Bailout Draft Bill

2008-09-28T15:35:00.000-07:00

Note: This is from the original modified bill, now revised:

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[DISCUSSION DRAFT]
110TH CONGRESS
2D SESSION H. R. ll
To provide authority for the Federal Government to purchase and insure
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 lll
A BILL
To provide authority for the Federal Government to purchase
and insure 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.
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 authority.
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. Authority to suspend 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.
Sec. 204. Emergency treatment.
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TITLE III—TAX PROVISIONS
Sec. 301. Gain or loss from sale or exchange of certain preferred stock.
Sec. 302. Special rules for tax treatment of executive compensation of employers
participating in the troubled assets relief program.
Sec. 303. 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—
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1 (A) the Committee on Banking, Housing,
2 and Urban Affairs, the Committee on Finance,
3 the Committee on the Budget, and the Com4
mittee on Appropriations of the Senate; and
5 (B) the Committee on Financial Services,
6 the Committee on Ways and Means, the Com7
mittee on the Budget, and the Committee on
8 Appropriations of the House of Representatives.
9 (2) BOARD.—The term ‘‘Board’’ means the
10 Board of Governors of the Federal Reserve System.
11 (3) CONGRESSIONAL SUPPORT AGENCIES.—The
12 term ‘‘congressional support agencies’’ means the
13 Congressional Budget Office and the Joint Com14
mittee on Taxation.
15 (4) CORPORATION.—The term ‘‘Corporation’’
16 means the Federal Deposit Insurance Corporation.
17 (5) FINANCIAL INSTITUTION.—The term ‘‘fi18
nancial institution’’ means any institution, including,
19 but not limited to, any bank, savings association,
20 credit union, security broker or dealer, or insurance
21 company, established and regulated under the laws
22 of the United States or any State, territory, or pos23
session of the United States, the District of Colum24
bia, Commonwealth of Puerto Rico, Commonwealth
25 of Northern Mariana Islands, Guam, American
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1 Samoa, or the United States Virgin Islands, and
2 having significant operations in the United States,
3 but excluding any central bank of, or institution
4 owned by, a foreign government.
5 (6) FUND.—The term ‘‘Fund’’ means the Trou6
bled Assets Insurance Financing Fund established
7 under section 102.
8 (7) SECRETARY.—The term ‘‘Secretary’’ means
9 the Secretary of the Treasury.
10 (8) TARP.—The term ‘‘TARP’’ means the
11 troubled asset relief program established under sec12
tion 101.
13 (9) TROUBLED ASSETS.—The term ‘‘troubled
14 assets’’ means—
15 (A) residential or commercial mortgages
16 and any securities, obligations, or other instru17
ments that are based on or related to such
18 mortgages, that in each case was originated or
19 issued on or before March 14, 2008, the pur20
chase of which the Secretary determines pro21
motes financial market stability; and
22 (B) any other financial instrument that the
23 Secretary, after consultation with the Chairman
24 of the Board of Governors of the Federal Re25
serve System, determines the purchase of which
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1 is necessary to promote financial market sta2
bility, but only upon transmittal of such deter3
mination, in writing, to the appropriate commit4
tees of Congress.
5 TITLE I—TROUBLED ASSETS
6 RELIEF PROGRAM
7 SEC. 101. PURCHASES OF TROUBLED ASSETS.
8 (a) OFFICES; AUTHORITY.—
9 (1) AUTHORITY.—The Secretary is authorized
10 to establish a troubled asset relief program (or
11 ‘‘TARP’’) to purchase, and to make and fund com12
mitments to purchase, troubled assets from any fi13
nancial institution, on such terms and conditions as
14 are determined by the Secretary, and in accordance
15 with this Act and the policies and procedures devel16
oped and published by the Secretary.
17 (2) COMMENCEMENT OF PROGRAM.—Establish18
ment of the policies and procedures and other simi19
lar administrative requirements imposed on the Sec20
retary by this Act are not intended to delay the com21
mencement of the TARP.
22 (3) ESTABLISHMENT OF TREASURY OFFICE.—
23 (A) IN GENERAL.—The Secretary shall im24
plement any program under paragraph (1)
25 through an Office of Financial Stability, estab7
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1 lished for such purpose within the Office of Do2
mestic Finance of the Department of the Treas3
ury, which office shall be headed by an Assist4
ant Secretary of the Treasury, appointed by the
5 President, by and with the advice and consent
6 of the Senate, except that an interim Assistant
7 Secretary may serve pending confirmation by
8 the Senate.
9 (B) CLERICAL AMENDMENTS.—
10 (i) TITLE 5.—Section 5315 of title 5,
11 United States Code, is amended in the
12 item relating to Assistant Secretaries of
13 the Treasury, by striking ‘‘(9)’’ and insert14
ing ‘‘(10)’’.
15 (ii) TITLE 31.—Section 301(e) of title
16 31, United States Code, is amended by
17 striking ‘‘9’’ and inserting ‘‘10’’.
18 (b) CONSULTATION.—In exercising the authority
19 under this section, the Secretary shall consult with the
20 Board of Governors of the Federal Reserve System, the
21 Corporation, the Comptroller of the Currency, the Direc22
tor of the Office of Thrift Supervision, and the Secretary
23 of Housing and Urban Development.
24 (c) NECESSARY ACTIONS.—The Secretary is author25
ized to take such actions as the Secretary deems necessary
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1 to carry out the authorities in this Act, including, without
2 limitation, the following:
3 (1) The Secretary shall have direct hiring au4
thority with respect to the appointment of employees
5 to administer this Act.
6 (2) Entering into contracts, including contracts
7 for services authorized by section 3109 of title 5,
8 United States Code.
9 (3) Designating financial institutions as finan10
cial agents of the Federal Government, and such in11
stitutions shall perform all such reasonable duties
12 related to this Act as financial agents of the Federal
13 Government as may be required.
14 (4) In order to provide the Secretary with the
15 flexibility to manage troubled assets in a manner de16
signed to minimize cost to the taxpayers, estab17
lishing vehicles that are authorized, subject to super18
vision by the Secretary, to purchase, hold, and sell
19 troubled assets and issue obligations.
20 (5) Issuing such regulations and other guidance
21 as may be necessary or appropriate to define terms
22 or carry out the authorities or purposes of this Act.
23 (d) PROGRAM GUIDELINES.—Before the earlier of
24 the end of the 2-business-day period beginning on the date
25 of the first purchase of troubled assets pursuant to the
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1 authority under this section or the end of the 45-day pe2
riod beginning on the date of enactment of this Act, the
3 Secretary shall publish program guidelines, including the
4 following:
5 (1) Mechanisms for purchasing troubled assets.
6 (2) Methods for pricing and valuing troubled
7 assets.
8 (3) Procedures for selecting asset managers.
9 (4) Criteria for identifying troubled assets for
10 purchase.
11 (e) PREVENTING UNJUST ENRICHMENT.—In making
12 purchases under the authority of this Act, the Secretary
13 shall take such steps as may be necessary to prevent un14
just enrichment of financial institutions participating in
15 a program established under this section, including by pre16
venting the sale of a troubled asset to the Secretary at
17 a higher price than what the seller paid to purchase the
18 asset. This subsection does not apply to troubled assets
19 acquired in a merger or acquisition, or a purchase of as20
sets from a financial institution in conservatorship or re21
ceivership, or that has initiated bankruptcy proceedings
22 under title 11, United States Code.
23 SEC. 102. INSURANCE OF TROUBLED ASSETS.
24 (a) AUTHORITY.—
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1 (1) IN GENERAL.—If the Secretary establishes
2 the program authorized under section 101, then the
3 Secretary shall establish a program to guarantee
4 troubled assets originated or issued prior to March
5 14, 2008, including such mortgage-backed securities.
6 (2) GUARANTEES.—In establishing any pro7
gram under this subsection, the Secretary may de8
velop guarantees of troubled assets and the associ9
ated premiums for such guarantees. Such guaran10
tees and premiums may be determined by category
11 or class of the troubled assets to be guaranteed.
12 (3) EXTENT OF GUARANTEE.—Upon request of
13 a financial institution, the Secretary may guarantee
14 the timely payment of principal of, and interest on,
15 troubled assets in amounts not to exceed 100 per16
cent of such payments. Such guarantee may be on
17 such terms and conditions as are determined by the
18 Secretary, provided that such terms and conditions
19 are consistent with the purposes of this Act.
20 (b) REPORTS.—Not later than 90 days after the date
21 of enactment of this Act, the Secretary shall report to the
22 appropriate committees of Congress on the program estab23
lished under subsection (a).
24 (c) PREMIUMS.—
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1 (1) IN GENERAL.—The Secretary shall collect
2 premiums from any financial institution partici3
pating in the program established under subsection
4 (a). Such premiums shall be in an amount that the
5 Secretary determines necessary to meet the purposes
6 of this Act and to provide sufficient reserves pursu7
ant to paragraph (3).
8 (2) AUTHORITY TO BASE PREMIUMS ON PROD9
UCT RISK.—In establishing any premium under
10 paragraph (1), the Secretary may provide for vari11
ations in such rates according to the credit risk as12
sociated with the particular troubled asset that is
13 being guaranteed. The Secretary shall publish the
14 methodology for setting the premium for a class of
15 troubled assets together with an explanation of the
16 appropriateness of the class of assets for participa17
tion in the program established under this section.
18 The methodology shall ensure that the premium is
19 consistent with paragraph (3).
20 (3) MINIMUM LEVEL.—The premiums referred
21 to in paragraph (1) shall be set by the Secretary at
22 a level necessary to create reserves sufficient to meet
23 anticipated claims, based on an actuarial analysis,
24 and to ensure that taxpayers are fully protected.
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1 (4) ADJUSTMENT TO PURCHASE AUTHORITY.—
2 The purchase authority limit in section 115 shall be
3 reduced by an amount equal to the difference be4
tween the total of the outstanding guaranteed obli5
gations and the balance in the Troubled Assets In6
surance Fund.
7 (d) TROUBLED ASSETS INSURANCE FINANCING
8 FUND.—
9 (1) DEPOSITS.—The Secretary shall deposit
10 fees collected under this section into the Fund estab11
lished under paragraph (2).
12 (2) ESTABLISHMENT.—There is established a
13 Troubled Assets Insurance Financing Fund that
14 shall consist of the amounts collected pursuant to
15 paragraph (1), and any balance in such fund shall
16 be invested by the Secretary in United States Treas17
ury securities, or kept in cash on hand or on deposit,
18 as necessary.
19 (3) PAYMENTS FROM FUND.—The Secretary
20 shall make payments from amounts deposited in the
21 Fund to fulfill obligations of the guarantees provided
22 to financial institutions under subsection (a).
23 SEC. 103. CONSIDERATIONS.
24 In exercising the authorities granted in this Act, the
25 Secretary shall take into consideration—
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1 (1) protecting the interests of taxpayers by
2 maximizing overall returns and minimizing the im3
pact on the national debt;
4 (2) providing stability and preventing disrup5
tion to financial markets in order to limit the impact
6 on the economy and protect American jobs, savings,
7 and retirement security;
8 (3) the need to help families keep their homes
9 and to stabilize communities;
10 (4) in determining whether to engage in a di11
rect purchase from an individual financial institu12
tion, the long-term viability of the financial institu13
tion in determining whether the purchase represents
14 the most efficient use of funds under this Act;
15 (5) ensuring that all financial institutions are
16 eligible to participate in the program, without dis17
crimination based on size, geography, form of orga18
nization, or the size, type, and number of assets eli19
gible for purchase under this Act;
20 (6) providing financial assistance to financial
21 institutions, including those serving low- and mod22
erate-income populations and other underserved
23 communities, and that have assets less than
24 $1,000,000,000, that were well or adequately cap25
italized as of June 30, 2008, and that as a result
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1 of the devaluation of the preferred government-spon2
sored enterprises stock will drop one or more capital
3 levels, in a manner sufficient to restore the financial
4 institutions to at least an adequately capitalized
5 level;
6 (7) the need to ensure stability for United
7 States public instrumentalities, such as counties and
8 cities, that may have suffered significant increased
9 costs or losses in the current market turmoil;
10 (8) protecting the retirement security of Ameri11
cans by purchasing troubled assets held by or on be12
half of an eligible retirement plan described in clause
13 (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the
14 Internal Revenue Code of 1986, except that such au15
thority shall not extend to any compensation ar16
rangements subject to section 409A of such Code;
17 and
18 (9) the utility of purchasing other real estate
19 owned and instruments backed by mortgages on
20 multifamily properties.
21 SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.
22 (a) ESTABLISHMENT.—There is established the Fi23
nancial Stability Oversight Board, which shall be respon24
sible for—
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1 (1) reviewing the exercise of authority under a
2 program developed in accordance with this Act, in3
cluding—
4 (A) policies implemented by the Secretary
5 and the Office of Financial Stability created
6 under sections 101 and 102, including the ap7
pointment of financial agents, the designation
8 of asset classes to be purchased, and plans for
9 the structure of vehicles used to purchase trou10
bled assets; and
11 (B) the effect of such actions in assisting
12 American families in preserving home owner13
ship, stabilizing financial markets, and pro14
tecting taxpayers;
15 (2) making recommendations, as appropriate, to
16 the Secretary regarding use of the authority under
17 this Act; and
18 (3) reporting any suspected fraud, misrepresen19
tation, or malfeasance to the Special Inspector Gen20
eral for the Troubled Assets Relief Program or the
21 Attorney General of the United States, consistent
22 with section 535(b) of title 28, United States Code.
23 (b) MEMBERSHIP.—The Financial Stability Over24
sight Board shall be comprised of—
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1 (1) the Chairman of the Board of Governors of
2 the Federal Reserve System;
3 (2) the Secretary;
4 (3) the Director of the Federal Home Finance
5 Agency;
6 (4) the Chairman of the Securities Exchange
7 Commission; and
8 (5) the Secretary of Housing and Urban Devel9
opment.
10 (c) CHAIRPERSON.—The chairperson of the Financial
11 Stability Oversight Board shall be elected by the members
12 of the Board from among the members other than the Sec13
retary.
14 (d) MEETINGS.—The Financial Stability Oversight
15 Board shall meet 2 weeks after the first exercise of the
16 purchase authority of the Secretary under this Act, and
17 monthly thereafter.
18 (e) ADDITIONAL AUTHORITIES.—In addition to the
19 responsibilities described in subsection (a), the Financial
20 Stability Oversight Board shall have the authority to en21
sure that the policies implemented by the Secretary are—
22 (1) in accordance with the purposes of this Act;
23 (2) in the economic interests of the United
24 States; and
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1 (3) consistent with protecting taxpayers, in ac2
cordance with section 112(a).
3 (f) CREDIT REVIEW COMMITTEE.—The Financial
4 Stability Oversight Board may appoint a credit review
5 committee for the purpose of evaluating the exercise of
6 the purchase authority provided under this Act and the
7 assets acquired through the exercise of such authority, as
8 the Financial Stability Oversight Board determines appro9
priate.
10 (g) REPORTS.—The Financial Stability Oversight
11 Board shall report to the appropriate committees of Con12
gress and the Congressional Oversight Panel established
13 under section 125, semiannually, on the matters described
14 under subsection (a)(1).
15 (h) TERMINATION.—The Financial Stability Over16
sight Board, and the authority of the Oversight Board
17 under this section, shall terminate on the expiration of the
18 15-day period beginning upon the later of—
19 (1) the date that the last troubled asset ac20
quired by the Secretary under section 101 has been
21 sold or transferred out of the ownership or control
22 of the Federal Government; or
23 (2) the date of expiration of the last insurance
24 contract issued under section 102.
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1 SEC. 105. REPORTS.
2 (a) IN GENERAL.—Before the expiration of the 60-
3 day period beginning on the date of the first exercise of
4 the authority granted in section 101(a), or of the first ex5
ercise of the authority granted in section 102, whichever
6 occurs first, and every 30-day period thereafter, the Sec7
retary shall report to the appropriate committees of Con8
gress, with respect to each such period—
9 (1) an overview of actions taken by the Sec10
retary, including the considerations required by sec11
tion 103 and the efforts under section 109;
12 (2) the actual obligation and expenditure of the
13 funds provided for administrative expenses by sec14
tion 118 during such period and the expected ex15
penditure of such funds in the subsequent period;
16 and
17 (3) a detailed financial statement with respect
18 to the exercise of authority under this Act, includ19
ing—
20 (A) all agreements made or renewed;
21 (B) all insurance contracts entered into
22 pursuant to section 102;
23 (C) all transactions occurring during such
24 period, including the types of parties involved;
25 (D) the nature of the assets purchased;
26 (E) all projected costs and liabilities;
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1 (F) operating expenses, including com2
pensation for financial agents;
3 (G) the valuation or pricing method used
4 for each transaction; and
5 (H) a description of the vehicles estab6
lished to exercise such authority.
7 (b) TRANCHE REPORTS TO CONGRESS.—
8 (1) REPORTS.—The Secretary shall provide to
9 the appropriate committees of Congress, at the times
10 specified in paragraph (2), a written report, includ11
ing—
12 (A) a description of all of the transactions
13 made during the reporting period;
14 (B) a description of the pricing mechanism
15 for the transactions;
16 (C) a justification of the price paid for and
17 other financial terms associated with the trans18
actions;
19 (D) a description of the impact of the exer20
cise of such authority on the financial system,
21 supported, to the extent possible, by specific
22 data;
23 (E) a description of challenges that remain
24 in the financial system, including any bench25
marks yet to be achieved; and
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1 (F) an estimate of additional actions under
2 the authority provided under this Act that may
3 be necessary to address such challenges.
4 (2) TIMING.—The report required by this sub5
section shall be submitted not later than 7 days
6 after the date on which commitments to purchase
7 troubled assets under the authorities provided in this
8 Act first reach an aggregate of $50,000,000,000 and
9 not later than 7 days after each $50,000,000,000 in10
terval of such commitments is reached thereafter.
11 (c) REGULATORY MODERNIZATION REPORT.—The
12 Secretary shall review the current state of the financial
13 markets and the regulatory system and submit a written
14 report to the appropriate committees of Congress not later
15 than April 30, 2009, analyzing the current state of the
16 regulatory system and its effectiveness at overseeing the
17 participants in the financial markets, including the over18
the-counter swaps market and government-sponsored en19
terprises, and providing recommendations for improve20
ment, including—
21 (1) recommendations regarding—
22 (A) whether any participants in the finan23
cial markets that are currently outside the reg24
ulatory system should become subject to the
25 regulatory system; and
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1 (B) enhancement of the clearing and set2
tlement of over-the-counter swaps; and
3 (2) the rationale underlying such recommenda4
tions.
5 (d) SHARING OF INFORMATION.—Any report re6
quired under this section shall also be submitted to the
7 Congressional Oversight Panel established under section
8 125.
9 (e) SUNSET.—The reporting requirements under this
10 section shall terminate on the later of—
11 (1) the date that the last troubled asset ac12
quired by the Secretary under section 101 has been
13 sold or transferred out of the ownership or control
14 of the Federal Government; or
15 (2) the date of expiration of the last insurance
16 contract issued under section 102.
17 SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED AS18
SETS; REVENUES AND SALE PROCEEDS.
19 (a) EXERCISE OF RIGHTS.—The Secretary may, at
20 any time, exercise any rights received in connection with
21 troubled assets purchased under this Act.
22 (b) MANAGEMENT OF TROUBLED ASSETS.—The Sec23
retary shall have authority to manage troubled assets pur24
chased under this Act, including revenues and portfolio
25 risks therefrom.
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1 (c) SALE OF TROUBLED ASSETS.—The Secretary
2 may, at any time, upon terms and conditions and at a
3 price determined by the Secretary, sell, or enter into secu4
rities loans, repurchase transactions, or other financial
5 transactions in regard to, any troubled asset purchased
6 under this Act.
7 (d) TRANSFER TO TREASURY.—Revenues of, and
8 proceeds from the sale of troubled assets purchased under
9 this Act, or from the sale, exercise, or surrender of war10
rants or senior debt instruments acquired under section
11 113 shall be paid into the general fund of the Treasury
12 for reduction of the public debt.
13 (e) APPLICATION OF SUNSET TO TROUBLED AS14
SETS.—The authority of the Secretary to hold any trou15
bled asset purchased under this Act before the termination
16 date in section 120, or to purchase or fund the purchase
17 of a troubled asset under a commitment entered into be18
fore the termination date in section 120, is not subject
19 to the provisions of section 120.
20 SEC. 107. CONTRACTING PROCEDURES.
21 (a) STREAMLINED PROCESS.—For purposes of this
22 Act, the Secretary may waive specific provisions of the
23 Federal Acquisition Regulation upon a determination that
24 urgent and compelling circumstances make compliance
25 with such provisions contrary to the public interest. Any
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1 such determination, and the justification for such deter2
mination, shall be submitted to the Committees on Over3
sight and Government Reform and Financial Services of
4 the House of Representatives and the Committees on
5 Homeland Security and Governmental Affairs and Bank6
ing, Housing, and Urban Affairs of the Senate within 7
7 days.
8 (b) ADDITIONAL CONTRACTING REQUIREMENTS.—In
9 any solicitation or contract where the Secretary has, pur10
suant to subsection (a), waived any provision of the Fed11
eral Acquisition Regulation pertaining to minority con12
tracting, the Secretary shall develop and implement stand13
ards and procedures to ensure, to the maximum extent
14 practicable, the inclusion and utilization of minorities (as
15 such term is defined in section 1204(c) of the Financial
16 Institutions Reform, Recovery, and Enforcement Act of
17 1989 (12 U.S.C. 1811 note)) and women, and minority18
and women-owned businesses (as such terms are defined
19 in section 21A(r)(4) of the Federal Home Loan Bank Act
20 (12 U.S.C. 1441a(r)(4)), in that solicitation or contract,
21 including contracts to asset managers, servicers, property
22 managers, and other service providers or expert consult23
ants.
24 (c) ELIGIBILITY OF FDIC.—Notwithstanding sub25
sections (a) and (b), the Corporation—
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1 (1) shall be eligible for, and shall be considered
2 in, the selection of asset managers for residential
3 mortgage loans and residential mortgage-backed se4
curities; and
5 (2) shall be reimbursed by the Secretary for
6 any services provided.
7 SEC. 108. CONFLICTS OF INTEREST.
8 (a) STANDARDS REQUIRED.—The Secretary shall
9 issue regulations or guidelines necessary to address and
10 manage or to prohibit conflicts of interest that may arise
11 in connection with the administration and execution of the
12 authorities provided under this Act, including—
13 (1) conflicts arising in the selection or hiring of
14 contractors or advisors, including asset managers;
15 (2) the purchase of troubled assets;
16 (3) the management of the troubled assets held;
17 (4) post-employment restrictions on employees;
18 and
19 (5) any other potential conflict of interest, as
20 the Secretary deems necessary or appropriate in the
21 public interest.
22 (b) TIMING.—Regulations or guidelines required by
23 this section shall be issued as soon as practicable after
24 the date of enactment of this Act.
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1 SEC. 109. FORECLOSURE MITIGATION EFFORTS.
2 (a) RESIDENTIAL MORTGAGE LOAN SERVICING
3 STANDARDS.—To the extent that the Secretary acquires
4 mortgages, mortgage backed securities, and other assets
5 secured by residential real estate, including multifamily
6 housing, the Secretary shall implement a plan that seeks
7 to maximize assistance for homeowners and use the au8
thority of the Secretary to encourage the servicers of the
9 underlying mortgages, considering net present value to the
10 taxpayer, to take advantage of the HOPE for Home11
owners Program under section 257 of the National Hous12
ing Act or other available programs to minimize fore13
closures. In addition, the Secretary may use loan guaran14
tees and credit enhancements to facilitate loan modifica15
tions to prevent avoidable foreclosures.
16 (b) COORDINATION.—The Secretary shall coordinate
17 with the Corporation, the Board (with respect to any
18 mortgage or mortgage-backed securities or pool of securi19
ties held, owned, or controlled by or on behalf of a Federal
20 reserve bank, as provided in section 110(a)(1)(C)), the
21 Federal Housing Finance Agency, the Secretary of Hous22
ing and Urban Development, and other Federal Govern23
ment entities that hold troubled assets to attempt to iden24
tify opportunities for the acquisition of classes of troubled
25 assets that will improve the ability of the Secretary to im26
prove the loan modification and restructuring process and,
26
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1 where permissible, to permit bona fide tenants who are
2 current on their rent to remain in their homes under the
3 terms of the lease. In the case of a mortgage on a residen4
tial rental property, the plan required under this section
5 shall include protecting Federal, State, and local rental
6 subsidies and protections, and ensuring any modification
7 takes into account the need for operating funds to main8
tain decent and safe conditions at the property.
9 (c) CONSENT TO REASONABLE LOAN MODIFICATION
10 REQUESTS.—Upon any request arising under existing in11
vestment contracts, the Secretary shall consent, where ap12
propriate, and considering net present value to the tax13
payer, to reasonable requests for loss mitigation measures,
14 including term extensions, rate reductions, principal write
15 downs, increases in the proportion of loans within a trust
16 or other structure allowed to be modified, or removal of
17 other limitation on modifications.
18 SEC. 110. ASSISTANCE TO HOMEOWNERS.
19 (a) DEFINITIONS.—As used in this section—
20 (1) the term ‘‘Federal property manager’’
21 means—
22 (A) the Federal Housing Finance Agency,
23 in its capacity as conservator of the Federal
24 National Mortgage Association and the Federal
25 Home Loan Mortgage Corporation;
27
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1 (B) the Corporation, with respect to resi2
dential mortgage loans and mortgage-backed se3
curities held by any bridge depository institu4
tion pursuant to section 11(n) of the Federal
5 Deposit Insurance Act; and
6 (C) the Board, with respect to any mort7
gage or mortgage-backed securities or pool of
8 securities held, owned, or controlled by or on
9 behalf of a Federal reserve bank, other than
10 mortgages or securities held, owned, or con11
trolled in connection with open market oper12
ations under section 14 of the Federal Reserve
13 Act (12 U.S.C. 353), or as collateral for an ad14
vance or discount that is not in default;
15 (2) the term ‘‘consumer’’ has the same meaning
16 as in section 103 of the Truth in Lending Act (15
17 U.S.C. 1602);
18 (3) the term ‘‘insured depository institution’’
19 has the same meaning as in section 3 of the Federal
20 Deposit Insurance Act (12 U.S.C. 1813); and
21 (4) the term ‘‘servicer’’ has the same meaning
22 as in section 6(i)(2) of the Real Estate Settlement
23 Procedures Act of 1974 (12 U.S.C. 2605(i)(2)).
24 (b) HOMEOWNER ASSISTANCE BY AGENCIES.—
28
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1 (1) IN GENERAL.—To the extent that the Fed2
eral property manager holds, owns, or controls mort3
gages, mortgage backed securities, and other assets
4 secured by residential real estate, including multi5
family housing, the Federal property manager shall
6 implement a plan that seeks to maximize assistance
7 for homeowners and use its authority to encourage
8 the servicers of the underlying mortgages, and con9
sidering net present value to the taxpayer, to take
10 advantage of the HOPE for Homeowners Program
11 under section 257 of the National Housing Act or
12 other available programs to minimize foreclosures.
13 (2) MODIFICATIONS.—In the case of a residen14
tial mortgage loan, modifications made under para15
graph (1) may include—
16 (A) reduction in interest rates;
17 (B) reduction of loan principal; and
18 (C) other similar modifications.
19 (3) TENANT PROTECTIONS.—In the case of
20 mortgages on residential rental properties, modifica21
tions made under paragraph (1) shall ensure—
22 (A) the continuation of any existing Fed23
eral, State, and local rental subsidies and pro24
tections; and
29
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1 (B) that modifications take into account
2 the need for operating funds to maintain decent
3 and safe conditions at the property.
4 (4) TIMING.—Each Federal property manager
5 shall develop and begin implementation of the plan
6 required by this subsection not later than 60 days
7 after the date of enactment of this Act.
8 (5) REPORTS TO CONGRESS.—Each Federal
9 property manager shall, 60 days after the date of
10 enactment of this Act and every 30 days thereafter,
11 report to Congress specific information on the num12
ber and types of loan modifications made and the
13 number of actual foreclosures occurring during the
14 reporting period in accordance with this section.
15 (6) CONSULTATION.—In developing the plan re16
quired by this subsection, the Federal property man17
agers shall consult with one another and, to the ex18
tent possible, utilize consistent approaches to imple19
ment the requirements of this subsection.
20 (c) ACTIONS WITH RESPECT TO SERVICERS.—In any
21 case in which a Federal property manager is not the owner
22 of a residential mortgage loan, but holds an interest in
23 obligations or pools of obligations secured by residential
24 mortgage loans, the Federal property manager shall—
30
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1 (1) encourage implementation by the loan
2 servicers of loan modifications developed under sub3
section (b); and
4 (2) assist in facilitating any such modifications,
5 to the extent possible.
6 (d) LIMITATION.—The requirements of this section
7 shall not supersede any other duty or requirement imposed
8 on the Federal property managers under otherwise appli9
cable law.
10 SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE
11 GOVERNANCE.
12 (a) APPLICABILITY.—Any financial institution that
13 sells troubled assets to the Secretary under this Act shall
14 be subject to the executive compensation requirements of
15 subsections (b) and (c) and the provisions under the Inter16
nal Revenue Code of 1986, as provided under the amend17
ment by section 302, as applicable.
18 (b) DIRECT PURCHASES.—
19 (1) IN GENERAL.—Where the Secretary deter20
mines that the purposes of this Act are best met
21 through direct purchases of troubled assets from an
22 individual financial institution where no bidding
23 process or market prices are available, and the Sec24
retary receives a meaningful equity or debt position
25 in the financial institution as a result of the trans31
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1 action, the Secretary shall require that the financial
2 institution meet appropriate standards for executive
3 compensation and corporate governance. The stand4
ards required under this subsection shall be effective
5 for the duration of the period that the Secretary
6 holds an equity or debt position in the financial in7
stitution.
8 (2) CRITERIA.—The standards required under
9 this subsection shall include—
10 (A) limits on compensation that exclude in11
centives for executive officers of a financial in12
stitution to take unnecessary and excessive
13 risks that threaten the value of the financial in14
stitution during the period that the Secretary
15 holds an equity or debt position in the financial
16 institution;
17 (B) a provision for the recovery by the fi18
nancial institution of any bonus or incentive
19 compensation paid to a senior executive officer
20 based on statements of earnings, gains, or other
21 criteria that are later proven to be materially
22 inaccurate; and
23 (C) a prohibition on the financial institu24
tion making any golden parachute payment to
25 its senior executive officer during the period
32
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1 that the Secretary holds an equity or debt posi2
tion in the financial institution.
3 (3) DEFINITION.—For purposes of this section,
4 the term ‘‘senior executive officer’’ means an indi5
vidual who is one of the top 5 executives of a public
6 company, whose compensated is required to be dis7
closed pursuant to the Securities Exchange Act of
8 1934, and any regulations issued thereunder, and
9 non-public company counterparts.
10 (c) AUCTION PURCHASES.—Where the Secretary de11
termines that the purposes of this Act are best met
12 through auction purchases of troubled assets, and only
13 where such purchases per financial institution, in the ag14
gregate exceed $300,000,000 (including direct purchases),
15 the Secretary shall prohibit, for such financial institution,
16 any new employment contract with a senior executive offi17
cer that provides a golden parachute in the event of an
18 involuntary termination, bankruptcy filing, insolvency, or
19 receivership. The Secretary shall issue guidance to carry
20 out this paragraph not later than 2 months after the date
21 of enactment of this Act, and such guidance shall be effec22
tive upon issuance.
23 (d) SUNSET.—The provisions of subsection (c) shall
24 apply only to arrangements entered into during the period
33
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1 during which the authorities under section 101(a) are in
2 effect, as determined under section 120.
3 SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES
4 AND CENTRAL BANKS.
5 The Secretary shall coordinate, as appropriate, with
6 foreign financial authorities and central banks to work to7
ward the establishment of similar programs by such au8
thorities and central banks. To the extent that such for9
eign financial authorities or banks hold troubled assets as
10 a result of extending financing to financial institutions
11 that have failed or defaulted on such financing, such trou12
bled assets qualify for purchase under section 101.
13 SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXI14
MIZATION OF BENEFITS FOR TAXPAYERS.
15 (a) LONG-TERM COSTS AND BENEFITS.—
16 (1) MINIMIZING NEGATIVE IMPACT.—The Sec17
retary shall use the authority under this Act in a
18 manner that will minimize any potential long-term
19 negative impact on the taxpayer, taking into account
20 the direct outlays, potential long-term returns on as21
sets purchased, and the overall economic benefits of
22 the program, including economic benefits due to im23
provements in economic activity and the availability
24 of credit, the impact on the savings and pensions of
34
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1 individuals, and reductions in losses to the Federal
2 Government.
3 (2) AUTHORITY.—In carrying out paragraph
4 (1), the Secretary shall—
5 (A) hold the assets to maturity or for re6
sale for and until such time as the Secretary
7 determines that the market is optimal for sell8
ing such assets, in order to maximize the value
9 for taxpayers; and
10 (B) sell such assets at a price that the Sec11
retary determines, based on available financial
12 analysis, will maximize return on investment for
13 the Federal Government.
14 (3) PRIVATE SECTOR PARTICIPATION.—The
15 Secretary shall encourage the private sector to par16
ticipate in purchases of troubled assets, and to in17
vest in financial institutions, consistent with the pro18
visions of this section.
19 (b) USE OF MARKET MECHANISMS.—In making pur20
chases under this Act, the Secretary shall—
21 (1) make such purchases at the lowest price
22 that the Secretary determines to be consistent with
23 the purposes of this Act; and
24 (2) maximize the efficiency of the use of tax25
payer resources by using market mechanisms, in35
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1 cluding auctions or reverse auctions, where appro2
priate.
3 (c) DIRECT PURCHASES.—If the Secretary deter4
mines that use of a market mechanism under subsection
5 (b) is not feasible or appropriate, and the purposes of the
6 Act are best met through direct purchases from an indi7
vidual financial institution, the Secretary shall pursue ad8
ditional measures to ensure that prices paid for assets are
9 reasonable and reflect the underlying value of the asset.
10 (d) CONDITIONS ON PURCHASE AUTHORITY FOR
11 WARRANTS AND DEBT INSTRUMENTS.—
12 (1) IN GENERAL.—The Secretary may not pur13
chase, or make any commitment to purchase, any
14 troubled asset under the authority of this Act, unless
15 the Secretary receives from the financial institution
16 from which such assets are to be purchased—
17 (A) in the case of a financial institution
18 that is registered (or approved for registration)
19 and traded on a national securities exchange or
20 a national securities association registered pur21
suant to section 15A of the Securities Exchange
22 Act of 1934 (15 U.S.C. 78o-3), a warrant giv23
ing the right to the Secretary to receive non24
voting common stock or preferred stock in such
36
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1 financial institution, as the Secretary deter2
mines appropriate; or
3 (B) in the case of any financial institution
4 other than one described in subparagraph (A),
5 a senior debt instrument from such financial in6
stitution, as described in paragraph (2)(C).
7 (2) TERMS AND CONDITIONS.—The terms and
8 conditions of any warrant or senior debt instrument
9 required under paragraph (1) shall meet the fol10
lowing requirements:
11 (A) PURPOSES.—Such terms and condi12
tions shall, at a minimum, be designed—
13 (i) to provide for reasonable participa14
tion by the Secretary, for the benefit of
15 taxpayers, in equity appreciation in the
16 case of a warrant, or a reasonable interest
17 rate premium, in the case of a debt instru18
ment; and
19 (ii) to provide additional protection
20 for the taxpayer against losses from sale of
21 assets by the Secretary under this Act and
22 the administrative expenses of the TARP.
23 (B) AUTHORITY TO SELL, EXERCISE, OR
24 SURRENDER.—The Secretary may sell, exercise,
25 or surrender a warrant or any senior debt in37
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1 strument received under this subsection, based
2 on the conditions established under subpara3
graph (A).
4 (C) CONVERSION.—The warrant shall pro5
vide that if, after the warrant is received by the
6 Secretary under this subsection, the financial
7 institution that issued the warrant is no longer
8 listed or traded on a national securities ex9
change or securities association, as described in
10 paragraph (1)(A), such warrants shall convert
11 to senior debt, in an amount determined by the
12 Secretary.
13 (D) PROTECTIONS.—Any warrant rep14
resenting securities to be received by the Sec15
retary under this subsection shall contain anti16
dilution provisions of the type employed in cap17
ital market transactions, as determined by the
18 Secretary. Such provisions shall protect the
19 value of the securities from market transactions
20 such as stock splits, stock distributions, divi21
dends, and other distributions, mergers, and
22 other forms of reorganization or recapitaliza23
tion.
24 (E) EXERCISE PRICE.—The exercise price
25 for any warrant issued pursuant to this sub38
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1 section shall be set by the Secretary, in the in2
terest of the taxpayers.
3 (F) SUFFICIENCY.—The financial institu4
tion shall guarantee to the Secretary that it has
5 authorized shares of nonvoting stock available
6 to fulfill its obligations under this subsection.
7 Should the financial institution not have suffi8
cient authorized shares, including preferred
9 shares that may carry dividend rights equal to
10 a multiple number of common shares, the Sec11
retary may, to the extent necessary, accept a
12 senior debt note in an amount, and on such
13 terms, as will compensate the Secretary equiva14
lently, in the event that a sufficient shareholder
15 vote to authorize the necessary additional
16 shares cannot be obtained.
17 (3) EXCEPTIONS.—
18 (A) DE MINIMIS.—The Secretary shall es19
tablish de minimis exceptions to the require20
ments of this subsection, based on the size of
21 the cumulative transactions of troubled assets
22 purchased from any one financial institution for
23 the duration of the program, at not more than
24 $100,000,000.
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1 (B) OTHER EXCEPTIONS.—The Secretary
2 shall establish an exception to the requirements
3 of this subsection and appropriate alternative
4 requirements for any participating financial in5
stitution that is legally prohibited from issuing
6 securities and debt instruments, so as not to
7 allow circumvention of the requirements of this
8 section.
9 SEC. 114. MARKET TRANSPARENCY.
10 (a) PRICING.—To facilitate market transparency, the
11 Secretary shall make available to the public, in electronic
12 form, a description, amounts, and pricing of assets ac13
quired under this Act, within 2 business days of purchase,
14 trade, or other disposition.
15 (b) DISCLOSURE.—For each type of financial institu16
tions that sells troubled assets to the Secretary under this
17 Act, the Secretary shall determine whether the public dis18
closure required for such financial institutions with re19
spect to off-balance sheet transactions, derivatives instru20
ments, contingent liabilities, and similar sources of poten21
tial exposure is adequate to provide to the public sufficient
22 information as to the true financial position of the institu23
tions. If such disclosure is not adequate for that purpose,
24 the Secretary shall make recommendations for additional
25 disclosure requirements to the relevant regulators.
40
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1 SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.
2 (a) AUTHORITY.—The authority of the Secretary to
3 purchase troubled assets under this Act shall be limited
4 as follows:
5 (1) Effective upon the date of enactment of this
6 Act, such authority shall be limited to
7 $250,000,000,000 outstanding at any one time.
8 (2) If at any time, the President submits to the
9 Congress a written certification that the Secretary
10 needs to exercise the authority under this paragraph,
11 effective upon such submission, such authority shall
12 be limited to $350,000,000,000 outstanding at any
13 one time.
14 (3) If, at any time after the certification in
15 paragraph (2) has been made, the President trans16
mits to the Congress a written report detailing the
17 plan of the Secretary to exercise the authority under
18 this paragraph, unless there is enacted, within 15
19 calendar days of such transmission, a joint resolu20
tion described in subsection (c), effective upon the
21 expiration of such 15-day period, such authority
22 shall be limited to $700,000,000,000 outstanding at
23 any one time.
24 (b) AGGREGATION OF PURCHASE PRICES.—The
25 amount of troubled assets purchased by the Secretary out26
standing at any one time shall be determined for purposes
41
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1 of the dollar amount limitations under subsection (a) by
2 aggregating the purchase prices of all troubled assets held.
3 (c) JOINT RESOLUTION OF DISAPPROVAL.—
4 (1) IN GENERAL.—Notwithstanding any other
5 provision of this section, the Secretary may not exer6
cise any authority to make purchases under this Act
7 with regard to any amount in excess of
8 $350,000,000,000 previously obligated, as described
9 in this section if, within 15 calendar days after the
10 date on which Congress receives a report of the plan
11 of the Secretary described in subsection (a)(3), there
12 is enacted into law a joint resolution disapproving
13 the plan of the Secretary with respect to such addi14
tional amount.
15 (2) CONTENTS OF JOINT RESOLUTION.—For
16 the purpose of this section, the term ‘‘joint resolu17
tion’’ means only a joint resolution—
18 (A) that is introduced not later than 3 cal19
endar days after the date on which the report
20 of the plan of the Secretary referred to in sub21
section (a)(3) is received by Congress;
22 (B) which does not have a preamble;
23 (C) the title of which is as follows: ‘‘Joint
24 resolution relating to the disapproval of obliga42
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1 tions under the Emergency Economic Stabiliza2
tion Act of 2008’’; and
3 (D) the matter after the resolving clause of
4 which is as follows: ‘‘That Congress disapproves
5 the obligation of any amount exceeding the
6 amounts obligated as described in paragraphs
7 (1) and (2) of section 114(a) of the Emergency
8 Economic Stabilization Act of 2008.’’.
9 (d) FAST TRACK CONSIDERATION IN HOUSE OF REP10
RESENTATIVES.—
11 (1) RECONVENING.—Upon receipt of a report
12 under subsection (a)(3), the Speaker, if the House
13 would otherwise be adjourned, shall notify the Mem14
bers of the House that, pursuant to this section, the
15 House shall convene not later than the second cal16
endar day after receipt of such report;
17 (2) REPORTING AND DISCHARGE.—Any com18
mittee of the House of Representatives to which a
19 joint resolution is referred shall report it to the
20 House not later than 5 calendar days after the date
21 of receipt of the report described in subsection
22 (a)(3). If a committee fails to report the joint resolu23
tion within that period, the committee shall be dis24
charged from further consideration of the joint reso43
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1 lution and the joint resolution shall be referred to
2 the appropriate calendar.
3 (3) PROCEEDING TO CONSIDERATION.—After
4 each committee authorized to consider a joint resolu5
tion reports it to the House or has been discharged
6 from its consideration, it shall be in order, not later
7 than the sixth day after Congress receives the report
8 described in subsection (a)(3), to move to proceed to
9 consider the joint resolution in the House. All points
10 of order against the motion are waived. Such a mo11
tion shall not be in order after the House has dis12
posed of a motion to proceed on the joint resolution.
13 The previous question shall be considered as ordered
14 on the motion to its adoption without intervening
15 motion. The motion shall not be debatable. A motion
16 to reconsider the vote by which the motion is dis17
posed of shall not be in order.
18 (4) CONSIDERATION.—The joint resolution
19 shall be considered as read. All points of order
20 against the joint resolution and against its consider21
ation are waived. The previous question shall be con22
sidered as ordered on the joint resolution to its pas23
sage without intervening motion except two hours of
24 debate equally divided and controlled by the pro25
ponent and an opponent. A motion to reconsider the
44
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1 vote on passage of the joint resolution shall not be
2 in order.
3 (e) FAST TRACK CONSIDERATION IN SENATE.—
4 (1) RECONVENING.—Upon receipt of a report
5 under subsection (a)(3), if the Senate has adjourned
6 or recessed for more than 2 days, the majority lead7
er of the Senate, after consultation with the minority
8 leader of the Senate, shall notify the Members of the
9 Senate that, pursuant to this section, the Senate
10 shall convene not later than the second calendar day
11 after receipt of such message.
12 (2) PLACEMENT ON CALENDAR.—Upon intro13
duction in the Senate, the joint resolution shall be
14 placed immediately on the calendar.
15 (3) FLOOR CONSIDERATION.—
16 (A) IN GENERAL.—Notwithstanding Rule
17 XXII of the Standing Rules of the Senate, it is
18 in order at any time during the period begin19
ning on the 4th day after the date on which
20 Congress receives a report of the plan of the
21 Secretary described in subsection (a)(3) and
22 ending on the 6th day after the date on which
23 Congress receives a report of the plan of the
24 Secretary described in subsection (a)(3) (even
25 though a previous motion to the same effect has
45
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1 been disagreed to) to move to proceed to the
2 consideration of the joint resolution, and all
3 points of order against the joint resolution (and
4 against consideration of the joint resolution)
5 are waived. The motion to proceed is not debat6
able. The motion is not subject to a motion to
7 postpone. A motion to reconsider the vote by
8 which the motion is agreed to or disagreed to
9 shall not be in order. If a motion to proceed to
10 the consideration of the resolution is agreed to,
11 the joint resolution shall remain the unfinished
12 business until disposed of.
13 (B) DEBATE.—Debate on the joint resolu14
tion, and on all debatable motions and appeals
15 in connection therewith, shall be limited to not
16 more than 10 hours, which shall be divided
17 equally between the majority and minority lead18
ers or their designees. A motion further to limit
19 debate is in order and not debatable. An
20 amendment to, or a motion to postpone, or a
21 motion to proceed to the consideration of other
22 business, or a motion to recommit the joint res23
olution is not in order.
24 (C) VOTE ON PASSAGE.—The vote on pas25
sage shall occur immediately following the con46
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1 clusion of the debate on a joint resolution, and
2 a single quorum call at the conclusion of the de3
bate if requested in accordance with the rules of
4 the Senate.
5 (D) RULINGS OF THE CHAIR ON PROCE6
DURE.—Appeals from the decisions of the Chair
7 relating to the application of the rules of the
8 Senate, as the case may be, to the procedure re9
lating to a joint resolution shall be decided
10 without debate.
11 (f) RULES RELATING TO SENATE AND HOUSE OF
12 REPRESENTATIVES.—
13 (1) COORDINATION WITH ACTION BY OTHER
14 HOUSE.—If, before the passage by one House of a
15 joint resolution of that House, that House receives
16 from the other House a joint resolution, then the fol17
lowing procedures shall apply:
18 (A) The joint resolution of the other House
19 shall not be referred to a committee.
20 (B) With respect to a joint resolution of
21 the House receiving the resolution—
22 (i) the procedure in that House shall
23 be the same as if no joint resolution had
24 been received from the other House; but
47
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1 (ii) the vote on passage shall be on
2 the joint resolution of the other House.
3 (2) TREATMENT OF JOINT RESOLUTION OF
4 OTHER HOUSE.—If one House fails to introduce or
5 consider a joint resolution under this section, the
6 joint resolution of the other House shall be entitled
7 to expedited floor procedures under this section.
8 (3) TREATMENT OF COMPANION MEASURES.—
9 If, following passage of the joint resolution in the
10 Senate, the Senate then receives the companion
11 measure from the House of Representatives, the
12 companion measure shall not be debatable.
13 (4) CONSIDERATION AFTER PASSAGE.—
14 (A) IN GENERAL.—If Congress passes a
15 joint resolution, the period beginning on the
16 date the President is presented with the joint
17 resolution and ending on the date the President
18 takes action with respect to the joint resolution
19 shall be disregarded in computing the 15-cal20
endar day period described in subsection (a)(3).
21 (B) VETOES.—If the President vetoes the
22 joint resolution—
23 (i) the period beginning on the date
24 the President vetoes the joint resolution
25 and ending on the date the Congress re48
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1 ceives the veto message with respect to the
2 joint resolution shall be disregarded in
3 computing the 15-calendar day period de4
scribed in subsection (a)(3), and
5 (ii) debate on a veto message in the
6 Senate under this section shall be 1 hour
7 equally divided between the majority and
8 minority leaders or their designees.
9 (5) RULES OF HOUSE OF REPRESENTATIVES
10 AND SENATE.—This subsection and subsections (c),
11 (d), and (e) are enacted by Congress—
12 (A) as an exercise of the rulemaking power
13 of the Senate and House of Representatives, re14
spectively, and as such it is deemed a part of
15 the rules of each House, respectively, but appli16
cable only with respect to the procedure to be
17 followed in that House in the case of a joint
18 resolution, and it supersedes other rules only to
19 the extent that it is inconsistent with such
20 rules; and
21 (B) with full recognition of the constitu22
tional right of either House to change the rules
23 (so far as relating to the procedure of that
24 House) at any time, in the same manner, and
49
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1 to the same extent as in the case of any other
2 rule of that House.
3 SEC. 116. OVERSIGHT AND AUDITS.
4 (a) COMPTROLLER GENERAL OVERSIGHT.—
5 (1) SCOPE OF OVERSIGHT.—The Comptroller
6 General of the United States shall, upon establish7
ment of the troubled assets relief program under
8 this Act (in this section referred to as the ‘‘TARP’’),
9 commence ongoing oversight of the activities and
10 performance of the TARP and of any agents and
11 representatives of the TARP (as related to the agent
12 or representative’s activities on behalf of or under
13 the authority of the TARP), including vehicles es14
tablished by the Secretary under this Act. The sub15
jects of such oversight shall include the following:
16 (A) The performance of the TARP in
17 meeting the purposes of this Act, particularly
18 those involving—
19 (i) foreclosure mitigation;
20 (ii) cost reduction;
21 (iii) whether it has provided stability
22 or prevented disruption to the financial
23 markets or the banking system; and
24 (iv) whether it has protected tax25
payers.
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1 (B) The financial condition and internal
2 controls of the TARP, its representatives and
3 agents.
4 (C) Characteristics of transactions and
5 commitments entered into, including trans6
action type, frequency, size, prices paid, and all
7 other relevant terms and conditions, and the
8 timing, duration and terms of any future com9
mitments to purchase assets.
10 (D) Characteristics and disposition of ac11
quired assets, including type, acquisition price,
12 current market value, sale prices and terms,
13 and use of proceeds from sales.
14 (E) Efficiency of the operations of the
15 TARP in the use of appropriated funds.
16 (F) Compliance with all applicable laws
17 and regulations by the TARP, its agents and
18 representatives.
19 (G) The efforts of the TARP to prevent,
20 identify, and minimize conflicts of interest in21
volving any agent or representative performing
22 activities on behalf of or under the authority of
23 the TARP.
24 (H) The efficacy of contracting procedures
25 pursuant to section 107(b), including, as appli51
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1 cable, the efforts of the TARP in evaluating
2 proposals for inclusion and contracting to the
3 maximum extent possible of minorities (as such
4 term is defined in 1204(c) of the Financial In5
stitutions Reform, Recovery, and Enhancement
6 Act of 1989 (12 U.S.C. 1811 note), women,
7 and minority- and women-owned businesses, in8
cluding ascertaining and reporting the total
9 amount of fees paid and other value delivered
10 by the TARP to all of its agents and represent11
atives, and such amounts paid or delivered to
12 such firms that are minority- and women-owned
13 businesses (as such terms are defined in section
14 21A of the Federal Home Loan Bank Act (12
15 U.S.C. 1441a)).
16 (2) CONDUCT AND ADMINISTRATION OF OVER17
SIGHT.—
18 (A) GAO PRESENCE.—The Secretary shall
19 provide the Comptroller General with appro20
priate space and facilities in the Department of
21 the Treasury as necessary to facilitate oversight
22 of the TARP until the termination date estab23
lished in section 120.
24 (B) ACCESS TO RECORDS.—To the extent
25 otherwise consistent with law, the Comptroller
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1 General shall have access, upon request, to any
2 information, data, schedules, books, accounts,
3 financial records, reports, files, electronic com4
munications, or other papers, things, or prop5
erty belonging to or in use by the TARP, or
6 any vehicles established by the Secretary under
7 this Act, and to the officers, directors, employ8
ees, independent public accountants, financial
9 advisors, and other agents and representatives
10 of the TARP (as related to the agent or rep11
resentative’s activities on behalf of or under the
12 authority of the TARP) or any such vehicle at
13 such reasonable time as the Comptroller Gen14
eral may request. The Comptroller General
15 shall be afforded full facilities for verifying
16 transactions with the balances or securities held
17 by depositaries, fiscal agents, and custodians.
18 The Comptroller General may make and retain
19 copies of such books, accounts, and other
20 records as the Comptroller General deems ap21
propriate.
22 (C) REIMBURSEMENT OF COSTS.—The
23 Treasury shall reimburse the Government Ac24
countability Office for the full cost of any such
25 oversight activities as billed therefor by the
53
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1 Comptroller General of the United States. Such
2 reimbursements shall be credited to the appro3
priation account ‘‘Salaries and Expenses, Gov4
ernment Accountability Office’’ current when
5 the payment is received and remain available
6 until expended.
7 (3) REPORTING.—The Comptroller General
8 shall submit reports of findings under this section,
9 regularly and no less frequently than once every 60
10 days, to the appropriate committees of Congress,
11 and the Special Inspector General for the Troubled
12 Asset Relief Program established under this Act on
13 the activities and performance of the TARP. The
14 Comptroller may also submit special reports under
15 this subsection as warranted by the findings of its
16 oversight activities.
17 (b) COMPTROLLER GENERAL AUDITS.—
18 (1) ANNUAL AUDIT.—The TARP shall annually
19 prepare and issue to the appropriate committees of
20 Congress and the public audited financial statements
21 prepared in accordance with generally accepted ac22
counting principles, and the Comptroller General
23 shall annually audit such statements in accordance
24 with generally accepted auditing standards. The
25 Treasury shall reimburse the Government Account54
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1 ability Office for the full cost of any such audit as
2 billed therefor by the Comptroller General. Such re3
imbursements shall be credited to the appropriation
4 account ‘‘Salaries and Expenses, Government Ac5
countability Office’’ current when the payment is re6
ceived and remain available until expended. The fi7
nancial statements prepared under this paragraph
8 shall be on the fiscal year basis prescribed under
9 section 1102 of title 31, United States Code.
10 (2) AUTHORITY.—The Comptroller General
11 may audit the programs, activities, receipts, expendi12
tures, and financial transactions of the TARP and
13 any agents and representatives of the TARP (as re14
lated to the agent or representative’s activities on
15 behalf of or under the authority of the TARP), in16
cluding vehicles established by the Secretary under
17 this Act.
18 (3) CORRECTIVE RESPONSES TO AUDIT PROB19
LEMS.—The TARP shall—
20 (A) take action to address deficiencies
21 identified by the Comptroller General or other
22 auditor engaged by the TARP; or
23 (B) certify to appropriate committees of
24 Congress that no action is necessary or appro25
priate.
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1 (c) INTERNAL CONTROL.—
2 (1) ESTABLISHMENT.—The TARP shall estab3
lish and maintain an effective system of internal
4 control, consistent with the standards prescribed
5 under section 3512(c) of title 31, United States
6 Code, that provides reasonable assurance of—
7 (A) the effectiveness and efficiency of oper8
ations, including the use of the resources of the
9 TARP;
10 (B) the reliability of financial reporting, in11
cluding financial statements and other reports
12 for internal and external use; and
13 (C) compliance with applicable laws and
14 regulations.
15 (2) REPORTING.—In conjunction with each an16
nual financial statement issued under this section,
17 the TARP shall—
18 (A) state the responsibility of management
19 for establishing and maintaining adequate in20
ternal control over financial reporting; and
21 (B) state its assessment, as of the end of
22 the most recent year covered by such financial
23 statement of the TARP, of the effectiveness of
24 the internal control over financial reporting.
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1 (d) SHARING OF INFORMATION.—Any report or audit
2 required under this section shall also be submitted to the
3 Congressional Oversight Panel established under section
4 125.
5 (e) TERMINATION.—Any oversight, reporting, or
6 audit requirement under this section shall terminate on
7 the later of—
8 (1) the date that the last troubled asset ac9
quired by the Secretary under section 101 has been
10 sold or transferred out of the ownership or control
11 of the Federal Government; or
12 (2) the date of expiration of the last insurance
13 contract issued under section 102.
14 SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.
15 (a) STUDY.—The Comptroller General shall under16
take a study to determine the extent to which leverage
17 and sudden deleveraging of financial institutions was a
18 factor behind the current financial crisis.
19 (b) CONTENT.—The study required by this section
20 shall include—
21 (1) an analysis of the roles and responsibilities
22 of the Board, the Securities and Exchange Commis23
sion, the Secretary, and other Federal banking agen24
cies with respect to monitoring leverage and acting
25 to curtail excessive leveraging;
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1 (2) an analysis of the authority of the Board to
2 regulate leverage, including by setting margin re3
quirements, and what process the Board used to de4
cide whether or not to use its authority;
5 (3) an analysis of any usage of the margin au6
thority by the Board; and
7 (4) recommendations for the Board and appro8
priate committees of Congress with respect to the
9 existing authority of the Board.
10 (c) REPORT.—Not later than June 1, 2009, the
11 Comptroller General shall complete and submit a report
12 on the study required by this section to the Committee
13 on Banking, Housing, and Urban Affairs of the Senate
14 and the Committee on Financial Services of the House of
15 Representatives.
16 (d) SHARING OF INFORMATION.—Any reports re17
quired under this section shall also be submitted to the
18 Congressional Oversight Panel established under section
19 125.
20 SEC. 118. FUNDING.
21 For the purpose of the authorities granted in this
22 Act, and for the costs of administering those authorities,
23 the Secretary may use the proceeds of the sale of any secu24
rities issued under chapter 31 of title 31, United States
25 Code, and the purposes for which securities may be issued
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1 under chapter 31 of title 31, United States Code, are ex2
tended to include actions authorized by this Act, including
3 the payment of administrative expenses. Any funds ex4
pended or obligated by the Secretary for actions author5
ized by this Act, including the payment of administrative
6 expenses, shall be deemed appropriated at the time of such
7 expenditure or obligation.
8 SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.
9 (a) JUDICIAL REVIEW.—
10 (1) STANDARD.—Actions by the Secretary pur11
suant to the authority of this Act shall be subject to
12 chapter 7 of title 5, United States Code, including
13 that such final actions shall be held unlawful and set
14 aside if found to be arbitrary, capricious, an abuse
15 of discretion, or not in accordance with law.
16 (2) LIMITATIONS ON EQUITABLE RELIEF.—
17 (A) INJUNCTION.—No injunction or other
18 form of equitable relief shall be issued against
19 the Secretary for actions pursuant to section
20 101, 102, 106, and 109, other than to remedy
21 a violation of the Constitution.
22 (B) TEMPORARY RESTRAINING ORDER.—
23 Any request for a temporary restraining order
24 against the Secretary for actions pursuant to
25 this Act shall be considered and granted or de59
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1 nied by the court within 3 days of the date of
2 the request.
3 (C) PRELIMINARY INJUNCTION.—Any re4
quest for a preliminary injunction against the
5 Secretary for actions pursuant to this Act shall
6 be considered and granted or denied by the
7 court on an expedited basis consistent with the
8 provisions of rule 65(b)(3) of the Federal Rules
9 of Civil Procedure, or any successor thereto.
10 (D) PERMANENT INJUNCTION.—Any re11
quest for a permanent injunction against the
12 Secretary for actions pursuant to this Act shall
13 be considered and granted or denied by the
14 court on an expedited basis. Whenever possible,
15 the court shall consolidate trial on the merits
16 with any hearing on a request for a preliminary
17 injunction, consistent with the provisions of rule
18 65(a)(2) of the Federal Rules of Civil Proce19
dure, or any successor thereto.
20 (3) LIMITATION ON ACTIONS BY PARTICIPATING
21 COMPANIES.—No action or claims may be brought
22 against the Secretary by any person that divests its
23 assets with respect to its participation in a program
24 under this Act, except as provided in paragraph (1),
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1 other than as expressly provided in a written con2
tract with the Secretary.
3 (4) STAYS.—Any injunction or other form of
4 equitable relief issued against the Secretary for ac5
tions pursuant to section 101, 102, 106, and 109,
6 shall be automatically stayed. The stay shall be lift7
ed unless the Secretary seeks a stay from a higher
8 court within 3 calendar days after the date on which
9 the relief is issued.
10 (b) RELATED MATTERS.—
11 (1) TREATMENT OF HOMEOWNERS’ RIGHTS.—
12 The terms of any residential mortgage loan that is
13 part of any purchase by the Secretary under this Act
14 shall remain subject to all claims and defenses that
15 would otherwise apply, notwithstanding the exercise
16 of authority by the Secretary under this Act.
17 (2) SAVINGS CLAUSE.—Any exercise of the au18
thority of the Secretary pursuant to this Act shall
19 not impair the claims or defenses that would other20
wise apply with respect to persons other than the
21 Secretary. Except as established in any contract, a
22 servicer of pooled residential mortgages owes any
23 duty to determine whether the net present value of
24 the payments on the loan, as modified, is likely to
25 be greater than the anticipated net recovery that
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1 would result from foreclosure to all investors and
2 holders of beneficial interests in such investment,
3 but not to any individual or groups of investors or
4 beneficial interest holders, and shall be deemed to
5 act in the best interests of all such investors or hold6
ers of beneficial interests if the servicer agrees to or
7 implements a modification or workout plan when the
8 servicer takes reasonable loss mitigation actions, in9
cluding partial payments.
10 SEC. 120. TERMINATION OF AUTHORITY.
11 (a) TERMINATION.—The authorities provided under
12 sections 101(a) and 102 shall terminate on December 31,
13 2009.
14 (b) EXTENSION UPON CERTIFICATION.—The Sec15
retary, upon submission of a written certification to Con16
gress, may extend the authority provided under this Act
17 to expire not later than 2 years from the date of enact18
ment of this Act. Such certification shall include a jus19
tification of why the extension is necessary to assist Amer20
ican families and stabilize financial markets, as well as
21 the expected cost to the taxpayers for such an extension.
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1 SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROU2
BLED ASSET RELIEF PROGRAM.
3 (a) OFFICE OF INSPECTOR GENERAL.—There is
4 hereby established the Office of the Special Inspector Gen5
eral for the Troubled Asset Relief Program.
6 (b) 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 In11
spector General’’), who shall be appointed by the Presi12
dent, by and with the advice and consent of the Senate.
13 (2) The appointment of the Special Inspector General
14 shall be made on the basis of integrity and demonstrated
15 ability in accounting, auditing, financial analysis, law,
16 management analysis, public administration, or investiga17
tions.
18 (3) The nomination of an individual as Special In19
spector General shall be made as soon as practicable after
20 the establishment of any program under sections 101 and
21 102.
22 (4) The Special Inspector General shall be removable
23 from office in accordance with the provisions of section
24 3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).
25 (5) For purposes of section 7324 of title 5, United
26 States Code, the Special Inspector General shall not be
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1 considered an employee who determines policies to be pur2
sued by the United States in the nationwide administra3
tion of Federal law.
4 (6) The annual rate of basic pay of the Special In5
spector General shall be the annual rate of basic pay pro6
vided for positions at level IV of the Executive Schedule
7 under section 5315 of title 5, United States Code.
8 (c) DUTIES.—(1) It shall be the duty of the Special
9 Inspector General to conduct, supervise, and coordinate
10 audits and investigations of the purchase, management,
11 and sale of assets by the Secretary of the Treasury under
12 any program established by the Secretary under section
13 101, and the management by the Secretary of any pro14
gram established under section 102, including by col15
lecting and summarizing the following information:
16 (A) A description of the categories of troubled
17 assets purchased or otherwise procured by the Sec18
retary.
19 (B) A listing of the troubled assets purchased
20 in each such category described under subparagraph
21 (A).
22 (C) An explanation of the reasons the Secretary
23 deemed it necessary to purchase each such troubled
24 asset.
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1 (D) A listing of each financial institution that
2 such troubled assets were purchased from.
3 (E) A listing of and detailed biographical infor4
mation on each person or entity hired to manage
5 such troubled assets.
6 (F) A current estimate of the total amount of
7 troubled assets purchased pursuant to any program
8 established under section 101, the amount of trou9
bled assets on the books of the Treasury, the
10 amount of troubled assets sold, and the profit and
11 loss incurred on each sale or disposition of each such
12 troubled asset.
13 (G) A listing of the insurance contracts issued
14 under section 102.
15 (2) The Special Inspector General shall establish,
16 maintain, and oversee such systems, procedures, and con17
trols as the Special Inspector General considers appro18
priate to discharge the duty under paragraph (1).
19 (3) In addition to the duties specified in paragraphs
20 (1) and (2), the Inspector General shall also have the du21
ties and responsibilities of inspectors general under the In22
spector General Act of 1978.
23 (d) POWERS AND AUTHORITIES.—(1) In carrying out
24 the duties specified in subsection (c), the Special Inspector
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1 General shall have the authorities provided in section 6
2 of the Inspector General Act of 1978.
3 (2) The Special Inspector General shall carry out the
4 duties specified in subsection (c)(1) in accordance with
5 section 4(b)(1) of the Inspector General Act of 1978.
6 (e) PERSONNEL, FACILITIES, AND OTHER RE7
SOURCES.—(1) The Special Inspector General may select,
8 appoint, and employ such officers and employees as may
9 be necessary for carrying out the duties of the Special In10
spector General, subject to the provisions of title 5, United
11 States Code, governing appointments in the competitive
12 service, and the provisions of chapter 51 and subchapter
13 III of chapter 53 of such title, relating to classification
14 and General Schedule pay rates.
15 (2) The Special Inspector General may obtain serv16
ices as authorized by section 3109 of title 5, United States
17 Code, at daily rates not to exceed the equivalent rate pre18
scribed for grade GS–15 of the General Schedule by sec19
tion 5332 of such title.
20 (3) The Special Inspector General may enter into
21 contracts and other arrangements for audits, studies,
22 analyses, and other services with public agencies and with
23 private persons, and make such payments as may be nec24
essary to carry out the duties of the Inspector General.
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1 (4)(A) Upon request of the Special Inspector General
2 for information or assistance from any department, agen3
cy, or other entity of the Federal Government, the head
4 of such entity shall, insofar as is practicable and not in
5 contravention of any existing law, furnish such informa6
tion or assistance to the Special Inspector General, or an
7 authorized designee.
8 (B) Whenever information or assistance requested by
9 the Special Inspector General is, in the judgment of the
10 Special Inspector General, unreasonably refused or not
11 provided, the Special Inspector General shall report the
12 circumstances to the appropriate committees of Congress
13 without delay.
14 (f) REPORTS.—(1) Not later than 60 days after the
15 confirmation of the Special Inspector General, and every
16 calendar quarter thereafter, the Special Inspector General
17 shall submit to the appropriate committees of Congress
18 a report summarizing the activities of the Special Inspec19
tor General during the 120-day period ending on the date
20 of such report. Each report shall include, for the period
21 covered by such report, a detailed statement of all pur22
chases, obligations, expenditures, and revenues associated
23 with any program established by the Secretary of the
24 Treasury under sections 101 and 102, as well as the infor25
mation collected under subsection (c)(1).
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1 (2) Nothing in this subsection shall be construed to
2 authorize the public disclosure of information that is—
3 (A) specifically prohibited from disclosure by
4 any other provision of law;
5 (B) specifically required by Executive order to
6 be protected from disclosure in the interest of na7
tional defense or national security or in the conduct
8 of foreign affairs; or
9 (C) a part of an ongoing criminal investigation.
10 (3) Any reports required under this section shall also
11 be submitted to the Congressional Oversight Panel estab12
lished under section 125.
13 (g) FUNDING.—(1) Of the amounts made available
14 to the Secretary of the Treasury under section 118,
15 $50,000,000 shall be available to the Special Inspector
16 General to carry out this section.
17 (2) The amount available under paragraph (1) shall
18 remain available until expended.
19 (h) TERMINATION.—The Office of the Special Inspec20
tor General shall terminate on the later of—
21 (1) the date that the last troubled asset ac22
quired by the Secretary under section 101 has been
23 sold or transferred out of the ownership or control
24 of the Federal Government; or
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1 (2) the date of expiration of the last insurance
2 contract issued under section 102.
3 SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC
4 DEBT.
5 Subsection (b) of section 3101 of title 31, United
6 States Code, is amended by striking out the dollar limita7
tion contained in such subsection and inserting
8 ‘‘$11,315,000,000,000’’.
9 SEC. 123. CREDIT REFORM.
10 (a) IN GENERAL.—Subject to subsection (b), the
11 costs of purchases of troubled assets made under section
12 101(a) and guarantees of troubled assets under section
13 102, and any cash flows associated with the activities au14
thorized in section 102 and subsections (a), (b), and (c)
15 of section 106 shall be determined as provided under the
16 Federal Credit Reform Act of 1990 (2 U.S.C. 661 et.
17 seq.), as applicable.
18 (b) COSTS.—For the purposes of section 502(5) of
19 the Federal Credit Reform Act of 1990 (2 U.S.C.
20 661a(5))—
21 (1) the cost of troubled assets and guarantees
22 of troubled assets shall be calculated by adjusting
23 the discount rate in section 502(5)(E) (2 U.S.C.
24 661a(5)(E)) for market risks; and
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1 (2) the cost of a modification of a troubled
2 asset or guarantee of a troubled asset shall be the
3 difference between the current estimate consistent
4 with paragraph (1) under the terms of the troubled
5 asset or guarantee of the troubled asset and the cur6
rent estimate consistent with paragraph (1) under
7 the terms of the troubled asset or guarantee of the
8 troubled asset, as modified.
9 SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.
10 Section 257 of the National Housing Act (12 U.S.C.
11 1715z-23) is amended—
12 (1) in subsection (e)—
13 (A) in paragraph (1)(B), by inserting be14
fore ‘‘a ratio’’ the following: ‘‘, or thereafter is
15 likely to have, due to the terms of the mortgage
16 being reset,’’;
17 (B) in paragraph (2)(B), by inserting be18
fore the period at the end ‘‘(or such higher per19
centage as the Board determines, in the discre20
tion of the Board)’’;
21 (C) in paragraph (4)(A)—
22 (i) in the first sentence, by inserting
23 after ‘‘insured loan’’ the following: ‘‘and
24 any payments made under this para25
graph,’’; and
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1 (ii) by adding at the end the fol2
lowing: ‘‘Such actions may include making
3 payments, which shall be accepted as pay4
ment in full of all indebtedness under the
5 eligible mortgage, to any holder of an ex6
isting subordinate mortgage, in lieu of any
7 future appreciation payments authorized
8 under subparagraph (B).’’; and
9 (2) in subsection (w), by inserting after ‘‘ad10
ministrative costs’’ the following: ‘‘and payments
11 pursuant to subsection (e)(4)(A)’’.
12 SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.
13 (a) ESTABLISHMENT.—There is hereby established
14 the Congressional Oversight Panel (hereafter in this sec15
tion referred to as the ‘‘Oversight Panel’’) as an establish16
ment in the legislative branch.
17 (b) DUTIES.—The Oversight Panel shall review the
18 current state of the financial markets and the regulatory
19 system and submit the following reports to Congress:
20 (1) REGULAR REPORTS.—
21 (A) IN GENERAL.—Regular reports of the
22 Oversight Panel shall include the following:
23 (i) The use by the Secretary of au24
thority under this Act, including with re71
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1 spect to the use of contracting authority
2 and administration of the program.
3 (ii) The impact of purchases made
4 under the Act on the financial markets and
5 financial institutions.
6 (iii) The extent to which the informa7
tion made available on transactions under
8 the program has contributed to market
9 transparency.
10 (iv) The effectiveness of foreclosure
11 mitigation efforts, and the effectiveness of
12 the program from the standpoint of mini13
mizing long-term costs to the taxpayers
14 and maximizing the benefits for taxpayers.
15 (B) TIMING.—The reports required under
16 this paragraph shall be submitted not later
17 than 30 days after the first exercise by the Sec18
retary of the authority under section 101(a) or
19 102, and every 30 days thereafter.
20 (2) SPECIAL REPORT ON REGULATORY RE21
FORM.—The Oversight Panel shall submit a special
22 report on regulatory reform not later than January
23 20, 2009, analyzing the current state of the regu24
latory system and its effectiveness at overseeing the
25 participants in the financial system and protecting
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1 consumers, and providing recommendations for im2
provement, including recommendations regarding
3 whether any participants in the financial markets
4 that are currently outside the regulatory system
5 should become subject to the regulatory system, the
6 rationale underlying such recommendation, and
7 whether there are any gaps in existing consumer
8 protections.
9 (c) MEMBERSHIP.—
10 (1) IN GENERAL.—The Oversight Panel shall
11 consist of 5 members, as follows:
12 (A) 1 member appointed by the Speaker of
13 the House of Representatives.
14 (B) 1 member appointed by the minority
15 leader of the House of Representatives.
16 (C) 1 member appointed by the majority
17 leader of the Senate.
18 (D) 1 member appointed by the minority
19 leader of the Senate.
20 (E) 1 member appointed by the Speaker of
21 the House of Representatives and the majority
22 leader of the Senate, after consultation with the
23 minority leader of the Senate and the minority
24 leader of the House of Representatives.
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1 (2) PAY.—Each member of the Oversight Panel
2 shall each be paid at a rate equal to the daily equiv3
alent of the annual rate of basic pay for level I of
4 the Executive Schedule for each day (including trav5
el time) during which such member is engaged in
6 the actual performance of duties vested in the Com7
mission.
8 (3) PROHIBITION OF COMPENSATION OF FED9
ERAL EMPLOYEES.—Members of the Oversight
10 Panel who are full-time officers or employees of the
11 United States or Members of Congress may not re12
ceive additional pay, allowances, or benefits by rea13
son of their service on the Oversight Panel.
14 (4) TRAVEL EXPENSES.—Each member shall
15 receive travel expenses, including per diem in lieu of
16 subsistence, in accordance with applicable provisions
17 under subchapter I of chapter 57 of title 5, United
18 States Code.
19 (5) QUORUM.—Four members of the Oversight
20 Panel shall constitute a quorum but a lesser number
21 may hold hearings.
22 (6) VACANCIES.—A vacancy on the Oversight
23 Panel shall be filled in the manner in which the
24 original appointment was made.
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1 (7) MEETINGS.—The Oversight Panel shall
2 meet at the call of the Chairperson or a majority of
3 its members.
4 (d) STAFF.—
5 (1) IN GENERAL.—The Oversight Panel may
6 appoint and fix the pay of any personnel as the
7 Commission considers appropriate.
8 (2) EXPERTS AND CONSULTANTS.—The Over9
sight Panel may procure temporary and intermittent
10 services under section 3109(b) of title 5, United
11 States Code.
12 (3) STAFF OF AGENCIES.—Upon request of the
13 Oversight Panel, the head of any Federal depart14
ment or agency may detail, on a reimbursable basis,
15 any of the personnel of that department or agency
16 to the Oversight Panel to assist it in carrying out its
17 duties under this Act.
18 (e) POWERS.—
19 (1) HEARINGS AND SESSIONS.—The Oversight
20 Panel may, for the purpose of carrying out this sec21
tion, hold hearings, sit and act at times and places,
22 take testimony, and receive evidence as the Panel
23 considers appropriate and may administer oaths or
24 affirmations to witnesses appearing before it.
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1 (2) POWERS OF MEMBERS AND AGENTS.—Any
2 member or agent of the Oversight Panel may, if au3
thorized by the Oversight Panel, take any action
4 which the Oversight Panel is authorized to take by
5 this section.
6 (3) OBTAINING OFFICIAL DATA.—The Over7
sight Panel may secure directly from any depart8
ment or agency of the United States information
9 necessary to enable it to carry out this section. Upon
10 request of the Chairperson of the Oversight Panel,
11 the head of that department or agency shall furnish
12 that information to the Oversight Panel.
13 (4) REPORTS .—The Oversight Panel shall re14
ceive and consider all reports required to be sub15
mitted to the Oversight Panel under this Act.
16 (f) TERMINATION.—The Oversight Panel shall termi17
nate 6 months after the termination date specified in sec18
tion 120.
19 (g) FUNDING FOR EXPENSES.—
20 (1) AUTHORIZATION OF APPROPRIATIONS.—
21 There is authorized to be appropriated to the Over22
sight Panel such sums as may be necessary for any
23 fiscal year, half of which shall be derived from the
24 applicable account of the House of Representatives,
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1 and half of which shall be derived from the contin2
gent fund of the Senate.
3 (2) REIMBURSEMENT OF AMOUNTS.—An
4 amount equal to the expenses of the Oversight Panel
5 shall be promptly transferred by the Secretary, from
6 time to time upon the presentment of a statement
7 of such expenses by the Chairperson of the Over8
sight Panel, from funds made available to the Sec9
retary under this Act to the applicable fund of the
10 House of Representatives and the contingent fund of
11 the Senate, as appropriate, as reimbursement for
12 amounts expended from such account and fund
13 under paragraph (1).
14 SEC. 126. FDIC AUTHORITY.
15 (a) IN GENERAL.—Section 18(a) of the Federal De16
posit Insurance Act (12 U.S.C. 1828(a)) is amended by
17 adding at the end the following new paragraph:
18 ‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC
19 NAMES, AND MISREPRESENTATION TO INDICATE IN20
SURED STATUS.—
21 ‘‘(A) PROHIBITION ON FALSE ADVER22
TISING AND MISUSE OF FDIC NAMES.—No per23
son may represent or imply that any deposit li24
ability, obligation, certificate, or share is in25
sured or guaranteed by the Corporation, if such
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1 deposit liability, obligation, certificate, or share
2 is not insured or guaranteed by the Corpora3
tion—
4 ‘‘(i) by using the terms ‘Federal De5
posit’, ‘Federal Deposit Insurance’, ‘Fed6
eral Deposit Insurance Corporation’, any
7 combination of such terms, or the abbre8
viation ‘FDIC’ as part of the business
9 name or firm name of any person, includ10
ing any corporation, partnership, business
11 trust, association, or other business entity;
12 or
13 ‘‘(ii) by using such terms or any other
14 terms, sign, or symbol as part of an adver15
tisement, solicitation, or other document.
16 ‘‘(B) PROHIBITION ON MISREPRESENTA17
TIONS OF INSURED STATUS.—No person may
18 knowingly misrepresent—
19 ‘‘(i) that any deposit liability, obliga20
tion, certificate, or share is insured, under
21 this Act, if such deposit liability, obliga22
tion, certificate, or share is not so insured;
23 or
24 ‘‘(ii) the extent to which or the man25
ner in which any deposit liability, obliga78
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1 tion, certificate, or share is insured under
2 this Act, if such deposit liability, obliga3
tion, certificate, or share is not so insured,
4 to the extent or in the manner represented.
5 ‘‘(C) AUTHORITY OF THE APPROPRIATE
6 FEDERAL BANKING AGENCY.—The appropriate
7 Federal banking agency shall have enforcement
8 authority in the case of a violation of this para9
graph by any person for which the agency is the
10 appropriate Federal banking agency, or any in11
stitution-affiliated party thereof.
12 ‘‘(D) CORPORATION AUTHORITY IF THE
13 APPROPRIATE FEDERAL BANKING AGENCY
14 FAILS TO FOLLOW RECOMMENDATION.—
15 ‘‘(i) RECOMMENDATION.—The Cor16
poration may recommend in writing to the
17 appropriate Federal banking agency that
18 the agency take any enforcement action
19 authorized under section 8 for purposes of
20 enforcement of this paragraph with respect
21 to any person for which the agency is the
22 appropriate Federal banking agency or any
23 institution-affiliated party thereof.
24 ‘‘(ii) AGENCY RESPONSE.—If the ap25
propriate Federal banking agency does not,
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1 within 30 days of the date of receipt of a
2 recommendation under clause (i), take the
3 enforcement action with respect to this
4 paragraph recommended by the Corpora5
tion or provide a plan acceptable to the
6 Corporation for responding to the situation
7 presented, the Corporation may take the
8 recommended enforcement action against
9 such person or institution-affiliated party.
10 ‘‘(E) ADDITIONAL AUTHORITY.—In addi11
tion to its authority under subparagraphs (C)
12 and (D), for purposes of this paragraph, the
13 Corporation shall have, in the same manner and
14 to the same extent as with respect to a State
15 nonmember insured bank—
16 ‘‘(i) jurisdiction over—
17 ‘‘(I) any person other than a per18
son for which another agency is the
19 appropriate Federal banking agency
20 or any institution-affiliated party
21 thereof; and
22 ‘‘(II) any person that aids or
23 abets a violation of this paragraph by
24 a person described in subclause (I);
25 and
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1 ‘‘(ii) for purposes of enforcing the re2
quirements of this paragraph, the author3
ity of the Corporation under—
4 ‘‘(I) section 10(c) to conduct in5
vestigations; and
6 ‘‘(II) subsections (b), (c), (d) and
7 (i) of section 8 to conduct enforce8
ment actions.
9 ‘‘(F) OTHER ACTIONS PRESERVED.—No
10 provision of this paragraph shall be construed
11 as barring any action otherwise available, under
12 the laws of the United States or any State, to
13 any Federal or State agency or individual.’’.
14 (b) ENFORCEMENT ORDERS.—Section 8(c) of the
15 Federal Deposit Insurance Act (12 U.S.C. 1818(c)) is
16 amended by adding at the end the following new para17
graph:
18 ‘‘(4) FALSE ADVERTISING OR MISUSE OF
19 NAMES TO INDICATE INSURED STATUS.—
20 ‘‘(A) TEMPORARY ORDER.—
21 ‘‘(i) IN GENERAL.—If a notice of
22 charges served under subsection (b)(1)
23 specifies on the basis of particular facts
24 that any person engaged or is engaging in
25 conduct described in section 18(a)(4), the
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1 Corporation or other appropriate Federal
2 banking agency may issue a temporary
3 order requiring—
4 ‘‘(I) the immediate cessation of
5 any activity or practice described,
6 which gave rise to the notice of
7 charges; and
8 ‘‘(II) affirmative action to pre9
vent any further, or to remedy any ex10
isting, violation.
11 ‘‘(ii) EFFECT OF ORDER.—Any tem12
porary order issued under this subpara13
graph shall take effect upon service.
14 ‘‘(B) EFFECTIVE PERIOD OF TEMPORARY
15 ORDER.—A temporary order issued under sub16
paragraph (A) shall remain effective and en17
forceable, pending the completion of an admin18
istrative proceeding pursuant to subsection
19 (b)(1) in connection with the notice of
20 charges—
21 ‘‘(i) until such time as the Corpora22
tion or other appropriate Federal banking
23 agency dismisses the charges specified in
24 such notice; or
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1 ‘‘(ii) if a cease-and-desist order is
2 issued against such person, until the effec3
tive date of such order.
4 ‘‘(C) CIVIL MONEY PENALTIES.—Any vio5
lation of section 18(a)(4) shall be subject to
6 civil money penalties, as set forth in subsection
7 (i), except that for any person other than an in8
sured depository institution or an institution-af9
filiated party that is found to have violated this
10 paragraph, the Corporation or other appro11
priate Federal banking agency shall not be re12
quired to demonstrate any loss to an insured
13 depository institution.’’.
14 (c) UNENFORCEABILITY OF CERTAIN AGREE15
MENTS.—Section 13(c) of the Federal Deposit Insurance
16 Act (12 U.S.C. 1823(c)) is amended by adding at the end
17 the following new paragraph:
18 ‘‘(11) UNENFORCEABILITY OF CERTAIN AGREE19
MENTS.—No provision contained in any existing or
20 future standstill, confidentiality, or other agreement
21 that, directly or indirectly—
22 ‘‘(A) affects, restricts, or limits the ability
23 of any person to offer to acquire or acquire,
24 ‘‘(B) prohibits any person from offering to
25 acquire or acquiring, or
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1 ‘‘(C) prohibits any person from using any
2 previously disclosed information in connection
3 with any such offer to acquire or acquisition of,
4 all or part of any insured depository institution, in5
cluding any liabilities, assets, or interest therein, in
6 connection with any transaction in which the Cor7
poration exercises its authority under section 11 or
8 13, shall be enforceable against or impose any liabil9
ity on such person, as such enforcement or liability
10 shall be contrary to public policy.’’.
11 (d) TECHNICAL AND CONFORMING AMENDMENTS.—
12 Section 18 of the Federal Deposit Insurance Act (12
13 U.S.C. 1828) is amended—
14 (1) in subsection (a)(3)—
15 (A) by striking ‘‘this subsection’’ the first
16 place that term appears and inserting ‘‘para17
graph (1)’’; and
18 (B) by striking ‘‘this subsection’’ the sec19
ond place that term appears and inserting
20 ‘‘paragraph (2)’’; and
21 (2) in the heading for subsection (a), by strik22
ing ‘‘INSURANCE LOGO.—’’ and inserting ‘‘REP23
RESENTATIONS OF DEPOSIT INSURANCE.—’’.
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1 SEC. 127. COOPERATION WITH THE FBI.
2 Any Federal financial regulatory agency shall cooper3
ate with the Federal Bureau of Investigation and other
4 law enforcement agencies investigating fraud, misrepre5
sentation, and malfeasance with respect to development,
6 advertising, and sale of financial products.
7 SEC. 128. ACCELERATION OF EFFECTIVE DATE.
8 Section 203 of the Financial Services Regulatory Re9
lief Act of 2006 (12 U.S.C. 461 note) is amended by strik10
ing ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.
11 SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHOR12
ITY.
13 (a) IN GENERAL.—Not later than 7 days after the
14 date on which the Board exercises its authority under the
15 third paragraph of section 13 of the Federal Reserve Act
16 (12 U.S.C. 343; relating to discounts for individuals, part17
nerships, and corporations) the Board shall provide to the
18 Committee on Banking, Housing, and Urban Affairs of
19 the Senate and the Committee on Financial Services of
20 the House of Representatives a report which includes—
21 (1) the justification for exercising the authority;
22 and
23 (2) the specific terms of the actions of the
24 Board, including the size and duration of the lend25
ing, available information concerning the value of
26 any collateral held with respect to such a loan, the
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1 recipient of warrants or any other potential equity in
2 exchange for the loan, and any expected cost to the
3 taxpayers for such exercise.
4 (b) PERIODIC UPDATES.—The Board shall provide
5 updates to the Committees specified in subsection (a) not
6 less frequently than once every 60 days while the subject
7 loan is outstanding, including—
8 (1) the status of the loan;
9 (2) the value of the collateral held by the Fed10
eral reserve bank which initiated the loan; and
11 (3) the projected cost to the taxpayers of the
12 loan.
13 (c) CONFIDENTIALITY.—The information submitted
14 to the Congress under this section may be kept confiden15
tial, upon the written request of the Chairman of the
16 Board, in which case it shall made available only to the
17 Chairpersons and Ranking Members of the Committees
18 described in subsection (a).
19 (d) APPLICABILITY.—The provisions of this section
20 shall be in force for all uses of the authority provided
21 under section 13 of the Federal Reserve Act occurring
22 during the period beginning on March 1, 2008 and ending
23 on the after the date of enactment of this Act, and reports
24 described in subsection (a) shall be required beginning not
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1 later than 30 days after that date of enactment, with re2
spect to any such exercise of authority.
3 (e) SHARING OF INFORMATION.—Any reports re4
quired under this section shall also be submitted to the
5 Congressional Oversight Panel established under section
6 125.
7 SEC. 130. TECHNICAL CORRECTIONS.
8 (a) IN GENERAL.—Section 128(b)(2) of the Truth in
9 Lending Act (15 U.S.C. 1638(b)(2)), as amended by sec10
tion 2502 of the Mortgage Disclosure Improvement Act
11 of 2008 (Public Law 110-289), is amended—
12 (1) in subparagraph (A), by striking ‘‘In the
13 case’’ and inserting ‘‘Except as provided in subpara14
graph (G), in the case’’; and
15 (2) by amending subparagraph (G) to read as
16 follows:
17 ‘‘(G)(i) In the case of an extension of cred18
it relating to a plan described in section
19 101(53D) of title 11, United States Code—
20 ‘‘(I) the requirements of subpara21
graphs (A) through (E) shall not apply;
22 and
23 ‘‘(II) a good faith estimate of the dis24
closures required under subsection (a) shall
25 be made in accordance with regulations of
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1 the Board under section 121(c) before
2 such credit is extended, or shall be deliv3
ered or placed in the mail not later than
4 3 business days after the date on which
5 the creditor receives the written application
6 of the consumer for such credit, whichever
7 is earlier.
8 ‘‘(ii) If a disclosure statement furnished
9 within 3 business days of the written applica10
tion (as provided under clause (i)(II)) contains
11 an annual percentage rate which is subse12
quently rendered inaccurate, within the mean13
ing of section 107(c), the creditor shall furnish
14 another disclosure statement at the time of set15
tlement or consummation of the transaction.’’.
16 (b) EFFECTIVE DATE.—The amendments made by
17 subsection (a) shall take effect as if included in the
18 amendments made by section 2502 of the Mortgage Dis19
closure Improvement Act of 2008 (Public Law 110-289).
20 SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSE21
MENT.
22 (a) REIMBURSEMENT.—The Secretary shall reim23
burse the Exchange Stabilization Fund established under
24 section 5302 of title 31, United States Code, for any funds
25 used for the temporary guaranty program for the United
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1 States money market mutual fund industry, from funds
2 under this Act.
3 (b) LIMITS ON USE OF EXCHANGE STABILIZATION
4 FUND.—The Secretary is prohibited from using the Ex5
change Stabilization Fund for the establishment of any
6 future guaranty programs for the United States money
7 market mutual fund industry.
8 SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC9
COUNTING.
10 (a) AUTHORITY.—The Securities and Exchange Com11
mission shall have the authority under the securities laws
12 (as such term is defined in section 3(a)(47) of the Securi13
ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to sus14
pend, by rule, regulation, or order, the application of
15 Statement Number 157 of the Financial Accounting
16 Standards Board for any issuer (as such term is defined
17 in section 3(a)(8) of such Act) or with respect to any class
18 or category of transaction if the Commission determines
19 that is necessary or appropriate in the public interest and
20 is consistent with the protection of investors.
21 (b) SAVINGS PROVISION.—Nothing in subsection (a)
22 shall be construed to restrict or limit any authority of the
23 Securities and Exchange Commission under securities
24 laws as in effect on the date of enactment of this Act.
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1 SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.
2 (a) STUDY.—The Securities and Exchange Commis3
sion, in consultation with the Board and the Secretary,
4 shall conduct a study on mark-to-market accounting
5 standards as provided in Statement Number 157 of the
6 Financial Accounting Standards Board, as such standards
7 are applicable to financial institutions, including deposi8
tory institutions. Such a study shall consider at a min9
imum—
10 (1) the effects of such accounting standards on
11 a financial institution’s balance sheet;
12 (2) the impacts of such accounting on bank fail13
ures in 2008;
14 (3) the impact of such standards on the quality
15 of financial information available to investors;
16 (4) the process used by the Financial Account17
ing Standards Board in developing accounting
18 standards;
19 (5) the advisability and feasibility of modifica20
tions to such standards; and
21 (6) alternative accounting standards to those
22 provided in such Statement Number 157.
23 (b) REPORT.—The Securities and Exchange Commis24
sion shall submit to Congress a report of such study before
25 the end of the 90-day period beginning on the date of the
26 enactment of this Act containing the findings and deter90
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1 minations of the Commission, including such administra2
tive and legislative recommendations as the Commission
3 determines appropriate.
4 SEC. 134. RECOUPMENT.
5 Upon the expiration of the 5-year period beginning
6 upon the date of the enactment of this Act, the Director
7 of the Office of Management and Budget, in consultation
8 with the Director of the Congressional Budget Office, shall
9 submit a report to the Congress on the net amount within
10 the Troubled Asset Relief Program under this Act. In any
11 case where there is a shortfall, the President shall submit
12 a legislative proposal that recoups from the financial in13
dustry an amount equal to the shortfall in order to ensure
14 that the Troubled Asset Relief Program does not add to
15 the deficit or national debt.
16 SEC. 135. PRESERVATION OF AUTHORITY.
17 With the exception of section 131, nothing in this Act
18 may be construed to limit the authority of the Secretary
19 or the Board under any other provision of law.
20 TITLE II—BUDGET-RELATED
21 PROVISIONS
22 SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT
23 AGENCIES.
24 Upon request, and to the extent otherwise consistent
25 with law, all information used by the Secretary in connec91
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1 tion with activities authorized under this Act (including
2 the records to which the Comptroller General is entitled
3 under this Act) shall be made available to congressional
4 support agencies (in accordance with their obligations to
5 support the Congress as set out in their authorizing stat6
utes) for the purposes of assisting the committees of Con7
gress with conducting oversight, monitoring, and analysis
8 of the activities authorized under this Act.
9 SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND
10 BUDGET AND THE CONGRESSIONAL BUDGET
11 OFFICE.
12 (a) REPORTS BY THE OFFICE OF MANAGEMENT AND
13 BUDGET.—Within 60 days of the first exercise of the au14
thority granted in section 101(a), but in no case later than
15 December 31, 2008, and semiannually thereafter, the Of16
fice of Management and Budget shall report to the Presi17
dent and the Congress—
18 (1) the estimate, notwithstanding section
19 502(5)(F) of the Federal Credit Reform Act of 1990
20 (2 U.S.C. 661a(5)(F)), as of the first business day
21 that is at least 30 days prior to the issuance of the
22 report, of the cost of the troubled assets, and guar23
antees of the troubled assets, determined in accord24
ance with section 123;
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1 (2) the information used to derive the estimate,
2 including assets purchased or guaranteed, prices
3 paid, revenues received, the impact on the deficit
4 and debt, and a description of any outstanding com5
mitments to purchase troubled assets; and
6 (3) a detailed analysis of how the estimate has
7 changed from the previous report.
8 Beginning with the second report under subsection (a), the
9 Office of Management and Budget shall explain the dif10
ferences between the Congressional Budget Office esti11
mates delivered in accordance with subsection (b) and
12 prior Office of Management and Budget estimates.
13 (b) REPORTS BY THE CONGRESSIONAL BUDGET OF14
FICE.—Within 45 days of receipt by the Congress of each
15 report from the Office of Management and Budget under
16 subsection (a), the Congressional Budget Office shall re17
port to the Congress the Congressional Budget Office’s
18 assessment of the report submitted by the Office of Man19
agement and Budget, including—
20 (1) the cost of the troubled assets and guaran21
tees of the troubled assets,
22 (2) the information and valuation methods used
23 to calculate such cost, and
24 (3) the impact on the deficit and the debt.
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1 (c) FINANCIAL EXPERTISE.—In carrying out the du2
ties in this subsection or performing analyses of activities
3 under this Act, the Director of the Congressional Budget
4 Office may employ personnel and procure the services of
5 experts and consultants.
6 (d) AUTHORIZATION OF APPROPRIATIONS.—There
7 are authorized to be appropriated such sums as may be
8 necessary to produce reports required by this section.
9 SEC. 203. ANALYSIS IN PRESIDENT’S BUDGET.
10 (a) IN GENERAL.—Section 1105(a) of title 31,
11 United States Code, is amended by adding at the end the
12 following new paragraph:
13 ‘‘(35) as supplementary materials, a separate
14 analysis of the budgetary effects for all prior fiscal
15 years, the current fiscal year, the fiscal year for
16 which the budget is submitted, and ensuing fiscal
17 years of the actions the Secretary of the Treasury
18 has taken or plans to take using any authority pro19
vided in the Emergency Economic Stabilization Act
20 of 2008, including—
21 ‘‘(A) an estimate of the current value of all
22 assets purchased, sold, and guaranteed under
23 the authority provided in the Emergency Eco24
nomic Stabilization Act of 2008 using method25
ology required by the Federal Credit Reform
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1 Act of 1990 (2 U.S.C. 661 et seq.) and section
2 123 of the Emergency Economic Stabilization
3 Act of 2008;
4 ‘‘(B) an estimate of the deficit, the debt
5 held by the public, and the gross Federal debt
6 using methodology required by the Federal
7 Credit Reform Act of 1990 and section 123 of
8 the Emergency Economic Stabilization Act of
9 2008;
10 ‘‘(C) an estimate of the current value of all
11 assets purchased, sold, and guaranteed under
12 the authority provided in the Emergency Eco13
nomic Stabilization Act of 2008 calculated on a
14 cash basis;
15 ‘‘(D) a revised estimate of the deficit, the
16 debt held by the public, and the gross Federal
17 debt, substituting the cash-based estimates in
18 subparagraph (C) for the estimates calculated
19 under subparagraph (A) pursuant to the Fed20
eral Credit Reform Act of 1990 and section 123
21 of the Emergency Economic Stabilization Act of
22 2008; and
23 ‘‘(E) the portion of the deficit which can
24 be attributed to any action taken by the Sec25
retary using authority provided by the Emer95
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1 gency Economic Stabilization Act of 2008 and
2 the extent to which the change in the deficit
3 since the most recent estimate is due to a re4
estimate using the methodology required by the
5 Federal Credit Reform Act of 1990 and section
6 123 of the Emergency Economic Stabilization
7 Act of 2008.’’
8 (b) CONSULTATION.—In implementing this section,
9 the Director of Office of Management and Budget shall
10 consult periodically, but at least annually, with the Com11
mittee on the Budget of the House of Representatives, the
12 Committee on the Budget of the Senate, and the Director
13 of the Congressional Budget Office.
14 (c) EFFECTIVE DATE.—This section and the amend15
ment made by this section shall apply beginning with re16
spect to the fiscal year 2010 budget submission of the
17 President.
18 SEC. 204. EMERGENCY TREATMENT.
19 All provisions of this Act are designated as an emer20
gency requirement and necessary to meet emergency needs
21 pursuant to section 204(a) of S. Con. Res 21 (110th Con22
gress), the concurrent resolution on the budget for fiscal
23 year 2008 and rescissions of any amounts provided in this
24 Act shall not be counted for purposes of budget enforce25
ment.
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1 TITLE III—TAX PROVISIONS
2 SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF
3 CERTAIN PREFERRED STOCK.
4 (a) IN GENERAL.—For purposes of the Internal Rev5
enue Code of 1986, gain or loss from the sale or exchange
6 of any applicable preferred stock by any applicable finan7
cial institution shall be treated as ordinary income or loss.
8 (b) APPLICABLE PREFERRED STOCK.—For purposes
9 of this section, the term ‘‘applicable preferred stock’’
10 means any stock—
11 (1) which is preferred stock in—
12 (A) the Federal National Mortgage Asso13
ciation, established pursuant to the Federal Na14
tional Mortgage Association Charter Act (12
15 U.S.C. 1716 et seq.), or
16 (B) the Federal Home Loan Mortgage
17 Corporation, established pursuant to the Fed18
eral Home Loan Mortgage Corporation Act (12
19 U.S.C. 1451 et seq.), and
20 (2) which—
21 (A) was held by the applicable financial in22
stitution on September 6, 2008, or
23 (B) was sold or exchanged by the applica24
ble financial institution on or after January 1,
25 2008, and before September 7, 2008.
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1 (c) APPLICABLE FINANCIAL INSTITUTION.—For pur2
poses of this section:
3 (1) IN GENERAL.—Except as provided in para4
graph (2), the term ‘‘applicable financial institution’’
5 means—
6 (A) a financial institution referred to in
7 section 582(c)(2) of the Internal Revenue Code
8 of 1986, or
9 (B) a depository institution holding com10
pany (as defined in section 3(w)(1) of the Fed11
eral Deposit Insurance Act (12 U.S.C.
12 1813(w)(1))).
13 (2) SPECIAL RULES FOR CERTAIN SALES.—In
14 the case of—
15 (A) a sale or exchange described in sub16
section (b)(2)(B), an entity shall be treated as
17 an applicable financial institution only if it was
18 an entity described in subparagraph (A) or (B)
19 of paragraph (1) at the time of the sale or ex20
change, and
21 (B) a sale or exchange after September 6,
22 2008, of preferred stock described in subsection
23 (b)(2)(A), an entity shall be treated as an appli24
cable financial institution only if it was an enti25
ty described in subparagraph (A) or (B) of
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1 paragraph (1) at all times during the period be2
ginning on September 6, 2008, and ending on
3 the date of the sale or exchange of the pre4
ferred stock.
5 (d) SPECIAL RULE FOR CERTAIN PROPERTY NOT
6 HELD ON SEPTEMBER 6, 2008.—The Secretary of the
7 Treasury or the Secretary’s delegate may extend the appli8
cation of this section to all or a portion of the gain or
9 loss from a sale or exchange in any case where—
10 (1) an applicable financial institution sells or
11 exchanges applicable preferred stock after Sep12
tember 6, 2008, which the applicable financial insti13
tution did not hold on such date, but the basis of
14 which in the hands of the applicable financial insti15
tution at the time of the sale or exchange is the
16 same as the basis in the hands of the person which
17 held such stock on such date, or
18 (2) the applicable financial institution is a part19
ner in a partnership which—
20 (A) held such stock on September 6, 2008,
21 and later sold or exchanged such stock, or
22 (B) sold or exchanged such stock during
23 the period described in subsection (b)(2)(B).
24 (e) REGULATORY AUTHORITY.—The Secretary of the
25 Treasury or the Secretary’s delegate may prescribe such
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1 guidance, rules, or regulations as are necessary to carry
2 out the purposes of this section.
3 (f) EFFECTIVE DATE.—This section shall apply to
4 sales or exchanges occurring after December 31, 2007, in
5 taxable years ending after such date.
6 SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECU7
TIVE COMPENSATION OF EMPLOYERS PAR8
TICIPATING IN THE TROUBLED ASSETS RE9
LIEF PROGRAM.
10 (a) DENIAL OF DEDUCTION.—Subsection (m) of sec11
tion 162 of the Internal Revenue Code of 1986 is amended
12 by adding at the end the following new paragraph:
13 ‘‘(5) SPECIAL RULE FOR APPLICATION TO EM14
PLOYERS PARTICIPATING IN THE TROUBLED ASSETS
15 RELIEF PROGRAM.—
16 ‘‘(A) IN GENERAL.—In the case of an ap17
plicable employer, no deduction shall be allowed
18 under this chapter—
19 ‘‘(i) in the case of executive remunera20
tion for any applicable taxable year which
21 is attributable to services performed by a
22 covered executive during such applicable
23 taxable year, to the extent that the amount
24 of such remuneration exceeds $500,000, or
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1 ‘‘(ii) in the case of deferred deduction
2 executive remuneration for any taxable
3 year for services performed during any ap4
plicable taxable year by a covered execu5
tive, to the extent that the amount of such
6 remuneration exceeds $500,000 reduced
7 (but not below zero) by the sum of—
8 ‘‘(I) the executive remuneration
9 for such applicable taxable year, plus
10 ‘‘(II) the portion of the deferred
11 deduction executive remuneration for
12 such services which was taken into ac13
count under this clause in a preceding
14 taxable year.
15 ‘‘(B) APPLICABLE EMPLOYER.—For pur16
poses of this paragraph—
17 ‘‘(i) IN GENERAL.—Except as pro18
vided in clause (ii), the term ‘applicable
19 employer’ means any employer from whom
20 1 or more troubled assets are acquired
21 under a program established by the Sec22
retary under section 101(a) of the Emer23
gency Economic Stabilization Act of 2008
24 if the aggregate amount of the assets so
101
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1 acquired for all taxable years exceeds
2 $300,000,000.
3 ‘‘(ii) DISREGARD OF CERTAIN ASSETS
4 SOLD THROUGH DIRECT PURCHASE.—If
5 the only sales of troubled assets by an em6
ployer under the program described in
7 clause (i) are through 1 or more direct
8 purchases (within the meaning of section
9 113(c) of the Emergency Economic Sta10
bilization Act of 2008), such assets shall
11 not be taken into account under clause (i)
12 in determining whether the employer is an
13 applicable employer for purposes of this
14 paragraph.
15 ‘‘(iii) AGGREGATION RULES.—Two or
16 more persons who are treated as a single
17 employer under subsection (b) or (c) of
18 section 414 shall be treated as a single em19
ployer, except that in applying section
20 1563(a) for purposes of either such sub21
section, paragraphs (2) and (3) thereof
22 shall be disregarded.
23 ‘‘(C) APPLICABLE TAXABLE YEAR.—For
24 purposes of this paragraph, the term ‘applicable
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1 taxable year’ means, with respect to any em2
ployer—
3 ‘‘(i) the first taxable year of the em4
ployer—
5 ‘‘(I) which includes any portion
6 of the period during which the au7
thorities under section 101(a) of the
8 Emergency Economic Stabilization
9 Act of 2008 are in effect (determined
10 under section 120 thereof), and
11 ‘‘(II) in which the aggregate
12 amount of troubled assets acquired
13 from the employer during the taxable
14 year pursuant to such authorities
15 (other than assets to which subpara16
graph (B)(ii) applies), when added to
17 the aggregate amount so acquired for
18 all preceding taxable years, exceeds
19 $300,000,000, and
20 ‘‘(ii) any subsequent taxable year
21 which includes any portion of such period.
22 ‘‘(D) COVERED EXECUTIVE.—For pur23
poses of this paragraph—
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1 ‘‘(i) IN GENERAL.—The term ‘covered
2 executive’ means, with respect to any ap3
plicable taxable year, any employee—
4 ‘‘(I) who, at any time during the
5 portion of the taxable year during
6 which the authorities under section
7 101(a) of the Emergency Economic
8 Stabilization Act of 2008 are in effect
9 (determined under section 120 there10
of), is the chief executive officer of the
11 applicable employer or the chief finan12
cial officer of the applicable employer,
13 or an individual acting in either such
14 capacity, or
15 ‘‘(II) who is described in clause
16 (ii).
17 ‘‘(ii) HIGHEST COMPENSATED EM18
PLOYEES.—An employee is described in
19 this clause if the employee is 1 of the 3
20 highest compensated officers of the appli21
cable employer for the taxable year (other
22 than an individual described in clause
23 (i)(I)), determined—
24 ‘‘(I) on the basis of the share25
holder disclosure rules for compensa104
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1 tion under the Securities Exchange
2 Act of 1934 (without regard to wheth3
er those rules apply to the employer),
4 and
5 ‘‘(II) by only taking into account
6 employees employed during the por7
tion of the taxable year described in
8 clause (i)(I).
9 ‘‘(iii) EMPLOYEE REMAINS COVERED
10 EXECUTIVE.—If an employee is a covered
11 executive with respect to an applicable em12
ployer for any applicable taxable year, such
13 employee shall be treated as a covered ex14
ecutive with respect to such employer for
15 all subsequent applicable taxable years and
16 for all subsequent taxable years in which
17 deferred deduction executive remuneration
18 with respect to services performed in all
19 such applicable taxable years would (but
20 for this paragraph) be deductible.
21 ‘‘(E) EXECUTIVE REMUNERATION.—For
22 purposes of this paragraph, the term ‘executive
23 remuneration’ means the applicable employee
24 remuneration of the covered executive, as deter25
mined under paragraph (4) without regard to
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1 subparagraphs (B), (C), and (D) thereof. Such
2 term shall not include any deferred deduction
3 executive remuneration with respect to services
4 performed in a prior applicable taxable year.
5 ‘‘(F) DEFERRED DEDUCTION EXECUTIVE
6 REMUNERATION.—For purposes of this para7
graph, the term ‘deferred deduction executive
8 remuneration’ means remuneration which would
9 be executive remuneration for services per10
formed in an applicable taxable year but for the
11 fact that the deduction under this chapter (de12
termined without regard to this paragraph) for
13 such remuneration is allowable in a subsequent
14 taxable year.
15 ‘‘(G) COORDINATION.—Rules similar to
16 the rules of subparagraphs (F) and (G) of para17
graph (4) shall apply for purposes of this para18
graph.
19 ‘‘(H) REGULATORY AUTHORITY.—The Sec20
retary may prescribe such guidance, rules, or
21 regulations as are necessary to carry out the
22 purposes of this paragraph and the Emergency
23 Economic Stabilization Act of 2008, including
24 the extent to which this paragraph applies in
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1 the case of any acquisition, merger, or reorga2
nization of an applicable employer.’’.
3 (b) GOLDEN PARACHUTE RULE.—Section 280G of
4 the Internal Revenue Code of 1986 is amended—
5 (1) by redesignating subsection (e) as sub6
section (f), and
7 (2) by inserting after subsection (d) the fol8
lowing new subsection:
9 ‘‘(e) SPECIAL RULE FOR APPLICATION TO EMPLOY10
ERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF
11 PROGRAM.—
12 ‘‘(1) IN GENERAL.—In the case of the sever13
ance from employment of a covered executive of an
14 applicable employer during the period during which
15 the authorities under section 101(a) of the Emer16
gency Economic Stabilization Act of 2008 are in ef17
fect (determined under section 120 of such Act), this
18 section shall be applied to payments to such execu19
tive with the following modifications:
20 ‘‘(A) Any reference to a disqualified indi21
vidual (other than in subsection (c)) shall be
22 treated as a reference to a covered executive.
23 ‘‘(B) Any reference to a change described
24 in subsection (b)(2)(A)(i) shall be treated as a
25 reference to an applicable severance from em107
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1 ployment of a covered executive, and any ref2
erence to a payment contingent on such a
3 change shall be treated as a reference to any
4 payment made during an applicable taxable
5 year of the employer on account of such appli6
cable severance from employment.
7 ‘‘(C) Any reference to a corporation shall
8 be treated as a reference to an applicable em9
ployer.
10 ‘‘(D) The provisions of subsections
11 (b)(2)(C), (b)(4), (b)(5), and (d)(5) shall not
12 apply.
13 ‘‘(2) DEFINITIONS AND SPECIAL RULES.—For
14 purposes of this subsection:
15 ‘‘(A) DEFINITIONS.—Any term used in
16 this subsection which is also used in section
17 162(m)(5) shall have the meaning given such
18 term by such section.
19 ‘‘(B) APPLICABLE SEVERANCE FROM EM20
PLOYMENT.—The term ‘applicable severance
21 from employment’ means any severance from
22 employment of a covered executive—
23 ‘‘(i) by reason of an involuntary ter24
mination of the executive by the employer,
25 or
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1 ‘‘(ii) in connection with any bank2
ruptcy, liquidation, or receivership of the
3 employer.
4 ‘‘(C) COORDINATION AND OTHER
5 RULES.—
6 ‘‘(i) IN GENERAL.—If a payment
7 which is treated as a parachute payment
8 by reason of this subsection is also a para9
chute payment determined without regard
10 to this subsection, this subsection shall not
11 apply to such payment.
12 ‘‘(ii) REGULATORY AUTHORITY.—The
13 Secretary may prescribe such guidance,
14 rules, or regulations as are necessary—
15 ‘‘(I) to carry out the purposes of
16 this subsection and the Emergency
17 Economic Stabilization Act of 2008,
18 including the extent to which this sub19
section applies in the case of any ac20
quisition, merger, or reorganization of
21 an applicable employer,
22 ‘‘(II) to apply this section and
23 section 4999 in cases where one or
24 more payments with respect to any in25
dividual are treated as parachute pay109
O:\AYO\AYO08C04.xml
1 ments by reason of this subsection,
2 and other payments with respect to
3 such individual are treated as para4
chute payments under this section
5 without regard to this subsection, and
6 ‘‘(III) to prevent the avoidance of
7 the application of this section through
8 the mischaracterization of a severance
9 from employment as other than an
10 applicable severance from employ11
ment.’’.
12 (c) EFFECTIVE DATES.—
13 (1) IN GENERAL.—The amendment made by
14 subsection (a) shall apply to taxable years ending on
15 or after the date of the enactment of this Act.
16 (2) GOLDEN PARACHUTE RULE.—The amend17
ments made by subsection (b) shall apply to pay18
ments with respect to severances occurring during
19 the period during which the authorities under sec20
tion 101(a) of this Act are in effect (determined
21 under section 120 of this Act).
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1 SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM
2 DISCHARGE OF QUALIFIED PRINCIPAL RESI3
DENCE INDEBTEDNESS.
4 (a) EXTENSION.—Subparagraph (E) of section
5 108(a)(1) of the Internal Revenue Code of 1986 is amend6
ed by striking ‘‘January 1, 2010’’ and inserting ‘‘January
7 1, 2013’’.
8 (b) EFFECTIVE DATE.—The amendment made by
9 this subsection shall apply to discharges of indebtedness
10 occurring on or after January 1, 2010.

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Bailout Draft Bill

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