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Thursday, October 2, 2008, 3:00 AM H.R. 1424: Bailout Bill, Part 1
AMENDMENT NO.llll Calendar No.lll
Purpose: In the nature of a substitute.
IN THE SENATE OF THE UNITED STATES--110th Cong., 2d Sess.
H. R. 1424
To amend section 712 of the Employee Retirement Income
Security Act of 1974, section 2705 of the Public Health
Service Act, section 9812 of the Internal Revenue Code
of 1986 to require equity in the provision of mental
health and substance-related disorder benefits under
group health plans, to prohibit discrimination on the
basis of genetic information with respect to health insur-
ance and employment, and for other purposes.
Referred to the Committee on llllllllll and
ordered to be printed
Ordered to lie on the table and to be printed
AMENDMENT IN THE NATURE OF A SUBSTITUTE intended
to be proposed by lllllll
Viz:
1 Strike all after the enacting clause and insert the fol-
2 lowing:
2
1 DIVISION A--EMERGENCY
2 ECONOMIC STABILIZATION
3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
4 (a) SHORT TITLE.--This division may be cited as the
5 ``Emergency Economic Stabilization Act of 2008''.
6 (b) TABLE OF CONTENTS.--The table of contents for
7 this division is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.
TITLE I--TROUBLED ASSETS RELIEF PROGRAM
Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 106. Rights; management; sale of troubled assets; revenues and sale pro-
ceeds.
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 tax-
payers.
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.
3
Sec. 133. Study on mark-to-market accounting.
Sec. 134. Recoupment.
Sec. 135. Preservation of authority.
Sec. 136. Temporary increase in deposit and share insurance coverage.
TITLE II--BUDGET-RELATED PROVISIONS
Sec. 201. Information for congressional support agencies.
Sec. 202. Reports by the Office of Management and Budget and the Congres-
sional Budget Office.
Sec. 203. Analysis in President's Budget.
Sec. 204. Emergency treatment.
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.
4
1 SEC. 3. DEFINITIONS.
2 For purposes of this Act, the following definitions
3 shall apply:
4 (1) APPROPRIATE COMMITTEES OF CON-
5 GRESS.--The term ``appropriate committees of Con-
6 gress'' means--
7 (A) the Committee on Banking, Housing,
8 and Urban Affairs, the Committee on Finance,
9 the Committee on the Budget, and the Com-
10 mittee on Appropriations of the Senate; and
11 (B) the Committee on Financial Services,
12 the Committee on Ways and Means, the Com-
13 mittee on the Budget, and the Committee on
14 Appropriations of the House of Representatives.
15 (2) BOARD.--The term ``Board'' means the
16 Board of Governors of the Federal Reserve System.
17 (3) CONGRESSIONAL SUPPORT AGENCIES.--The
18 term ``congressional support agencies'' means the
19 Congressional Budget Office and the Joint Com-
20 mittee on Taxation.
21 (4) CORPORATION.--The term ``Corporation''
22 means the Federal Deposit Insurance Corporation.
23 (5) FINANCIAL INSTITUTION.--The term ``fi-
24 nancial institution'' means any institution, including,
25 but not limited to, any bank, savings association,
26 credit union, security broker or dealer, or insurance
5
1 company, established and regulated under the laws
2 of the United States or any State, territory, or pos-
3 session of the United States, the District of Colum-
4 bia, Commonwealth of Puerto Rico, Commonwealth
5 of Northern Mariana Islands, Guam, American
6 Samoa, or the United States Virgin Islands, and
7 having significant operations in the United States,
8 but excluding any central bank of, or institution
9 owned by, a foreign government.
10 (6) FUND.--The term ``Fund'' means the Trou-
11 bled Assets Insurance Financing Fund established
12 under section 102.
13 (7) SECRETARY.--The term ``Secretary'' means
14 the Secretary of the Treasury.
15 (8) TARP.--The term ``TARP'' means the
16 Troubled Asset Relief Program established under
17 section 101.
18 (9) TROUBLED ASSETS.--The term ``troubled
19 assets'' means--
20 (A) residential or commercial mortgages
21 and any securities, obligations, or other instru-
22 ments that are based on or related to such
23 mortgages, that in each case was originated or
24 issued on or before March 14, 2008, the pur-
6
1 chase of which the Secretary determines pro-
2 motes financial market stability; and
3 (B) any other financial instrument that the
4 Secretary, after consultation with the Chairman
5 of the Board of Governors of the Federal Re-
6 serve System, determines the purchase of which
7 is necessary to promote financial market sta-
8 bility, but only upon transmittal of such deter-
9 mination, in writing, to the appropriate commit-
10 tees of Congress.
11 TITLE I--TROUBLED ASSETS
12 RELIEF PROGRAM
13 SEC. 101. PURCHASES OF TROUBLED ASSETS.
14 (a) OFFICES; AUTHORITY.--
15 (1) AUTHORITY.--The Secretary is authorized
16 to establish the Troubled Asset Relief Program (or
17 ``TARP'') to purchase, and to make and fund com-
18 mitments to purchase, troubled assets from any fi-
19 nancial institution, on such terms and conditions as
20 are determined by the Secretary, and in accordance
21 with this Act and the policies and procedures devel-
22 oped and published by the Secretary.
23 (2) COMMENCEMENT OF PROGRAM.--Establish-
24 ment of the policies and procedures and other simi-
25 lar administrative requirements imposed on the Sec-
7
1 retary by this Act are not intended to delay the com-
2 mencement of the TARP.
3 (3) ESTABLISHMENT OF TREASURY OFFICE.--
4 (A) IN GENERAL.--The Secretary shall im-
5 plement any program under paragraph (1)
6 through an Office of Financial Stability, estab-
7 lished for such purpose within the Office of Do-
8 mestic Finance of the Department of the Treas-
9 ury, which office shall be headed by an Assist-
10 ant Secretary of the Treasury, appointed by the
11 President, by and with the advice and consent
12 of the Senate, except that an interim Assistant
13 Secretary may be appointed by the Secretary.
14 (B) CLERICAL AMENDMENTS.--
15 (i) TITLE 5.--Section 5315 of title 5,
16 United States Code, is amended in the
17 item relating to Assistant Secretaries of
18 the Treasury, by striking ``(9)'' and insert-
19 ing ``(10)''.
20 (ii) TITLE 31.--Section 301(e) of title
21 31, United States Code, is amended by
22 striking ``9'' and inserting ``10''.
23 (b) CONSULTATION.--In exercising the authority
24 under this section, the Secretary shall consult with the
25 Board, the Corporation, the Comptroller of the Currency,
8
1 the Director of the Office of Thrift Supervision, and the
2 Secretary of Housing and Urban Development.
3 (c) NECESSARY ACTIONS.--The Secretary is author-
4 ized to take such actions as the Secretary deems necessary
5 to carry out the authorities in this Act, including, without
6 limitation, the following:
7 (1) The Secretary shall have direct hiring au-
8 thority with respect to the appointment of employees
9 to administer this Act.
10 (2) Entering into contracts, including contracts
11 for services authorized by section 3109 of title 5,
12 United States Code.
13 (3) Designating financial institutions as finan-
14 cial agents of the Federal Government, and such in-
15 stitutions shall perform all such reasonable duties
16 related to this Act as financial agents of the Federal
17 Government as may be required.
18 (4) In order to provide the Secretary with the
19 flexibility to manage troubled assets in a manner de-
20 signed to minimize cost to the taxpayers, estab-
21 lishing vehicles that are authorized, subject to super-
22 vision by the Secretary, to purchase, hold, and sell
23 troubled assets and issue obligations.
9
1 (5) Issuing such regulations and other guidance
2 as may be necessary or appropriate to define terms
3 or carry out the authorities or purposes of this Act.
4 (d) PROGRAM GUIDELINES.--Before the earlier of
5 the end of the 2-business-day period beginning on the date
6 of the first purchase of troubled assets pursuant to the
7 authority under this section or the end of the 45-day pe-
8 riod beginning on the date of enactment of this Act, the
9 Secretary shall publish program guidelines, including the
10 following:
11 (1) Mechanisms for purchasing troubled assets.
12 (2) Methods for pricing and valuing troubled
13 assets.
14 (3) Procedures for selecting asset managers.
15 (4) Criteria for identifying troubled assets for
16 purchase.
17 (e) PREVENTING UNJUST ENRICHMENT.--In making
18 purchases under the authority of this Act, the Secretary
19 shall take such steps as may be necessary to prevent un-
20 just enrichment of financial institutions participating in
21 a program established under this section, including by pre-
22 venting the sale of a troubled asset to the Secretary at
23 a higher price than what the seller paid to purchase the
24 asset. This subsection does not apply to troubled assets
25 acquired in a merger or acquisition, or a purchase of as-
10
1 sets from a financial institution in conservatorship or re-
2 ceivership, or that has initiated bankruptcy proceedings
3 under title 11, United States Code.
4 SEC. 102. INSURANCE OF TROUBLED ASSETS.
5 (a) AUTHORITY.--
6 (1) IN GENERAL.--If the Secretary establishes
7 the program authorized under section 101, then the
8 Secretary shall establish a program to guarantee
9 troubled assets originated or issued prior to March
10 14, 2008, including mortgage-backed securities.
11 (2) GUARANTEES.--In establishing any pro-
12 gram under this subsection, the Secretary may de-
13 velop guarantees of troubled assets and the associ-
14 ated premiums for such guarantees. Such guaran-
15 tees and premiums may be determined by category
16 or class of the troubled assets to be guaranteed.
17 (3) EXTENT OF GUARANTEE.--Upon request of
18 a financial institution, the Secretary may guarantee
19 the timely payment of principal of, and interest on,
20 troubled assets in amounts not to exceed 100 per-
21 cent of such payments. Such guarantee may be on
22 such terms and conditions as are determined by the
23 Secretary, provided that such terms and conditions
24 are consistent with the purposes of this Act.
11
1 (b) REPORTS.--Not later than 90 days after the date
2 of enactment of this Act, the Secretary shall report to the
3 appropriate committees of Congress on the program estab-
4 lished under subsection (a).
5 (c) PREMIUMS.--
6 (1) IN GENERAL.--The Secretary shall collect
7 premiums from any financial institution partici-
8 pating in the program established under subsection
9 (a). Such premiums shall be in an amount that the
10 Secretary determines necessary to meet the purposes
11 of this Act and to provide sufficient reserves pursu-
12 ant to paragraph (3).
13 (2) AUTHORITY TO BASE PREMIUMS ON PROD-
14 UCT RISK.--In establishing any premium under
15 paragraph (1), the Secretary may provide for vari-
16 ations in such rates according to the credit risk as-
17 sociated with the particular troubled asset that is
18 being guaranteed. The Secretary shall publish the
19 methodology for setting the premium for a class of
20 troubled assets together with an explanation of the
21 appropriateness of the class of assets for participa-
22 tion in the program established under this section.
23 The methodology shall ensure that the premium is
24 consistent with paragraph (3).
12
1 (3) MINIMUM LEVEL.--The premiums referred
2 to in paragraph (1) shall be set by the Secretary at
3 a level necessary to create reserves sufficient to meet
4 anticipated claims, based on an actuarial analysis,
5 and to ensure that taxpayers are fully protected.
6 (4) ADJUSTMENT TO PURCHASE AUTHORITY.--
7 The purchase authority limit in section 115 shall be
8 reduced by an amount equal to the difference be-
9 tween the total of the outstanding guaranteed obli-
10 gations and the balance in the Troubled Assets In-
11 surance Financing Fund.
12 (d) TROUBLED ASSETS INSURANCE FINANCING
13 FUND.--
14 (1) DEPOSITS.--The Secretary shall deposit
15 fees collected under this section into the Fund estab-
16 lished under paragraph (2).
17 (2) ESTABLISHMENT.--There is established a
18 Troubled Assets Insurance Financing Fund that
19 shall consist of the amounts collected pursuant to
20 paragraph (1), and any balance in such fund shall
21 be invested by the Secretary in United States Treas-
22 ury securities, or kept in cash on hand or on deposit,
23 as necessary.
24 (3) PAYMENTS FROM FUND.--The Secretary
25 shall make payments from amounts deposited in the
13
1 Fund to fulfill obligations of the guarantees provided
2 to financial institutions under subsection (a).
3 SEC. 103. CONSIDERATIONS.
4 In exercising the authorities granted in this Act, the
5 Secretary shall take into consideration--
6 (1) protecting the interests of taxpayers by
7 maximizing overall returns and minimizing the im-
8 pact on the national debt;
9 (2) providing stability and preventing disrup-
10 tion to financial markets in order to limit the impact
11 on the economy and protect American jobs, savings,
12 and retirement security;
13 (3) the need to help families keep their homes
14 and to stabilize communities;
15 (4) in determining whether to engage in a di-
16 rect purchase from an individual financial institu-
17 tion, the long-term viability of the financial institu-
18 tion in determining whether the purchase represents
19 the most efficient use of funds under this Act;
20 (5) ensuring that all financial institutions are
21 eligible to participate in the program, without dis-
22 crimination based on size, geography, form of orga-
23 nization, or the size, type, and number of assets eli-
24 gible for purchase under this Act;
14
1 (6) providing financial assistance to financial
2 institutions, including those serving low- and mod-
3 erate-income populations and other underserved
4 communities, and that have assets less than
5 $1,000,000,000, that were well or adequately cap-
6 italized as of June 30, 2008, and that as a result
7 of the devaluation of the preferred government-spon-
8 sored enterprises stock will drop one or more capital
9 levels, in a manner sufficient to restore the financial
10 institutions to at least an adequately capitalized
11 level;
12 (7) the need to ensure stability for United
13 States public instrumentalities, such as counties and
14 cities, that may have suffered significant increased
15 costs or losses in the current market turmoil;
16 (8) protecting the retirement security of Ameri-
17 cans by purchasing troubled assets held by or on be-
18 half of an eligible retirement plan described in clause
19 (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the
20 Internal Revenue Code of 1986, except that such au-
21 thority shall not extend to any compensation ar-
22 rangements subject to section 409A of such Code;
23 and
15
1 (9) the utility of purchasing other real estate
2 owned and instruments backed by mortgages on
3 multifamily properties.
4 SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.
5 (a) ESTABLISHMENT.--There is established the Fi-
6 nancial Stability Oversight Board, which shall be respon-
7 sible for--
8 (1) reviewing the exercise of authority under a
9 program developed in accordance with this Act, in-
10 cluding--
11 (A) policies implemented by the Secretary
12 and the Office of Financial Stability created
13 under sections 101 and 102, including the ap-
14 pointment of financial agents, the designation
15 of asset classes to be purchased, and plans for
16 the structure of vehicles used to purchase trou-
17 bled assets; and
18 (B) the effect of such actions in assisting
19 American families in preserving home owner-
20 ship, stabilizing financial markets, and pro-
21 tecting taxpayers;
22 (2) making recommendations, as appropriate, to
23 the Secretary regarding use of the authority under
24 this Act; and
16
1 (3) reporting any suspected fraud, misrepresen-
2 tation, or malfeasance to the Special Inspector Gen-
3 eral for the Troubled Assets Relief Program or the
4 Attorney General of the United States, consistent
5 with section 535(b) of title 28, United States Code.
6 (b) MEMBERSHIP.--The Financial Stability Over-
7 sight Board shall be comprised of--
8 (1) the Chairman of the Board of Governors of
9 the Federal Reserve System;
10 (2) the Secretary;
11 (3) the Director of the Federal Housing Fi-
12 nance Agency;
13 (4) the Chairman of the Securities Exchange
14 Commission; and
15 (5) the Secretary of Housing and Urban Devel-
16 opment.
17 (c) CHAIRPERSON.--The chairperson of the Financial
18 Stability Oversight Board shall be elected by the members
19 of the Board from among the members other than the Sec-
20 retary.
21 (d) MEETINGS.--The Financial Stability Oversight
22 Board shall meet 2 weeks after the first exercise of the
23 purchase authority of the Secretary under this Act, and
24 monthly thereafter.
17
1 (e) ADDITIONAL AUTHORITIES.--In addition to the
2 responsibilities described in subsection (a), the Financial
3 Stability Oversight Board shall have the authority to en-
4 sure that the policies implemented by the Secretary are--
5 (1) in accordance with the purposes of this Act;
6 (2) in the economic interests of the United
7 States; and
8 (3) consistent with protecting taxpayers, in ac-
9 cordance with section 113(a).
10 (f) CREDIT REVIEW COMMITTEE.--The Financial
11 Stability Oversight Board may appoint a credit review
12 committee for the purpose of evaluating the exercise of
13 the purchase authority provided under this Act and the
14 assets acquired through the exercise of such authority, as
15 the Financial Stability Oversight Board determines appro-
16 priate.
17 (g) REPORTS.--The Financial Stability Oversight
18 Board shall report to the appropriate committees of Con-
19 gress and the Congressional Oversight Panel established
20 under section 125, not less frequently than quarterly, on
21 the matters described under subsection (a)(1).
22 (h) TERMINATION.--The Financial Stability Over-
23 sight Board, and its authority under this section, shall ter-
24 minate on the expiration of the 15-day period beginning
25 upon the later of--
18
1 (1) the date that the last troubled asset ac-
2 quired by the Secretary under section 101 has been
3 sold or transferred out of the ownership or control
4 of the Federal Government; or
5 (2) the date of expiration of the last insurance
6 contract issued under section 102.
7 SEC. 105. REPORTS.
8 (a) IN GENERAL.--Before the expiration of the 60-
9 day period beginning on the date of the first exercise of
10 the authority granted in section 101(a), or of the first ex-
11 ercise of the authority granted in section 102, whichever
12 occurs first, and every 30-day period thereafter, the Sec-
13 retary shall report to the appropriate committees of Con-
14 gress, with respect to each such period--
15 (1) an overview of actions taken by the Sec-
16 retary, including the considerations required by sec-
17 tion 103 and the efforts under section 109;
18 (2) the actual obligation and expenditure of the
19 funds provided for administrative expenses by sec-
20 tion 118 during such period and the expected ex-
21 penditure of such funds in the subsequent period;
22 and
23 (3) a detailed financial statement with respect
24 to the exercise of authority under this Act, includ-
25 ing--
19
1 (A) all agreements made or renewed;
2 (B) all insurance contracts entered into
3 pursuant to section 102;
4 (C) all transactions occurring during such
5 period, including the types of parties involved;
6 (D) the nature of the assets purchased;
7 (E) all projected costs and liabilities;
8 (F) operating expenses, including com-
9 pensation for financial agents;
10 (G) the valuation or pricing method used
11 for each transaction; and
12 (H) a description of the vehicles estab-
13 lished to exercise such authority.
14 (b) TRANCHE REPORTS TO CONGRESS.--
15 (1) REPORTS.--The Secretary shall provide to
16 the appropriate committees of Congress, at the times
17 specified in paragraph (2), a written report, includ-
18 ing--
19 (A) a description of all of the transactions
20 made during the reporting period;
21 (B) a description of the pricing mechanism
22 for the transactions;
23 (C) a justification of the price paid for and
24 other financial terms associated with the trans-
25 actions;
20
1 (D) a description of the impact of the exer-
2 cise of such authority on the financial system,
3 supported, to the extent possible, by specific
4 data;
5 (E) a description of challenges that remain
6 in the financial system, including any bench-
7 marks yet to be achieved; and
8 (F) an estimate of additional actions under
9 the authority provided under this Act that may
10 be necessary to address such challenges.
11 (2) TIMING.--The report required by this sub-
12 section shall be submitted not later than 7 days
13 after the date on which commitments to purchase
14 troubled assets under the authorities provided in this
15 Act first reach an aggregate of $50,000,000,000 and
16 not later than 7 days after each $50,000,000,000 in-
17 terval of such commitments is reached thereafter.
18 (c) REGULATORY MODERNIZATION REPORT.--The
19 Secretary shall review the current state of the financial
20 markets and the regulatory system and submit a written
21 report to the appropriate committees of Congress not later
22 than April 30, 2009, analyzing the current state of the
23 regulatory system and its effectiveness at overseeing the
24 participants in the financial markets, including the over-
25 the-counter swaps market and government-sponsored en-
21
1 terprises, and providing recommendations for improve-
2 ment, including--
3 (1) recommendations regarding--
4 (A) whether any participants in the finan-
5 cial markets that are currently outside the reg-
6 ulatory system should become subject to the
7 regulatory system; and
8 (B) enhancement of the clearing and set-
9 tlement of over-the-counter swaps; and
10 (2) the rationale underlying such recommenda-
11 tions.
12 (d) SHARING OF INFORMATION.--Any report re-
13 quired under this section shall also be submitted to the
14 Congressional Oversight Panel established under section
15 125.
16 (e) SUNSET.--The reporting requirements under this
17 section shall terminate on the later of--
18 (1) the date that the last troubled asset ac-
19 quired by the Secretary under section 101 has been
20 sold or transferred out of the ownership or control
21 of the Federal Government; or
22 (2) the date of expiration of the last insurance
23 contract issued under section 102.
22
1 SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED AS-
2 SETS; REVENUES AND SALE PROCEEDS.
3 (a) EXERCISE OF RIGHTS.--The Secretary may, at
4 any time, exercise any rights received in connection with
5 troubled assets purchased under this Act.
6 (b) MANAGEMENT OF TROUBLED ASSETS.--The Sec-
7 retary shall have authority to manage troubled assets pur-
8 chased under this Act, including revenues and portfolio
9 risks therefrom.
10 (c) SALE OF TROUBLED ASSETS.--The Secretary
11 may, at any time, upon terms and conditions and at a
12 price determined by the Secretary, sell, or enter into secu-
13 rities loans, repurchase transactions, or other financial
14 transactions in regard to, any troubled asset purchased
15 under this Act.
16 (d) TRANSFER TO TREASURY.--Revenues of, and
17 proceeds from the sale of troubled assets purchased under
18 this Act, or from the sale, exercise, or surrender of war-
19 rants or senior debt instruments acquired under section
20 113 shall be paid into the general fund of the Treasury
21 for reduction of the public debt.
22 (e) APPLICATION OF SUNSET TO TROUBLED AS-
23 SETS.--The authority of the Secretary to hold any trou-
24 bled asset purchased under this Act before the termination
25 date in section 120, or to purchase or fund the purchase
26 of a troubled asset under a commitment entered into be-
23
1 fore the termination date in section 120, is not subject
2 to the provisions of section 120.
3 SEC. 107. CONTRACTING PROCEDURES.
4 (a) STREAMLINED PROCESS.--For purposes of this
5 Act, the Secretary may waive specific provisions of the
6 Federal Acquisition Regulation upon a determination that
7 urgent and compelling circumstances make compliance
8 with such provisions contrary to the public interest. Any
9 such determination, and the justification for such deter-
10 mination, shall be submitted to the Committees on Over-
11 sight and Government Reform and Financial Services of
12 the House of Representatives and the Committees on
13 Homeland Security and Governmental Affairs and Bank-
14 ing, Housing, and Urban Affairs of the Senate within 7
15 days.
16 (b) ADDITIONAL CONTRACTING REQUIREMENTS.--In
17 any solicitation or contract where the Secretary has, pur-
18 suant to subsection (a), waived any provision of the Fed-
19 eral Acquisition Regulation pertaining to minority con-
20 tracting, the Secretary shall develop and implement stand-
21 ards and procedures to ensure, to the maximum extent
22 practicable, the inclusion and utilization of minorities (as
23 such term is defined in section 1204(c) of the Financial
24 Institutions Reform, Recovery, and Enforcement Act of
25 1989 (12 U.S.C. 1811 note)) and women, and minority-
24
1 and women-owned businesses (as such terms are defined
2 in section 21A(r)(4) of the Federal Home Loan Bank Act
3 (12 U.S.C. 1441a(r)(4)), in that solicitation or contract,
4 including contracts to asset managers, servicers, property
5 managers, and other service providers or expert consult-
6 ants.
7 (c) ELIGIBILITY OF FDIC.--Notwithstanding sub-
8 sections (a) and (b), the Corporation--
9 (1) shall be eligible for, and shall be considered
10 in, the selection of asset managers for residential
11 mortgage loans and residential mortgage-backed se-
12 curities; and
13 (2) shall be reimbursed by the Secretary for
14 any services provided.
15 SEC. 108. CONFLICTS OF INTEREST.
16 (a) STANDARDS REQUIRED.--The Secretary shall
17 issue regulations or guidelines necessary to address and
18 manage or to prohibit conflicts of interest that may arise
19 in connection with the administration and execution of the
20 authorities provided under this Act, including--
21 (1) conflicts arising in the selection or hiring of
22 contractors or advisors, including asset managers;
23 (2) the purchase of troubled assets;
24 (3) the management of the troubled assets held;
25
1 (4) post-employment restrictions on employees;
2 and
3 (5) any other potential conflict of interest, as
4 the Secretary deems necessary or appropriate in the
5 public interest.
6 (b) TIMING.--Regulations or guidelines required by
7 this section shall be issued as soon as practicable after
8 the date of enactment of this Act.
9 SEC. 109. FORECLOSURE MITIGATION EFFORTS.
10 (a) RESIDENTIAL MORTGAGE LOAN SERVICING
11 STANDARDS.--To the extent that the Secretary acquires
12 mortgages, mortgage backed securities, and other assets
13 secured by residential real estate, including multifamily
14 housing, the Secretary shall implement a plan that seeks
15 to maximize assistance for homeowners and use the au-
16 thority of the Secretary to encourage the servicers of the
17 underlying mortgages, considering net present value to the
18 taxpayer, to take advantage of the HOPE for Home-
19 owners Program under section 257 of the National Hous-
20 ing Act or other available programs to minimize fore-
21 closures. In addition, the Secretary may use loan guaran-
22 tees and credit enhancements to facilitate loan modifica-
23 tions to prevent avoidable foreclosures.
24 (b) COORDINATION.--The Secretary shall coordinate
25 with the Corporation, the Board (with respect to any
26
1 mortgage or mortgage-backed securities or pool of securi-
2 ties held, owned, or controlled by or on behalf of a Federal
3 reserve bank, as provided in section 110(a)(1)(C)), the
4 Federal Housing Finance Agency, the Secretary of Hous-
5 ing and Urban Development, and other Federal Govern-
6 ment entities that hold troubled assets to attempt to iden-
7 tify opportunities for the acquisition of classes of troubled
8 assets that will improve the ability of the Secretary to im-
9 prove the loan modification and restructuring process and,
10 where permissible, to permit bona fide tenants who are
11 current on their rent to remain in their homes under the
12 terms of the lease. In the case of a mortgage on a residen-
13 tial rental property, the plan required under this section
14 shall include protecting Federal, State, and local rental
15 subsidies and protections, and ensuring any modification
16 takes into account the need for operating funds to main-
17 tain decent and safe conditions at the property.
18 (c) CONSENT TO REASONABLE LOAN MODIFICATION
19 REQUESTS.--Upon any request arising under existing in-
20 vestment contracts, the Secretary shall consent, where ap-
21 propriate, and considering net present value to the tax-
22 payer, to reasonable requests for loss mitigation measures,
23 including term extensions, rate reductions, principal write
24 downs, increases in the proportion of loans within a trust
27
1 or other structure allowed to be modified, or removal of
2 other limitation on modifications.
3 SEC. 110. ASSISTANCE TO HOMEOWNERS.
4 (a) DEFINITIONS.--As used in this section--
5 (1) the term ``Federal property manager''
6 means--
7 (A) the Federal Housing Finance Agency,
8 in its capacity as conservator of the Federal
9 National Mortgage Association and the Federal
10 Home Loan Mortgage Corporation;
11 (B) the Corporation, with respect to resi-
12 dential mortgage loans and mortgage-backed se-
13 curities held by any bridge depository institu-
14 tion pursuant to section 11(n) of the Federal
15 Deposit Insurance Act; and
16 (C) the Board, with respect to any mort-
17 gage or mortgage-backed securities or pool of
18 securities held, owned, or controlled by or on
19 behalf of a Federal reserve bank, other than
20 mortgages or securities held, owned, or con-
21 trolled in connection with open market oper-
22 ations under section 14 of the Federal Reserve
23 Act (12 U.S.C. 353), or as collateral for an ad-
24 vance or discount that is not in default;
28
1 (2) the term ``consumer'' has the same meaning
2 as in section 103 of the Truth in Lending Act (15
3 U.S.C. 1602);
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