[House Report 108-724]
[From the U.S. Government Publishing Office]



108th Congress                                            Rept. 108-724
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 3

======================================================================



 
                9/11 RECOMMENDATIONS IMPLEMENTATION ACT

                                _______
                                

                October 4, 2004.--Ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                         [To accompany H.R. 10]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 10) to provide for reform of the intelligence 
community, terrorism prevention and prosecution, border 
security, and international cooperation and coordination, and 
for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................    49
Background and Need for Legislation..............................    50
Hearings.........................................................    52
Committee Consideration..........................................    52
Committee Votes..................................................    52
Committee Oversight Findings.....................................    56
Performance Goals and Objectives.................................    56
New Budget Authority, Entitlement Authority, and Tax Expenditures    56
Committee and Congressional Budget Act Cost Estimates............    56
Federal Mandates Statement.......................................    56
Advisory Committee Statement.....................................    57
Constitutional Authority Statement...............................    57
Applicability to Legislative Branch..............................    57
Section-by-Section Analysis of the Legislation...................    57
Changes in Existing Law Made by the Bill, as Reported............    87
Dissenting Views.................................................    89

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``9/11 Recommendations Implementation 
Act''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

             TITLE I--REFORM OF THE INTELLIGENCE COMMUNITY

Sec. 1001. Short title.

      Subtitle A--Establishment of National Intelligence Director

Sec. 1011. Reorganization and improvement of management of intelligence 
community.
Sec. 1012. Revised definition of national intelligence.
Sec. 1013. Joint procedures for operational coordination between 
Department of Defense and Central Intelligence Agency.
Sec. 1014. Role of National Intelligence Director in appointment of 
certain officials responsible for intelligence-related activities.
Sec. 1015. Initial appointment of the National Intelligence Director.
Sec. 1016. Executive schedule matters.

   Subtitle B--National Counterterrorism Center and Civil Liberties 
                              Protections

Sec. 1021. National Counterterrorism Center.
Sec. 1022. Civil Liberties Protection Officer.

            Subtitle C--Joint Intelligence Community Council

Sec. 1031. Joint Intelligence Community Council.

         Subtitle D--Improvement of Human Intelligence (HUMINT)

Sec. 1041. Human intelligence as an increasingly critical component of 
the intelligence community.
Sec. 1042. Improvement of human intelligence capacity.

  Subtitle E--Improvement of Education for the Intelligence Community

Sec. 1051. Modification of obligated service requirements under 
National Security Education Program.
Sec. 1052. Improvements to the National Flagship Language Initiative.
Sec. 1053. Establishment of scholarship program for English language 
studies for heritage community citizens of the United States within the 
National Security Education Program.
Sec. 1054. Sense of Congress with respect to language and education for 
the intelligence community; reports.
Sec. 1055. Advancement of foreign languages critical to the 
intelligence community.
Sec. 1056. Pilot project for Civilian Linguist Reserve Corps.
Sec. 1057. Codification of establishment of the National Virtual 
Translation Center.
Sec. 1058. Report on recruitment and retention of qualified instructors 
of the Defense Language Institute.

     Subtitle F--Additional Improvements of Intelligence Activities

Sec. 1061. Permanent extension of Central Intelligence Agency Voluntary 
Separation Incentive Program.
Sec. 1062. National Security Agency Emerging Technologies Panel.

              Subtitle G--Conforming and Other Amendments

Sec. 1071. Conforming amendments relating to roles of National 
Intelligence Director and Director of the Central Intelligence Agency.
Sec. 1072. Other conforming amendments
Sec. 1073. Elements of intelligence community under National Security 
Act of 1947.
Sec. 1074. Redesignation of National Foreign Intelligence Program as 
National Intelligence Program. 
Sec. 1075. Repeal of superseded authorities.
Sec. 1076. Clerical amendments to National Security Act of 1947.
Sec. 1077. Conforming amendments relating to prohibiting dual service 
of the Director of the Central Intelligence Agency.
Sec. 1078. Access to Inspector General protections.
Sec. 1079. General references.
Sec. 1080. Application of other laws.

   Subtitle H--Transfer, Termination, Transition and Other Provisions

Sec. 1091. Transfer of community management staff.
Sec. 1092. Transfer of terrorist threat integration center.
Sec. 1093. Termination of positions of Assistant Directors of Central 
Intelligence.
Sec. 1094. Implementation plan.
Sec. 1095. Transitional authorities.
Sec. 1096. Effective dates.

               Subtitle I--Grand Jury Information Sharing

Sec. 1101. Grand jury information sharing.

                       Subtitle J--Other Matters

Sec. 1111. Interoperable law enforcement and intelligence data system.
Sec. 1112. Improvement of intelligence capabilities of the Federal 
Bureau of Investigation.

             TITLE II--TERRORISM PREVENTION AND PROSECUTION

     Subtitle A--Individual Terrorists as Agents of Foreign Powers

Sec. 2001. Individual terrorists as agents of foreign powers.

       Subtitle B--Stop Terrorist and Military Hoaxes Act of 2004

Sec. 2021. Short title.
Sec. 2022. Hoaxes and recovery costs.
Sec. 2023. Obstruction of justice and false statements in terrorism 
cases.
Sec. 2024. Clarification of definition.

 Subtitle C--Material Support to Terrorism Prohibition Enhancement Act 
                                of 2004

Sec. 2041. Short title.
Sec. 2042. Receiving military-type training from a foreign terrorist 
organization.
Sec. 2043. Providing material support to terrorism.
Sec. 2044. Financing of terrorism.

Subtitle D--Weapons of Mass Destruction Prohibition Improvement Act of 
                                  2004

Sec. 2051. Short title.
Sec. 2052. Weapons of mass destruction.
Sec. 2053. Participation in nuclear and weapons of mass destruction 
threats to the United States.

          Subtitle E--Money Laundering and Terrorist Financing

   Chapter 1--Funding to Combat Financial Crimes Including Terrorist 
                               Financing

Sec. 2101. Additional authorization for FinCEN.
Sec. 2102. Money laundering and financial crimes strategy 
reauthorization.

   Chapter 2--Enforcement Tools to Combat Financial Crimes Including 
                          Terrorist Financing

   Subchapter A--Money laundering abatement and financial antiterrorism 
                          technical corrections

Sec. 2111. Short title.
Sec. 2112. Technical corrections to Public Law 107-56.
Sec. 2113. Technical corrections to other provisions of law.
Sec. 2114. Repeal of review.
Sec. 2115. Effective date.

                Subchapter B--Additional enforcement tools

Sec. 2121. Bureau of Engraving and Printing security printing.
Sec. 2122. Conduct in aid of counterfeiting.
Sec. 2123. Reporting of cross-border transmittal of funds.
Sec. 2124. Enhanced effectiveness of examinations, including anti-money 
laundering programs.

       Subchapter C--Unlawful Internet Gambling Funding Prohibition

Sec. 2131. Short title.
Sec. 2132. Findings.
Sec. 2133. Policies and procedures required to prevent payments for 
unlawful internet gambling.
Sec. 2134. Definitions.
Sec. 2135. Common sense rule of construction.

             Subtitle F--Criminal History Background Checks

Sec. 2141. Short title.
Sec. 2142. Criminal history information checks.

Subtitle G--Protection of United States Aviation System from Terrorist 
                                Attacks

Sec. 2171. Provision for the use of biometric or other technology.
Sec. 2172. Transportation security strategic planning.
Sec. 2173. Next generation airline passenger prescreening.
Sec. 2174. Deployment and use of explosive detection equipment at 
airport screening checkpoints.
Sec. 2175. Pilot program to evaluate use of blast-resistant cargo and 
baggage containers.
Sec. 2176. Air cargo screening technology.
Sec. 2177. Airport checkpoint screening explosive detection.
Sec. 2178. Next generation security checkpoint.
Sec. 2179. Penalty for failure to secure cockpit door.
Sec. 2180. Federal air marshal anonymity.
Sec. 2181. Federal law enforcement in-flight counterterrorism training.
Sec. 2182. Federal flight deck officer weapon carriage pilot program.
Sec. 2183. Registered traveler program.
Sec. 2184. Wireless communication.
Sec. 2185. Secondary flight deck barriers.
Sec. 2186. Extension.
Sec. 2187. Perimeter Security.
Sec. 2188. Definitions.

                       Subtitle H--Other Matters

Sec. 2191. Grand jury information sharing.
Sec. 2192. Interoperable law enforcement and intelligence data system.
Sec. 2193. Improvement of intelligence capabilities of the Federal 
Bureau of Investigation.

            TITLE III--BORDER SECURITY AND TERRORIST TRAVEL

        Subtitle A--Immigration Reform in the National Interest

                     Chapter 1--General Provisions

Sec. 3001. Eliminating the ``Western Hemisphere'' exception for 
citizens.
Sec. 3002. Modification of waiver authority with respect to 
documentation requirements for nationals of foreign contiguous 
territories and adjacent islands.
Sec. 3003. Increase in full-time border patrol agents.
Sec. 3004. Increase in full-time immigration and customs enforcement 
investigators.
Sec. 3005. Alien identification standards.
Sec. 3006. Expedited removal.
Sec. 3007. Preventing terrorists from obtaining asylum.
Sec. 3008. Revocation of visas and other travel documentation.
Sec. 3009. Judicial review of orders of removal.

    Chapter 2--Deportation of Terrorists and Supporters of Terrorism

Sec. 3031. Expanded inapplicability of restriction on removal.
Sec. 3032. Exception to restriction on removal for terrorists and 
criminals.
Sec. 3033. Additional removal authorities.

                Subtitle B--Identity Management Security

    Chapter 1--Improved Security for Drivers' Licenses and Personal 
                          Identification Cards

Sec. 3051. Definitions.
Sec. 3052. Minimum document requirements and issuance standards for 
Federal recognition.
Sec. 3053. Linking of databases.
Sec. 3054. Trafficking in authentication features for use in false 
identification documents.
Sec. 3055. Grants to States.
Sec. 3056. Authority.

          Chapter 2--Improved Security for Birth Certificates

Sec. 3061. Definitions.
Sec. 3062. Applicability of minimum standards to local governments.
Sec. 3063. Minimum standards for Federal recognition.
Sec. 3064. Establishment of electronic birth and death registration 
systems.
Sec. 3065. Electronic verification of vital events.
Sec. 3066. Grants to States.
Sec. 3067. Authority.

Chapter 3--Measures To Enhance Privacy and Integrity of Social Security 
                            Account Numbers

Sec. 3071. Prohibition of the display of social security account 
numbers on driver's licenses or motor vehicle registrations.
Sec. 3072. Independent verification of birth records provided in 
support of applications for social security account numbers.
Sec. 3073. Enumeration at birth.
Sec. 3074. Study relating to use of photographic identification in 
connection with applications for benefits, social security account 
numbers, and social security cards.
Sec. 3075. Restrictions on issuance of multiple replacement social 
security cards.
Sec. 3076. Study relating to modification of the social security 
account numbering system to show work authorization status.

                 Subtitle C--Targeting Terrorist Travel

Sec. 3081. Studies on machine-readable passports and travel history 
database.
Sec. 3082. Expanded preinspection at foreign airports.
Sec. 3083. Immigration security initiative.
Sec. 3084. Responsibilities and functions of consular officers.
Sec. 3085. Increase in penalties for fraud and related activity.
Sec. 3086. Criminal penalty for false claim to citizenship.
Sec. 3087. Antiterrorism assistance training of the Department of 
State.
Sec. 3088. International agreements to track and curtail terrorist 
travel through the use of fraudulently obtained documents.
Sec. 3089. International standards for translation of names into the 
Roman alphabet for international travel documents and name-based 
watchlist systems.
Sec. 3090. Biometric entry and exit data system.
Sec. 3091. Enhanced responsibilities of the Coordinator for 
Counterterrorism.
Sec. 3092. Establishment of Office of Visa and Passport Security in the 
Department of State.

                      Subtitle D--Terrorist Travel

Sec. 3101. Information sharing and coordination.
Sec. 3102. Terrorist travel program.
Sec. 3103. Training program.
Sec. 3104. Technology acquisition and dissemination plan.

               Subtitle E--Maritime Security Requirements

Sec. 3111. Deadlines for implementation of maritime security 
requirements.

          TITLE IV--INTERNATIONAL COOPERATION AND COORDINATION

         Subtitle A--Attack Terrorists and Their Organizations

        Chapter 1--Provisions Relating to Terrorist Sanctuaries

Sec. 4001. United States policy on terrorist sanctuaries.
Sec. 4002. Reports on terrorist sanctuaries.
Sec. 4003. Amendments to existing law to include terrorist sanctuaries.

                      Chapter 2--Other Provisions

Sec. 4011. Appointments to fill vacancies in Arms Control and 
Nonproliferation Advisory Board.
Sec. 4012. Review of United States policy on proliferation of weapons 
of mass destruction and control of strategic weapons.
Sec. 4013. International agreements to interdict acts of international 
terrorism.
Sec. 4014. Effective Coalition approach toward detention and humane 
treatment of captured terrorists.
Sec. 4015. Sense of Congress and report regarding counter-drug efforts 
in Afghanistan.

         Subtitle B--Prevent the Continued Growth of Terrorism

               Chapter 1--United States Public Diplomacy

Sec. 4021. Annual review and assessment of public diplomacy strategy.
Sec. 4022. Public diplomacy training.
Sec. 4023. Promoting direct exchanges with Muslim countries.
Sec. 4024. Public diplomacy required for promotion in Foreign Service.

            Chapter 2--United States Multilateral Diplomacy

Sec. 4031. Purpose.
Sec. 4032. Support and expansion of democracy caucus.
Sec. 4033. Leadership and membership of international organizations.
Sec. 4034. Increased training in multilateral diplomacy.
Sec. 4035. Implementation and establishment of Office on Multilateral 
Negotiations.

                      Chapter 3--Other Provisions

Sec. 4041. Pilot program to provide grants to American-sponsored 
schools in predominantly Muslim countries to provide scholarships.
Sec. 4042. Enhancing free and independent media.
Sec. 4043. Combating biased or false foreign media coverage of the 
United States.
Sec. 4044. Report on broadcast outreach strategy.
Sec. 4045. Office relocation.
Sec. 4046. Strengthening the Community of Democracies for Muslim 
countries.

  Subtitle C--Reform of Designation of Foreign Terrorist Organizations

Sec. 4051. Designation of foreign terrorist organizations.
Sec. 4052. Inclusion in annual Department of State country reports on 
terrorism of information on terrorist groups that seek weapons of mass 
destruction and groups that have been designated as foreign terrorist 
organizations.

     Subtitle D--Afghanistan Freedom Support Act Amendments of 2004

Sec. 4061. Short title.
Sec. 4062. Coordination of assistance for Afghanistan.
Sec. 4063. General provisions relating to the Afghanistan Freedom 
Support Act of 2002.
Sec. 4064. Rule of law and related issues.
Sec. 4065. Monitoring of assistance.
Sec. 4066. United States policy to support disarmament of private 
militias and to support expansion of international peacekeeping and 
security operations in Afghanistan.
Sec. 4067. Efforts to expand international peacekeeping and security 
operations in Afghanistan.
Sec. 4068. Provisions relating to counternarcotics efforts in 
Afghanistan.
Sec. 4069. Additional amendments to the Afghanistan Freedom Support Act 
of 2002.
Sec. 4070. Repeal.

      Subtitle E--Provisions Relating to Saudi Arabia and Pakistan

Sec. 4081. New United States strategy for relationship with Saudi 
Arabia.
Sec. 4082. United States commitment to the future of Pakistan.
Sec. 4083. Extension of Pakistan waivers.

                    Subtitle F--Oversight Provisions

Sec. 4091. Case-Zablocki Act requirements.

  Subtitle G--Additional Protections of United States Aviation System 
                         from Terrorist Attacks

Sec. 4101. International agreements to allow maximum deployment of 
Federal flight deck officers.
Sec. 4102. Federal air marshal training.
Sec. 4103. Man-portable air defense systems (MANPADS).

Subtitle H--Improving International Standards and Cooperation to Fight 
                          Terrorist Financing

Sec. 4111. Sense of the Congress regarding success in multilateral 
organizations.
Sec. 4112. Expanded reporting and testimony requirements for the 
Secretary of the Treasury.
Sec. 4113. Coordination of United States Government efforts.
Sec. 4114. Definitions.

                   TITLE V--GOVERNMENT RESTRUCTURING

      Subtitle A--Faster and Smarter Funding for First Responders

Sec. 5001. Short title.
Sec. 5002. Findings.
Sec. 5003. Faster and smarter funding for first responders.
Sec. 5004. Modification of homeland security advisory system.
Sec. 5005. Coordination of industry efforts.
Sec. 5006. Superseded provision.
Sec. 5007. Sense of Congress regarding interoperable communications.
Sec. 5008. Sense of Congress regarding citizen corps councils.
Sec. 5009. Study regarding nationwide emergency notification system.
Sec. 5010. Required coordination.

            Subtitle B--Government Reorganization Authority

Sec. 5021. Authorization of intelligence community reorganization 
plans.

   Subtitle C--Restructuring Relating to the Department of Homeland 
                  Security and Congressional Oversight

Sec. 5025. Responsibilities of Counternarcotics Office.
Sec. 5026. Use of counternarcotics enforcement activities in certain 
employee performance appraisals.
Sec. 5027. Sense of the House of Representatives on addressing homeland 
security for the American people.

            Subtitle D--Improvements to Information Security

Sec. 5031. Amendments to Clinger-Cohen provisions to enhance agency 
planning for information security needs.

             Subtitle E--Personnel Management Improvements

                 Chapter 1--Appointments Process Reform

Sec. 5041. Appointments to national security positions.
Sec. 5042. Presidential inaugural transitions.
Sec. 5043. Public financial disclosure for the intelligence community.
Sec. 5044. Reduction of positions requiring appointment with Senate 
confirmation.
Sec. 5045. Effective dates.

       Chapter 2--Federal Bureau of Investigation Revitalization

Sec. 5051. Mandatory separation age.
Sec. 5052. Retention and relocation bonuses.
Sec. 5053. Federal Bureau of Investigation Reserve Service.
Sec. 5054. Critical positions in the Federal Bureau of Investigation 
intelligence directorate.

                    Chapter 3--Management Authority

Sec. 5061. Management authority.

              Subtitle F--Security Clearance Modernization

Sec. 5071. Definitions.
Sec. 5072. Security clearance and investigative programs oversight and 
administration.
Sec. 5073. Reciprocity of security clearance and access determinations.
Sec. 5074. Establishment of national database .
Sec. 5075. Use of available technology in clearance investigations.
Sec. 5076. Reduction in length of personnel security clearance process.
Sec. 5077. Security clearances for presidential transition.
Sec. 5078. Reports.

              Subtitle G--Emergency Financial Preparedness

        Chapter 1--Emergency Preparedness for Fiscal Authorities

Sec. 5081. Delegation authority of the Secretary of the Treasury.
Sec. 5081A. Treasury support for financial services industry 
preparedness and response.

                     Chapter 2--Market Preparedness

               Subchapter A--Netting of Financial Contracts

Sec. 5082. Short title.
Sec. 5082A. Treatment of certain agreements by conservators or 
receivers of insured depository institutions.
Sec. 5082B. Authority of the FDIC and NCUAB with respect to failed and 
failing institutions.
Sec. 5082C. Amendments relating to transfers of qualified financial 
contracts.
Sec. 5082D. Amendments relating to disaffirmance or repudiation of 
qualified financial contracts.
Sec. 5082E. Clarifying amendment relating to master agreements.
Sec. 5082F. Federal Deposit Insurance Corporation Improvement Act of 
1991.
Sec. 5082G. Bankruptcy code amendments.
Sec. 5082H. Recordkeeping requirements.
Sec. 5082I. Exemptions from contemporaneous execution requirement.
Sec. 5082J. Damage measure.
Sec. 5082K. SIPC stay.
Sec. 5082L. Applicability of other sections to chapter 9.
Sec. 5082M. Effective date; application of amendments.
Sec. 5082N. Savings clause.

                Subchapter B--Emergency Securities Response

Sec. 5086. Short title.
Sec. 5087. Extension of emergency order authority of the Securities and 
Exchange Commission.
Sec. 5088. Parallel authority of the Secretary of the Treasury with 
respect to government securities.
Sec. 5089. Joint report on implementation of financial system 
resilience recommendations.
Sec. 5089A. Private sector preparedness.
Sec. 5089B. Report on public/private partnerships.

                       Subtitle H--Other Matters

                       Chapter 1--Privacy Matters

Sec. 5091. Requirement that agency rulemaking take into consideration 
impacts on individual privacy.
Sec. 5092. Chief privacy officers for agencies with law enforcement or 
anti-terrorism functions.

            Chapter 2--Mutual Aid and Litigation Management

Sec. 5101. Short title.
Sec. 5102. Mutual aid authorized.
Sec. 5103. Litigation management agreements.
Sec. 5104. Additional provisions.
Sec. 5105. Definitions.

                    Chapter 3--Miscellaneous Matters

Sec. 5131. Enhancement of public safety communications 
interoperability.
Sec. 5132. Sense of Congress regarding the incident command system.
Sec. 5133. Sense of Congress regarding United States Northern Command 
plans and strategies.

             TITLE I--REFORM OF THE INTELLIGENCE COMMUNITY

  [Title I of the Amendment in the Nature of a Substitute consists of 
title I of the bill H.R. 10, as introduced on September 24, 2004]

             TITLE II--TERRORISM PREVENTION AND PROSECUTION

  [Subtitles A through D of title II of the Amendment in the Nature of 
a Substitute consist of subtitles A through D of title II of the bill 
H.R. 10, as introduced on September 24, 2004]

          Subtitle E--Money Laundering and Terrorist Financing

   CHAPTER 1--FUNDING TO COMBAT FINANCIAL CRIMES INCLUDING TERRORIST 
                               FINANCING

SEC. 2101. ADDITIONAL AUTHORIZATION FOR FINCEN.

  Subsection (d) of section 310 of title 31, United States Code, is 
amended----
          (1) by striking ``appropriations.--There are authorized'' and 
        inserting ``Appropriations.--
          ``(1) In general.--There are authorized''; and
          (2) by adding at the end the following new paragraph:
          ``(2) Authorization for funding key technological 
        improvements in mission-critical fincen systems.--There are 
        authorized to be appropriated for fiscal year 2005 the 
        following amounts, which are authorized to remain available 
        until expended:
                  ``(A) BSA direct.--For technological improvements to 
                provide authorized law enforcement and financial 
                regulatory agencies with Web-based access to FinCEN 
                data, to fully develop and implement the highly secure 
                network required under section 362 of Public Law 107-56 
                to expedite the filing of, and reduce the filing costs 
                for, financial institution reports, including 
                suspicious activity reports, collected by FinCEN under 
                chapter 53 and related provisions of law, and enable 
                FinCEN to immediately alert financial institutions 
                about suspicious activities that warrant immediate and 
                enhanced scrutiny, and to provide and upgrade advanced 
                information-sharing technologies to materially improve 
                the Government's ability to exploit the information in 
                the FinCEN databanks, $16,500,000.
                  ``(B) Advanced analytical technologies.--To provide 
                advanced analytical tools needed to ensure that the 
                data collected by FinCEN under chapter 53 and related 
                provisions of law are utilized fully and appropriately 
                in safeguarding financial institutions and supporting 
                the war on terrorism, $5,000,000.
                  ``(C) Data networking modernization.--To improve the 
                telecommunications infrastructure to support the 
                improved capabilities of the FinCEN systems, 
                $3,000,000.
                  ``(D) Enhanced compliance capability.--To improve the 
                effectiveness of the Office of Compliance in FinCEN, 
                $3,000,000.
                  ``(E) Detection and prevention of financial crimes 
                and terrorism.--To provide development of, and training 
                in the use of, technology to detect and prevent 
                financial crimes and terrorism within and without the 
                United States, $8,000,000.''.

SEC. 2102. MONEY LAUNDERING AND FINANCIAL CRIMES STRATEGY 
                    REAUTHORIZATION.

  (a) Program.--Section 5341(a)(2) of title 31, United States Code, is 
amended by striking ``and 2003,'' and inserting ``2003, and 2005,''.
  (b) Reauthorization of Appropriations.--Section 5355 of title 31, 
United States Code, is amended by adding at the end the following:

    ``2004
                                        $15,000,000.
    ``2005
                                        $15,000,000.''.

   CHAPTER 2--ENFORCEMENT TOOLS TO COMBAT FINANCIAL CRIMES INCLUDING 
                          TERRORIST FINANCING

 Subchapter A--Money laundering abatement and financial antiterrorism 
                         technical corrections

SEC. 2111. SHORT TITLE.

  This subchapter may be cited as the ``Money Laundering Abatement and 
Financial Antiterrorism Technical Corrections Act of 2004''.

SEC. 2112. TECHNICAL CORRECTIONS TO PUBLIC LAW 107-56.

  (a) The heading of title III of Public Law 107-56 is amended to read 
as follows:

  ``TITLE III--INTERNATIONAL MONEY LAUNDERING ABATEMENT AND FINANCIAL 
                      ANTITERRORISM ACT OF 2001''.

  (b) The table of contents of Public Law 107-56 is amended by striking 
the item relating to title III and inserting the following new item:

  ``TITLE III--INTERNATIONAL MONEY LAUNDERING ABATEMENT AND FINANCIAL 
                      ANTITERRORISM ACT OF 2001''.

  (c) Section 302 of Public Law 107-56 is amended--
          (1) in subsection (a)(4), by striking the comma after 
        ``movement of criminal funds'';
          (2) in subsection (b)(7), by inserting ``or types of 
        accounts'' after ``classes of international transactions''; and
          (3) in subsection (b)(10), by striking ``subchapters II and 
        III'' and inserting ``subchapter II''.
  (d) Section 303(a) of Public Law 107-56 is amended by striking 
``Anti-Terrorist Financing Act'' and inserting ``Financial 
Antiterrorism Act''.
  (e) The heading for section 311 of Public Law 107-56 is amended by 
striking ``or international transactions'' and 
inserting ``international transactions, or types 
of accounts''.
  (f) Section 314 of Public Law 107-56 is amended--
          (1) in paragraph (1)--
                  (A) by inserting a comma after ``organizations 
                engaged in''; and
                  (B) by inserting a comma after ``credible evidence of 
                engaging in'';
          (2) in paragraph (2)(A)--
                  (A) by striking ``and'' after ``nongovernmental 
                organizations,''; and
                  (B) by inserting a comma after ``unwittingly involved 
                in such finances'';
          (3) in paragraph (3)(A)--
                  (A) by striking ``to monitor accounts of'' and 
                inserting ``monitor accounts of,''; and
                  (B) by striking the comma after ``organizations 
                identified''; and
          (4) in paragraph (3)(B), by inserting ``financial'' after 
        ``size, and nature of the''.
  (g) Section 321 of Public Law 107-56 is amended by striking 
``5312(2)'' and inserting ``5312(a)(2)''.
  (h) Section 325 of Public Law 107-56 is amended by striking ``as 
amended by section 202 of this title,'' and inserting ``as amended by 
section 352,''.
  (i) Subsections (a)(2) and (b)(2) of section 327 of Public Law 107-56 
are each amended by inserting a period after ``December 31, 2001'' and 
striking all that follows through the period at the end of each such 
subsection.
  (j) Section 356(c)(4) of Public Law 107-56 is amended by striking 
``or business or other grantor trust'' and inserting ``, business 
trust, or other grantor trust''.
  (k) Section 358(e) of Public Law 107-56 is amended--
          (1) by striking ``Section 123(a)'' and inserting ``That 
        portion of section 123(a)'';
          (2) by striking ``is amended to read'' and inserting ``that 
        precedes paragraph (1) of such section is amended to read''; 
        and
          (3) by striking ``.'.'' at the end of such section and 
        inserting ``--' ''.
  (l) Section 360 of Public Law 107-56 is amended--
          (1) in subsection (a), by inserting ``the'' after 
        ``utilization of the funds of''; and
          (2) in subsection (b), by striking ``at such institutions'' 
        and inserting ``at such institution''.
  (m) Section 362(a)(1) of Public Law 107-56 is amended by striking 
``subchapter II or III'' and inserting ``subchapter II''.
  (n) Section 365 of Public Law 107-56 is amended--
          (1) by redesignating the 2nd of the 2 subsections designated 
        as subsection (c) (relating to a clerical amendment) as 
        subsection (d); and
          (2) by redesignating subsection (f) as subsection (e).
  (o) Section 365(d) of Public Law 107-56 (as so redesignated by 
subsection (n) of this section) is amended by striking ``section 5332 
(as added by section 112 of this title)'' and inserting ``section 
5330''.

SEC. 2113. TECHNICAL CORRECTIONS TO OTHER PROVISIONS OF LAW.

  (a) Section 310(c) of title 31, United States Code, is amended by 
striking ``the Network'' each place such term appears and inserting 
``FinCEN''.
  (b) Section 5312(a)(3)(C) of title 31, United States Code, is amended 
by striking ``sections 5333 and 5316'' and inserting ``sections 5316 
and 5331''.
  (c) Section 5318(i) of title 31, United States Code, is amended--
          (1) in paragraph (3)(B), by inserting a comma after ``foreign 
        political figure'' the 2nd place such term appears; and
          (2) in the heading of paragraph (4), by striking 
        ``Definition'' and inserting ``Definitions''.
  (d) Section 5318(k)(1)(B) of title 31, United States Code, is amended 
by striking ``section 5318A(f)(1)(B)'' and inserting ``section 
5318A(e)(1)(B)''.
  (e) The heading for section 5318A of title 31, United States Code, is 
amended to read as follows:

``Sec. 5318A. Special measures for jurisdictions, financial 
                    institutions, international transactions, or types 
                    of accounts of primary money laundering concern''.

  (f) Section 5318A of title 31, United States Code, is amended--
          (1) in subsection (a)(4)(A), by striking ``, as defined in 
        section 3 of the Federal Deposit Insurance Act,'' and inserting 
        `` (as defined in section 3 of the Federal Deposit Insurance 
        Act)'';
          (2) in subsection (a)(4)(B)(iii), by striking ``or class of 
        transactions'' and inserting ``class of transactions, or type 
        of account'';
          (3) in subsection (b)(1)(A), by striking ``or class of 
        transactions to be'' and inserting ``class of transactions, or 
        type of account to be''; and
          (4) in subsection (e)(3), by inserting ``or subsection (i) or 
        (j) of section 5318'' after ``identification of individuals 
        under this section''.
  (g) Section 5324(b) of title 31, United States Code, is amended by 
striking ``5333'' each place such term appears and inserting ``5331''.
  (h) Section 5332 of title 31, United States Code, is amended--
          (1) in subsection (b)(2), by striking ``, subject to 
        subsection (d) of this section''; and
          (2) in subsection (c)(1), by striking ``, subject to 
        subsection (d) of this section,''.
  (i) The table of sections for subchapter II of chapter 53 of title 
31, United States Code, is amended by striking the item relating to 
section 5318A and inserting the following new item:

``5318A. Special measures for jurisdictions, financial institutions, 
international transactions, or types of accounts of primary money 
laundering concern.''.
  (j) Section 18(w)(3) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(w)(3)) is amended by inserting a comma after ``agent of such 
institution''.
  (k) Section 21(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1829b(a)(2)) is amended by striking ``recognizes that'' and inserting 
``recognizing that''.
  (l) Section 626(e) of the Fair Credit Reporting Act (15 U.S.C. 
1681v(e)) is amended by striking ``governmental agency'' and inserting 
``government agency''.

SEC. 2114. REPEAL OF REVIEW.

  Title III of Public Law 107-56 is amended by striking section 303 (31 
U.S.C. 5311 note).

SEC. 2115. EFFECTIVE DATE.

  The amendments made by this subchapter to Public Law 107-56, the 
United States Code, the Federal Deposit Insurance Act, and any other 
provision of law shall take effect as if such amendments had been 
included in Public Law 107-56, as of the date of the enactment of such 
Public Law, and no amendment made by such Public Law that is 
inconsistent with an amendment made by this subchapter shall be deemed 
to have taken effect.

               Subchapter B--Additional enforcement tools

SEC. 2121. BUREAU OF ENGRAVING AND PRINTING SECURITY PRINTING.

  (a) Production of Documents.--Section 5114(a) of title 31, United 
States Code (relating to engraving and printing currency and security 
documents), is amended--
          (1) by striking ``(a) The Secretary of the Treasury'' and 
        inserting:
  ``(a) Authority to Engrave and Print.--
          ``(1) In general.--The Secretary of the Treasury''; and
          (2) by adding at the end the following new paragraphs:
          ``(2) Engraving and printing for other governments.--The 
        Secretary of the Treasury may produce currency, postage stamps, 
        and other security documents for foreign governments if--
                  ``(A) the Secretary of the Treasury determines that 
                such production will not interfere with engraving and 
                printing needs of the United States; and
                  ``(B) the Secretary of State determines that such 
                production would be consistent with the foreign policy 
                of the United States.
          ``(3) Procurement guidelines.--Articles, material, and 
        supplies procured for use in the production of currency, 
        postage stamps, and other security documents for foreign 
        governments pursuant to paragraph (2) shall be treated in the 
        same manner as articles, material, and supplies procured for 
        public use within the United States for purposes of title III 
        of the Act of March 3, 1933 (41 U.S.C. 10a et seq.; commonly 
        referred to as the Buy American Act).''.
  (b) Reimbursement.--Section 5143 of title 31, United States Code 
(relating to payment for services of the Bureau of Engraving and 
Printing), is amended--
          (1) in the first sentence, by inserting ``or to a foreign 
        government under section 5114'' after ``agency'';
          (2) in the second sentence, by inserting ``and other'' after 
        ``including administrative''; and
          (3) in the last sentence, by inserting ``, and the Secretary 
        shall take such action, in coordination with the Secretary of 
        State, as may be appropriate to ensure prompt payment by a 
        foreign government of any invoice or statement of account 
        submitted by the Secretary with respect to services rendered 
        under section 5114'' before the period at the end.

SEC. 2122. CONDUCT IN AID OF COUNTERFEITING.

  (a) In General.--Section 474(a) of title 18, United States Code, is 
amended by inserting after the paragraph beginning ``Whoever has in his 
control, custody, or possession any plate'' the following:
  `` Whoever, with intent to defraud, has in his custody, control, or 
possession any material that can be used to make, alter, forge or 
counterfeit any obligations and other securities of the United States 
or any part of such securities and obligations, except under the 
authority of the Secretary of the Treasury; or''.
  (b) Foreign Obligations and Securities.--Section 481 of title 18, 
United States Code, is amended by inserting after the paragraph 
beginning ``Whoever, with intent to defraud'' the following:
  `` Whoever, with intent to defraud, has in his custody, control, or 
possession any material that can be used to make, alter, forge or 
counterfeit any obligation or other security of any foreign government, 
bank or corporation; or''.
  (c) Counterfeit Acts.--Section 470 of title 18, United States Code, 
is amended by striking ``or 474'' and inserting ``474, or 474A''.
  (d) Materials Used in Counterfeiting.--Section 474A(b) of title 18, 
United States Code, is amended by striking ``any essentially 
identical'' and inserting ``any thing or material made after or in the 
similitude of any''.

SEC. 2123. REPORTING OF CROSS-BORDER TRANSMITTAL OF FUNDS.

  Section 5318 of title 31, United States Code, is amended by adding at 
the end the following new subsection:
  ``(n) Reporting of Cross-Border Transmittal of Funds.--
          ``(1) In general.--Subject to paragraph (3), the Secretary 
        shall prescribe regulations requiring such financial 
        institutions as the Secretary determines to be appropriate to 
        report to the Financial Crimes Enforcement Network certain 
        cross-border electronic transmittals of funds relevant to 
        efforts of the Secretary against money laundering and terrorist 
        financing.
          ``(2) Form and manner of reports.--In prescribing the 
        regulations required under paragraph (1), the Secretary shall 
        determine the appropriate form, manner, content and frequency 
        of filing of the required reports.
          ``(3) Feasibility report.--Before prescribing the regulations 
        required under paragraph (1), and as soon as is practicable 
        after the date of enactment of the 9/11 Recommendations 
        Implementation Act, the Secretary shall delegate to the Bank 
        Secrecy Act Advisory Group established by the Secretary the 
        task of producing a report for the Secretary and the Congress 
        that--
                  ``(A) identifies the information in cross-border 
                electronic transmittals of funds that is relevant to 
                efforts against money laundering and terrorist 
                financing;
                  ``(B) makes recommendations regarding the appropriate 
                form, manner, content and frequency of filing of the 
                required reports; and
                  ``(C) identifies the technology necessary for the 
                Financial Crimes Enforcement Network to receive, keep, 
                exploit and disseminate information from reports of 
                cross-border electronic transmittals of funds to law 
                enforcement and other entities engaged in efforts 
                against money laundering and terrorist financing.
        The report shall be submitted to the Secretary and the Congress 
        no later than the end of the 1-year period beginning on the 
        date of enactment of such Act.
          ``(4) Regulations.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                regulations required by paragraph (1) shall be 
                prescribed in final form by the Secretary, in 
                consultation with the Board of Governors of the Federal 
                Reserve System, before the end of the 3-year period 
                beginning on the date of the enactment of the 9/11 
                Recommendations Implementation Act.
                  ``(B) Technological feasibility.--No regulations 
                shall be prescribed under this subsection before the 
                Secretary certifies to the Congress that the Financial 
                Crimes Enforcement Network has the technological 
                systems in place to effectively and efficiently 
                receive, keep, exploit, and disseminate information 
                from reports of cross-border electronic transmittals of 
                funds to law enforcement and other entities engaged in 
                efforts against money laundering and terrorist 
                financing.
          ``(5) Recordkeeping.--No financial institution required to 
        submit reports on certain cross-border electronic transmittals 
        of funds to the Financial Crimes Enforcement Network under this 
        subsection shall be subject to the recordkeeping requirement 
        under section 21(b)(3) of the Federal Deposit Insurance Act 
        with respect to such transmittals of funds.''.

SEC. 2124. ENHANCED EFFECTIVENESS OF EXAMINATIONS, INCLUDING ANTI-MONEY 
                    LAUNDERING PROGRAMS.

  (a) Depository Institutions and Depository Institution Holding 
Companies.--Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 
1820) is amended by adding at the end the following new subsection:
  ``(k) Post-Employment Limitations on Leading Bank Examiners.--
          ``(1) In general.--In the case of any person who--
                  ``(A) was an officer or employee (including any 
                special Government employee) of a Federal banking 
                agency or a Federal reserve bank; and
                  ``(B) served 2 or more months during the final 18 
                months of such person's employment with such agency or 
                entity as the examiner-in-charge (or a functionally 
                equivalent position) of a depository institution or 
                depository institution holding company with dedicated, 
                overall, continuous, and ongoing responsibility for the 
                examination (or inspection) and supervision of that 
                depository institution or depository institution 
                holding company,
        such person may not hold any office, position, or employment at 
        any such depository institution or depository institution 
        holding company, become a controlling shareholder in, a 
        consultant for, a joint-venture partner with, or an independent 
        contractor for (including as attorney, appraiser, or 
        accountant) any such depository institution or holding company, 
        or any other company that controls such depository institution, 
        or otherwise participate in the conduct of the affairs of any 
        such depository institution or holding company, during the 1-
        year period beginning on such date.
          ``(2) Violators subject to industry-wide prohibition 
        orders.--
                  ``(A) In general.--In addition to any other penalty 
                which may apply, whenever the appropriate Federal 
                banking agency determines that a person subject to 
                paragraph (1) has violated the prohibition in such 
                paragraph with respect to any insured depository 
                institution or depository institution holding company 
                or any other company, the agency shall serve a written 
                notice or order, in accordance with and subject to the 
                provisions of section 8(e)(4) for written notices under 
                paragraphs (1) or (2) of section 8(e), upon such person 
                of the agency's intention to--
                          ``(i) remove such person from office in any 
                        capacity described in paragraph (1); and
                          ``(ii) prohibit any further participation by 
                        such person, in any manner, in the conduct of 
                        the affairs of any insured depository 
                        institution or depository institution holding 
                        company for a period of 5 years.
                  ``(B) Scope of prohibition order.--Any person subject 
                to an order issued under this subsection shall be 
                subject to paragraphs (6) and (7) of section 8(e) in 
                the same manner and to the same extent as a person 
                subject to an order issued under such section and 
                subsections (i) and (j) of section 8 and any other 
                provision of this Act applicable to orders issued under 
                subsection (e) or (g) shall apply with respect to such 
                order.
          ``(3) Regulations.--
                  ``(A) In general.--The Federal banking agencies shall 
                prescribe regulations to implement this subsection, 
                including the manner for determining which persons are 
                referred to in paragraph 1(B) taking into account--
                          ``(i) the manner in which examiners and other 
                        persons who participate in the regulation, 
                        examination, or monitoring of depository 
                        institutions or depository institution holding 
                        companies are distributed among such 
                        institutions or companies by such agency, 
                        including the number of examiners and other 
                        persons assigned to each institution or holding 
                        company, the depth and structure of any group 
                        so assigned within such distribution, and the 
                        factors giving rise to that distribution;
                          ``(ii) the number of institutions or 
                        companies each such examiner or other person is 
                        so involved with in any given period of 
                        assignment;
                          ``(iii) the period of time for which each 
                        such examiner or other person is assigned to an 
                        institution or company, or a group of 
                        institutions or companies, before reassignment;
                          ``(iv) the size of the institutions or 
                        holding companies for which each such person is 
                        responsible and the amount of time devoted to 
                        each such institution or holding company during 
                        each examination period; and
                          ``(v) such other factors as the agency 
                        determines to be appropriate.
                  ``(B) Determination of applicability.--The 
                regulations prescribed or orders issued under this 
                subparagraph by an appropriate Federal banking agency 
                shall include a process, initiated by application or 
                otherwise, for determining whether any person who 
                ceases to be, or intends to cease to be, an examiner 
                of, or a person having supervisory authority over, 
                insured depository institutions or depository 
                institution holding companies for or on behalf of such 
                agency is subject to the limitations of this subsection 
                with respect to any particular insured depository 
                institution or depository institution holding company.
                  ``(C) Consultation.--The Federal banking agencies 
                shall consult with each other for the purpose of 
                assuring that the rules and regulations issued by the 
                agencies under subparagraph (A) are, to the extent 
                possible, consistent, comparable, and practicable, 
                taking into account any differences in the supervisory 
                programs utilized by the agencies for the supervision 
                of depository institutions and depository institution 
                holding companies.
          ``(4) Waiver.--A Federal banking agency may waive, on a case-
        by-case basis, the restrictions imposed by this subsection if--
                  ``(A) the head of the agency certifies in writing 
                that the grant of such waiver would be not inconsistent 
                with the public interest; and
                  ``(B) the waiver is provided in advance before the 
                person becomes affiliated in any way with the 
                depository institution or depository institution 
                holding company.
          ``(5) Definitions and rules of construction.--For purposes of 
        this subsection, the following definitions and rules shall 
        apply:
                  ``(A) Depository institution.--The term `depository 
                institution' includes an uninsured branch or agency of 
                a foreign bank if such branch or agency is located in 
                any State.
                  ``(B) Depository institution holding company.--The 
                term `depository institution holding company' includes 
                any foreign bank or company described in section 8(a) 
                of the International Banking Act of 1978.
                  ``(C) Head of the agency.--The term `the head of 
                agency' means--
                          ``(i) the Comptroller of the Currency, in the 
                        case of the Office of the Comptroller of the 
                        Currency;
                          ``(ii) the Chairman of the Board of Governors 
                        of the Federal Reserve System, in the case of 
                        the Board of Governors of the Federal Reserve 
                        System;
                          ``(iii) the Chairperson of the Board of 
                        Directors, in the case of the Federal Deposit 
                        Insurance Corporation; and
                          ``(iv) the Director, in the case of the 
                        Office of Thrift Supervision.
                  ``(D) Rule of construction for consultants and 
                independent contractors.--A person shall be deemed to 
                act as a consultant or independent contractor 
                (including as an attorney, appraiser, or accountant) 
                for a depository institution or a depository holding 
                company only if such person directly works on matters 
                for, or on behalf of, such depository institution or 
                depository holding company.
                  ``(E) Appropriate agency for certain other 
                companies.--The term `appropriate Federal banking 
                agency' means, with respect to a company that is not a 
                depository institution or depository institution 
                holding company, the Federal banking agency on whose 
                behalf the person described in paragraph (1) performed 
                the functions described in paragraph (3).''.
  (b) Credit Unions.--Section 206 of the Federal Credit Union Act (12 
U.S.C. 1786) is amended by adding at the end the following new 
subsection:
  ``(w) Post-Employment Limitations on Examiners.--
          ``(1) Regulations required.--The Board shall consult with the 
        Federal banking agencies and prescribe regulations imposing the 
        same limitations on persons employed by or on behalf of the 
        Board as leading examiners of, or functionally equivalent 
        positions with respect to, credit unions as are applicable 
        under section 10(k) of the Federal Deposit Insurance Act, 
        taking into account all the requirements and factors described 
        in paragraphs (3) and (4) of such section.
          ``(2) Enforcement.--The Board shall issue orders under 
        subsection (g) with respect to any person who violates any 
        regulation prescribed pursuant to paragraph (1) to--
                  ``(A) remove such person from office in any capacity 
                with respect to a credit union; and
                  ``(B) prohibit any further participation by such 
                person, in any manner, in the conduct of the affairs of 
                any credit union for a period of 5 years.
          ``(3) Scope of prohibition order.--Any person subject to an 
        order issued under this subsection shall be subject to 
        paragraphs (5) and (7) of subsection (g) in the same manner and 
        to the same extent as a person subject to an order issued under 
        such subsection and subsection (l) and any other provision of 
        this Act applicable to orders issued under subsection (g) shall 
        apply with respect to such order.''.
  (c) Study of Examiner Hiring and Retention.--
          (1) Study required.--The Board of Directors of the Federal 
        Deposit Insurance Corporation, the Comptroller of the Currency, 
        the Director of the Office of Thrift Supervision, the Board of 
        Governors of the Federal Reserve System, and the National 
        Credit Union Administration Board, acting through the Financial 
        Institutions Examination Council, shall conduct a study of 
        efforts and proposals for--
                  (A) retaining the services of experienced and highly 
                qualified examiners and supervisors already employed by 
                such agencies; and
                  (B) continuing to attract such examiners and 
                supervisors on an-ongoing basis to the extent necessary 
                to fulfill the agencies' obligations to maintain the 
                safety and soundness of the Nation's depository 
                institutions.
          (2) Report.--Before the end of the 1-year period beginning on 
        the date of the enactment of this Act, the agencies conducting 
        the study under paragraph (1) shall submit a report containing 
        the findings and conclusions of such agencies with respect to 
        such study, together with such recommendations for 
        administrative or legislative changes as the agencies determine 
        to be appropriate.

      Subchapter C--Unlawful Internet Gambling Funding Prohibition

SEC. 2131. SHORT TITLE.

  This subchapter may be cited as the ``Unlawful Internet Gambling 
Funding Prohibition Act''.

SEC. 2132. FINDINGS.

  The Congress finds as follows:
          (1) Internet gambling is primarily funded through personal 
        use of bank instruments, including credit cards and wire 
        transfers.
          (2) The National Gambling Impact Study Commission in 1999 
        recommended the passage of legislation to prohibit wire 
        transfers to Internet gambling sites or the banks which 
        represent them.
          (3) Internet gambling is a major cause of debt collection 
        problems for insured depository institutions and the consumer 
        credit industry.
          (4) Internet gambling conducted through offshore 
        jurisdictions has been identified by United States law 
        enforcement officials as a significant money laundering 
        vulnerability.

SEC. 2133. POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
                    UNLAWFUL INTERNET GAMBLING.

  (a) Regulations.--Before the end of the 6-month period beginning on 
the date of the enactment of this subchapter, the Federal functional 
regulators shall prescribe regulations requiring any designated payment 
system to establish policies and procedures reasonably designed to 
identify and prevent restricted transactions in any of the following 
ways:
          (1) The establishment of policies and procedures that--
                  (A) allow the payment system and any person involved 
                in the payment system to identify restricted 
                transactions by means of codes in authorization 
                messages or by other means; and
                  (B) block restricted transactions identified as a 
                result of the policies and procedures developed 
                pursuant to subparagraph (A).
          (2) The establishment of policies and procedures that prevent 
        the acceptance of the products or services of the payment 
        system in connection with a restricted transaction.
  (b) Requirements for Policies and Procedures.--In prescribing 
regulations pursuant to subsection (a), the Federal functional 
regulators shall--
          (1) identify types of policies and procedures, including 
        nonexclusive examples, which would be deemed to be ``reasonably 
        designed to identify'' and ``reasonably designed to block'' or 
        to ``prevent the acceptance of the products or services'' with 
        respect to each type of transaction, such as, should credit 
        card transactions be so designated, identifying transactions by 
        a code or codes in the authorization message and denying 
        authorization of a credit card transaction in response to an 
        authorization message;
          (2) to the extent practical, permit any participant in a 
        payment system to choose among alternative means of identifying 
        and blocking, or otherwise preventing the acceptance of the 
        products or services of the payment system or participant in 
        connection with, restricted transactions; and
          (3) consider exempting restricted transactions from any 
        requirement under subsection (a) if the Federal functional 
        regulators find that it is not reasonably practical to identify 
        and block, or otherwise prevent, such transactions.
  (c) Compliance With Payment System Policies and Procedures.--A 
creditor, credit card issuer, financial institution, operator of a 
terminal at which an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or local 
network utilized to effect a credit transaction, electronic fund 
transfer, or money transmitting service, or a participant in such 
network, meets the requirement of subsection (a) if--
          (1) such person relies on and complies with the policies and 
        procedures of a designated payment system of which it is a 
        member or participant to--
                  (A) identify and block restricted transactions; or
                  (B) otherwise prevent the acceptance of the products 
                or services of the payment system, member, or 
                participant in connection with restricted transactions; 
                and
          (2) such policies and procedures of the designated payment 
        system comply with the requirements of regulations prescribed 
        under subsection (a).
  (d) Enforcement.--
          (1) In general.--This section shall be enforced by the 
        Federal functional regulators and the Federal Trade Commission 
        under applicable law in the manner provided in section 505(a) 
        of the Gramm-Leach-Bliley Act.
          (2) Factors to be considered.--In considering any enforcement 
        action under this subsection against any payment system, or any 
        participant in a payment system that is a creditor, credit card 
        issuer, financial institution, operator of a terminal at which 
        an electronic fund transfer may be initiated, money 
        transmitting business, or international, national, regional, or 
        local network utilized to effect a credit transaction, 
        electronic fund transfer, or money transmitting service, or a 
        participant in such network, the Federal functional regulators 
        and the Federal Trade Commission shall consider the following 
        factors:
                  (A) The extent to which such person is extending 
                credit or transmitting funds knowing the transaction is 
                in connection with unlawful Internet gambling.
                  (B) The history of such person in extending credit or 
                transmitting funds knowing the transaction is in 
                connection with unlawful Internet gambling.
                  (C) The extent to which such person has established 
                and is maintaining policies and procedures in 
                compliance with regulations prescribed under this 
                subsection.
                  (D) The feasibility that any specific remedy 
                prescribed can be implemented by such person without 
                substantial deviation from normal business practice.
                  (E) The costs and burdens the specific remedy will 
                have on such person.

SEC. 2134. DEFINITIONS.

  For purposes of this subchapter, the following definitions shall 
apply:
          (1) Restricted transaction.--The term ``restricted 
        transaction'' means any transaction or transmittal to any 
        person engaged in the business of betting or wagering, in 
        connection with the participation of another person in unlawful 
        Internet gambling, of--
                  (A) credit, or the proceeds of credit, extended to or 
                on behalf of such other person (including credit 
                extended through the use of a credit card);
                  (B) an electronic fund transfer or funds transmitted 
                by or through a money transmitting business, or the 
                proceeds of an electronic fund transfer or money 
                transmitting service, from or on behalf of the other 
                person;
                  (C) any check, draft, or similar instrument which is 
                drawn by or on behalf of the other person and is drawn 
                on or payable at or through any financial institution; 
                or
                  (D) the proceeds of any other form of financial 
                transaction as the Federal functional regulators may 
                prescribe by regulation which involves a financial 
                institution as a payor or financial intermediary on 
                behalf of or for the benefit of the other person.
          (2) Bets or wagers.--The term ``bets or wagers''--
                  (A) means the staking or risking by any person of 
                something of value upon the outcome of a contest of 
                others, a sporting event, or a game subject to chance, 
                upon an agreement or understanding that the person or 
                another person will receive something of greater value 
                than the amount staked or risked in the event of a 
                certain outcome;
                  (B) includes the purchase of a chance or opportunity 
                to win a lottery or other prize (which opportunity to 
                win is predominantly subject to chance);
                  (C) includes any scheme of a type described in 
                section 3702 of title 28, United States Code;
                  (D) includes any instructions or information 
                pertaining to the establishment or movement of funds in 
                an account by the bettor or customer with the business 
                of betting or wagering; and
                  (E) does not include--
                          (i) any activity governed by the securities 
                        laws (as that term is defined in section 
                        3(a)(47) of the Securities Exchange Act of 
                        1934) for the purchase or sale of securities 
                        (as that term is defined in section 3(a)(10) of 
                        such Act);
                          (ii) any transaction conducted on or subject 
                        to the rules of a registered entity or exempt 
                        board of trade pursuant to the Commodity 
                        Exchange Act;
                          (iii) any over-the-counter derivative 
                        instrument;
                          (iv) any other transaction that--
                                  (I) is excluded or exempt from 
                                regulation under the Commodity Exchange 
                                Act; or
                                  (II) is exempt from State gaming or 
                                bucket shop laws under section 12(e) of 
                                the Commodity Exchange Act or section 
                                28(a) of the Securities Exchange Act of 
                                1934;
                          (v) any contract of indemnity or guarantee;
                          (vi) any contract for insurance;
                          (vii) any deposit or other transaction with a 
                        depository institution (as defined in section 
                        3(c) of the Federal Deposit Insurance Act);
                          (viii) any participation in a simulation 
                        sports game or an educational game or contest 
                        that--
                                  (I) is not dependent solely on the 
                                outcome of any single sporting event or 
                                nonparticipant's singular individual 
                                performance in any single sporting 
                                event;
                                  (II) has an outcome that reflects the 
                                relative knowledge and skill of the 
                                participants with such outcome 
                                determined predominantly by accumulated 
                                statistical results of sporting events; 
                                and
                                  (III) offers a prize or award to a 
                                participant that is established in 
                                advance of the game or contest and is 
                                not determined by the number of 
                                participants or the amount of any fees 
                                paid by those participants; and
                          (ix) any lawful transaction with a business 
                        licensed or authorized by a State, and for 
                        purposes of this clause, the term ``lawful 
                        transaction'' means any transaction that is 
                        lawful under all applicable Federal laws and 
                        all applicable State laws of both the State in 
                        which the licensed or authorized business is 
                        located and the State where the bet is 
                        initiated.
          (3) Designated payment system defined.--The term ``designated 
        payment system'' means any system utilized by any creditor, 
        credit card issuer, financial institution, operator of a 
        terminal at which an electronic fund transfer may be initiated, 
        money transmitting business, or international, national, 
        regional, or local network utilized to effect a credit 
        transaction, electronic fund transfer, or money transmitting 
        service, or any participant in such network, that the Federal 
        functional regulators determine, by regulation or order, could 
        be utilized in connection with, or to facilitate, any 
        restricted transaction.
          (4) Federal functional regulator.--The term ``Federal 
        functional regulator'' has the same meaning as in section 
        509(2) of the Gramm-Leach-Bliley Act.
          (5) Internet.--The term ``Internet'' means the international 
        computer network of interoperable packet switched data 
        networks.
          (6) Unlawful internet gambling.--The term ``unlawful Internet 
        gambling'' means to place, receive, or otherwise transmit a bet 
        or wager by any means which involves the use, at least in part, 
        of the Internet where such bet or wager is unlawful under any 
        applicable Federal or State law in the State in which the bet 
        or wager is initiated, received, or otherwise made.
          (7) Other terms.--
                  (A) Credit; creditor; and credit card.--The terms 
                ``credit'', ``creditor'', and ``credit card'' have the 
                meanings given such terms in section 103 of the Truth 
                in Lending Act.
                  (B) Electronic fund transfer.--The term ``electronic 
                fund transfer''--
                          (i) has the meaning given such term in 
                        section 903 of the Electronic Fund Transfer 
                        Act; and
                          (ii) includes any fund transfer covered by 
                        Article 4A of the Uniform Commercial Code, as 
                        in effect in any State.
                  (C) Financial institution.--The term ``financial 
                institution''--
                          (i) has the meaning given such term in 
                        section 903 of the Electronic Fund Transfer 
                        Act; and
                          (ii) includes any financial institution, as 
                        defined in section 509(3) of the Gramm-Leach-
                        Bliley Act.
                  (D) Money transmitting business and money 
                transmitting service.--The terms ``money transmitting 
                business'' and ``money transmitting service'' have the 
                meanings given such terms in section 5330(d) of title 
                31, United States Code.

SEC. 2135. COMMON SENSE RULE OF CONSTRUCTION.

  No provision of this subchapter shall be construed as altering, 
limiting, extending, changing the status of, or otherwise affecting any 
law relating to, affecting, or regulating gambling within the United 
States.

             Subtitle F--Criminal History Background Checks

  [Subtitles F through H of title II of the Amendment in the Nature of 
a Substitute consist of subtitles F through H of title II of the bill 
H.R. 10, as introduced on September 24, 2004]

            TITLE III--BORDER SECURITY AND TERRORIST TRAVEL

  [Title III of the Amendment in the Nature of a Substitute consists of 
title III of the bill H.R. 10, as introduced on September 24, 2004]

          TITLE IV--INTERNATIONAL COOPERATION AND COORDINATION

  [Subtitle A of title IV of the Amendment in the Nature of a 
Substitute consists of subtitle A of title IV of the bill H.R. 10, as 
introduced on September 24, 2004]

         Subtitle B--Prevent the Continued Growth of Terrorism

               CHAPTER 1--UNITED STATES PUBLIC DIPLOMACY

  [Chapter 1 of title IV of the Amendment in the Nature of a Substitute 
consists of chapter 1 of title IV of the bill H.R. 10, as introduced on 
September 24, 2004]

            CHAPTER 2--UNITED STATES MULTILATERAL DIPLOMACY

  [Sections 4031 and 4032 of chapter 2 of subtitle B of title IV of the 
Amendment in the Nature of a Substitute consist of sections 4031 and 
4032 of chapter 2 of subtitle B of title IV of the bill H.R. 10, as 
introduced on September 24, 2004]

SEC. 4033. LEADERSHIP AND MEMBERSHIP OF INTERNATIONAL ORGANIZATIONS.

  (a) United States Policy.--The President, acting through the 
Secretary of State, the relevant United States chiefs of mission, and, 
where appropriate, the Secretary of the Treasury, shall use the voice, 
vote, and influence of the United States to--
          (1) where appropriate, reform the criteria for leadership 
        and, in appropriate cases, for membership, at all United 
        Nations bodies and at other international organizations and 
        multilateral institutions to which the United States is a 
        member so as to exclude countries that violate the principles 
        of the specific organization;
          (2) make it a policy of the United Nations and other 
        international organizations and multilateral institutions of 
        which the United States is a member that a member country may 
        not stand in nomination for membership or in nomination or in 
        rotation for a leadership position in such bodies if the member 
        country is subject to sanctions imposed by the United Nations 
        Security Council; and
          (3) work to ensure that no member country stand in nomination 
        for membership, or in nomination or in rotation for a 
        leadership position in such organizations, or for membership on 
        the United Nations Security Council, if the member country is 
        subject to a determination under section 6(j)(1)(A) of the 
        Export Administration Act of 1979 (50 U.S.C. App. 
        2405(j)(1)(A)), section 620A(a) of the Foreign Assistance Act 
        of 1961 (22 U.S.C. 2371(a)), or section 40(d) of the Arms 
        Export Control Act (22 U.S.C. 2780(d)).
  (b) Report to Congress.--Not later than 15 days after a country 
subject to a determination under one or more of the provisions of law 
specified in subsection (a)(3) is selected for membership or a 
leadership post in an international organization of which the United 
States is a member or for membership on the United Nations Security 
Council, the Secretary of State shall submit to the Committee on 
International Relations of the House of Representatives and the 
Committee on Foreign Relations of the Senate a report on any steps 
taken pursuant to subsection (a)(3).

SEC. 4034. INCREASED TRAINING IN MULTILATERAL DIPLOMACY.

  [Section 4034 of title IV of the Amendment in the Nature of a 
Substitute consists of section 4034 of title IV of the bill H.R. 10, as 
introduced on September 24, 2004]

SEC. 4035. IMPLEMENTATION AND ESTABLISHMENT OF OFFICE ON MULTILATERAL 
                    NEGOTIATIONS.

  (a) Establishment of Office.--The Secretary of State is authorized to 
establish, within the Bureau of International Organizational Affairs, 
an Office on Multilateral Negotiations to be headed by a Special 
Representative for Multilateral Negotiations (in this section referred 
to as the ``Special Representative'').
  (b) Appointment.--The Special Representative shall be appointed by 
the President and shall have the rank of Ambassador-at-Large. At the 
discretion of the President another official at the Department may 
serve as the Special Representative.
  (c) Staffing.--The Special Representative shall have a staff of 
Foreign Service and civil service officers skilled in multilateral 
diplomacy.
  (d) Duties.--The Special Representative shall have the following 
responsibilities:
          (1) In general.--The primary responsibility of the Special 
        Representative shall be to assist in the organization of, and 
        preparation for, United States participation in multilateral 
        negotiations, including advocacy efforts undertaken by the 
        Department of State and other United States Government 
        agencies.
          (2) Consultations.--The Special Representative shall consult 
        with Congress, international organizations, nongovernmental 
        organizations, and the private sector on matters affecting 
        multilateral negotiations.
          (3) Advisory role.--The Special Representative shall advise 
        the Assistant Secretary for International Organizational 
        Affairs and, as appropriate, the Secretary of State, regarding 
        advocacy at international organizations, multilateral 
        institutions, and negotiations, and shall make recommendations 
        regarding--
                  (A) effective strategies (and tactics) to achieve 
                United States policy objectives at multilateral 
                negotiations;
                  (B) the need for and timing of high level 
                intervention by the President, the Secretary of State, 
                the Deputy Secretary of State, and other United States 
                officials to secure support from key foreign government 
                officials for United States positions at such 
                organizations, institutions, and negotiations; and
                  (C) the composition of United States delegations to 
                multilateral negotiations.
          (4) Annual diplomatic missions of multilateral issues.--The 
        Special Representative, in coordination with the Assistant 
        Secretary for International Organizational Affairs, shall 
        organize annual diplomatic missions to appropriate foreign 
        countries to conduct consultations between principal officers 
        responsible for advising the Secretary of State on 
        international organizations and high-level representatives of 
        the governments of such foreign countries to promote the United 
        States agenda at the United Nations General Assembly and other 
        key international fora (such as the United Nations Human Rights 
        Commission).
          (5) Leadership and membership of international 
        organizations.--The Special Representative, in coordination 
        with the Assistant Secretary of International Organizational 
        Affairs, shall direct the efforts of the United States to 
        reform the criteria for leadership of and membership in 
        international organizations as described in section 4033.
          (6) Participation in multilateral negotiations.--The 
        Secretary of State may direct the Special Representative to 
        serve as a member of a United States delegation to any 
        multilateral negotiation.
          (7) Coordination with the department of the treasury.--
                  (A) Coordination and consultation.--The Special 
                Representative shall coordinate and consult with the 
                relevant staff at the Department of the Treasury in 
                order to prepare recommendations for the Secretary of 
                State regarding multilateral negotiations involving 
                international financial institutions and other 
                multilateral financial policymaking bodies.
                  (B) Negotiating authority clarified.--Notwithstanding 
                any other provision of law, the Secretary of the 
                Treasury shall remain the lead representative and lead 
                negotiator for the United States within the 
                international financial institutions and other 
                multilateral financial policymaking bodies.
                  (C) Definitions.--In this paragraph:
                          (i) International financial institutions.--
                        The term ``international financial 
                        institutions'' has the meaning given in section 
                        1701(c)(2) of the International Financial 
                        Institutions Act.
                          (ii) Other multilateral financial 
                        policymaking bodies.--The term ``other 
                        multilateral financial policymaking bodies'' 
                        means--
                                  (I) the Financial Action Task Force 
                                at the Organization for Economic 
                                Cooperation and Development;
                                  (II) the international network of 
                                financial intelligence units known as 
                                the ``Egmont Group'';
                                  (III) the United States, Canada, the 
                                United Kingdom, France, Germany, Italy, 
                                Japan, and Russia, when meeting as the 
                                Group of Eight; and
                                  (IV) any other multilateral financial 
                                policymaking group in which the 
                                Secretary of the Treasury represents 
                                the United States.
                          (iii) Financial action task force.--The term 
                        ``Financial Action Task Force'' means the 
                        international grouping of countries that meets 
                        periodically to address issues related to money 
                        laundering, terrorist financing, and other 
                        financial crimes.

                      CHAPTER 3--OTHER PROVISIONS

  [Chapter 3 of subtitle B of title IV of the Amendment in the Nature 
of a Substitute consists of chapter 3 of subtitles B of title IV of the 
bill H.R. 10, as introduced on September 24, 2004]

  Subtitle C--Reform of Designation of Foreign Terrorist Organizations

  [Subtitle C of title IV of the Amendment in the Nature of a 
Substitute consists of subtitle C of title IV of the bill H.R. 10, as 
introduced on September 24, 2004]

     Subtitle D--Afghanistan Freedom Support Act Amendments of 2004

SEC. 4061. SHORT TITLE.

  This subtitle may be cited as the ``Afghanistan Freedom Support Act 
Amendments of 2004''.

SEC. 4062. COORDINATION OF ASSISTANCE FOR AFGHANISTAN.

  (a) Findings.--Congress finds that--
          (1) the Final Report of the National Commission on Terrorist 
        Attacks Upon the United States criticized the provision of 
        United States assistance to Afghanistan for being too 
        inflexible; and
          (2) the Afghanistan Freedom Support Act of 2002 (Public Law 
        107-327; 22 U.S.C. 7501 et seq.) contains provisions that 
        provide for flexibility in the provision of assistance for 
        Afghanistan and are not subject to the requirements of typical 
        foreign assistance programs and provide for the designation of 
        a coordinator to oversee United States assistance for 
        Afghanistan.
  (b) Designation of Coordinator.--Section 104(a) of the Afghanistan 
Freedom Support Act of 2002 (22 U.S.C. 7514(a)) is amended in the 
matter preceding paragraph (1) by striking ``is strongly urged to'' and 
inserting ``shall''.
  (c) Other Matters.--Section 104 of such Act (22 U.S.C. 7514) is 
amended by adding at the end the following:
  ``(c) Program Plan.--The coordinator designated under subsection (a) 
shall annually submit to the Committees on International Relations and 
Appropriations of the House of Representatives and the Committees on 
Foreign Relations and Appropriations of the Senate the Administration's 
plan for assistance to Afghanistan together with a description of such 
assistance in prior years.
  ``(d) Coordination With International Community.--The coordinator 
designated under subsection (a) shall work with the international 
community and the Government of Afghanistan to ensure that assistance 
to Afghanistan is implemented in a coherent, consistent, and efficient 
manner to prevent duplication and waste. The coordinator designated 
under subsection (a) shall work through the Secretary of the Treasury 
and the United States Executive Directors at the international 
financial institutions in order to effectuate these responsibilities 
within the international financial institutions. The term 
`international financial institution' has the meaning given in section 
1701(c)(2) of the International Financial Institutions Act.''.

SEC. 4063. GENERAL PROVISIONS RELATING TO THE AFGHANISTAN FREEDOM 
                    SUPPORT ACT OF 2002.

  [Section 4063 and the remaining sections of subtitle D of title IV of 
the Amendment in the Nature of a Substitute consist of section 4063 and 
the remaining sections of subtitle D of title IV of the bill H.R. 10, 
as introduced on September 24, 2004]

      Subtitle E--Provisions Relating to Saudi Arabia and Pakistan

  [Subtitles E through G of title IV of the Amendment in the Nature of 
a Substitute consist of subtitles E through G of title IV of the bill 
H.R. 10, as introduced on September 24, 2004]

Subtitle H--Improving International Standards and Cooperation to Fight 
                          Terrorist Financing

SEC. 4111. SENSE OF THE CONGRESS REGARDING SUCCESS IN MULTILATERAL 
                    ORGANIZATIONS.

  (a) Findings.--The Congress finds as follows:
          (1) The global war on terrorism and cutting off terrorist 
        financing is a policy priority for the United States and its 
        partners, working bilaterally and multilaterally through the 
        United Nations (UN), the UN Security Council and its 
        Committees, such as the 1267 and 1373 Committees, the Financial 
        Action Task Force (FATF) and various international financial 
        institutions, such as the International Monetary Fund (IMF), 
        the International Bank for Reconstruction and Development 
        (IBRD), and the regional multilateral development banks, and 
        other multilateral fora.
          (2) The Secretary of the Treasury has engaged the 
        international financial community in the global fight against 
        terrorist financing. Specifically, the Department of the 
        Treasury helped redirect the focus of the Financial Action Task 
        Force on the new threat posed by terrorist financing to the 
        international financial system, resulting in the establishment 
        of the FATF's Eight Special Recommendations on Terrorist 
        Financing as the international standard on combating terrorist 
        financing. The Secretary of the Treasury has engaged the Group 
        of Seven and the Group of Twenty Finance Ministers to develop 
        action plans to curb the financing of terror. In addition, 
        other economic and regional fora, such as the Asia-Pacific 
        Economic Cooperation (APEC) Forum, the Western Hemisphere 
        Financial Ministers, have been used to marshal political will 
        and actions in support of countering the financing of terrorism 
        (CFT) standards.
          (3) FATF's Forty Recommendations on Money Laundering and the 
        Eight Special Recommendations on Terrorist Financing are the 
        recognized global standards for fighting money laundering and 
        terrorist financing. The FATF has engaged in an assessment 
        process for jurisdictions based on their compliance with these 
        standards.
          (4) In March 2004, the IMF and IBRD Boards agreed to make 
        permanent a pilot program of collaboration with the FATF to 
        assess global compliance with the FATF Forty Recommendations on 
        Money Laundering and the Eight Special Recommendations on 
        Terrorist Financing. As a result, anti-money laundering (AML) 
        and combating the financing of terrorism (CFT) assessments are 
        now a regular part of their Financial Sector Assessment Progam 
        (FSAP) and Offshore Financial Center assessments, which provide 
        for a comprehensive analysis of the strength of a 
        jurisdiction's financial system. These reviews assess potential 
        systemic vulnerabilities, consider sectoral development needs 
        and priorities, and review the state of implementation of and 
        compliance with key financial codes and regulatory standards, 
        among them the AML and CFT standards.
          (5) To date, 70 FSAPs have been conducted, with over 24 of 
        those incorporating AML and CFT assessments. The international 
        financial institutions (IFIs), the FATF, and the FATF-style 
        regional bodies together are expected to assess AML and CFT 
        regimes in up to 40 countries or jurisdictions per year. This 
        will help countries and jurisdictions identify deficiencies in 
        their AML and CFT regimes and help focus technical assistance 
        (TA) efforts.
          (6) TA programs from the United States and other nations, 
        coordinated with the Department of State and other departments 
        and agencies, are playing an important role in helping 
        countries and jurisdictions address shortcomings in their AML 
        and CFT regimes and bringing their regimes into conformity with 
        international standards. Training is coordinated within the 
        United States Government, which leverages multilateral 
        organizations and bodies and international financial 
        institutions to internationalize the conveyance of technical 
        assistance.
          (7) In fulfilling its duties in advancing incorporation of 
        AML and CFT standards into the IFIs as part of the IFIs' work 
        on protecting the integrity of the international monetary 
        system, the Department of the Treasury, under the guidance of 
        the Secretary of the Treasury, has effectively brought together 
        all of the key United States Government agencies. In 
        particular, United States Government agencies continue to work 
        together to foster broad support for this important undertaking 
        in various multilateral fora, and United States Government 
        agencies recognize the need for close coordination and 
        communication within our own government.
  (b) Sense of the Congress.--It is the sense of the Congress that the 
Secretary of the Treasury should continue to promote the dissemination 
of international AML and CFT standards, and to press for full 
implementation of the FATF 40 + 8 Recommendations by all countries in 
order to curb financial risks and hinder terrorist financing around the 
globe.

SEC. 4112. EXPANDED REPORTING AND TESTIMONY REQUIREMENTS FOR THE 
                    SECRETARY OF THE TREASURY.

  (a) Reporting Requirements.--Section 1503(a) of the International 
Financial Institutions Act (22 U.S.C. 262o-2(a)) is amended by adding 
at the end the following new paragraph:
          ``(15) Work with the International Monetary Fund to--
                  ``(A) foster strong global anti-money laundering 
                (AML) and combat the financing of terrorism (CFT) 
                regimes;
                  ``(B) ensure that country performance under the 
                Financial Action Task Force anti-money laundering and 
                counter-terrorist financing standards is effectively 
                and comprehensively monitored;
                  ``(C) ensure note is taken of AML and CFT issues in 
                Article IV reports, International Monetary Fund 
                programs, and other regular reviews of country 
                progress;
                  ``(D) ensure that effective AML and CFT regimes are 
                considered to be indispensable elements of sound 
                financial systems; and
                  ``(E) emphasize the importance of sound AML and CFT 
                regimes to global growth and development.''.
  (b) Testimony.--Section 1705(b) of such Act (22 U.S.C. 262r-4(b)) is 
amended--
          (1) by striking ``and'' at the end of paragraph (2);
          (2) by striking the period at the end of paragraph (3) and 
        inserting ``; and'' and
          (3) by adding at the end the following:
          ``(4) the status of implementation of international anti-
        money laundering and counter-terrorist financing standards by 
        the International Monetary Fund, the multilateral development 
        banks, and other multilateral financial policymaking bodies.''.

SEC. 4113. COORDINATION OF UNITED STATES GOVERNMENT EFFORTS.

  The Secretary of the Treasury, or the designee of the Secretary as 
the lead United States Government official to the Financial Action Task 
Force (FATF), shall continue to convene the interagency United States 
Government FATF working group. This group, which includes 
representatives from all relevant federal agencies, shall meet at least 
once a year to advise the Secretary on policies to be pursued by the 
United States regarding the development of common international AML and 
CFT standards, to assess the adequacy and implementation of such 
standards, and to recommend to the Secretary improved or new standards 
as necessary.

SEC. 4114. DEFINITIONS.

  In this subtitle:
          (1) International financial institutions.--The term 
        ``international financial institutions'' has the meaning given 
        in section 1701(c)(2) of the International Financial 
        Institutions Act.
          (2) Financial Action Task Force.--The term ``Financial Action 
        Task Force'' means the international policy-making and 
        standard-setting body dedicated to combating money laundering 
        and terrorist financing that was created by the Group of Seven 
        in 1989.

                   TITLE V--GOVERNMENT RESTRUCTURING

  [Subtitles A through F of title V of the Amendment in the Nature of a 
Substitute consist of subtitles A through F of title V of the bill H.R. 
10, as introduced on September 24, 2004]

              Subtitle G--Emergency Financial Preparedness

        CHAPTER 1--EMERGENCY PREPAREDNESS FOR FISCAL AUTHORITIES

SEC. 5081. DELEGATION AUTHORITY OF THE SECRETARY OF THE TREASURY.

  Subsection (d) of section 306 of title 31, United States Code, is 
amended by inserting ``or employee'' after ``another officer''.

SEC. 5081A. TREASURY SUPPORT FOR FINANCIAL SERVICES INDUSTRY 
                    PREPAREDNESS AND RESPONSE.

  (a) Congressional Finding.--The Congress finds that the Secretary of 
the Treasury--
          (1) has successfully communicated and coordinated with the 
        private-sector financial services industry about counter-
        terrorist financing activities and preparedness;
          (2) has successfully reached out to State and local 
        governments and regional public-private partnerships, such as 
        ChicagoFIRST, that protect employees and critical 
        infrastructure by enhancing communication and coordinating 
        plans for disaster preparedness and business continuity; and
          (3) has set an example for the Department of Homeland 
        Security and other Federal agency partners, whose active 
        participation is vital to the overall success of the activities 
        described in paragraphs (1) and (2).
  (b) Further Education and Preparation Efforts.--It is the sense of 
Congress that the Secretary of the Treasury, in consultation with the 
Secretary of Homeland Security and other Federal agency partners, 
should--
          (1) furnish sufficient personnel and technological and 
        financial resources to foster the formation of public-private 
        sector coalitions, similar to ChicagoFIRST, that, in 
        collaboration with the Department of Treasury, the Department 
        of Homeland Security, and other Federal agency partners, would 
        educate consumers and employees of the financial services 
        industry about domestic counter-terrorist financing activities, 
        including--
                  (A) how the public and private sector organizations 
                involved in counter-terrorist financing activities can 
                help to combat terrorism and simultaneously protect and 
                preserve the lives and civil liberties of consumers and 
                employees of the financial services industry; and
                  (B) how consumers and employees of the financial 
                services industry can assist the public and private 
                sector organizations involved in counter-terrorist 
                financing activities; and
          (2) submit annual reports to the Congress on Federal efforts, 
        in conjunction with public-private sector coalitions, to 
        educate consumers and employees of the financial services 
        industry about domestic counter-terrorist financing activities.

                     CHAPTER 2--MARKET PREPAREDNESS

              Subchapter A--Netting of Financial Contracts

SEC. 5082. SHORT TITLE.

  This subchapter may be cited as the ``Financial Contracts Bankruptcy 
Reform Act of 2004''.

SEC. 5082A. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR 
                    RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

  (a) Definition of Qualified Financial Contract.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)) is amended--
                  (A) by striking ``subsection--'' and inserting 
                ``subsection, the following definitions shall apply:''; 
                and
                  (B) in clause (i), by inserting ``, resolution, or 
                order'' after ``any similar agreement that the 
                Corporation determines by regulation''.
          (2) Insured credit unions.--Section 207(c)(8)(D) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended--
                  (A) by striking ``subsection--'' and inserting 
                ``subsection, the following definitions shall apply:''; 
                and
                  (B) in clause (i), by inserting ``, resolution, or 
                order'' after ``any similar agreement that the Board 
                determines by regulation''.
  (b) Definition of Securities Contract.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(ii)) is amended to read as follows:
                          ``(ii) Securities contract.--The term 
                        `securities contract'--
                                  ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                the foregoing, including any option to 
                                purchase or sell any such security, 
                                certificate of deposit, mortgage loan, 
                                interest, group or index, or option, 
                                and including any repurchase or reverse 
                                repurchase transaction on any such 
                                security, certificate of deposit, 
                                mortgage loan, interest, group or 
                                index, or option;
                                  ``(II) does not include any purchase, 
                                sale, or repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such agreement within the 
                                meaning of such term;
                                  ``(III) means any option entered into 
                                on a national securities exchange 
                                relating to foreign currencies;
                                  ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, 
                                mortgage loan, interest, group or 
                                index, or option;
                                  ``(V) means any margin loan;
                                  ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) means any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                  ``(IX) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                  ``(X) means any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause, including 
                                any guarantee or reimbursement 
                                obligation in connection with any 
                                agreement or transaction referred to in 
                                this clause.''.
          (2) Insured credit unions.--Section 207(c)(8)(D)(ii) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(ii)) is 
        amended to read as follows:
                          ``(ii) Securities contract.--The term 
                        `securities contract'--
                                  ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                the foregoing, including any option to 
                                purchase or sell any such security, 
                                certificate of deposit, mortgage loan, 
                                interest, group or index, or option, 
                                and including any repurchase or reverse 
                                repurchase transaction on any such 
                                security, certificate of deposit, 
                                mortgage loan, interest, group or 
                                index, or option;
                                  ``(II) does not include any purchase, 
                                sale, or repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Board determines by 
                                regulation, resolution, or order to 
                                include any such agreement within the 
                                meaning of such term;
                                  ``(III) means any option entered into 
                                on a national securities exchange 
                                relating to foreign currencies;
                                  ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, 
                                mortgage loan, interest, group or 
                                index, or option;
                                  ``(V) means any margin loan;
                                  ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) means any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                  ``(IX) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                  ``(X) means any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause, including 
                                any guarantee or reimbursement 
                                obligation in connection with any 
                                agreement or transaction referred to in 
                                this clause.''.
  (c) Definition of Commodity Contract.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12 
        U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:
                          ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                  ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                  ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                  ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                  ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                  ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                  ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only with 
                                respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (II), (III), (IV), (V), (VI), (VII), or 
                                (VIII); or
                                  ``(X) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause, including 
                                any guarantee or reimbursement 
                                obligation in connection with any 
                                agreement or transaction referred to in 
                                this clause.''.
          (2) Insured credit unions.--Section 207(c)(8)(D)(iii) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(iii)) is 
        amended to read as follows:
                          ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                  ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                  ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                  ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                  ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                  ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                  ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only with 
                                respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (II), (III), (IV), (V), (VI), (VII), or 
                                (VIII); or
                                  ``(X) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause, including 
                                any guarantee or reimbursement 
                                obligation in connection with any 
                                agreement or transaction referred to in 
                                this clause.''.
  (d) Definition of Forward Contract.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(iv)) is amended to read as follows:
                          ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                  ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or by-product thereof, with 
                                a maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including, a repurchase transaction, 
                                reverse repurchase transaction, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, option, 
                                allocated transaction, unallocated 
                                transaction, or any other similar 
                                agreement;
                                  ``(II) any combination of agreements 
                                or transactions referred to in 
                                subclauses (I) and (III);
                                  ``(III) any option to enter into any 
                                agreement or transaction referred to in 
                                subclause (I) or (II);
                                  ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclauses 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                  ``(V) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV), including any guarantee 
                                or reimbursement obligation in 
                                connection with any agreement or 
                                transaction referred to in any such 
                                subclause.''.
          (2) Insured credit unions.--Section 207(c)(8)(D)(iv) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(iv)) is 
        amended to read as follows:
                          ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                  ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or by-product thereof, with 
                                a maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including, a repurchase transaction, 
                                reverse repurchase transaction, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, option, 
                                allocated transaction, unallocated 
                                transaction, or any other similar 
                                agreement;
                                  ``(II) any combination of agreements 
                                or transactions referred to in 
                                subclauses (I) and (III);
                                  ``(III) any option to enter into any 
                                agreement or transaction referred to in 
                                subclause (I) or (II);
                                  ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclauses 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                  ``(V) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV), including any guarantee 
                                or reimbursement obligation in 
                                connection with any agreement or 
                                transaction referred to in any such 
                                subclause.''.
  (e) Definition of Repurchase Agreement.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(v)) is amended to read as follows:
                          ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to a reverse repurchase agreement)--
                                  ``(I) means an agreement, including 
                                related terms, which provides for the 
                                transfer of one or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                mortgage loans, or interests with a 
                                simultaneous agreement by such 
                                transferee to transfer to the 
                                transferor thereof certificates of 
                                deposit, eligible bankers' acceptances, 
                                securities, mortgage loans, or 
                                interests as described above, at a date 
                                certain not later than 1 year after 
                                such transfers or on demand, against 
                                the transfer of funds, or any other 
                                similar agreement;
                                  ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                  ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                  ``(IV) means any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (III);
                                  ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a repurchase 
                                agreement under this subclause only 
                                with respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (III), or (IV); and
                                  ``(VI) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V), including any 
                                guarantee or reimbursement obligation 
                                in connection with any agreement or 
                                transaction referred to in any such 
                                subclause.
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
          (2) Insured credit unions.--Section 207(c)(8)(D)(v) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)(v)) is 
        amended to read as follows:
                          ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to a reverse repurchase agreement)--
                                  ``(I) means an agreement, including 
                                related terms, which provides for the 
                                transfer of one or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                mortgage loans, or interests with a 
                                simultaneous agreement by such 
                                transferee to transfer to the 
                                transferor thereof certificates of 
                                deposit, eligible bankers' acceptances, 
                                securities, mortgage loans, or 
                                interests as described above, at a date 
                                certain not later than 1 year after 
                                such transfers or on demand, against 
                                the transfer of funds, or any other 
                                similar agreement;
                                  ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Board determines by 
                                regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                  ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                  ``(IV) means any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (III);
                                  ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a repurchase 
                                agreement under this subclause only 
                                with respect to each agreement or 
                                transaction under the master agreement 
                                that is referred to in subclause (I), 
                                (III), or (IV); and
                                  ``(VI) means any security agreement 
                                or arrangement or other credit 
                                enhancement related to any agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), or (V), including any 
                                guarantee or reimbursement obligation 
                                in connection with any agreement or 
                                transaction referred to in any such 
                                subclause.
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
  (f) Definition of Swap Agreement.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(D)(vi)) is amended to read as follows:
                          ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                  ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a total return, credit 
                                spread or credit swap, option, future, 
                                or forward agreement; a commodity index 
                                or commodity swap, option, future, or 
                                forward agreement; or a weather swap, 
                                weather derivative, or weather option;
                                  ``(II) any agreement or transaction 
                                that is similar to any other agreement 
                                or transaction referred to in this 
                                clause and that is of a type that has 
                                been, is presently, or in the future 
                                becomes, the subject of recurrent 
                                dealings in the swap markets (including 
                                terms and conditions incorporated by 
                                reference in such agreement) and that 
                                is a forward, swap, future, or option 
                                on one or more rates, currencies, 
                                commodities, equity securities or other 
                                equity instruments, debt securities or 
                                other debt instruments, quantitative 
                                measures associated with an occurrence, 
                                extent of an occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic consequence, or 
                                economic or financial indices or 
                                measures of economic or financial risk 
                                or value;
                                  ``(III) any combination of agreements 
                                or transactions referred to in this 
                                clause;
                                  ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                  ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in subclause 
                                (I), (II), (III), (IV), or (V), 
                                including any guarantee or 
                                reimbursement obligation in connection 
                                with any agreement or transaction 
                                referred to in any such subclause.
                        Such term is applicable for purposes of this 
                        subsection only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, the Gramm-Leach-Bliley Act, and the Legal 
                        Certainty for Bank Products Act of 2000.''.
          (2) Insured credit unions.--Section 207(c)(8)(D) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended 
        by adding at the end the following new clause:
                          ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                  ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a total return, credit 
                                spread or credit swap, option, future, 
                                or forward agreement; a commodity index 
                                or commodity swap, option, future, or 
                                forward agreement; or a weather swap, 
                                weather derivative, or weather option;
                                  ``(II) any agreement or transaction 
                                that is similar to any other agreement 
                                or transaction referred to in this 
                                clause and that is of a type that has 
                                been, is presently, or in the future 
                                becomes, the subject of recurrent 
                                dealings in the swap markets (including 
                                terms and conditions incorporated by 
                                reference in such agreement) and that 
                                is a forward, swap, future, or option 
                                on one or more rates, currencies, 
                                commodities, equity securities or other 
                                equity instruments, debt securities or 
                                other debt instruments, quantitative 
                                measures associated with an occurrence, 
                                extent of an occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic consequence, or 
                                economic or financial indices or 
                                measures of economic or financial risk 
                                or value;
                                  ``(III) any combination of agreements 
                                or transactions referred to in this 
                                clause;
                                  ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                  ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in subclause 
                                (I), (II), (III), (IV), or (V), 
                                including any guarantee or 
                                reimbursement obligation in connection 
                                with any agreement or transaction 
                                referred to in any such subclause.
                        Such term is applicable for purposes of this 
                        subsection only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, the Gramm-Leach-Bliley Act, and the Legal 
                        Certainty for Bank Products Act of 2000.''.
  (g) Definition of Transfer.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12 
        U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows:
                          ``(viii) Transfer.--The term `transfer' means 
                        every mode, direct or indirect, absolute or 
                        conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institution's equity of 
                        redemption.''.
          (2) Insured credit unions.--Section 207(c)(8)(D) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) (as amended 
        by subsection (f) of this section) is amended by adding at the 
        end the following new clause:
                          ``(viii) Transfer.--The term `transfer' means 
                        every mode, direct or indirect, absolute or 
                        conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institution's equity of 
                        redemption.''.
  (h) Treatment of Qualified Financial Contracts.--
          (1) FDIC-insured depository institutions.--Section 11(e)(8) 
        of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is 
        amended--
                  (A) in subparagraph (A)--
                          (i) by striking ``paragraph (10)'' and 
                        inserting ``paragraphs (9) and (10)'';
                          (ii) in clause (i), by striking ``to cause 
                        the termination or liquidation'' and inserting 
                        ``such person has to cause the termination, 
                        liquidation, or acceleration''; and
                          (iii) by striking clause (ii) and inserting 
                        the following new clause:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to one or more qualified financial 
                        contracts described in clause (i);''; and
                  (B) in subparagraph (E), by striking clause (ii) and 
                inserting the following:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to one or more qualified financial 
                        contracts described in clause (i);''.
          (2) Insured credit unions.--Section 207(c)(8) of the Federal 
        Credit Union Act (12 U.S.C. 1787(c)(8)) is amended--
                  (A) in subparagraph (A)--
                          (i) by striking ``paragraph (12)'' and 
                        inserting ``paragraphs (9) and (10)'';
                          (ii) in clause (i), by striking ``to cause 
                        the termination or liquidation'' and inserting 
                        ``such person has to cause the termination, 
                        liquidation, or acceleration''; and
                          (iii) by striking clause (ii) and inserting 
                        the following new clause:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''; and
                  (B) in subparagraph (E), by striking clause (ii) and 
                inserting the following new clause:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''.
  (i) Avoidance of Transfers.--
          (1) FDIC-insured depository institutions.--Section 
        11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(e)(8)(C)(i)) is amended by inserting ``section 5242 of the 
        Revised Statutes of the United States or any other Federal or 
        State law relating to the avoidance of preferential or 
        fraudulent transfers,'' before ``the Corporation''.
          (2) Insured credit unions.--Section 207(c)(8)(C)(i) of the 
        Federal Credit Union Act (12 U.S.C. 1787(c)(8)(C)(i)) is 
        amended by inserting ``section 5242 of the Revised Statutes of 
        the United States or any other Federal or State law relating to 
        the avoidance of preferential or fraudulent transfers,'' before 
        ``the Board''.

SEC. 5082B. AUTHORITY OF THE FDIC AND NCUAB WITH RESPECT TO FAILED AND 
                    FAILING INSTITUTIONS.

  (a) Federal Deposit Insurance Corporation.--
          (1) In general.--Section 11(e)(8) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
                  (A) in subparagraph (E), by striking ``other than 
                paragraph (12) of this subsection, subsection (d)(9)'' 
                and inserting ``other than subsections (d)(9) and 
                (e)(10)''; and
                  (B) by adding at the end the following new 
                subparagraphs:
                  ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with subsection (e)(1) of this 
                section.
                  ``(G) Walkaway clauses not effective.--
                          ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                          ``(ii) Walkaway clause defined.--For purposes 
                        of this subparagraph, the term `walkaway 
                        clause' means a provision in a qualified 
                        financial contract that, after calculation of a 
                        value of a party's position or an amount due to 
                        or from 1 of the parties in accordance with its 
                        terms upon termination, liquidation, or 
                        acceleration of the qualified financial 
                        contract, either does not create a payment 
                        obligation of a party or extinguishes a payment 
                        obligation of a party in whole or in part 
                        solely because of such party's status as a 
                        nondefaulting party.''.
          (2) Technical and conforming amendment.--Section 11(e)(12)(A) 
        of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(12)(A)) 
        is amended by inserting ``or the exercise of rights or powers 
        by'' after ``the appointment of''.
  (b) National Credit Union Administration Board.--
          (1) In general.--Section 207(c)(8) of the Federal Credit 
        Union Act (12 U.S.C. 1787(c)(8)) is amended--
                  (A) in subparagraph (E) (as amended by section 2(h)), 
                by striking ``other than paragraph (12) of this 
                subsection, subsection (b)(9)'' and inserting ``other 
                than subsections (b)(9) and (c)(10)''; and
                  (B) by adding at the end the following new 
                subparagraphs:
                  ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the Board, 
                or authorizing any court or agency to limit or delay, 
                in any manner, the right or power of the Board to 
                transfer any qualified financial contract in accordance 
                with paragraphs (9) and (10) of this subsection or to 
                disaffirm or repudiate any such contract in accordance 
                with subsection (c)(1) of this section.
                  ``(G) Walkaway clauses not effective.--
                          ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        credit union in default.
                          ``(ii) Walkaway clause defined.--For purposes 
                        of this subparagraph, the term `walkaway 
                        clause' means a provision in a qualified 
                        financial contract that, after calculation of a 
                        value of a party's position or an amount due to 
                        or from 1 of the parties in accordance with its 
                        terms upon termination, liquidation, or 
                        acceleration of the qualified financial 
                        contract, either does not create a payment 
                        obligation of a party or extinguishes a payment 
                        obligation of a party in whole or in part 
                        solely because of such party's status as a 
                        nondefaulting party.''.
          (2) Technical and conforming amendment.--Section 
        207(c)(12)(A) of the Federal Credit Union Act (12 U.S.C. 
        1787(c)(12)(A)) is amended by inserting ``or the exercise of 
        rights or powers by'' after ``the appointment of''.

SEC. 5082C. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
                    CONTRACTS.

  (a) FDIC-Insured Depository Institutions.--
          (1) Transfers of qualified financial contracts to financial 
        institutions.--Section 11(e)(9) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as 
        follows:
          ``(9) Transfer of qualified financial contracts.--
                  ``(A) In general.--In making any transfer of assets 
                or liabilities of a depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                          ``(i) transfer to one financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                  ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the 
                                depository institution in default;
                                  ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such depository institution under any 
                                such contract (other than any claim 
                                which, under the terms of any such 
                                contract, is subordinated to the claims 
                                of general unsecured creditors of such 
                                institution);
                                  ``(III) all claims of such depository 
                                institution against such person or any 
                                affiliate of such person under any such 
                                contract; and
                                  ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                          ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                  ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                under subparagraph (A)(i), the conservator or receiver 
                for the depository institution shall not make such 
                transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to one or more 
                qualified financial contracts, the contractual rights 
                of the parties to such qualified financial contracts, 
                netting contracts, security agreements or arrangements, 
                or other credit enhancements are enforceable 
                substantially to the same extent as permitted under 
                this section.
                  ``(C) Transfer of contracts subject to the rules of a 
                clearing organization.--In the event that a conservator 
                or receiver transfers any qualified financial contract 
                and related claims, property, and credit enhancements 
                pursuant to subparagraph (A)(i) and such contract is 
                cleared by or subject to the rules of a clearing 
                organization, the clearing organization shall not be 
                required to accept the transferee as a member by virtue 
                of the transfer.
                  ``(D) Definitions.--For purposes of this paragraph, 
                the term `financial institution' means a broker or 
                dealer, a depository institution, a futures commission 
                merchant, or any other institution, as determined by 
                the Corporation by regulation to be a financial 
                institution, and the term `clearing organization' has 
                the same meaning as in section 402 of the Federal 
                Deposit Insurance Corporation Improvement Act of 
                1991.''.
          (2) Notice to qualified financial contract counterparties.--
        Section 11(e)(10)(A) of the Federal Deposit Insurance Act (12 
        U.S.C. 1821(e)(10)(A)) is amended in the material immediately 
        following clause (ii) by striking ``the conservator'' and all 
        that follows through the period and inserting the following: 
        ``the conservator or receiver shall notify any person who is a 
        party to any such contract of such transfer by 5:00 p.m. 
        (eastern time) on the business day following the date of the 
        appointment of the receiver in the case of a receivership, or 
        the business day following such transfer in the case of a 
        conservatorship.''.
          (3) Rights against receiver and conservator and treatment of 
        bridge banks.--Section 11(e)(10) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1821(e)(10)) is amended--
                  (A) by redesignating subparagraph (B) as subparagraph 
                (D); and
                  (B) by inserting after subparagraph (A) the following 
                new subparagraphs:
                  ``(B) Certain rights not enforceable.--
                          ``(i) Receivership.--A person who is a party 
                        to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right that such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) of this subsection or section 403 or 404 
                        of the Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a receiver for 
                        the depository institution (or the insolvency 
                        or financial condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                  ``(I) until 5:00 p.m. (eastern time) 
                                on the business day following the date 
                                of the appointment of the receiver; or
                                  ``(II) after the person has received 
                                notice that the contract has been 
                                transferred pursuant to paragraph 
                                (9)(A).
                          ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right that such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) of this subsection or section 403 or 404 
                        of the Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a conservator 
                        for the depository institution (or the 
                        insolvency or financial condition of the 
                        depository institution for which the 
                        conservator has been appointed).
                          ``(iii) Notice.--For purposes of this 
                        paragraph, the Corporation as receiver or 
                        conservator of an insured depository 
                        institution shall be deemed to have notified a 
                        person who is a party to a qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
                        the time specified in subparagraph (A).
                  ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered to be a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                paragraph (9):
                          ``(i) A bridge bank.
                          ``(ii) A depository institution organized by 
                        the Corporation, for which a conservator is 
                        appointed either--
                                  ``(I) immediately upon the 
                                organization of the institution; or
                                  ``(II) at the time of a purchase and 
                                assumption transaction between the 
                                depository institution and the 
                                Corporation as receiver for a 
                                depository institution in default.''.
  (b) Insured Credit Unions.--
          (1) Transfers of qualified financial contracts to financial 
        institutions.--Section 207(c)(9) of the Federal Credit Union 
        Act (12 U.S.C. 1787(c)(9)) is amended to read as follows:
          ``(9) Transfer of qualified financial contracts.--
                  ``(A) In general.--In making any transfer of assets 
                or liabilities of a credit union in default which 
                includes any qualified financial contract, the 
                conservator or liquidating agent for such credit union 
                shall either--
                          ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                  ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the credit 
                                union in default;
                                  ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such credit union under any such 
                                contract (other than any claim which, 
                                under the terms of any such contract, 
                                is subordinated to the claims of 
                                general unsecured creditors of such 
                                credit union);
                                  ``(III) all claims of such credit 
                                union against such person or any 
                                affiliate of such person under any such 
                                contract; and
                                  ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                          ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                  ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                under subparagraph (A)(i), the conservator or 
                liquidating agent for the credit union shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts, the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                  ``(C) Transfer of contracts subject to the rules of a 
                clearing organization.--In the event that a conservator 
                or liquidating agent transfers any qualified financial 
                contract and related claims, property, and credit 
                enhancements pursuant to subparagraph (A)(i) and such 
                contract is cleared by or subject to the rules of a 
                clearing organization, the clearing organization shall 
                not be required to accept the transferee as a member by 
                virtue of the transfer.
                  ``(D) Definitions.--For purposes of this paragraph--
                          ``(i) the term `financial institution' means 
                        a broker or dealer, a depository institution, a 
                        futures commission merchant, a credit union, or 
                        any other institution, as determined by the 
                        Board by regulation to be a financial 
                        institution; and
                          ``(ii) the term `clearing organization' has 
                        the same meaning as in section 402 of the 
                        Federal Deposit Insurance Corporation 
                        Improvement Act of 1991.''.
          (2) Notice to qualified financial contract counterparties.--
        Section 207(c)(10)(A) of the Federal Credit Union Act (12 
        U.S.C. 1787(c)(10)(A)) is amended in the material immediately 
        following clause (ii) by striking ``the conservator'' and all 
        that follows through the period and inserting the following: 
        ``the conservator or liquidating agent shall notify any person 
        who is a party to any such contract of such transfer by 5:00 
        p.m. (eastern time) on the business day following the date of 
        the appointment of the liquidating agent in the case of a 
        liquidation, or the business day following such transfer in the 
        case of a conservatorship.''.
          (3) Rights against liquidating agent and conservator and 
        treatment of bridge banks.--Section 207(c)(10) of the Federal 
        Credit Union Act (12 U.S.C. 1787(c)(10)) is amended--
                  (A) by redesignating subparagraph (B) as subparagraph 
                (D); and
                  (B) by inserting after subparagraph (A) the following 
                new subparagraphs:
                  ``(B) Certain rights not enforceable.--
                          ``(i) Liquidation.--A person who is a party 
                        to a qualified financial contract with an 
                        insured credit union may not exercise any right 
                        that such person has to terminate, liquidate, 
                        or net such contract under paragraph (8)(A) of 
                        this subsection or section 403 or 404 of the 
                        Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a liquidating 
                        agent for the credit union institution (or the 
                        insolvency or financial condition of the credit 
                        union for which the liquidating agent has been 
                        appointed)--
                                  ``(I) until 5:00 p.m. (eastern time) 
                                on the business day following the date 
                                of the appointment of the liquidating 
                                agent; or
                                  ``(II) after the person has received 
                                notice that the contract has been 
                                transferred pursuant to paragraph 
                                (9)(A).
                          ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured credit union may not exercise any right 
                        that such person has to terminate, liquidate, 
                        or net such contract under paragraph (8)(E) of 
                        this subsection or section 403 or 404 of the 
                        Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, solely by reason of or 
                        incidental to the appointment of a conservator 
                        for the credit union or the insolvency or 
                        financial condition of the credit union for 
                        which the conservator has been appointed).
                          ``(iii) Notice.--For purposes of this 
                        paragraph, the Board as conservator or 
                        liquidating agent of an insured credit union 
                        shall be deemed to have notified a person who 
                        is a party to a qualified financial contract 
                        with such credit union if the Board has taken 
                        steps reasonably calculated to provide notice 
                        to such person by the time specified in 
                        subparagraph (A).
                  ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered to be a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                paragraph (9):
                          ``(i) A bridge bank.
                          ``(ii) A credit union organized by the Board, 
                        for which a conservator is appointed either--
                                  ``(I) immediately upon the 
                                organization of the credit union; or
                                  ``(II) at the time of a purchase and 
                                assumption transaction between the 
                                credit union and the Board as receiver 
                                for a credit union in default.''.

SEC. 5082D. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
                    QUALIFIED FINANCIAL CONTRACTS.

  (a) FDIC-Insured Depository Institutions.--Section 11(e) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is amended--
          (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively;
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                  ``(A) disaffirm or repudiate all qualified financial 
                contracts between--
                          ``(i) any person or any affiliate of such 
                        person; and
                          ``(ii) the depository institution in default; 
                        or
                  ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''; and
          (3) by adding at the end the following new paragraph:
          ``(17) Savings clause.--The meanings of terms used in this 
        subsection are applicable for purposes of this subsection only, 
        and shall not be construed or applied so as to challenge or 
        affect the characterization, definition, or treatment of any 
        similar terms under any other statute, regulation, or rule, 
        including the Gramm-Leach-Bliley Act, the Legal Certainty for 
        Bank Products Act of 2000, the securities laws (as that term is 
        defined in section 3(a)(47) of the Securities Exchange Act of 
        1934), and the Commodity Exchange Act.''.
  (b) Insured Credit Unions.--Section 207(c) of the Federal Credit 
Union Act (12 U.S.C. 1787(c)) is amended--
          (1) by redesignating paragraphs (11), (12), and (13) as 
        paragraphs (12), (13), and (14), respectively;
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or liquidating agent with respect 
        to any qualified financial contract to which an insured credit 
        union is a party, the conservator or liquidating agent for such 
        credit union shall either--
                  ``(A) disaffirm or repudiate all qualified financial 
                contracts between--
                          ``(i) any person or any affiliate of such 
                        person; and
                          ``(ii) the credit union in default; or
                  ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''; and
          (3) by adding at the end the following new paragraph:
          ``(15) Savings clause.--The meanings of terms used in this 
        subsection are applicable for purposes of this subsection only, 
        and shall not be construed or applied so as to challenge or 
        affect the characterization, definition, or treatment of any 
        similar terms under any other statute, regulation, or rule, 
        including the Gramm-Leach-Bliley Act, the Legal Certainty for 
        Bank Products Act of 2000, the securities laws (as that term is 
        defined in section (a)(47) of the Securities Exchange Act of 
        1934), and the Commodity Exchange Act.''.

SEC. 5082E. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

  (a) FDIC-Insured Depository Institutions.--Section 11(e)(8)(D)(vii) 
of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is 
amended to read as follows:
                          ``(vii) Treatment of master agreement as one 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract. If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.
  (b) Insured Credit Unions.--Section 207(c)(8)(D) of the Federal 
Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended by inserting 
after clause (vi) (as added by section 5082A(f) of this subchapter) the 
following new clause:
                          ``(vii) Treatment of master agreement as one 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract. If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 5082F. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 
                    1991.

  (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4402) is amended--
          (1) in paragraph (2)--
                  (A) in subparagraph (A)(ii), by inserting before the 
                semicolon ``, or is exempt from such registration by 
                order of the Securities and Exchange Commission''; and
                  (B) in subparagraph (B), by inserting before the 
                period ``, that has been granted an exemption under 
                section 4(c)(1) of the Commodity Exchange Act, or that 
                is a multilateral clearing organization (as defined in 
                section 408 of this Act)'';
          (2) in paragraph (6)--
                  (A) by redesignating subparagraphs (B) through (D) as 
                subparagraphs (C) through (E), respectively;
                  (B) by inserting after subparagraph (A) the following 
                new subparagraph:
                  ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System, if the national bank or State member bank is 
                not eligible to make application to become an insured 
                bank under section 5 of the Federal Deposit Insurance 
                Act;''; and
                  (C) by amending subparagraph (C) (as redesignated) to 
                read as follows:
                  ``(C) a branch or agency of a foreign bank, a foreign 
                bank and any branch or agency of the foreign bank, or 
                the foreign bank that established the branch or agency, 
                as those terms are defined in section 1(b) of the 
                International Banking Act of 1978;'';
          (3) in paragraph (11), by inserting before the period ``and 
        any other clearing organization with which such clearing 
        organization has a netting contract'';
          (4) by amending paragraph (14)(A)(i) to read as follows:
                          ``(i) means a contract or agreement between 2 
                        or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or close out values relating to such 
                        obligations or entitlements) among the parties 
                        to the agreement; and''; and
          (5) by adding at the end the following new paragraph:
          ``(15) Payment.--The term `payment' means a payment of United 
        States dollars, another currency, or a composite currency, and 
        a noncash delivery, including a payment or delivery to 
        liquidate an unmatured obligation.''.
  (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C. 4403) is amended--
          (1) by striking subsection (a) and inserting the following:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act, paragraphs (8)(E), 
(8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act, 
or any order authorized under section 5(b)(2) of the Securities 
Investor Protection Act of 1970), the covered contractual payment 
obligations and the covered contractual payment entitlements between 
any 2 financial institutions shall be netted in accordance with, and 
subject to the conditions of, the terms of any applicable netting 
contract (except as provided in section 561(b)(2) of title 11, United 
States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to one or more netting contracts between any 2 financial institutions 
shall be enforceable in accordance with their terms (except as provided 
in section 561(b)(2) of title 11, United States Code), and shall not be 
stayed, avoided, or otherwise limited by any State or Federal law 
(other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of 
the Federal Deposit Insurance Act, paragraphs (8)(E), (8)(F), and 
(10)(B) of section 207(c) of the Federal Credit Union Act, and section 
5(b)(2) of the Securities Investor Protection Act of 1970).''.
  (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C. 4404) is amended--
          (1) by striking subsection (a) and inserting the following:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act, paragraphs (8)(E), 
(8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act, 
and any order authorized under section 5(b)(2) of the Securities 
Investor Protection Act of 1970), the covered contractual payment 
obligations and the covered contractual payment entitlements of a 
member of a clearing organization to and from all other members of a 
clearing organization shall be netted in accordance with and subject to 
the conditions of any applicable netting contract (except as provided 
in section 561(b)(2) of title 11, United States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to one or more netting contracts between any 2 members of a clearing 
organization shall be enforceable in accordance with their terms 
(except as provided in section 561(b)(2) of title 11, United States 
Code), and shall not be stayed, avoided, or otherwise limited by any 
State or Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) 
of section 11(e) of the Federal Deposit Insurance Act, paragraphs 
(8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit 
Union Act, and section 5(b)(2) of the Securities Investor Protection 
Act of 1970).''.
  (d) Enforceability of Contracts With Uninsured National Banks, 
Uninsured Federal Branches and Agencies, Certain Uninsured State Member 
Banks, and Edge Act Corporations.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.) is 
amended--
          (1) by redesignating section 407 as section 407A; and
          (2) by inserting after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS, 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES, CERTAIN 
                    UNINSURED STATE MEMBER BANKS, AND EDGE ACT 
                    CORPORATIONS.

  ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal 
Deposit Insurance Act shall apply to an uninsured national bank or 
uninsured Federal branch or Federal agency, a corporation chartered 
under section 25A of the Federal Reserve Act, or an uninsured State 
member bank which operates, or operates as, a multilateral clearing 
organization pursuant to section 409 of this Act, except that for such 
purpose--
          ``(1) any reference to the `Corporation as receiver' or `the 
        receiver or the Corporation' shall refer to the receiver 
        appointed by the Comptroller of the Currency in the case of an 
        uninsured national bank or uninsured Federal branch or agency, 
        or to the receiver appointed by the Board of Governors of the 
        Federal Reserve System in the case of a corporation chartered 
        under section 25A of the Federal Reserve Act or an uninsured 
        State member bank;
          ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator 
        appointed by the Comptroller of the Currency in the case of an 
        uninsured national bank or uninsured Federal branch or agency, 
        or to the receiver or conservator appointed by the Board of 
        Governors of the Federal Reserve System in the case of a 
        corporation chartered under section 25A of the Federal Reserve 
        Act or an uninsured State member bank; and
          ``(3) any reference to an `insured depository institution' or 
        `depository institution' shall refer to an uninsured national 
        bank, an uninsured Federal branch or Federal agency, a 
        corporation chartered under section 25A of the Federal Reserve 
        Act, or an uninsured State member bank which operates, or 
        operates as, a multilateral clearing organization pursuant to 
        section 409 of this Act.
  ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank, uninsured Federal branch or agency, a 
corporation chartered under section 25A of the Federal Reserve Act, or 
an uninsured State member bank which operates, or operates as, a 
multilateral clearing organization pursuant to section 409 of this Act, 
shall be determined in the same manner and subject to the same 
limitations that apply to receivers and conservators of insured 
depository institutions under section 11(e) of the Federal Deposit 
Insurance Act.
  ``(c) Regulatory Authority.--
          ``(1) In general.--The Comptroller of the Currency in the 
        case of an uninsured national bank or uninsured Federal branch 
        or agency and the Board of Governors of the Federal Reserve 
        System in the case of a corporation chartered under section 25A 
        of the Federal Reserve Act, or an uninsured State member bank 
        that operates, or operates as, a multilateral clearing 
        organization pursuant to section 409 of this Act, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may each promulgate regulations solely to implement this 
        section.
          ``(2) Specific requirement.--In promulgating regulations, 
        limited solely to implementing paragraphs (8), (9), (10), and 
        (11) of section 11(e) of the Federal Deposit Insurance Act, the 
        Comptroller of the Currency and the Board of Governors of the 
        Federal Reserve System each shall ensure that the regulations 
        generally are consistent with the regulations and policies of 
        the Federal Deposit Insurance Corporation adopted pursuant to 
        the Federal Deposit Insurance Act.
  ``(d) Definitions.--For purposes of this section, the terms `Federal 
branch', `Federal agency', and `foreign bank' have the same meanings as 
in section 1(b) of the International Banking Act of 1978.''.

SEC. 5082G. BANKRUPTCY CODE AMENDMENTS.

  (a) Definitions of Forward Contract, Repurchase Agreement, Securities 
Clearing Agency, Swap Agreement, Commodity Contract, and Securities 
Contract.--Title 11, United States Code, is amended--
          (1) in section 101--
                  (A) in paragraph (25)--
                          (i) by striking ``means a contract'' and 
                        inserting ``means--
                  ``(A) a contract'';
                          (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                          (iii) by adding at the end the following:
                  ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                  ``(C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or (B);
                  ``(D) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), or (C), together with all supplements to any 
                such master agreement, without regard to whether such 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under such master agreement that is 
                referred to in subparagraph (A), (B), or (C); or
                  ``(E) any security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), including any guarantee or reimbursement 
                obligation by or to a forward contract merchant or 
                financial participant in connection with any agreement 
                or transaction referred to in any such subparagraph, 
                but not to exceed the damages in connection with any 
                such agreement or transaction, measured in accordance 
                with section 562 of this title;'';
                  (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and inserting ``at any time before'';
                  (C) by amending paragraph (47) to read as follows:
          ``(47) `repurchase agreement' (which definition also applies 
        to a reverse repurchase agreement)--
                  ``(A) means--
                          ``(i) an agreement, including related terms, 
                        which provides for the transfer of one or more 
                        certificates of deposit, mortgage related 
                        securities (as defined in section 3 of the 
                        Securities Exchange Act of 1934), mortgage 
                        loans, interests in mortgage related securities 
                        or mortgage loans, eligible bankers' 
                        acceptances, qualified foreign government 
                        securities (defined as a security that is a 
                        direct obligation of, or that is fully 
                        guaranteed by, the central government of a 
                        member of the Organization for Economic 
                        Cooperation and Development), or securities 
                        that are direct obligations of, or that are 
                        fully guaranteed by, the United States or any 
                        agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, mortgage loans, or 
                        interests, with a simultaneous agreement by 
                        such transferee to transfer to the transferor 
                        thereof certificates of deposit, eligible 
                        bankers' acceptance, securities, mortgage 
                        loans, or interests of the kind described in 
                        this clause, at a date certain not later than 1 
                        year after such transfer or on demand, against 
                        the transfer of funds;
                          ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                          ``(iii) an option to enter into an agreement 
                        or transaction referred to in clause (i) or 
                        (ii);
                          ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), or (iii), together with all 
                        supplements to any such master agreement, 
                        without regard to whether such master agreement 
                        provides for an agreement or transaction that 
                        is not a repurchase agreement under this 
                        paragraph, except that such master agreement 
                        shall be considered to be a repurchase 
                        agreement under this paragraph only with 
                        respect to each agreement or transaction under 
                        the master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                          ``(v) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), including any 
                        guarantee or reimbursement obligation by or to 
                        a repo participant or financial participant in 
                        connection with any agreement or transaction 
                        referred to in any such clause, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                  ``(B) does not include a repurchase obligation under 
                a participation in a commercial mortgage loan;'';
                  (D) in paragraph (48), by inserting ``, or exempt 
                from such registration under such section pursuant to 
                an order of the Securities and Exchange Commission,'' 
                after ``1934''; and
                  (E) by amending paragraph (53B) to read as follows:
          ``(53B) `swap agreement'--
                  ``(A) means--
                          ``(i) any agreement, including the terms and 
                        conditions incorporated by reference in such 
                        agreement, which is--
                                  ``(I) an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap;
                                  ``(II) a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement;
                                  ``(III) a currency swap, option, 
                                future, or forward agreement;
                                  ``(IV) an equity index or equity 
                                swap, option, future, or forward 
                                agreement;
                                  ``(V) a debt index or debt swap, 
                                option, future, or forward agreement;
                                  ``(VI) a total return, credit spread 
                                or credit swap, option, future, or 
                                forward agreement;
                                  ``(VII) a commodity index or a 
                                commodity swap, option, future, or 
                                forward agreement; or
                                  ``(VIII) a weather swap, weather 
                                derivative, or weather option;
                          ``(ii) any agreement or transaction that is 
                        similar to any other agreement or transaction 
                        referred to in this paragraph and that--
                                  ``(I) is of a type that has been, is 
                                presently, or in the future becomes, 
                                the subject of recurrent dealings in 
                                the swap markets (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                  ``(II) is a forward, swap, future, or 
                                option on one or more rates, 
                                currencies, commodities, equity 
                                securities, or other equity 
                                instruments, debt securities or other 
                                debt instruments, quantitative measures 
                                associated with an occurrence, extent 
                                of an occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic consequence, or 
                                economic or financial indices or 
                                measures of economic or financial risk 
                                or value;
                          ``(iii) any combination of agreements or 
                        transactions referred to in this subparagraph;
                          ``(iv) any option to enter into an agreement 
                        or transaction referred to in this 
                        subparagraph;
                          ``(v) a master agreement that provides for an 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), together with all 
                        supplements to any such master agreement, and 
                        without regard to whether the master agreement 
                        contains an agreement or transaction that is 
                        not a swap agreement under this paragraph, 
                        except that the master agreement shall be 
                        considered to be a swap agreement under this 
                        paragraph only with respect to each agreement 
                        or transaction under the master agreement that 
                        is referred to in clause (i), (ii), (iii), or 
                        (iv); or
                          ``(vi) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreements or transactions referred to in 
                        clause (i) through (v), including any guarantee 
                        or reimbursement obligation by or to a swap 
                        participant or financial participant in 
                        connection with any agreement or transaction 
                        referred to in any such clause, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                  ``(B) is applicable for purposes of this title only, 
                and shall not be construed or applied so as to 
                challenge or affect the characterization, definition, 
                or treatment of any swap agreement under any other 
                statute, regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 1934, the 
                Public Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company Act of 
                1940, the Investment Advisers Act of 1940, the 
                Securities Investor Protection Act of 1970, the 
                Commodity Exchange Act, the Gramm-Leach-Bliley Act, and 
                the Legal Certainty for Bank Products Act of 2000;'';
          (2) in section 741(7), by striking paragraph (7) and 
        inserting the following:
          ``(7) `securities contract'--
                  ``(A) means--
                          ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, a group or index of securities, 
                        certificates of deposit, or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security, 
                        certificate of deposit, mortgage loan, 
                        interest, group or index, or option, and 
                        including any repurchase or reverse repurchase 
                        transaction on any such security, certificate 
                        of deposit, mortgage loan, interest, group or 
                        index, or option;
                          ``(ii) any option entered into on a national 
                        securities exchange relating to foreign 
                        currencies;
                          ``(iii) the guarantee by or to any securities 
                        clearing agency of a settlement of cash, 
                        securities, certificates of deposit, mortgage 
                        loans or interests therein, group or index of 
                        securities, or mortgage loans or interests 
                        therein (including any interest therein or 
                        based on the value thereof), or option on any 
                        of the foregoing, including an option to 
                        purchase or sell any such security, certificate 
                        of deposit, mortgage loan, interest, group or 
                        index, or option;
                          ``(iv) any margin loan;
                          ``(v) any other agreement or transaction that 
                        is similar to an agreement or transaction 
                        referred to in this subparagraph;
                          ``(vi) any combination of the agreements or 
                        transactions referred to in this subparagraph;
                          ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        subparagraph;
                          ``(viii) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this subparagraph, 
                        except that such master agreement shall be 
                        considered to be a securities contract under 
                        this subparagraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                          ``(ix) any security agreement or arrangement 
                        or other credit enhancement related to any 
                        agreement or transaction referred to in this 
                        subparagraph, including any guarantee or 
                        reimbursement obligation by or to a 
                        stockbroker, securities clearing agency, 
                        financial institution, or financial participant 
                        in connection with any agreement or transaction 
                        referred to in this subparagraph, but not to 
                        exceed the damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this title; and
                  ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in a 
                commercial mortgage loan;''; and
          (3) in section 761(4)--
                  (A) by striking ``or'' at the end of subparagraph 
                (D); and
                  (B) by adding at the end the following:
                  ``(F) any other agreement or transaction that is 
                similar to an agreement or transaction referred to in 
                this paragraph;
                  ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  ``(H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G), or (H), together 
                with all supplements to such master agreement, without 
                regard to whether the master agreement provides for an 
                agreement or transaction that is not a commodity 
                contract under this paragraph, except that the master 
                agreement shall be considered to be a commodity 
                contract under this paragraph only with respect to each 
                agreement or transaction under the master agreement 
                that is referred to in subparagraph (A), (B), (C), (D), 
                (E), (F), (G), or (H); or
                  ``(J) any security agreement or arrangement or other 
                credit enhancement related to any agreement or 
                transaction referred to in this paragraph, including 
                any guarantee or reimbursement obligation by or to a 
                commodity broker or financial participant in connection 
                with any agreement or transaction referred to in this 
                paragraph, but not to exceed the damages in connection 
                with any such agreement or transaction, measured in 
                accordance with section 562 of this title;''.
  (b) Definitions of Financial Institution, Financial Participant, and 
Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
          (1) by striking paragraph (22) and inserting the following:
          ``(22) `financial institution' means--
                  ``(A) a Federal reserve bank, or an entity (domestic 
                or foreign) that is a commercial or savings bank, 
                industrial savings bank, savings and loan association, 
                trust company, federally-insured credit union, or 
                receiver or conservator for such entity and, when any 
                such Federal reserve bank, receiver, conservator or 
                entity is acting as agent or custodian for a customer 
                in connection with a securities contract (as defined in 
                section 741) such customer; or
                  ``(B) in connection with a securities contract (as 
                defined in section 741) an investment company 
                registered under the Investment Company Act of 1940;'';
          (2) by inserting after paragraph (22) the following:
          ``(22A) `financial participant' means--
                  ``(A) an entity that, at the time it enters into a 
                securities contract, commodity contract, swap 
                agreement, repurchase agreement, or forward contract, 
                or at the time of the filing of the petition, has one 
                or more agreements or transactions described in 
                paragraph (1), (2), (3), (4), (5), or (6) of section 
                561(a) with the debtor or any other entity (other than 
                an affiliate) of a total gross dollar value of not less 
                than $1,000,000,000 in notional or actual principal 
                amount outstanding on any day during the previous 15-
                month period, or has gross mark-to-market positions of 
                not less than $100,000,000 (aggregated across 
                counterparties) in one or more such agreements or 
                transactions with the debtor or any other entity (other 
                than an affiliate) on any day during the previous 15-
                month period; or
                  ``(B) a clearing organization (as defined in section 
                402 of the Federal Deposit Insurance Corporation 
                Improvement Act of 1991);''; and
          (3) by striking paragraph (26) and inserting the following:
          ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity the business of which consists in whole or 
        in part of entering into forward contracts as or with merchants 
        in a commodity (as defined in section 761) or any similar good, 
        article, service, right, or interest which is presently or in 
        the future becomes the subject of dealing in the forward 
        contract trade;''.
  (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
          ``(38A) `master netting agreement'--
                  ``(A) means an agreement providing for the exercise 
                of rights, including rights of netting, setoff, 
                liquidation, termination, acceleration, or close out, 
                under or in connection with one or more contracts that 
                are described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit enhancement 
                related to one or more of the foregoing, including any 
                guarantee or reimbursement obligation related to 1 or 
                more of the foregoing; and
                  ``(B) if the agreement contains provisions relating 
                to agreements or transactions that are not contracts 
                described in paragraphs (1) through (5) of section 
                561(a), shall be deemed to be a master netting 
                agreement only with respect to those agreements or 
                transactions that are described in any one or more of 
                paragraphs (1) through (5) of section 561(a);
          ``(38B) `master netting agreement participant' means an 
        entity that, at any time before the filing of the petition, is 
        a party to an outstanding master netting agreement with the 
        debtor;''.
  (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-stay.--
          (1) In general.--Section 362(b) of title 11, United States 
        Code, is amended--
                  (A) in paragraph (6), by inserting ``, pledged to, 
                under the control of,'' after ``held by'';
                  (B) in paragraph (7), by inserting ``, pledged to, 
                under the control of,'' after ``held by'';
                  (C) by striking paragraph (17) and inserting the 
                following:
          ``(17) under subsection (a), of the setoff by a swap 
        participant or financial participant of a mutual debt and claim 
        under or in connection with one or more swap agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with any swap agreement against any payment 
        due to the debtor from the swap participant or financial 
        participant under or in connection with any swap agreement or 
        against cash, securities, or other property held by, pledged 
        to, under the control of, or due from such swap participant or 
        financial participant to margin, guarantee, secure, or settle 
        any swap agreement;'';
                  (D) in paragraph (18) by striking the period at the 
                end and inserting ``; or''; and
                  (E) by inserting after paragraph (18) the following 
                new paragraph:
          ``(19) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with one or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements or against cash, 
        securities, or other property held by, pledged to, under the 
        control of, or due from such master netting agreement 
        participant to margin, guarantee, secure, or settle such 
        agreements or any contract or agreement subject to such 
        agreements, to the extent that such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), or (17) 
        for each individual contract covered by the master netting 
        agreement in issue.''.
          (2) Limitation.--Section 362 of title 11, United States Code, 
        is amended by adding at the end the following:
  ``(i) The exercise of rights not subject to the stay arising under 
subsection (a) pursuant to paragraph (6), (7), (17), or (19) of 
subsection (b) shall not be stayed by any order of a court or 
administrative agency in any proceeding under this title.''.
  (e) Limitation of Avoidance Powers Under Master Netting Agreement.--
Section 546 of title 11, United States Code, is amended--
          (1) in subsection (g) (as added by section 103 of Public Law 
        101-311)--
                  (A) by striking ``under a swap agreement'';
                  (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement''; and
                  (C) by inserting ``or financial participant'' after 
                ``swap participant'' each place such term appears; and
          (2) by adding at the end the following:
  ``(i) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b) the trustee may not avoid a transfer made by or to a master 
netting agreement participant under or in connection with any master 
netting agreement or any individual contract covered thereby that is 
made before the commencement of the case, except under section 
548(a)(1)(A) and except to the extent that the trustee could otherwise 
avoid such a transfer made under an individual contract covered by such 
master netting agreement.''.
  (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (C), by striking ``and'' at the end;
          (2) in subparagraph (D), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following new subparagraph:
          ``(E) a master netting agreement participant that receives a 
        transfer in connection with a master netting agreement or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except that, with respect to a 
        transfer under any individual contract covered thereby, to the 
        extent that such master netting agreement participant otherwise 
        did not take (or is otherwise not deemed to have taken) such 
        transfer for value.''.
  (g) Termination or Acceleration of Securities Contracts.--Section 555 
of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract'';

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract'';

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''; and
          (3) in the second sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
        securities exchange, a national securities association, a 
        securities clearing agency, a contract market designated under 
        the Commodity Exchange Act, a derivatives transaction execution 
        facility registered under the Commodity Exchange Act, or a 
        board of trade (as defined in the Commodity Exchange Act) or in 
        a resolution of the governing board thereof and a right,''.
  (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement'';

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''; and
          (3) in the third sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
        securities exchange, a national securities association, a 
        securities clearing agency, a contract market designated under 
        the Commodity Exchange Act, a derivatives transaction execution 
        facility registered under the Commodity Exchange Act, or a 
        board of trade (as defined in the Commodity Exchange Act) or in 
        a resolution of the governing board thereof and a right,''.
  (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement'';

          (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of one or more swap agreements'';
          (3) by striking ``in connection with any swap agreement'' and 
        inserting ``in connection with the termination, liquidation, or 
        acceleration of one or more swap agreements''; and
          (4) in the second sentence, by striking ``As used'' and all 
        that follows through ``right,'' and inserting ``As used in this 
        section, the term `contractual right' includes a right set 
        forth in a rule or bylaw of a derivatives clearing organization 
        (as defined in the Commodity Exchange Act), a multilateral 
        clearing organization (as defined in the Federal Deposit 
        Insurance Corporation Improvement Act of 1991), a national 
        securities exchange, a national securities association, a 
        securities clearing agency, a contract market designated under 
        the Commodity Exchange Act, a derivatives transaction execution 
        facility registered under the Commodity Exchange Act, or a 
        board of trade (as defined in the Commodity Exchange Act) or in 
        a resolution of the governing board thereof and a right,''.
  (k) Liquidation, Termination, Acceleration, or Offset Under a Master 
Netting Agreement and Across Contracts.--
          (1) In general.--Title 11, United States Code, is amended by 
        inserting after section 560 the following:

``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts; proceedings under Section 304

  ``(a) Subject to subsection (b), the exercise of any contractual 
right, because of a condition of the kind specified in section 
365(e)(1), to cause the termination, liquidation, or acceleration of or 
to offset or net termination values, payment amounts, or other transfer 
obligations arising under or in connection with one or more (or the 
termination, liquidation, or acceleration of one or more)--
          ``(1) securities contracts, as defined in section 741(7);
          ``(2) commodity contracts, as defined in section 761(4);
          ``(3) forward contracts;
          ``(4) repurchase agreements;
          ``(5) swap agreements; or
          ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
  ``(b)(1) A party may exercise a contractual right described in 
subsection (a) to terminate, liquidate, or accelerate only to the 
extent that such party could exercise such a right under section 555, 
556, 559, or 560 for each individual contract covered by the master 
netting agreement in issue.
  ``(2) If a debtor is a commodity broker subject to subchapter IV of 
chapter 7--
          ``(A) a party may not net or offset an obligation to the 
        debtor arising under, or in connection with, a commodity 
        contract traded on or subject to the rules of a contract market 
        designated under the Commodity Exchange Act or a derivatives 
        transaction execution facility registered under the Commodity 
        Exchange Act against any claim arising under, or in connection 
        with, other instruments, contracts, or agreements listed in 
        subsection (a) except to the extent that the party has positive 
        net equity in the commodity accounts at the debtor, as 
        calculated under such subchapter; and
          ``(B) another commodity broker may not net or offset an 
        obligation to the debtor arising under, or in connection with, 
        a commodity contract entered into or held on behalf of a 
        customer of the debtor and traded on or subject to the rules of 
        a contract market designated under the Commodity Exchange Act 
        or a derivatives transaction execution facility registered 
        under the Commodity Exchange Act against any claim arising 
        under, or in connection with, other instruments, contracts, or 
        agreements listed in subsection (a).
  ``(3) No provision of subparagraph (A) or (B) of paragraph (2) shall 
prohibit the offset of claims and obligations that arise under--
          ``(A) a cross-margining agreement or similar arrangement that 
        has been approved by the Commodity Futures Trading Commission 
        or submitted to the Commodity Futures Trading Commission under 
        paragraph (1) or (2) of section 5c(c) of the Commodity Exchange 
        Act and has not been abrogated or rendered ineffective by the 
        Commodity Futures Trading Commission; or
          ``(B) any other netting agreement between a clearing 
        organization (as defined in section 761) and another entity 
        that has been approved by the Commodity Futures Trading 
        Commission.
  ``(c) As used in this section, the term `contractual right' includes 
a right set forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Exchange Act), a multilateral 
clearing organization (as defined in the Federal Deposit Insurance 
Corporation Improvement Act of 1991), a national securities exchange, a 
national securities association, a securities clearing agency, a 
contract market designated under the Commodity Exchange Act, a 
derivatives transaction execution facility registered under the 
Commodity Exchange Act, or a board of trade (as defined in the 
Commodity Exchange Act) or in a resolution of the governing board 
thereof, and a right, whether or not evidenced in writing, arising 
under common law, under law merchant, or by reason of normal business 
practice.
  ``(d) Any provisions of this title relating to securities contracts, 
commodity contracts, forward contracts, repurchase agreements, swap 
agreements, or master netting agreements shall apply in a case under 
section 304, so that enforcement of contractual provisions of such 
contracts and agreements in accordance with their terms will not be 
stayed or otherwise limited by operation of any provision of this title 
or by order of a court in any case under this title, and to limit 
avoidance powers to the same extent as in a proceeding under chapter 7 
or 11 of this title (such enforcement not to be limited based on the 
presence or absence of assets of the debtor in the United States).''.
          (2) Conforming amendment.--The table of sections for chapter 
        5 of title 11, United States Code, is amended by inserting 
        after the item relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
under a master netting agreement and across contracts; proceedings 
under section 304.''.

  (l) Commodity Broker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 766 the following:

``Sec. 767. Commodity broker liquidation and forward contract 
                    merchants, commodity brokers, stockbrokers, 
                    financial institutions, financial participants, 
                    securities clearing agencies, swap participants, 
                    repo participants, and master netting agreement 
                    participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, financial participant, securities clearing 
agency, swap participant, repo participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (m) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:

``Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, financial participants, securities 
                    clearing agencies, swap participants, repo 
                    participants, and master netting agreement 
                    participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, financial participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (n) Setoff.--Section 553 of title 11, United States Code, is 
amended--
          (1) in subsection (a)(2)(B)(ii), by inserting before the 
        semicolon the following: ``(except for a setoff of a kind 
        described in section 362(b)(6), 362(b)(7), 362(b)(17), 
        362(b)(19), 555, 556, 559, 560, or 561)'';
          (2) in subsection (a)(3)(C), by inserting before the period 
        the following: ``(except for a setoff of a kind described in 
        section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 
        559, 560, or 561 of this title)''; and
          (3) in subsection (b)(1), by striking ``362(b)(14),'' and 
        inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560, 561,''.
  (o) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
          (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant,'';
          (2) in sections 362(b)(7) and 546(f), by inserting ``or 
        financial participant'' after ``repo participant'' each place 
        such term appears;
          (3) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (4) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (5) in section 548(d)(2)(C), by inserting ``or financial 
        participant'' after ``repo participant'';
          (6) in section 548(d)(2)(D), by inserting ``or financial 
        participant'' after ``swap participant'';
          (7) in section 555--
                  (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                  (B) by striking the second sentence and inserting the 
                following: ``As used in this section, the term 
                `contractual right' includes a right set forth in a 
                rule or bylaw of a derivatives clearing organization 
                (as defined in the Commodity Exchange Act), a 
                multilateral clearing organization (as defined in the 
                Federal Deposit Insurance Corporation Improvement Act 
                of 1991), a national securities exchange, a national 
                securities association, a securities clearing agency, a 
                contract market designated under the Commodity Exchange 
                Act, a derivatives transaction execution facility 
                registered under the Commodity Exchange Act, or a board 
                of trade (as defined in the Commodity Exchange Act), or 
                in a resolution of the governing board thereof, and a 
                right, whether or not in writing, arising under common 
                law, under law merchant, or by reason of normal 
                business practice'';
          (8) in section 556, by inserting ``, financial participant,'' 
        after ``commodity broker'';
          (9) in section 559, by inserting ``or financial participant'' 
        after ``repo participant'' each place such term appears; and
          (10) in section 560, by inserting ``or financial 
        participant'' after ``swap participant''.
  (p) Conforming Amendments.--Title 11, United States Code, is 
amended--
          (1) in the table of sections for chapter 5--
                  (A) by amending the items relating to sections 555 
                and 556 to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
commodities contract or forward contract.'';

                and
                  (B) by amending the items relating to sections 559 
                and 560 to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
agreement.'';

                and
          (2) in the table of sections for chapter 7--
                  (A) by inserting after the item relating to section 
                766 the following:

``767. Commodity broker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, repo 
participants, and master netting agreement participants.'';

                and
                  (B) by inserting after the item relating to section 
                752 the following:

``753. Stockbroker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, repo 
participants, and master netting agreement participants.''.

SEC. 5082H. RECORDKEEPING REQUIREMENTS.

  (a) FDIC-Insured Depository Institutions.--Section 11(e)(8) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amended by 
adding at the end the following new subparagraph:
                  ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies and the National Credit Union Administration 
                Board, may prescribe regulations requiring more 
                detailed recordkeeping by any insured depository 
                institution with respect to qualified financial 
                contracts (including market valuations) only if such 
                insured depository institution is in a troubled 
                condition (as such term is defined by the Corporation 
                pursuant to section 32).''.
  (b) Insured Credit Unions.--Section 207(c)(8) of the Federal Credit 
Union Act (12 U.S.C. 1787(c)(8)) is amended by adding at the end the 
following new subparagraph:
                  ``(H) Recordkeeping requirements.--The Board, in 
                consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping by any insured credit union with 
                respect to qualified financial contracts (including 
                market valuations) only if such insured credit union is 
                in a troubled condition (as such term is defined by the 
                Board pursuant to section 212).''.

SEC. 5082I. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.

  Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(e)(2)) is amended to read as follows:
          ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                  ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                  ``(C) extensions of credit, including any overdraft, 
                from a Federal reserve bank or Federal home loan bank; 
                or
                  ``(D) one or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 5082J. DAMAGE MEASURE.

  (a) In General.--Title 11, United States Code, is amended--
          (1) by inserting after section 561, as added by section 
        5082G(k)(1) of this subchapter, the following:

``Sec. 562. Timing of damage measurement in connection with swap 
                    agreements, securities contracts, forward 
                    contracts, commodity contracts, repurchase 
                    agreements, and master netting agreements

  ``(a) If the trustee rejects a swap agreement, securities contract 
(as defined in section 741), forward contract, commodity contract (as 
defined in section 761), repurchase agreement, or master netting 
agreement pursuant to section 365(a), or if a forward contract 
merchant, stockbroker, financial institution, securities clearing 
agency, repo participant, financial participant, master netting 
agreement participant, or swap participant liquidates, terminates, or 
accelerates such contract or agreement, damages shall be measured as of 
the earlier of--
          ``(1) the date of such rejection; or
          ``(2) the date or dates of such liquidation, termination, or 
        acceleration.
  ``(b) If there are not any commercially reasonable determinants of 
value as of any date referred to in paragraph (1) or (2) of subsection 
(a), damages shall be measured as of the earliest subsequent date or 
dates on which there are commercially reasonable determinants of value.
  ``(c) For the purposes of subsection (b), if damages are not measured 
as of the date or dates of rejection, liquidation, termination, or 
acceleration, and the forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo participant, financial 
participant, master netting agreement participant, or swap participant 
or the trustee objects to the timing of the measurement of damages--
          ``(1) the trustee, in the case of an objection by a forward 
        contract merchant, stockbroker, financial institution, 
        securities clearing agency, repo participant, financial 
        participant, master netting agreement participant, or swap 
        participant; or
          ``(2) the forward contract merchant, stockbroker, financial 
        institution, securities clearing agency, repo participant, 
        financial participant, master netting agreement participant, or 
        swap participant, in the case of an objection by the trustee,
has the burden of proving that there were no commercially reasonable 
determinants of value as of such date or dates.''; and
          (2) in the table of sections for chapter 5, by inserting 
        after the item relating to section 561 (as added by section 
        5082G(k)(2) of this subchapter) the following new item:

``562. Timing of damage measure in connection with swap agreements, 
securities contracts, forward contracts, commodity contracts, 
repurchase agreements, or master netting agreements.''.

  (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
          (1) by inserting ``(1)'' after ``(g)''; and
          (2) by adding at the end the following:
  ``(2) A claim for damages calculated in accordance with section 562 
of this title shall be allowed under subsection (a), (b), or (c), or 
disallowed under subsection (d) or (e), as if such claim had arisen 
before the date of the filing of the petition.''.

SEC. 5082K. SIPC STAY.

  Section 5(b)(2) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78eee(b)(2)) is amended by adding at the end the following new 
subparagraph:
                  ``(C) Exception from stay.--
                          ``(i) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by SIPC from the court 
                        shall operate as a stay of any contractual 
                        rights of a creditor to liquidate, terminate, 
                        or accelerate a securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master netting 
                        agreement, as those terms are defined in 
                        sections 101, 741, and 761 of title 11, United 
                        States Code, to offset or net termination 
                        values, payment amounts, or other transfer 
                        obligations arising under or in connection with 
                        one or more of such contracts or agreements, or 
                        to foreclose on any cash collateral pledged by 
                        the debtor, whether or not with respect to one 
                        or more of such contracts or agreements.
                          ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on, or disposition of, 
                        securities collateral pledged by the debtor, 
                        whether or not with respect to one or more of 
                        such contracts or agreements, securities sold 
                        by the debtor under a repurchase agreement, or 
                        securities lent under a securities lending 
                        agreement.
                          ``(iii) As used in this subparagraph, the 
                        term `contractual right' includes a right set 
                        forth in a rule or bylaw of a national 
                        securities exchange, a national securities 
                        association, or a securities clearing agency, a 
                        right set forth in a bylaw of a clearing 
                        organization or contract market or in a 
                        resolution of the governing board thereof, and 
                        a right, whether or not in writing, arising 
                        under common law, under law merchant, or by 
                        reason of normal business practice.''.

SEC. 5082L. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

  Section 901(a) of title 11, United States Code, is amended--
          (1) by inserting ``555, 556,'' after ``553,''; and
          (2) by inserting ``559, 560, 561, 562'' after ``557,''.

SEC. 5082M. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

  (a) Effective Date.--This subchapter shall take effect on the date of 
enactment of this Act.
  (b) Application of Amendments.--The amendments made by this 
subchapter shall apply with respect to cases commenced or appointments 
made under any Federal or State law on or after the date of enactment 
of this Act, but shall not apply with respect to cases commenced or 
appointments made under any Federal or State law before the date of 
enactment of this Act.

SEC. 5082N. SAVINGS CLAUSE.

  The meanings of terms used in this subchapter are applicable for 
purposes of this subchapter only, and shall not be construed or applied 
so as to challenge or affect the characterization, definition, or 
treatment of any similar terms under any other statute, regulation, or 
rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for 
Bank Products Act of 2000, the securities laws (as that term is defined 
in section 3(a)(47) of the Securities Exchange Act of 1934), and the 
Commodity Exchange Act.

              Subchapter B--Emergency Securities Response

SEC. 5086. SHORT TITLE.

  This subchapter may be cited as the ``Emergency Securities Response 
Act of 2004''.

SEC. 5087. EXTENSION OF EMERGENCY ORDER AUTHORITY OF THE SECURITIES AND 
                    EXCHANGE COMMISSION.

  (a) Extension of Authority.--Paragraph (2) of section 12(k) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78l(k)(2)) is amended to 
read as follows:
          ``(2) Emergency.--(A) The Commission, in an emergency, may by 
        order summarily take such action to alter, supplement, suspend, 
        or impose requirements or restrictions with respect to any 
        matter or action subject to regulation by the Commission or a 
        self-regulatory organization under the securities laws, as the 
        Commission determines is necessary in the public interest and 
        for the protection of investors--
                  ``(i) to maintain or restore fair and orderly 
                securities markets (other than markets in exempted 
                securities);
                  ``(ii) to ensure prompt, accurate, and safe clearance 
                and settlement of transactions in securities (other 
                than exempted securities); or
                  ``(iii) to reduce, eliminate, or prevent the 
                substantial disruption by the emergency of (I) 
                securities markets (other than markets in exempted 
                securities), investment companies, or any other 
                significant portion or segment of such markets, or (II) 
                the transmission or processing of securities 
                transactions (other than transactions in exempted 
                securities).
          ``(B) An order of the Commission under this paragraph (2) 
        shall continue in effect for the period specified by the 
        Commission, and may be extended. Except as provided in 
        subparagraph (C), the Commission's action may not continue in 
        effect for more than 30 business days, including extensions.
          ``(C) An order of the Commission under this paragraph (2) may 
        be extended to continue in effect for more than 30 business 
        days if, at the time of the extension, the Commission finds 
        that the emergency still exists and determines that the 
        continuation of the order beyond 30 business days is necessary 
        in the public interest and for the protection of investors to 
        attain an objective described in clause (i), (ii), or (iii) of 
        subparagraph (A). In no event shall an order of the Commission 
        under this paragraph (2) continue in effect for more than 90 
        calendar days.
          ``(D) If the actions described in subparagraph (A) involve a 
        security futures product, the Commission shall consult with and 
        consider the views of the Commodity Futures Trading Commission. 
        In exercising its authority under this paragraph, the 
        Commission shall not be required to comply with the provisions 
        of section 553 of title 5, United States Code, or with the 
        provisions of section 19(c) of this title.
          ``(E) Notwithstanding the exclusion of exempted securities 
        (and markets therein) from the Commission's authority under 
        subparagraph (A), the Commission may use such authority to take 
        action to alter, supplement, suspend, or impose requirements or 
        restrictions with respect to clearing agencies for transactions 
        in such exempted securities. In taking any action under this 
        subparagraph, the Commission shall consult with and consider 
        the views of the Secretary of the Treasury.''.
  (b) Consultation; Definition of Emergency.--Section 12(k) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78l(k)) is further amended 
by striking paragraph (6) and inserting the following:
          ``(6) Consultation.--Prior to taking any action described in 
        paragraph (1)(B), the Commission shall consult with and 
        consider the views of the Secretary of the Treasury, Board of 
        Governors of the Federal Reserve System, and the Commodity 
        Futures Trading Commission, unless such consultation is 
        impracticable in light of the emergency.
          ``(7) Definitions.--
                  ``(A) Emergency.--For purposes of this subsection, 
                the term `emergency' means--
                          ``(i) a major market disturbance 
                        characterized by or constituting--
                                  ``(I) sudden and excessive 
                                fluctuations of securities prices 
                                generally, or a substantial threat 
                                thereof, that threaten fair and orderly 
                                markets; or
                                  ``(II) a substantial disruption of 
                                the safe or efficient operation of the 
                                national system for clearance and 
                                settlement of transactions in 
                                securities, or a substantial threat 
                                thereof; or
                          ``(ii) a major disturbance that substantially 
                        disrupts, or threatens to substantially 
                        disrupt--
                                  ``(I) the functioning of securities 
                                markets, investment companies, or any 
                                other significant portion or segment of 
                                the securities markets; or
                                  ``(II) the transmission or processing 
                                of securities transactions.
                  ``(B) Securities laws.--Notwithstanding section 
                3(a)(47), for purposes of this subsection, the term 
                `securities laws' does not include the Public Utility 
                Holding Company Act of 1935 (15 U.S.C. 79a et seq.).''.

SEC. 5088. PARALLEL AUTHORITY OF THE SECRETARY OF THE TREASURY WITH 
                    RESPECT TO GOVERNMENT SECURITIES.

  Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5) 
is amended by adding at the end the following new subsection:
  ``(h) Emergency Authority.--The Secretary may by order take any 
action with respect to a matter or action subject to regulation by the 
Secretary under this section, or the rules of the Secretary thereunder, 
involving a government security or a market therein (or significant 
portion or segment of that market), that the Commission may take under 
section 12(k)(2) of this title with respect to transactions in 
securities (other than exempted securities) or a market therein (or 
significant portion or segment of that market).''.

SEC. 5089. JOINT REPORT ON IMPLEMENTATION OF FINANCIAL SYSTEM 
                    RESILIENCE RECOMMENDATIONS.

  (a) Report Required.--Not later than April 30, 2006, the Board of 
Governors of the Federal Reserve System, the Comptroller of the 
Currency, and the Securities and Exchange Commission shall prepare and 
submit to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate a joint report on the efforts of the private 
sector to implement the Interagency Paper on Sound Practices to 
Strengthen the Resilience of the U.S. Financial System.
  (b) Contents of Report.--The report required by subsection (a) 
shall--
          (1) examine the efforts to date of covered private sector 
        financial services firms to implement enhanced business 
        continuity plans;
          (2) examine the extent to which the implementation of 
        business continuity plans has been done in a geographically 
        dispersed manner, including an analysis of the extent to which 
        such firms have located their main and backup facilities in 
        separate electrical networks, in different watersheds, in 
        independent transportation systems, and using separate 
        telecommunications centers;
          (3) examine the need to cover more financial services 
        entities than those covered by the Interagency Paper; and
          (4) recommend legislative and regulatory changes that will--
                  (A) expedite the effective implementation of the 
                Interagency Paper by all covered financial services 
                entities; and
                  (B) maximize the effective implementation of business 
                continuity planning by all participants in the 
                financial services industry.
  (c) Confidentiality.--Any information provided to the Federal Reserve 
Board, the Comptroller of the Currency, or the Securities and Exchange 
Commission for the purposes of the preparation and submission of the 
report required by subsection (a) shall be treated as privileged and 
confidential. For purposes of section 552 of title 5, United States 
Code, this subsection shall be considered a statute described in 
subsection (b)(3)(B) of such section 552.
  (d) Definition.--The Interagency Paper on Sound Practices to 
Strengthen the Resilience of the U.S. Financial System is the 
interagency paper prepared by the Board of Governors of the Federal 
Reserve System, the Comptroller of the Currency, and the Securities and 
Exchange Commission that was announced in the Federal Register on April 
8, 2003.

SEC. 5089A. PRIVATE SECTOR PREPAREDNESS.

  It is the sense of the Congress that the insurance industry and 
credit-rating agencies, where relevant, should carefully consider a 
company's compliance with standards for private sector disaster and 
emergency preparedness in assessing insurability and creditworthiness, 
to ensure that private sector investment in disaster and emergency 
preparedness is appropriately encouraged.

SEC. 5089B. REPORT ON PUBLIC/PRIVATE PARTNERSHIPS.

  Before the end of the 6-month period beginning on the date of the 
enactment of this Act, the Secretary of the Treasury shall submit a 
report to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate containing--
          (1) information on the efforts the Department of the Treasury 
        has made to encourage the formation of public/private 
        partnerships to protect critical financial infrastructure and 
        the type of support that the Department has provided to these 
        partnerships; and
          (2) recommendations for administrative or legislative action 
        regarding these partnerships as the Secretary may determine to 
        be appropriate.

                       Subtitle H--Other Matters

  [Subtitle H of title V of the Amendment in the Nature of a Substitute 
consists of subtitle H of title V of the bill H.R. 10, as introduced on 
September 24, 2004]

                          Purpose and Summary

    The portions of H.R. 10 within the jurisdiction of the 
Financial Services Committee will authorize new funding for the 
fight against the financing of terror, give the government new 
tools to fight the funding of terrorism, take steps both to 
help prevent an attack on the financial system and to make the 
system and markets more resilient in case of another attack, 
and establish tools to improve international cooperation in the 
fight against terror funding. Among the major elements of the 
legislation are: additional authorizations for the Treasury 
Department's Financial Crimes Enforcement Network (FinCEN), to 
reduce the Bank Secrecy Act compliance burden on financial 
institutions while significantly increasing the usefulness of 
FinCEN's data to law enforcement; a series of purely technical 
corrections to the anti-terror finance title of the USA PATRIOT 
Act; language to tighten laws governing the counterfeiting of 
U.S. currency; authority for the Treasury Department to help 
countries strengthen their own currencies against 
counterfeiting; tools to close the Internet gambling loophole 
which provides a dangerous opportunity for the financing of 
terror; legislation to provide for the orderly unwinding of 
certain financial contracts where one party becomes insolvent, 
thus minimizing the risk of market disruption in the case of 
attack; and language aimed at improving international 
cooperation to combat the financing of terror, including a 
requirement for the Treasury Secretary to report annually on 
anti-terrorist financing initiatives and language supporting 
codification of interagency cooperation before international 
sessions held to set standards for anti-terrorist financing.

                  Background and Need for Legislation

    On November 27, 2002, President Bush signed legislation 
creating the National Commission on Terrorist Attacks Upon the 
United States (9/11 Commission) (Public Law 107-306), which was 
directed to investigate the ``facts and circumstances relating 
to the terrorist attacks of September 11, 2001,'' including 
those relating to intelligence agencies, law enforcement 
agencies, diplomacy, immigration issues and border control, the 
flow of assets to terrorist organizations, and the role of 
congressional oversight and resource allocation. To fulfill its 
mandate, the 9/11 Commission reviewed over 2.5 million pages of 
documents, conducted interviews of some 1,200 individuals in 
ten countries, and held 19 days of public hearings featuring 
testimony from 160 witnesses. On July 22, 2004, the 9/11 
Commission issued a 567-page report on its investigation.
    On August 23, 2004, the Committee held a hearing on those 
findings and recommendations of the 9/11 Commission that relate 
to terrorist financing and other matters within the Committee's 
purview. The Committee received testimony from 9/11 Commission 
Vice-Chairman Lee Hamilton, as well as representatives of the 
Treasury Department, the Department of Justice, and the 
Department of Homeland Security.
    The bulk of the 9/11 Commission's final report centers on 
reorganizing and strengthening the Nation's intelligence 
capabilities to prevent another large-scale terrorist attack. 
While the 9/11 Commission made no specific legislative 
recommendations on terrorist financing issues, both its final 
report and Vice-Chairman Hamilton's August 23, 2004, testimony 
contained findings that are of legislative interest to the 
Committee, including the following:
     Vigorous efforts to track terrorist financing must 
remain front and center in U.S. counterterrorism efforts.
     Since 9/11, the U.S. financial services sector and 
some of its international counterparts have provided law 
enforcement agencies with ``extraordinary cooperation'' to 
support quickly developing counter-terrorism investigations. 
Because financial institutions are in the best position to 
understand and identify problematic transactions or accounts, 
continued enforcement of the Bank Secrecy Act (BSA) rules for 
financial institutions, particularly in the area of Suspicious 
Activity Reporting, is necessary.
     Investigators need the right tools to identify 
customers and trace financial transactions in fast-moving 
counterterrorism investigations.
     While the financial provisions enacted after 9/11, 
particularly those contained in title III of the USA PATRIOT 
Act and subsequent regulations, have succeeded in addressing 
obvious vulnerabilities in the domestic financial system, the 
U.S. has been less successful in persuading other countries to 
adopt financial regulations that would permit the tracing of 
financial transactions.
    Enacted shortly after the September 11, 2001, attacks, 
title III of the USA PATRIOT Act (Public Law 107-56) represents 
easily the most far-reaching anti-money laundering legislation 
since the original Bank Secrecy Act was enacted in 1970. It 
gives U.S. law enforcement agencies new tools with which to 
attack the financial infrastructure of terrorism, and new 
authority, to share information and better coordinate their 
efforts with the intelligence community and the financial 
services industry. The law enlists a broad range of commercial 
entities beyond traditional depository institutions in the 
financial war against terrorism, through provisions requiring 
across-the-board implementation of anti-money laundering 
programs and enhanced regulatory and law enforcement scrutiny 
of informal or underground financial networks, such as the 
hawala system used by al Qaeda and other terrorist groups. 
Title III includes strong measures for tracking and 
interrupting the flow of criminal funds through off-shore 
secrecy havens, countries characterized by a lack of financial 
transparency and minimal cooperation with U.S. law enforcement 
efforts. The USA PATRIOT Act also imposes significant new 
identification requirements on individuals seeking to open 
accounts at financial institutions, designed to make it more 
difficult for terrorists to gain entry to the U.S. financial 
system.
    The Committee has performed rigorous oversight of the 
implementation of title III and other aspects of the 
Government's efforts to combat terrorist financing, holding 14 
full Committee and subcommittee hearings on those issues since 
9/11. While the 9/11 Commission made no legislative 
recommendations on issues that fall within the Committee's 
jurisdiction, the Commission found that ``vigorous efforts to 
track terrorist financing must remain front and center in U.S. 
counterterrorism efforts,'' and that new ways of fostering 
inter-agency and international cooperation are essential to the 
fight against terrorist financing. The Commission also found 
that ``terrorists have shown considerable creativity in their 
methods for moving money.'' Expanding upon this point in his 
August 23, 2004 testimony, 9/11 Commission Vice-Chairman 
Hamilton stated:

    While we have spent significant resources examining the 
ways al Qaeda raised and moved money, we are under no illusions 
that the next attack will use similar methods. As the 
government has moved to close financial vulnerabilities and 
loopholes, al Qaeda adapts. We must continually examine our 
system for loopholes that al Qaeda can exploit, and close them 
as they are uncovered. This will require constant efforts on 
the part of this Committee, working with the financial 
industry, their regulators and the law enforcement and 
intelligence community.

    The Committee believes that it is important to note the 
rationale for two provisions which are included in its 
recommended amendment which were not included in the introduced 
version of the bill. The first, a provision prohibiting the use 
of the payments system to conduct unlawful Internet gambling, 
is the text of H.R. 2143 as it passed the House. This provision 
responds to the 9/11 Commission's call for a continuous 
examination of the financial system for loopholes which 
terrorists such as al Qaeda can exploit. Enactment of this 
provision will close a specific loophole that the Federal 
Bureau of Investigation and the Department of Justice have both 
identified in testimony before the Committee as being 
vulnerable to use in terrorist financing schemes, largely 
because of the speed and anonymity with which Internet gambling 
can be conducted.
    The second provision which deserves special mention is the 
inclusion of provisions addressing the ``netting'' of financial 
contracts. While these complicated but non-controversial 
provisions were originally imagined as an important tool in 
resolving the insolvency of financial firms, they have taken on 
greater importance in the period since the events of September 
11, 2001 and the specific targeting of several large financial 
institutions by terrorists in recent months. The effects on the 
Nation's economy of a successful attack on any sizable 
financial firm could be catastrophic. With a single, well-
placed attack, literally tens of billions of dollars could 
disappear from the Nation's economy. As Chairman of the Federal 
Reserve Alan Greenspan wrote in a recent letter to the Chairman 
of the Committee, ``Should a terrorist attack result in the 
insolvency of one or more market participants, such uncertainty 
would unnecessarily place the financial system at greater risk 
in what unquestionably would be an especially dangerous 
period.'' Without the tools contained in these provisions, 
originally reported by the Committee as H.R. 2120, recovery 
from such an attack could be far from certain.
    The Committee's amendment to H.R. 10 constitutes its 
response to the 9/11 Commission's call for constant vigilance, 
and builds on landmarkprovisions of the USA PATRIOT Act that 
the Commission concluded have significantly advanced efforts to combat 
the financing of terrorism.

                                Hearings

    The Committee on Financial Services held a hearing on 
September 22, 2004 entitled ``Legislative Proposals to 
Implement the Recommendations of the 9/11 Commission.'' Those 
proposals formed the basis of the Committee's legislative 
contributions to the legislation introduced as H.R. 10, the 9/
11 Recommendations mplementation Act. The following witnesses 
testified: The Honorable Stuart A. Levey, Under Secretary for 
the Office of Terrorism and Financial Intelligence, Department 
of the Treasury and The Honorable Brian C. Roseboro, Under 
Secretary for Domestic Finance, Department of the Treasury.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 29, 2004, and ordered H.R. 10, the 9/11 
Recommendations Implementation Act, favorably reported to the 
House, with an amendment, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following amendments were considered by record vote. The names 
of members voting for and against follow.
    An amendment to the amendment in the nature of a substitute 
by Mr. Paul, no. 1b, changing the standards under which a 
financial institution must file a suspicious activity report, 
was not agreed to by a record vote of 10 yeas and 58 nays 
(Record vote no. FC-22).

                                              RECORD VOTE NO. FC-22
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...  ........        X   .........
Mr. Leach......................  ........  ........  .........  Mr. Kanjorski....  ........        X   .........
Mr. Baker......................  ........        X   .........  Ms. Waters.......        X   ........  .........
Mr. Bachus.....................  ........        X   .........  Mr. Sanders......        X   ........  .........
Mr. Castle.....................  ........        X   .........  Mrs. Maloney.....  ........        X   .........
Mr. King.......................  ........        X   .........  Mr. Gutierrez....  ........        X   .........
Mr. Royce......................  ........        X   .........  Ms. Velazquez....  ........        X   .........
Mr. Lucas (OK).................  ........  ........  .........  Mr. Watt.........        X   ........  .........
Mr. Ney........................  ........        X   .........  Mr. Ackerman.....  ........        X   .........
Mrs. Kelly.....................  ........        X   .........  Ms. Hooley (OR)..  ........        X   .........
Mr. Paul.......................        X   ........  .........  Ms. Carson (IN)..  ........        X   .........
Mr. Gillmor....................        X   ........  .........  Mr. Sherman......  ........        X   .........
Mr. Ryun (KS)..................  ........        X   .........  Mr. Meeks (NY)...  ........        X   .........
Mr. LaTourette.................  ........        X   .........  Ms. Lee..........        X   ........  .........
Mr. Manzullo...................        X   ........  .........  Mr. Inslee.......  ........        X   .........
Mr. Jones (NC).................        X   ........  .........  Mr. Moore........  ........        X   .........
Mr. Ose........................  ........        X   .........  Mr. Capuano......  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........  ........        X   .........
Mr. Green (WI).................  ........        X   .........  Mr. Hinojosa.....  ........        X   .........
Mr. Toomey.....................        X   ........  .........  Mr. Lucas (KY)...  ........        X   .........
Mr. Shays......................  ........        X   .........  Mr. Crowley......  ........        X   .........
Mr. Shadegg....................  ........        X   .........  Mr. Clay.........  ........        X   .........
Mr. Fossella...................  ........        X   .........  Mr. Israel.......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........        X   .........  Mr. Ross.........  ........        X   .........
Ms. Hart.......................  ........        X   .........  Mrs. McCarthy      ........        X   .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........  Mr. Baca.........  ........        X   .........
Mr. Tiberi.....................  ........        X   .........  Mr. Matheson.....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........  Mr. Lynch........  ........        X   .........
Mr. Feeney.....................  ........        X   .........  Mr. Miller (NC)..  ........        X   .........
Mr. Hensarling.................  ........        X   .........  Mr. Emanuel......  ........        X   .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Scott (GA)...  ........        X   .........
Mr. Murphy.....................  ........        X   .........  Mr. Davis (AL)...  ........        X   .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  Mr. Bell.........  ........        X   .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........        X   .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
Mr. Gerlach....................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
* Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


    An amendment to the amendment in the nature of a substitute 
by Mr. Inslee, no. 1n, amending the Fair Credit Reporting Act 
to change the procedures under which officials of certain law 
enforcement and intelligence agencies may obtain credit 
reports, was not agreed to by a record vote of 33 yeas and 35 
nays (Record vote no. FC-23).

                                              RECORD VOTE NO. FC-23
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...        X   ........  .........
Mr. Leach......................  ........  ........  .........  Mr. Kanjorski....        X   ........  .........
Mr. Baker......................  ........        X   .........  Ms. Waters.......        X   ........  .........
Mr. Bachus.....................  ........        X   .........  Mr. Sanders......        X   ........  .........
Mr. Castle.....................  ........        X   .........  Mrs. Maloney.....        X   ........  .........
Mr. King.......................  ........        X   .........  Mr. Gutierrez....        X   ........  .........
Mr. Royce......................  ........        X   .........  Ms. Velazquez....        X   ........  .........
Mr. Lucas (OK).................  ........  ........  .........  Mr. Watt.........        X   ........  .........
Mr. Ney........................  ........        X   .........  Mr. Ackerman.....        X   ........  .........
Mrs. Kelly.....................  ........        X   .........  Ms. Hooley (OR)..        X   ........  .........
Mr. Paul.......................  ........        X   .........  Ms. Carson (IN)..        X   ........  .........
Mr. Gillmor....................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........  Mr. Meeks (NY)...        X   ........  .........
Mr. LaTourette.................  ........        X   .........  Ms. Lee..........        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Inslee.......        X   ........  .........
Mr. Jones (NC).................  ........        X   .........  Mr. Moore........        X   ........  .........
Mr. Ose........................  ........        X   .........  Mr. Capuano......        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........        X   .........  Mr. Hinojosa.....        X   ........  .........
Mr. Toomey.....................  ........        X   .........  Mr. Lucas (KY)...        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Crowley......        X   ........  .........
Mr. Shadegg....................  ........        X   .........  Mr. Clay.........        X   ........  .........
Mr. Fossella...................  ........        X   .........  Mr. Israel.......        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........  Mr. Ross.........        X   ........  .........
Ms. Hart.......................  ........        X   .........  Mrs. McCarthy            X   ........  .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........  Mr. Matheson.....        X   ........  .........
Mr. Kennedy (MN)...............  ........        X   .........  Mr. Lynch........        X   ........  .........
Mr. Feeney.....................  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Mr. Hensarling.................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........  Mr. Scott (GA)...        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Davis (AL)...        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  Mr. Bell.........        X   ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........        X   .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
Mr. Gerlach....................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
* Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


    An amendment to the amendment in the nature of a substitute 
by Mr. Royce, no. 1o, limiting the forms of identification that 
may be accepted from non-United States persons by financial 
institutions, was not agreed to by a record vote of 22 yeas and 
47 nays (Record vote no. FC-24).

                                              RECORD VOTE NO. FC-24
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...  ........        X   .........
Mr. Leach......................  ........        X   .........  Mr. Kanjorski....  ........        X   .........
Mr. Baker......................  ........        X   .........  Ms. Waters.......  ........        X   .........
Mr. Bachus.....................  ........        X   .........  Mr. Sanders......  ........        X   .........
Mr. Castle.....................  ........        X   .........  Mrs. Maloney.....  ........        X   .........
Mr. King.......................  ........        X   .........  Mr. Gutierrez....  ........        X   .........
Mr. Royce......................        X   ........  .........  Ms. Velazquez....  ........        X   .........
Mr. Lucas (OK).................  ........  ........  .........  Mr. Watt.........  ........        X   .........
Mr. Ney........................        X   ........  .........  Mr. Ackerman.....  ........        X   .........
Mrs. Kelly.....................        X   ........  .........  Ms. Hooley (OR)..  ........        X   .........
Mr. Paul.......................        X   ........  .........  Ms. Carson (IN)..  ........        X   .........
Mr. Gillmor....................        X   ........  .........  Mr. Sherman......  ........        X   .........
Mr. Ryun (KS)..................        X   ........  .........  Mr. Meeks (NY)...  ........        X   .........
Mr. LaTourette.................        X   ........  .........  Ms. Lee..........  ........        X   .........
Mr. Manzullo...................        X   ........  .........  Mr. Inslee.......  ........        X   .........
Mr. Jones (NC).................        X   ........  .........  Mr. Moore........  ........        X   .........
Mr. Ose........................  ........        X   .........  Mr. Capuano......  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........  ........        X   .........
Mr. Green (WI).................        X   ........  .........  Mr. Hinojosa.....  ........        X   .........
Mr. Toomey.....................  ........        X   .........  Mr. Lucas (KY)...  ........        X   .........
Mr. Shays......................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Shadegg....................        X   ........  .........  Mr. Clay.........  ........        X   .........
Mr. Fossella...................  ........        X   .........  Mr. Israel.......  ........        X   .........
Mr. Gary G. Miller (CA)........        X   ........  .........  Mr. Ross.........  ........        X   .........
Ms. Hart.......................  ........        X   .........  Mrs. McCarthy      ........        X   .........
                                                                 (NY).
Mrs. Capito....................        X   ........  .........  Mr. Baca.........  ........        X   .........
Mr. Tiberi.....................  ........        X   .........  Mr. Matheson.....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........  Mr. Lynch........  ........        X   .........
Mr. Feeney.....................        X   ........  .........  Mr. Miller (NC)..  ........        X   .........
Mr. Hensarling.................  ........        X   .........  Mr. Emanuel......  ........        X   .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Scott (GA)...  ........        X   .........
Mr. Murphy.....................        X   ........  .........  Mr. Davis (AL)...  ........        X   .........
Ms. Ginny Brown-Waite (FL).....        X   ........  .........  Mr. Bell.........  ........        X   .........
Mr. Barrett (SC)...............        X   ........  .........  .................  ........  ........  .........
Ms. Harris.....................        X   ........  .........  .................  ........  ........  .........
Mr. Renzi......................        X   ........  .........  .................  ........  ........  .........
Mr. Gerlach....................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
* Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


    The following other amendments were also considered:
    An amendment in the nature of a substitute by Mr. Oxley, 
containing the legislative recommendations of the Committee on 
Financial Services in response to the findings of the 9/11 
Commission, was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. Kanjorski, no. 1a, providing for a joint report on 
implementation of financial system resilience recommendations, 
was agreed to by a voice vote.
    A substitute amendment to the amendment in the nature of a 
substitute by Mrs. Maloney, no. 1c, substituting the text of 
the bill H.R. 5150, the National Intelligence Reform Act of 
2004, was ruled out of order by the Chair.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Biggert, no. 1d, providing for coordination with the 
Secretary of the Treasury regarding international financial 
institutions, was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. Baca, no. 1e, expressing the sense of Congress with 
regard to private sector preparedness, was agreed to by a voice 
vote.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Biggert, no. 1f, expressing the sense of Congress with 
regard to support for financial services industry preparedness 
and response by the Department of the Treasury, was agreed to 
by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Maloney, no. 1g, establishing a critical infrastructure 
support program, was withdrawn.
    An amendment to the amendment in the nature of a substitute 
by Ms. Harris, no. 1h, providing for an exclusion from the Fair 
Credit Reporting Act for certain information exchange networks, 
was withdrawn.
    An amendment to the amendment in the nature of a substitute 
by Mr. Inslee, no. 1i, clarifying the definition of ``lawful 
transaction'', was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. Inslee, no. 1j, granting tribal authorities the same 
exception as State and local authorities, was withdrawn.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Kelly, no. 1k, requiring certain financial institutions 
to report certain cross-border electronic transmittals of 
funds, was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. Emanuel, no. 1l, requiring a report on public/private 
partnerships, was agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Kelly, no. 1m, establishing the office of terrorism and 
financial intelligence in the Department of the Treasury, was 
not agreed to by a voice vote.
    An amendment to the amendment in the nature of a substitute 
by Mr. Gutierrez, no. 1p, providing for post-employment 
limitations on leading bank examiners, was agreed to by a voice 
vote.
    An amendment to the amendment in the nature of a substitute 
by Mrs. Kelly, no. 1q, regarding certification procedures to 
deter financial support for domestic or international 
terrorism, was withdrawn.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The Secretary of the Treasury and the appropriate financial 
regulators will use the authority granted by this legislation 
to improve the Nation's ability to detect, seize, and freeze 
assets used in the financing of terrorist activities directed 
at the United States at home and abroad.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
legislation would result in no new budget authority, 
entitlement authority, or tax expenditures or revenues.

        Committee and Congressional Budget Office Cost Estimates

    The cost estimate provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974 was not available for inclusion in this report. The 
Chairman will cause such estimate to be printed in either a 
supplemental report or the Congressional Record when it is 
available.

                       Federal Mandates Statement

    The estimate of Federal mandates prepared by the Director 
of the Congressional Budget Office pursuant to section 423 of 
the Unfunded Mandates Reform Act was not available for 
inclusion in this report. The Chairman will cause such estimate 
to be printed either in a supplemental report or the 
Congressional Record when it is available.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) clause 3 (relating to the 
power to regulate interstate commerce) and clause 5 (relating 
to the power to coin money).

                  Applicability To Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-By-Section Analysis of the Legislation

    This section-by-section analysis contains only those 
provisions in H.R. 10, as introduced, which fall within the 
jurisdiction of the Committee on Financial Services, or added 
by the Committee's amendment.

             TITLE II--TERRORISM PREVENTION AND PROSECUTION


          Subtitle E--Money Laundering and Terrorist Financing


   Chapter 1--Funding to Combat Financial Crimes Including Terrorist 
                               Financing


Section 2101. Additional authorization for FinCEN

    This section authorizes funding for a series of technology 
enhancements to (1) improve the usefulness of data maintained 
by the Financial Crimes Enforcement Network, the Treasury's 
anti-terror finance unit, while reducing the compliance burden 
on financial institutions; and (2) initiate an office to 
improve compliance with the requirements of the Bank Secrecy 
Act (BSA), as enhanced by the USA PATRIOT Act. Among the 
programs authorized by this section, the ``BSA Direct'' program 
completely redesigns the way FinCEN accepts data from financial 
institutions in compliance with the BSA, the way law 
enforcement queries the database, and the way FinCEN, acting 
with law enforcement, shares data with financial institutions 
about particular individuals or entities of interest.

Section 2102. Money laundering and financial crimes strategy 
        reauthorization

    This section contains a short-term reauthorization of 
provisions first enacted in 1998 (Public Law 105-310) which 
require the Secretary of the Treasury, in consultation with the 
Attorney General and a number of other Federal financial 
regulators and Federal and State law enforcement agencies, to 
submit to Congress a national strategy for combating money 
laundering and related financial crimes, to include efforts 
directed at the prevention, detection, and prosecution of the 
funding of acts of international terrorism.
    The Committee believes that the potential exists for terror 
organizations to self-finance with counterfeit currency, and 
strongly encourages the Department of Treasury to consider that 
possibility as part of its implementation of a national money 
laundering strategy.
    The section also authorizes the appropriation of $15 
million in both fiscal years 2004 and 2005, to fund the 
designation of high risk money laundering areas that warrant 
enhanced scrutiny by Federal, State, and local law enforcement 
officials, as well as a grant program designed to support State 
and local law enforcement initiatives to detect and prevent 
money laundering and related financial crimes.

   Chapter 2--Enforcement Tools to Combat Financial Crimes Including 
                          Terrorist Financing


 SUBCHAPTER A--MONEY LAUNDERING ABATEMENT AND FINANCIAL ANTITERRORISM 
                         TECHNICAL CORRECTIONS

Section 2111. Short title

    This section establishes the short title of the subtitle, 
the ``Money Laundering Abatement and Financial Antiterrorism 
Technical Corrections Act of 2004''.

Section 2112. Technical corrections to Public Law 107-56

    This section makes a number of typographical and 
grammatical corrections to title III of the USA PATRIOT Act 
(relating to terrorist financing and money laundering) to 
ensure that those provisions work as intended and can be 
enforced by the relevant Federal agencies.

Section 2113. Technical corrections to other provisions of law

    This section makes a number of typographical and 
grammatical corrections to title 31 of the U.S. Code and other 
provisions of Federal law, as amended by title III of the USA 
PATRIOT Act (relating to terrorist financing and money 
laundering), to ensure that those provisions work as intended 
and can be enforced by the relevant Federal agencies.
    Among other changes, this section corrects a typographical 
error in 31 U.S.C. Sec. 5324. Subsection (b) of that statute 
makes it an offense to evade the currency reporting 
requirements set forth in ``section 5333.'' There is in fact no 
such section. The intended reference was to section 5331. That 
section requires any person who receives more than $10,000 in 
coins or currency, in one transaction or in two or more related 
transactions in the course of that person's trade or business, 
to file a report with respect to that transaction with the 
Financial Crimes Enforcement Network (FinCEN). Correcting the 
typographical error would make it possible for any person who 
violates this requirement to be subject to criminal and civil 
forfeitures under 31 U.S.C. Sec. 5317(c)(2), in addition to 
civil and criminal penalties.
    The U.S. Supreme Court's decision in United States v. 
Bajakajian, 524 U.S. 321 (1998) established legal precedents 
that protect against potentially unfair civil forfeitures. The 
Committee notes that these precedents now form the basis for 
more fair civil and criminal forfeitures and serve as guiding 
principles that Federal prosecutors should observe when 
enforcing failure-to-file violations under 31 U.S.C. Sec. 5331. 
The Committee also notes that all of the due process 
protections enacted as part of the Civil Asset Forfeiture 
Reform Act of 2000 apply to forfeitures under 31 U.S.C. 
Sec. 5317(c), including the protection against forfeitures that 
are grossly disproportional to the gravity of the offense. See 
18 U.S.C. Sec. 983(g), which codified the Supreme Court's 
decision in Bajakajian.
    In the Bajakajian case, the Court ruled it unconstitutional 
under the Eighth Amendment's Excessive Fines Clause for the 
government to seize $357,144 in currency that an individual 
attempted to transport out of the United States without filing 
a report required by law. As the majority opinion stated, ``The 
forfeiture serves no remedial purpose, is designed to punish 
the offender, and cannot be imposed on innocent owners.'' 
Bajakajian, 524 U.S. at 332.
    The Court found that the failure to file a report required 
by Federal law was the only offense committed by the 
respondent. The forfeiture of the entire amount of the currency 
in question ``would be grossly disproportional to the gravity 
of his offense.'' Bajakajian, 524 U.S. at 339-40. It is 
permissible to move currency out of the country as long as it 
is reported. Moreover, the majority opinion also stated that 
the money came from legal activity and was to be used to repay 
a lawful debt. Lastly, the Court majority argued that the harm 
caused by the defendant's failure to file was minimal, in that 
there was no fraud on the Federal government, and no cost to 
the taxpayers of the failure to file. ``Had his crime gone 
undetected,'' wrote the Court, ``the Government would have been 
deprived only of the information that $357,144 had left the 
country.'' Bajakajian, 524 U.S. at 339.
    The Committee therefore notes that the civil and criminal 
forfeitures provided for under 31 U.S.C. Sec. 5317(c) for 
violations of 31 U.S.C. Sec. 5331 are governed by the legal 
precedents established in United States v. Bajakajian.

Section 2114. Repeal of review

    This section makes permanent the provisions of title III of 
the USA PATRIOT Act by repealing section 303 of the Act. 
Section 303 provides that the provisions of title III will 
terminate after September 30, 2004, if both Houses of Congress 
enact a joint resolution to that effect.

Section 2115. Effective date

    This section provides that the amendments made by this 
subtitle to Public Law 107-56, the United States Code, the 
Federal Deposit Insurance Act, and any other provision of law 
shall take effect as if such amendments had been included in 
Public Law 107-56, as of the date of the enactment of that 
public law, and no amendment made by that public law that is 
inconsistent with an amendment made by this subtitle will be 
deemed to have taken effect.

               SUBCHAPTER B--ADDITIONAL ENFORCEMENT TOOLS

Section 2121. Bureau of Engraving and Printing security printing

    This section authorizes the Secretary of the Treasury to 
produce currency and other security documents at the request of 
foreign governments on a reimbursable basis, as a way of 
strengthening those currencies and the economies of developing 
countries that do not have the capacity to print secure notes 
themselves.

Section 2122. Conduct in aid of counterfeiting

    This section amends the criminal code to equate the 
possession of anti-counterfeiting technology or components 
thereof, with the actual act of counterfeiting. It takes into 
account the fact that as currency anti-counterfeiting 
technology is improved, traditional counterfeiters may have to 
``subcontract'' the manufacture of a necessary component.

Section 2123. Reporting of cross-border transmittal of funds

    This section directs the Secretary of the Treasury, in 
consultation with the Federal Reserve Board of Governors, to 
prescribe regulations requiring those financial institutions 
the Secretary deems appropriate to report certain crossborder 
transmittals of funds relevant to Treasury's anti-money 
laundering and anti-terrorist financing efforts to the 
Financial Crimes Enforcement Network (FinCEN). Before 
prescribing the regulations, the Secretary is required to 
delegate the task of producing a report to the Secretary and 
the Congress to the Bank Secrecy Act Advisory Group. The 
report, due within one year of the date of enactment, must 
identify the information in cross-border electronic 
transmittals of funds relevant to anti-money laundering and 
counter-terrorist financing efforts, recommend the appropriate 
form, manner, content and frequency of filing of the required 
reports, and identify the technology necessary for FinCEN to 
receive, maintain, exploit and disseminate information from 
reports of cross-border electronic transmittals of funds.
    The Secretary must prescribe final regulations pursuant to 
this section within 3 years of the date of enactment of this 
Act. The Secretary may not prescribe regulations before 
certifying to Congress that FinCEN has the technological 
systems in place to receive, maintain, exploit and disseminate 
information from reports of cross-border electronic 
transmittals of funds to law enforcement and other entities 
engaged in efforts against money laundering and terrorist 
financing.
    Financial institutions required to submit reports on 
certain cross-border electronic transmittals of funds pursuant 
to this section are relieved of the recordkeeping requirements 
regarding such transmittals imposed by section 21(b)(3) of the 
Federal Deposit Insurance Act.

Section 2124. Enhanced effectiveness of examinations, including anti-
        money laundering programs

    This section amends section 10 of the Federal Deposit 
Insurance Act (12 U.S.C. Sec. 1820) by imposing post-employment 
restrictions on leading bank examiners. Specifically, this 
section prohibits an officer or employee of a Federal banking 
agency or Federal Reserve Bank, who has served as the examiner-
in-charge, or a functionally equivalent position, for two or 
more months during the final eighteen months of his employment 
for a particular depository institution or depository 
institution holding company, from holding any office or 
position, or becoming a consultant or controlling shareholder, 
at this institution for a period of one year. Violators of this 
section are subject to suspension or an industry-wide 
prohibition, among other penalties which may apply to Federal 
employees.
    The Federal banking regulators are charged with developing 
regulations that determine what constitutes a leading examiner. 
In prescribing the regulations, the agencies are directed to 
take into account the manner in which the examiners are 
distributed among institutions and holding companies; the 
number of institutions an examiner is involved with; the period 
of time an examiner is assigned to an institution or holding 
company; the size of the institutions or holding companies for 
which each examiner is responsible; and any other factors the 
agency determines to be appropriate.
    A Federal banking agency may waive the restrictions of this 
section on a case-by-case basis if the agency head certifies in 
writing that such a waiver would not be inconsistent with the 
public interest and if the waiver is provided in advance of the 
examiner becoming affiliated with the institution or holding 
company.
    This section also amends the Federal Credit Union Act to 
require similar post-employment limitations on examiners of 
Federally insured credit unions.
    This section also requires the Federal banking and credit 
union regulators to study efforts and proposals for the 
retention of experienced and highly qualified examiners. The 
regulators must also study continuing efforts to attract 
examiners and supervisors. A report on the results of this 
study is required within one year of the enactment of this 
legislation.

      SUBCHAPTER C--UNLAWFUL INTERNET GAMBLING FUNDING PROHIBITION

Section 2131. Short title

    This section provides the short title of the subchapter, 
the ``Unlawful Internet Gambling Funding Prohibition Act''.

Section 2132. Findings

    This section provides certain Congressional findings. In 
particular, Congress finds that: (1) Internet gambling is 
primarily funded through the use of personal banking 
instruments and plays a large role in the creation of 
ultimately uncollectible personal debt; and (2) Internet 
gambling is susceptible to abuse by money launderers.

Section 2133. Policies and procedures required to prevent payments for 
        unlawful internet gambling

    Subsection (a) requires the Federal functional regulators 
to prescribe regulations within six months requiring any 
designated payment system to establish policies and procedures 
reasonably designed to identify and prevent restricted 
transactions.
    Subsection (b) requires the Federal functional regulators, 
in prescribing regulations, to identify types of policies and 
procedures which would be reasonably designed to identify, 
block or prevent a restricted transaction; to the extent 
practical permit any participant in a payment system to choose 
among alternative means of compliance; and consider exempting 
restricted transactions where it is not reasonably practical to 
identify and block, or otherwise prevent, such transactions.
    Subsection (c) provides that a creditor, credit card 
issuer, financial institution, operator of a terminal at which 
an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or 
local network utilized to effect a credit transaction, 
electronic fund transfer, or money transmitting service, or a 
participant in such network, is in compliance with subsection 
(a) if such person operates in reliance on procedures 
established by the payment system pursuant to subsection (a).
    Subsection (d) requires that this section be enforced by 
the Federal functional regulators and the Federal Trade 
Commission, and sets out factors to be considered in any 
enforcement action against any payment system, or any 
participant in a payment system that is a creditor, credit card 
issuer, financial institution, operator of a terminal at which 
an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or 
local network utilized to effect a credit transaction, 
electronic fund transfer, or money transmitting service, or a 
participant in such network.

Section 2134. Definitions

    This section defines the terms ``restricted transaction'', 
``designated payment system'', ``Federal functional 
regulator'', ``Internet'', ``unlawful Internet gambling'', 
``credit'', ``creditor'' and ``credit card'', ``electronic fund 
transfer'', ``financial institution'', and ``money transmitting 
business'' and ``money transmitting service.'' Paragraph (2) 
defines the term ``bets or wagers'' as the staking or risking 
by any person of something of value upon the outcome of a 
contest of others, a sporting event, or a game subject to 
chance with the agreement that the winner will receive 
something of greater value than the amount staked or risked. 
This subsection clarifies that ``bets or wagers'' does not 
include a bona fide business transaction governed by the 
securities laws; a transaction subject to the Commodity 
Exchange Act; an over-the-counter derivative instrument and any 
other transaction exempt from State gaming or bucket shop laws 
pursuant to the Commodity Exchange Act or Securities Exchange 
Act; a contract of indemnity or guarantee; a contract for life, 
health, or accident insurance; a deposit with a depository 
institution; certain participation in a simulation sports game 
or education game; or a lawful transaction with a business 
licensed or authorized by a State, defined for these purposes 
as any transaction that is lawful under all applicable Federal 
laws and all applicable State laws of both the State in which 
the licensed or authorized business is located and the State 
where the bet is initiated.

Section 2135. Common sense rule of construction

    This section provides that no provision of this legislation 
may be construed as altering, limiting, extending, changing the 
status of, or otherwise affecting any law relating to, 
affecting, or regulating gambling within the United States.

          TITLE IV--INTERNATIONAL COOPERATION AND COORDINATION


         Subtitle B--Prevent the Continued Growth of Terrorism


            Chapter 2--United States Multilateral Diplomacy


Section 4033. Leadership and membership of international organizations

    This section requires that the President, acting through 
the Secretary of State, the relevant United States chiefs of 
mission, and, where appropriate, the Secretary of the Treasury, 
use the voice, vote, and influence of the United States to 
prevent countries subject to United Nations Security Council 
sanctions from becoming members or serving in leadership roles 
in all United Nation bodies and at other international 
organizations and multilateral institutions of which the United 
States is a member. The purpose of including the Secretary of 
the Treasury is to enable the Secretary to direct conforming 
action through instructions to U.S. Executive Directors to the 
International Monetary Fund, the International Bank for 
Reconstruction and Development, the regional development banks, 
and other more informal multilateral financial policymaking 
bodies in which the Department of the Treasury is the lead 
representative and lead negotiator for the United States.

Section 4035. Implementation and establishment of office of 
        multilateral negotiations

    This section creates an office within the State Department 
and a Special Representative for Multilateral Negotiations, 
appointed by the President and carrying Ambassador-at-large 
status. The duties of the Special Representative include 
assisting in the organization of, and preparation for, United 
States participation in multilateral negotiations and, at the 
direction of the Secretary of State, serving as a member of a 
United States delegation to any multilateral negotiation. The 
section further requires the Special Representative to 
coordinate and consult with the Secretary of the Treasury 
regarding initiatives associated with international financial 
institutions and multilateral financial policymaking bodies, 
and clarifies that the Secretary of the Treasury is the lead 
representative and negotiator for those entities, including the 
International Monetary Fund, the development banks, the 
Financial Action Task Force, and the Group of Eight.

     Subtitle D--Afghanistan Freedom Support Act Amendments of 2004


Section 4061. Short title

    This section establishes the short title of the subtitle, 
the ``Afghanistan Freedom Support Act Amendments of 2004''.

Section 4062. Coordination of assistance for Afghanistan

    This section creates a coordinator to unify and create 
assistance plans for Afghanistan. The coordinator is required 
to work with the international community, including 
multilateral organizations and international financial 
institutions, and the government of Afghanistan to ensure that 
assistance to Afghanistan is implemented in a coherent, 
consistent, and efficient manner to prevent duplication and 
waste. To effectuate these responsibilities within the 
international financial institutions, as defined in section 
1701(c)(2) of the International Financial Institutions Act, the 
coordinator is required to work through the Secretary of the 
Treasury and the U.S. Executive Directors at the international 
financial institutions.
    It is expected that the U.S. Executive Directors and the 
Department of the Treasury will provide all necessary 
assistance to the coordinator in order to ensure that bilateral 
U.S. aid packages are designed and delivered to Afghanistan in 
the most efficient and effective manner possible. There may be 
cases in which it the coordinator will need to meet with staff 
of relevant multilateral financial institutions. This provision 
is not intended to rule out the possibility of such meetings. 
However, the provision makes clear that any such meetings 
should be undertaken in consultation with the appropriate 
Treasury officials.

Subtitle H--Improving International Standards and Cooperation To Fight 
                          Terrorist Financing


Section 4111. Sense of the Congress regarding success in multilateral 
        organizations

    Subsection (a) sets forth findings that detail United 
States successes in creating a set of international standards 
for fighting terrorist financing through the Financial Action 
Task Force (FATF). They also describe the success of United 
States leadership in providing a mechanism in the International 
Monetary Fund and the development banks for identifying 
deficiencies in financial systems and for directing development 
funds to support changes in emerging market financial systems 
that want to comply with the international FATF standards.
    Subsection (b) expresses the sense of Congress that the 
Secretary of the Treasury should continue to promote the 
dissemination of international anti-money laundering (AML) and 
counter-terrorist financing (CTF) standards, and to press for 
full implementation of the FATF 40 + 8 recommendations by all 
countries.

Section 4112. Expanded reporting and testimony requirements for the 
        Secretary of the Treasury

    This section amends the International Financial 
Institutions Act to require the Secretary of the Treasury to 
work with the International Monetary Fund (IMF) to foster 
strong global AML/CTF regimes and ensure that country 
performance under the FATF AML/CTF standards is monitored 
effectively. The section also directs the Secretary to work 
with the IMF to ensure that AML/CTF issues are a part of 
regular reviews of country progress and these measures are to 
be considered indispensable elements of sound financial 
systems. Finally, the section requires the Treasury Department 
to emphasize the importance of sound AML/CTF regimes to global 
growth and development. The Committee notes that all of these 
actions currently are undertaken and, thus, the section seeks 
only to codify existing practice.
    Section 1503(a) of the International Financial Institutions 
Act (22 U.S.C. 262o-2(a)) requires the Secretary of the 
Treasury to report to Congress during the first quarter of each 
year on the state of the international financial system. This 
section adds one more specific item to be included in the 
annual report: a progress report on the Secretary's efforts to 
fight terrorist financing through international financial 
institutions and multilateral policymaking bodies.
    Since the events of September 11, 2001, the Secretary of 
the Treasury has provided these status reports, thus this 
section codifies existing practice. This section also defines 
the term ``other multilateral policymaking bodies'' in order to 
ensure that Group of Eight and FATF initiatives are included in 
the annual report in addition to international financial 
institution initiatives. In establishing this additional 
requirement, the Committee does not intend to diminish the 
importance of the development and financial stability work 
undertaken by the international institutions. Rather, the 
provision will ensure that the efforts to strengthen standards 
against money laundering and terrorist financing are properly 
understood within the overall context of strengthening 
financial system resilience and institutional strength.

Section 4113. Coordination of United States government efforts

    This section codifies existing practice by authorizing the 
Secretary of the Treasury to continue convening the interagency 
U.S. Government FATF working group. The Committee notes that 
since the events of September 11, 2001, the Department of the 
Treasury has spearheaded efforts to cooperate with other 
agencies of the United States government to ensure that its 
negotiations within FATF, the Group of Eight, and other 
international fora are consistent and compatible with broader 
U.S. government objectives. The 9/11 Commission Report and the 
accompanying staff Monograph on terrorist financing acknowledge 
the unprecedented level of cooperation within the Federal 
government on anti-terrorist financing measures since September 
11, 2001, but also express concern that such cooperation could 
wane ``as memories fade'' and as relevant personnel move on to 
other projects. In addition, the 9/11 Commission Report 
recommended that ``information procedures should provide 
incentives for sharing, to restore a better balance between 
security and shared knowledge * * *. We propose that 
information be shared horizontally, across new networks that 
transcend individual agencies.''
    By including this provision, the Committee intends to make 
the strong interagency cooperation and communication on 
international financial standard-setting matters related to 
anti-terrorist financing where the Treasury Department is in 
the lead permanent. Currently, the Secretary of the Treasury, 
or his designee, acts as the lead United States Government 
official to FATF. The section makes clear that the Secretary 
will continue to convene the interagency United States 
Government FATF working group.
    This interagency working group has a flexible membership 
that permits the Secretary of the Treasury to draw on the 
resources of a range of U.S. government agencies for the 
purposes of preparing for international financial policy 
standard-setting negotiations at the multilateral level. For 
example, if FATF were considering establishing international 
standards concerning law enforcement-related issues, the 
Secretary would have formal authority under this section to 
incorporate into pre-negotiation meetings law enforcement 
agencies within the U.S. Federal government so that the 
Treasury Department position is consistent with U.S. government 
practice or priorities. If the issue for consideration relates 
instead to a specific financial sector, such as banking, 
securities, or insurance, the Secretary has the formal 
authority under this section to include financial regulators.
    The Committee anticipates that in some years there will be 
no major standard-setting activities within the various 
international groups in which the Secretary of the Treasury has 
the lead. In those instances, the section requires that the 
interagency working group meet annually to advise the Secretary 
on policies to be pursued by the United States regarding the 
development of common international anti-money laundering and 
counter-terrorist financing standards.

Section 4114. Definitions

    This section clarifies terms used throughout this title. It 
incorporates by reference the definition of the term 
``international financial institution'' which already exists in 
section 1701(c)(2) of the International Financial Institutions 
Act. This section also defines the term ``Financial Action Task 
Force.''

                   TITLE V--GOVERNMENT RESTRUCTURING


              Subtitle G--Emergency Financial Preparedness


        Chapter 1--Emergency Preparedness for Fiscal Authorities


Section 5081. Delegation authority of the Secretary of the Treasury

    This section authorizes Treasury's Fiscal Assistant 
Secretary, which operates as the U.S. government's money 
manager, to delegate to subordinates the authority to authorize 
cash movements and approve and sign changes to debt security 
terms and conditions.

Section 5081A. Treasury support for financial services preparedness and 
        response

    Subsection (a) provides a finding that the Secretary of the 
Treasury has successfully communicated and coordinated with the 
private-sector financial services industry about counter-
terrorist financing activities and preparedness; successfully 
reached out to State and local governments and regional public-
private partnerships that protect employees and critical 
infrastructure by enhancing communication and coordinating 
plans for disaster preparedness and business continuity; and 
has set an example for the Department of Homeland Security and 
other Federal agency partners, whose active participation is 
vital on these issues.
    Subsection (b) expresses the sense of the Congress that the 
Secretary of the Treasury, in consultation with the Secretary 
of Homeland Security and other Federal agency partners, should 
furnish resources and submit annual reports to Congress on 
Federal efforts to educate consumers and employees of the 
financial services industry about domestic counter-terrorist 
financing activities, including how the public and private 
sector organizations involved in counter-terrorist financing 
activities can help to combat terrorism and simultaneously 
protect the lives and civil liberties of consumers and 
financial services employees, and how those consumers and 
employees can assist the public and private sector 
organizations involved in counter-terrorist financing 
activities.

                     Chapter 2--Market Preparedness


              SUBCHAPTER A--NETTING OF FINANCIAL CONTRACTS

Section 5082. Short title

    This section provides the short title of the subchapter, 
the ``Financial Contracts Bankruptcy Reform Act of 2002.''

Section 5082A. Treatment of certain agreements by conservators or 
        receivers of insured depository institutions

    Subsections (a) through (f) of this section amend the 
Federal Deposit Insurance Act's (FDIA) definitions of 
``qualified financial contract,'' ``securities contract,'' 
``commodity contract,'' ``forward contract,'' ``repurchase 
agreement'' and ``swap agreement'' to make them consistent with 
the definitions in the Bankruptcy Code and to reflect the 
enactment of the Commodity Futures Modernization Act of 2000 
(CFMA). It is intended that the legislative history and case 
law surrounding those terms, to the date of this amendment, be 
incorporated into the legislative history of the FDIA.
    Subsection (b) amends the definition of ``securities 
contract'' expressly to encompass margin loans, to clarify the 
coverage of securities options and to clarify the coverage of 
repurchase and reverse repurchase transactions. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans,'' such as arrangements where a securities 
broker or dealer extends credit to a customer in connection 
with the purchase, sale, or trading of securities, and does not 
include loans that are not commonly referred to as ``margin 
loans.'' The reference in subsection (b) to a ``guarantee by or 
to any securities clearing agency'' is intended to cover other 
arrangements, such as novation, that have an effect similar to 
a guarantee. The reference to a ``loan'' of a security in the 
definition is intended to apply to loans of securities, whether 
or not for a ``permitted purpose'' under margin regulations. 
The reference to ``repurchase and reverse repurchase 
transactions'' is intended to eliminate any inquiry under the 
qualified financial contract provisions of the FDIA as to 
whether a repurchase or reverse repurchase transaction is a 
purchase and sale transaction or a secured financing. 
Repurchase and reverse repurchase transactions meeting certain 
criteria are already covered under the definition of 
``repurchase agreement'' in the FDIA (and a regulation of the 
Federal Deposit Insurance Corporation (FDIC)). Repurchase and 
reverse repurchase transactions on all securities (including, 
for example, equity securities, asset-backed securities, 
corporate bonds and commercial paper) are included under the 
definition of ``securities contract.'' Subsection (b) also 
specifies that purchase, sale and repurchase obligations under 
a participation in a commercial mortgage loan do not constitute 
``securities contracts.'' While a contract for the purchase, 
sale or repurchase of a participation may constitute a 
``securities contract,'' the purchase, sale or repurchase 
obligation embedded in a participation agreement does not make 
that agreement a ``securities contract.''
    A number of terms used in the qualified financial contract 
provisions, but not defined therein, are intended to have the 
meanings set forth in the analogous provisions of the 
Bankruptcy Code or Federal Deposit Insurance Corporation 
Improvement Act (FDICIA), such as, for example, ``securities 
clearing agency''. The term ``person,'' however, is intended to 
have the meaning set forth in section 1 of title 1 of the 
United States Code.
    Subsection (c) amends the definition of ``commodity 
contract'' in section 11(e)(8)(D)(iii) of the Federal Deposit 
Insurance Act. Subsection (d) amends section 11(e)(8)(D)(iv) of 
the Federal Deposit Insurance Act with respect to its 
definition of a ``forward contract.''
    Subsection (e) amends the definition of ``repurchase 
agreement'' to codify the substance of the FDIC's 1995 
regulation defining repurchase agreement to include those on 
qualified foreign government securities. The term ``qualified 
foreign government securities'' is defined to include those 
that are direct obligations of, or fully guaranteed by, central 
governments of members of the Organization for Economic 
Cooperation and Development (OECD), as determined by rule of 
the appropriate Federal banking agency. Subsection (e) reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. The securities are limited to those issued by 
or guaranteed by full members of the OECD, as well as countries 
that have concluded special lending arrangements with the 
International Monetary Fund associated with the Fund's General 
Arrangements to Borrow. (See 12 C.F.R. 360.5.) Subsection (e) 
also amends the definition of ``repurchase agreement'' to 
include those on mortgage-related securities, mortgage loans 
and interests therein, and to include principal and interest-
only U.S. government and agency securities as securities that 
can be the subject of a ``repurchase agreement.'' The reference 
in the definition to United States government- and agency-
issued or fully guaranteed securities is intended to include 
obligations issued or guaranteed by Fannie Mae and the Federal 
Home Loan Mortgage Corporation (Freddie Mac) as well as all 
obligations eligible for purchase by Federal Reserve banks 
under the similar language of section 14(b) of the Federal 
Reserve Act. This amendment is not intended to affect the 
status of repos involving securities or commodities as 
securities contracts, commodity contracts, or forward 
contracts, and their consequent eligibility for similar 
treatment under the qualified financial contract provisions. In 
particular, an agreement for the sale and repurchase of a 
security would continue to be a securities contract as defined 
in the FDIA, even if not a ``repurchase agreement'' as defined 
in the FDIA. Similarly, an agreement for the sale and 
repurchase of a commodity, even though not a ``repurchase 
agreement'' as defined in the FDIA, would continue to be a 
forward contract for purposes of the FDIA.
    Subsection (e), like subsection (b) for ``securities 
contracts,'' specifies that repurchase obligations under a 
participation in a commercial mortgage loan do not make the 
participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' A repurchase agreement involving the 
transfer of participations in commercial mortgage loans with a 
simultaneous agreement to repurchase the participation on 
demand or at a date certain 1 year or less after such transfer, 
however, would constitute a ``repurchase agreement'' as well as 
a ``securities contract''.
    Subsection (f) amends the definition of ``swap agreement'' 
to include an ``interest rate swap, option, future, or forward 
agreement, including a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis swap; a spot, same day-
tomorrow, tomorrow-next, forward, or other foreign exchange or 
precious metals agreement; a currency swap, option, future, or 
forward agreement; an equity index or equity swap, option, 
future, or forward agreement; a debt index or debt swap, 
option, future, or forward agreement; a total return, credit 
spread or credit swap, option, future, or forward agreement; a 
commodity index or commodity swap, option, future, or forward 
agreement; or a weather swap, weather derivative, or weather 
option.'' As amended, the definition of ``swap agreement'' will 
update the statutory definition and achieve contractual netting 
across economically similar transactions that are the subject 
of recurring dealings in the swap agreements.
    The definition of ``swap agreement'' was originally 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (f) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [section 11(e)(8)(D)(vi) of the FDIA] and is of a type 
that has been, is presently, or in the future becomes, the 
subject of recurrent dealings in the swap markets * * * and 
that is a forward, swap, future, or option on one or more 
rates, currencies, commodities, equity securities or other 
equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement,'' however, should not 
be interpreted to permit parties to document non-swaps as swap 
transactions. Traditional commercial arrangements, such as 
supply agreements, or other non-financial market transactions, 
such as commercial, residential or consumer loans, cannot be 
treated as ``swaps'' under either the FDIA or the Bankruptcy 
Code simply because the parties purport to document or label 
the transactions as ``swap agreements.'' In addition, these 
definitions apply only for purposes of the FDIA and the 
Bankruptcy Code. These definitions, and the characterization of 
a certain transaction as a ``swap agreement,'' are not intended 
to affect the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule 
including, but not limited to, the statutes, regulations or 
rules enumerated in subsection (f). Similarly, a new paragraph 
of section 11(e) of the FDIA provides that the definitions of 
``securities contract,'' ``repurchase agreement,'' ``forward 
contract,'' and ``commodity contract,'' and the 
characterization of certain transactions as such a contract or 
agreement, are not intended to affect the characterization, 
definition, or treatment of any instruments under any other 
statute, regulation, or rule including, but not limited to, the 
statutes, regulations or rules enumerated in subsection (f).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the FDIA and the Bankruptcy Code. Similar 
changes are made in the definitions of ``forward contract,'' 
``commodity contract,'' ``repurchase agreement'' and 
``securities contract.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    Subsection (g) amends the FDIA by adding a definition for 
``transfer,'' which is a key term used in the FDIA, to ensure 
that it is broadly construed to encompass dispositions of 
property or interests in property. The definition tracks that 
in section 101 of the Bankruptcy Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
FDIA. It also clarifies that the FDIA expressly protects rights 
under security agreements, arrangements or other credit 
enhancements related to one or more qualified financial 
contracts (QFCs). An example of a security arrangement is a 
right of setoff, and examples of other credit enhancements are 
letters of credit, guarantees, reimbursement obligations and 
other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
state law relating to the avoidance of preferential or 
fraudulent transfers (including the anti-preference provision 
of the National Bank Act) can be invoked to avoid a transfer 
made in connection with any QFC of an insured depository 
institution in conservatorship or receivership, absent actual 
fraudulent intent on the part of the transferee.

Section 5082B. Authority of the FDIC and NCUAB with respect to failed 
        and failing institutions

    This section provides that no provision of law, including 
FDICIA, shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. This section, as well as other 
provisions in the Act, clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFCs.
    This section denies enforcement to ``walkaway'' clauses in 
QFCs. A walkaway clause is defined as a provision that, after 
calculation of a value of a party's position or an amount due 
to or from one of the parties upon termination, liquidation or 
acceleration of the QFC, either does not create a payment 
obligation of a party or extinguishes a payment obligation of a 
party in whole or in part solely because of such party's status 
as a non-defaulting party.

Section 5082C. Amendments relating to transfers of qualified financial 
        contracts

    This section amends the FDIA to expand the transfer 
authority of the FDIC to permit transfers of QFCs to 
``financial institutions'' as defined in FDICIA or in 
regulations. This provision will allow the FDIC to transfer 
QFCs to a non-depository financial institution, provided the 
institution is not subject to bankruptcy or insolvency 
proceedings.
    The new FDIA provision specifies that when the FDIC 
transfers QFCs that are cleared on or subject to the rules of a 
particular clearing organization, the transfer will not require 
the clearing organizationtion to accept the transferee as a 
member of the organization. This provision gives the FDIC flexibility 
in resolving QFCs cleared on or subject to the rules of a clearing 
organization, while preserving the ability of such organizations to 
enforce appropriate risk reducing membership requirements. The 
amendment does not require the clearing organization to accept for 
clearing any QFCs from the transferee, except on the terms and 
conditions applicable to other parties permitted to clear through that 
clearing organization. ``Clearing organization'' is defined to mean a 
``clearing organization'' within the meaning of FDICIA (as amended both 
by the CFMA and by section 5082F of this Act).
    The new FDIA provision also permits transfers to an 
eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person or a U.S. financial 
institution that is not an FDIC-insured institution if, 
following the transfer, the contractual rights of the parties 
would be enforceable substantially to the same extent as under 
the FDIA. It is expected that the FDIC would not transfer QFCs 
to such a financial institution if there were an impending 
change of law that would impair the enforceability of the 
parties' contractual rights.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as receiver or following the date of such transfer 
by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties to terminate or liquidate 
a QFC before the expiration of the time period provided by the 
FDIA during which the FDIC may repudiate or transfer a QFC in a 
conservatorship or receivership. Subsection (c) provides that a 
party may not terminate a QFC based solely on the appointment 
of the FDIC as receiver until 5 p.m. (Eastern Time) on the 
business day following the appointment of the receiver or after 
the person has received notice of a transfer under FDIA section 
11(d)(9), or based solely on the appointment of the FDIC as 
conservator, notwithstanding the provisions of FDICIA. This 
provides the FDIC with an opportunity to undertake an orderly 
resolution of the insured depository institution.
    Subsection (c) also prohibits the enforcement of rights of 
termination or liquidation that arise solely because of the 
insolvency of the institution or are based on the ``financial 
condition'' of the depository institution in receivership or 
conservatorship. For example, termination based on a cross-
default provision in a QFC that is triggered upon a default 
under another contract could be rendered ineffective if such 
other default was caused by an acceleration of amounts due 
under that other contract, and such acceleration was based 
solely on the appointment of a conservator or receiver for that 
depository institution. Similarly, a provision in a QFC 
permitting termination of the QFC based solely on a downgraded 
credit rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. However, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver, or from 
taking actions based upon a receivership or other financial 
condition-triggered default in the absence of a transfer (as 
contemplated in Section 11(e)(10) of the FDIA). The amendment 
allows the FDIC to meet its obligation to provide notice to 
parties to transferred QFCs by taking steps reasonably 
calculated to provide notice to such parties by the required 
time. This is consistent with the existing policy statement on 
QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.

Section 5082D. Amendments relating to disaffirmance or repudiation of 
        qualified financial contracts

    This section limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.

Section 5082E. Clarifying amendment relating to master agreements

    This section specifies that a master agreement for one or 
more securities contracts, commodity contracts, forward 
contracts, repurchase agreements or swap agreements will be 
treated as a single QFC under the FDIA (but only with respect 
to underlying agreements that are themselves QFCs). This 
provision ensures that cross-product netting pursuant to a 
master agreement, or pursuant to an umbrella agreement for 
separate master agreements between the same parties, each of 
which is used to document one or more qualified financial 
contracts, will be enforceable under the FDIA. Cross-product 
netting permits a wide variety of financial transactions 
between two parties to be netted, thereby maximizing the 
present and potential future risk-reducing benefits of the 
netting arrangement between the parties. Express recognition of 
the enforceability of such cross-product master agreements 
furthers the policy of increasing legal certainty and reducing 
systemic risks in the case of an insolvency of a large 
financial participant.

Section 5082F. Federal Deposit Insurance Corporation Improvement Act of 
        1991

    Subsection (a)(1) amends the definition of ``clearing 
organization'' to include clearinghouses that are subject to 
exemptions pursuant to orders of the Securities and Exchange 
Commission or the Commodity Futures Trading Commission and to 
include multilateral clearing organizations (the definition of 
which was added to FDICIA by the CFMA).
    FDICIA provides that a netting arrangement will be enforced 
pursuant to its terms, notwithstanding the failure of a party 
to the agreement. The current netting provisions of FDICIA, 
however, limit this protection to ``financial institutions,'' 
which include depository institutions. Subsection (a)(2) amends 
the FDICIA definition of covered institutions to include (i) 
uninsured national and State member banks, irrespective of 
their eligibility for deposit insurance and (ii) foreign banks 
(including the foreign bank and its branches or agencies as a 
combined group, or only the foreign bank parent of a branch or 
agency). The latter change will extend the protections of 
FDICIA to ensure that U.S. financial organizations 
participating in netting agreements with foreign banks are 
covered by the bill, thereby enhancing the safety and soundness 
of these arrangements. It is intended that a non-defaulting 
foreign bank and its branches and agencies be considered to be 
a single financial institution for purposes of the bilateral 
netting provisions of FDICIA (except to the extent that the 
non-defaulting foreign bank and its branches and agencies on 
the one hand, and the defaulting financial institution, on the 
other, have entered into agreements that clearly evidence an 
intention that the non-defaulting foreign bank and its branches 
and agencies be treated as separate financial institutions for 
purposes of the bilateral netting provisions of FDICIA).
    Subsection (a)(3) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(4) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. Many of these 
agreements, however, particularly netting arrangements covering 
positions taken in foreign exchange dealings, are governed by 
the laws of a foreign country. This subsection broadens the 
definition of ``netting contract'' to include those agreements 
governed by foreign law, and preserves the FDICIA requirement 
that a netting contract not be invalid under, or precluded by, 
Federal law.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members. First, the termination 
provisions of netting contracts will not be enforceable based 
solely on (i) the appointment of a conservator for an insolvent 
depository institution under the FDIA or (ii) the appointment 
of a receiver for such institution under the FDIA, if such 
receiver transfers or repudiates QFCs in accordance with the 
FDIA and gives notice of a transfer by 5 p.m. on the business 
day following the appointment of a receiver. This change is 
made to confirm the FDIC's flexibility to transfer or repudiate 
the QFCs of an insolvent depository institution in accordance 
with the terms of the FDIA. This modification also provides 
important legal certainty regarding the treatment of QFCs under 
the FDIA, because the current relationship between the FDIA and 
FDICIA is unclear.
    The second exception provides that FDICIA does not override 
a stay order under SIPA with respect to foreclosure on 
securities (but not cash) collateral of a debtor (section 
5082(k) makes a conforming change to the Securities Investor 
Protection Act (SIPA)). There is also an exception relating to 
insolvent commodity brokers. Subsections (b) and (c) also 
clarify that a security agreement or other credit enhancement 
related to a netting contract is enforceable to the same extent 
as the underlying netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks, an uninsured Federal branch or agency 
or Edge Act corporation, or an uninsured State member bank that 
operates, or operates as, a multilateral clearing organization 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with these institutions will have 
the same rights and obligations as parties entering into the 
same agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for such an institution to those contained in 12 
U.S.C. 1821(e)(8), (9), (10), and (11), which address QFCs.
    While the amendment would apply the same rules as apply to 
insured institutions, the provision would not change the rules 
that apply to insured institutions. Nothing in this section 
would amend the International Banking Act, the Federal Deposit 
Insurance Act, the National Bank Act, or other statutory 
provisions with respect to receiverships of insured national 
banks or Federal branches.

Section 5082G. Bankruptcy code amendments

    This section makes a series of amendments to the Bankruptcy 
Code. Subsection (a)(1) amends the Bankruptcy Code definitions 
of ``repurchase agreement'' and ``swap agreement'' to conform 
with the amendments to the FDIA contained in subsections 5082A 
(e) and (f).
    In connection with the definition of ``repurchase 
agreement,'' the term ``qualified foreign government 
securities'' is defined to include securities that are direct 
obligations of, or fully guaranteed by, central governments of 
members of the Organization for Economic Cooperation and 
Development (OECD). This language reflects developments in the 
repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. The securities 
are limited to those issued by or guaranteed by full members of 
the OECD, as well as countries that have concluded special 
lending arrangements with the International Monetary Fund 
associated with the Fund's General Arrangements to Borrow.
    Subsection (a)(1) also amends the definition of 
``repurchase agreement'' to include those on mortgage-related 
securities, mortgage loans and interests therein, and to 
include principal and interest-only U.S. Government and agency 
securities as securities that can be the subject of a 
``repurchase agreement.'' The reference in the definition to 
United States government- and agency-issued or fully guaranteed 
securities is intended to include obligations issued or 
guaranteed by Fannie Mae and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) as well as all obligations eligible 
for purchase by Federal Reserve banks under the similar 
language of section 14(b) of the Federal Reserve Act.
    This amendment is not intended to affect the status of 
repos involving securities or commodities as securities 
contracts, commodity contracts, or forward contracts, and their 
consequent eligibility for similar treatment under other 
provisions of the Bankruptcy Code. In particular, an agreement 
for the sale and repurchase of a security would continue to be 
a securities contract as defined in the Bankruptcy Code and 
thus also would be subject to the Bankruptcy Code provisions 
pertaining to securities contracts, even if not a ``repurchase 
agreement'' as defined in the Bankruptcy Code. Similarly, an 
agreement for the sale and repurchase of a commodity, even 
though not a ``repurchase agreement'' as defined in the 
Bankruptcy Code, would continue to be a forward contract for 
purposes of the Bankruptcy Code and would be subject to the 
Bankruptcy Code provisions pertaining to forward contracts.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' These 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' However, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain 1 year or less 
after such transfer would constitute a ``repurchase agreement'' 
(as well as a ``securities contract'').
    The definition of ``swap agreement'' is amended to include 
an ``interest rate swap, option, future, or forward agreement, 
including a rate floor, rate cap, rate collar, cross-currency 
rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-
next, forward, or otherforeign exchange or precious metals 
agreement; a currency swap, option, future, or forward agreement; an 
equity index or equity swap, option, future, or forward agreement; a 
debt index or debt swap, option, future, or forward agreement; a total 
return, credit spread or credit swap, option, future, or forward 
agreement; a commodity index or commodity swap, option, future, or 
forward agreement; or a weather swap, weather derivative, or weather 
option.'' As amended, the definition of ``swap agreement'' will update 
the statutory definition and achieve contractual netting across 
economically similar transactions.
    The definition of ``swap agreement'' was originally 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. To that end, the phrase ``or any other 
similar agreement'' was included in the definition. (The phrase 
``or any similar agreement'' has been added to the definitions 
of ``forward contract,'' ``commodity contract,'' ``repurchase 
agreement,'' and ``securities contract'' for the same reason.) 
To clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include ``any agreement or transaction 
that is similar to any other agreement or transaction referred 
to in [section 101(53B) of the Bankruptcy Code] and that is of 
a type that has been, is presently, or in the future becomes, 
the subject of recurrent dealings in the swap markets'' and 
that ``is a forward, swap, future, or option on one or more 
rates, currencies, commodities, equity securities or other 
equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of 
an occurrence, or contingency associated with a financial, 
commercial, or economic consequence, or economic or financial 
indices or measures of economic or financial risk or value.''
    The definition of ``swap agreement'' in this subsection 
should not be interpreted to permit parties to document non-
swaps as swap transactions. Traditional commercial 
arrangements, such as supply agreements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under either the 
FDIA or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
These definitions, and the characterization of a certain 
transaction as a ``swap agreement,'' are not intended to affect 
the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule 
including, but not limited to, the statutes, regulations or 
rules enumerated in subsection (a)(1)(C). Similarly, the 
definitions of ``securities contract'', ``repurchase 
agreement'', and ``commodity contract'' and the 
characterization of certain transactions as such a contract or 
agreement, are not intended to affect the characterization, 
definition, or treatment of any instrument under any other 
statute regulation, or rule including, but not limited to, the 
statutes, regulations, or rules enumerated in subsection (f).
    The definition also includes any security agreement or 
arrangement, or other credit enhancement, related to a swap 
agreement, including any guarantee or reimbursement obligation 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the Bankruptcy Code and the FDIA. Similar 
changes are made in the definitions of ``forward contract,'' 
``commodity contract,'' ``repurchase agreement,'' and 
``securities contract.'' An example of a security arrangement 
is a right of setoff; examples of other credit enhancements are 
letters of credit and other similar agreements. A security 
agreement or arrangement or guarantee or reimbursement 
obligation related to a ``swap agreement,'' ``forward 
contract,'' ``commodity contract,'' ``repurchase agreement'' or 
``securities contract'' will be such an agreement or contract 
only to the extent of the damages in connection with such 
agreement measured in accordance with Section 562 of the 
Bankruptcy Code (added by the bill). This limitation does not 
affect, however, the other provisions of the Bankruptcy Code 
(including section 362(b)) relating to security arrangements in 
connection with agreements or contracts that otherwise qualify 
as ``swap agreements,'' ``forward contracts,'' ``commodity 
contracts,'' ``repurchase agreements'' or ``securities 
contracts.''
    The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that 
fall within the definition of ``forward contract.'' Instead, a 
``forward'' transaction could be a ``swap agreement'' even if 
not a ``forward contract.''
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``commodity 
contract,'' respectively, to conform them to the definitions in 
the FDIA.
    Subsection (a)(2), like the amendments to the FDIA, amends 
the definition of ``securities contract'' expressly to 
encompass margin loans, to clarify the coverage of securities 
options and to clarify the coverage of repurchase and reverse 
repurchase transactions. The inclusion of ``margin loans'' in 
the definition is intended to encompass only those loans 
commonly known in the securities industry as ``margin loans'', 
such as arrangements where a securities broker or dealer 
extends credit to a customer in connection with the purchase, 
sale, or trading of securities, and does not include loans that 
are not commonly referred to as ``margin loans.'' The reference 
in subsection (b) to a ``guarantee'' by or to a ``securities 
clearing agency'' is intended to cover other arrangements, such 
as novation, that have an effect similar to a guarantee. The 
reference to a ``loan'' of a security in the definition is 
intended to apply to loans of securities, whether or not for a 
``permitted purpose'' under margin regulations. The reference 
to ``repurchase and reverse repurchase transactions'' is 
intended to eliminate any inquiry under section 555 of the 
Bankruptcy Code and related provisions as to whether a 
repurchase or reverse repurchase transaction is a purchase and 
sale transaction or a secured financing. Repurchase and reverse 
repurchase transactions meeting certain criteria are already 
covered under the definition of ``repurchase agreement'' in the 
Bankruptcy Code. Repurchase and reverse repurchase transactions 
on all securities (including, for example, equity securities, 
asset-backed securities, corporate bonds and commercial paper) 
are included under the definition of ``securities contract''. A 
repurchase or reverse repurchase transaction which is a 
``securities contract'' but not a ``repurchase agreement'' 
would thus be subject to the ``counterparty limitations'' 
contained in section 555 of the Bankruptcy Code (i.e., only 
stockbrokers, financial institutions, securities clearing 
agencies and financial participants can avail themselves of 
section 555 and related provisions).
    Subsection (a)(2) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase, sale or repurchase of a 
participation may constitute a ``securities contract,'' the 
purchase, sale or repurchase obligation embedded in a 
participation agreement does not make that agreement a 
``securities contract.'' Subsection (a) clarifies the reference 
to guarantee or reimbursement obligation.
    Subsection (b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition of ``financial institution'' adds Federally 
insured credit unions to the list of existing financial 
institutions.
    Subsection (b) also adds a new definition of ``financial 
participant'' to limit the potential impact of insolvencies 
upon other major market participants. This definition will 
allow such market participants to close out and net agreements 
with insolvent entities under sections 362(b)(6), 555, and 556 
of the Bankruptcy Code even if the creditor could not qualify 
as, for example, a commodity broker. Sections 362(b)(6), 555 
and 556 preserve the limitations of the right to close-out and 
net such contracts, in most cases, to entities who qualify 
under the Bankruptcy Code's counterparty limitations. However, 
where the counterparty has transactions with a total gross 
dollar value of at least $1 billion in notional or actual 
principal amount outstanding on any day during the previous 15-
month period, or has gross mark-to-market positions of at least 
$100 million (aggregated across counterparties) in one or more 
agreements or transactions on any day during the previous 15-
month period, sections 362(b)(6), 555 and 556 and corresponding 
amendments would permit it to exercise netting and related 
rights irrespective of its inability otherwise to satisfy those 
counterparty limitations. This change will help prevent 
systemic impact upon the markets from a single failure, and is 
derived from threshold tests contained in Regulation EE 
promulgated by the Federal Reserve Board in implementing the 
netting provisions of the Federal Deposit Insurance Corporation 
Improvement Act. It is intended that the 15-month period be 
measured with reference to the 15 months preceding the filing 
of a petition by or against the debtor.
    ``Financial participant'' is also defined to include 
``clearing organizations'' within the meaning of FDICIA (as 
amended by the CFMA and section 5082F). This amendment, 
together with the inclusion of ``financial participants'' as 
eligible counterparties in connection with ``commodity 
contracts,'' ``forward contracts'' and ``securities contracts'' 
and the amendments made in other sections of the bill to 
include ``financial participants'' as counterparties eligible 
for the protections in respect of ``swap agreements'' and 
``repurchase agreements'', take into account the CFMA and will 
allow clearing organizations to benefit from the protections of 
all of the provisions of the Bankruptcy Code relating to these 
contracts and agreements. This will further the goal of 
promoting the clearing of derivatives and other transactions as 
a way to reduce systemic risk. The definition of ``financial 
participant'' (as with the other provisions of the Bankruptcy 
Code relating to ``securities contracts,'' ``forward 
contracts,'' ``commodity contracts,'' ``repurchase agreements'' 
and ``swap agreements'') is not mutually exclusive, i.e., an 
entity that qualifies as a ``financial participant'' could also 
be a ``swap participant,'' ``repo participant,'' ``forward 
contract merchant,'' ``commodity broker,'' ``stockbroker,'' 
``securities clearing agency'' and/or ``financial 
institution.''
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements or 
(ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions). A ``master netting agreement participant'' is 
any entity that is a party to an outstanding master netting 
agreement with a debtor before the filing of a bankruptcy 
petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the references to ``setoff'' in these 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against obligations to return, 
collateral securing swap agreements, master netting agreements, 
repurchase agreements, securities contracts, commodity 
contracts, or forward contracts. Collateral may be pledged to 
cover the cost of replacing the defaulted transactions in the 
relevant market, as well as other costs and expenses incurred 
or estimated to be incurred for the purpose of hedging or 
reducing the risks arising out of such termination. Enforcement 
of these agreements and arrangements free from the automatic 
stay is consistent with the policy goal of minimizing systemic 
risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor but that cannot technically be ``held by'' the creditor, 
such as receivables and book-entry securities, and to 
collateral that has been repledged by the creditor and 
securities resold pursuant to repurchase agreements.
    Subsections (e) and (f) amend sections 546 and 548(d) of 
the Bankruptcy Code to provide that transfers made under or in 
connection with a master netting agreement may not be avoided 
by a trustee except where such transfer is made with actual 
intent to hinder, delay or defraud and not taken in good faith. 
This amendment provides the same protections for a transfer 
made under, or in connection with, a master netting agreement 
as currently is provided for margin payments, settlement 
payments and other transfers received by commodity brokers, 
forward contract merchants, stockbrokers, financial 
institutions, securities clearing agencies, repo participants, 
and swap participants under sections 546 and 548(d), except to 
the extent the trustee could otherwise avoid such a transfer 
made under an individual contract covered by such master 
netting agreement.
    Subsections (g), (h), (i), and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. These rights include rights arising (i) from 
the rules of a derivatives clearing organization, multilateral 
clearing organization, securities clearing agency, securities 
exchange, securities association, contract market, derivatives 
transaction execution facility or board of trade, (ii) under 
common law, law merchant or (iii) by reason of normal business 
practice. This reflects the enactment of the CFMA and the 
current treatment of rights under swap agreements under section 
560 of the Bankruptcy Code. Similar changes to reflect the 
enactment of the CFMA have been made to the definition of 
``contractual right'' for purposes of sections 555, 556, 559 
and 560 of the Bankruptcy Code.
    Subsections (b)(2)(A) and (b)(2)(B) of new section 561 
limit the exercise of contractual rights to net or to offset 
obligations where the debtor is a commodity broker and one leg 
of the obligations sought to be netted relates to commodity 
contracts traded on or subject to the rules of a contract 
market designated under the Commodity Exchange Act or a 
derivatives transaction execution facility registered under the 
Commodity Exchange Act. Under subsection (b)(2)(A) netting or 
offsetting is not permitted in these circumstances if the party 
seeking to net or to offset has no positive net equity in the 
commodity accounts at the debtor. Subsection (b)(2)(B) applies 
only if the debtor is a commodity broker, acting on behalf of 
its own customer, and is in turn a customer of another 
commodity broker. In that case, the latter commodity broker may 
not net or offset obligations under such commodity contracts 
with other claims against its customer, the debtor. Subsections 
(b)(2)(A) and (b)(2)(B) limit the depletion of assets available 
fordistribution to customers of commodity brokers. Subsection 
(b)(2)(C) provides an exception to subsections (b)(2)(A) and (b)(2)(B) 
for cross-margining and other similar arrangements approved by, or 
submitted to and not rendered ineffective by, the Commodity Futures 
Trading Commission, as well as certain other netting arrangements.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560 and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankrupt or insolvent party. The protection of netting and 
offset rights in sections 560 and 561 is in addition to the 
protections afforded in sections 362(b)(6), (b)(7), (b)(17) and 
(b)(28) of the Bankruptcy Code.
    Under this Act, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or setoff rights. Similarly, a 
waiver by a bank or a counterparty of netting or setoff rights 
in connection with QFCs would be enforceable under the FDIA.
    New section 561 of the Bankruptcy Code clarifies that the 
provisions of the Bankruptcy Code related to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements apply 
in a proceeding ancillary to a foreign insolvency proceeding 
under section 304 of the Bankruptcy Code.
    Subsections (l) and (m) clarify that the exercise of 
termination and netting rights will not otherwise affect the 
priority of the creditor's claim after the exercise of netting, 
foreclosure and related rights.
    Subsection (n) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of setoff rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements cannot be avoided as a 
preference. This subsection also adds setoff of the kinds 
described in sections 555, 556, 559, 560, and 561 of the 
Bankruptcy Code to the types of setoff excepted from section 
553(b).
    Subsection (o), as well as other subsections of the Act, 
adds references to ``financial participant'' in all the 
provisions of the Bankruptcy Code relating to securities, 
forward and commodity contracts and repurchase and swap 
agreements.

Section 5082H. Recordkeeping requirements

    This section amends section 11(e)(8) of the Federal Deposit 
Insurance Act to explicitly authorize the FDIC, in consultation 
with appropriate Federal banking agencies, to prescribe 
regulations on recordkeeping by any insured depository 
institution with respect to QFCs only if the insured financial 
institution is in a troubled condition (as such term is defined 
in the FDIA).

Section 5082I. Exemptions from contemporaneous execution requirement

    This section amends FDIA section 13(e)(2) to provide that 
an agreement for the collateralization of governmental 
deposits, bankruptcy estate funds, Federal Reserve Bank or 
Federal Home Loan Bank extensions of credit or one or more QFCs 
shall not be deemed invalid solely because such agreement was 
not entered into contemporaneously with the acquisition of the 
collateral or because of pledges, delivery or substitution of 
the collateral made in accordance with such agreement.
    This section codifies portions of policy statements issued 
by the FDIC regarding the application of section 13(e), which 
codifies the ``D'Oench Duhme'' doctrine. With respect to QFCs, 
this codification recognizes that QFCs often are subject to 
collateral and other security arrangements that may require 
posting and return of collateral on an ongoing basis based on 
the mark-to-market values of the collateralized transactions. 
The codification of only portions of the existing FDIC policy 
statements on these and related issues should not give rise to 
any negative implication regarding the continued validity of 
these policy statements.

Section 5082J. Damage measure

    This section adds a new section 562 to the Bankruptcy Code 
providing that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement will be calculated as of 
the earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date or dates of liquidation, termination 
or acceleration of such contract or agreement.
    Section 562 provides an exception to the rules in (i) and 
(ii) if there are no commercially reasonable determinants of 
value as of such date or dates, in which case damages are to be 
measured as of the earliest subsequent date or dates on which 
there are commercially reasonable determinants of value. 
Although it is expected that in most circumstances damages 
would be measured as of the date or dates of either rejection 
or liquidation, termination or acceleration, in certain unusual 
circumstances, such as dysfunctional markets or liquidation of 
very large portfolios, there may be no commercially reasonable 
determinants of value for liquidating any such agreements or 
contracts or for liquidating all such agreements and contracts 
in a large portfolio on a single day. It is expected that 
measuring damages as of a date or dates before the date of 
liquidation, termination, or acceleration, will occur only in 
very unusual circumstances.
    The party determining damages is given limited discretion 
to determine the dates as of which damages are to be measured. 
Its actions are circumscribed unless there are no 
``commercially reasonable'' determinants of value for it to 
measure damages on the date or dates of either rejection or 
liquidation, termination or acceleration. The references to 
``commercially reasonable'' are intended to reflect existing 
state law standards relating to a creditor's actions in 
determining damages. New section 562 provides that if damages 
are not measured as of either the date of rejection or the date 
or dates of liquidation, termination or acceleration and the 
trustee challenges the timing of the measurement of damages by 
the non-defaulting party determining the damages, the non-
defaulting party, rather than the trustee, has the burden of 
proving the absence of any commercially reasonable determinants 
of value.
    New section 562 is not intended to have any impact on the 
determination under the Bankruptcy Code of the timing of 
damages for contracts and agreements other than those specified 
in section 562. Also, section 562 does not apply to proceedings 
under the FDIA, and it is not intended that Section 562 have 
any impact on the interpretation of the provisions of the FDIA 
relating to timing of damages in respect of QFCs or other 
contracts.

Section 5082K. SIPC stay

    This section amends SIPA to provide that an order or decree 
issued pursuant to SIPA shall not operate as a stay of any 
right of liquidation, termination, acceleration, offset or 
netting under one or more securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements or master netting agreements (as defined in the 
Bankruptcy Code and including rights of foreclosure on 
collateral), except that such order or decree may stay any 
right to foreclose on or dispose of securities (but not cash) 
collateral pledged by the debtor or sold by the debtor under a 
repurchase agreement or lent by the debtor under a securities 
lending agreement. A corresponding amendment to FDICIA is made 
by section 5082F. A creditor that was stayed in exercising 
rights against such securities would be entitled to post-
insolvency interest to the extent of the value of such 
securities.

Section 5082L. Applicability of other sections to chapter 9

    This section clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all proceedings under title 11) will apply in a Chapter 9 
proceeding for a municipality. Although sections 555, 556, 559 
and 560 of the Bankruptcy Code provide that they apply in any 
proceeding under the Bankruptcy Code, Section 502 makes a 
technical amendment in Chapter 9 to clarify the applicability 
of these provisions.

Section 5082M. Effective date; application of amendments

    Subsection (a) provides that the amendments made by the 
bill take effect on the date of enactment. Subsection (b) 
provides that the amendments made by the bill shall not apply 
with respect to cases commenced, or to conservator/receiver 
appointments made, before the date of enactment. The amendments 
would, however, apply to contracts entered into prior to the 
date of enactment, so long as a Bankruptcy Code case were 
commenced or a conservator/receiver appointment were made on or 
after the date of enactment under any Federal or State law.

Section 5082N. Savings clause

    This section provides that the meaning of terms used in the 
Act are applicable for purposes of the Act only, and shall not 
be construed or applied so as to challenge or affect the 
characterization, definition, or treatment of any similar terms 
under any other statute, regulation, or rule, including the 
Gramm-Leach Bliley Act, the Legal Certainty for Bank Products 
Act of 2000, the securities laws (as that term is defined in 
Section 3(a)(47) of the Securities Exchange Act of 1934), and 
the Commodity Exchange Act.

              SUBCHAPTER B--EMERGENCY SECURITIES RESPONSE

Section 5086. Short title

    This section states the short title of the subchapter, the 
``Emergency Securities Response Act of 2004.''

Section 5087. Extension of emergency order authority of the Securities 
        Exchange Commission

    This section modifies the authority of the Securities and 
Exchange Commission to issue emergency orders under section 
12(k)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78l(k)(2)). The section modifies section 12(k)(2) to grant the 
Commission authority to take emergency action with respect to 
any matter or action subject to regulation by the Commission or 
a self-regulatory organization under the securities laws, not 
just under the Securities Exchange Act of 1934. The Committee 
recognizes that emergency conditions can necessitate emergency 
relief under securities laws other than the Securities Exchange 
Act of 1934 and is broadening the emergency measures the 
Commission can take under section 12(k)(2) accordingly.
    The section also modifies the findings required for the 
Commission to enter an emergency order by adding a third 
finding that may support emergency action. Under new section 
12(k)(2)(A)(iii), the Commission may take emergency action if 
it determines that action is necessary in the public interest 
and for the protection of investors ``to reduce, eliminate, or 
prevent the substantial disruption by the emergency of (I) 
securities markets, investment companies, or any other 
significant portion or segment of such markets, or (II) the 
transmission or processing of securities transactions.''
    The first of these two findings--section 
12(k)(2)(A)(iii)(I)--covers situations in which emergency 
relief is warranted to reduce, eliminate or prevent the 
substantial disruption by the emergency of securities markets 
broadly defined, including investment companies or any other 
significant portion or segment of the securities markets (such 
as broker-dealers or investment advisers, or a class thereof). 
As illustrated by the aftermath of the terrorist attacks of 
September 11, 2001, the effects of transportation and 
communication problems, no less than market disruptions, can 
require emergency relief. If transportation or communication 
problems or other circumstances substantially disrupt or 
threaten to substantially disrupt the operation of investment 
companies, broker-dealers, or any other significant portion or 
segment of the securities markets, and constitute an 
``emergency'' under section 12(k)(6) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78l(k)(6)), section 12(k)(2)(A)(iii)(I) 
allows the Commission to take emergency action under section 
12(k)(2) even if the securities secondary-trading markets and 
the national system for clearance and settlement of securities 
transactions are not threatened or disrupted.
    The second finding--section 12(k)(2)(A)(iii)(II)--covers 
situations in which emergency relief is warranted to reduce, 
eliminate or prevent the substantial disruption by the 
emergency of the transmission or processing of securities 
transactions. The Committee is aware that certain market 
participants experienced difficulties in transmitting and 
processing securities transactions, including government 
securities transactions, in the aftermath of the attacks of 
September 11, 2001. In the future, should these or other 
circumstances substantially disrupt or threaten to 
substantially disrupt the transmission or processing of 
securities transactions and constitute an ``emergency'' under 
section 12(k)(6), section 12(k)(2)(A)(iii)(II) allows the 
Commission to take emergency action under section 12(k)(2) even 
if the national system for clearance and settlement of 
securities transactions is not threatened or disrupted.
    The section also modifies the statute's definition of 
``emergency'' to reflect the broader scope of findings that may 
support an emergency order. Specifically, the definition of 
``emergency'' in section 12(k)(6) of the Securities Exchange 
Act (15 U.S.C. 78l(k)(6)) is modified to include a major 
disturbance that substantially disrupts, or threatens to 
substantially disrupt, the functioning of securities markets, 
investment companies, or any other significant portion or 
segment of such markets, or the transmission or processing of 
securities transactions. This modification of section 12(k)(6) 
mirrors the changes to the findings under section 12(k)(2)(A) 
and, as discussed above, is designed to account for emergencies 
that substantially disrupt, or threaten to substantially 
disrupt, the securities markets broadly defined, including the 
functioning of investment companies or any other significant 
portion or segment of the securities markets or the 
transmission or processing of securities transactions, even in 
the absence of a major market disturbance under section 
12(k)(6)(A).
    The section also extends the duration of a Commission 
emergency order to 30 business days, from the current 10 
business days. The section also allows the Commission to extend 
an emergency order for more than 30 business days, up to a 
total of 90 calendar days, based upon certain findings. 
Specifically, under new section 12(k)(2)(C) (15 U.S.C. 
78l(k)(2)(C)), the Commission may extend the duration of an 
emergency order beyond 30 business days if the Commission 
finds, at the time of the extension, that the emergency still 
exists, and determines that the continuation is necessary in 
the public interest and for the protection of investors to 
attain one of the three objectives that may support the 
Commission's initial emergency action. The calendar day, as 
opposed to business day, limit on total extensions of an 
emergency order reflects the judgment that a total of 
approximately three months is a reasonable limit on Commission 
discretion, while providing sufficient latitude for the 
Commission to provide appropriate immediate relief.
    Finally, the section provides that, as used in the 
subsection added by the legislation, the definition of 
``securities laws'' excludes the Public Utility Holding Company 
Act of 1935 (15 U.S.C. 79a et seq.).

Section 5088. Parallel authority of the Secretary of the Treasury with 
        respect to government securities

    This section amends the Securities Exchange Act to provide 
emergency authority for the Secretary of the Treasury to take 
any action by order, involving a government security or a 
market therein (or significant portion or segment of that 
market), that the Commission may take under section 12(k)(2) of 
this title with respect to transactions in securities (other 
than exempted securities) or a market therein (or significant 
portion or segment of that market).

Section 5089. Joint report on implementation of financial system 
        resilience recommendations

    This section requires the Board of Governors of the Federal 
Reserve System, the Office of the Comptroller of the Currency, 
and the Securities and Exchange Commission to prepare and 
submit to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a joint report on the efforts of 
the private sector to implement the Interagency Paper on Sound 
Practices to Strengthen the Resilience of the US Financial 
System. The report must be submitted no later than April 30, 
2006.
    The report is to examine (1) covered private sector 
financial services firms' efforts to implement enhanced 
business continuity plans; (2) the extent to which the 
implementation of business continuity plans has been done in a 
geographically dispersed manner; and (3) the need to cover more 
financial services entities than those covered by the 
Interagency Paper. The agencies are also directed to recommend 
legislative and regulatory changes that will maximize the 
effective implementation of business continuity planning by the 
financial services industry.

Section 5089A. Private sector preparedness

    This section expresses the sense of the Congress that the 
insurance industry and credit-rating agencies, where relevant, 
should carefully consider a company's compliance with standards 
for private sector disaster and emergency preparedness in 
assessing insurability and creditworthiness, to ensure that 
private sector investment in disaster and emergency 
preparedness is appropriately encouraged.

Section 5089B. Report on public/private partnerships

    This section requires the Secretary of the Treasury to 
submit a report to the Committee on Financial Services of the 
House of Representatives and the Committee on Banking, Housing, 
and Urban Affairs of the Senate providing information on the 
efforts that the Treasury Department has made to encourage the 
formation of public/private partnerships to protect critical 
financial infrastructure. The report shall discuss the type of 
support that the Treasury has provided to these partnerships 
and provide recommendations for administrative or legislative 
action regarding these partnerships as the Secretary may 
determine to be appropriate.

         Changes in Existing Law Made by the Bill, as Reported

    The comparative print required by clause 3(e)(2) of rule 
XIII of the Rules of the House was not available in time for 
the filing of this report.
                            DISSENTING VIEWS

    The Committee on Financial Services' 9/11 legislation is 
another attempt to address the threat of terrorism by giving 
more power and money to the federal bureaucracy. Should this 
legislation become law, Americans will not likely be 
significantly safer, but they will definitely be less free. 
Therefore, I urge my colleagues to vote against this bill. A 
particularly disturbing provision of this bill repeals the 
expedited procedure for Congress to debate repeal of the 
PATRIOT Act's money laundering provisions. Since the PATRIOT 
Act was rushed into law in the panicked atmosphere after the 9/
11 attacks and the anthrax scare and before many members had a 
chance to even understand the PATRIOT Act, the ability to 
revisit this issue by debating a resolution of repeal is very 
important. This is especially so since many members, oftentimes 
under pressure from their constituents who are concerned that 
many provisions of the so-called PATRIOT Act threaten 
constitutional liberties, have expressed regret about hastily 
voting in favor of the act.
    This legislation erodes one of the bulwarks of individual 
liberty--the presumption of innocence and the corresponding 
requirement that the government prove beyond a reasonable doubt 
that an individual committed a crime. It does this by 
criminalizing the mere possession of technology that may be 
used in counterfeiting. The committee claims this is necessary 
because of both improvements in counterfeiting technology and 
the increased practice of ``contracting out'' counterfeiting 
activities have made it more difficult to apprehend 
counterfeiters. However, this is no excuse for relieving the 
government of its obligation to prove that an individual was 
involved in a crime, rather than that he was merely in 
possession of technology that could be used in a crime, before 
depriving that individual of his liberty.
    This bill further infringes on individual liberty by 
enacting an unconstitutional ban on internet gambling. Using 
the spurious pretext that terrorists may use internet gambling 
operations as a source of funds, supporters of banning internet 
gambling have snuck the ban into this bill. However, terrorists 
obtain funding from a wide variety of sources. During the 
committee's hearing on the 9/11 commission it was mentioned 
that some terrorists seek jobs in the mainstream economy to 
raise funds. Therefore, following the committee's logic to its 
natural conclusion, we should outlaw all private economic 
activity.
    Furthermore, prohibiting internet gambling will make it 
more likely that criminal organizations, including groups 
dedicated to international terrorism, will control internet 
gambling. History, from the failed experiment of prohibition to 
today's futile ``war on drugs,'' shows that the government 
cannot eliminate demand for something like internet gambling 
simply by passing a law. Instead, this bill will force those 
who wish to gamble over the internet to patronize suppliers 
willing to flaunt the ban. In many cases, providers of services 
banned by the government will be members of criminal 
organizations. After all, since the owners and patrons of 
outlawed internet gambling could not rely on the police and 
courts to enforce contracts and resolve other disputes, they 
will be forced to rely on members of organized crime to perform 
those functions. Thus, the profits of internet gambling will 
flow into organized crime. Furthermore, outlawing an activity 
will raise the price vendors are able to charge consumers. 
Combined with the increased market share organized crime will 
gain over gambling granted organized crime by the ban. This 
could increase the profits flowing to organized crime. It is 
bitterly ironic that a bill masquerading as an attack on crime 
will actually increase organized crime's ability to control 
internet gambling!
    Instead of trusting financial markets to make the necessary 
preparations and adjustments in the event of a terrorist 
attack, the committee gives the Securities and Exchange 
Commission (SEC) extended ``emergency'' powers to suspend 
trading and otherwise interfere in the securities market in the 
event of a terrorist attack. Granting the SEC this power 
assumes that SEC officials will know exactly when trading needs 
to be suspended and for how long. However, no individual or 
small group of individuals can have such knowledge. Instead, 
this knowledge is dispersed among all market actors and 
coordinated though the free market. In addition, shutting down 
trading after a terrorist attack, when markets need to adjust 
in response to new conditions, will induce distortions in the 
market and thus worsen the economic effects of a terrorist 
attack.
    Perhaps the most disturbing feature of the committee's 9/11 
bill is the failure to address a major intrusion into financial 
privacy, which also hinders an effective war on terrorism: the 
requirement that financial institutions file suspicious 
activity reports whenever a transaction's value exceeds 
$10,000. The suspicious activity report requirement buries law 
enforcement in a mountain of reports, making it difficult to 
identify the reports that indicate behavior truly threatening 
to our safety. There were over 300,000 suspicious activity 
reports filed in 2002 alone. Expecting law enforcement to shift 
through massive amounts of reports and identify the true 
threats to our safety is the equivalent of asking law 
enforcement to find a needle in a forest!
    John Yoder, Director of the Department of Justice's Asset 
Forfeiture Office during the Reagan Administration, told 
investigative reporter John Berlau, for a story in Reason 
magazine, that, ``It costs more to enforce and regulate them 
[financial institutions subject to the Bank Secrecy Act's 
reporting requirements] than the benefits that are received. 
You're getting so much data on people who are absolutely 
legitimate and who are doing nothing wrong. You have 
investigators running around chasing innocent people, trying to 
find something that they're doing wrong, rather than targeting 
real criminals.''
    Director Yoder also expressed concerns that this 
information overload contributed to the failure to identify the 
September 11 highjackers: ``We already had so much information 
that we weren't really focusing on the right stuff. What good 
does it do to gather more paperwork when you're already so 
awash in paperwork that you're not paying attention to your own 
currently existing intelligence gathering system?''
    By expanding the reporting requirements to gold dealers, 
pawns shops, jewelers, and even convenience stores that process 
money orders, the PATRIOT Act increased the burden on law 
enforcment, while further diminishing the financial privacy of 
American citizens. The 9/11 commission expressed skepticism 
over whether making 7-11s and Stop-and-Gos subject to the 
Suspicious Activity Reports could help catch members of Al 
Queda, since terrorists do not use money orders!
    The suspicious activity reports also violate the Fourth 
Amendment to the United States Constitution. The Fourth 
Amendment guarantees the people the right to be secure in their 
persons and papers, unless the government has probable cause to 
believe the person is involved in criminal activities. 
Requiring the filing of a suspicious activity report every time 
a transaction's value exceeds $10,000 shreds the Fourth 
Amendment. Government has no right or need to spy on the 
financial transactions of every Americans whenever the value of 
the transaction exceeds an arbitrary amount.
    Justice William Douglas's criticism of suspicious activity 
reports still rings true today: ``Delivery of the records 
without the requisite hearing of probable cause breaches the 
Fourth Amendment . . . . I am not yet ready to agree that 
America is so possessed with evil that we must level all 
constitutional barriers to give our civil authorities the tools 
to catch criminals.''
    The 9/11 Recommendations Implementation Act is yet another 
in a series of bills that expands government power and restrict 
individual liberty in the name of the war on terrorism. 
Outlawing internet gambling, increasing the SEC's power to 
suspend trading in the event of a terrorist attack, and 
continuing to violate the Fourth Amendment by burying law 
enforcement in suspicious activities reports will do little to 
keep Americana safe. Therefore, I urge my colleagues to reject 
this bill.

                                                          Ron Paul.

                                  
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