleagues to pass the Cybersecurity Act of 2012, which we drafted and 
which included, among other provisions, major reforms to improve the 
protection of Federal networks. We will never know if the OPM breach 
that compromised the security clearance background information of more 
than 21 million people could have been prevented if the Senate had 
passed our bill at that time. Of course, no bill, no law can protect 
against every cyber breach, but I believe we would have been far better 
positioned had we acted then.
  What we do know is that once a malware signature is identified, it 
was DHS's intrusion detection system--known as EINSTEIN--and other DHS-
recommended tools that played key roles in identifying the massive 
compromise of the OPM data. Without these tools, OPM might still be 
blissfully unaware that it had been subjected to a major hack.
  The government's response to the breach demonstrates the urgent need 
for our legislation. The five agency networks that were monitored by 
EINSTEIN 3 were protected and capable of blocking the malware the 
moment the dangerous signatures used in the OPM breach were loaded into 
their systems. For every other civilian agency, however, that was not 
the case. DHS had to call the chief information officer responsible for 
every one of those networks that were not covered yet by the EINSTEIN 3 
system. Then the bad indicators had to be passed on to each CIO, and 
each CIO had to search their agency networks for the harmful malware. 
Cyber threats move at the speed of light. No organization that takes 
cyber security seriously would rely upon a game of telephone tag to 
guard the security of its information.
  I also note that at the time the OPM breach actually occurred, the 
latest version of EINSTEIN had been deployed on less than 25 percent of 
the dot-gov network. So even if the government had detected the malware 
immediately, the government's ability to protect all of the networks 
would have taken that much longer because DHS's best intrusion system 
was not deployed widely enough. And, inexplicably, to this day, it is 
still not installed at OPM despite the information it stores as the 
chief employment office for millions of Federal employees and retirees.
  If we fail to give these much needed authorities to DHS, the 
unacceptable

[[Page S5458]]

status quo will prevail. Under the status quo, each agency--however 
competently or incompetently--monitors its own networks and only asks 
DHS for assistance if it sees fit to do so. Let me describe just how 
poorly that approach has worked so far.
  We know that information security incidents in the Federal Government 
have increased more than twelvefold--from 5,500 in fiscal year 2006 to 
more than 67,000 in fiscal year 2014 according to the Government 
Accountability Office. That undoubtedly understates the real number 
since these are just the incidents of which we are aware. Nineteen of 
twenty-four major agencies have declared cyber security as a 
significant deficiency or material weakness for financial reporting 
purposes. At the same time, Federal agencies have failed to implement 
hundreds of recommendations from the GAO and inspectors general that 
could enhance the security of their networks.
  I could go on and on, citing the breach at IRS, at the Postal 
Service, at FAA, at NOAA, not to mention the OPM breach. It is 
unacceptable that we are putting important data belonging to the 
American people as well as our economic edge at risk. We simply have to 
take action now.
  It is incredible that OPM implausibly asserted earlier this month 
that ``there is no information at this time to suggest any misuse or 
further dissemination of the information that was stolen from OPM's 
systems.'' That incredible statement, which implied that the 
perpetrators of this lengthy and extensive attack have no intention of 
ever using the stolen data, suggests that OPM still has yet to 
recognize the gravity of this cyber attack.
  But Congress also has the responsibility to make the job for those 
securing our Federal civilian networks easier to do in light of the 
extraordinary threat that foreign adversaries, international criminal 
gangs, and other hackers pose to government systems and the privacy and 
safety of our citizens. This bill is the first of many steps to 
strengthen our Nation's cyber security, and I urge my colleagues to 
support this bipartisan measure.
  Mr. WARNER. Mr. President, I rise today to speak on the Federal 
Information Security Management Reform Act, FISMA Reform, of 2015, 
which I introduced today with Senator Collins, Senator Mikulski, 
Senator Coats, Senator Ayotte, and Senator McCaskill. This legislation 
will give the Department of Homeland Security the power to make sure 
that civilian government agencies--like OPM--have adequate cyber 
defenses against these kinds of attacks.
  Cyberattacks present one of the most critical national and economic 
threats that this Nation faces. As the FBI Director recently stated, 
there are two types of companies in the U.S.--those that have been 
hacked by China, and those that do not yet know they have been hacked.
  Estimates by the Center for Strategic and International Studies 
indicate that cyberattacks and cybercrime account for between $24 and 
as much as $120 billion in economic and intellectual property loss per 
year in the U.S. That is the equivalent of .2 to .8 percent of our GDP. 
The same CSIS study suggests that $100 billion in losses due to 
cyberattacks is the equivalent of over half a million lost U.S. jobs.
  As we have seen with the OPM cyberattack, more than 22 million 
Federal employees, retirees and applicants had their personal data 
stolen, including--most troublingly--information on their security 
clearance background investigations. The scope of this breach was 
unprecedented. As the FBI Director told the Intelligence Committee 
recently, this is a ``huge deal'' and represents a treasure trove of 
information for potential adversaries.
  But this is a serious problem that isn't limited to government, as we 
have already seen with recent breaches involving Anthem, CareFirst, 
Target, Neiman Marcus, Home Depot, and banks like J.P. Morgan, just to 
name a few. Both the private and public sector need to be better 
prepared for an increasing number of these cyberattacks.
  To figure out how to protect consumers' financial data, last year I 
held the first hearing in Congress into data breaches in the aftermath 
of the Target breach.
  One takeaway was how much more serious private sector and government 
entities need to be in investing in infrastructure and talent to secure 
their systems from cyberattack and breach. While there is always a risk 
of breaches, we can significantly mitigate those risks by increasing 
our ability to detect and respond to attacks.
  I also believe we must get serious about passing cybersecurity 
legislation. This is also why I supported the Cyber Information Sharing 
Act (CISA) that passed in the Senate Intelligence Committee 14-1 in 
March.
  A couple years ago, Senators Lieberman and Collins had a 
comprehensive cybersecurity bill which was unable to pass in the 
Senate. Unfortunately, when the bill did not pass, so did many of the 
good-government provisions such as strengthening the ability of the 
government to protect the ``Dot-gov'' infrastructure. While some of the 
language in the Lieberman-Collins bill regarding the DHS's role in 
cybersecurity did make it into law in December 2014, these changes did 
not go far enough.
  That is why today I have introduced with Senator Collins, Senator 
Mikulski, Senator Coats, Senator Ayotte and Senator McCaskill the 
Federal Information Security Management Reform Act, FISMRA, of 2015. 
This legislation would give the DHS strengthened authorities to enforce 
standards, employ cyber threat detection technology and defensive 
countermeasures, and to conduct threat and vulnerability analyses 
across all civilian U.S. Government agencies. Our bill would affect 
federal agencies only, except defense and intelligence agencies, not 
the private sector.
  The basic problem with protecting U.S. Government information systems 
is that while DHS has the responsibility to protect the ``Dot-gov'' 
domain, right now it does not have the ``teeth'' to actually enforce 
security standards or fix vulnerabilities. It is likely that if the DHS 
had the additional authorities we are proposing this could have helped 
to discover the OPM breach sooner. In fact, OPM only discovered the 
breach after implementing a cybersecurity tool that was recommended by 
the DHS.
  Our bill would give the DHS secretary the authority to direct--not 
request--that agencies undertake needed corrective actions to protect 
their cyber and information systems. Now, some government agencies 
systems may already be pretty good--so the DHS may not need to issue 
them directives. But I also know that we are not where we want to be.
  While the breach at OPM was and continues to be devastating to those 
federal employees who are affected, we need to remember that 
cybersecurity is not just an issue at OPM. A recent article in the New 
York Times quoted the President's cyber advisor, Michael Daniels, as 
saying ``it's safe to say that federal agencies are not where we want 
them to be across the board,'' that the bureaucracy needed a ``mind-set 
shift,'' that would put cybersecurity at the top of their list of 
priorities, and that ``we clearly need to be moving faster.''
  Likewise, a recent audit of the Federal Aviation Administration's 
network in January cited ``significant security control weaknesses . . 
. placing the safe and uninterrupted operation of the nation's air 
traffic control system at increased and unnecessary risk.'' The FAA's 
former chief information security officer told the press that he had 
been frustrated by the failure to address obvious security holes in its 
most important networks.
  Similarly, at the Department of Energy's network that contains 
sensitive information on critical infrastructure and nuclear 
propulsion, investigators found ``numerous holes,'' according to the 
New York Times.
  At the IRS network, auditors found 69 vulnerabilities.
  I believe it is not a matter of if, but of when government systems 
will again be hit by a major cyberattack. And that is why I believe we 
cannot wait to give one primary entity the authority--especially when 
it already has the responsibility--to ensure that all ``Dot-gov'' 
government agencies meet robust cybersecurity standards, and that they 
are able to deploy tools and technology across the government to detect 
and prevent cyberattacks like the ones we saw at OPM. The Department of 
Homeland Security is such an entity.
  I know that some of my colleagues have argued that the NSA is the 
best in

[[Page S5459]]

government at countering the cyber threat. I think that the NSA's 
capabilities are impressive. They do an excellent job protecting our 
defense and intelligence information systems. However, it would be 
unfeasible to put the NSA in charge of the United States' civilian 
cybersecurity.
  DHS cyber capabilities have been steadily improving. It is deploying 
innovative tools like EINSTEIN 3A. It has an extremely capable National 
Cybersecurity and Communications Integration Center, NCCIC, located in 
Virginia, that already detects threats and promotes information sharing 
with industries through the so-called ISACs, Information Sharing and 
Analysis Centers, that cover a range of industries from Aviation, 
Defense Industries, the Financial and Banking sectors, Electricity, IT, 
Communications and others.
  As DHS Secretary Jeh Johnson recently stated: ``Legally, each agency 
and department head has the responsibility for their own system--
legally, and I stress that to my colleagues. We have the responsibility 
for the overall protection of the Federal civilian dot-gov world [. . 
.] [W]here we need help in protecting Federal cybersecurity is legal--
making express our legal authority to receive information from other 
departments and governments. [. . .] [W]e want the express legal 
authority to make it plain that when we utilize things like EINSTEIN, 
EINSTEIN 3A, those other agencies are authorized to share information 
with us, to give us access to our network.''
  In short, this bill would allow DHS--which already has the 
responsibility to protect ``Dot-gov'' networks--the authority and the 
ability to deploy tools and technology across the government to 
proactively detect and prevent cyberattacks like the ones we saw at 
OPM. The alternative is continuing the status quo, where each agency--
no matter how poorly--monitors its own networks and only asks for 
outside assistance when it feels like it. That doesn't work. I urge my 
colleagues to join us in supporting this bipartisan bill.
                                 ______
                                 
      By Mr. LEAHY (for himself and Mr. Udall):
  S. 1838. A bill to amend the Federal Election Campaign Act of 1971 to 
clarify the treatment of coordinated expenditures as contributions to 
candidates, and for other purposes; to the Committee on Rules and 
Administration.
  Mr. LEAHY. Mr. President, although we are still a year and a half 
from the next presidential election, our perpetual campaign cycle 
already seems to be in full swing. Among the many troubling trends we 
are seeing is the rise of ``independent'' super PACs that support 
candidates. These super PACs are supposed to operate completely 
independent from the candidates' campaigns, but no one believes this to 
be true. It is the worst kept secret in America.
  A July 6, 2015, article in the Washington Post entitled ``It's bold, 
but legal: How campaigns and their super PAC backers work together'' 
documents just how easily these super PACs and campaigns coordinate 
their messages and skirt the rules. As the author notes:

       For the first time, nearly every top presidential hopeful 
     has a personalized super PAC that can raise unlimited sums 
     and is run by close associates or former aides. Many also are 
     being boosted by nonprofits, which do not have to disclose 
     their donors.
       The boldness of the candidates has elevated the importance 
     of wealthy donors to even greater heights than in the last 
     White House contest, when super PACs and nonprofits reported 
     spending more than $1 billion on federal races. Although they 
     are not supposed to coordinate directly with their 
     independent allies, candidates are finding creative ways to 
     work in concert with them.

  Five years ago, in Citizens United v. FEC, five justices on the 
Supreme Court departed from principles of judicial restraint and 
decided to overturn an act of Congress under the broadest grounds 
possible. In so doing, they overruled a century of practice and decades 
of doctrine. The Court declared that corporations have a First 
Amendment right to spend endlessly to finance and influence our 
elections. This precedent then led to another court decision--
SpeechNow.org v. FEC--in the D.C. Circuit that resulted in the creation 
of the super PAC. Super PACs are supposed to be independent 
expenditure-only committees, and may raise unlimited sums of money from 
corporations, unions, associations and individuals, then spend 
unlimited sums to advocate for or against political candidates. But 
nobody believes that they truly act independently.
  That is why I am introducing the Stop Super PAC-Candidate 
Coordination Act today. This bill would end the sham practice of 
presidential candidates boldly and shamelessly exploiting our campaign 
finance laws by coordinating with allegedly independent super PACs.
  First, the bill codifies a definition of what constitutes 
``coordination'' based on Supreme Court case law to make it more 
difficult for coordination to occur. Second, it prohibits outside 
groups from skirting the coordination provisions by stating that they 
cannot simply create a ``firewall'' and claim that the there is an 
independent division that is making independent expenditures. Third, it 
prevents single-candidate super PACs from acting as an arm of the 
candidates' campaign. It does this by including factors of when a super 
PAC should be deemed a ``coordinated spender.'' Once the super PAC 
falls into this category, the super PACs expenditures are then 
considered to be ``coordinated expenditures'' and the super PAC is 
subject to Federal contribution limits and prohibitions. Under existing 
law, coordinated expenditures are defined as also being in-kind 
contributions and are subject to the PAC contribution limit of $5,000 
per year.
  The penalty for any person who knowingly violates the coordination 
provisions of this act is a civil fine that is three times the amount 
of the coordinated expenditures involved in excess of the applicable 
contribution limit. The act also imposes joint and several liability on 
any director, manager, or officer of an outside spending group for any 
unpaid penalties by the group violating the coordination rules.
  Lastly, the bill prohibits candidates and their agents from raising 
money for super PACs by prohibiting the raising of funds for any super 
PAC or political committee that is not subject to Federal contribution 
limits and reporting requirements. This bill would provide real rules 
and put into place some regulations that would make it more difficult 
for these super PACs to coordinate with candidates.
  The issue of how our politics are paid for is an issue that is 
important to the American people, and it is also important to 
Vermonters. We have always remained steadfast in our belief that our 
democracy should not be for sale, and that the size of your bank 
account should not determine whether or not the government responds to 
your views or needs.
  This bill I introduce today is an incremental measure that would help 
eliminate the sham of single-candidate super PACs and provide some real 
rules to a process in which the American public is becoming more 
cynical about every day. I hope that my fellow Senators from both sides 
of the aisle will support this modest measure.
  I understand why Vermonters are outraged by the devastating effects 
of Citizens United and its progeny. In recent years I have held several 
hearings to highlight the damage that Citizens United has done to our 
political process. Last summer, I led the charge in the Senate 
Judiciary Committee to consider a constitutional amendment to restore 
the ability of lawmakers at both the Federal and State levels to rein 
in the influence that billionaires and corporations now have on our 
elections. The amendment would also have made clear that corporations 
are not people. Although Senate Democrats were able to vote the 
constitutional amendment out of the Judiciary Committee, Senate 
Republicans filibustered the amendment on the floor and refused to 
allow it an up-or-down vote. I will continue to do all I can to reverse 
the devastating effects of Citizens United and its subsequent 
decisions. This bill is one step towards addressing one of the problems 
that has resulted from those decisions.
  Mr. President, I ask unanimous consent that the Washington Post 
article referenced above be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page S5460]]

                [From the Washington Post, July 6, 2015]

 It's Bold, But Legal: How Campaigns and Their Super PAC Backers Work 
                                Together

                            (By Matea Gold)

       The 2016 presidential contenders are stretching the 
     latitude they have to work with their independent allies more 
     than candidates in recent elections ever dared, taking 
     advantage of a narrowly drawn rule that separates campaigns 
     from outside groups.
       For the first time, nearly every top presidential hopeful 
     has a personalized super PAC that can raise unlimited sums 
     and is run by close associates or former aides. Many also are 
     being boosted by non-profits, which do not have to disclose 
     their donors.
       The boldness of the candidates has elevated the importance 
     of wealthy donors to even greater heights than in the last 
     White House contest, when super PACs and nonprofits reported 
     spending more than $1 billion on federal races. Although they 
     are not supposed to coordinate directly with their 
     independent allies, candidates are finding creative ways to 
     work in concert with them.
       Before former Florida governor Jeb Bush (R) announced his 
     bid in mid-June, the Right to Rise super PAC filmed footage 
     of him that the group plans to use in ads. Hillary Rodham 
     Clinton's campaign is collaborating directly with Correct the 
     Record, a super PAC providing the Democratic hopeful's team 
     with opposition research.
       Top advisers to Wisconsin Gov. Scott Walker (R) have been 
     positioned at two big-money groups as they await his 
     presidential announcement next week. GOP candidate Carly 
     Fiorina has gone even further, outsourcing core functions 
     such as rapid response and event preparation to her allied 
     super PAC, the aptly named--CARLY for America.
       The 2016 contenders and their big-money backers VIEW 
     GRAPHIC. The widespread cooperation--which many campaign 
     finance-experts say stretches the legal boundaries--indicates 
     that candidates and their advisers have little fear that they 
     will face serious scrutiny from law enforcement, despite the 
     Justice Department's successful prosecution this year of a 
     Virginia campaign operative for illegal coordination.
       One main reason: Under Federal Election Commission rules, 
     there is no wall dividing candidates and independent groups. 
     In practice, it's more like a one-way mirror--with a 
     telephone on each side for occasional calls.
       ``The rules of affiliation are just about as porous as they 
     can be, and it amounts to a joke that there's no coordination 
     between these individual super PACs and the candidates,'' 
     said Rep. David E. Price (D-N.C.), who has sponsored 
     legislation that would put stricter limits in place.
       A close reading of FEC regulations reveals that campaigns 
     can do more than just publicly signal their needs to 
     independent groups, a practice that flourished in the 2014 
     midterms.
       Operatives on both sides can talk to one another directly, 
     as long as they do not discuss candidate strategy. According 
     to an FEC rule, an independent group also can confer with a 
     campaign until this fall about ``issue ads'' featuring a 
     candidate. Some election-law lawyers think that a super PAC 
     could share its entire paid media plan, as long as the 
     candidate's team does not respond.
       But those who defend the current system say that broader 
     rules could infringe on rights to free speech.
       Right to Rise, a super PAC run by Mike Murphy, filmed 
     footage with then-undeclared candidate Jeb Bush to be used in 
     later commercials. (NBCU Photo Bank via Getty Images) ``Every 
     discussion you have cannot trigger illegal coordination,'' 
     said Lee E. Goodman, a Republican appointee to the FEC.
       ``I understand some people look at relationships between 
     candidates and independent spenders and sense that those 
     relationships are too cozy,'' he added. ``Yet the courts have 
     said that you cannot prohibit friendships and knowledge of 
     each other.''
       But many experts say that the limited-coordination rules 
     are emblematic of an outdated, incoherent and often 
     contradictory campaign finance framework.
       ``We're at this transitional point where the way money is 
     raised and spent and the costs of campaigns have changed so 
     dramatically,'' said Bob Bauer, a prominent campaign finance 
     lawyer who served as White House counsel for President Obama. 
     ``The problem isn't that the law isn't being enforced--the 
     problem is that we need to rethink the whole thing from the 
     ground up.''
       Political strategists on both sides of the aisle agree, 
     saying that navigating the complex legal thickets is 
     increasingly difficult.
       ``If you talk to three lawyers, you are likely to get three 
     different answers,'' said Phil Cox, executive director of 
     America Leads, a super PAC supporting Chris Christie, the 
     Republican governor of New Jersey. ``The system makes no 
     sense. It's crying out for reform. We need to put the power 
     back in the hands of the candidates and their campaigns, not 
     the outside groups.''
       At the moment, though, an overhaul of campaign finance has 
     little bipartisan support in Congress. And members of the 
     long-polarized FEC appear more divided than ever. A 
     discussion at a recent public meeting about stricter 
     regulations devolved into hostile barbs.
       The public is left with the sense that no one is following 
     the rules, said Ellen L. Weintraub, one of the Democrats on 
     the FEC.
       ``There is this basic notion that super PACs are supposed 
     to be separate from the candidates,'' she said. ``They look 
     at what's going on, and they say: `This doesn't look 
     separate. Where are the lines?' ''
       A sweeping boundary was drawn by the Supreme Court in its 
     seminal 1976 Buckley v. Valeo decision, which said that 
     political activity by outside groups must be done ``totally 
     independently'' of candidates and parties. A similar standard 
     was set in the 2002--McCain-Feingold Act, which said that 
     independent expenditures cannot be made ``in cooperation, 
     consultation, or concert'' with a candidate.
       But in practice, defining coordination has not been easy. 
     The FEC wrestled mightily with where to draw the lines, 
     issuing regulations that were challenged repeatedly in the 
     courts.
       A set of FEC rules approved in 2010 prohibits a campaign 
     from coordinating with an independent group on a paid 
     communication. The agency laid out specific tests to 
     determine whether a campaign has illegally shared internal 
     strategy used to guide an independent group's advertising.
       But the rules do not ban coordination in general--much less 
     conversations between each side.
       Bobby Burchfield, a Republican campaign finance lawyer, 
     said that the clarity of current regulation helps avoid the 
     kind of intrusive investigations into groups, such as the 
     Christian Coalition, that the FEC once pursued. ``That had 
     the effect of suppressing and chilling political activity,'' 
     he said.
       Now, there's plenty of room to maneuver. Although a 
     campaign cannot share private strategy with a super PAC, it 
     can give a campaign information about its plans, as long the 
     group is not sharing something of value that could be 
     considered a contribution.
       The FEC also has given candidates its blessing to appear at 
     super PAC fundraisers, as long as they do not solicit more 
     than $5,000--a decision that came in response to a query from 
     two Democratic super PACs in 2011.
       Taken together, critics say, the narrow rules offer far too 
     many opportunities for candidates and their well-funded 
     outside allies to work in agreement.
       The FEC ``couldn't imagine how bold people would be,'' said 
     Larry Noble, senior counsel at the Campaign Legal Center, 
     which supports tougher restrictions.
       Right to Rise, the super PAC run by longtime Bush adviser 
     Mike Murphy, is set to serve as a massive external ad 
     operation bolstering the former governor's campaign. Murphy 
     told donors in a recent conference call that before Bush 
     announced his candidacy, the super PAC filmed footage of him 
     that the group plans to use in digital and TV spots, 
     according to an account in BuzzFeed.
       ``One of the new ideas that, you know, the governor had--
     he's such an innovator--is we're going to be the first super 
     PAC to really be able to do just positive advertising,'' 
     Murphy said.
       Paul Lindsay, a spokesman for Right to Rise, said that 
     Murphy was referring to ``Governor Bush's historical 
     preference for positive advertising, which was consistent in 
     his previous elections and is no secret.''
       Clinton's campaign is working closely with Correct the 
     Record, a liberal rapid-response group that refashioned 
     itself as a super PAC this year. The group says it can 
     coordinate directly with the campaign under a 2006 FEC rule 
     that made content posted free online off-limits to 
     regulation.
       Correct the Record has more than 20 staffers and plans to 
     disseminate much of its research on its Web site and through 
     social media.
       Any nonpublic information of value that it shares with the 
     Clinton staff will be purchased, according to a campaign 
     official.
       Already, partisan critics have pounced, filing complaints 
     with the FEC alleging that the pro-Bush and pro-Clinton super 
     PACs are engaged in illegal coordination.
       But if the agency launches an investigation, it would be a 
     first. Since 2010, the FEC has yet to open an investigation 
     into alleged illegal super PAC coordination, closing 29 such 
     complaints. In 28 of those cases, the agency's general 
     counsel did not recommend pursuing the matters, according to 
     Goodman of the FEC.
       ``We could capture all of this stuff if we had real 
     rules,'' said Fred Wertheimer, a longtime advocate of 
     reducing the influence of big money on politics. ``For all 
     practical purposes, there are no prohibitions against 
     coordination.''
                                 ______
                                 
      By Mr. CORNYN (for himself, Mr. Toomey, Mr. Crapo, and Mr. Lee):
  S. 1840. A bill to amend title 11, United States Code, to provide for 
the liquidation, reorganization, or recapitalization of a covered 
financial corporation, and for other purposes; to the Committee on 
Banking, Housing, and Urban Affairs.
  Mr. CORNYN. 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. 1840

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page S5461]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Taxpayer Protection and 
     Responsible Resolution Act''.

     SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FINANCIAL 
                   CORPORATIONS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting the following after paragraph 
     (9):
       ``(9A) The term `covered financial corporation' means any 
     corporation incorporated or organized under any Federal or 
     State law, other than a stockbroker, a commodity broker, or 
     an entity of the kind specified in paragraph (2) or (3) of 
     section 109(b), that is--
       ``(A) a bank holding company, as defined in section 2(a) of 
     the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); or
       ``(B) a corporation that exists for the primary purpose of 
     owning, controlling, and financing subsidiaries that are 
     predominantly engaged in activities that the Board of 
     Governors of the Federal Reserve System has determined are 
     financial in nature or incidental to such financial activity 
     for purposes of section 4(k) of the Bank Holding Company Act 
     of 1956 (12 U.S.C. 1843(k)).''.
       (b) Applicability of Chapters.--Section 103 of title 11, 
     United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``section 1161'' and inserting ``sections 
     1161 and 1401''; and
       (B) by striking ``or 13'' and inserting ``13, or 14'';
       (2) in subsection (g), by inserting ``subsection (m) and'' 
     before ``section''; and
       (3) by adding at the end the following:
       ``(l) Chapter 14 of this title applies only in a case under 
     such chapter.
       ``(m) Except as otherwise provided in chapter 14 of this 
     title, chapter 11 of this title applies in a case under 
     chapter 14 of this title.''.
       (c) Who May Be a Debtor.--Section 109 of title 11, United 
     States Code, is amended--
       (1) in subsection (d)--
       (A) by striking ``and'';
       (B) by striking ``or a'' and inserting ``or''; and
       (C) by inserting ``, or a covered financial corporation'' 
     after ``Federal Deposit Insurance Corporation Improvement Act 
     of 1991''; and
       (2) by adding at the end the following:
       ``(i) Only a covered financial corporation may be a debtor 
     in a case under chapter 14.''.
       (d) Distribution of Property of the Estate.--Section 
     726(a)(1) of title 11, United States Code, is amended by 
     inserting ``in payment of any unpaid fees, costs, and 
     expenses of a special trustee appointed under section 1406, 
     and then'' after ``first,''.
       (e) Confirmation of Plan.--Section 1129(a) of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(17) In a case under chapter 14, all payable fees, costs, 
     and expenses of the special trustee have been paid or the 
     plan provides for the payment of all such fees, costs, and 
     expenses, as of the effective date of the plan.
       ``(18) In a case under chapter 14, confirmation of the plan 
     is not likely to cause serious adverse effects on financial 
     stability in the United States.''.
       (f) Qualification of Trustee.--Section 322(b)(2) of title 
     11, United States Code, is amended by striking ``The'' and 
     inserting ``In cases under chapter 14, the United States 
     trustee shall recommend to the court, and in all other cases, 
     the''.

     SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                   COVERED FINANCIAL CORPORATION.

       (a) In General.--Title 11, United States Code, is amended 
     by inserting before chapter 15 the following:

  ``CHAPTER 14--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

``Sec.
``1401. Inapplicability of other sections.
``1402. Definitions for this chapter.
``1403. Commencement of a case concerning a covered financial 
              corporation.
``1404. Regulators.
``1405. Special transfer of property of the estate.
``1406. Special trustee.
``1407. Automatic stay; assumed debt.
``1408. Treatment of qualified financial contracts and affiliate 
              contracts.
``1409. Licenses, permits, and registrations.
``1410. Conversion to chapter 7.
``1411. Exemption from securities laws.
``1412. Inapplicability of certain avoiding powers.
``1413. Consideration of financial stability.

     ``Sec. 1401. Inapplicability of other sections

       ``Sections 303 and 321(c) do not apply in a case under this 
     chapter.

     ``Sec. 1402. Definitions for this chapter

       ``In this chapter, the following definitions shall apply:
       ``(1) The term `Board' means the Board of Governors of the 
     Federal Reserve System.
       ``(2) The term `bridge company' means a newly formed 
     corporation to which property of the estate may be 
     transferred under section 1405(a) and the equity securities 
     of which may be transferred to a special trustee under 
     section 1406(a).
       ``(3) The term `capital structure debt' means all unsecured 
     debt of the debtor for borrowed money for which the debtor is 
     the primary obligor, other than a qualified financial 
     contract and other than debt secured by a lien on property of 
     the estate that is to be transferred to a bridge company 
     pursuant to an order of the court under section 1405(a).
       ``(4) The term `contractual right' means a contractual 
     right of a kind described in section 555, 556, 559, 560, or 
     561.
       ``(5) The term `qualified financial contract' means any 
     contract of a kind defined in paragraph (25), (38A), (47), or 
     (53B) of section 101, section 741(7), or paragraph (4), (5), 
     (11), or (13) of section 761.
       ``(6) The term `special trustee' means a trustee appointed 
     under section 1406(a)(2)(A).
       ``(7) The term `trustee' means a person who is--
       ``(A) appointed or elected under section 1104; and
       ``(B) qualified under section 322 to serve as trustee in 
     the case or, in the absence of such person, the debtor in 
     possession.

     ``Sec. 1403. Commencement of a case concerning a covered 
       financial corporation

       ``(a) In General.--A case under this chapter may be 
     commenced by the filing of a petition with the court by an 
     entity that may be a debtor under section 301 if the entity 
     states to the best of its knowledge, under penalty of 
     perjury, in the petition that the entity is a covered 
     financial corporation.
       ``(b) Order for Relief.--The commencement of a case under 
     subsection (a) constitutes an order for relief under this 
     chapter.
       ``(c) Liability.--The members of the board of directors (or 
     body performing similar functions) of a covered financial 
     corporation shall not be liable to shareholders, creditors or 
     other parties in interest for--
       ``(1) a good faith filing of a case under this chapter; or
       ``(2) for any reasonable action taken, before or after the 
     date on which a case is commenced under this chapter, in good 
     faith in contemplation of or in connection with such a filing 
     or a transfer under section 1405 or section 1406.
       ``(d) Notice to Court.--Counsel to the entity that may be a 
     debtor shall provide, to the greatest extent practicable, 
     sufficient confidential notice to the Director of the 
     Administrative Office of the United States Courts and the 
     chief judge of the court of appeals embracing the district in 
     which the case is pending regarding the potential 
     commencement of a case under this chapter without disclosing 
     the identity of the potential debtor to allow the Director 
     and chief judge to designate and ensure the ready 
     availability of 1 of the bankruptcy judges designated under 
     section 298(b)(1) of title 28 to be available to preside over 
     the case.

     ``Sec. 1404. Regulators

       ``The Board, the Securities Exchange Commission, the 
     Comptroller of the Currency, and the Federal Deposit 
     Insurance Corporation may raise and may appear and be heard 
     on any issue in any case or proceeding under this chapter.

     ``Sec. 1405. Special transfer of property of the estate

       ``(a) In General.--
       ``(1) Transfer.--On request of the trustee, and after 
     notice and hearing not less than 24 hours after the order for 
     relief, the court may order a transfer under this section of 
     property of the estate, and the assignment of debt, executory 
     contracts, unexpired leases, qualified financial contracts, 
     and agreements of the debtor, to a bridge company. Except as 
     provided under this section, the provisions of sections 363 
     and 365 shall apply to a transfer and assignment under this 
     section.
       ``(2) Property of estate.--Upon the entry of an order 
     approving a transfer under this section, any property 
     transferred, and any debt, executory contract, unexpired 
     leases, qualified financial contract, or agreement assigned 
     under such order shall no longer be property of the estate.
       ``(b) Notice.--Unless the court orders otherwise, notice of 
     a request for an order under subsection (a) shall consist of 
     electronic or telephonic notice of not less than 24 hours 
     to--
       ``(1) the holders of the 20 largest secured claims against 
     the debtor;
       ``(2) the holders of the 20 largest unsecured claims 
     against the debtor;
       ``(3) counterparties to any debt, executory contract, 
     unexpired lease, qualified financial contract, or agreement 
     requested to be transferred under this section;
       ``(4) the Board;
       ``(5) the Federal Deposit Insurance Corporation;
       ``(6) the Secretary of the Treasury;
       ``(7) the Comptroller of the Currency;
       ``(8) the Securities and Exchange Commission;
       ``(9) the United States trustee or bankruptcy 
     administrator; and
       ``(10) each primary financial regulatory agency (as defined 
     in section 2(12) of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (12 U.S.C. 5301(12))) with respect to 
     any affiliate the equity securities of which are proposed to 
     be transferred under this section.
       ``(c) Determination.--The court may not order a transfer 
     under this section unless the court determines, based upon a 
     preponderance of the evidence, that--
       ``(1) the transfer under this section is necessary to 
     prevent serious adverse effects on financial stability in the 
     United States;
       ``(2) the transfer does not provide for the assumption of 
     any capital structure debt by the bridge company;
       ``(3) the transfer does not provide for the transfer to the 
     bridge company of any property of the estate that is subject 
     to a lien securing a debt, executory contract, unexpired 
     lease, or agreement of the debtor unless--

[[Page S5462]]

       ``(A)(i) the bridge company assumes such debt, executory 
     contract, unexpired lease, or agreement, including any claims 
     arising in respect thereof that would not be allowed secured 
     claims under section 506(a)(1), and after giving effect to 
     such transfer, such property remains subject to the lien 
     securing such debt, executory contract, unexpired lease, or 
     agreement; and
       ``(ii) the court has determined that assumption of such 
     debt, executory contract, unexpired lease, or agreement by 
     the bridge company is in the best interest of the estate; or
       ``(B) such property is being transferred to the bridge 
     company in accordance with the provisions of section 363;
       ``(4) the transfer does not provide for the assumption by 
     the bridge company of any debt, executory contract, unexpired 
     lease, or agreement of the debtor secured by a lien on 
     property in which the estate has an interest unless the 
     transfer provides for such property to be transferred to the 
     bridge company in accordance with paragraph (3)(A) of this 
     subsection;
       ``(5) the transfer does not provide for the transfer of the 
     equity of the debtor;
       ``(6) the debtor has demonstrated that the bridge company 
     is not likely to fail to meet the obligations of any debt, 
     executory contract, qualified financial contract, unexpired 
     lease, or other agreement assumed and assigned to the bridge 
     company;
       ``(7) the transfer provides for the transfer to a special 
     trustee all of the equity securities in the bridge company 
     and appointment of a special trustee in accordance with 
     section 1406;
       ``(8) after giving effect to the transfer, adequate 
     provision has been made for the payment of the fees, costs, 
     and expenses of the estate and special trustee; and
       ``(9) the bridge company will have governing documents, and 
     initial directors and senior officers, that are in the best 
     interest of creditors and the estate.
       ``(d) Requirements Before Transfer.--Immediately before a 
     transfer under this section, the bridge company that is the 
     recipient of the transfer shall--
       ``(1) not have any property, debts, executory contracts, 
     unexpired leases, qualified financial contracts, or 
     agreements, other than any property acquired or debts, 
     executory contracts, unexpired leases, qualified financial 
     contracts, or agreements assumed when acting as a transferee 
     of a transfer under this section; and
       ``(2) have equity securities that are property of the 
     estate, which may be sold or distributed in accordance with 
     this title.

     ``Sec. 1406. Special trustee

       ``(a) In General.--
       ``(1) Transfer to special trustee.--An order approving a 
     transfer under section 1405 shall require the trustee to 
     transfer to a special trustee all of the equity securities in 
     the bridge company that is the recipient of a transfer under 
     section 1405 to hold in trust for the sole benefit of the 
     estate subject to satisfaction of the special trustee's fees, 
     costs, and expenses. The trust of which the special trustee 
     is the trustee shall be a newly formed trust governed by a 
     trust agreement approved by the court as in the best 
     interests of the estate, and shall exist for the sole purpose 
     of holding and administering, and shall be permitted to 
     dispose of, the equity securities of the bridge company in 
     accordance with the trust agreement.
       ``(2) Appointment of special trustee.--
       ``(A) In general.--A special trustee shall be qualified and 
     independent and shall be appointed by the court.
       ``(B) Proposal by trustee.--In connection with the hearing 
     to approve a transfer under section 1405, the trustee may 
     propose to the court a person to serve as special trustee, if 
     the trustee confirms to the court that the Board has been 
     consulted regarding the identity of the proposed special 
     trustee and advises the court of the results of such 
     consultation.
       ``(b) Trust Agreement.--The trust agreement governing a 
     trust formed under subsection (a)(1) shall provide--
       ``(1) for the payment of the fees, costs, expenses, and 
     indemnities of the special trustee from the assets of the 
     debtor's estate;
       ``(2) that the special trustee provide--
       ``(A) quarterly reporting to the estate, which shall be 
     filed with the court; and
       ``(B) information about the bridge company reasonably 
     requested by a party in interest to prepare a disclosure 
     statement for a plan providing for distribution of any 
     securities of the bridge company if such information is 
     necessary to prepare such disclosure statement;
       ``(3) that for as long as the equity securities of the 
     bridge company are held by the trust, the special trustee 
     shall file a notice with the court in connection with--
       ``(A) any change in a director or senior officer of the 
     bridge company;
       ``(B) any modification to the governing documents of the 
     bridge company; or
       ``(C) any material corporate action of the bridge company, 
     including--
       ``(i) recapitalization;
       ``(ii) a material borrowing;
       ``(iii) termination of an intercompany debt or guarantee;
       ``(iv) a transfer of a substantial portion of the assets of 
     the bridge company; or
       ``(v) the issuance or sale of any securities of the bridge 
     company;
       ``(4) that any sale of any equity securities of the bridge 
     company shall not be consummated until the special trustee 
     consults with the Federal Deposit Insurance Corporation and 
     the Board regarding such sale and discloses the results of 
     such consultation with the court;
       ``(5) that, subject to reserves for payments permitted 
     under paragraph (1) provided for in the trust agreement, the 
     proceeds of the sale of any equity securities of the bridge 
     company by the special trustee be held in trust for the 
     benefit of or transferred to the estate;
       ``(6) the process and guidelines for the replacement of the 
     special trustee; and
       ``(7) that the property held in trust by the special 
     trustee is subject to distribution in accordance with 
     subsection (c).
       ``(c) Distribution of Assets Held in Trust.--
       ``(1) In general.--The special trustee shall distribute the 
     assets held in trust--
       ``(A) if the court confirms a plan in the case, in 
     accordance with the plan on the effective date of the plan; 
     or
       ``(B) if the case is converted to a case under chapter 7 
     under section 1410.
       ``(2) Termination.--As soon as practicable after a final 
     distribution under paragraph (1), the office of the special 
     trustee shall terminate, except as may be necessary to wind 
     up and conclude the business and financial affairs of the 
     trust.
       ``(d) Applicability.--After a transfer to the special 
     trustee under this section, the special trustee shall be 
     subject only to applicable nonbankruptcy law, and the actions 
     and conduct of the special trustee shall no longer be subject 
     to approval by the court in the case under this chapter.

     ``Sec. 1407. Automatic stay; assumption

       ``(a) Automatic Stay.--
       ``(1) In general.--A petition filed under section 1403 
     operates as a stay, applicable to all entities, of the 
     acceleration, termination, or modification of any debt, 
     contract, lease, or agreement of the kind described in 
     paragraph (2), or of any right or obligation under any such 
     debt, contract, lease, or agreement, solely because of--
       ``(A) a default by the debtor under any such debt, 
     contract, lease, or agreement; or
       ``(B) a provision in such debt, contract, lease, or 
     agreement, or in applicable nonbankruptcy law, that is 
     conditioned on--
       ``(i) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(ii) the commencement of a case under this title 
     concerning the debtor;
       ``(iii) the appointment of or taking possession by a 
     trustee in a case under this title concerning the debtor or 
     by a custodian before the commencement of the case; or
       ``(iv) a credit rating agency rating, or absence or 
     withdrawal of a credit rating agency rating of--

       ``(I) the debtor at any time after the commencement of the 
     case;
       ``(II) an affiliate during the 48 hours after the 
     commencement of the case;
       ``(III) the bridge company while the trustee or the special 
     trustee is a direct or indirect beneficial holder of more 
     than 50 percent of the equity securities of--

       ``(aa) the bridge company; or
       ``(bb) an affiliate, if all of the direct or indirect 
     interests in the affiliate that are property of the estate 
     are transferred under section 1406; or

       ``(IV) an affiliate while the trustee or the special 
     trustee is a direct or indirect beneficial holder of more 
     than 50 percent of the equity securities of--

       ``(aa) the bridge company; or
       ``(bb) the affiliate, if all of the direct or indirect 
     interests in the affiliate that are property of the estate 
     are transferred under section 1405.
       ``(2) Debt, contract, lease, or agreement.--A debt, 
     contract, lease, or agreement described in this paragraph--
       ``(A) is--
       ``(i) any debt, executory contract, or unexpired lease of 
     the debtor;
       ``(ii) any agreement under which the debtor issued or is 
     obligated for debt;
       ``(iii) any debt, executory contract, or unexpired lease of 
     an affiliate; and
       ``(iv) any agreement under which an affiliate issued or is 
     obligated for debt; and
       ``(B) does not include capital structure debt or qualified 
     financial contracts.
       ``(3) Termination of stay.--A stay under this subsection 
     terminates--
       ``(A) as to the debtor, upon the earliest of--
       ``(i) 48 hours after the commencement of the case;
       ``(ii) assumption of the debt, contract, lease, or 
     agreement by the bridge company under an order authorizing a 
     transfer under section 1405;
       ``(iii) a final order of the court denying the request for 
     a transfer of the debt, contract, lease, or agreement under 
     section 1405; or
       ``(iv) the time the case is dismissed; and
       ``(B) as to an affiliate, upon the earliest of--
       ``(i) 48 hours after the commencement of the case, if the 
     court has not ordered a transfer under section 1405;
       ``(ii) the entry of an order authorizing a transfer under 
     section 1405 in which the direct or indirect interests in the 
     affiliate that are property of the estate are not transferred 
     under section 1405;
       ``(iii) a final order of the court denying the request for 
     a transfer under section 1405; or
       ``(iv) the time the case is dismissed.
       ``(4) Applicability.--Sections (d), (e), (f), and (g) of 
     section 362 apply to a stay under this subsection.

[[Page S5463]]

       ``(b) Assumption by Bridge Company.--A debt, executory 
     contract, unexpired lease of the debtor, or any other 
     agreement described in subsection (a)(2), may be assumed by a 
     bridge company in a transfer under section 1405 
     notwithstanding any provision in an agreement or in 
     applicable nonbankruptcy law that--
       ``(1) prohibits, restricts, or conditions the assignment of 
     the debt, contract, lease, or agreement; or
       ``(2) accelerates, terminates, or modifies, or permits a 
     party other than the debtor to accelerate, terminate, or 
     modify, the debt, contract, lease, or agreement on account 
     of--
       ``(A) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(B) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(c) No Acceleration, Termination, or Modification of 
     Agreements of Debtor.--
       ``(1) In general.--A debt, contract, lease, or agreement of 
     the kind described in subsection (a)(2) may not be 
     accelerated, terminated, or modified, and any right or 
     obligation under such debt, contract, lease, or agreement may 
     not be accelerated, terminated, or modified, as to the bridge 
     company solely because of a provision in the debt, contract, 
     lease, or agreement or in applicable nonbankruptcy law--
       ``(A) of the kind described in subsection (a)(1)(B) as 
     applied to the debtor;
       ``(B) that prohibits, restricts, or conditions the 
     assignment of the debt, contract, lease, or agreement; or
       ``(C) that accelerates, terminates, or modifies, or permits 
     a party other than the debtor to accelerate, terminate, or 
     modify, the debt, contract, lease or agreement, on account 
     of--
       ``(i) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(ii) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(2) Default.--If there has been a default by the debtor 
     under a provision other than the kind described in paragraph 
     (1) in a debt, contract, lease, or agreement of the kind 
     described in subsection (a)(2), the bridge company may assume 
     such debt, contract, lease, or agreement only if the bridge 
     company--
       ``(A) cures, or provides adequate assurance in connection 
     with a transfer under section 1405 that the bridge company 
     will promptly cure, the default;
       ``(B) compensates, or provides adequate assurance in 
     connection with a transfer under section 1405 that the bridge 
     company will promptly compensate, a party other than the 
     debtor to the debt, contract, lease, or agreement, for any 
     actual pecuniary loss to the party resulting from the 
     default; and
       ``(C) provides adequate assurance in connection with a 
     transfer under section 1405 of future performance under the 
     debt, contract, lease, or agreement, as determined by the 
     court under section 1405(c)(4).

     ``Sec. 1408. Treatment of qualified financial contracts and 
       affiliate contracts

       ``(a) In General.--Notwithstanding sections 362(b)(6), 
     362(b)(7), 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 
     560, and 561, a petition filed under section 1403 operates as 
     a stay, during the period specified in section 1407(a)(3)(A), 
     applicable to all entities, of the exercise of a contractual 
     right--
       ``(1) to cause the acceleration, termination, modification, 
     or liquidation of a qualified financial contract of the 
     debtor or an affiliate;
       ``(2) to offset or net out any termination value, payment 
     amount, or other transfer obligation arising under or in 
     connection with a qualified financial contract of the debtor 
     or an affiliate; or
       ``(3) under any security agreement or arrangement or other 
     credit enhancement forming a part of or related to a 
     qualified financial contract of the debtor or an affiliate.
       ``(b) Payment and Delivery Obligations.--
       ``(1) In general.--During the period specified in section 
     1407(a)(3)(A), the trustee or the affiliate shall perform all 
     payment and delivery obligations under a qualified financial 
     contract of the debtor or the affiliate, as the case may be, 
     that become due after the commencement of the case. The stay 
     provided under subsection (a) terminates as to a qualified 
     financial contract of the debtor or an affiliate immediately 
     upon the failure of the trustee or the affiliate, as the case 
     may be, to perform any such obligation during such period.
       ``(2) Failure to perform.--Any failure by a counterparty to 
     any qualified financial contract of the debtor or any 
     affiliate to perform any payment or delivery obligation under 
     such qualified financial contract, including during the 
     pendency of the stay provided under subsection (a), shall 
     constitute a breach of such qualified financial contract by 
     the counterparty.
       ``(c) Assignment or Assumption.--Notwithstanding any 
     provision of subsection 1407(b) or applicable nonbankruptcy 
     law, subject to the court's approval, a qualified financial 
     contract between an entity and the debtor may be assigned to 
     or assumed by the bridge company in a transfer under section 
     1405 only if--
       ``(1) all qualified financial contracts between the entity 
     and the debtor are assigned to and assumed by the bridge 
     company in the transfer under section 1405;
       ``(2) all claims of the entity against the debtor under any 
     qualified financial contract between the entity and the 
     debtor (other than any claim that, under the terms of the 
     qualified financial contract, is subordinated to the claims 
     of general unsecured creditors) are assigned to and assumed 
     by the bridge company;
       ``(3) all claims of the debtor against the entity under any 
     qualified financial contract between the entity and the 
     debtor are assigned to and assumed by the bridge company; and
       ``(4) all property securing or any other credit enhancement 
     furnished by the debtor for any qualified financial contract 
     described in paragraph (1) or any claim described in 
     paragraph (2) or (3) under any qualified financial contract 
     between the entity and the debtor is assigned to and assumed 
     by the bridge company.
       ``(d) No Acceleration, Termination, or Modification of 
     Qualified Financial Contracts.--Notwithstanding any provision 
     of a qualified financial contract or of applicable 
     nonbankruptcy law, a qualified financial contract of the 
     debtor that is assumed by or assigned to the bridge company 
     in a transfer under section 1405 may not be accelerated, 
     terminated, modified, or liquidated after the entry of the 
     order approving a transfer under section 1405, and any right 
     or obligation under the qualified financial contract may not 
     be accelerated, terminated, or modified, after the entry of 
     the order approving a transfer under section 1405 solely 
     because of a provision of the kind described in section 
     1407(c)(1), other than a provision of the kind described in 
     section 1407(b) that occurs after property of the estate no 
     longer includes a direct beneficial interest or an indirect 
     beneficial interest through the special trustee, in more than 
     50 percent of the equity securities of the bridge company.
       ``(e) No Acceleration, Termination, Modification, or 
     Liquidation of Agreements of Affiliates.--Notwithstanding any 
     provision in any agreement or in applicable nonbankruptcy 
     law, an agreement (including an executory contract, unexpired 
     lease, qualified financial contract, or an agreement under 
     which the affiliate issued or is obligated for debt) of an 
     affiliate that is assumed by or assigned to the bridge 
     company in a transfer under section 1405, and any right or 
     obligation under such agreement, may not be accelerated, 
     terminated, modified, or liquidated after the entry of the 
     order approving a transfer under section 1405 solely because 
     of a provision of the kind described in section 1407(c)(1), 
     other than a provision of the kind described in section 
     1407(b) that occurs after the bridge company is no longer a 
     direct or indirect beneficial holder of more than 50 percent 
     of the equity securities of the affiliate at any time after 
     the commencement of the case if--
       ``(1) all direct or indirect interests in the affiliate 
     that are property of the estate are transferred under section 
     1405 to the bridge company within the period specified in 
     subsection (a);
       ``(2) the bridge company assumes--
       ``(A) any guarantee or other credit enhancement issued by 
     the debtor relating to the agreement of the affiliate; and
       ``(B) any right of setoff, netting arrangement, or debt of 
     the debtor that directly arises out of or directly relates to 
     the guarantee or credit enhancement; and
       ``(3) any property of the estate that directly serves as 
     collateral for the guarantee or credit enhancement is 
     transferred to the bridge company.

     ``Sec. 1409. Licenses, permits, and registrations

       ``(a) In General.--Notwithstanding any otherwise applicable 
     nonbankruptcy law, if a request is made under section 1405 
     for a transfer of property of the estate, any Federal, State, 
     or local license, permit, or registration that the debtor or 
     an affiliate had immediately before the commencement of the 
     case and that is proposed to be transferred under section 
     1405 may not be accelerated, terminated, or modified at any 
     time after the request solely on account of--
       ``(1) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(2) the commencement of a case under this title 
     concerning the debtor;
       ``(3) the appointment of or taking possession by a trustee 
     in a case under this title concerning the debtor or by a 
     custodian before the commencement of the case; or
       ``(4) a transfer under section 1405.
       ``(b) Validity of Certain Licenses, Permits, and 
     Registrations.--Notwithstanding any otherwise applicable 
     nonbankruptcy law, any Federal, State, or local license, 
     permit, or registration that the debtor had immediately 
     before the commencement of the case that is included in a 
     transfer under section 1405 shall be valid and all rights and 
     obligations thereunder shall vest in the bridge company.

     ``Sec. 1410. Conversion to chapter 7

       ``Notwithstanding section 109(b), a court may convert a 
     case under this chapter to a case under chapter 7 if--
       ``(1) a transfer described in section 1405 has taken place;
       ``(2) the court has ordered the appointment of a special 
     trustee under section 1406; and
       ``(3) the court finds, after providing notice and 
     conducting a hearing, that the conversion of the case is in 
     the best interests of the creditors and the estate.

     ``Sec. 1411. Exemption from securities laws

       ``For purposes of section 1145, a security of the bridge 
     company shall be deemed to be a security of a successor to 
     the debtor under a plan if the court approves the disclosure 
     statement for the plan as providing adequate information (as 
     defined in section 1125(a)) about the bridge company and the 
     security.

[[Page S5464]]

     ``Sec. 1412. Inapplicability of certain avoiding powers

       ``A transfer made or an obligation incurred by the debtor 
     to an affiliate prior to or after the commencement of the 
     case, including any obligation released by the debtor or the 
     estate to or for the benefit of an affiliate, in 
     contemplation of or in connection with a transfer under 
     section 1405, is not avoidable under section 544, 547, 
     548(a)(1)(B), or 549, or under any similar nonbankruptcy law.

     ``Sec. 1413. Consideration of financial stability

       ``The court may consider the effect that any decision in 
     connection with this chapter may have on financial stability 
     in the United States.''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for title 11, United States Code, is amended by 
     inserting after the item relating to chapter 13 the 
     following:

``14.  Liquidation, reorganization, or recapitalization of a covered 
    financial corporation..................................1401.''.....

     SEC. 4. AMENDMENTS TO TITLE 28, UNITED STATES CODE.

       (a) Amendment to Chapter 13.--Chapter 13 of title 28, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 298. Judge for a case under chapter 14 of title 11

       ``(a) Notwithstanding section 295, the Chief Justice of the 
     United States shall designate not fewer than 10 bankruptcy 
     judges to be available to hear a case under chapter 14 of 
     title 11. Bankruptcy judges may request to be considered by 
     the Chief Justice of the United States for such designation.
       ``(b)(1) Notwithstanding section 155, a case under chapter 
     14 of title 11 shall be heard under section 157 by a 
     bankruptcy judge designated under subsection (a), who shall 
     be assigned to hear such case by the chief judge of the court 
     of appeals for the circuit embracing the district in which 
     the case is pending.
       ``(2) If the bankruptcy judge assigned to hear a case under 
     paragraph (1) is not assigned to the district in which the 
     case is pending, the bankruptcy judge shall be temporarily 
     assigned to the district. To the greatest extent practicable, 
     the approvals required under section 155(a) shall be 
     obtained.
       ``(c) A case under chapter 14 of title 11, and all 
     proceedings in the case, shall take place in the district in 
     which the case is pending.''.
       (b) Amendment to Section 1334.--Section 1334 of title 28, 
     United States Code, is amended by adding at the end the 
     following:
       ``(f) This section does not grant jurisdiction to the 
     district court after a transfer pursuant to an order under 
     section 1405 of title 11 of any proceeding related to a 
     special trustee appointed, or to a bridge company formed to 
     accomplish a transfer, under section 1405 of title 11.''.
       (c) Technical and Conforming Amendment.--The table of 
     sections for chapter 13 of title 28, United States Code, is 
     amended by adding at the end the following:

``298. Judge for a case under chapter 14 of title 11.''.

     SEC. 5. REPEAL OF TITLE II OF DODD-FRANK WALL STREET REFORM 
                   AND CONSUMER PROTECTION ACT.

       (a) In General.--Title II of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (Public Law 111-203) is 
     repealed and any Federal law amended by such title shall, on 
     and after the date of enactment of this Act, be effective as 
     if title II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act had not been enacted.
       (b) Conforming Amendments.--
       (1) Dodd-frank wall street reform and consumer protection 
     act.--The Dodd-Frank Wall Street Reform and Consumer 
     Protection Act is amended--
       (A) in the table of contents, by striking all items 
     relating to title II;
       (B) in section 165(d)(6), by striking ``, a receiver 
     appointed under title II,'';
       (C) in section 716(g), by striking ``or a covered financial 
     company under title II'';
       (D) in section 1105(e)(5), by striking ``amount of any 
     securities issued under that chapter 31 for such purpose 
     shall be treated in the same manner as securities issued 
     under section 208(n)(5)(E)'' and inserting ``issuances of 
     such securities under that chapter 31 for such purpose shall 
     by treated as public debt transactions of the United States, 
     and the proceeds from the sale of any obligations acquired by 
     the Secretary under this paragraph shall be deposited into 
     the Treasury of the United States as miscellaneous 
     receipts''; and
       (E) in section 1106(c)(2)(A)--
       (i) in clause (i), by inserting ``, other than a covered 
     financial corporation (as defined in section 101(9A) of title 
     11, United States Code),'' after ``company''; and
       (ii) in clause (ii), by inserting ``, other than a covered 
     financial corporation (as defined in section 101(9A) of title 
     11, United States Code),'' after ``company''.
       (2) Federal deposit insurance act.--Section 10(b)(3)(A) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)(A)) 
     is amended by striking ``, or of such nonbank financial 
     company supervised by the Board of Governors or bank holding 
     company described in section 165(a) of the Financial 
     Stability Act of 2010, for the purpose of implementing its 
     authority to provide for orderly liquidation of any such 
     company under title II of that Act''.
       (3) Federal reserve act.--Section 13(3) of the Federal 
     Reserve Act (12 U.S.C. 343(3)) is amended--
       (A) in subparagraph (B)--
       (i) in clause (ii), by striking ``, resolution under title 
     II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, or'' and inserting ``or is subject to 
     resolution under''; and
       (ii) in clause (iii), by striking ``, resolution under 
     title II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, or'' and inserting ``or resolution under''; 
     and
       (B) by striking subparagraph (E).

     SEC. 6. LIMITATION ON ADVANCES FROM A FEDERAL RESERVE BANK.

       Section 10B(b) of the Federal Reserve Act (12 U.S.C. 
     347b(b)) is amended--
       (1) by redesignating paragraph (5) as paragraph (6);
       (2) by inserting after paragraph (4) the following:
       ``(5) Limitation on advances to covered financial 
     corporations and bridge companies.--Notwithstanding paragraph 
     (2), a Federal Reserve bank may not make advances to any 
     covered financial corporation that is a debtor in a pending 
     case under chapter 14 of title 11, United States Code, or to 
     a bridge company, for the purpose of providing debtor-in-
     possession financing pursuant to section 364 of such 
     title.''; and
       (3) in paragraph (6), as redesignated--
       (A) by redesignating subparagraphs (B) through (E) as 
     subparagraphs (D) through (G), respectively; and
       (B) by inserting after subparagraph (A) the following:
       ``(B) Bridge company.--The term `bridge company' has the 
     same meaning as in section 1402(2) of title 11, United States 
     Code.
       ``(C) Covered financial corporation.--The term `covered 
     financial corporation' has the same meaning as in section 
     101(9A) of title 11, United States Code.''.

     SEC. 7. LIMITATION ON USE OF FEDERAL FUNDS.

       Notwithstanding any other provision of law, no funds 
     appropriated to the Federal Government may be paid to a 
     covered financial corporation (as defined in section 101(9A) 
     of title 11, United States Code, as amended by section 2(a) 
     of this Act), or to a creditor of any covered financial 
     corporation, to satisfy a claim in a case under chapter 14 of 
     title 11, United States Code.
                                 ______
                                 
      By Mr. CORNYN (for himself and Mr. Toomey):
  S. 1841. A bill to amend title 11, United States Code, to provide for 
the liquidation, reorganization, or recapitalization of a covered 
financial corporation, and for other purposes; to the Committee on the 
Judiciary.
  Mr. CORNYN. 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. 1841

       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 ``Taxpayer Protection and 
     Responsible Resolution Act''.

     SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FINANCIAL 
                   CORPORATIONS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting the following after paragraph 
     (9):
       ``(9A) The term `covered financial corporation' means any 
     corporation incorporated or organized under any Federal or 
     State law, other than a stockbroker, a commodity broker, or 
     an entity of the kind specified in paragraph (2) or (3) of 
     section 109(b), that is--
       ``(A) a bank holding company, as defined in section 2(a) of 
     the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); or
       ``(B) a corporation that exists for the primary purpose of 
     owning, controlling, and financing subsidiaries that are 
     predominantly engaged in activities that the Board of 
     Governors of the Federal Reserve System has determined are 
     financial in nature or incidental to such financial activity 
     for purposes of section 4(k) of the Bank Holding Company Act 
     of 1956 (12 U.S.C. 1843(k)).''.
       (b) Applicability of Chapters.--Section 103 of title 11, 
     United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``section 1161'' and inserting ``sections 
     1161 and 1401''; and
       (B) by striking ``or 13'' and inserting ``13, or 14'';
       (2) in subsection (g), by inserting ``subsection (m) and'' 
     before ``section''; and
       (3) by adding at the end the following:
       ``(l) Chapter 14 of this title applies only in a case under 
     such chapter.
       ``(m) Except as otherwise provided in chapter 14 of this 
     title, chapter 11 of this title applies in a case under 
     chapter 14 of this title.''.
       (c) Who May Be a Debtor.--Section 109 of title 11, United 
     States Code, is amended--
       (1) in subsection (d)--
       (A) by striking ``and'';
       (B) by striking ``or a'' and inserting ``or''; and
       (C) by inserting ``, or a covered financial corporation'' 
     after ``Federal Deposit Insurance Corporation Improvement Act 
     of 1991''; and
       (2) by adding at the end the following:
       ``(i) Only a covered financial corporation may be a debtor 
     in a case under chapter 14.''.

[[Page S5465]]

       (d) Distribution of Property of the Estate.--Section 
     726(a)(1) of title 11, United States Code, is amended by 
     inserting ``in payment of any unpaid fees, costs, and 
     expenses of a special trustee appointed under section 1406, 
     and then'' after ``first,''.
       (e) Confirmation of Plan.--Section 1129(a) of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(17) In a case under chapter 14, all payable fees, costs, 
     and expenses of the special trustee have been paid or the 
     plan provides for the payment of all such fees, costs, and 
     expenses, as of the effective date of the plan.
       ``(18) In a case under chapter 14, confirmation of the plan 
     is not likely to cause serious adverse effects on financial 
     stability in the United States.''.
       (f) Qualification of Trustee.--Section 322(b)(2) of title 
     11, United States Code, is amended by striking ``The'' and 
     inserting ``In cases under chapter 14, the United States 
     trustee shall recommend to the court, and in all other cases, 
     the''.

     SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                   COVERED FINANCIAL CORPORATION.

       (a) In General.--Title 11, United States Code, is amended 
     by inserting before chapter 15 the following:

  ``CHAPTER 14--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

``Sec.
``1401. Inapplicability of other sections.
``1402. Definitions for this chapter.
``1403. Commencement of a case concerning a covered financial 
              corporation.
``1404. Regulators.
``1405. Special transfer of property of the estate.
``1406. Special trustee.
``1407. Automatic stay; assumed debt.
``1408. Treatment of qualified financial contracts and affiliate 
              contracts.
``1409. Licenses, permits, and registrations.
``1410. Conversion to chapter 7.
``1411. Exemption from securities laws.
``1412. Inapplicability of certain avoiding powers.
``1413. Consideration of financial stability.

     ``Sec. 1401. Inapplicability of other sections

       ``Sections 303 and 321(c) do not apply in a case under this 
     chapter.

     ``Sec. 1402. Definitions for this chapter

       ``In this chapter, the following definitions shall apply:
       ``(1) The term `Board' means the Board of Governors of the 
     Federal Reserve System.
       ``(2) The term `bridge company' means a newly formed 
     corporation to which property of the estate may be 
     transferred under section 1405(a) and the equity securities 
     of which may be transferred to a special trustee under 
     section 1406(a).
       ``(3) The term `capital structure debt' means all unsecured 
     debt of the debtor for borrowed money for which the debtor is 
     the primary obligor, other than a qualified financial 
     contract and other than debt secured by a lien on property of 
     the estate that is to be transferred to a bridge company 
     pursuant to an order of the court under section 1405(a).
       ``(4) The term `contractual right' means a contractual 
     right of a kind described in section 555, 556, 559, 560, or 
     561.
       ``(5) The term `qualified financial contract' means any 
     contract of a kind defined in paragraph (25), (38A), (47), or 
     (53B) of section 101, section 741(7), or paragraph (4), (5), 
     (11), or (13) of section 761.
       ``(6) The term `special trustee' means a trustee appointed 
     under section 1406(a)(2)(A).
       ``(7) The term `trustee' means a person who is--
       ``(A) appointed or elected under section 1104; and
       ``(B) qualified under section 322 to serve as trustee in 
     the case or, in the absence of such person, the debtor in 
     possession.

     ``Sec. 1403. Commencement of a case concerning a covered 
       financial corporation

       ``(a) In General.--A case under this chapter may be 
     commenced by the filing of a petition with the court by an 
     entity that may be a debtor under section 301 if the entity 
     states to the best of its knowledge, under penalty of 
     perjury, in the petition that the entity is a covered 
     financial corporation.
       ``(b) Order for Relief.--The commencement of a case under 
     subsection (a) constitutes an order for relief under this 
     chapter.
       ``(c) Liability.--The members of the board of directors (or 
     body performing similar functions) of a covered financial 
     corporation shall not be liable to shareholders, creditors or 
     other parties in interest for--
       ``(1) a good faith filing of a case under this chapter; or
       ``(2) for any reasonable action taken, before or after the 
     date on which a case is commenced under this chapter, in good 
     faith in contemplation of or in connection with such a filing 
     or a transfer under section 1405 or section 1406.
       ``(d) Notice to Court.--Counsel to the entity that may be a 
     debtor shall provide, to the greatest extent practicable, 
     sufficient confidential notice to the Director of the 
     Administrative Office of the United States Courts and the 
     chief judge of the court of appeals embracing the district in 
     which the case is pending regarding the potential 
     commencement of a case under this chapter without disclosing 
     the identity of the potential debtor to allow the Director 
     and chief judge to designate and ensure the ready 
     availability of 1 of the bankruptcy judges designated under 
     section 298(b)(1) of title 28 to be available to preside over 
     the case.

     ``Sec. 1404. Regulators

       ``The Board, the Securities Exchange Commission, the 
     Comptroller of the Currency, and the Federal Deposit 
     Insurance Corporation may raise and may appear and be heard 
     on any issue in any case or proceeding under this chapter.

     ``Sec. 1405. Special transfer of property of the estate

       ``(a) In General.--
       ``(1) Transfer.--On request of the trustee, and after 
     notice and hearing not less than 24 hours after the order for 
     relief, the court may order a transfer under this section of 
     property of the estate, and the assignment of debt, executory 
     contracts, unexpired leases, qualified financial contracts, 
     and agreements of the debtor, to a bridge company. Except as 
     provided under this section, the provisions of sections 363 
     and 365 shall apply to a transfer and assignment under this 
     section.
       ``(2) Property of estate.--Upon the entry of an order 
     approving a transfer under this section, any property 
     transferred, and any debt, executory contract, unexpired 
     leases, qualified financial contract, or agreement assigned 
     under such order shall no longer be property of the estate.
       ``(b) Notice.--Unless the court orders otherwise, notice of 
     a request for an order under subsection (a) shall consist of 
     electronic or telephonic notice of not less than 24 hours 
     to--
       ``(1) the holders of the 20 largest secured claims against 
     the debtor;
       ``(2) the holders of the 20 largest unsecured claims 
     against the debtor;
       ``(3) counterparties to any debt, executory contract, 
     unexpired lease, qualified financial contract, or agreement 
     requested to be transferred under this section;
       ``(4) the Board;
       ``(5) the Federal Deposit Insurance Corporation;
       ``(6) the Secretary of the Treasury;
       ``(7) the Comptroller of the Currency;
       ``(8) the Securities and Exchange Commission;
       ``(9) the United States trustee or bankruptcy 
     administrator; and
       ``(10) each primary financial regulatory agency (as defined 
     in section 2(12) of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (12 U.S.C. 5301(12))) with respect to 
     any affiliate the equity securities of which are proposed to 
     be transferred under this section.
       ``(c) Determination.--The court may not order a transfer 
     under this section unless the court determines, based upon a 
     preponderance of the evidence, that--
       ``(1) the transfer under this section is necessary to 
     prevent serious adverse effects on financial stability in the 
     United States;
       ``(2) the transfer does not provide for the assumption of 
     any capital structure debt by the bridge company;
       ``(3) the transfer does not provide for the transfer to the 
     bridge company of any property of the estate that is subject 
     to a lien securing a debt, executory contract, unexpired 
     lease, or agreement of the debtor unless--
       ``(A)(i) the bridge company assumes such debt, executory 
     contract, unexpired lease, or agreement, including any claims 
     arising in respect thereof that would not be allowed secured 
     claims under section 506(a)(1), and after giving effect to 
     such transfer, such property remains subject to the lien 
     securing such debt, executory contract, unexpired lease, or 
     agreement; and
       ``(ii) the court has determined that assumption of such 
     debt, executory contract, unexpired lease, or agreement by 
     the bridge company is in the best interest of the estate; or
       ``(B) such property is being transferred to the bridge 
     company in accordance with the provisions of section 363;
       ``(4) the transfer does not provide for the assumption by 
     the bridge company of any debt, executory contract, unexpired 
     lease, or agreement of the debtor secured by a lien on 
     property in which the estate has an interest unless the 
     transfer provides for such property to be transferred to the 
     bridge company in accordance with paragraph (3)(A) of this 
     subsection;
       ``(5) the transfer does not provide for the transfer of the 
     equity of the debtor;
       ``(6) the debtor has demonstrated that the bridge company 
     is not likely to fail to meet the obligations of any debt, 
     executory contract, qualified financial contract, unexpired 
     lease, or other agreement assumed and assigned to the bridge 
     company;
       ``(7) the transfer provides for the transfer to a special 
     trustee all of the equity securities in the bridge company 
     and appointment of a special trustee in accordance with 
     section 1406;
       ``(8) after giving effect to the transfer, adequate 
     provision has been made for the payment of the fees, costs, 
     and expenses of the estate and special trustee; and
       ``(9) the bridge company will have governing documents, and 
     initial directors and senior officers, that are in the best 
     interest of creditors and the estate.
       ``(d) Requirements Before Transfer.--Immediately before a 
     transfer under this section, the bridge company that is the 
     recipient of the transfer shall--
       ``(1) not have any property, debts, executory contracts, 
     unexpired leases, qualified financial contracts, or 
     agreements, other than any property acquired or debts, 
     executory contracts, unexpired leases, qualified financial 
     contracts, or agreements assumed when

[[Page S5466]]

     acting as a transferee of a transfer under this section; and
       ``(2) have equity securities that are property of the 
     estate, which may be sold or distributed in accordance with 
     this title.

     ``Sec. 1406. Special trustee

       ``(a) In General.--
       ``(1) Transfer to special trustee.--An order approving a 
     transfer under section 1405 shall require the trustee to 
     transfer to a special trustee all of the equity securities in 
     the bridge company that is the recipient of a transfer under 
     section 1405 to hold in trust for the sole benefit of the 
     estate subject to satisfaction of the special trustee's fees, 
     costs, and expenses. The trust of which the special trustee 
     is the trustee shall be a newly formed trust governed by a 
     trust agreement approved by the court as in the best 
     interests of the estate, and shall exist for the sole purpose 
     of holding and administering, and shall be permitted to 
     dispose of, the equity securities of the bridge company in 
     accordance with the trust agreement.
       ``(2) Appointment of special trustee.--
       ``(A) In general.--A special trustee shall be qualified and 
     independent and shall be appointed by the court.
       ``(B) Proposal by trustee.--In connection with the hearing 
     to approve a transfer under section 1405, the trustee may 
     propose to the court a person to serve as special trustee, if 
     the trustee confirms to the court that the Board has been 
     consulted regarding the identity of the proposed special 
     trustee and advises the court of the results of such 
     consultation.
       ``(b) Trust Agreement.--The trust agreement governing a 
     trust formed under subsection (a)(1) shall provide--
       ``(1) for the payment of the fees, costs, expenses, and 
     indemnities of the special trustee from the assets of the 
     debtor's estate;
       ``(2) that the special trustee provide--
       ``(A) quarterly reporting to the estate, which shall be 
     filed with the court; and
       ``(B) information about the bridge company reasonably 
     requested by a party in interest to prepare a disclosure 
     statement for a plan providing for distribution of any 
     securities of the bridge company if such information is 
     necessary to prepare such disclosure statement;
       ``(3) that for as long as the equity securities of the 
     bridge company are held by the trust, the special trustee 
     shall file a notice with the court in connection with--
       ``(A) any change in a director or senior officer of the 
     bridge company;
       ``(B) any modification to the governing documents of the 
     bridge company; or
       ``(C) any material corporate action of the bridge company, 
     including--
       ``(i) recapitalization;
       ``(ii) a material borrowing;
       ``(iii) termination of an intercompany debt or guarantee;
       ``(iv) a transfer of a substantial portion of the assets of 
     the bridge company; or
       ``(v) the issuance or sale of any securities of the bridge 
     company;
       ``(4) that any sale of any equity securities of the bridge 
     company shall not be consummated until the special trustee 
     consults with the Federal Deposit Insurance Corporation and 
     the Board regarding such sale and discloses the results of 
     such consultation with the court;
       ``(5) that, subject to reserves for payments permitted 
     under paragraph (1) provided for in the trust agreement, the 
     proceeds of the sale of any equity securities of the bridge 
     company by the special trustee be held in trust for the 
     benefit of or transferred to the estate;
       ``(6) the process and guidelines for the replacement of the 
     special trustee; and
       ``(7) that the property held in trust by the special 
     trustee is subject to distribution in accordance with 
     subsection (c).
       ``(c) Distribution of Assets Held in Trust.--
       ``(1) In general.--The special trustee shall distribute the 
     assets held in trust--
       ``(A) if the court confirms a plan in the case, in 
     accordance with the plan on the effective date of the plan; 
     or
       ``(B) if the case is converted to a case under chapter 7 
     under section 1410.
       ``(2) Termination.--As soon as practicable after a final 
     distribution under paragraph (1), the office of the special 
     trustee shall terminate, except as may be necessary to wind 
     up and conclude the business and financial affairs of the 
     trust.
       ``(d) Applicability.--After a transfer to the special 
     trustee under this section, the special trustee shall be 
     subject only to applicable nonbankruptcy law, and the actions 
     and conduct of the special trustee shall no longer be subject 
     to approval by the court in the case under this chapter.

     ``Sec. 1407. Automatic stay; assumption

       ``(a) Automatic Stay.--
       ``(1) In general.--A petition filed under section 1403 
     operates as a stay, applicable to all entities, of the 
     acceleration, termination, or modification of any debt, 
     contract, lease, or agreement of the kind described in 
     paragraph (2), or of any right or obligation under any such 
     debt, contract, lease, or agreement, solely because of--
       ``(A) a default by the debtor under any such debt, 
     contract, lease, or agreement; or
       ``(B) a provision in such debt, contract, lease, or 
     agreement, or in applicable nonbankruptcy law, that is 
     conditioned on--
       ``(i) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(ii) the commencement of a case under this title 
     concerning the debtor;
       ``(iii) the appointment of or taking possession by a 
     trustee in a case under this title concerning the debtor or 
     by a custodian before the commencement of the case; or
       ``(iv) a credit rating agency rating, or absence or 
     withdrawal of a credit rating agency rating of--

       ``(I) the debtor at any time after the commencement of the 
     case;
       ``(II) an affiliate during the 48 hours after the 
     commencement of the case;
       ``(III) the bridge company while the trustee or the special 
     trustee is a direct or indirect beneficial holder of more 
     than 50 percent of the equity securities of--

       ``(aa) the bridge company; or
       ``(bb) an affiliate, if all of the direct or indirect 
     interests in the affiliate that are property of the estate 
     are transferred under section 1406; or

       ``(IV) an affiliate while the trustee or the special 
     trustee is a direct or indirect beneficial holder of more 
     than 50 percent of the equity securities of--

       ``(aa) the bridge company; or
       ``(bb) the affiliate, if all of the direct or indirect 
     interests in the affiliate that are property of the estate 
     are transferred under section 1405.
       ``(2) Debt, contract, lease, or agreement.--A debt, 
     contract, lease, or agreement described in this paragraph--
       ``(A) is--
       ``(i) any debt, executory contract, or unexpired lease of 
     the debtor;
       ``(ii) any agreement under which the debtor issued or is 
     obligated for debt;
       ``(iii) any debt, executory contract, or unexpired lease of 
     an affiliate; and
       ``(iv) any agreement under which an affiliate issued or is 
     obligated for debt; and
       ``(B) does not include capital structure debt or qualified 
     financial contracts.
       ``(3) Termination of stay.--A stay under this subsection 
     terminates--
       ``(A) as to the debtor, upon the earliest of--
       ``(i) 48 hours after the commencement of the case;
       ``(ii) assumption of the debt, contract, lease, or 
     agreement by the bridge company under an order authorizing a 
     transfer under section 1405;
       ``(iii) a final order of the court denying the request for 
     a transfer of the debt, contract, lease, or agreement under 
     section 1405; or
       ``(iv) the time the case is dismissed; and
       ``(B) as to an affiliate, upon the earliest of--
       ``(i) 48 hours after the commencement of the case, if the 
     court has not ordered a transfer under section 1405;
       ``(ii) the entry of an order authorizing a transfer under 
     section 1405 in which the direct or indirect interests in the 
     affiliate that are property of the estate are not transferred 
     under section 1405;
       ``(iii) a final order of the court denying the request for 
     a transfer under section 1405; or
       ``(iv) the time the case is dismissed.
       ``(4) Applicability.--Sections (d), (e), (f), and (g) of 
     section 362 apply to a stay under this subsection.
       ``(b) Assumption by Bridge Company.--A debt, executory 
     contract, unexpired lease of the debtor, or any other 
     agreement described in subsection (a)(2), may be assumed by a 
     bridge company in a transfer under section 1405 
     notwithstanding any provision in an agreement or in 
     applicable nonbankruptcy law that--
       ``(1) prohibits, restricts, or conditions the assignment of 
     the debt, contract, lease, or agreement; or
       ``(2) accelerates, terminates, or modifies, or permits a 
     party other than the debtor to accelerate, terminate, or 
     modify, the debt, contract, lease, or agreement on account 
     of--
       ``(A) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(B) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(c) No Acceleration, Termination, or Modification of 
     Agreements of Debtor.--
       ``(1) In general.--A debt, contract, lease, or agreement of 
     the kind described in subsection (a)(2) may not be 
     accelerated, terminated, or modified, and any right or 
     obligation under such debt, contract, lease, or agreement may 
     not be accelerated, terminated, or modified, as to the bridge 
     company solely because of a provision in the debt, contract, 
     lease, or agreement or in applicable nonbankruptcy law--
       ``(A) of the kind described in subsection (a)(1)(B) as 
     applied to the debtor;
       ``(B) that prohibits, restricts, or conditions the 
     assignment of the debt, contract, lease, or agreement; or
       ``(C) that accelerates, terminates, or modifies, or permits 
     a party other than the debtor to accelerate, terminate, or 
     modify, the debt, contract, lease or agreement, on account 
     of--
       ``(i) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(ii) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(2) Default.--If there has been a default by the debtor 
     under a provision other than the kind described in paragraph 
     (1) in a debt, contract, lease, or agreement of the kind 
     described in subsection (a)(2), the bridge company may assume 
     such debt, contract, lease, or agreement only if the bridge 
     company--
       ``(A) cures, or provides adequate assurance in connection 
     with a transfer under section 1405 that the bridge company 
     will promptly cure, the default;
       ``(B) compensates, or provides adequate assurance in 
     connection with a transfer under section 1405 that the bridge 
     company will

[[Page S5467]]

     promptly compensate, a party other than the debtor to the 
     debt, contract, lease, or agreement, for any actual pecuniary 
     loss to the party resulting from the default; and
       ``(C) provides adequate assurance in connection with a 
     transfer under section 1405 of future performance under the 
     debt, contract, lease, or agreement, as determined by the 
     court under section 1405(c)(4).

     ``Sec. 1408. Treatment of qualified financial contracts and 
       affiliate contracts

       ``(a) In General.--Notwithstanding sections 362(b)(6), 
     362(b)(7), 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 
     560, and 561, a petition filed under section 1403 operates as 
     a stay, during the period specified in section 1407(a)(3)(A), 
     applicable to all entities, of the exercise of a contractual 
     right--
       ``(1) to cause the acceleration, termination, modification, 
     or liquidation of a qualified financial contract of the 
     debtor or an affiliate;
       ``(2) to offset or net out any termination value, payment 
     amount, or other transfer obligation arising under or in 
     connection with a qualified financial contract of the debtor 
     or an affiliate; or
       ``(3) under any security agreement or arrangement or other 
     credit enhancement forming a part of or related to a 
     qualified financial contract of the debtor or an affiliate.
       ``(b) Payment and Delivery Obligations.--
       ``(1) In general.--During the period specified in section 
     1407(a)(3)(A), the trustee or the affiliate shall perform all 
     payment and delivery obligations under a qualified financial 
     contract of the debtor or the affiliate, as the case may be, 
     that become due after the commencement of the case. The stay 
     provided under subsection (a) terminates as to a qualified 
     financial contract of the debtor or an affiliate immediately 
     upon the failure of the trustee or the affiliate, as the case 
     may be, to perform any such obligation during such period.
       ``(2) Failure to perform.--Any failure by a counterparty to 
     any qualified financial contract of the debtor or any 
     affiliate to perform any payment or delivery obligation under 
     such qualified financial contract, including during the 
     pendency of the stay provided under subsection (a), shall 
     constitute a breach of such qualified financial contract by 
     the counterparty.
       ``(c) Assignment or Assumption.--Notwithstanding any 
     provision of subsection 1407(b) or applicable nonbankruptcy 
     law, subject to the court's approval, a qualified financial 
     contract between an entity and the debtor may be assigned to 
     or assumed by the bridge company in a transfer under section 
     1405 only if--
       ``(1) all qualified financial contracts between the entity 
     and the debtor are assigned to and assumed by the bridge 
     company in the transfer under section 1405;
       ``(2) all claims of the entity against the debtor under any 
     qualified financial contract between the entity and the 
     debtor (other than any claim that, under the terms of the 
     qualified financial contract, is subordinated to the claims 
     of general unsecured creditors) are assigned to and assumed 
     by the bridge company;
       ``(3) all claims of the debtor against the entity under any 
     qualified financial contract between the entity and the 
     debtor are assigned to and assumed by the bridge company; and
       ``(4) all property securing or any other credit enhancement 
     furnished by the debtor for any qualified financial contract 
     described in paragraph (1) or any claim described in 
     paragraph (2) or (3) under any qualified financial contract 
     between the entity and the debtor is assigned to and assumed 
     by the bridge company.
       ``(d) No Acceleration, Termination, or Modification of 
     Qualified Financial Contracts.--Notwithstanding any provision 
     of a qualified financial contract or of applicable 
     nonbankruptcy law, a qualified financial contract of the 
     debtor that is assumed by or assigned to the bridge company 
     in a transfer under section 1405 may not be accelerated, 
     terminated, modified, or liquidated after the entry of the 
     order approving a transfer under section 1405, and any right 
     or obligation under the qualified financial contract may not 
     be accelerated, terminated, or modified, after the entry of 
     the order approving a transfer under section 1405 solely 
     because of a provision of the kind described in section 
     1407(c)(1), other than a provision of the kind described in 
     section 1407(b) that occurs after property of the estate no 
     longer includes a direct beneficial interest or an indirect 
     beneficial interest through the special trustee, in more than 
     50 percent of the equity securities of the bridge company.
       ``(e) No Acceleration, Termination, Modification, or 
     Liquidation of Agreements of Affiliates.--Notwithstanding any 
     provision in any agreement or in applicable nonbankruptcy 
     law, an agreement (including an executory contract, unexpired 
     lease, qualified financial contract, or an agreement under 
     which the affiliate issued or is obligated for debt) of an 
     affiliate that is assumed by or assigned to the bridge 
     company in a transfer under section 1405, and any right or 
     obligation under such agreement, may not be accelerated, 
     terminated, modified, or liquidated after the entry of the 
     order approving a transfer under section 1405 solely because 
     of a provision of the kind described in section 1407(c)(1), 
     other than a provision of the kind described in section 
     1407(b) that occurs after the bridge company is no longer a 
     direct or indirect beneficial holder of more than 50 percent 
     of the equity securities of the affiliate at any time after 
     the commencement of the case if--
       ``(1) all direct or indirect interests in the affiliate 
     that are property of the estate are transferred under section 
     1405 to the bridge company within the period specified in 
     subsection (a);
       ``(2) the bridge company assumes--
       ``(A) any guarantee or other credit enhancement issued by 
     the debtor relating to the agreement of the affiliate; and
       ``(B) any right of setoff, netting arrangement, or debt of 
     the debtor that directly arises out of or directly relates to 
     the guarantee or credit enhancement; and
       ``(3) any property of the estate that directly serves as 
     collateral for the guarantee or credit enhancement is 
     transferred to the bridge company.

     ``Sec. 1409. Licenses, permits, and registrations

       ``(a) In General.--Notwithstanding any otherwise applicable 
     nonbankruptcy law, if a request is made under section 1405 
     for a transfer of property of the estate, any Federal, State, 
     or local license, permit, or registration that the debtor or 
     an affiliate had immediately before the commencement of the 
     case and that is proposed to be transferred under section 
     1405 may not be accelerated, terminated, or modified at any 
     time after the request solely on account of--
       ``(1) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(2) the commencement of a case under this title 
     concerning the debtor;
       ``(3) the appointment of or taking possession by a trustee 
     in a case under this title concerning the debtor or by a 
     custodian before the commencement of the case; or
       ``(4) a transfer under section 1405.
       ``(b) Validity of Certain Licenses, Permits, and 
     Registrations.--Notwithstanding any otherwise applicable 
     nonbankruptcy law, any Federal, State, or local license, 
     permit, or registration that the debtor had immediately 
     before the commencement of the case that is included in a 
     transfer under section 1405 shall be valid and all rights and 
     obligations thereunder shall vest in the bridge company.

     ``Sec. 1410. Conversion to chapter 7

       ``Notwithstanding section 109(b), a court may convert a 
     case under this chapter to a case under chapter 7 if--
       ``(1) a transfer described in section 1405 has taken place;
       ``(2) the court has ordered the appointment of a special 
     trustee under section 1406; and
       ``(3) the court finds, after providing notice and 
     conducting a hearing, that the conversion of the case is in 
     the best interests of the creditors and the estate.

     ``Sec. 1411. Exemption from securities laws

       ``For purposes of section 1145, a security of the bridge 
     company shall be deemed to be a security of a successor to 
     the debtor under a plan if the court approves the disclosure 
     statement for the plan as providing adequate information (as 
     defined in section 1125(a)) about the bridge company and the 
     security.

     ``Sec. 1412. Inapplicability of certain avoiding powers

       ``A transfer made or an obligation incurred by the debtor 
     to an affiliate prior to or after the commencement of the 
     case, including any obligation released by the debtor or the 
     estate to or for the benefit of an affiliate, in 
     contemplation of or in connection with a transfer under 
     section 1405, is not avoidable under section 544, 547, 
     548(a)(1)(B), or 549, or under any similar nonbankruptcy law.

     ``Sec. 1413. Consideration of financial stability

       ``The court may consider the effect that any decision in 
     connection with this chapter may have on financial stability 
     in the United States.''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for title 11, United States Code, is amended by 
     inserting after the item relating to chapter 13 the 
     following:

``14.  Liquidation, reorganization, or recapitalization of a covered 
    financial corporation..................................1401.''.....

     SEC. 4. AMENDMENTS TO TITLE 28, UNITED STATES CODE.

       (a) Amendment to Chapter 13.--Chapter 13 of title 28, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 298. Judge for a case under chapter 14 of title 11

       ``(a) Notwithstanding section 295, the Chief Justice of the 
     United States shall designate not fewer than 10 bankruptcy 
     judges to be available to hear a case under chapter 14 of 
     title 11. Bankruptcy judges may request to be considered by 
     the Chief Justice of the United States for such designation.
       ``(b)(1) Notwithstanding section 155, a case under chapter 
     14 of title 11 shall be heard under section 157 by a 
     bankruptcy judge designated under subsection (a), who shall 
     be assigned to hear such case by the chief judge of the court 
     of appeals for the circuit embracing the district in which 
     the case is pending.
       ``(2) If the bankruptcy judge assigned to hear a case under 
     paragraph (1) is not assigned to the district in which the 
     case is pending, the bankruptcy judge shall be temporarily 
     assigned to the district. To the greatest extent practicable, 
     the approvals required under section 155(a) shall be 
     obtained.
       ``(c) A case under chapter 14 of title 11, and all 
     proceedings in the case, shall take place in the district in 
     which the case is pending.''.
       (b) Amendment to Section 1334.--Section 1334 of title 28, 
     United States Code, is amended by adding at the end the 
     following:

[[Page S5468]]

       ``(f) This section does not grant jurisdiction to the 
     district court after a transfer pursuant to an order under 
     section 1405 of title 11 of any proceeding related to a 
     special trustee appointed, or to a bridge company formed to 
     accomplish a transfer, under section 1405 of title 11.''.
       (c) Technical and Conforming Amendment.--The table of 
     sections for chapter 13 of title 28, United States Code, is 
     amended by adding at the end the following:

``298. Judge for a case under chapter 14 of title 11.''.

     SEC. 5. LIMITATION ON USE OF FEDERAL FUNDS.

       Notwithstanding any other provision of law, no funds 
     appropriated to the Federal Government may be paid to a 
     covered financial corporation (as defined in section 101(9A) 
     of title 11, United States Code, as amended by section 2(a) 
     of this Act), or to a creditor of any covered financial 
     corporation, to satisfy a claim in a case under chapter 14 of 
     title 11, United States Code.

                          ____________________