[DISCUSSION DRAFT]

SEPTEMBER 25, 2008

H. R. ll

110TH CONGRESS

2D SESSION

To provide authority for the Federal Government to purchase certain types

of troubled assets for the purposes of providing stability to and pre venting disruption in the economy and financial system and protecting

taxpayers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Ml. llllll introduced the following bill; which was referred to the

Committee on llllllllllllll

A BILL

To provide authority for the Federal Government to purchase

certain types of troubled assets for the purposes of pro viding stability to and preventing disruption in the econ omy and financial system and protecting taxpayers, and

for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the

‘‘Economic Recovery and Corporate Accountability Act of2008’’.

(b) TABLE CONTENTS.—The table of contents for

OF

this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Definitions.

TITLE I—TROUBLED ASSETS RELIEF PROGRAM

Sec. 101. Purchases of troubled assets.

Sec. 102.Considerations.

Sec. 103.

Financial Stability Oversight Board.

Sec. 104.Reports.

Sec. 105.Rights; management; sale of troubled assets; revenues and sale pro ceeds.

Sec. 106. Contracting procedures.

Sec. 107. Conflicts of interest.

Sec. 108. Foreclosure mitigation efforts.

Sec. 109. Assistance to homeowners and localities.

Sec. 110. Executive compensation and corporate governance.

Sec. 111. Coordination with foreign authorities and central banks.

Sec. 112. Minimization of long-term costs and maximization of benefits for tax payers.

Sec. 113. Market transparency.

<<Sec. 114. Graduated authorization to purchase.

>>Sec. 115. Oversight and audits.

Sec. 116. Studies and reports.Sec. 117. Funding.

Sec. 118. Judicial review.

Sec. 119.

Termination of authority.

Sec. 120. Special inspector general for the troubled asset program.

Sec. 121. Increase in statutory limit on the public debt.

Sec. 122. Credit reform.

Sec. 123. Minimizing foreclosures.Sec. 124.

Congressional Oversight Panel.

Sec. 125. FDIC enforcement enhancement.

Sec. 126. Cooperation with the FBI.

Sec. 127. Acceleration of effective date.

Sec. 128. Disclosures on exercise of loan authority.

Sec. 129. Technical corrections.

Sec. 130. Temporary money market fund

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 Congres sional Budget Office.

Sec. 203. Analysis in President’s budget.

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 and modification of exclusion of income from discharge of qualified principal

residence indebtedness.

]SEC. 2. FINDINGS AND PURPOSES.

(b) PURPOSES.—The purposes of this Act are—

(1) to immediately provide authority and facilities that the Secretary of the Treasury can use to

restore liquidity and stability to the United States financial system;(2) to ensure that this authority and these

facilities are used in a manner that minimizes mortgage foreclosures, maximizes the ability of UnitedStates homeowners to remain in their homes, protects individual investors, including

retirement fundfinancial system

.

SEC. 3. DEFINITIONS.

For purposes of this Act, the following definitions

shall apply:

(1) APPROPRIATE CON COMMITTEES OF

GRESS.—The term ‘‘appropriate committees of Congress’’ means—

(A) the Committee on Banking, Housing,

and Urban Affairs, the Committee on Finance,

and the Committee on the Budget of the Senate; and

(B) the Committee on Financial Services,

the Committee on Ways and Means, and the

Committee on the Budget of the House of Representatives.

(2) BOARD.—The term ‘‘Board’’ means the

Board of Governors of the Federal Reserve System.

(3) CONGRESSIONAL SUPPORT AGENCIES.—The

term ‘‘congressional support agencies’’ means the

Congressional Budget Office and the Joint Committee on Taxation.

) FINANCIAL

INSTITUTION.—The term ‘‘financial institution’’ means any institution, including

any bank, savings association,

credit union, security broker or dealer, or insurance

company, organized and regulated under the laws of

the United States or any State, territory, or possession of the United States, the District of Columbia,

Commonwealth of Puerto Rico, Commonwealth of

Northern MarianasIslands, Guam, American Samoa,

or the UnitedStates Virgin Islands, and having significant operations in the United States, but exclud

ing any central bank of, or institution owned by, a

) SECRETARY.—The term ‘‘Secretary’’ means

the Secretary of the Treasury.

(6

) TROUBLED ASSETS.—The term ‘‘troubled

assets’’ means

residential or commercial mortgages

and any securities, obligations, or other instruments that are based on or related to such

mortgages, that in each case was originated or

issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

consultation with the Chairman of the Board ofdetermine

s necessary to promote financial market

stability

.

TITLE I—TROUBLED ASSETS

RELIEF PROGRAM

SEC. 101. PURCHASES OF TROUBLED ASSETS.

(a) OFFICES; AUTHORITY.—

(1) AUTHORITY.—The Secretary is authorized

to establish a program

to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as

are determined by the Secretary, and in accordance

with this Act and the policies and procedures devel oped and published by the Secretary.

(2) ESTABLISHMENT OF TREASURY OFFICE.—

(A) IN GENERAL.—The Secretary shall implement any program under paragraph (1)

through an Office of Financial Stability, established for such purpose within the Office of Domestic Finance of the Department of the Treasury, which office shall be headed by an Assistant Secretary of the Treasury

.

(B) CLERICAL AMENDMENT.—Section

5315 of title 5, United States Code, is amended

in the item relating to Assistant Secretaries of

the Treasury, by striking ‘‘(9)’’ and inserting

‘‘(10)’’.

(b) CONSULTATION.—In exercising the authority

under this Act, the Secretary shall consult with the Board

of Governors of the Federal Reserve System, the

Federal Reserve Bank of New York, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, theDirector of the Office

of Thrift Supervision, and the Secretary of Housing and

Urban Development.

(c) NECESSARY ACTIONS.—The Secretary is authorized to take such actions as the Secretary deems necessary

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

limitation, the following:

(1) The Secretary shall have direct hiring authority with respect to the appointment of employees

to administer this Act.

(2) Entering into contracts, including contracts

for services authorized by section 3109 of title 5,

United States Code.

(3) Designating financial institutions as financial agents of the Federal Government, and such institutions shall perform all such reasonable duties

related to this Act as financial agents of the Federal

Government as may be required.

(4) E

stablishing vehicles that are authorized, subject to supervision by the Secretary, to purchasetroubled assets and

issue obligations.

(5) Issuing such regulations and other guidance

as may be necessary or appropriate to define terms

or carry out the authorities or purposes of this Act.

(d) PROGRAM GUIDELINES.—Before the earlier of

the end of the 2-business day period beginning on the date

of the first exercise of the authority under this section orthe end of the 30

-day period beginning on the date of theguidelines, including the

following:

(1) Mechanisms for purchasing troubled assets.

(2) Methods for pricing and valuing troubled

assets.

(3) Procedures for selecting asset managers.

(4) Criteria for identifying troubled assets for

purchase.

(e) PREVENTING UNJUST ENRICHMENT.—In making

purchases under the authority of this Act, the Secretary

shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in

a program established under this section, including by preventing the resale of a troubled asset to the Secretary at

a higher price than what the seller paid to purchase the

asset.

SEC. 102.

CONSIDERATIONS.

In exercising the authorities granted in this Act, the

Secretary shall take into consideration—

(1)

providing stability or preventing disruption(2

) the need to help families to keep their homes

and to stabilize communities;

(3) in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents

the most efficient use of funds under this Act;

(4) ensuring that as many financial institutionsas possible participate in the program, without discrimination against financial institutions based ontheir

size, geographic operation, or the size, type, and number of assets eligible for purchase under(5

) providing assistance to financial institutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets less than

$1,000,000,000 that were well or adequately capitalized as of June 30, 2008, and that as a result

of the devaluation of the preferred government-sponsored enterprises stock will drop one or more capital

levels, in a manner sufficient to restore the financial

institutions to at least an adequately capitalized

level;

(6) the need to ensure stability for United

States public instrumentalities, such as counties and

cities, that may have suffered significant increased

costs or losses in the current market turmoil;

(9) that nothing in this Act prevents the Secretary from

protecting the retirement security of

Americans by purchasing troubled assets that a financial institution holds or manages on behalf of a(10

) the utility of purchasing other real estate

owned and instruments backed by mortgages on

multifamily properties.

SEC. 103. FINANCIAL STABILITY OVERSIGHT BOARD.

(a) ESTABLISHMENT.—There is established the Financial Stability Oversight Board, which shall be responsible for—

(1) reviewing the exercise of authority under a

program developed in accordance with this Act, including—

(A) all actionstaken by the Secretary and

the Office of Financial Stability created under

section 101, including the appointment of financial agents, the designation of asset classes to

be purchased, and plans for the structure of vehicles used to purchase troubled assets; and

(B) the effect of such actions in assisting

American families in preserving home ownership, stabilizing financial markets, and protecting taxpayers;

(2) making recommendations, as appropriate, to

the Secretary regarding use of the authority under

this Act; and

(3) reporting any fraud, misrepresentation, ormalfeasance to appropriate law enforcement agencies

.

(b) MEMBERSHIP.—The Financial Stability Oversight Board shall be comprised of—

(1) the <<Chairman>> of the Board of Governorsof

the Federal Reserve System;

(2) the <<chairperson>> of the Board of Directors(3) the <<chairperson>>

of the Securities and Ex 5leader of the House of Representatives

.

(c) CHAIRPERSON.—The chairperson of the Financial

Stability Oversight Board shall be elected by the members

of the Board from among the members.

(d) MEETINGS.—The Financial Stability Oversight

Board shall meet 2 weeks after the first exercise of the

purchase authority of the Secretary under this Act and

monthly thereafter.

(e) EXECUTIVE COMMITTEE.—

(1) APPOINTMENT.—There is established an executive committee of the Financial Stability Oversight Board which shall consist of the members of

the Financial Stability Oversight Board pursuant to

paragraphs (1), (2), and (3) of subsection (b).

(2) AUTHORITIES.—Notwithstanding the authority granted to the Secretary under sectionnot in accordance with the purposes of this Act

.

(f) CREDIT REVIEW COMMITTEE.—established under subsection (e) may appoint

a credit review committee for the purpose of evaluating

acquired through the exercise of such

authority, as the executive committee determines appropriate.

(g) SHARING OF INFORMATION.—Any reports or recommendations submitted or proposed under this section

shall also be submitted to the Congressional Oversight

Panel established under section 124.SEC. 104

. REPORTS.

(a) IN GENERAL.—Before the expiration of the 60day period beginning on the date of the first exercise of

the authority granted in section 101(a),

and every 30-day

period thereafter, the Secretary shall report to the appropriate committees of Congress, with respect to each such

period—

(1) an overview of actions taken by the Secretary, including the considerations required by section 102 and the efforts under section 111;

(2) the actual obligation and expenditure of the

funds provided for administrative expenses by section 117 during such period and the expected expenditure of such funds in the subsequent period;

and

(3) a detailed financial statement with respect

to the exercise of authority under this Act, including—

(A) all agreements made or renewed;

(B) all

transactions occurring during such

period, including the types of parties involved;

(C) the nature of the assets purchased;

(D) all projected costs and liabilities;

(E) operating expenses, including compensation for financial agents;

(F) the valuation or pricing method used

for each transaction; and

(G) a description of the vehicles established to exercise such authority.

(b) WEEKLY PUBLIC REPORTS.—On a weekly basis,(c) TRANCHE REPORTS TO CONGRESS.—

(1) REPORTS.—The Secretary shall provide to

the Committee on Banking, Housing, and Urban Affairs, the Committee on the Budget, and the Committee on Finance of the Senate and the Committeeparagraph

(2), a written report, including—

(A) a description of all of the transactions

made during the reporting period;

(B) a description of the pricing mechanism

for the transactions;

(C) a justification of the price paid for and

other financial terms associated with the transactions;

(D) a description of the impact of the exercise of such authority on the financial system,

supported, to the extent possible, by specific

data;

(E) a description of challenges that remain

in the financial system, including any benchmarks yet to be achieved; and

(F) an estimate of additional actions under

the authority provided under this Act that may

be necessary to address such challenges.

(2) TIMING.—The reports required by this subsection shall be submitted not later than 7 days

after the date on which commitments to purchase

troubled assets under the authorities provided in this

Act first reach an aggregate of $50,000,000,000 and

not later than 7 days after each $50,000,000,000 interval of such commitments is reached thereafter.

(d) REGULATORY MODERNIZATION REPORT.—The

Secretary shall review the current state of the financial

markets and the regulatory system and submit a written

report to the appropriate committees of Congress not later

than April 30, 2009, analyzing the current state of the

regulatory system and its effectiveness at overseeing the

participants in the financial markets, and providing recommendations for improvement, including

recommendations regarding

whether any participants in the financial markets that are currently outside the regulatory system should become subject to the

rationale underlying such recommendations.

(e) SHARING INFORMATION.—Any reports re OF

quired under this section shall also be submitted to the

Congressional Oversight Panel established under section

124.SEC. 105

. RIGHTS; MANAGEMENT; SALE OF TROUBLED AS

SETS; REVENUES AND SALE PROCEEDS.

(a) EXERCISE RIGHTS.—The Secretary may, at

OF

any time, exercise any rights received in connection with

troubled assets purchased under this Act.

TROUBLED ASSETS.—The

portfolio risks therefrom.

(c) SALE TROUBLED ASSETS.—The Secretary

OF

may, at any time, upon terms and conditions and at prices

determined by the Secretary, sell, or enter into securities loans, repurchase transactions, or other financial

transactions in regard to, any troubled asset purchased

PROFITS.—

(1) DEPOSITS.—Not less than 20 percent of

any profit realized on the sale of each troubled asset

purchased under this Act shall be deposited as provided in paragraph (2).(2) USE

OF DEPOSITS.—Of the amount referred

(A) 65 percent shall be deposited into the

Housing Trust Fund established under section

1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568);

and

(B) 35 percent shall be deposited into the

Capital Magnet Fund established under section

1339 of that Act (12 U.S.C. 4569).(3) REMAINDER DEPOSITED IN THE

TREASURY.—Revenues of,

(e) APPLICATION SUNSET TROUBLED AS OF TO

SETS.—The authority of the Secretary to hold any troubled asset purchased under this Act before the termination

date in section 119, or to purchase or fund the purchase

of a troubled asset under a commitment entered into before the termination date in section 119, is not subjectto the provisions of section 119

.

SEC. 106. CONTRACTING PROCEDURES.

(a) STREAMLINED PROCESS.—In awarding contracts,managers, and other service providers or expert consultants, that would otherwise be subject to the

Federal Acquisition Regulation, the Secretary may instead design athe work

.

(b) ADDITIONAL CONTRACTING REQUIREMENTS.—In

soliciting and awarding contracts authorized under the authority provided in subsection (a), the Secretary shall de [Discussion Draft]velop and implement standards and procedures to ensure, to the maximum extent

practicable, the inclusion and utilization of minorities (as

Institutions Reform, Recovery, and Enforcement Act of

1989 (12 U.S.C. 1811 note)) andwomen, and minority- and women-owned businesses (as

Home Loan Bank Act

(12 U.S.C. 1441a(r)(4)), in allbusiness and activities provided for under this Act (

including contracts to asset managers, servicers, property

managers, and other service providers or expert consultants).the applicant.

(c) ELIGIBILITY FDIC.—Notwithstanding sub OF

sections (a) and (b), the Federal Deposit Insurance Corporation shall be eligible and shall be considered in theand residential mortgage-backed securities

shall be reimbursed by the Secretary for

any services provided.

SEC. 107. CONFLICTS OF INTEREST.

(a) STANDARDS REQUIRED.—The Secretary shall

issue regulations or guidelines necessary to address and

manage or to prohibit conflicts of interest that may arise

in connection with the administration and execution of the

authorities provided under this Act, including—

(1) conflicts arising in the selection or hiring of

contractors or advisors, including asset managers;

(2) the purchase of troubled assets;

(3) the management of the troubled assets held;

(4) post-employment restrictions on employees;

and

(5) any other potential conflict of interest, as

the Secretary deems necessary or appropriate in the

public interest.

(b) TIMING.—Regulations or guidelines required by

this section shall be issued as soon as practicable after

the date of the enactment of this Act.

SEC. 108. FORECLOSURE MITIGATION EFFORTS.

(a) RESIDENTIAL MORTGAGE LOAN SERVICING

STANDARDS.—To the extent the Secretary acquires mortgages, mortgage

backed securities, and other assets

secured by residential real estate, including multifamily

housing, the Secretary shall

maximize assistance forhomeowners and use the Secretary’s authority as investorto encourage the servicers of the

take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures. In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.

(b) COORDINATION.—The Secretary shall coordinate

with the Federal Deposit Insurance Corporation, theBoard

, the Federal Housing Finance Agency, the

Secretary of Housing and Urban Development, and other

Federal Government entities that hold troubled assets to

attempt to identify opportunities for the acquisition of

classes of troubled assets that will improve the Secretary’sabilit

y to improve the loan modification and restructuring process and, where permissible, to permit bona

fide tenants who are current on their rent to remain in

their homes under the terms of the lease. property, the systematic approach required under this sub

section shall include protecting Federal,

State, and local rental subsidies and protections, and ensuring any modification takes into account the need for

operating funds to maintain decent and safe conditions at

CONSENT REASONABLE LOAN MODIFICATION

TO

REQUESTS.—For residential mortgages underlying troubled assets purchased under this Act, the Secretary shallUpon any request arising under existing investment contracts, the Secretary shall consent, where appropriate, toreasonable requests for loss mitigation measures,

including term extensions, rate reductions, principal write

downs, increases in the proportion of loans within a trust

or other structure allowed to be modified, or removal of

other limitation on modifications.

SEC. 109. ASSISTANCE TO HOMEOWNERS AND LOCALITIES.

(a) DEFINITIONS.—As used in this section—

(1) the term ‘‘Federal property manager’’

means—

(A) the Federal Housing Finance Agency,

in its capacity as conservator of the Federal

National Mortgage Association and the Federal

Home Loan Mortgage Corporation;

(B) the Corporation, in its capacity as conservator or receiver of an insured depository institution

; and

(C) the Board, with respect to any mortgage or mortgage-backed securities or pool of

securities held, owned, or controlled by or on

behalf of a Federal reserve bank;

(2) the term ‘‘consumer’’ has the same meaning

as in section 103 of the Truth in Lending Act (15

U.S.C. 1602);

(3) the term ‘‘insured depository institution’’

has the same meaning as in section 3 of the Federal

Deposit Insurance Act (12 U.S.C. 1813); and

(4) the term ‘‘servicer’’ has the same meaning

as in section 6(i)(2) of the Real Estate Settlement

Procedures Act of 1974 (12 U.S.C. 2605(i)(2)).

(b) SYSTEMATIC HOMEOWNER ASSISTANCE BY AGENCIES.—

(1) IN GENERAL.—Each Federal property manager shall, with respect to any residential mortgageholds, owns, or controls on or after the date of enactment of this Act, develop a program that is designed to provide a systematic approach for preventing foreclosure on the properties securing suchand use of the

HOPE for Homeowners Program

established under section 257 of the National Housing(2)

MODIFICATIONS.—In the case of a residential mortgage loan, modifications made under paragraph (1) may include—

(A) reduction in interest rates;

(B) reduction of loan principal; and

(C) other similar modifications.

(3) TENANT PROTECTIONS.—In the case of

mortgages on residential rental properties, modifications made under paragraph (1) shall ensure—

(A) the continuation of any existing Federal, State, and local rental subsidies and protections; and

(B) that modifications take into account

the need for operating funds to maintain decent

and safe conditions at the property.

(4) TIMING.—Each Federal property manager

shall develop and begin implementation of the program

required by this subsection not later than 60 days

after the date of enactment of this Act.

(5) REPORTS CONGRESS.—Each Federal

TO

property manager shall, 60 days after the date of

enactment of this Act and every 30 days thereafter,

report to Congress specific information on the number and types of loan modifications made and the

number of actual foreclosures occurring during the

reporting period in accordance with this section.

(6) CONSULTATION.—In developing the program required by this subsection, the Federal propertymanagers shall consult with one another and, to the extent possible, utilize consistent approaches to implement the requirements of this subsection.

(d) ACTIONS WITH RESPECT TO SERVICERS.—In any

case in which a Federal property manager is not the owner

of a residential mortgage loan, but holds an interest in

obligations or pools of obligations secured by residential

mortgage loans, the Federal property manager shall—

(1) encourage implementation by the loan

servicers of loan modifications developed under subsection (b);(3

) assist in facilitating any such modificationsor sales, to the extent

possible.

(e) LIMITATION.—The requirements of this section

shall not supersede any other duty or requirement imposed

on the Federal property managers under otherwise applicable law.

SEC. 110. EXECUTIVE COMPENSATION AND CORPORATE

GOVERNANCE.

(a) IN GENERAL.—The Secretary shall require thatprogram under this Act

meet appropriate standards forsenior executive officer compensation and corporate governance in order to be eligible.(b) CRITERIA STANDARDS

.—The standards(1

) limits on compensation to exclude incentives(2

) a provision for the recovery by the financialinstitution of any bonus or other incentive

compensation paid to a senior executive officer based on

statements of earnings, gains, or

other criteria that are later proven to be false or inaccurate; and

(3) a prohibition on the financial institutionof an equity position in such financial institution pursuant

an equity position in

the Secretary shall require to comply withsuch standards

upon issuance.

.—For purposes of this section, the‘‘senior executive officer’’ means the same individuals that are the most highly

compensated executiveto the compensation

disclosure requirements of theSecurities Exchange Act of 1934, and their counterparts in a non-public company

.

(2)

SEVERANCE COMPENSATION

.—The termSEC. 111

. COORDINATION WITH FOREIGN AUTHORITIES

AND CENTRAL BANKS.

The Secretary shall coordinate, as appropriate, with

foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks.

SEC. 112. MINIMIZATION OF LONG-TERM COSTS AND MAXI

MIZATION OF BENEFITS FOR TAXPAYERS.

(a) LONG-TERM COSTS BENEFITS.—

that will minimize any potential long-term

negative impact on the taxpayer, taking into account

the direct outlays, potential long-term returns on assets purchased, and the overall economic benefits of

the program, including economic benefits due to improvements in economic activity and the availability

of credit, the impact on the savings and pensions of

individuals, and reductions in losses tothe Federal Government

.

(b) USE MARKET MECHANISMS.—In making pur OF

chases under this Act, the Secretary shall maximize theefficiency of its

use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate.

(c) DIRECT PURCHASES.—If the Secretary determines that use of a market mechanism under subsection

(b) is not feasible or appropriate, and the purposes of the

Act are best met through direct purchases from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid for assets are

reasonable and reflect the underlying value of the asset.

(d) CONDITIONS PURCHASE AUTHORITY

ON FOR

WARRANTS AND DEBT INSTRUMENTS.—

(1) IN GENERAL.—Except as provided in paragraph (3), the Secretary may notpurchase, or make any commitment to purchase, any

such assets are to be purchased—

(A) in the case of a financial institution

that is registered (or approved for registration)

and traded on a national securities exchange or

a national securities association registered pur

suant to section 15A of the Securities Exchange

Act of 1934 (15 U.S.C. 78o-3), a warrant giving the right to the Secretary to receive nonvoting common stock or preferred stock in such

financial institution, as the Secretary determines appropriate; or

(B) in the case of any financial institution

other than one described in subparagraph (A),

a senior debt instrument from such financial institution, as described in paragraph (3)(C).

(2) TERMS AND CONDITIONS.—The terms and

conditions of any warrant or senior debt instrument

required under paragraph (1) shall meet the following requirements:

(A) PURPOSES.—Such terms and conditions shall, at a minimum, be designed—

(i) to provide for reasonable participation by the Secretary

in equity appreciation in the

case of a warrant, or a reasonable interest

rate premium, in the case ofa debt instrument for the benefit of taxpayers;(iii) to cover

the administrative costs(B) AUTHORITY

TO SELL, EXERCISE, OR

SURRENDER.—The Secretary may sell, exercise,

or surrender a warrant or any senior debt instrument received under this subsection, based

on the conditions established under subparagraph (A).

(C) CONVERSION.—The warrant shall provide that if, after the warrant is received by the

Secretary under this subsection, the financial

institution that issued the warrant is no longer

listed or traded on a national securities exchange or securities association, as described in

paragraph (2)(A), such warrants shall convert

to senior debt, in an amount determined by the

Secretary.

(D) PROTECTIONS.—Any warrant representing securities to be received by the Secretary under this subsection shall contain antidilution provisions of the type employed in capital market transactions, as determined by the

Secretary. Such provisions shall protect the

value of the securities from market transactions

such as stock splits, stock distributions, divi

dends, and other distributions, mergers, and

other forms of reorganization or recapitalization.

(E) EXERCISE PRICE.—The exercise price

for any warrant issued pursuant to this subsection shall be set by the Secretary, in thepublic interest.

(F) SUFFICIENCY.—The financial institution shall guarantee to the Secretary that it has

authorized shares of nonvoting stock available

to fulfill its obligations under this subsection.

Should the financial institution not have sufficient authorized shares, the Secretary may accept a contingent

senior debt note in anticipation of a shareholder vote for such authorization. The note must be for a short, limited period of time, as determined by the Secretary,and shall include a penalty whenever such period expires

.

(3)

DE MINIMIS EXCEPTION.—The Secretaryshall establish a de minimis exception to the requirements of this subsection, based on the size of the financial institution or

the size of the transa

ction.

SEC. 113. MARKET TRANSPARENCY.

(a) PRICING.—To facilitate market transparency, the

Secretary shall make available to the public, in electronic

form, a description, amounts, and pricing of assets acquired under this Act, within 2 business days of purchase,

trade, or other disposition.

(b) DISCLOSURE.—For each type of financial institutions that is authorized to use the program established

under this Act, the Secretary shall determine whether the

public disclosure required for such financial institutions

with respect to off-balance sheet transactions, derivatives

instruments, contingent liabilities, and similar sources of

potential exposure is adequate to provide to the public sufficient information as to the true financial position of the

institutions. If such disclosure is not adequate for that

purpose, the Secretary shall make recommendations for

additional disclosure requirements to the relevant regulators.

<<SEC. 114. GRADUATED AUTHORIZATION TO PURCHASE.

>><<(a) AUTHORITY.—The authority of the Secretary to

purchase troubled assets under this Act shall be limited

as follows:

>><<(1) Effective upon the date of the enactmentof this Act, such authority shall be

limited to

$250,000,000,000 outstanding at any one time.

>><<(2) If at any time, the President submits tothe Congress

written notification that the Secretaryis exercising the authority

under this paragraph, effective upon such submission, such authority shall be

limited to $350,000,000,000 outstanding at any one

time.

the President submits tothe Congress a written

report detailing the plan of

paragraph, unless there is

enacted, within <<15>> cal 4endar days of such submission,

a joint resolution described in subsection (c), effective upon the expira tion of such <<15-day>> period, such authority shall be

limited to $700,000,000,000 outstanding at any one

PURCHASE PRICES.—The

OF

amount of troubled assets purchased by the Secretary outstanding at any one time shall be determined for purposes

of the dollar amount limitations under subsection (a) by

aggregating the purchase prices of all troubled assets<<

(c) FAST TRACK CONSIDERATION.—

>>GENERAL.—Notwithstanding any other

provision of this section, the Secretary may not exercise any authority to make purchases under this Act

with regard to any amount in excess of

$350,000,000,000 previously obligated, as described

in this section if, within <<15>> calendar days after

enacts a joint resolution disapproving the plan of the

Secretary with respect to such additional amount.

>>purpose of paragraph(1), ‘‘joint resolution’’ means only

a joint resolution introduced after the date onwhich the report of the Secretary referred to in subsection

(a)(3) is received by Congress, the matter after the

resolving clause of which is as follows: ‘‘That Congress disapproves the obligation of any amount exceeding the amounts obligated as described in paragraphs (1) and (2) of section 114(a)

TO COMMITTEE.—A resolution

described in paragraph (2) introduced in the House

of Representatives shall be referred to the Committee on Financial Services of the House of Representatives. A resolution described in paragraph (2)

introduced in the Senate shall be referred to the

Committee on Committee on Banking, Housing, and

Urban Affairs of the Senate. Such a resolution may

not be reported before the 8th day after its introduc tion.>>

OF COMMITTEE.—If the committee to which is referred a resolution described in

paragraph (2) has not reported such resolution (or

an identical resolution) at the end of <<10>> calendardays

after its introduction, such committee shall be

deemed to be discharged from further consideration

of such resolution, and such resolution shall be

placed on the appropriate calendar of the House in volved.>>

GENERAL.—When the committee(2) is

referred has reported, or has been deemed to be

discharged (under paragraph (4)) from further

consideration of, a resolution described in paragraph (2), it is at any time thereafter in order

(even though a previous motion to the same effect has been disagreed to)move to proceed to the

consideration of the resolution, and all points of

order against the resolution (and against consideration of the resolution) are waived. The

motion is highly privileged in the House of Representatives and is

to reconsider the vote

in order. If a motion to proceed

to the consideration of the resolution is agreed

House until disposed

(B) DEBATE.—Debate on the resolution,

and on all debatable motions and appeals in

connection therewith, shall be limited to not

more than 10 hours, which shall be divided

equally between those favoring and those opposing the resolution. A motion further to limit debate is in order and not debatable. An amendment to, or a motion to postpone, or a motion

to proceed to the consideration of other business, or a motion to recommit the resolution is

not in order. A motion to reconsider the vote by

which the resolution is agreed to or disagreed to

is not in order.

>>ON FINAL PASSAGE.—Immediately following the

conclusion of the debate on

a resolution described in paragraph (2), and a

single quorum call at the conclusion of the debate if requested in accordance with the rules of

the appropriate House, the vote on final pas sage of the resolution shall occur.>>

OF THE CHAIR ON PROCE

DURE.—Appeals from the decisions of the Chair

relating to the application of the rules of the

Senate or the House of Representatives, as the

case may be, to the procedure relating to a resolution described in paragraph (2) shall be decided without debate.

>>WITH ACTION BY OTHER

HOUSE.—If, before the passage by one House of a

resolution of that House described in paragraph (2),

that House receives from the other House a resolution described in paragraph (2), then the following

procedures shall apply:

>><<(A) The resolution of the other House shall

not be referred to a committee.

>><<(B) With respect to a resolution described

in paragraph (2) of the House receiving the res olution—>><<

(i) the procedure in that House shall

be the same as if no resolution had been

received from the other House; but

>><<(ii) the vote on final passage shall be

on the resolution of the other House.

>>OF HOUSE OF REPRESENTATIVES

AND SENATE.—This subsection is enacted by Con gress—>><<

(A) as an exercise of the rulemaking power

of the Senate and House of Representatives, respectively, and as such it is deemed a part of

the rules of each House, respectively, but applicable only with respect to the procedure to be followed in that House in the case

it supersedes other rules only to the extent that it is inconsistent with such rules; and

>><<(B) with full recognition of the constitu13tional right of either House to change the rules

(so far as relating to the procedure of that

House) at any time, in the same manner, and

to the same extent as in the case of any other

rule of that House.

>><<SEC. 115. OVERSIGHT AND AUDITS.

>>(a) COMPTROLLER GENERAL OVERSIGHT.—

(1) SCOPE OF OVERSIGHT.—The Comptroller

General of the United States shall, upon establishment of the troubled assets relief program under

this Act (in this section referred to as the ‘‘TARP’’),

commence ongoing oversight of the activities and

performance of the TARP and of any agents and

representatives of the TARP (as related to the agent

or representative’s activities on behalf of or under

the authority of the TARP), including vehicles established by the Secretary under this Act. The subjects of such oversight shall include the following:

(A) TARP’s performance in meeting thegoals set out in this Act, particularly those

involving foreclosure mitigation, consumer protection, cost reduction,

.

(B) The financial condition and internal

controls of the TARP, its representatives and

agents.

(C) Characteristics of transactions and

commitments entered into, including transaction type, frequency, size, prices paid, and all

other relevant terms and conditions, and the

timing, duration and terms of any future commitments to purchase assets.

(D) Characteristics and disposition of acquired assets, including type, acquisition price,

current market value, sale prices and terms,

and use of proceeds from sales.

(E) Efficiency of the TARP’s operations in

the use of appropriated funds.

(F) Compliance with all applicable laws

and regulations by TARP, its agents and

and minimize conflicts of interest involving any agent or representative performing

the TARP.

(H) The efficacy of contracting procedures

established under section 106, includingTARP’s efforts in evaluating proposals for inclusion and contracting to the maximum extent

possible of minorities, women, and minorityand women-owned businesses, including

ascertaining and reporting the total amount of

fees paid and other value delivered by TARP to

all of its agents and representatives, and such

amounts paid or delivered to such firms that

are minority- and women-owned businesses (as

such terms are defined in section 21A of the

Federal Home Loan Bank Act (12 U.S.C.

1441a)).

(2) CONDUCT AND ADMINISTRATION OF OVER

SIGHT.—

(A) GAO PRESENCE.—The Secretary shall

provide the Comptroller General with appropriate space and facilities in the Department of

the Treasury as necessary to facilitate oversight

of the TARP until the termination date established in section 119 of this Act.

(B) ACCESS TO RECORDS.—The Comptroller

General shall have access, upon request, to any

information, data, schedules, books, accounts,

financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the TARP, or

any vehicles established by the Secretary under

this Act, and to the officers, directors, employees, independent public accountants, financial

(as related to the agent or representative’s activities on behalf ofComptroller General may

request. The Comptroller General

shall be afforded full facilitiessecurities held

by depositaries, fiscal agents,make and retain

copies of such books, accounts,(C)

REIMBURSEMENT COSTS.—The

OF

Treasury shall reimburse the Government Accountability Office for the full cost of any such

oversight activities as billed therefor by the

Comptroller General of the United States. Such

reimbursements shall be credited to the appropriation account ‘‘Salaries and Expenses, Government Accountability Office’’ current when

the payment is received and remain available

until expended.

(3) REPORTING.—The Comptroller General

shall submit reports of findings under this section,

regularly and no less frequently than once every 60

days, to the appropriate committees of Congress,

and the Inspector General for the Department of theTARP. The

Comptroller may also submit special reports under

oversight activities.

(b) COMPTROLLER GENERAL AUDITS.—

(1) ANNUAL AUDIT.—The TARP shall annually

prepare and issue to the appropriate committees of

Congress and the public audited financial statements

prepared in accordance with generally accepted accounting principles

and the Comptroller General

shall annually audit such statements in accordance

with generally accepted auditing standards. The

Treasury shall reimburse the Government Accountability Office for the full cost of any such audit as

billed therefor by the Comptroller General. Such reimbursements shall be credited to the appropriation

account ‘‘Salaries and Expenses, Government Accountability Office’’ current when the payment is received and remain available until expended. The financial statements prepared under this paragraph

shall be on the fiscal year basis prescribed under

section 1102 of title 31, United States Code.

(2) AUTHORITY.—The Comptroller General

may audit the programs, activities, receipts, expenditures, and financial transactions of the TARP and

any agents and representatives of the TARP (as related to the agent or representative’s activities on

behalf of or under the authority of the TARP), including vehicles established by the Secretary under

this Act.

(3) CORRECTIVE RESPONSES TO AUDIT PROB

LEMS.—The TARP shall—

(A) take action to address deficiencies

identified by the Comptroller General or other

auditor engaged by the TARP; or

(B) certify to appropriate committees of

Congress that no action is necessary or appropriate.

(c) INTERNAL CONTROL.—

(1) ESTABLISHMENT.—The TARP shall establish and maintain an effective system of internal

control, consistent with the standards prescribed

under section 3512(c)) of title 31, United States

Code, that provides reasonable assurance over—

(A) the effectiveness and efficiency of operations, including the use of the TARP’s resources

;

(B) the reliability of financial reporting, including financial statements and other reports

for internal and external use; and

(C) compliance with applicable laws and

regulations.

(2) REPORTING.—In conjunction with each annual financial statement issued under this section,

the TARP shall—

(A) state the responsibility of management

for establishing and maintaining adequate internal control over financial reporting; and

(B) state its assessment, as of the end of

the most recent year covered by such financial

statement of the TARP, of the effectiveness of

the internal control over financial reporting.

(d) SHARING OF INFORMATION.—Any reports or audits required under this

section shall also be submitted(a)

MARGIN AUTHORITY.

—(1) STUDY.—The Comptroller General shall undertake a study to determine the extent to which leverage

and sudden deleveraging of financial institutions was a

factor behind the current financial crisis.

(2) CONTENT.—The study required by this section

) an analysis of the roles and responsibilities

of the Board, the Securities and Exchange Commission, the Secretary, and other Federal banking agencies with respect to monitoring leverage and acting

to curtail excessive(B) an

analysis of the authority of the Board to

regulate leverage, including by setting margin requirements, and what process the Board used to decide whether or not to use its(C

) an analysis of the margin authority of(D

) recommendations for the Board and(3

) REPORT.—Not later than June 1, 2009, the

Comptroller General shall complete and submit a report

on Banking, Housing, and Urban Affairs of the Senate

) SHARING INFORMATION.—Any reports re OF

quired under this section shall also be submitted to the

Congressional Oversight Panel established under section

124.

SEC. 117. FUNDING.

For the purpose of the authorities granted in this

Act, and for the costs of administering those authorities,

the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States

Code, and the purposes for which securities may be issued

under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including

the payment of administrative expenses.Any funds expended or obligated for actions authorized by this Act, in [Discussion Draft]cluding the payment of administrative expenses, shall be

deemed appropriated at the time of such expenditure or

obligation.

JUDICIAL REVIEW.>><<

(1) STANDARD.—Actions by the Secretaryunlawful and set aside only

if found to be arbitrary,<<an abuse

of discretion, or not in accordance withno injunction or other

form of equitable relief shall<<(3)

STAYS.—<<Other than in cases involvingconstitutional claims,>> Any injunction or other formof equitable relief that is issued shall be automatically stayed until the Secretary has had the opportunity to seek

a stay from a higher court and such

HOMEOWNERS’ RIGHTS.—

shall remain subject to all claims

impair the claims or defenses available to any other person

.

SEC. 119. TERMINATION OF AUTHORITY.

(a) TERMINATION.—The authorities provided under

section 101(a) shall terminate on December

31, 2009.

(b) EXTENSION UPON CERTIFICATION.—The Secretary, upon submission of a written certification to Congress, may extend the authority provided under this Act

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

ment of this Act. Such certification shall include a justification of why the extension is necessary to assist American families and stabilize financial markets, as well as

the expected costs to the taxpayer for such an extension.

SEC. 120. SPECIAL INSPECTOR GENERAL FOR THE TROU

BLED ASSET PROGRAM.

<<(a) PURPOSES.—The purposes of this section are as

follows:

>><<(1) To provide for the independent and objec 1tive conduct and supervision of audits and investigations relating to the programs and operations of the

program authorized to be established under section

101.

>><<(2) To provide for the independent and objec 6tive leadership and coordination of, and recommendations on, policies designed to—

>><<(A) promote economy, efficiency, and ef 9fectiveness in the administration of such pro gram; and>><<

(B) prevent and detect fraud and abuse<<

(3) To provide for an independent and objec14tive

means of keeping the Congress fully and currently

informed about problems and deficiencies relating to

the administration of such program and the necessity for and progress for corrective action.

<<De18(b) OFFICE INSPECTOR GENERAL.—There is

OF

hereby established the Office of the Special Inspector General for the Troubled Asset Relief Program.

(c) APPOINTMENT INSPECTOR GENERAL; RE OF

MOVAL.—(1) The head of the Office of the Special Inspector General for the Troubled Asset Relief Program is the

Special Inspector General for the Troubled Asset Relief

Program, who shall be appointed by the President.

(2) The appointment of the Special Inspector General

for the Troubled Asset Relief Program shall be made solely on the basis of integrity and demonstrated

ability in accounting, auditing, financial analysis, law,

managementanalysis, publicadministration, or investigations.

(3) The nomination of an individual as Special Inspector General for the Troubled Asset Relief Programshall be made not later than 30 days

after the establishment of any program under section 101.

(4) The Special Inspector General for the Troubledaccordance with the provisions of section

3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).

(5) For purposes of section 7324 of title 5, United

States Code, the Special Inspector General for the Troubled Asset Relief Program shall not be

considered an employee who determines policies to be pursued by the

United States in the nationwide administration of Federal law.

(6) The annual rate of basic pay of the Special Inspector General for the Troubled Asset Relief Programshall be the annual rate of basic pay provided for positions at level IV of the Executive Schedule

under section 5315 of title 5, United States Code.

<<(d) ASSISTANT INSPECTORS GENERAL.—The Spe 3cial Inspector General for the Troubled Asset Relief Program

shall, in accordance with applicable

laws and regulations governing the civil service—>>

<<(1) appoint an Assistant Inspector General for

Auditing who shall have the responsibility for supervising the performance of auditing activities relating

to any program established under section 2; and>>

<<(2) appoint an Assistant Inspector General for

Investigations who shall have the responsibility for

supervising the performance of investigative activi ties relating to such program.<<Delete this sub14section?>>>>

(e) DUTIES.—(1) It shall be the duty of the Special

Inspector General for the Troubled Asset Relief Programto conduct, supervise, and coordinate

audits and investigations of the purchase, management,

(A) A description of the categories of troubled

assets purchased or otherwise procured by the Sec retary.>><<(B)

A listing of the troubled assets purchased

in each such category described under subparagraph

(A).

>><<(C) An explanation of the reasons the Sec 7<<

(D) A listing of each financial institution that

such troubled assets were purchased from.

>><<(E) A listing of and detailed biographical in12formation on each person or entity hired to manage

such troubled assets.

>><<(F) A current estimate of the total amount of

troubled assets purchased pursuant to any program

established under section 101, the amount of troubled assets on the books of the Treasury, the

amount of troubled assets sold, and the profit and

loss incurred on each sale or disposition of each such

troubled asset.

maintain, and oversee such systems, procedures, and controls as the Special Inspector General considers appropriate to discharge the duty under paragraph (1).

(3) In addition to the duties specified in paragraphs

(1) and (2), the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978.

(f) POWERS AUTHORITIES.—(1) In carrying out

AND

the duties specified in subsection (e), the Special Inspector

General for the Troubled Asset Relief Program shall havethe authorities provided in section 6

of the Inspector General Act of 1978.

(2) The Special Inspector General for the Troubled

the Inspector General Act of 1978.

<<(g) PERSONNEL, FACILITIES, OTHER RE AND

SOURCES.—>>(1)

employ such officers and employees as may

be necessary for carrying out the duties of the Special Inspector General, subject to the provisions of title 5, United

States Code, governing appointments in the competitive

service,and the provisions of chapter 51 and subchapter

III of chapter 53 of such title, relating to classification

and General Schedule pay rates.

>>Asset Relief Program may obtain services as authorized by section 3109 of title 5, United States

Code, at daily rates not to exceed the equivalent rate prescribed for grade GS–15 of the General Schedule by section 5332 of such

arrangements for audits, studies,

the duties of the Inspector General.

>><<(4)(A) Upon request of the Special Inspector Gen13eral for the Troubled Asset Relief Program for information or

assistance from any department, agency, or other entity of the Federal Government, the head

of such entity shall, insofar as is practicable and not in

contravention of any existing law, furnish such information or assistance to the Special Inspector General, or an

authorized designee.

>><<(B) Whenever information or assistance requestedRelief Program

is, in the judgment of the

Special Inspector General, unreasonably refused or not

delay.

(h) REPORTS.—(1)Not later than October 31, 2008,

and every calendar quarter thereafter, the Special Inspector General for the Troubled Asset Relief Program shall

summarizing the activities of the Special Inspector General during the 120-day period ending

on the date of such report. Each report shall include, for

the period covered by such report, a detailed statement

of all purchases, obligations, expenditures, and revenues

under section 101, as well as the information collected under subsection (e)(1).

(2) Nothing in this subsection shall be construed to

authorize the public disclosure of information that is—

(A) specifically prohibited from disclosure by

any other provision of law;

(B) specifically required by Executive order to

be protected from disclosure in the interest of national defense or national security or in the conduct

of foreign affairs; or

(C) a part of an ongoing criminal investigation.

(3) Any reports required under this section shall also

be submitted to the Congressional Oversight Panel established under section 124.

(i) APPROPRIATE COMMITTEES CONGRESS DE OF<<(j)FUNDING.—>>(1) Of the amounts made available to

the Secretary of the Treasury under section 117,

$75,000,000 shall be available to the Special Inspector

General for the Troubled Asset Relief Program to carry<<(2) The amount available

under paragraph (1) shall

remain available until expended.

. INCREASE IN STATUTORY LIMIT ON THE PUBLIC