Sunday, September 28, 2008

‘‘Emergency Economic Stabilization Act of 2008’’

O:\AYO\AYO08C04.xml

[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 llllllllllllll

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''.

2

O:\AYO\AYO08C04.xml

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.

3

O:\AYO\AYO08C04.xml

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—

4

O:\AYO\AYO08C04.xml

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

5

O:\AYO\AYO08C04.xml

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

6

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

8

O:\AYO\AYO08C04.xml

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

9

O:\AYO\AYO08C04.xml

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.—

10

O:\AYO\AYO08C04.xml

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.—

11

O:\AYO\AYO08C04.xml

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.

12

O:\AYO\AYO08C04.xml

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—

13

O:\AYO\AYO08C04.xml

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

14

O:\AYO\AYO08C04.xml

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—

15

O:\AYO\AYO08C04.xml

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—

16

O:\AYO\AYO08C04.xml

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

17

O:\AYO\AYO08C04.xml

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.

18

O:\AYO\AYO08C04.xml

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;

19

O:\AYO\AYO08C04.xml

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

20

O:\AYO\AYO08C04.xml

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

21

O:\AYO\AYO08C04.xml

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.

22

O:\AYO\AYO08C04.xml

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

23

O:\AYO\AYO08C04.xml

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—

24

O:\AYO\AYO08C04.xml

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.

25

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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.

39

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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.

50

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

52

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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.

55

O:\AYO\AYO08C04.xml

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.

56

O:\AYO\AYO08C04.xml

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;

57

O:\AYO\AYO08C04.xml

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

58

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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),

60

O:\AYO\AYO08C04.xml

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

61

O:\AYO\AYO08C04.xml

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.

62

O:\AYO\AYO08C04.xml

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

63

O:\AYO\AYO08C04.xml

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.

64

O:\AYO\AYO08C04.xml

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

65

O:\AYO\AYO08C04.xml

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.

66

O:\AYO\AYO08C04.xml

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).

67

O:\AYO\AYO08C04.xml

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

68

O:\AYO\AYO08C04.xml

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

69

O:\AYO\AYO08C04.xml

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

70

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

72

O:\AYO\AYO08C04.xml

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.

73

O:\AYO\AYO08C04.xml

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.

74

O:\AYO\AYO08C04.xml

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.

75

O:\AYO\AYO08C04.xml

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,

76

O:\AYO\AYO08C04.xml

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

77

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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,

79

O:\AYO\AYO08C04.xml

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

80

O:\AYO\AYO08C04.xml

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

81

O:\AYO\AYO08C04.xml

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

82

O:\AYO\AYO08C04.xml

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

83

O:\AYO\AYO08C04.xml

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.—''.

84

O:\AYO\AYO08C04.xml

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

85

O:\AYO\AYO08C04.xml

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

86

O:\AYO\AYO08C04.xml

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

87

O:\AYO\AYO08C04.xml

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

88

O:\AYO\AYO08C04.xml

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.

89

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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;

92

O:\AYO\AYO08C04.xml

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.

93

O:\AYO\AYO08C04.xml

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

94

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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.

96

O:\AYO\AYO08C04.xml

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.

97

O:\AYO\AYO08C04.xml

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

98

O:\AYO\AYO08C04.xml

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

99

O:\AYO\AYO08C04.xml

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

100

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

102

O:\AYO\AYO08C04.xml

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—

103

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

105

O:\AYO\AYO08C04.xml

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

106

O:\AYO\AYO08C04.xml

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

O:\AYO\AYO08C04.xml

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

108

O:\AYO\AYO08C04.xml

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).

110

O:\AYO\AYO08C04.xml

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.

No comments: