-
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

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

employ-
ers 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 facili-

4 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 fa-

8 cilities are used in a manner that--

9 (A) protects home values, college funds, re-

10 tirement accounts, and life savings;

11 (B) preserves homeownership

and pro-

12 motes jobs and economic growth;

13 (C) maximizes overall returns to the tax-

14 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 CON-

21 GRESS.--The term ''appropriate committees of Con-

22 gress'' means--

4

1 (A) the Committee on Banking, Housing,

2 and Urban Affairs, the Committee on Finance,

3 the Committee on the Budget, and the Com-

4 mittee on Appropriations of the Senate; and

5 (B) the Committee on Financial Services,

6 the Committee on Ways and Means, the Com-

7 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 Com-

14 mittee on Taxation.

15 (4) CORPORATION.--The term ''Corporation''

16 means the Federal Deposit Insurance Corporation.

17 (5) FINANCIAL INSTITUTION.--The term ''fi-

18 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 pos-

23 session of the United States, the District of Colum-

24 bia, Commonwealth of Puerto Rico, Commonwealth

25 of Northern Mariana Islands, Guam, American

5

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 Trou-

6 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 sec-

12 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 instru-

17 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 pur-

20 chase of which the Secretary determines pro-

21 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 Re-

25 serve System, determines the purchase of which

6

1 is necessary to promote financial market sta-

2 bility, but only upon transmittal of such deter-

3 mination, in writing, to the appropriate commit-

4 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 com-

12 mitments to purchase, troubled assets from any fi-

13 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 devel-

16 oped and published by the Secretary.

17 (2) COMMENCEMENT OF PROGRAM.--Establish-

18 ment of the policies and procedures and other simi-

19 lar administrative requirements imposed on the Sec-

20 retary by this Act are not intended to delay the com-

21 mencement of the TARP.

22 (3) ESTABLISHMENT OF TREASURY OFFICE.--

23 (A) IN GENERAL.--The Secretary shall im-

24 plement any program under paragraph

(1)

25 through an Office of Financial Stability, estab-

7

1 lished for such purpose within the Office of Do-

2 mestic Finance of the Department of the Treas-

3 ury, which office shall be headed by an Assist-

4 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 insert-

14 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 Direc-

22 tor of the Office of Thrift Supervision, and the Secretary

23 of Housing and Urban Development.

24 (c) NECESSARY ACTIONS.--The Secretary is author-

25 ized to take such actions as the Secretary deems necessary

8

1 to carry out the authorities in this Act, including, without

2 limitation, the following:

3 (1) The Secretary shall have direct hiring au-

4 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 finan-

10 cial agents of the Federal Government, and such in-

11 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 de-

16 signed to minimize cost to the taxpayers, estab-

17 lishing vehicles that are authorized, subject to super-

18 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

1 authority under this section or the end of the 45-day pe-

2 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 un-

14 just enrichment of financial institutions participating in

15 a program established under this section, including by pre-

16 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 as-

20 sets from a financial institution in conservatorship or re-

21 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

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 pro-

7 gram under this subsection, the Secretary may de-

8 velop guarantees of troubled assets and the associ-

9 ated premiums for such guarantees. Such guaran-

10 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 per-

16 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 estab-

23 lished under subsection (a).

24 (c) PREMIUMS.--

11

1 (1) IN GENERAL.--The Secretary shall collect

2 premiums from any financial institution partici-

3 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 pursu-

7 ant to paragraph (3).

8 (2) AUTHORITY TO BASE PREMIUMS ON PROD-

9 UCT RISK.--In establishing any premium under

10 paragraph (1), the Secretary may provide for vari-

11 ations in such rates according to the credit risk as-

12 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 participa-

17 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

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 be-

4 tween the total of the outstanding guaranteed obli-

5 gations and the balance in the Troubled Assets In-

6 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 estab-

11 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 Treas-

17 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

1 (1) protecting the interests of taxpayers

by

2 maximizing overall returns and minimizing the im-

3 pact on the national debt;

4 (2) providing stability and preventing disrup-

5 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 di-

11 rect purchase from an individual financial institu-

12 tion, the long-term viability of the financial institu-

13 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 dis-

17 crimination based on size, geography, form of orga-

18 nization, or the size, type, and number of assets eli-

19 gible for purchase under this Act;

20 (6) providing financial assistance to financial

21 institutions, including those serving low- and mod-

22 erate-income populations and other underserved

23 communities, and that have assets less

than

24 $1,000,000,000, that were well or adequately cap-

25 italized as of June 30, 2008, and that as a result

14

1 of the devaluation of the preferred government-spon-

2 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 Ameri-

11 cans by purchasing troubled assets held by or on be-

12 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 au-

15 thority shall not extend to any compensation ar-

16 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 Fi-

23 nancial Stability Oversight Board, which shall be respon-

24 sible for--

15

1 (1) reviewing the exercise of authority under a

2 program developed in accordance with this Act, in-

3 cluding--

4 (A) policies implemented by the Secretary

5 and the Office of Financial Stability created

6 under sections 101 and 102, including the ap-

7 pointment of financial agents, the designation

8 of asset classes to be purchased, and plans for

9 the structure of vehicles used to purchase trou-

10 bled assets; and

11 (B) the effect of such actions in assisting

12 American families in preserving home owner-

13 ship, stabilizing financial markets, and pro-

14 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, misrepresen-

19 tation, or malfeasance to the Special Inspector Gen-

20 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 Over-

24 sight Board shall be comprised of--

16

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 Devel-

9 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 Sec-

13 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 en-

21 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

1 (3) consistent with protecting taxpayers, in ac-

2 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 appro-

9 priate.

10 (g) REPORTS.--The Financial Stability Oversight

11 Board shall report to the appropriate committees of Con-

12 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 Over-

16 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 ac-

20 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

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 ex-

5 ercise of the authority granted in section 102, whichever

6 occurs first, and every 30-day period thereafter, the Sec-

7 retary shall report to the appropriate committees of Con-

8 gress, with respect to each such period--

9 (1) an overview of actions taken by the Sec-

10 retary, including the considerations required by sec-

11 tion 103 and the efforts under section 109;

12 (2) the actual obligation and expenditure of the

13 funds provided for administrative expenses by sec-

14 tion 118 during such period and the expected ex-

15 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, includ-

19 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

1 (F) operating expenses, including com-

2 pensation for financial agents;

3 (G) the valuation or pricing method used

4 for each transaction; and

5 (H) a description of the vehicles estab-

6 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, includ-

11 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 trans-

18 actions;

19 (D) a description of the impact of the exer-

20 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 bench-

25 marks yet to be achieved; and

20

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 sub-

5 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 in-

10 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 over-

18 the-counter swaps market and government-sponsored en-

19 terprises, and providing recommendations for improve-

20 ment, including--

21 (1) recommendations regarding--

22 (A) whether any participants in the finan-

23 cial markets that are currently outside the reg-

24 ulatory system should become subject to the

25 regulatory system; and

21

1 (B) enhancement of the clearing and set-

2 tlement of over-the-counter swaps; and

3 (2) the rationale underlying such recommenda-

4 tions.

5 (d) SHARING OF INFORMATION.--Any

report re-

6 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 ac-

12 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 AS-

18 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 Sec-

23 retary shall have authority to manage troubled assets pur-

24 chased under this Act, including revenues and portfolio

25 risks therefrom.

22

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 secu-

4 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 war-

10 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

AS-

14 SETS.--The authority of the Secretary to hold any trou-

15 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 be-

18 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

1 such determination, and the justification for such deter-

2 mination, shall be submitted to the Committees on Over-

3 sight and Government Reform and Financial Services of

4 the House of Representatives and the Committees on

5 Homeland Security and Governmental Affairs and Bank-

6 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, pur-

10 suant to subsection (a), waived any provision of the Fed-

11 eral Acquisition Regulation pertaining to minority con-

12 tracting, the Secretary shall develop and implement stand-

13 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 minority-

18 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 consult-

23 ants.

24 (c) ELIGIBILITY OF FDIC.--Notwithstanding sub-

25 sections (a) and (b), the Corporation--

24

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 se-

4 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

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 au-

8 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 Home-

11 owners Program under section 257 of the National Hous-

12 ing Act or other available programs to minimize fore-

13 closures. In addition, the Secretary may use loan guaran-

14 tees and credit enhancements to facilitate loan modifica-

15 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 securi-

19 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 Hous-

22 ing and Urban Development, and other Federal Govern-

23 ment entities that hold troubled assets to attempt to iden-

24 tify opportunities for the acquisition of classes of troubled

25 assets that will improve the ability of the Secretary to im-

26 prove the loan modification and restructuring process and,

26

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 residen-

4 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 main-

8 tain decent and safe conditions at the property.

9 (c) CONSENT TO REASONABLE LOAN MODIFICATION

10 REQUESTS.--Upon any request arising under existing in-

11 vestment contracts, the Secretary shall consent, where ap-

12 propriate, and considering net present value to the tax-

13 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

1 (B) the Corporation, with respect to resi-

2 dential mortgage loans and mortgage-backed se-

3 curities held by any bridge depository institu-

4 tion pursuant to section 11(n) of the Federal

5 Deposit Insurance Act; and

6 (C) the Board, with respect to any mort-

7 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 con-

11 trolled in connection with open market oper-

12 ations under section 14 of the Federal Reserve

13 Act (12 U.S.C. 353), or as collateral for an ad-

14 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

1 (1) IN GENERAL.--To the extent that the Fed-

2 eral property manager holds, owns, or controls mort-

3 gages, mortgage backed securities, and other assets

4 secured by residential real estate, including multi-

5 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 con-

9 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 residen-

14 tial mortgage loan, modifications made under para-

15 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, modifica-

21 tions made under paragraph (1) shall ensure--

22 (A) the continuation of any existing Fed-

23 eral, State, and local rental subsidies and pro-

24 tections; and

29

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 num-

12 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 re-

16 quired by this subsection, the Federal property man-

17 agers shall consult with one another and, to the ex-

18 tent possible, utilize consistent approaches to imple-

19 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

1 (1) encourage implementation by the

loan

2 servicers of loan modifications developed under sub-

3 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 appli-

9 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 Inter-

16 nal Revenue Code of 1986, as provided under the amend-

17 ment by section 302, as applicable.

18 (b) DIRECT PURCHASES.--

19 (1) IN GENERAL.--Where the Secretary deter-

20 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 Sec-

24 retary receives a meaningful equity or debt position

25 in the financial institution as a result of the trans-

31

1 action, the Secretary shall require that the financial

2 institution meet appropriate standards for executive

3 compensation and corporate governance. The stand-

4 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 in-

7 stitution.

8 (2) CRITERIA.--The standards required under

9 this subsection shall include--

10 (A) limits on compensation that exclude in-

11 centives for executive officers of a financial in-

12 stitution to take unnecessary and excessive

13 risks that threaten the value of the financial in-

14 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 fi-

18 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 institu-

24 tion making any golden parachute payment to

25 its senior executive officer during the period

32

1 that the Secretary holds an equity or debt posi-

2 tion in the financial institution.

3 (3) DEFINITION.--For purposes of this section,

4 the term ''senior executive officer'' means an indi-

5 vidual who is one of the top 5 executives of a public

6 company, whose compensated is required to be dis-

7 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 de-

11 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 ag-

14 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 offi-

17 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 effec-

22 tive upon issuance.

23 (d) SUNSET.--The provisions of subsection (c) shall

24 apply only to arrangements entered into during the period

33

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 to-

7 ward the establishment of similar programs by such au-

8 thorities and central banks. To the extent that such for-

9 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 trou-

12 bled assets qualify for purchase under section 101.

13 SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXI-

14 MIZATION OF BENEFITS FOR TAXPAYERS.

15 (a) LONG-TERM COSTS AND BENEFITS.--

16 (1) MINIMIZING NEGATIVE IMPACT.--The Sec-

17 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 as-

21 sets purchased, and the overall economic benefits of

22 the program, including economic benefits due to im-

23 provements in economic activity and the availability

24 of credit, the impact on the savings and pensions of

34

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 re-

6 sale for and until such time as the Secretary

7 determines that the market is optimal for sell-

8 ing such assets, in order to maximize the value

9 for taxpayers; and

10 (B) sell such assets at a price that the Sec-

11 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 par-

16 ticipate in purchases of troubled assets, and to in-

17 vest in financial institutions, consistent with the pro-

18 visions of this section.

19 (b) USE OF MARKET MECHANISMS.--In making pur-

20 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 tax-

25 payer resources by using market mechanisms, in-

35

1 cluding auctions or reverse auctions, where appro-

2 priate.

3 (c) DIRECT PURCHASES.--If the Secretary deter-

4 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 indi-

7 vidual financial institution, the Secretary shall pursue ad-

8 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 pur-

13 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 pur-

21 suant to section 15A of the Securities Exchange

22 Act of 1934 (15 U.S.C. 78o-3), a warrant giv-

23 ing the right to the Secretary to receive non-

24 voting common stock or preferred stock in such

36

1 financial institution, as the Secretary

deter-

2 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 in-

6 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 fol-

10 lowing requirements:

11 (A) PURPOSES.--Such terms and condi-

12 tions shall, at a minimum, be designed--

13 (i) to provide for reasonable participa-

14 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 instru-

18 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 in-

37

1 strument received under this subsection, based

2 on the conditions established under subpara-

3 graph (A).

4 (C) CONVERSION.--The warrant shall pro-

5 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 ex-

9 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 rep-

14 resenting securities to be received by the Sec-

15 retary under this subsection shall contain anti-

16 dilution provisions of the type employed in cap-

17 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, divi-

21 dends, and other distributions, mergers, and

22 other forms of reorganization or recapitaliza-

23 tion.

24 (E) EXERCISE PRICE.--The exercise price

25 for any warrant issued pursuant to this sub-

38

1 section shall be set by the Secretary, in the in-

2 terest of the taxpayers.

3 (F) SUFFICIENCY.--The financial institu-

4 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 suffi-

8 cient authorized shares, including preferred

9 shares that may carry dividend rights equal to

10 a multiple number of common shares, the Sec-

11 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 equiva-

14 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 es-

19 tablish de minimis exceptions to the require-

20 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

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 in-

5 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 ac-

13 quired under this Act, within 2 business days of purchase,

14 trade, or other disposition.

15 (b) DISCLOSURE.--For each type of financial institu-

16 tions that sells troubled assets to the Secretary under this

17 Act, the Secretary shall determine whether the public dis-

18 closure required for such financial institutions with re-

19 spect to off-balance sheet transactions, derivatives instru-

20 ments, contingent liabilities, and similar sources of poten-

21 tial exposure is adequate to provide to the public sufficient

22 information as to the true financial position of the institu-

23 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

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 trans-

16 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 resolu-

20 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 out-

26 standing at any one time shall be determined for purposes

41

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 exer-

6 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 addi-

14 tional amount.

15 (2) CONTENTS OF JOINT RESOLUTION.--For

16 the purpose of this section, the term ''joint resolu-

17 tion'' means only a joint resolution--

18 (A) that is introduced not later than 3 cal-

19 endar days after the date on which the report

20 of the plan of the Secretary referred to in sub-

21 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 obliga-

42

1 tions under the Emergency Economic Stabiliza-

2 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 REP-

10 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 Mem-

14 bers of the House that, pursuant to this section, the

15 House shall convene not later than the second cal-

16 endar day after receipt of such report;

17 (2) REPORTING AND DISCHARGE.--Any com-

18 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 resolu-

23 tion within that period, the committee shall be dis-

24 charged from further consideration of the joint reso-

43

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 resolu-

5 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 mo-

11 tion shall not be in order after the House has dis-

12 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 dis-

17 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 consider-

21 ation are waived. The previous question shall be con-

22 sidered as ordered on the joint resolution to its pas-

23 sage without intervening motion except two hours of

24 debate equally divided and controlled by the pro-

25 ponent and an opponent. A motion to reconsider the

44

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 lead-

7 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 intro-

13 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 begin-

19 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

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 debat-

6 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 resolu-

14 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 lead-

18 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 res-

23 olution is not in order.

24 (C) VOTE ON PASSAGE.--The vote on pas-

25 sage shall occur immediately following the con-

46

1 clusion of the debate on a joint resolution, and

2 a single quorum call at the conclusion of the de-

3 bate if requested in accordance with the rules of

4 the Senate.

5 (D) RULINGS OF THE CHAIR ON

PROCE-

6 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 re-

9 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 fol-

17 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

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-cal-

20 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 re-

48

1 ceives the veto message with respect to the

2 joint resolution shall be disregarded in

3 computing the 15-calendar day period de-

4 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, re-

14 spectively, and as such it is deemed a part of

15 the rules of each House, respectively, but appli-

16 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 constitu-

22 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

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 establish-

7 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 es-

14 tablished by the Secretary under this Act. The sub-

15 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

tax-

25 payers.

50

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 trans-

6 action type, frequency, size, prices paid, and all

7 other relevant terms and conditions, and the

8 timing, duration and terms of any future com-

9 mitments to purchase assets.

10 (D) Characteristics and disposition of ac-

11 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 in-

21 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 appli-

51

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 In-

5 stitutions Reform, Recovery, and Enhancement

6 Act of 1989 (12 U.S.C. 1811 note), women,

7 and minority- and women-owned businesses, in-

8 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 represent-

11 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 OVER-

17 SIGHT.--

18 (A) GAO PRESENCE.--The Secretary shall

19 provide the Comptroller General with appro-

20 priate space and facilities in the Department of

21 the Treasury as necessary to facilitate oversight

22 of the TARP until the termination date estab-

23 lished in section 120.

24 (B) ACCESS TO RECORDS.--To the extent

25 otherwise consistent with law, the Comptroller

52

1 General shall have access, upon request, to any

2 information, data, schedules, books, accounts,

3 financial records, reports, files, electronic com-

4 munications, or other papers, things, or prop-

5 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, employ-

8 ees, independent public accountants, financial

9 advisors, and other agents and representatives

10 of the TARP (as related to the agent or rep-

11 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 Gen-

14 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 ap-

21 propriate.

22 (C) REIMBURSEMENT OF COSTS.--The

23 Treasury shall reimburse the Government Ac-

24 countability Office for the full cost of any such

25 oversight activities as billed therefor by the

53

1 Comptroller General of the United States. Such

2 reimbursements shall be credited to the appro-

3 priation account ''Salaries and Expenses, Gov-

4 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 ac-

22 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 Account-

54

1 ability Office for the full cost of any such audit as

2 billed therefor by the Comptroller General. Such re-

3 imbursements shall be credited to the appropriation

4 account ''Salaries and Expenses, Government Ac-

5 countability Office'' current when the payment is re-

6 ceived and remain available until expended. The fi-

7 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, expendi-

12 tures, and financial transactions of the TARP and

13 any agents and representatives of the TARP (as re-

14 lated to the agent or representative's activities on

15 behalf of or under the authority of the TARP), in-

16 cluding vehicles established by the Secretary under

17 this Act.

18 (3) CORRECTIVE RESPONSES TO AUDIT PROB-

19 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 appro-

25 priate.

55

1 (c) INTERNAL CONTROL.--

2 (1) ESTABLISHMENT.--The TARP shall estab-

3 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 oper-

8 ations, including the use of the resources of the

9 TARP;

10 (B) the reliability of financial reporting, in-

11 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 an-

16 nual financial statement issued under this section,

17 the TARP shall--

18 (A) state the responsibility of management

19 for establishing and maintaining adequate in-

20 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

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 ac-

9 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 under-

16 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 Commis-

23 sion, the Secretary, and other Federal banking agen-

24 cies with respect to monitoring leverage and acting

25 to curtail excessive leveraging;

57

1 (2) an analysis of the authority of the Board to

2 regulate leverage, including by setting margin re-

3 quirements, and what process the Board used to de-

4 cide whether or not to use its authority;

5 (3) an analysis of any usage of the margin au-

6 thority by the Board; and

7 (4) recommendations for the Board and appro-

8 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 re-

17 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 secu-

24 rities issued under chapter 31 of title 31, United States

25 Code, and the purposes for which securities may be issued

58

1 under chapter 31 of title 31, United States Code, are ex-

2 tended to include actions authorized by this Act, including

3 the payment of administrative expenses. Any funds ex-

4 pended or obligated by the Secretary for actions author-

5 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 pur-

11 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 de-

59

1 nied by the court within 3 days of the date of

2 the request.

3 (C) PRELIMINARY INJUNCTION.--Any re-

4 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

re-

11 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 Proce-

19 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

1 other than as expressly provided in a written con-

2 tract with the Secretary.

3 (4) STAYS.--Any injunction or other form of

4 equitable relief issued against the Secretary for ac-

5 tions pursuant to section 101, 102, 106, and 109,

6 shall be automatically stayed. The stay shall be lift-

7 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 au-

18 thority of the Secretary pursuant to this Act shall

19 not impair the claims or defenses that would other-

20 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

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 hold-

6 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, in-

9 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 Sec-

15 retary, upon submission of a written certification to Con-

16 gress, may extend the authority provided under this Act

17 to expire not later than 2 years from the date of enact-

18 ment of this Act. Such certification shall include a jus-

19 tification of why the extension is necessary to assist Amer-

20 ican families and stabilize financial markets, as well as

21 the expected cost to the taxpayers for such an extension.

62

1 SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROU-

2 BLED ASSET RELIEF PROGRAM.

3 (a) OFFICE OF INSPECTOR GENERAL.--There

is

4 hereby established the Office of the Special Inspector Gen-

5 eral for the Troubled Asset Relief Program.

6 (b) APPOINTMENT OF INSPECTOR GENERAL; RE-

7 MOVAL.--(1) The head of the Office of the Special Inspec-

8 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 In-

11 spector General''), who shall be appointed by the Presi-

12 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 investiga-

17 tions.

18 (3) The nomination of an individual as Special In-

19 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

1 considered an employee who determines policies to be pur-

2 sued by the United States in the nationwide administra-

3 tion of Federal law.

4 (6) The annual rate of basic pay of the Special In-

5 spector General shall be the annual rate of basic pay pro-

6 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 pro-

14 gram established under section 102, including by col-

15 lecting and summarizing the following information:

16 (A) A description of the categories of troubled

17 assets purchased or otherwise procured by the Sec-

18 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

1 (D) A listing of each financial institution that

2 such troubled assets were purchased from.

3 (E) A listing of and detailed biographical infor-

4 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 trou-

9 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 con-

17 trols as the Special Inspector General considers appro-

18 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 du-

21 ties and responsibilities of inspectors general under the In-

22 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

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

RE-

7 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 In-

10 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 serv-

16 ices as authorized by section 3109 of title 5, United States

17 Code, at daily rates not to exceed the equivalent rate pre-

18 scribed for grade GS-15 of the General Schedule by sec-

19 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 nec-

24 essary to carry out the duties of the Inspector General.

66

1 (4)(A) Upon request of the Special Inspector General

2 for information or assistance from any department, agen-

3 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 informa-

6 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 Inspec-

19 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 pur-

22 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 infor-

25 mation collected under subsection (c)(1).

67

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 na-

7 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 estab-

12 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 Inspec-

20 tor General shall terminate on the later of--

21 (1) the date that the last troubled asset ac-

22 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

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 limita-

7 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 au-

14 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

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 cur-

6 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 be-

14 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 be-

18 fore the period at the end ''(or such higher per-

19 centage as the Board determines, in the discre-

20 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 para-

25 graph,''; and

70

1 (ii) by adding at the end the

fol-

2 lowing: ''Such actions may include making

3 payments, which shall be accepted as pay-

4 ment in full of all indebtedness under the

5 eligible mortgage, to any holder of an ex-

6 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 ''ad-

10 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 sec-

15 tion referred to as the ''Oversight Panel'') as an establish-

16 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 au-

24 thority under this Act, including with re-

71

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 informa-

7 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 mini-

13 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 Sec-

18 retary of the authority under section 101(a) or

19 102, and every 30 days thereafter.

20 (2) SPECIAL REPORT ON REGULATORY RE-

21 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 regu-

24 latory system and its effectiveness at overseeing the

25 participants in the financial system and protecting

72

1 consumers, and providing recommendations for im-

2 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

1 (2) PAY.--Each member of the Oversight Panel

2 shall each be paid at a rate equal to the daily equiv-

3 alent of the annual rate of basic pay for level I of

4 the Executive Schedule for each day (including trav-

5 el time) during which such member is engaged in

6 the actual performance of duties vested in the Com-

7 mission.

8 (3) PROHIBITION OF COMPENSATION

OF FED-

9 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 re-

12 ceive additional pay, allowances, or benefits by rea-

13 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

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 Over-

9 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 depart-

14 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 sec-

21 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

1 (2) POWERS OF MEMBERS AND AGENTS.--Any

2 member or agent of the Oversight Panel may, if au-

3 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

Over-

7 sight Panel may secure directly from any depart-

8 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 re-

14 ceive and consider all reports required to be sub-

15 mitted to the Oversight Panel under this Act.

16 (f) TERMINATION.--The Oversight Panel shall termi-

17 nate 6 months after the termination date specified in sec-

18 tion 120.

19 (g) FUNDING FOR EXPENSES.--

20 (1) AUTHORIZATION OF APPROPRIATIONS.--

21 There is authorized to be appropriated to the Over-

22 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

1 and half of which shall be derived from the contin-

2 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 Over-

8 sight Panel, from funds made available to the Sec-

9 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 De-

16 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 IN-

20 SURED STATUS.--

21 ''(A) PROHIBITION ON FALSE

ADVER-

22 TISING AND MISUSE OF FDIC NAMES.--No per-

23 son may represent or imply that any deposit li-

24 ability, obligation, certificate, or share is in-

25 sured or guaranteed by the Corporation, if such

77

1 deposit liability, obligation, certificate, or share

2 is not insured or guaranteed by the Corpora-

3 tion--

4 ''(i) by using the terms 'Federal De-

5 posit', 'Federal Deposit Insurance', 'Fed-

6 eral Deposit Insurance Corporation', any

7 combination of such terms, or the abbre-

8 viation 'FDIC' as part of the business

9 name or firm name of any person, includ-

10 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 adver-

15 tisement, solicitation, or other document.

16 ''(B) PROHIBITION ON MISREPRESENTA-

17 TIONS OF INSURED STATUS.--No person may

18 knowingly misrepresent--

19 ''(i) that any deposit liability, obliga-

20 tion, certificate, or share is insured, under

21 this Act, if such deposit liability, obliga-

22 tion, certificate, or share is not so insured;

23 or

24 ''(ii) the extent to which or the man-

25 ner in which any deposit liability, obliga-

78

1 tion, certificate, or share is insured under

2 this Act, if such deposit liability, obliga-

3 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 para-

9 graph by any person for which the agency is the

10 appropriate Federal banking agency, or any in-

11 stitution-affiliated party thereof.

12 ''(D) CORPORATION AUTHORITY IF

THE

13 APPROPRIATE FEDERAL BANKING AGENCY

14 FAILS TO FOLLOW RECOMMENDATION.--

15 ''(i) RECOMMENDATION.--The

Cor-

16 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 ap-

25 propriate Federal banking agency does not,

79

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 Corpora-

5 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 addi-

11 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 per-

18 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

1 ''(ii) for purposes of enforcing the re-

2 quirements of this paragraph, the author-

3 ity of the Corporation under--

4 ''(I) section 10(c) to conduct in-

5 vestigations; and

6 ''(II) subsections (b), (c), (d) and

7 (i) of section 8 to conduct enforce-

8 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 para-

17 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

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 pre-

9 vent any further, or to remedy any ex-

10 isting, violation.

11 ''(ii) EFFECT OF ORDER.--Any tem-

12 porary order issued under this subpara-

13 graph shall take effect upon service.

14 ''(B) EFFECTIVE PERIOD OF TEMPORARY

15 ORDER.--A temporary order issued under sub-

16 paragraph (A) shall remain effective and en-

17 forceable, pending the completion of an admin-

18 istrative proceeding pursuant to subsection

19 (b)(1) in connection with the notice of

20 charges--

21 ''(i) until such time as the Corpora-

22 tion or other appropriate Federal banking

23 agency dismisses the charges specified in

24 such notice; or

82

1 ''(ii) if a cease-and-desist order

is

2 issued against such person, until the effec-

3 tive date of such order.

4 ''(C) CIVIL MONEY PENALTIES.--Any vio-

5 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 in-

8 sured depository institution or an institution-af-

9 filiated party that is found to have violated this

10 paragraph, the Corporation or other

appro-

11 priate Federal banking agency shall not be re-

12 quired to demonstrate any loss to an insured

13 depository institution.''.

14 (c) UNENFORCEABILITY OF CERTAIN AGREE-

15 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 AGREE-

19 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

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, in-

5 cluding any liabilities, assets, or interest therein, in

6 connection with any transaction in which the Cor-

7 poration exercises its authority under section 11 or

8 13, shall be enforceable against or impose any liabil-

9 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 ''para-

17 graph (1)''; and

18 (B) by striking ''this subsection'' the sec-

19 ond place that term appears and

inserting

20 ''paragraph (2)''; and

21 (2) in the heading for subsection (a), by strik-

22 ing ''INSURANCE LOGO.--'' and inserting

''REP-

23 RESENTATIONS OF DEPOSIT INSURANCE.--''.

84

1 SEC. 127. COOPERATION WITH THE FBI.

2 Any Federal financial regulatory agency shall cooper-

3 ate with the Federal Bureau of Investigation and other

4 law enforcement agencies investigating fraud, misrepre-

5 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 Re-

9 lief Act of 2006 (12 U.S.C. 461 note) is amended by strik-

10 ing ''October 1, 2011'' and inserting ''October 1, 2008''.

11 SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHOR-

12 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, part-

17 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 lend-

25 ing, available information concerning the value of

26 any collateral held with respect to such a loan, the

85

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 Fed-

10 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 confiden-

15 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

1 later than 30 days after that date of enactment, with re-

2 spect to any such exercise of authority.

3 (e) SHARING OF INFORMATION.--Any reports re-

4 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 sec-

10 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 subpara-

14 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 cred-

18 it relating to a plan described in

section

19 101(53D) of title 11, United States Code--

20 ''(I) the requirements of

subpara-

21 graphs (A) through (E) shall not apply;

22 and

23 ''(II) a good faith estimate of the dis-

24 closures required under subsection (a) shall

25 be made in accordance with regulations of

87

1 the Board under section 121(c) before

2 such credit is extended, or shall be deliv-

3 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 applica-

10 tion (as provided under clause (i)(II)) contains

11 an annual percentage rate which is subse-

12 quently rendered inaccurate, within the mean-

13 ing of section 107(c), the creditor shall furnish

14 another disclosure statement at the time of set-

15 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 Dis-

19 closure Improvement Act of 2008 (Public Law 110-289).

20 SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSE-

21 MENT.

22 (a) REIMBURSEMENT.--The Secretary shall reim-

23 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

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 Ex-

5 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 AC-

9 COUNTING.

10 (a) AUTHORITY.--The Securities and Exchange Com-

11 mission shall have the authority under the securities laws

12 (as such term is defined in section 3(a)(47) of the Securi-

13 ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to sus-

14 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

1 SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.

2 (a) STUDY.--The Securities and Exchange Commis-

3 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 deposi-

8 tory institutions. Such a study shall consider at a min-

9 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 fail-

13 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 Account-

17 ing Standards Board in developing

accounting

18 standards;

19 (5) the advisability and feasibility of modifica-

20 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 Commis-

24 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 deter-

90

1 minations of the Commission, including such administra-

2 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 in-

13 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 SE