ECON TEXT OF BILL as requested by mem bers

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[DISCUSSION DRAFT]
SEPTEMBER 28, 2008
110TH CONGRESS
2D SESSION H. R. ll
To provide authority for the Federal Government to purchase certain types
of troubled assets for the purposes of providing stability to and preventing
disruption in the economy and financial system and protecting
taxpayers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
Ml. llllll introduced the following bill; which was referred to the
Committee on llllllllllllll
A BILL
To provide authority for the Federal Government to purchase
certain types of troubled assets for the purposes of providing
stability to and preventing disruption in the economy
and financial system and protecting taxpayers, and
for other purposes.
1 Be it enacted by the Senate and House of Representa2
tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
4 (a) SHORT TITLE.—This Act may be cited as the
5 ‘‘Emergency Economic Stabilization Act of 2008’’.
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1 (b) TABLE OF CONTENTS.—The table of contents for
2 this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.
TITLE I—TROUBLED ASSETS RELIEF PROGRAM
Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 106. Rights; management; sale of troubled assets; revenues and sale proceeds.
Sec. 107. Contracting procedures.
Sec. 108. Conflicts of interest.
Sec. 109. Foreclosure mitigation efforts.
Sec. 110. Assistance to homeowners and localities.
Sec. 111. Executive compensation and corporate governance.
Sec. 112. Coordination with foreign authorities and central banks.
Sec. 113. Minimization of long-term costs and maximization of benefits for taxpayers.
Sec. 114. Market transparency.
Sec. 115. Graduated authorization to purchase.
Sec. 116. Oversight and audits.
Sec. 117. Study and report on margin authority.
Sec. 118. Funding.
Sec. 119. Judicial review and related matters.
Sec. 120. Termination of authority.
Sec. 121. Special Inspector General For The Troubled Asset Relief Program.
Sec. 122. Increase in statutory limit on the public debt.
Sec. 123. Credit reform.
Sec. 124. HOPE for Homeowners amendments.
Sec. 125. Congressional Oversight Panel.
Sec. 126. FDIC enforcement enhancement.
Sec. 127. Cooperation with the FBI.
Sec. 128. Acceleration of effective date.
Sec. 129. Disclosures on exercise of loan authority.
Sec. 130. Technical corrections.
Sec. 131. Exchange Stabilization Fund reimbursement.
Sec. 132. Suspension of mark-to-market accounting.
Sec. 133. Study on mark-to-market accounting.
Sec. 134. Recoupment.
Sec. 135. Preservation of authority.
TITLE II—BUDGET-RELATED PROVISIONS
Sec. 201. Information for congressional support agencies.
Sec. 202. Reports by the Office of Management and Budget and the Congressional
Budget Office.
Sec. 203. Analysis in President’s Budget.
TITLE III—TAX PROVISIONS
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Sec. 301. Gain or loss from sale or exchange of certain preferred stock.
Sec. 302. Extension of exclusion of income from discharge of qualified principal
residence indebtedness.
1 SEC. 2. PURPOSES.
2 The purposes of this Act are—
3 (1) to immediately provide authority and facili4
ties that the Secretary of the Treasury can use to
5 restore liquidity and stability to the financial system
6 of the United States; and
7 (2) to ensure that such authority and such fa8
cilities are used in a manner that—
9 (A) protects home values, college funds, re10
tirement accounts, and life savings;
11 (B) preserves homeownership and pro12
motes jobs and economic growth;
13 (C) maximizes overall returns to the tax14
payers of the United States; and
15 (D) provides public accountability for the
16 exercise of such authority.
17 SEC. 3. DEFINITIONS.
18 For purposes of this Act, the following definitions
19 shall apply:
20 (1) APPROPRIATE COMMITTEES OF CON21
GRESS.—The term ‘‘appropriate committees of Con22
gress’’ means—
23 (A) the Committee on Banking, Housing,
24 and Urban Affairs, the Committee on Finance,
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1 and the Committee on the Budget of the Sen2
ate; and
3 (B) the Committee on Financial Services,
4 the Committee on Ways and Means, and the
5 Committee on the Budget of the House of Rep6
resentatives.
7 (2) BOARD.—The term ‘‘Board’’ means the
8 Board of Governors of the Federal Reserve System.
9 (3) CONGRESSIONAL SUPPORT AGENCIES.—The
10 term ‘‘congressional support agencies’’ means the
11 Congressional Budget Office and the Joint Com12
mittee on Taxation.
13 (4) CORPORATION.—The term ‘‘Corporation’’
14 means the Federal Deposit Insurance Corporation.
15 ø(5) FINANCIAL INSTITUTION.—The term ‘‘fi16
nancial institution’’ means any institution, including,
17 but not limited to, any bank, savings association,
18 credit union, security broker or dealer, or insurance
19 company, organized and regulated under the laws of
20 the United States or any State, territory, or posses21
sion of the United States, the District of Columbia,
22 Commonwealth of Puerto Rico, Commonwealth of
23 Northern Mariana Islands, Guam, American Samoa,
24 or the United States Virgin Islands, and having sig25
nificant operations in the United States, but exclud5
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1 ing any central bank of, or institution owned by, a
2 foreign government.¿
3 (6) FUND.—The term ‘‘Fund’’ means the Trou4
bled Assets Insurance Fund established under sec5
tion 102.
6 (7) SECRETARY.—The term ‘‘Secretary’’ means
7 the Secretary of the Treasury.
8 (8) TARP.—The term ‘‘TARP’’ means the
9 troubled asset relief program established under sec10
tion 101.
11 (9) TROUBLED ASSETS.—The term ‘‘troubled
12 assets’’ means—
13 (A) residential or commercial mortgages
14 and any securities, obligations, or other instru15
ments that are based on or related to such
16 mortgages, that in each case was originated or
17 issued on or before March 14, 2008, the pur18
chase of which the Secretary determines pro19
motes financial market stability; and
20 (B) øany other financial instrument that
21 the Secretary, after consultation with the Chair22
man of the Board of Governors of the Federal
23 Reserve System, determines the purchase of
24 which is necessary to promote financial market
25 stability, but only upon transmittal of such de6
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1 termination, in writing, to the appropriate com2
mittees of Congress¿.
3 TITLE I—TROUBLED ASSETS
4 RELIEF PROGRAM
5 SEC. 101. PURCHASES OF TROUBLED ASSETS.
6 (a) OFFICES; AUTHORITY.—
7 ø(1) AUTHORITY.—The Secretary is authorized
8 to establish a troubled asset relief program (or
9 ‘‘TARP’’) to purchase, and to make and fund com10
mitments to purchase, troubled assets from any fi11
nancial institution, on such terms and conditions as
12 are determined by the Secretary, and in accordance
13 with this Act and the policies and procedures devel14
oped and published by the Secretary.¿
15 (2) ESTABLISHMENT OF TREASURY OFFICE.—
16 (A) IN GENERAL.—The Secretary shall im17
plement any program under paragraph (1)
18 through an Office of Financial Stability, estab19
lished for such purpose within the Office of Do20
mestic Finance of the Department of the Treas21
ury, which office shall be headed by an Assist22
ant Secretary of the Treasury, appointed by the
23 President, by and with the advice and consent
24 of the Senate.
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1 (B) CLERICAL AMENDMENT.—Section
2 5315 of title 5, United States Code, is amended
3 in the item relating to Assistant Secretaries of
4 the Treasury, by striking ‘‘(9)’’ and inserting
5 ‘‘(10)’’.
6 (b) CONSULTATION.—In exercising the authority
7 under this section, the Secretary shall consult with the
8 Board of Governors of the Federal Reserve System, the
9 Federal Reserve Bank of New York, the Corporation, the
10 Comptroller of the Currency, the Director of the Office
11 of Thrift Supervision, and the Secretary of Housing and
12 Urban Development.
13 (c) NECESSARY ACTIONS.—The Secretary is author14
ized to take such actions as the Secretary deems necessary
15 to carry out the authorities in this Act, including, without
16 limitation, the following:
17 (1) The Secretary shall have direct hiring au18
thority with respect to the appointment of employees
19 to administer this Act.
20 (2) Entering into contracts, including contracts
21 for services authorized by section 3109 of title 5,
22 United States Code.
23 (3) Designating financial institutions as finan24
cial agents of the Federal Government, and such in25
stitutions shall perform all such reasonable duties
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1 related to this Act as financial agents of the Federal
2 Government as may be required.
3 (4) In order to provide the Secretary with the
4 flexibility to manage troubled assets in a manner de5
signed to minimize cost to the taxpayers, estab6
lishing vehicles that are authorized, subject to super7
vision by the Secretary, to purchase troubled assets
8 and issue obligations.
9 (5) Issuing such regulations and other guidance
10 as may be necessary or appropriate to define terms
11 or carry out the authorities or purposes of this Act.
12 (d) PROGRAM GUIDELINES.—Before the earlier of
13 the end of the 2-business-day period beginning on the date
14 of the first purchase of troubled assets pursuant to the
15 authority under this section or the end of the 45-day pe16
riod beginning on the date of enactment of this Act, the
17 Secretary shall publish program guidelines, including the
18 following:
19 (1) Mechanisms for purchasing troubled assets.
20 (2) Methods for pricing and valuing troubled
21 assets.
22 (3) Procedures for selecting asset managers.
23 (4) Criteria for identifying troubled assets for
24 purchase.
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1 (e) PREVENTING UNJUST ENRICHMENT.—In making
2 purchases under the authority of this Act, the Secretary
3 shall take such steps as may be necessary to prevent un4
just enrichment of financial institutions participating in
5 a program established under this section, including by pre6
venting the resale of a troubled asset to the Secretary at
7 a higher price than what the seller paid to purchase the
8 asset. This subsection does not apply to troubled assets
9 acquired in a merger or acquisition, or a purchase of as10
sets from a financial institution in conservatorship or re11
ceivership, or that has initiated bankruptcy proceedings
12 under title 11, United States Code.
13 SEC. 102. INSURANCE OF TROUBLED ASSETS.
14 (a) AUTHORITY.—
15 (1) IN GENERAL.—If the Secretary establishes
16 the program authorized under section 101, then the
17 Secretary shall establish a program to guarantee
18 troubled assets, including mortgage-backed securities
19 issued prior to March 18, 2008.
20 (2) GUARANTEES.—In establishing any pro21
gram under this subsection, the Secretary may de22
velop guarantees of troubled assets and the associ23
ated premiums for such guarantees. Such guaran24
tees and premiums shall be determined by category
25 or class of the securities to be guaranteed.
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1 (3) EXTENT OF GUARANTEE.—Upon request of
2 a financial institution, the Secretary may guarantee
3 the timely payment of principal of, and interest on,
4 troubled assets in amounts not to exceed 100 per5
cent of such payments. Such guarantee may be on
6 such terms and conditions as are determined by the
7 Secretary, provided that such terms and conditions
8 are consistent with the purposes of this Act.
9 (b) REPORTS.—The Secretary shall report to the ap10
propriate committees of Congress on the program estab11
lished under subsection (a). Such report shall be sub12
mitted prior to any increase in the authority to purchase
13 troubled assets in accordance with section 115.
14 (c) PREMIUMS.—
15 (1) IN GENERAL.—The Secretary shall collect
16 premiums from any financial institution partici17
pating in the program established under subsection
18 (a). Such premiums may be in amount that the Sec19
retary determines necessary to meet the purposes of
20 this Act and to provide sufficient reserves pursuant
21 to paragraph (3).
22 (2) AUTHORITY TO BASE PREMIUMS ON PROD23
UCT RISK.—In establishing any premium under
24 paragraph (1), the Secretary may provide for vari25
ations in such rates according to the credit risk as11
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1 sociated with the particular troubled asset that is
2 being guaranteed. The Secretary shall publish the
3 methodology for setting the premium for a class of
4 troubled assets, such that the premium is consistent
5 with paragraph (3), together with an explanation of
6 the appropriateness of the class of assets that may
7 participate in the program established under this
8 section.
9 (3) MINIMUM LEVEL.—The premiums referred
10 to in paragraph (1) shall be set by the Secretary at
11 a level necessary to create reserves sufficient to meet
12 anticipated claims, based on an actuarial analysis
13 and to ensure that taxpayers are fully protected.
14 (4) OFFSET.—The amount of premiums col15
lected under this subsection shall offset the amount
16 authorized to be purchased under section 115.
17 (d) TROUBLED ASSETS INSURANCE FUND.—
18 (1) DEPOSITS.—The Secretary shall deposit
19 fees collected under this section into the Troubled
20 Assets Insurance Fund established under paragraph
21 (2).
22 (2) ESTABLISHMENT.—There is established a
23 Troubled Assets Insurance Fund that shall consist
24 of the amounts collected pursuant to paragraph (1),
25 and any balance ins such fund shall be invested by
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1 the Secretary in United States Treasury securities,
2 or kept in cash on hand or on deposit, as necessary.
3 (3) PAYMENTS FROM FUND.—The Secretary
4 shall make payments from amounts deposited in the
5 Troubled Assets Insurance Fund to fulfill obligations
6 of the guarantees provided to financial institutions
7 under subsection (a).
8 SEC. 103. CONSIDERATIONS.
9 In exercising the authorities granted in this Act, the
10 Secretary shall take into consideration—
11 (1) protecting the interests of taxpayers by
12 maximizing overall returns and minimizing the im13
pact to the national debt;
14 (2) providing stability and preventing disrup15
tion to financial markets in order to limit the impact
16 on the economy;
17 (3) the need to help families keep their homes
18 and to stabilize communities;
19 (4) in determining whether to engage in a di20
rect purchase from an individual financial institu21
tion, the long-term viability of the financial institu22
tion in determining whether the purchase represents
23 the most efficient use of funds under this Act;
24 (5) ensuring that all financial institutions are
25 eligible to participate in the program, without dis13
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1 crimination based on size, geography, form of orga2
nization, or the size, type, and number of assets eli3
gible for purchase under this Act;
4 (6) providing assistance to financial institu5
tions, including those serving low- and moderate-in6
come populations and other underserved commu7
nities, and that have assets less than
8 $1,000,000,000, that were well or adequately cap9
italized as of June 30, 2008, and that as a result
10 of the devaluation of the preferred government-spon11
sored enterprises stock will drop one or more capital
12 levels, in a manner sufficient to restore the financial
13 institutions to at least an adequately capitalized
14 level;
15 (7) the need to ensure stability for United
16 States public instrumentalities, such as counties and
17 cities, that may have suffered significant increased
18 costs or losses in the current market turmoil;
19 ø(8) that nothing in this Act prevents the Sec20
retary from protecting the retirement security of
21 Americans by purchasing troubled assets held by or
22 on behalf of an eligible retirement plan other than
23 a plan described in section 409A of the Internal
24 Revenue Code of 1986; and¿
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1 (9) the utility of purchasing other real estate
2 owned and instruments backed by mortgages on
3 multifamily properties.
4 SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.
5 (a) ESTABLISHMENT.—There is established the Fi6
nancial Stability Oversight Board, which shall be respon7
sible for—
8 (1) reviewing the exercise of authority under a
9 program developed in accordance with this Act, in10
cluding—
11 (A) any action taken by the Secretary and
12 the Office of Financial Stability created under
13 section 101, including the appointment of finan14
cial agents, the designation of asset classes to
15 be purchased, and plans for the structure of ve16
hicles used to purchase troubled assets; and
17 (B) the effect of such actions in assisting
18 American families in preserving home owner19
ship, stabilizing financial markets, and pro20
tecting taxpayers;
21 (2) making recommendations, as appropriate, to
22 the Secretary regarding use of the authority under
23 this Act; and
24 (3) reporting any suspected fraud, misrepresen25
tation, or malfeasance to the Inspector General for
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1 the Department of the Treasury or the Attorney
2 General of the United States, consistent with section
3 535(b) of title 28, United States Code.
4 (b) MEMBERSHIP.—The Financial Stability Over5
sight Board shall be comprised of—
6 (1) the Chairman of the Board of Governors of
7 the Federal Reserve System;
8 (2) the Secretary;
9 (3) the Director of the Federal Home Finance
10 Agency;
11 (4) the chairman of the Securities and Ex12
change Commission; amd
13 (5) the Secretary of Housing and Urban Devel14
opment.
15 (c) CHAIRPERSON.—The chairperson of the Financial
16 Stability Oversight Board shall be elected by the members
17 of the Board from among the members.
18 (d) MEETINGS.—The Financial Stability Oversight
19 Board shall meet 2 weeks after the first exercise of the
20 purchase authority of the Secretary under this Act, and
21 monthly thereafter.
22 (e) EXECUTIVE COMMITTEE.—
23 (1) APPOINTMENT.—There is established an ex24
ecutive committee of the Financial Stability Over25
sight Board which shall consist of the members of
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1 the Financial Stability Oversight Board pursuant to
2 paragraphs (1), (2), and (3) of subsection (b).
3 (2) AUTHORITIES.—The Financial Stability
4 Oversight Board shall have the authority to ensure
5 that the policies implemented by the Secretary are—
6 (A) in accordance with the purposes of this
7 Act;
8 (B) in the economic interests of the United
9 States; and
10 (C) consistent with protecting taxpayers, in
11 accordance with section 112(a).
12 (f) CREDIT REVIEW COMMITTEE.—The executive
13 committee established under subsection (e) may appoint
14 a credit review committee for the purpose of evaluating
15 the exercise of the purchase authority provided under this
16 Act and the assets acquired through the exercise of such
17 authority, as the executive committee determines appro18
priate.
19 (g) SHARING OF INFORMATION.—Any reports or rec20
ommendations submitted or proposed under this section
21 shall also be submitted to the Congressional Oversight
22 Panel established under section 125.
23 (h) TERMINATION.—The Financial Stability Over24
sight Board, and the authority of the Oversight Board
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1 under this section, shall terminate on the expiration of the
2 15-day period beginning upon the later of—
3 (1) the date of expiration of the last insurance
4 contract issued under section 102; or
5 (2) the date that the last troubled asset ac6
quired by the Secretary under section 101 has been
7 sold or transferred out of the ownership or control
8 of the Federal Government.
9 SEC. 105. REPORTS.
10 (a) IN GENERAL.—Before the expiration of the 60-
11 day period beginning on the date of the first exercise of
12 the authority granted in section 101(a), whichever date
13 is earlier, or of the first exercise of the authority granted
14 in section 102, whichever occurs first, and every 30-day
15 period thereafter, the Secretary shall report to the appro16
priate committees of Congress, with respect to each such
17 period—
18 (1) an overview of actions taken by the Sec19
retary, including the considerations required by sec20
tion 103 and the efforts under section 112;
21 (2) the actual obligation and expenditure of the
22 funds provided for administrative expenses by sec23
tion 118 during such period and the expected ex24
penditure of such funds in the subsequent period;
25 and
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1 (3) a detailed financial statement with respect
2 to the exercise of authority under this Act, includ3
ing—
4 (A) all agreements made or renewed;
5 (B) all insurance contracts entered into
6 pursuant to section 102;
7 (C) all transactions occurring during such
8 period, including the types of parties involved;
9 (D) the nature of the assets purchased;
10 (E) all projected costs and liabilities;
11 (F) operating expenses, including com12
pensation for financial agents;
13 (G) the valuation or pricing method used
14 for each transaction; and
15 (H) a description of the vehicles estab16
lished to exercise such authority.
17 (b) TRANCHE REPORTS TO CONGRESS.—
18 (1) REPORTS.—The Secretary shall provide to
19 the appropriate committees of Congress, at the times
20 specified in paragraph (2), a written report, includ21
ing—
22 (A) a description of all of the transactions
23 made during the reporting period;
24 (B) a description of the pricing mechanism
25 for the transactions;
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1 (C) a justification of the price paid for and
2 other financial terms associated with the trans3
actions;
4 (D) a description of the impact of the exer5
cise of such authority on the financial system,
6 supported, to the extent possible, by specific
7 data;
8 (E) a description of challenges that remain
9 in the financial system, including any bench10
marks yet to be achieved; and
11 (F) an estimate of additional actions under
12 the authority provided under this Act that may
13 be necessary to address such challenges.
14 (2) TIMING.—The report required by this sub15
section shall be submitted not later than 7 days
16 after the date on which commitments to purchase
17 troubled assets under the authorities provided in this
18 Act first reach an aggregate of $50,000,000,000 and
19 not later than 7 days after each $50,000,000,000 in20
terval of such commitments is reached thereafter.
21 (c) REGULATORY MODERNIZATION REPORT.—The
22 Secretary shall review the current state of the financial
23 markets and the regulatory system and submit a written
24 report to the appropriate committees of Congress not later
25 than April 30, 2009, analyzing the current state of the
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1 regulatory system and its effectiveness at overseeing the
2 participants in the financial markets, including the over3
the-counter swaps market and government-sponsored en4
terprises, and providing recommendations for improve5
ment, including—
6 (1) recommendations regarding—
7 (A) whether any participants in the finan8
cial markets that are currently outside the reg9
ulatory system should become subject to the
10 regulatory system; and
11 (B) enhancement of the clearing and set12
tlement of over-the-counter swaps; and
13 (2) the rationale underlying such recommenda14
tions.
15 (d) SHARING OF INFORMATION.—Any report re16
quired under this section shall also be submitted to the
17 Congressional Oversight Panel established under section
18 125.
19 (e) SUNSET.—The reporting requirements under this
20 section shall terminate on the later of—
21 (1) the date of expiration of the last insurance
22 contract issued under section 102; or
23 (2) the date that the last troubled asset ac24
quired by the Secretary under section 101 has been
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1 sold or transferred out of the ownership or control
2 of the Federal Government.
3 SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED AS4
SETS; REVENUES AND SALE PROCEEDS.
5 (a) EXERCISE OF RIGHTS.—The Secretary may, at
6 any time, exercise any rights received in connection with
7 troubled assets purchased under this Act.
8 ø(b) MANAGEMENT OF TROUBLED ASSETS.—The
9 Secretary, in consultation with the Corporation, shall have
10 authority to manage troubled assets purchased under this
11 Act, including revenues and portfolio risks therefrom.¿
12 (c) SALE OF TROUBLED ASSETS.—The Secretary
13 may, at any time, upon terms and conditions and at a
14 price determined by the Secretary, sell, or enter into secu15
rities loans, repurchase transactions, or other financial
16 transactions in regard to, any troubled asset purchased
17 under this Act.
18 ø(d) TRANSFER OF A PERCENTAGE OF PROFITS.—
19 ¿
20 ø(1) DEPOSITS.—Not less than 20 percent of
21 any profit realized on the sale of each troubled asset
22 purchased under this Act shall be deposited as pro23
vided in paragraph (2).¿
24 ø(2) USE OF DEPOSITS.—Of the amount re25
ferred to in paragraph (1)—¿
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1 ø(A) 65 percent shall be deposited into the
2 Housing Trust Fund established under section
3 1338 of the Federal Housing Enterprises Regu4
latory Reform Act of 1992 (12 U.S.C. 4568);
5 and¿
6 ø(B) 35 percent shall be deposited into the
7 Capital Magnet Fund established under section
8 1339 of that Act (12 U.S.C. 4569).¿
9 ø(3) TRANSFER TO TREASURY.—Revenues of,
10 and proceeds from the sale of troubled assets pur11
chased under this Act, øor from¿ the sale, exercise,
12 or surrender of warrants or senior debt acquired
13 under section ø113¿ shall be paid into the general
14 fund of the Treasury for reduction of the public
15 debt.¿
16 (e) APPLICATION OF SUNSET TO TROUBLED AS17
SETS.—The authority of the Secretary to hold any trou18
bled asset purchased under this Act before the termination
19 date in section 120, or to purchase or fund the purchase
20 of a troubled asset under a commitment entered into be21
fore the termination date in section 120, is not subject
22 to the provisions of section 120.
23 SEC. 107. CONTRACTING PROCEDURES.
24 (a) STREAMLINED PROCESS.—For purposes of this
25 Act, the Secretary may waive specific provisions of the
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1 Federal Acquisition Regulation upon a determination that
2 urgent and compelling circumstances make compliance
3 with such provisions contrary to the public interest. Any
4 such determination, and the justification for such deter5
mination, shall be submitted to the Committees on Over6
sight and Government Reform and Financial Services of
7 the House of Representatives and the Committees on
8 Homeland Security and Governmental Affairs and Bank9
ing, Housing, and Urban Affairs of the Senate within 7
10 days.
11 (b) ADDITIONAL CONTRACTING REQUIREMENTS.—In
12 any solicitation or contract where the Secretary has, pur13
suant to subsection (a) waived the provisions of the Fed14
eral Acquisition Regulation pertaining to minority con15
tracting, the Secretary shall develop and implement stand16
ards and procedures to ensure, to the maximum extent
17 practicable, the inclusion and utilization of minorities (as
18 such term is defined in section 1204(c) of the Financial
19 Institutions Reform, Recovery, and Enforcement Act of
20 1989 (12 U.S.C. 1811 note)) and women, and minority21
and women-owned businesses (as such terms are defined
22 in section 21A(r)(4) of the Federal Home Loan Bank Act
23 (12 U.S.C. 1441a(r)(4)), in that solicitation or contract,
24 including contracts to asset managers, servicers, property
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1 managers, and other service providers or expert consult2
ants.
3 (c) ELIGIBILITY OF FDIC.—Notwithstanding sub4
sections (a) and (b), the Corporation—
5 (1) shall be eligible for, and shall be considered
6 in, the selection of asset managers for residential
7 mortgage loans and residential mortgage-backed se8
curities; and
9 (2) shall be reimbursed by the Secretary for
10 any services provided.
11 SEC. 108. CONFLICTS OF INTEREST.
12 (a) STANDARDS REQUIRED.—The Secretary shall
13 issue regulations or guidelines necessary to address and
14 manage or to prohibit conflicts of interest that may arise
15 in connection with the administration and execution of the
16 authorities provided under this Act, including—
17 (1) conflicts arising in the selection or hiring of
18 contractors or advisors, including asset managers;
19 (2) the purchase of troubled assets;
20 (3) the management of the troubled assets held;
21 (4) post-employment restrictions on employees;
22 and
23 (5) any other potential conflict of interest, as
24 the Secretary deems necessary or appropriate in the
25 public interest.
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1 (b) TIMING.—Regulations or guidelines required by
2 this section shall be issued as soon as practicable after
3 the date of enactment of this Act.
4 SEC. 109. FORECLOSURE MITIGATION EFFORTS.
5 (a) RESIDENTIAL MORTGAGE LOAN SERVICING
6 STANDARDS.—To the extent that the Secretary acquires
7 mortgages, mortgage backed securities, and other assets
8 secured by residential real estate, including multifamily
9 housing, the Secretary shall implement a plan that seeks
10 to maximize assistance for homeowners and use the au11
thority of the Secretary to encourage the servicers of the
12 underlying mortgages, considering net present value to the
13 taxpayer, to take advantage of the HOPE for Home14
owners Program under section 257 of the National Hous15
ing Act or other available programs to minimize fore16
closures. In addition, the Secretary may use loan guaran17
tees and credit enhancements to facilitate loan modifica18
tions to prevent avoidable foreclosures.
19 (b) COORDINATION.—The Secretary shall coordinate
20 with the Corporation, the Board (with respect to any
21 mortgage or mortgage-backed securities or pool of securi22
ties held, owned, or controlled by or on behalf of a Federal
23 reserve bank), the Federal Housing Finance Agency, the
24 Secretary of Housing and Urban Development, and other
25 Federal Government entities that hold troubled assets to
26
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1 attempt to identify opportunities for the acquisition of
2 classes of troubled assets that will improve the ability of
3 the Secretary to improve the loan modification and re4
structuring process and, where permissible, to permit bona
5 fide tenants who are current on their rent to remain in
6 their homes under the terms of the lease. In the case of
7 a mortgage on a residential rental property, the plan re8
quired under this section shall include protecting Federal,
9 State, and local rental subsidies and protections, and en10
suring any modification takes into account the need for
11 operating funds to maintain decent and safe conditions at
12 the property.
13 (c) CONSENT TO REASONABLE LOAN MODIFICATION
14 REQUESTS.—Upon any request arising under existing in15
vestment contracts, the Secretary shall consent, where ap16
propriate, and considering net present value to the tax17
payer, to reasonable requests for loss mitigation measures,
18 including term extensions, rate reductions, principal write
19 downs, increases in the proportion of loans within a trust
20 or other structure allowed to be modified, or removal of
21 other limitation on modifications.
22 SEC. 110. ASSISTANCE TO HOMEOWNERS AND LOCALITIES.
23 (a) DEFINITIONS.—As used in this section—
24 (1) the term ‘‘Federal property manager’’
25 means—
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1 (A) the Federal Housing Finance Agency,
2 in its capacity as conservator of the Federal
3 National Mortgage Association and the Federal
4 Home Loan Mortgage Corporation;
5 (B) the Corporation, with respect to resi6
dential mortgage loans and mortgage-backed se7
curities held by any bridge depository institu8
tion pursuant to section 11(n) of the Federal
9 Deposit Insurance Act; and
10 (C) the Board, with respect to any mort11
gage or mortgage-backed securities or pool of
12 securities held, owned, or controlled by or on
13 behalf of a Federal reserve bank;
14 (2) the term ‘‘consumer’’ has the same meaning
15 as in section 103 of the Truth in Lending Act (15
16 U.S.C. 1602);
17 (3) the term ‘‘insured depository institution’’
18 has the same meaning as in section 3 of the Federal
19 Deposit Insurance Act (12 U.S.C. 1813); and
20 (4) the term ‘‘servicer’’ has the same meaning
21 as in section 6(i)(2) of the Real Estate Settlement
22 Procedures Act of 1974 (12 U.S.C. 2605(i)(2)).
23 (b) HOMEOWNER ASSISTANCE BY AGENCIES.—
24 (1) IN GENERAL.—To the extent that the Fed25
eral property manager holds, owns, or controls mort28
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1 gages, mortgage backed securities, and other assets
2 secured by residential real estate, including multi3
family housing, the Federal property manager shall
4 implement a plan that seeks to maximize assistance
5 for homeowners and use their authority to encourage
6 the servicers of the underlying mortgages, and con7
sidering net present value to the taxpayer, to take
8 advantage of the HOPE for Homeowners Program
9 under section 257 of the National Housing Act or
10 other available programs to minimize foreclosures.
11 (2) MODIFICATIONS.—In the case of a residen12
tial mortgage loan, modifications made under para13
graph (1) may include—
14 (A) reduction in interest rates;
15 (B) reduction of loan principal; and
16 (C) other similar modifications.
17 (3) TENANT PROTECTIONS.—In the case of
18 mortgages on residential rental properties, modifica19
tions made under paragraph (1) shall ensure—
20 (A) the continuation of any existing Fed21
eral, State, and local rental subsidies and pro22
tections; and
23 (B) that modifications take into account
24 the need for operating funds to maintain decent
25 and safe conditions at the property.
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1 (4) TIMING.—Each Federal property manager
2 shall develop and begin implementation of the plan
3 required by this subsection not later than 60 days
4 after the date of enactment of this Act.
5 (5) REPORTS TO CONGRESS.—Each Federal
6 property manager shall, 60 days after the date of
7 enactment of this Act and every 30 days thereafter,
8 report to Congress specific information on the num9
ber and types of loan modifications made and the
10 number of actual foreclosures occurring during the
11 reporting period in accordance with this section.
12 (6) CONSULTATION.—In developing the plan re13
quired by this subsection, the Federal property man14
agers shall consult with one another and, to the ex15
tent possible, utilize consistent approaches to imple16
ment the requirements of this subsection.
17 (c) ACTIONS WITH RESPECT TO SERVICERS.—In any
18 case in which a Federal property manager is not the owner
19 of a residential mortgage loan, but holds an interest in
20 obligations or pools of obligations secured by residential
21 mortgage loans, the Federal property manager shall—
22 (1) encourage implementation by the loan
23 servicers of loan modifications developed under sub24
section (b); and
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1 (2) assist in facilitating any such modifications,
2 to the extent possible.
3 (d) LIMITATION.—The requirements of this section
4 shall not supersede any other duty or requirement imposed
5 on the Federal property managers under otherwise appli6
cable law.
7 SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE
8 GOVERNANCE.
9 (a) DIRECT PURCHASES.—
10 (1) IN GENERAL.—Where the Secretary deter11
mines that the purposes of this Act are best met
12 through direct purchases of troubled assets from an
13 individual financial institution where no bidding
14 process or market prices are available, and the Sec15
retary receives a meaningful equity position in the
16 financial institution as a result of the transaction,
17 the Secretary shall require that the financial institu18
tion meet appropriate standards for executive com19
pensation and corporate governance. The standards
20 required under this subsection shall be effective for
21 the duration of the period that the Secretary holds
22 an equity position in the financial institution.
23 (2) CRITERIA.—The standards required under
24 subsection shall include—
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1 (A) limits on compensation that exclude in2
centives for executive officers of a financial in3
stitution to take unnecessary and excessive
4 risks that threaten the value of the financial in5
stitution during the period that the Secretary
6 holds an equity position in the financial institu7
tion;
8 (B) a provision for the recovery by the fi9
nancial institution of any bonus or incentive
10 compensation paid to a øsenior executive offi11
cer¿ based on statements of earnings, gains, or
12 other criteria that are later proven to be mate13
rially inaccurate; and
14 (C) a prohibition on the financial institu15
tion making any golden parachute payment to
16 its øsenior executive officers¿ during the period
17 that the Secretary holds an equity position in
18 the financial institution.
19 (b) AUCTION PURCHASES.—Where the Secretary de20
termines that the purposes of this Act are best met
21 through auction purchases of troubled assets, and only
22 where such purchases in the aggregate exceed
23 $300,000,000, the Secretary shall prohibit any golden
24 parachute for any employee hired after the successful par25
ticipation in such an auction who also qualifies as a cov32
O:\AYO\AYO08B94.xml [Discussion Draft]
1 ered executive under section 162(m)(5)(D) of the Internal
2 Revenue Code of 1986. The Secretary shall issue guidance
3 to carry out this paragraph not later than 2 months after
4 the date of enactment of this Act, and such guidance shall
5 be effective upon issuance.
6 ø(c) GOLDEN PARACHUTE DEFINED.—In this sec7
tion, the term ‘‘golden parachute’’ means any payment (or
8 any agreement to make any payment) in the nature of
9 compensation by any financial institution for the benefit
10 of an individual pursuant to an obligation of the financial
11 institution that—¿
12 ø(1) is contingent on the termination of the af13
filiation of such individual with the financial institu14
tion; and¿
15 ø(2) is received on or after the date on which—
16 ¿
17 ø(A) the financial institution becomes in18
solvent;¿
19 ø(B) any conservator or receiver is ap20
pointed for the financial institution;¿
21 ø(C) the financial institution files for
22 bankruptcy protection under title 11, United
23 States Code; or¿
24 ø(D) the financial institution is in a trou25
bled condition.¿
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1 (d) SPECIAL RULES FOR TAX TREATMENT OF EXEC2
UTIVE COMPENSATION OF EMPLOYERS PARTICIPATING IN
3 THE TROUBLED ASSETS RELIEF PROGRAM.—
4 (1) DENIAL OF DEDUCTION.—Subsection (m)
5 of section 162 of the Internal Revenue Code of 1986
6 is amended by adding at the end the following new
7 paragraph:
8 ‘‘(5) SPECIAL RULE FOR APPLICATION TO EM9
PLOYERS PARTICIPATING IN THE TROUBLED ASSETS
10 RELIEF PROGRAM.—
11 ‘‘(A) IN GENERAL.—In the case of an ap12
plicable employer, no deduction shall be allowed
13 under this chapter—
14 ‘‘(i) in the case of executive remunera15
tion for any applicable taxable year which
16 is attributable to services performed by a
17 covered executive during such applicable
18 taxable year, to the extent that the amount
19 of such remuneration exceeds $500,000, or
20 ‘‘(ii) in the case of deferred deduction
21 executive remuneration for any taxable
22 year for services performed during any ap23
plicable taxable year by a covered execu24
tive, to the extent that the amount of such
34
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1 remuneration exceeds $500,000 reduced
2 (but not below zero) by the sum of—
3 ‘‘(I) the executive remuneration
4 for such applicable taxable year, plus
5 ‘‘(II) the portion of the deferred
6 deduction executive remuneration for
7 such services which was taken into ac8
count under this clause in a preceding
9 taxable year.
10 ‘‘(B) APPLICABLE EMPLOYER.—For pur11
poses of this paragraph—
12 ‘‘(i) IN GENERAL.—Except as pro13
vided in clause (ii), the term ‘applicable
14 employer’ means any employer from whom
15 1 or more troubled assets are acquired
16 under a program established by the Sec17
retary under section 101(a) of the Eco18
nomic Recovery and Corporate Account19
ability Act of 2008 if the aggregate
20 amount of the assets so acquired for all
21 taxable years exceeds $300,000,000.
22 ‘‘(ii) DISREGARD OF ASSETS SOLD
23 THROUGH DIRECT PURCHASE.—If an em24
ployer sells any troubled assets to the Sec25
retary through a direct purchase (within
35
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1 the meaning of section 112(c) of the Eco2
nomic Recovery and Corporate Account3
ability Act of 2008), such assets shall not
4 be taken into account under clause (i) in
5 determining whether the employer is an
6 applicable employer for purposes of this
7 paragraph.
8 ‘‘(iii) AGGREGATION RULES.—Two or
9 more persons who are treated as a single
10 employer under subsection (b) or (c) of
11 section 414 shall be treated as a single em12
ployer, except that in applying section
13 1563(a) for purposes of either such sub14
section, paragraphs (2) and (3) thereof
15 shall be disregarded.
16 ‘‘(C) APPLICABLE TAXABLE YEAR.—For
17 purposes of this paragraph, the term ‘applicable
18 taxable year’ means, with respect to any em19
ployer—
20 ‘‘(i) the first taxable year of the em21
ployer—
22 ‘‘(I) which includes any portion
23 of the period during which the au24
thorities under section 101(a) of the
25 Economic Recovery and Corporate Ac36
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1 countability Act of 2008 are in effect
2 (determined under section 119 there3
of), and
4 ‘‘(II) in which the aggregate
5 amount of troubled assets acquired
6 from the employer during the taxable
7 year pursuant to such authorities,
8 when added to the aggregate amount
9 so acquired for all preceding taxable
10 years, exceeds $300,000,000, and
11 ‘‘(ii) any subsequent taxable year
12 which includes any portion of such period.
13 ‘‘(D) COVERED EXECUTIVE.—For pur14
poses of this paragraph—
15 ‘‘(i) IN GENERAL.—The term ‘covered
16 executive’ means, with respect to any ap17
plicable taxable year, any employee—
18 ‘‘(I) who, at any time during the
19 portion of the taxable year during
20 which the authorities under section
21 101(a) of the Economic Recovery and
22 Corporate Accountability Act of 2008
23 are in effect (determined under sec24
tion 119 thereof), is the chief execu25
tive officer of the applicable employer
37
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1 or the chief financial officer of the ap2
plicable employer, or an individual
3 acting in either such capacity, or
4 ‘‘(II) who is described in clause
5 (ii).
6 ‘‘(ii) HIGHEST COMPENSATED EM7
PLOYEES.—An employee is described in
8 this clause if the employee is 1 of the 3
9 highest compensated officers of the appli10
cable employer for the taxable year (other
11 than an individual described in clause
12 (i)(I)), determined—
13 ‘‘(I) on the basis of the share14
holder disclosure rules for compensa15
tion under the Securities Exchange
16 Act of 1934 (without regard to wheth17
er those rules apply to the employer),
18 and
19 ‘‘(II) by only taking into account
20 employees employed during the por21
tion of the taxable year described in
22 clause (i)(I).
23 ‘‘(iii) EMPLOYEE REMAINS COVERED
24 EXECUTIVE.—If an employee is a covered
25 executive with respect to an applicable em38
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1 ployer for any applicable taxable year, such
2 employee shall be treated as a covered ex3
ecutive with respect to such employer for
4 all subsequent applicable taxable years and
5 for all subsequent taxable years in which
6 deferred deduction executive remuneration
7 with respect to services performed in all
8 such applicable taxable years is paid.
9 ‘‘(E) EXECUTIVE REMUNERATION.—For
10 purposes of this paragraph, the term ‘executive
11 remuneration’ means the applicable employee
12 remuneration of the covered executive, as deter13
mined under paragraph (4) without regard to
14 subparagraphs (B), (C), and (D) thereof. Such
15 term shall not include any deferred deduction
16 executive remuneration with respect to services
17 performed in a prior applicable taxable year.
18 ‘‘(F) DEFERRED DEDUCTION EXECUTIVE
19 REMUNERATION.—For purposes of this para20
graph, the term ‘deferred deduction executive
21 remuneration’ means remuneration which would
22 be executive remuneration for services per23
formed in an applicable taxable year but for the
24 fact that the deduction under this chapter (de25
termined without regard to this paragraph) for
39
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1 such remuneration is allowable in a subsequent
2 taxable year.
3 ‘‘(G) COORDINATION.—Rules similar to
4 the rules of subparagraphs (F) and (G) of para5
graph (4) shall apply for purposes of this para6
graph.
7 ‘‘(H) REGULATORY AUTHORITY.—The Sec8
retary may prescribe such guidance, rules, or
9 regulations as are necessary to carry out the
10 purposes of this paragraph and the Economic
11 Recovery and Corporate Accountability Act of
12 2008, including the extent to which this para13
graph applies in the case of any acquisition,
14 merger, or reorganization of an applicable em15
ployer.’’.
16 (2) GOLDEN PARACHUTE RULE.—Section 280G
17 of the Internal Revenue Code of 1986 is amended—
18 (A) by redesignating subsection (e) as sub19
section (f), and
20 (B) by inserting after subsection (d) the
21 following new subsection:
22 ‘‘(e) SPECIAL RULE FOR APPLICATION TO EMPLOY23
ERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF
24 PROGRAM.—
40
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1 ‘‘(1) IN GENERAL.—In the case of the sever2
ance from employment of a covered executive of an
3 applicable employer during any applicable taxable
4 year, this section shall be applied to payments to
5 such executive with the following modifications:
6 ‘‘(A) Any reference to a disqualified indi7
vidual (other than in subsection (c)) shall be
8 treated as a reference to a covered executive.
9 ‘‘(B) Any reference to a change described
10 in subsection (b)(2)(A)(i) shall be treated as a
11 reference to an applicable severance from em12
ployment of a covered executive, and any ref13
erence to a payment contingent on such a
14 change shall be treated as a reference to any
15 payment made during an applicable taxable
16 year of the employer on account of such appli17
cable severance from employment.
18 ‘‘(C) Any reference to a corporation shall
19 be treated as a reference to an applicable em20
ployer.
21 ‘‘(D) The provisions of subsections
22 (b)(2)(C), (b)(4), (b)(5), and (d)(5) shall not
23 apply.
24 ‘‘(2) DEFINITIONS AND SPECIAL RULES.—For
25 purposes of this subsection—
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O:\AYO\AYO08B94.xml [Discussion Draft]
1 ‘‘(A) DEFINITIONS.—Any term used in
2 this subsection which is also used in section
3 162(m)(5) shall have the meaning given such
4 term by such section.
5 ‘‘(B) APPLICABLE SEVERANCE FROM EM6
PLOYMENT.—The term ‘applicable severance
7 from employment’ means any severance from
8 employment of a covered executive by reason
9 of—
10 ‘‘(i) an involuntary termination of the
11 executive by the employer,
12 ‘‘(ii) any bankruptcy or liquidation of
13 the employer, or
14 ‘‘(iii) the placement of the employer in
15 receivership.
16 ‘‘(C) COORDINATION AND OTHER
17 RULES.—
18 ‘‘(i) IN GENERAL.—If a payment
19 which is treated as a parachute payment
20 by reason of this subsection is also a para21
chute payment determined without regard
22 to this subsection, this subsection shall not
23 apply to such payment.
42
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1 ‘‘(ii) REGULATORY AUTHORITY.—The
2 Secretary may prescribe such guidance,
3 rules, or regulations as are necessary—
4 ‘‘(I) to carry out the purposes of
5 this subsection and the Economic Re6
covery and Corporate Accountability
7 Act of 2008, including the extent to
8 which this subsection applies in the
9 case of any acquisition, merger, or re10
organization of an applicable em11
ployer, and
12 ‘‘(II) to apply this section and
13 section 4999 in cases where one or
14 more payments with respect to any in15
dividual are treated as parachute pay16
ments by reason of this subsection,
17 and other payments with respect to
18 such individual are treated as para19
chute payments under this section
20 without regard to this subsection.’’.
21 (3) EFFECTIVE DATES.—
22 (A) IN GENERAL.—The amendment made
23 by paragraph (1) shall apply to taxable years
24 ending on or after the date of the enactment of
25 this Act.
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1 (B) GOLDEN PARACHUTE RULE.—The
2 amendments made by paragraph (2) shall apply
3 to payments with respect to severances occur4
ring during the period during which the au5
thorities under section 101(a) are in effect (de6
termined under section 120).
7 SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES
8 AND CENTRAL BANKS.
9 The Secretary shall coordinate, as appropriate, with
10 foreign financial authorities and central banks to work to11
ward the establishment of similar programs by such au12
thorities and central banks. To the extent that such for13
eign financial authorities or banks hold troubled assets as
14 a result of extending financing to financial institutions
15 that have failed or defaulted on such financing, such trou16
bled assets qualify for purchase under section 101.
17 SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXI18
MIZATION OF BENEFITS FOR TAXPAYERS.
19 (a) LONG-TERM COSTS AND BENEFITS.—
20 (1) MINIMIZING NEGATIVE IMPACT.—The Sec21
retary shall use the authority under this Act in a
22 manner that will minimize any potential long-term
23 negative impact on the taxpayer, taking into account
24 the direct outlays, potential long-term returns on as25
sets purchased, and the overall economic benefits of
44
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1 the program, including economic benefits due to im2
provements in economic activity and the availability
3 of credit, the impact on the savings and pensions of
4 individuals, and reductions in losses to the Federal
5 Government.
6 (2) AUTHORITY.—In carrying out paragraph
7 (1), the Secretary shall—
8 (A) hold the assets to maturity or for re9
sale for and until such time as the Secretary
10 determines that the market is optimal for sell11
ing such assets, in order to maximize the value
12 for taxpayers; and
13 (B) sell such assets at a price that the Sec14
retary determines, based on available financial
15 analysis, will maximize return on investment for
16 the Federal Government.
17 (3) PRIVATE SECTOR PARTICIPATION.—The
18 Secretary shall encourage the private sector to par19
ticipate in purchases of troubled assets, and to in20
vest in financial institutions, consistent with the pro21
visions of this section.
22 (b) USE OF MARKET MECHANISMS.—In making pur23
chases under this Act, the Secretary shall—
45
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1 (1) make such purchases at the lowest price
2 that the Secretary determines to be consistent with
3 the purposes of this Act; and
4 (2) maximize the efficiency of the use of tax5
payer resources by using market mechanisms, in6
cluding auctions or reverse auctions, where appro7
priate.
8 (c) DIRECT PURCHASES.—If the Secretary deter9
mines that use of a market mechanism under subsection
10 (b) is not feasible or appropriate, and the purposes of the
11 Act are best met through direct purchases from an indi12
vidual financial institution, the Secretary shall pursue ad13
ditional measures to ensure that prices paid for assets are
14 reasonable and reflect the underlying value of the asset.
15 (d) CONDITIONS ON PURCHASE AUTHORITY FOR
16 WARRANTS AND DEBT INSTRUMENTS.—
17 (1) IN GENERAL.—The Secretary may not pur18
chase, or make any commitment to purchase, any
19 troubled asset under the authority of this Act, unless
20 the Secretary receives from the financial institution
21 from which such assets are to be purchased—
22 (A) in the case of a financial institution
23 that is registered (or approved for registration)
24 and traded on a national securities exchange or
25 a national securities association registered pur46
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1 suant to section 15A of the Securities Exchange
2 Act of 1934 (15 U.S.C. 78o-3), a warrant giv3
ing the right to the Secretary to receive non4
voting common stock or preferred stock in such
5 financial institution, as the Secretary deter6
mines appropriate; or
7 (B) in the case of any financial institution
8 other than one described in subparagraph (A),
9 a senior debt instrument from such financial in10
stitution, as described in paragraph (2)(C).
11 (2) TERMS AND CONDITIONS.—The terms and
12 conditions of any warrant or senior debt instrument
13 required under paragraph (1) shall meet the fol14
lowing requirements:
15 (A) PURPOSES.—Such terms and condi16
tions shall, at a minimum, be designed—
17 (i) to provide for reasonable participa18
tion by the Secretary, for the benefit of
19 taxpayers, in equity appreciation in the
20 case of a warrant, or a reasonable interest
21 rate premium, in the case of a debt instru22
ment; and
23 (ii) to provide additional protection
24 for the taxpayer against losses from sale of
47
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1 assets by the Secretary under this Act and
2 the administrative expenses of the TARP.
3 (B) AUTHORITY TO SELL, EXERCISE, OR
4 SURRENDER.—The Secretary may sell, exercise,
5 or surrender a warrant or any senior debt in6
strument received under this subsection, based
7 on the conditions established under subpara8
graph (A).
9 (C) CONVERSION.—The warrant shall pro10
vide that if, after the warrant is received by the
11 Secretary under this subsection, the financial
12 institution that issued the warrant is no longer
13 listed or traded on a national securities ex14
change or securities association, as described in
15 paragraph (1)(A), such warrants shall convert
16 to senior debt, in an amount determined by the
17 Secretary.
18 (D) PROTECTIONS.—Any warrant rep19
resenting securities to be received by the Sec20
retary under this subsection shall contain anti21
dilution provisions of the type employed in cap22
ital market transactions, as determined by the
23 Secretary. Such provisions shall protect the
24 value of the securities from market transactions
25 such as stock splits, stock distributions, divi48
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1 dends, and other distributions, mergers, and
2 other forms of reorganization or recapitaliza3
tion.
4 (E) EXERCISE PRICE.—The exercise price
5 for any warrant issued pursuant to this sub6
section shall be set by the Secretary, in the in7
terest of the taxpayers.
8 (F) SUFFICIENCY.—The financial institu9
tion shall guarantee to the Secretary that it has
10 authorized shares of nonvoting stock available
11 to fulfill its obligations under this subsection.
12 Should the financial institution not have suffi13
cient authorized shares, including preferred
14 shares that may carry dividend rights equal to
15 a multiple number of common shares, the Sec16
retary may, to the extent necessary, accept a
17 senior debt note in an amount, and on such
18 terms, as will compensate the Secretary equiva19
lently, in the event that a sufficient shareholder
20 vote to authorize the necessary additional
21 shares cannot be obtained.
22 (3) EXCEPTIONS.—
23 (A) DE MINIMIS.—The Secretary shall es24
tablish de minimis exceptions to the require25
ments of this subsection, based on either—
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1 (i) the total consolidated assets of the
2 financial institution, $500,000,000 or less;
3 or
4 (ii) the size of the cumulative trans5
actions of troubled assets purchased from
6 any one financial institution, at not more
7 than $100,000,000.
8 (B) OTHER EXCEPTIONS.—The Secretary
9 shall establish an exception to the requirements
10 of this subsection and appropriate alternative
11 requirements for any participating financial in12
stitution that is legally prohibited from issuing
13 securities and debt instruments, so as not to
14 allow circumvention of the requirements of this
15 section.
16 SEC. 114. MARKET TRANSPARENCY.
17 (a) PRICING.—To facilitate market transparency, the
18 Secretary shall make available to the public, in electronic
19 form, a description, amounts, and pricing of assets ac20
quired under this Act, within 2 business days of purchase,
21 trade, or other disposition.
22 (b) DISCLOSURE.—For each type of financial institu23
tions that is authorized to use the program established
24 under this Act, the Secretary shall determine whether the
25 public disclosure required for such financial institutions
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1 with respect to off-balance sheet transactions, derivatives
2 instruments, contingent liabilities, and similar sources of
3 potential exposure is adequate to provide to the public suf4
ficient information as to the true financial position of the
5 institutions. If such disclosure is not adequate for that
6 purpose, the Secretary shall make recommendations for
7 additional disclosure requirements to the relevant regu8
lators.
9 SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.
10 (a) AUTHORITY.—The authority of the Secretary to
11 purchase troubled assets under this Act shall be limited
12 as follows:
13 (1) Effective upon the date of enactment of this
14 Act, such authority shall be limited to
15 $250,000,000,000 outstanding at any one time.
16 (2) If at any time, the President submits to the
17 Congress a written certification that the Secretary is
18 exercising the authority under this paragraph, effec19
tive upon such submission, such authority shall be
20 limited to $350,000,000,000 outstanding at any one
21 time.
22 (3) If at any time after obligations of amounts
23 described in paragraphs (1) and (2) have been made,
24 the President transmits to the Congress a written
25 report detailing the plan of the Secretary to exercise
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1 the authority under this paragraph, unless there is
2 enacted, within 15 calendar days of such submission,
3 a joint resolution described in subsection (c), effec4
tive upon the expiration of such 15-day period, such
5 authority shall be limited to $700,000,000,000 out6
standing at any one time.
7 (b) AGGREGATION OF PURCHASE PRICES.—The
8 amount of troubled assets purchased by the Secretary out9
standing at any one time shall be determined for purposes
10 of the dollar amount limitations under subsection (a) by
11 aggregating the purchase prices of all troubled assets held.
12 (c) FAST TRACK CONSIDERATION.—
13 (1) IN GENERAL.—Notwithstanding any other
14 provision of this section, the Secretary may not exer15
cise any authority to make purchases under this Act
16 with regard to any amount in excess of
17 $350,000,000,000 previously obligated, as described
18 in this section if, within 10 calendar days after the
19 date on which Congress receives a report of the Sec20
retary described in subsection (a)(3), Congress en21
acts a joint resolution disapproving the plan of the
22 Secretary with respect to such additional amount.
23 (2) CONTENTS OF RESOLUTION.—For the pur24
pose of paragraph (1), ‘‘joint resolution’’ means only
25 a joint resolution introduced after the date on which
52
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1 the report of the Secretary referred to in subsection
2 (a)(3) is received by Congress, the matter after the
3 resolving clause of which is as follows: ‘‘That Con4
gress disapproves the obligation of any amount ex5
ceeding the amounts obligated as described in para6
graphs (1) and (2) of section 114(a) of the Emer7
gency Economic Stabilization Act of 2008.’’.
8 (3) REFERRAL TO COMMITTEE.—A resolution
9 described in paragraph (2) introduced in the House
10 of Representatives shall be referred to the Com11
mittee on Financial Services of the House of Rep12
resentatives. A resolution described in paragraph (2)
13 introduced in the Senate shall be referred to the
14 Committee on Committee on Banking, Housing, and
15 Urban Affairs of the Senate. Such a resolution may
16 not be reported before the 8th day after its introduc17
tion.
18 (4) DISCHARGE OF COMMITTEE.—If the com19
mittee to which is referred a resolution described in
20 paragraph (2) has not reported such resolution (or
21 an identical resolution) at the end of 8 calendar days
22 after its introduction, such committee shall be
23 deemed to be discharged from further consideration
24 of such resolution, and such resolution shall be
53
O:\AYO\AYO08B94.xml [Discussion Draft]
1 placed on the appropriate calendar of the House in2
volved.
3 (5) FLOOR CONSIDERATION.—
4 (A) IN GENERAL.—When the committee to
5 which a resolution described in paragraph (2) is
6 referred has reported, or has been deemed to be
7 discharged (under paragraph (4)) from further
8 consideration of, a resolution described in para9
graph (2), it is at any time thereafter in order
10 (even though a previous motion to the same ef11
fect has been disagreed to) for any Member of
12 the respective House to move to proceed to the
13 consideration of the resolution, and all points of
14 order against the resolution (and against con15
sideration of the resolution) are waived. The
16 motion is highly privileged in the House of Rep17
resentatives and is privileged in the Senate and
18 is not debatable. The motion is not subject to
19 amendment, or to a motion to postpone, or to
20 a motion to proceed to the consideration of
21 other business. A motion to reconsider the vote
22 by which the motion is agreed to or disagreed
23 to shall not be in order. If a motion to proceed
24 to the consideration of the resolution is agreed
25 to, the resolution shall remain the unfinished
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1 business of the respective House until disposed
2 of.
3 (B) DEBATE.—Debate on the resolution,
4 and on all debatable motions and appeals in
5 connection therewith, shall be limited to not
6 more than 10 hours, which shall be divided
7 equally between those favoring and those oppos8
ing the resolution. A motion further to limit de9
bate is in order and not debatable. An amend10
ment to, or a motion to postpone, or a motion
11 to proceed to the consideration of other busi12
ness, or a motion to recommit the resolution is
13 not in order. A motion to reconsider the vote by
14 which the resolution is agreed to or disagreed to
15 is not in order.
16 (C) VOTE ON FINAL PASSAGE.—Imme17
diately following the conclusion of the debate on
18 a resolution described in paragraph (2), and a
19 single quorum call at the conclusion of the de20
bate if requested in accordance with the rules of
21 the appropriate House.
22 (D) RULINGS OF THE CHAIR ON PROCE23
DURE.—Appeals from the decisions of the Chair
24 relating to the application of the rules of the
25 Senate or the House of Representatives, as the
55
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1 case may be, to the procedure relating to a res2
olution described in paragraph (2) shall be de3
cided without debate.
4 (6) COORDINATION WITH ACTION BY OTHER
5 HOUSE.—If, before the passage by one House of a
6 resolution of that House described in paragraph (2),
7 that House receives from the other House a resolu8
tion described in paragraph (2), then the following
9 procedures shall apply:
10 (A) The resolution of the other House shall
11 not be referred to a committee.
12 (B) With respect to a resolution described
13 in paragraph (2) of the House receiving the res14
olution—
15 (i) the procedure in that House shall
16 be the same as if no resolution had been
17 received from the other House; but
18 (ii) the vote on final passage shall be
19 on the resolution of the other House.
20 (7) RULES OF HOUSE OF REPRESENTATIVES
21 AND SENATE.—This subsection is enacted by Con22
gress—
23 (A) as an exercise of the rulemaking power
24 of the Senate and House of Representatives, re25
spectively, and as such it is deemed a part of
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1 the rules of each House, respectively, but appli2
cable only with respect to the procedure to be
3 followed in that House in the case of a resolu4
tion described in paragraph (2), and it super5
sedes other rules only to the extent that it is in6
consistent with such rules; and
7 (B) with full recognition of the constitu8
tional right of either House to change the rules
9 (so far as relating to the procedure of that
10 House) at any time, in the same manner, and
11 to the same extent as in the case of any other
12 rule of that House.
13 SEC. 116. OVERSIGHT AND AUDITS.
14 (a) COMPTROLLER GENERAL OVERSIGHT.—
15 (1) SCOPE OF OVERSIGHT.—The Comptroller
16 General of the United States shall, upon establish17
ment of the troubled assets relief program under
18 this Act (in this section referred to as the ‘‘TARP’’),
19 commence ongoing oversight of the activities and
20 performance of the TARP and of any agents and
21 representatives of the TARP (as related to the agent
22 or representative’s activities on behalf of or under
23 the authority of the TARP), including vehicles es24
tablished by the Secretary under this Act. The sub25
jects of such oversight shall include the following:
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1 (A) the performance of the TARP in meet2
ing the purposes of this Act, particularly those
3 involving foreclosure mitigation, cost reduction,
4 and whether it has provided stability or pre5
vented disruption to the financial markets or
6 the banking system and protected taxpayers.
7 (B) The financial condition and internal
8 controls of the TARP, its representatives and
9 agents.
10 (C) Characteristics of transactions and
11 commitments entered into, including trans12
action type, frequency, size, prices paid, and all
13 other relevant terms and conditions, and the
14 timing, duration and terms of any future com15
mitments to purchase assets.
16 (D) Characteristics and disposition of ac17
quired assets, including type, acquisition price,
18 current market value, sale prices and terms,
19 and use of proceeds from sales.
20 (E) Efficiency of the operations of the
21 TARP in the use of appropriated funds.
22 (F) Compliance with all applicable laws
23 and regulations by the TARP, its agents and
24 representatives.
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1 (G) the efforts of the TARP to prevent,
2 identify, and minimize conflicts of interest in3
volving any agent or representative performing
4 activities on behalf of or under the authority of
5 the TARP.
6 (H) The efficacy of contracting procedures
7 established under section 106, including the ef8
forts of TARP in evaluating proposals for inclu9
sion and contracting to the maximum extent
10 possible of minorities, women, and minority11
and women-owned businesses, including
12 ascertaining and reporting the total amount of
13 fees paid and other value delivered by TARP to
14 all of its agents and representatives, and such
15 amounts paid or delivered to such firms that
16 are minority- and women-owned businesses (as
17 such terms are defined in section 21A of the
18 Federal Home Loan Bank Act (12 U.S.C.
19 1441a)).
20 (2) CONDUCT AND ADMINISTRATION OF OVER21
SIGHT.—
22 (A) GAO PRESENCE.—The Secretary shall
23 provide the Comptroller General with appro24
priate space and facilities in the Department of
25 the Treasury as necessary to facilitate oversight
59
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1 of the TARP until the termination date estab2
lished in section 119 of this Act.
3 (B) ACCESS TO RECORDS.—To the extent
4 otherwise consistent with law, the Comptroller
5 General shall have access, upon request, to any
6 information, data, schedules, books, accounts,
7 financial records, reports, files, electronic com8
munications, or other papers, things, or prop9
erty belonging to or in use by the TARP, or
10 any vehicles established by the Secretary under
11 this Act, and to the officers, directors, employ12
ees, independent public accountants, financial
13 advisors, and other agents and representatives
14 of the TARP (as related to the agent or rep15
resentative’s activities on behalf of or under the
16 authority of the TARP) or any such vehicle at
17 such reasonable time as the Comptroller Gen18
eral may request. The Comptroller General
19 shall be afforded full facilities for verifying
20 transactions with the balances or securities held
21 by depositaries, fiscal agents, and custodians.
22 The Comptroller General may make and retain
23 copies of such books, accounts, and other
24 records as the Comptroller General deems ap25
propriate.
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1 (C) REIMBURSEMENT OF COSTS.—The
2 Treasury shall reimburse the Government Ac3
countability Office for the full cost of any such
4 oversight activities as billed therefor by the
5 Comptroller General of the United States. Such
6 reimbursements shall be credited to the appro7
priation account ‘‘Salaries and Expenses, Gov8
ernment Accountability Office’’ current when
9 the payment is received and remain available
10 until expended.
11 (3) REPORTING.—The Comptroller General
12 shall submit reports of findings under this section,
13 regularly and no less frequently than once every 60
14 days, to the appropriate committees of Congress,
15 and the Special Inspector General for the Troubled
16 Asset Relief Program established under this Act on
17 the activities and performance of the TARP. The
18 Comptroller may also submit special reports under
19 this subsection as warranted by the findings of its
20 oversight activities.
21 (b) COMPTROLLER GENERAL AUDITS.—
22 (1) ANNUAL AUDIT.—The TARP shall annually
23 prepare and issue to the appropriate committees of
24 Congress and the public audited financial statements
25 prepared in accordance with generally accepted ac61
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1 counting principles, and the Comptroller General
2 shall annually audit such statements in accordance
3 with generally accepted auditing standards. The
4 Treasury shall reimburse the Government Account5
ability Office for the full cost of any such audit as
6 billed therefor by the Comptroller General. Such re7
imbursements shall be credited to the appropriation
8 account ‘‘Salaries and Expenses, Government Ac9
countability Office’’ current when the payment is re10
ceived and remain available until expended. The fi11
nancial statements prepared under this paragraph
12 shall be on the fiscal year basis prescribed under
13 section 1102 of title 31, United States Code.
14 (2) AUTHORITY.—The Comptroller General
15 may audit the programs, activities, receipts, expendi16
tures, and financial transactions of the TARP and
17 any agents and representatives of the TARP (as re18
lated to the agent or representative’s activities on
19 behalf of or under the authority of the TARP), in20
cluding vehicles established by the Secretary under
21 this Act.
22 (3) CORRECTIVE RESPONSES TO AUDIT PROB23
LEMS.—The TARP shall—
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1 (A) take action to address deficiencies
2 identified by the Comptroller General or other
3 auditor engaged by the TARP; or
4 (B) certify to appropriate committees of
5 Congress that no action is necessary or appro6
priate.
7 (c) INTERNAL CONTROL.—
8 (1) ESTABLISHMENT.—The TARP shall estab9
lish and maintain an effective system of internal
10 control, consistent with the standards prescribed
11 under section 3512(c) of title 31, United States
12 Code, that provides reasonable assurance of—
13 (A) the effectiveness and efficiency of oper14
ations, including the use of the resources of the
15 TARP;
16 (B) the reliability of financial reporting, in17
cluding financial statements and other reports
18 for internal and external use; and
19 (C) compliance with applicable laws and
20 regulations.
21 (2) REPORTING.—In conjunction with each an22
nual financial statement issued under this section,
23 the TARP shall—
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1 (A) state the responsibility of management
2 for establishing and maintaining adequate in3
ternal control over financial reporting; and
4 (B) state its assessment, as of the end of
5 the most recent year covered by such financial
6 statement of the TARP, of the effectiveness of
7 the internal control over financial reporting.
8 (d) SHARING OF INFORMATION.—Any report or audit
9 required under this section shall also be submitted to the
10 Congressional Oversight Panel established under section
11 125.
12 (e) TERMINATION.—Any reporting or audit require13
ment under this section shall terminate on the later of—
14 (1) the date of expiration of the last insurance
15 contract issued under section 102; or
16 (2) the date that the last troubled asset ac17
quired by the Secretary under section 101 has been
18 sold or transferred out of the ownership or control
19 of the Federal Government.
20 SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.
21 (a) STUDY.—The Comptroller General shall under22
take a study to determine the extent to which leverage
23 and sudden deleveraging of financial institutions was a
24 factor behind the current financial crisis.
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1 (b) CONTENT.—The study required by this section
2 shall include—
3 (1) an analysis of the roles and responsibilities
4 of the Board, the Securities and Exchange Commis5
sion, the Secretary, and other Federal banking agen6
cies with respect to monitoring leverage and acting
7 to curtail excessive leveraging;
8 (2) an analysis of the authority of the Board to
9 regulate leverage, including by setting margin re10
quirements, and what process the Board used to de11
cide whether or not to use its authority;
12 (3) an analysis of the margin authority of the
13 Board; and
14 (4) recommendations for the Board and appro15
priate committees of Congress with respect to the
16 existing authority of the Board.
17 (c) REPORT.—Not later than June 1, 2009, the
18 Comptroller General shall complete and submit a report
19 on the study required by this section to the Committee
20 on Banking, Housing, and Urban Affairs of the Senate
21 and the Committee on Financial Services of the House of
22 Representatives.
23 (d) SHARING OF INFORMATION.—Any reports re24
quired under this section shall also be submitted to the
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1 Congressional Oversight Panel established under section
2 125.

1 Congressional Oversight Panel established under section
2 125.
3 SEC. 118. FUNDING.
4 øFor the purpose of the authorities granted in this
5 Act, and for the costs of administering those authorities,
6 the Secretary may use the proceeds of the sale of any secu7
rities issued under chapter 31 of title 31, United States
8 Code, and the purposes for which securities may be issued
9 under chapter 31 of title 31, United States Code, are ex10
tended to include actions authorized by this Act, including
11 the payment of administrative expenses.¿ Any funds ex12
pended or obligated for actions authorized by this Act, in13
cluding the payment of administrative expenses, shall be
14 deemed appropriated at the time of such expenditure or
15 obligation.
16 SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.
17 (a) JUDICIAL REVIEW.—
18 (1) STANDARD.—Actions by the Secretary pur19
suant to the authority of this Act shall be subject to
20 chapter 7 of title 5, United States Code, including
21 that such actions shall be held unlawful and set
22 aside if found to be arbitrary, capricious, an abuse
23 of discretion, or not in accordance with law.
24 (2) LIMITATIONS ON EQUITABLE RELIEF.—
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1 (A) INJUNCTION.—No injunction or other
2 form of equitable relief shall be issued against
3 the Secretary for actions pursuant to section
4 101, 105, or 108, other than to remedy a viola5
tion of the Constitution.
6 (B) TEMPORARY RESTRAINING ORDER.—
7 Any request for a temporary restraining order
8 against the Secretary for actions pursuant to
9 this Act shall be considered and granted or de10
nied by the court within 3 days of the date of
11 the request.
12 (C) PRELIMINARY INJUNCTION.—Any re13
quest for a preliminary injunction against the
14 Secretary for actions pursuant to this Act shall
15 be considered and granted or denied by the
16 court on an expedited basis consistent with the
17 provisions of rule 65(b)(3) of the Federal Rules
18 of Civil Procedure, or any successor thereto.
19 (D) PERMANENT INJUNCTION.—Any re20
quest for a permanent injunction against the
21 Secretary for actions pursuant to this Act shall
22 be considered and granted or denied by the
23 court on an expedited basis. Whenever possible,
24 the court shall consolidate trial on the merits
25 with any hearing on a request for a preliminary
67
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1 injunction, consistent with the provisions of rule
2 65(a)(2) of the Federal Rules of Civil Proce3
dure, or any successor thereto.
4 (3) LIMITATION ON ACTIONS BY PARTICIPATING
5 COMPANIES.—No action or claims may be brought
6 against the Secretary by any person that divests its
7 assets with respect to its participation in a program
8 under this Act, except as provided in paragraph (1),
9 other than as expressly provided in a written con10
tract with the Secretary.
11 (4) STAYS.—Any injunction or other form of
12 equitable relief issued against the Secretary for ac13
tions pursuant to section 101, 105, or 108 shall be
14 automatically stayed. The stay shall be lifted unless
15 the Secretary seeks a stay from a higher court with16
in 3 calendar days after the date on which the relief
17 is issued.
18 (b) RELATED MATTERS.—
19 ø(1) TREATMENT OF HOMEOWNERS’ RIGHTS.—
20 The terms of any residential mortgage loan that is
21 part of any purchase by the Secretary under this Act
22 shall remain subject to all claims and defenses that
23 would otherwise apply, notwithstanding the exercise
24 of authority by the Secretary under this Act.¿
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1 (2) SAVINGS CLAUSE.—Any exercise of the au2
thority of the Secretary pursuant to this Act shall
3 not impair the claims or defenses otherwise available
4 to any other person. Except as established in any
5 contract, a servicer of pooled residential mortgages
6 owes any duty to determine whether the net present
7 value of the payments on the loan, as modified, is
8 likely to be greater than the anticipated net recovery
9 that would result from foreclosure to all investors
10 and holders of beneficial interests in such invest11
ment, but not to any individual or groups of inves12
tors or beneficial interest holders, and shall be
13 deemed to act in the best interests of all such inves14
tors or holders of beneficial interests if the servicer
15 agrees to or implements a modification or workout
16 plan when the servicer takes reasonable loss mitiga17
tion actions, including partial payments.
18 SEC. 120. TERMINATION OF AUTHORITY.
19 (a) TERMINATION.—The authorities provided under
20 sections 101(a) øand 102¿ shall terminate on December
21 31, 2009.
22 (b) EXTENSION UPON CERTIFICATION.—The Sec23
retary, upon submission of a written certification to Con24
gress, may extend the authority provided under this Act
25 to expire not later than 2 years from the date of enact69
O:\AYO\AYO08B94.xml [Discussion Draft]
1 ment of this Act. Such certification shall include a jus2
tification of why the extension is necessary to assist Amer3
ican families and stabilize financial markets, as well as
4 the expected cost to the taxpayers for such an extension.
5 SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROU6
BLED ASSET RELIEF PROGRAM.
7 (a) PURPOSES.—The purposes of this section are as
8 follows:
9 (1) To provide for the independent and objec10
tive conduct and supervision of audits and investiga11
tions relating to the programs and operations of the
12 program authorized to be established under section
13 101.
14 (2) To provide for the independent and objec15
tive leadership and coordination of, and rec16
ommendations on, policies designed to—
17 (A) promote economy, efficiency, and effec18
tiveness in the administration of such program;
19 and
20 (B) prevent and detect fraud and abuse in
21 such program.
22 (3) To provide for an independent and objective
23 means of keeping the Congress fully and currently
24 informed about problems and deficiencies relating to
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1 the administration of such program and the neces2
sity for and progress for corrective action.
3 (b) OFFICE OF INSPECTOR GENERAL.—There is
4 hereby established the Office of the Special Inspector Gen5
eral for the Troubled Asset Relief Program.
6 (c) APPOINTMENT OF INSPECTOR GENERAL; RE7
MOVAL.—(1) The head of the Office of the Special Inspec8
tor General for the Troubled Asset Relief Program is the
9 Special Inspector General for the Troubled Asset Relief
10 Program (in this section referred to as the Special Inspec11
tor General), who shall be appointed by the President.
12 (2) The appointment of the Special Inspector General
13 shall be made on the basis of integrity and demonstrated
14 ability in accounting, auditing, financial analysis, law,
15 management analysis, public administration, or investiga16
tions.
17 (3) The nomination of an individual as Special In18
spector General shall be made øas soon as practicable¿
19 after the establishment of any program under section 101.
20 (4) The Special Inspector General shall be removable
21 from office in accordance with the provisions of section
22 3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).
23 (5) For purposes of section 7324 of title 5, United
24 States Code, the Special Inspector General shall not be
25 considered an employee who determines policies to be pur71
O:\AYO\AYO08B94.xml [Discussion Draft]
1 sued by the United States in the nationwide administra2
tion of Federal law.
3 (6) The annual rate of basic pay of the Special In4
spector General shall be the annual rate of basic pay pro5
vided for positions at level IV of the Executive Schedule
6 under section 5315 of title 5, United States Code.
7 ø(d) ASSISTANT INSPECTORS GENERAL.—The Spe8
cial Inspector General shall, in accordance with applicable
9 laws and regulations governing the civil service—¿
10 ø(1) appoint an Assistant Inspector General for
11 Auditing who shall have the responsibility for super12
vising the performance of auditing activities relating
13 to any program established under section 2; and¿
14 ø(2) appoint an Assistant Inspector General for
15 Investigations who shall have the responsibility for
16 supervising the performance of investigative activi17
ties relating to such program.¿
18 (e) DUTIES.—(1) It shall be the duty of the Special
19 Inspector General to conduct, supervise, and coordinate
20 audits and investigations of the purchase, management,
21 and sale of assets by the Secretary of the Treasury under
22 any program established by the Secretary under section
23 101 and 102, including by collecting and summarizing the
24 following information:
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1 (A) A description of the categories of troubled
2 assets purchased or otherwise procured by the Sec3
retary.
4 (B) A listing of the troubled assets purchased
5 in each such category described under subparagraph
6 (A).
7 (C) An explanation of the reasons the Secretary
8 deemed it necessary to purchase each such troubled
9 asset.
10 (D) A listing of each financial institution that
11 such troubled assets were purchased from.
12 (E) A listing of and detailed biographical infor13
mation on each person or entity hired to manage
14 such troubled assets.
15 (F) A current estimate of the total amount of
16 troubled assets purchased pursuant to any program
17 established under section 101, the amount of trou18
bled assets on the books of the Treasury, the
19 amount of troubled assets sold, and the profit and
20 loss incurred on each sale or disposition of each such
21 troubled asset.
22 (2) The Special Inspector General shall establish,
23 maintain, and oversee such systems, procedures, and con24
trols as the Special Inspector General considers appro25
priate to discharge the duty under paragraph (1).
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1 (3) In addition to the duties specified in paragraphs
2 (1) and (2), the Inspector General shall also have the du3
ties and responsibilities of inspectors general under the In4
spector General Act of 1978.
5 (f) POWERS AND AUTHORITIES.—(1) In carrying out
6 the duties specified in subsection (e), the Special Inspector
7 General shall have the authorities provided in section 6
8 of the Inspector General Act of 1978.
9 (2) The Special Inspector General shall carry out the
10 duties specified in subsection (e)(1) in accordance with
11 section 4(b)(1) of the Inspector General Act of 1978.
12 (g) PERSONNEL, FACILITIES, AND OTHER RE13
SOURCES.—(1) The Special Inspector General may select,
14 appoint, and employ such officers and employees as may
15 be necessary for carrying out the duties of the Special In16
spector General, subject to the provisions of title 5, United
17 States Code, governing appointments in the competitive
18 service, and the provisions of chapter 51 and subchapter
19 III of chapter 53 of such title, relating to classification
20 and General Schedule pay rates.
21 (2) The Special Inspector General may obtain serv22
ices as authorized by section 3109 of title 5, United States
23 Code, at daily rates not to exceed the equivalent rate pre24
scribed for grade GS–15 of the General Schedule by sec25
tion 5332 of such title.
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1 (3) The Special Inspector General may enter into
2 contracts and other arrangements for audits, studies,
3 analyses, and other services with public agencies and with
4 private persons, and make such payments as may be nec5
essary to carry out the duties of the Inspector General.
6 (4)(A) Upon request of the Special Inspector General
7 for information or assistance from any department, agen8
cy, or other entity of the Federal Government, the head
9 of such entity shall, insofar as is practicable and not in
10 contravention of any existing law, furnish such informa11
tion or assistance to the Special Inspector General, or an
12 authorized designee.
13 (B) Whenever information or assistance requested by
14 the Special Inspector General is, in the judgment of the
15 Special Inspector General, unreasonably refused or not
16 provided, the Special Inspector General shall report the
17 circumstances to the appropriate committees of Congress
18 without delay.
19 (h) REPORTS.—(1) Not later than October 31, 2008,
20 and every calendar quarter thereafter, the Special Inspec21
tor General shall submit to the appropriate committees of
22 Congress a report summarizing the activities of the Spe23
cial Inspector General during the 120-day period ending
24 on the date of such report. Each report shall include, for
25 the period covered by such report, a detailed statement
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1 of all purchases, obligations, expenditures, and revenues
2 associated with any program established by the Secretary
3 of the Treasury under section 101, as well as the informa4
tion collected under subsection (e)(1).
5 (2) Nothing in this subsection shall be construed to
6 authorize the public disclosure of information that is—
7 (A) specifically prohibited from disclosure by
8 any other provision of law;
9 (B) specifically required by Executive order to
10 be protected from disclosure in the interest of na11
tional defense or national security or in the conduct
12 of foreign affairs; or
13 (C) a part of an ongoing criminal investigation.
14 (3) Any reports required under this section shall also
15 be submitted to the Congressional Oversight Panel estab16
lished under section 124.
17 (i) FUNDING.—(1) Of the amounts made available to
18 the Secretary of the Treasury under section 118,
19 $75,000,000 shall be available to the Special Inspector
20 General to carry out this section.
21 (2) The amount available under paragraph (1) shall
22 remain available until expended.
23 (j) TERMINATION.—The Office of the Special Inspec24
tor General shall terminate on the later of—
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1 (1) the date of expiration of the last insurance
2 contract issued under section 102; or
3 (2) the date that the last troubled asset ac4
quired by the Secretary under section 101 has been
5 sold or transferred out of the ownership or control
6 of the Federal Government.
7 SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC
8 DEBT.
9 Subsection (b) of section 3101 of title 31, United
10 States Code, is amended by striking out the dollar limita11
tion contained in such subsection and inserting
12 ‘‘$11,315,000,000,000’’.
13 SEC. 123. CREDIT REFORM.
14 (a) IN GENERAL.—Subject to subsection (b), the
15 costs of purchases of troubled assets made under section
16 101(a) and guarantees of troubled assets under section
17 102, and any cash flows associated with the activities au18
thorized in subsections (a), (b), and (c) of section 106
19 shall be determined as provided under the Federal Credit
20 Reform Act of 1990 (2 U.S.C. 661 et. seq.), as applicable.
21 (b) COSTS.—For the purposes of section 502(5) of
22 the Federal Credit Reform Act of 1990 (2 U.S.C.
23 661a(5))—
24 (1) the cost of troubled assets and guarantees
25 of troubled assets shall be calculated by adjusting
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1 the discount rate in section 502(5)(E) (2 U.S.C.
2 661a(5)(E)) for market risks; and
3 (2) the cost of a modification of a troubled
4 asset or guarantee of a troubled asset shall be the
5 difference between the current estimate consistent
6 with paragraph (1) under the terms of the troubled
7 asset or guarantee of the troubled asset and the cur8
rent estimate consistent with paragraph (1) under
9 the terms of the troubled asset or guarantee of the
10 troubled asset, as modified.
11 SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.
12 Section 257 of the National Housing Act (12 U.S.C.
13 1715z-23) is amended—
14 (1) in subsection (e)—
15 (A) in paragraph (1)(B), by inserting be16
fore ‘‘a ratio’’ the following: ‘‘, or thereafter is
17 likely to have, due to the terms of the mortgage
18 being reset,’’;
19 (B) in paragraph (2)(B), by inserting be20
fore the period at the end ‘‘(or such higher per21
centage as the Board determines, in the discre22
tion of the Board)’’; and
23 (C) in paragraph (4)—
24 (i) in the first sentence, by inserting
25 after ‘‘insured loan’’ the following: ‘‘and
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1 any payments made under this para2
graph,’’; and
3 (ii) by inserting at the end the fol4
lowing ‘‘Such actions may include making
5 payments, which shall be accepted as pay6
ment in full of all indebtedness under the
7 eligible mortgage, to any holder of an ex8
isting subordinate mortgage in lieu of any
9 future appreciation payments authorized
10 under subparagraph (B).’’; and
11 (2) in subsection (w), by inserting after ‘‘ad12
ministrative costs’’ the following: ‘‘and payments
13 pursuant to subsection (e)(4)(A)’’.
14 SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.
15 (a) ESTABLISHMENT.—There is hereby established
16 the Congressional Oversight Panel (hereafter in this sec17
tion referred to as the ‘‘Oversight Panel’’) as an establish18
ment in the legislative branch.
19 (b) DUTIES.—The Oversight Panel shall review the
20 current state of the financial markets and the regulatory
21 system and submit the following reports to Congress:
22 (1) REGULAR REPORTS.—
23 (A) IN GENERAL.—Regular reports of the
24 Oversight Panel shall include the following:
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1 (i) The use by the Secretary of au2
thority under this Act, including with re3
spect to the use of contracting authority
4 and administration of the program.
5 (ii) The impact of purchases made
6 under the Act on the financial markets and
7 financial institutions.
8 (iii) The extent to which the informa9
tion made available on transactions under
10 the program has contributed to market
11 transparency.
12 (iv) The effectiveness of foreclosure
13 mitigation efforts, and the effectiveness of
14 the program from the standpoint of mini15
mizing long-term costs to the taxpayers
16 and maximizing the benefits for taxpayers.
17 (B) TIMING.—The reports required under
18 this paragraph shall be submitted not later
19 than 30 days after the first exercise by the Sec20
retary of the authority under section 101(a),
21 and every 30 days thereafter.
22 (2) SPECIAL REPORT ON REGULATORY RE23
FORM.—The Oversight Panel shall submit a special
24 report on regulatory reform not later than January
25 20, 2009, analyzing the current state of the regu80
O:\AYO\AYO08B94.xml [Discussion Draft]
1 latory system and its effectiveness at overseeing the
2 participants in the financial system, protecting con3
sumers, and providing recommendations for im4
provement including recommendations regarding
5 whether any participants in the financial markets
6 that are currently outside the regulatory system
7 should become subject to the regulatory system and
8 the rationale underlying such recommendation and
9 whether there are any gaps in existing consumer
10 protections.
11 (c) MEMBERSHIP.—
12 (1) IN GENERAL.—The Oversight Panel shall
13 consist of 5 members, as follows:
14 (A) 1 member appointed by the Speaker of
15 the House of Representatives.
16 (B) 1 member appointed by the minority
17 leader of the House of Representatives.
18 (C) 1 member appointed by the majority
19 leader of the Senate.
20 (D) 1 member appointed by the minority
21 leader of the Senate.
22 (E) 1 member appointed by the Speaker of
23 the House of Representatives and the majority
24 leader of the Senate, in consultation with the
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1 minority leader of the Senate and the minority
2 leader of the House of Representatives.
3 (2) PAY.—Each member of the Oversight Panel
4 shall each be paid at a rate equal to the daily equiv5
alent of the annual rate of basic pay for level I of
6 the Executive Schedule for each day (including trav7
el time) during which such member is engaged in
8 the actual performance of duties vested in the Com9
mission.
10 (3) PROHIBITION OF COMPENSATION OF FED11
ERAL EMPLOYEES.—Members of the Oversight
12 Panel who are full-time officers or employees of the
13 United States or Members of Congress may not re14
ceive additional pay, allowances, or benefits by rea15
son of their service on the Oversight Panel.
16 (4) TRAVEL EXPENSES.—Each member shall
17 receive travel expenses, including per diem in lieu of
18 subsistence, in accordance with applicable provisions
19 under subchapter I of chapter 57 of title 5, United
20 States Code.
21 (5) QUORUM.—Four members of the Oversight
22 Panel shall constitute a quorum but a lesser number
23 may hold hearings.
24 (6) VACANCIES.—Any member appointed to fill
25 a vacancy occurring before the expiration of the
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1 term for which a member’s predecessor was ap2
pointed shall be appointed only for the remainder of
3 that term. A member may serve after the expiration
4 of that member’s term until a successor has taken
5 office. A vacancy in the Oversight Panel shall be
6 filled in the manner in which the original appoint7
ment was made.
8 (7) MEETINGS.—The Oversight Panel shall
9 meet at the call of the Chairperson or a majority of
10 its members.
11 (d) STAFF.—
12 (1) IN GENERAL.—The Oversight Panel may
13 appoint and fix the pay of any personnel as the
14 Commission considers appropriate.
15 (2) EXPERTS AND CONSULTANTS.—The Over16
sight Panel may procure temporary and intermittent
17 services under section 3109(b) of title 5, United
18 States Code.
19 (3) STAFF OF AGENCIES.—Upon request of the
20 Oversight Panel, the head of any Federal depart21
ment or agency may detail, on a reimbursable basis,
22 any of the personnel of that department or agency
23 to the Oversight Panel to assist it in carrying out its
24 duties under this Act.
25 (e) POWERS.—
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1 (1) HEARINGS AND SESSIONS.—The Oversight
2 Panel may, for the purpose of carrying out this sec3
tion, hold hearings, sit and act at times and places,
4 take testimony, and receive evidence as the Panel
5 considers appropriate and may administer oaths or
6 affirmations to witnesses appearing before it.
7 (2) POWERS OF MEMBERS AND AGENTS.—Any
8 member or agent of the Oversight Panel may, if au9
thorized by the Oversight Panel, take any action
10 which the Oversight Panel is authorized to take by
11 this section.
12 (3) OBTAINING OFFICIAL DATA.—The Over13
sight Panel may secure directly from any depart14
ment or agency of the United States information
15 necessary to enable it to carry out this section. Upon
16 request of the Chairperson of the Oversight Panel,
17 the head of that department or agency shall furnish
18 that information to the Oversight Panel.
19 (4) REPORTS .—The Oversight Panel shall re20
ceive and consider all reports required to be sub21
mitted to the Oversight Panel under this Act.
22 (f) TERMINATION.—The Oversight Panel shall termi23
nate 6 months after the termination date specified in sec24
tion 120.
25 (g) FUNDING FOR EXPENSES.—
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1 (1) AUTHORIZATION OF APPROPRIATIONS.—
2 There is authorized to be appropriated to the Over3
sight Panel such sums as may be necessary for any
4 fiscal year, half of which shall be derived from the
5 applicable account of the House of Representatives,
6 and half of which shall be derived from the contin7
gent fund of the Senate.
8 (2) REIMBURSEMENT OF AMOUNTS.—An
9 amount equal to the expenses of the Oversight Panel
10 shall be promptly transferred by the Secretary, from
11 time to time upon the presentment of a statement
12 of such expenses by the Chairperson of the Over13
sight Panel, from funds made available to the Sec14
retary under this Act to the applicable fund of the
15 House of Representatives and the contingent fund of
16 the Senate, as appropriate, as reimbursement for
17 amounts expended from such account and fund
18 under paragraph (1).
19 SEC. 126. FDIC ENFORCEMENT ENHANCEMENT.
20 (a) IN GENERAL.—Section 18(a) of the Federal De21
posit Insurance Act (12 U.S.C. 1828(a)) is amended by
22 adding at the end the following new paragraph:
23 ‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC
24 NAMES, AND MISREPRESENTATION TO INDICATE IN25
SURED STATUS.—
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1 ‘‘(A) PROHIBITION ON FALSE ADVER2
TISING AND MISUSE OF FDIC NAMES.—No per3
son may represent or imply that any deposit li4
ability, obligation, certificate, or share is in5
sured or guaranteed by the Corporation, if such
6 deposit liability, obligation, certificate, or share
7 is not insured or guaranteed by the Corpora8
tion—
9 ‘‘(i) by using the terms ‘Federal De10
posit’, ‘Federal Deposit Insurance’, ‘Fed11
eral Deposit Insurance Corporation’, any
12 combination of such terms, or the abbre13
viation ‘FDIC’ as part of the business
14 name or firm name of any person, includ15
ing any corporation, partnership, business
16 trust, association, or other business entity;
17 or
18 ‘‘(ii) by using such terms or any other
19 terms, sign, or symbol as part of an adver20
tisement, solicitation, or other document.
21 ‘‘(B) PROHIBITION ON MISREPRESENTA22
TIONS OF INSURED STATUS.—No person may
23 knowingly misrepresent—
24 ‘‘(i) that any deposit liability, obliga25
tion, certificate, or share is insured, under
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1 this Act, if such deposit liability, obliga2
tion, certificate, or share is not so insured;
3 or
4 ‘‘(ii) the extent to which or the man5
ner in which any deposit liability, obliga6
tion, certificate, or share is insured under
7 this Act, if such deposit liability, obliga8
tion, certificate, or share is not so insured,
9 to the extent or in the manner represented.
10 ‘‘(C) AUTHORITY OF THE APPROPRIATE
11 FEDERAL BANKING AGENCY.—The appropriate
12 Federal banking agency shall have enforcement
13 authority in the case of a violation of this para14
graph by any person for which the agency is the
15 appropriate Federal banking agency, or any in16
stitution-affiliated party thereof.
17 ‘‘(D) CORPORATION AUTHORITY IF THE
18 APPROPRIATE FEDERAL BANKING AGENCY
19 FAILS TO FOLLOW RECOMMENDATION.—
20 ‘‘(i) RECOMMENDATION.—The Cor21
poration may recommend in writing to the
22 appropriate Federal banking agency that
23 the agency take any enforcement action
24 authorized under section 8 for purposes of
25 enforcement of this paragraph with respect
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1 to any person for which the agency is the
2 appropriate Federal banking agency or any
3 institution-affiliated party thereof.
4 ‘‘(ii) AGENCY RESPONSE.—If the ap5
propriate Federal banking agency does not,
6 within 30 days of the date of receipt of a
7 recommendation under clause (i), take the
8 enforcement action with respect to this
9 paragraph recommended by the Corpora10
tion or provide a plan acceptable to the
11 Corporation for responding to the situation
12 presented, the Corporation may take the
13 recommended enforcement action against
14 such person or institution-affiliated party.
15 ‘‘(E) ADDITIONAL AUTHORITY.—In addi16
tion to its authority under subparagraphs (C)
17 and (D), for purposes of this paragraph, the
18 Corporation shall have, in the same manner and
19 to the same extent as with respect to a State
20 nonmember insured bank—
21 ‘‘(i) jurisdiction over—
22 ‘‘(I) any person other than a per23
son for which another agency is the
24 appropriate Federal banking agency
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1 or any institution-affiliated party
2 thereof; and
3 ‘‘(II) any person that aids or
4 abets a violation of this paragraph by
5 a person described in subclause (I);
6 and
7 ‘‘(ii) for purposes of enforcing the re8
quirements of this paragraph, the author9
ity of the Corporation under—
10 ‘‘(I) section 10(c) to conduct in11
vestigations; and
12 ‘‘(II) subsections (b), (c), (d) and
13 (i) of section 8 to conduct enforce14
ment actions.
15 ‘‘(F) OTHER ACTIONS PRESERVED.—No
16 provision of this paragraph shall be construed
17 as barring any action otherwise available, under
18 the laws of the United States or any State, to
19 any Federal or State agency or individual.’’.
20 (b) ENFORCEMENT ORDERS.—Section 8(c) of the
21 Federal Deposit Insurance Act (12 U.S.C. 1818(c)) is
22 amended by adding at the end the following new para23
graph:
24 ‘‘(4) FALSE ADVERTISING OR MISUSE OF
25 NAMES TO INDICATE INSURED STATUS.—
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1 ‘‘(A) TEMPORARY ORDER.—
2 ‘‘(i) IN GENERAL.—If a notice of
3 charges served under subsection (b)(1)
4 specifies on the basis of particular facts
5 that any person engaged or is engaging in
6 conduct described in section 18(a)(4), the
7 Corporation or other appropriate Federal
8 banking agency may issue a temporary
9 order requiring—
10 ‘‘(I) the immediate cessation of
11 any activity or practice described,
12 which gave rise to the notice of
13 charges; and
14 ‘‘(II) affirmative action to pre15
vent any further, or to remedy any ex16
isting, violation.
17 ‘‘(ii) EFFECT OF ORDER.—Any tem18
porary order issued under this subpara19
graph shall take effect upon service.
20 ‘‘(B) EFFECTIVE PERIOD OF TEMPORARY
21 ORDER.—A temporary order issued under sub22
paragraph (A) shall remain effective and en23
forceable, pending the completion of an admin24
istrative proceeding pursuant to subsection
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1 (b)(1) in connection with the notice of
2 charges—
3 ‘‘(i) until such time as the Corpora4
tion or other appropriate Federal banking
5 agency dismisses the charges specified in
6 such notice; or
7 ‘‘(ii) if a cease-and-desist order is
8 issued against such person, until the effec9
tive date of such order.
10 ‘‘(C) CIVIL MONEY PENALTIES.—Any vio11
lation of section 18(a)(4) shall be subject to
12 civil money penalties, as set forth in subsection
13 (i), except that for any person other than an in14
sured depository institution or an institution-af15
filiated party that is found to have violated this
16 paragraph, the Corporation or other appro17
priate Federal banking agency shall not be re18
quired to demonstrate any loss to an insured
19 depository institution.’’.
20 (c) TECHNICAL AND CONFORMING AMENDMENTS.—
21 Section 18 of the Federal Deposit Insurance Act (12
22 U.S.C. 1828) is amended—
23 (1) in subsection (a)(3)—
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1 (A) by striking ‘‘this subsection’’ the first
2 place that term appears and inserting ‘‘para3
graph (1)’’; and
4 (B) by striking ‘‘this subsection’’ the sec5
ond place that term appears and inserting
6 ‘‘paragraph (2)’’; and
7 (2) in the heading for subsection (a), by strik8
ing ‘‘INSURANCE LOGO.—’’ and inserting ‘‘REP9
RESENTATIONS OF DEPOSIT INSURANCE.—’’.
10 SEC. 127. COOPERATION WITH THE FBI.
11 Any Federal financial regulatory agency shall cooper12
ate with the Federal Bureau of Investigation and other
13 law enforcement agencies investigating fraud, misrepre14
sentation, and malfeasance with respect to development,
15 advertising, and sale of financial products.
16 SEC. 128. ACCELERATION OF EFFECTIVE DATE.
17 Section 203 of the Financial Services Regulatory Re18
lief Act of 2006 (12 U.S.C. 461 note) is amended by strik19
ing ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.
20 SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHOR21
ITY.
22 (a) IN GENERAL.—Not later than 7 days after the
23 date on which the Board exercises its authority under the
24 third paragraph of section 13 of the Federal Reserve Act
25 (12 U.S.C. 343; relating to discounts for individuals, part92
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1 nerships, and corporations) the Board shall provide to the
2 Committee on Banking, Housing, and Urban Affairs of
3 the Senate and the Committee on Financial Services of
4 the House of Representatives a report which includes—
5 (1) the justification for exercising the authority;
6 and
7 (2) the specific terms of the actions of the
8 Board, including the size and duration of the lend9
ing, available information concerning the value of
10 any collateral held with respect to such a loan, the
11 recipient of warrants or any other potential equity in
12 exchange for the loan, and any expected cost to the
13 taxpayers for such exercise.
14 (b) PERIODIC UPDATES.—The Board shall provide
15 updates to the Committees specified in subsection (a) not
16 less frequently than once every 60 days while the subject
17 loan is outstanding, including—
18 (1) the status of the loan;
19 (2) the value of the collateral held by the Fed20
eral reserve bank which initiated the loan; and
21 (3) the projected cost to the taxpayers of the
22 loan.
23 (c) CONFIDENTIALITY.—The information submitted
24 to the Congress under this section may be kept confiden25
tial, upon the written request of the Chairman of the
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1 Board, in which case it shall made available only to the
2 Chairpersons and Ranking Members of the Committees
3 described in subsection (a).
4 (d) APPLICABILITY.—The provisions of this section
5 shall be in force for all uses of the authority provided
6 under section 13 of the Federal Reserve Act occurring
7 during the period beginning on March 1, 2008 and ending
8 on the after the date of enactment of this Act, and reports
9 described in subsection (a) shall be required beginning not
10 later than 30 days after that date of enactment, with re11
spect to any such exercise of authority.
12 (e) SHARING OF INFORMATION.—Any reports re13
quired under this section shall also be submitted to the
14 Congressional Oversight Panel established under section
15 125.
16 SEC. 130. TECHNICAL CORRECTIONS.
17 (a) IN GENERAL.—Section 128(b)(2) of the Truth in
18 Lending Act (15 U.S.C. 1638(b)(2)), as amended by sec19
tion 2502 of the Mortgage Disclosure Improvement Act
20 of 2008 (Public Law 110-289), is amended—
21 (1) in subparagraph (A), by striking ‘‘In the
22 case’’ and inserting ‘‘Except as provided in subpara23
graph (G), in the case’’; and
24 (2) by amending subparagraph (G) to read as
25 follows:
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1 ‘‘(G)(i) In the case of an extension of cred2
it relating to a plan described in section
3 101(53D) of title 11, United States Code—
4 ‘‘(I) the requirements of subpara5
graphs (A) through (E) shall not apply;
6 and
7 ‘‘(II) a good faith estimate of the dis8
closures required under subsection (a) shall
9 be made in accordance with regulations of
10 the Board under section 121(c) before
11 such credit is extended, or shall be deliv12
ered or placed in the mail not later than
13 3 business days after the date on which
14 the creditor receives the written application
15 of the consumer for such credit, whichever
16 is earlier.
17 ‘‘(ii) If a disclosure statement furnished
18 within 3 business days of the written applica19
tion (as provided under clause (i)(II)) contains
20 an annual percentage rate which is subse21
quently rendered inaccurate, within the mean22
ing of section 107(c), the creditor shall furnish
23 another disclosure statement at the time of set24
tlement or consummation of the transaction.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by
2 subsection (a) shall take effect as if included in the
3 amendments made by section 2502 of the Mortgage Dis4
closure Improvement Act of 2008 (Public Law 110-289).
5 SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSE6
MENT.
7 (a) REIMBURSEMENT.—The Secretary shall reim8
burse the Exchange Stabilization Fund established under
9 section 5302 of title 31, United States Code, for any funds
10 used for the temporary guaranty program for the United
11 States money market mutual fund industry, from funds
12 under this Act.
13 (b) LIMITS ON USE OF EXCHANGE STABILIZATION
14 FUND.—The Secretary is prohibited from using the Ex15
change Stabilization Fund for the establishment of any
16 future guaranty programs for the United States money
17 market mutual fund industry.
18 (c) CONSULTATIONS.—In carrying out any guarantee
19 program, the Secretary shall consult with the Board of
20 Directors of the Corporation and the Securities and Ex21
change Commission.
22 SEC. 132. SUSPENSION OF MARK-TO-MARKET ACCOUNTING.
23 (a) AUTHORITY.—The Securities and Exchange Com24
mission shall have the authority under securities laws (as
25 such term is defined under section 3(a)(47) of the Securi96
O:\AYO\AYO08B94.xml [Discussion Draft]
1 ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to sus2
pend, by rule, regulation, or oder, the application of State3
ment Number 157 of the Financial Accounting Standards
4 Board for any issuer (as such term is defined in section
5 3(a)(8) of such Act) or with respect to any class or cat6
egory of transaction if the Commission determines that
7 is necessary or appropriate in the public interest and is
8 consistent with the protection of investors.
9 (b) SAVINGS PROVISION.—Nothing in subsection (a)
10 shall be construed to restrict or limit any authority of the
11 Securities Exchange Commission under securities laws as
12 in effect on the date of enactment of this Act.
13 SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.
14 (a) STUDY.—The Securities and Exchange Commis15
sion, in consultation with the Board of Governors of the
16 Federal Reserve System and the Secretary of the Treas17
ury, shall conduct a study on mark-to-market accounting
18 standards as provided in Statement Number 157 of the
19 Financial Accounting Standards Board, as such standards
20 are applicable to financial institutions, including deposi21
tory institutions. Such a study shall consider at a min22
imum—
23 (1) the effects of such accounting standards on
24 a financial institution’s balance sheet;
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1 (2) the impacts of such accounting on bank fail2
ures in 2008;
3 (3) the impact of such standards on the quality
4 of financial information available to investors;
5 (4) the process used by the Financial Account6
ing Standards Board in developing accounting
7 standards;
8 (5) the advisability and feasibility of modifica9
tions to such standards; and
10 (6) alternative accounting standards to those
11 provided in such Statement Number 157.
12 (b) REPORT.—The Securities and Exchange Commis13
sion shall submit to Congress a report of such study before
14 the end of the 90-day period beginning on the date of the
15 enactment of this Act containing the findings and deter16
minations of the Commission, including such administra17
tive and legislative recommendations as the Commission
18 determines appropriate.
19 SEC. 134. RECOUPMENT.
20 Upon the expiration of the 5-year period beginning
21 upon the date of the enactment of this Act, the Director
22 of the Office of Management and Budget, in consultation
23 with the Director of the Congressional Budget Office, shall
24 submit a report to the Congress on the net amount within
25 the Troubled Asset Relief Program under this Act. In any
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1 case in which there is a shortfall, the President shall sub2
mit to the Congress a legislative proposal that recoups
3 from entities benefitting from the program an amount
4 equal to the shortfall in order to ensure that the Troubled
5 Asset Relief Program does not add to the budget deficit
6 or the national debt.
7 SEC. 135. PRESERVATION OF AUTHORITY.
8 With the exception of section 131, nothing in this Act
9 may be construed to limit the authority of the Secretary
10 or the Board under any other provision of law.
11 TITLE II—BUDGET-RELATED
12 PROVISIONS
13 SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT
14 AGENCIES.
15 Upon request, and to the extent otherwise consistent
16 with law, all information used by the Secretary in connec17
tion with activities authorized under this Act (including
18 the records to which the Comptroller General is entitled
19 under this Act) shall be made available to congressional
20 support agencies (in accordance with their obligations to
21 support the Congress as set out in their authorizing stat22
utes) for the purposes of assisting the committees of Con23
gress with conducting oversight, monitoring, and analysis
24 of the activities authorized under this Act.
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1 SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND
2 BUDGET AND THE CONGRESSIONAL BUDGET
3 OFFICE.
4 (a) REPORTS BY THE OFFICE OF MANAGEMENT AND
5 BUDGET.—Within 60 days of the first exercise of the au6
thority granted in section 101(a), but in no case later than
7 December 31, 2008, and semiannually thereafter, the Of8
fice of Management and Budget shall report to the Presi9
dent and the Congress—
10 (1) the estimate, notwithstanding section
11 502(5)(F) of the Federal Credit Reform Act of 1990
12 (2 U.S.C. 661a(5)(F)), as of the first business day
13 that is at least 30 days prior to the issuance of the
14 report, of the cost of the troubled assets determined
15 in accordance with section ø123/118¿;
16 (2) the information used to derive the estimate,
17 including assets purchased, prices paid, revenues re18
ceived, the impact on the deficit and debt, and a de19
scription of any outstanding commitments to pur20
chase troubled assets; and
21 (3) a detailed analysis of how the estimate has
22 changed from the previous report.
23 Beginning with the second report under subsection (a), the
24 Office of Management and Budget shall explain the dif25
ferences between the Congressional Budget Office esti100
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1 mates delivered in accordance with subsection (b) and
2 prior Office of Management and Budget estimates.
3 (b) REPORTS BY THE CONGRESSIONAL BUDGET OF4
FICE.—Within 45 days of receipt by the Congress of each
5 report from the Office of Management and Budget under
6 subsection (a), the Congressional Budget Office shall re7
port to the Congress the Congressional Budget Office’s
8 assessment of the report submitted by the Office of Man9
agement and Budget, including—
10 (1) the cost of the troubled assets,
11 (2) the information and valuation methods used
12 to calculate such cost, and
13 (3) the impact on the deficit and the debt.
14 (c) FINANCIAL EXPERTISE.—In carrying out the du15
ties in this subsection or performing analyses of activities
16 under this Act, the Director of the Congressional Budget
17 Office may employ personnel and procure the services of
18 experts and consultants.
19 (d) AUTHORIZATION OF APPROPRIATIONS.—There
20 are authorized to be appropriated such sums as may be
21 necessary to produce reports required by this section.
22 SEC. 203. ANALYSIS IN PRESIDENT’S BUDGET.
23 (a) IN GENERAL.—Section 1105(a) of title 31,
24 United States Code, is amended by adding at the end the
25 following new paragraph:
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1 ‘‘(35) as supplementary materials, a separate
2 analysis of the budgetary effects for all prior fiscal
3 years, the current fiscal year, the fiscal year for
4 which the budget is submitted, and ensuing fiscal
5 years of the actions the Secretary of the Treasury
6 has taken or plans to take using any authority pro7
vided in the Emergency Economic Stabilization Act
8 of 2008, including—
9 ‘‘(A) an estimate of the current value of all
10 assets purchased and sold under the authority
11 provided in the Emergency Economic Stabiliza12
tion Act of 2008 using methodology required by
13 the Federal Credit Reform Act of 1990 (2
14 U.S.C. 661 et seq.) and section ø123/118¿ of
15 the Emergency Economic Stabilization Act of
16 2008;
17 ‘‘(B) an estimate of the deficit, the debt
18 held by the public, and the gross Federal debt
19 using methodology required by the Federal
20 Credit Reform Act of 1990 and section 118 of
21 the Emergency Economic Stabilization Act of
22 2008;
23 ‘‘(C) an estimate of the current value of all
24 assets purchased and sold under the authority
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1 provided in the Emergency Economic Stabiliza2
tion Act of 2008 calculated on a cash basis;
3 ‘‘(D) a revised estimate of the deficit, the
4 debt held by the public, and the gross Federal
5 debt, substituting the cash-based estimates in
6 subparagraph (C) for the estimates calculated
7 under subparagraph (A) pursuant to the Fed8
eral Credit Reform Act of 1990 and section
9 ø123/118¿ of the Emergency Economic Sta10
bilization Act of 2008; and
11 ‘‘(E) the portion of the deficit which can
12 be attributed to any action taken by the Sec13
retary using authority provided by the Emer14
gency Economic Stabilization Act of 2008 and
15 the extent to which the change in the deficit
16 since the most recent estimate is due to a re17
estimate using the methodology required by the
18 Federal Credit Reform Act of 1990 and section
19 ø123/118¿ of the Emergency Economic Sta20
bilization Act of 2008.’’
21 (b) CONSULTATION.—In implementing this section,
22 the Director of Office of Management and Budget shall
23 consult periodically, but at least annually, with the Com24
mittee on the Budget of the House of Representatives, the
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1 Committee on the Budget of the Senate, and the Director
2 of the Congressional Budget Office.
3 (c) EFFECTIVE DATE.—This section and the amend4
ment made by this section shall apply beginning with re5
spect to the fiscal year 2010 budget submission of the
6 President.
7 TITLE III—TAX PROVISIONS
8 SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF
9 CERTAIN PREFERRED STOCK.
10 (a) IN GENERAL.—For purposes of the Internal Rev11
enue Code of 1986, gain or loss from the sale or exchange
12 of any applicable preferred stock by any applicable finan13
cial institution shall be treated as ordinary income or loss.
14 (b) APPLICABLE PREFERRED STOCK.—For purposes
15 of this section, the term ‘‘applicable preferred stock’’
16 means any stock—
17 (1) which is preferred stock in—
18 (A) the Federal National Mortgage Asso19
ciation, established pursuant to the Federal Na20
tional Mortgage Association Charter Act (12
21 U.S.C. 1716 et seq.), or
22 (B) the Federal Home Loan Mortgage
23 Corporation, established pursuant to the Fed24
eral Home Loan Mortgage Corporation Act (12
25 U.S.C. 1451 et seq.), and
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1 (2) which—
2 (A) was held by the applicable financial in3
stitution on September 6, 2008, or
4 (B) was sold or exchanged by the applica5
ble financial institution on or after January 1,
6 2008, and before September 7, 2008.
7 (c) APPLICABLE FINANCIAL INSTITUTION.—For pur8
poses of this section:
9 (1) IN GENERAL.—Except as provided in para10
graph (2), the term ‘‘applicable financial institution’’
11 means—
12 (A) a financial institution referred to in
13 section 582(c)(2) of the Internal Revenue Code
14 of 1986, or
15 (B) a depository institution holding com16
pany (as defined in section 3(w)(1) of the Fed17
eral Deposit Insurance Act (12 U.S.C.
18 1813(w)(1))).
19 (2) SPECIAL RULES FOR CERTAIN SALES.—In
20 the case of —
21 (A) a sale or exchange described in sub22
section (b)(2)(B), an entity shall be treated as
23 an applicable financial institution only if it was
24 an entity described in subparagraph (A) or (B)
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1 of paragraph (1) at the time of the sale or ex2
change, and
3 (B) a sale or exchange after September 6,
4 2008, of preferred stock described in subsection
5 (b)(2)(A), an entity shall be treated as an appli6
cable financial institution only if it was an enti7
ty described in subparagraph (A) or (B) of
8 paragraph (1) at all times during the period be9
ginning on September 6, 2008, and ending on
10 the date of the sale or exchange of the pre11
ferred stock.
12 (d) SPECIAL RULE FOR CERTAIN PROPERTY NOT
13 HELD ON SEPTEMBER 6, 2008.—The Secretary of the
14 Treasury or the Secretary’s delegate may extend the appli15
cation of this section to all or a portion of the gain or
16 loss from a sale or exchange in any case where—
17 (1) an applicable financial institution sells or
18 exchanges applicable preferred stock after Sep19
tember 6, 2008, which the applicable financial insti20
tution did not hold on such date, but the basis of
21 which in the hands of the applicable financial insti22
tution at the time of the sale or exchange is the
23 same as the basis in the hands of the person which
24 held such stock on such date, or
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1 (2) the applicable financial institution is a part2
ner in a partnership which—
3 (A) held such stock on September 6, 2008,
4 and later sold or exchanged such stock, or
5 (B) sold or exchanged such stock during
6 the period described in subsection (b)(2)(B).
7 (e) REGULATORY AUTHORITY.—The Secretary of the
8 Treasury or the Secretary’s delegate may prescribe such
9 guidance, rules, or regulations as are necessary to carry
10 out the purposes of this section.
11 (f) EFFECTIVE DATE.—This section shall apply to
12 sales or exchanges occurring after December 31, 2007, in
13 taxable years ending after such date.
14 SEC. 302. EXTENSION OF EXCLUSION OF INCOME FROM
15 DISCHARGE OF QUALIFIED PRINCIPAL RESI16
DENCE INDEBTEDNESS.
17 (a) EXTENSION.—Subparagraph (E) of section
18 108(a)(1) of the Internal Revenue Code of 1986 is amend19
ed by striking ‘‘January 1, 2010’’ and inserting ‘‘January
20 1, 2013’’.
21 (b) EFFECTIVE DATE.—The amendment made by
22 this subsection shall apply to discharges of indebtedness
23 occurring on or after January 1, 2010.

I started a new tread for discussion If you wanna say anything.

http://www.timebomb2000.com/vb/showthread.php?t=303612