[DISCUSSION DRAFT]SEPTEMBER 258, 2008H. R. ll110TH CONGRESS2D SESSIONTo provide authority for the Federal Government to purchase certain typesof troubled assets for the purposes of providing stability to and pre venting disruption in the economy and financial system and protectingtaxpayers, and for other purposes.IN THE HOUSE OF REPRESENTATIVESMl. llllll introduced the following bill; which was referred to theCommittee on llllllllllllllA BILLTo provide authority for the Federal Government to purchasecertain 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, andfor 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 ofmergency Economic Stabilization Act of 2008’’.(b) TABLE CONTENTS.—The table of contents forOFthis Act is as follows:Sec. 1. Short title and table of contents.Sec. 2. Findings and pPurposes.Sec. 3. Definitions.TITLE I—TROUBLED ASSETS RELIEF PROGRAMSec. 101. Purchases of troubled assets.Sec. 102.Consideration Insurance of troubled assets.Sec. 103. Considerations.Sec. 104. Financial Stability Oversight Board.Sec. 104.5. Reports.Sec. 105.6. Rights; management; sale of troubled assets; revenues and sale pro ceeds.Sec. 106.7. Contracting procedures.Sec. 107.8. Conflicts of interest.Sec. 108.9. Foreclosure mitigation efforts.Sec. 109.10. Assistance to homeowners and localities.Sec. 110.1. Executive compensation and corporate governance.Sec. 111.2. Coordination with foreign authorities and central banks.Sec. 112.3. Minimization of long-term costs and maximization of benefits for tax payers.Sec. 113.4. Market transparency.<<Sec. 114. Maximum amount of authorized purchases.>><<Sec. 114.Sec. 115. Graduated authorization to purchase.>>Sec. 115.Sec. 116. Oversight and audits.Sec. 116. Studies and reports.Sec. 117. FundingStudy and report on margin authority.Sec. 118. Judicial reviewFunding.Sec. 119. Judicial review and related matters.Sec. 120. Termination of authority.Sec. 120. Special inspector general for the troubled asset p1. Special Inspector General For The Troubled Asset Relief Program.Sec. 121.2. Increase in statutory limit on the public debt.Sec. 122.3. Credit reform.Sec. 123. Minimizing foreclosures.Sec. 124. HOPE for Homeowners amendments.Sec. 125. Congressional Oversight Panel.Sec. 125.6. FDIC enforcement enhancement.Sec. 126.7. Cooperation with the FBI.Sec. 127.8. Acceleration of effective date.Sec. 128.9. Disclosures on exercise of loan authority.Sec. 129.30. Technical corrections.Sec. 130. Temporary money market fund1. Exchange Stabilization Fund reimbursement.Sec. 132. Suspension of mark-to-market accounting.Sec. 133. Study on mark-to-market accounting.Sec. 134. Recoupment.Sec. 135. Preservation of authority.TITLE II—BUDGET-RELATED PROVISIONSSec. 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 bBudget.TITLE III—TAX PROVISIONSSec. 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 modificatExtension of exclusion of income from discharge of qualified principalresidence indebtedness.]SEC. 2. FINDINGS AND PURPOSES.(a) FINDINGS.—The Congress finds that—(1) the current United States financial crisisnecessitates immediate action to stabilize the economy, restore liquidity to financial institutions andthe capital markets, protect savings and pensions,and preserve the availability of credit for individualsand businesses;(2) actions taken to protect consumers andminimize mortgage foreclosures are equally important objectives in promoting a resolution to this crisis and minimizing any losses and maximizing theultimate return to the taxpayer on assets purchasedunder this program;(3) financial regulators ignored questionablepractices and emerging problems and, as a result,existing financial regulatory structures have clearlyfailed to prevent the current crisis or to protectUnited States consumers and investors; and(4) comprehensive regulatory modernization isrequired to restore confidence in financial marketsand institutions going forward.(b) PURPOSES.—The purposes of this Act are—(1) to immediately provide authority and facilities that the Secretary of the Treasury can use torestore liquidity and stability to the United States financial system;(2) to ensure that this authority and thesefinancial systemof the United States; and(2) to ensure that such authority and such 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—(A) protects home values, college funds, retirement fundinvestors, minimizes initial costs, and maximizesoverall returns to United States taxpayers;(3) to review, on an expedited basis, the waysthat deficiencies and gaps in the current financialregulatory system contributed to the current crisis;and(4) to act as quickly as possible to comprehensively modernize the United States financial regulatory system to protect consumers and homeowners,reform the mortgage lending and securitization process, enhance the transparency and fairness in finan [Discussion Draft]cial markets, and ensure the future stability of thefinancial systemaccounts, and life savings;(B) preserves homeownership and promotes jobs and economic growth;(C) maximizes overall returns to the taxpayers of the United States; and(D) provides public accountability for theexercise of such authority.SEC. 3. DEFINITIONS.For purposes of this Act, the following definitionsshall apply:(1) APPROPRIATE CON COMMITTEES OFGRESS.—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 theCommittee on the Budget of the House of Representatives.(2) BOARD.—The term ‘‘Board’’ means theBoard of Governors of the Federal Reserve System.(3) CONGRESSIONAL SUPPORT AGENCIES.—Theterm ‘‘congressional support agencies’’ means theCongressional Budget Office and the Joint Committee on Taxation.<<(4(4) CORPORATION.—The term ‘‘Corporation’’means the Federal Deposit Insurance Corporation.<<(5) FINANCIALINSTITUTION.—The term ‘‘financial institution’’ means any institution, including,but not limited to, any bank, savings association,credit union, security broker or dealer, or insurancecompany, organized and regulated under the laws ofthe United States or any State, territory, or possession of the United States, the District of Columbia,Commonwealth of Puerto Rico, Commonwealth of Northern MarianasNorthern Mariana Islands, Guam, American Samoa, or the UnitedStates or the United States Virgin Islands, and having significant operations in the United States, but exclud [Discussion Draft]ing any central bank of, or institution owned by, a foreign gov ernment.>>(5foreign government.>>(6) FUND.—The term ‘‘Fund’’ means the Troubled Assets Insurance Fund established under section 102.(7) SECRETARY.—The term ‘‘Secretary’’ meansthe Secretary of the Treasury.(68) TARP.—The term ‘‘TARP’’ means thetroubled asset relief program established under section 101.(9) TROUBLED ASSETS.—The term ‘‘troubledassets’’ means—(A) residential or commercial mortgagesand any securities, obligations, or other instruments that are based on or related to suchmortgages, that in each case was originated orissued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and, upon the determination of the Secretaryin(B) <<any other financial instrument thatthe Secretary, after consultation with the Chairman of the Board ofGovernors of the Federal Reserve, any other financial instrument, the purchase of which the Secretarydetermine Governors of the FederalReserve System, determines the purchase ofwhich is necessary to promote financial marketstability, but only upon transmittal of such de [Discussion Draft]termination, in writing, to the appropriate com mittees of Congress>>.TITLE I—TROUBLED ASSETSRELIEF PROGRAMSEC. 101. PURCHASES OF TROUBLED ASSETS.(a) OFFICES; AUTHORITY.—<<(1) AUTHORITY.—The Secretary is authorizedto establish a programtroubled asset relief program (or‘‘TARP’’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions asare determined by the Secretary, and in accordancewith 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, appointed by thePresident, by and with the advice and consentof the Senate.(B) CLERICAL AMENDMENT.—Section5315 of title 5, United States Code, is amendedin the item relating to Assistant Secretaries ofthe Treasury, by striking ‘‘(9)’’ and inserting‘‘(10)’’.(b) CONSULTATION.—In exercising the authorityunder this Act, the Secretary shall consult with the Boardsection, the Secretary shall consult with theBoard of Governors of the Federal Reserve System, theFederal Reserve Bank of New York, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, theDirector of the Office Corporation, theComptroller of the Currency, the Director of the Officeof Thrift Supervision, and the Secretary of Housing andUrban Development.(c) NECESSARY ACTIONS.—The Secretary is authorized to take such actions as the Secretary deems necessaryto carry out the authorities in this Act, including, withoutlimitation, the following:(1) The Secretary shall have direct hiring authority with respect to the appointment of employeesto administer this Act.(2) Entering into contracts, including contractsfor 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 dutiesrelated to this Act as financial agents of the FederalGovernment as may be required.(4) EIn order to provide the Secretary with theflexibility to manage troubled assets in a manner designed to minimize cost to the taxpayers, establishing vehicles that are authorized, subject to supervision by the Secretary, to purchasetroubled assets and troubled assetsand issue obligations.(5) Issuing such regulations and other guidanceas may be necessary or appropriate to define termsor carry out the authorities or purposes of this Act.(d) PROGRAM GUIDELINES.—Before the earlier ofthe end of the 2-business -day period beginning on the dateof the first exercise of the authority under this section orthe end of the 30purchase of troubled assets pursuant to theauthority under this section or the end of the 45-day period beginning on the date of theenactment of this Act, the Secretary shall publish programguidelines, including the enactment of this Act, theSecretary shall publish program guidelines, including thefollowing:(1) Mechanisms for purchasing troubled assets.(2) Methods for pricing and valuing troubledassets.(3) Procedures for selecting asset managers.(4) Criteria for identifying troubled assets forpurchase.(e) PREVENTING UNJUST ENRICHMENT.—In makingpurchases under the authority of this Act, the Secretaryshall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating ina program established under this section, including by preventing the resale of a troubled asset to the Secretary ata higher price than what the seller paid to purchase theasset. This subsection does not apply to troubled assetsacquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedingsunder title 11, United States Code.SEC. 102. INSURANCE OF TROUBLED ASSETS.(a) AUTHORITY.—(1) IN GENERAL.—If the Secretary establishesthe program authorized under section 101, then theSecretary shall establish a program to guaranteetroubled assets, including mortgage-backed securitiesissued prior to March 18, 2008.(2) GUARANTEES.—In establishing any program under this subsection, the Secretary may develop guarantees of troubled assets and the associated premiums for such guarantees. Such guarantees and premiums shall be determined by categoryor class of the securities to be guaranteed.(3) EXTENT OF GUARANTEE.—Upon request ofa financial institution, the Secretary may guaranteethe timely payment of principal of, and interest on,troubled assets in amounts not to exceed 100 percent of such payments. Such guarantee may be onsuch terms and conditions as are determined by theSecretary, provided that such terms and conditionsare consistent with the purposes of this Act.(b) REPORTS.—The Secretary shall report to the appropriate committees of Congress on the program established under subsection (a). Such report shall be submitted prior to any increase in the authority to purchasetroubled assets in accordance with section 115.(c) PREMIUMS.—(1) IN GENERAL.—The Secretary shall collectpremiums from any financial institution participating in the program established under subsection(a). Such premiums may be in amount that the Secretary determines necessary to meet the purposes ofthis Act and to provide sufficient reserves pursuantto paragraph (3).(2) AUTHORITY TO BASE PREMIUMS ON PRODRISK.—In establishing any premium underUCTparagraph (1), the Secretary may provide for variations in such rates according to the credit risk as [Discussion Draft]sociated with the particular troubled asset that isbeing guaranteed. The Secretary shall publish themethodology for setting the premium for a class oftroubled assets, such that the premium is consistentwith paragraph (3), together with an explanation ofthe appropriateness of the class of assets that mayparticipate in the program established under thissection.(3) MINIMUM LEVEL.—The premiums referredto in paragraph (1) shall be set by the Secretary ata level necessary to create reserves sufficient to meetanticipated claims, based on an actuarial analysisand to ensure that taxpayers are fully protected.(4) OFFSET.—The amount of premiums collected under this subsection shall offset the amountauthorized to be purchased under section 115.(d) TROUBLED ASSETS INSURANCE FUND.—(1) DEPOSITS.—The Secretary shall depositfees collected under this section into the TroubledAssets Insurance Fund established under paragraph(2).(2) ESTABLISHMENT.—There is established aTroubled Assets Insurance Fund that shall consistof the amounts collected pursuant to paragraph (1),and any balance ins such fund shall be invested bythe Secretary in United States Treasury securities,or kept in cash on hand or on deposit, as necessary.(3) PAYMENTS FROM FUND.—The Secretaryshall make payments from amounts deposited in theTroubled Assets Insurance Fund to fulfill obligationsof the guarantees provided to financial institutionsunder subsection (a).SEC. 103. CONSIDERATIONS.In exercising the authorities granted in this Act, theSecretary shall take into consideration—(1) protecting the interests of taxpayers bymaximizing overall returns and minimizing the impact to the national debt;(2) providing stability orand preventing disruptionto the financial markets or banking system;(2 to financial markets in order to limit the impacton the economy;(3) the need to help families to keep their homesand to stabilize communities;(34) 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 representsthe most efficient use of funds under this Act;(4) ensuring that as many financial institutionsas possible participate in the program, without discrimination against financial 5) ensuring that all financial institutions based ontheirareeligible to participate in the program, without dis [Discussion Draft]crimination based on size, geographic opery, form of organization, or the size, type, and number of assets eligible for purchase underthis Act;(5 this Act;(6) 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 resultof the devaluation of the preferred government-sponsored enterprises stock will drop one or more capitallevels, in a manner sufficient to restore the financialinstitutions to at least an adequately capitalizedlevel;(67) the need to ensure stability for UnitedStates public instrumentalities, such as counties andcities, that may have suffered significant increasedcosts or losses in the current market turmoil;(7) the need to protect the interest of the taxpayers, taking into account the impact on the economy, jobs, savings, and pensions;<<(8) student loans;>>(9<<(8) that nothing in this Act prevents the Secretary from19retary from protecting the retirement security ofAmericans by purchasing troubled assets that a financial institution holds or manages on behalf of acash or deferred <<arrangement>> that meets the re16quirements of section 401(k) of the Internal Revenue Code of 1986, pension, or other retirementplan; and(10held by oron behalf of an eligible retirement plan other thana plan described in section 409A of the InternalRevenue Code of 1986; and>>(9) the utility of purchasing other real estateowned and instruments backed by mortgages onmultifamily properties.SEC. 1034. 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 aprogram developed in accordance with this Act, including—(A) all actionsny action taken by the Secretary andthe Office of Financial Stability created undersection 101, including the appointment of financial agents, the designation of asset classes tobe purchased, and plans for the structure of vehicles used to purchase troubled assets; and(B) the effect of such actions in assistingAmerican families in preserving home ownership, stabilizing financial markets, and protecting taxpayers;(2) making recommendations, as appropriate, tothe Secretary regarding use of the authority underthis Act; and(3) reporting any suspected fraud, misrepresentation, ormalfeasance to appropriate law enforcement agencies malfeasance to the Inspector General forthe Department of the Treasury or the AttorneyGeneral of the United States, consistent with section535(b) of title 28, United States Code.(b) MEMBERSHIP.—The Financial Stability Oversight Board shall be comprised of—(1) the <<Chairman>> of the Board of Governorsof Chairman of the Board of Governors ofthe Federal Reserve System;(2) the <<chairperson>> of the Board of Directorsof the Federal Deposit Insurance Corporation;(3) the <<chairperson>>Secretary;(3) the Director of the Federal Home FinanceAgency;(4) the chairman of the Securities and Ex 5change Commission;(4) one member who is not an employee of theFederal Government or any State government having appropriate financial expertise in both the publicand private sectors, appointed jointly by the majority leader of the Senate and the Speaker of theHouse of Representatives; and(5) one member who is not a government employee, having appropriate financial expertise in boththe public and private sectors, appointed jointly bythe minority leader of the Senate and the minorityleader of the House of Representativeschange Commission; amd(5) the Secretary of Housing and Urban Development.(c) CHAIRPERSON.—The chairperson of the FinancialStability Oversight Board shall be elected by the membersof the Board from among the members.(d) MEETINGS.—The Financial Stability OversightBoard shall meet 2 weeks after the first exercise of thepurchase authority of the Secretary under this Act, andmonthly thereafter.(e) EXECUTIVE COMMITTEE.—(1) APPOINTMENT.—There is established an executive committee of the Financial Stability Oversight Board which shall consist of the members ofthe Financial Stability Oversight Board pursuant toparagraphs (1), (2), and (3) of subsection (b).(2) AUTHORITIES.—Notwithstanding the authority granted to the Secretary under section101(a), the executive committee may direct, limit, orprohibit the activities of the Secretary to carry outthe purposes of this Act, to the extent that the executive committee determines that such activities arenot in accordance with the purposes of this ActThe Financial StabilityOversight Board shall have the authority to ensurethat the policies implemented by the Secretary are—(A) in accordance with the purposes of thisAct;(B) in the economic interests of the UnitedStates; and(C) consistent with protecting taxpayers, inaccordance with section 112(a).(f) CREDIT REVIEW COMMITTEE.—(1) APPOINTMENT.—The executive committeeestablished under subsection (e) may appoint The executivecommittee established under subsection (e) may appointa credit review committee for the purpose of evaluating theexercise of the purchase authority provided underthis Act and the assetsthe exercise of the purchase authority provided under thisAct and the assets acquired through the exercise of suchauthority, as the executive committee determines appropriate.(2) ADVISORY COMMITTEE ACT APPLIES.—TheFederal Advisory Committee Act (5 U.S.C. App.)shall apply to a credit review committee appointedunder this subsection.(3) FEDERAL EMPLOYEES.—The employees ofa credit review committee appointed under this subsection shall be employees under section 2105 oftitle 5, United States Code, including for purposesof chapters 63, 81, 83, 84, 85, 87, 89, 89A, 89B,and 90 of that title.(g) SHARING OF INFORMATION.—Any reports or recommendations submitted or proposed under this sectionshall also be submitted to the Congressional OversightPanel established under section 124.SEC. 1045.(h) TERMINATION.—The Financial Stability Oversight Board, and the authority of the Oversight Boardunder this section, shall terminate on the expiration of the15-day period beginning upon the later of—(1) the date of expiration of the last insurancecontract issued under section 102; or(2) the date that the last troubled asset acquired by the Secretary under section 101 has beensold or transferred out of the ownership or controlof the Federal Government.SEC. 105. REPORTS.(a) IN GENERAL.—Before the expiration of the 60day period beginning on the date of the first exercise ofthe authority granted in section 101(a), whichever dateis earlier, or of the first exercise of the authority grantedin section 102, whichever occurs first, and every 30-dayperiod thereafter, the Secretary shall report to the appropriate committees of Congress, with respect to each suchperiod—(1) an overview of actions taken by the Secretary, including the considerations required by section 1023 and the efforts under section 1112;(2) the actual obligation and expenditure of thefunds provided for administrative expenses by section 1178 during such period and the expected expenditure of such funds in the subsequent period;and(3) a detailed financial statement with respectto the exercise of authority under this Act, including—(A) all agreements made or renewed;(B) all insurance contracts entered intopursuant to section 102;(C) all transactions occurring during suchperiod, including the types of parties involved;(CD) the nature of the assets purchased;(DE) all projected costs and liabilities;(EF) operating expenses, including compensation for financial agents;(FG) the valuation or pricing method usedfor each transaction; and(GH) a description of the vehicles established to exercise such authority.(b) WEEKLY PUBLIC REPORTS.—On a weekly basis,every Monday or the first business day of the week, theSecretary shall make public the total amount of assetspurchased and sold during the preceding week under theauthority of this Act.(c) TRANCHE REPORTS TO CONGRESS.—(1) REPORTS.—The Secretary shall provide tothe Committee on Banking, Housing, and Urban Affairs, the Committee on the Budget, and the Committee on Finance of the Senate and the Committeeon Financial Services, the Committee on the Budget,and the Committee on Ways and Means of theHouse of Representatives, at the times specified inparagraph appropriate committees of Congress, at the timesspecified in paragraph (2), a written report, including—(A) a description of all of the transactionsmade during the reporting period;(B) a description of the pricing mechanismfor the transactions;(C) a justification of the price paid for andother 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 specificdata;(E) a description of challenges that remainin the financial system, including any benchmarks yet to be achieved; and(F) an estimate of additional actions underthe authority provided under this Act that maybe necessary to address such challenges.(2) TIMING.—The reports required by this subsection shall be submitted not later than 7 daysafter the date on which commitments to purchasetroubled assets under the authorities provided in thisAct first reach an aggregate of $50,000,000,000 andnot later than 7 days after each $50,000,000,000 interval of such commitments is reached thereafter.(dc) REGULATORY MODERNIZATION REPORT.—TheSecretary shall review the current state of the financialmarkets and the regulatory system and submit a writtenreport to the appropriate committees of Congress not laterthan April 30, 2009, analyzing the current state of theregulatory system and its effectiveness at overseeing theparticipants in the financial markets, including the overthe-counter swaps market and government-sponsored enterprises, and providing recommendations for improvement, including—(1) recommendations regarding—(A) whether any participants in the financial markets that are currently outside the regulatory system should become subject to the regulatory system and theregulatory system; and(B) enhancement of the clearing and settlement of over-the-counter swaps; and(2) the rationale underlying such recommendations.(ed) SHARING INFORMATION.—Any reports re OFquired under this section shall also be submitted to theCongressional Oversight Panel established under section124.SEC. 1055.(e) SUNSET.—The reporting requirements under thissection shall terminate on the later of—(1) the date of expiration of the last insurancecontract issued under section 102; or(2) the date that the last troubled asset acquired by the Secretary under section 101 has beensold or transferred out of the ownership or controlof the Federal Government.SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS; REVENUES AND SALE PROCEEDS.(a) EXERCISE RIGHTS.—The Secretary may, atOFany time, exercise any rights received in connection withtroubled assets purchased under this Act.(b) MANAGEMENT OF <<(b) MANAGEMENTTROUBLED ASSETS.—The Secretary, in consultation with the Federal Deposit InsuranceCorporation, shall have authority to manage troubled assets purchased under this Act, including revenues andOFSecretary, in consultation with the Corporation, shall haveauthority to manage troubled assets purchased under thisAct, including revenues and portfolio risks therefrom.>>(c) SALE TROUBLED ASSETS.—The SecretaryOFmay, at any time, upon terms and conditions and at pricesaprice determined by the Secretary, sell, or enter into securities loans, repurchase transactions, or other financialtransactions in regard to, any troubled asset purchased underthis Act.(d) TRANSFER OF A PERCENTAGE OFunder this Act.<<(d) TRANSFERPERCENTAGE PROFITS.—OF A OF>><<(1) DEPOSITS.—Not less than 20 percent ofany profit realized on the sale of each troubled assetpurchased under this Act shall be deposited as provided in paragraph (2).(2) USE vided in paragraph (2).>><<(2) USEOF DEPOSITS.—Of the amount referredto in paragraph (1)— ferred to in paragraph (1)—>><<(A) 65 percent shall be deposited into theHousing Trust Fund established under section1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568);and>><<(B) 35 percent shall be deposited into theCapital Magnet Fund established under section1339 of that Act (12 U.S.C. 4569).(3) REMAINDER DEPOSITED IN THE>><<(3) TRANSFERTO TREASURY.—Revenues of, and proceeds from the sale ofeach troubled asset purchased under this Act thatare remaining after payments under paragraph (1)shall be paid into the General Fund of the Treasuryfor reduction of the public debt.and proceeds from the sale of troubled assets pur chased under this Act, <<or from>> the sale, exercise,or surrender of warrants or senior debt acquiredunder section <<113>> shall be paid into the generalfund of the Treasury for reduction of the publicdebt.>>(e) APPLICATION SUNSET TROUBLED AS OF TOSETS.—The authority of the Secretary to hold any troubled asset purchased under this Act before the terminationdate in section 11920, or to purchase or fund the purchaseof a troubled asset under a commitment entered into before the termination date in section 119, is not subjectto the provisions of section 11920, is not subjectto the provisions of section 120.SEC. 1067. CONTRACTING PROCEDURES.(a) STREAMLINED PROCESS.—In awarding contracts,including contracts to asset managers, servicers, propertymanagers, and other service providers or expert consultants, that would otherwise be subject to the For purposes of thisAct, the Secretary may waive specific provisions of theFederal Acquisition Regulation, the Secretary may instead design astreamlined process, and shall solicit proposals from abroad range of qualified vendors interested in performingthe work upon a determination thaturgent and compelling circumstances make compliancewith such provisions contrary to the public interest. Anysuch determination, and the justification for such determination, shall be submitted to the Committees on Oversight and Government Reform and Financial Services ofthe House of Representatives and the Committees onHomeland Security and Governmental Affairs and Banking, Housing, and Urban Affairs of the Senate within 7days.(b) ADDITIONAL CONTRACTING REQUIREMENTS.—Insoliciting and awarding contracts authorized under the authority provided in subsection (a), the Secretary shall de [Discussion Draft]any solicitation or contract where the Secretary has, pursuant to subsection (a) waived the provisions of the Federal Acquisition Regulation pertaining to minority contracting, the Secretary shall develop and implement standards and procedures to ensure, to the maximum extentpracticable, the inclusion and utilization of minorities (as such term is defined in section1204(c) of the Financial such term is defined in section 1204(c) of the FinancialInstitutions Reform, Recovery, and Enforcement Act of1989 (12 U.S.C. 1811 note)) andwomen, and minority- women, and minorityand women-owned businesses (assuch terms are defined in section 21A(r)(4) of the Federal such terms are definedin section 21A(r)(4) of the Federal Home Loan Bank Act(12 U.S.C. 1441a(r)(4)), in allbusiness and activities provided for under this Act (that solicitation or contract,including contracts to asset managers, servicers, propertymanagers, and other service providers or expert consultants).Any streamlined processes established by the Secretary forreview and evaluation of contract proposals shall includea component that gives consideration to the diversity ofthe applicant.(c) ELIGIBILITY FDIC.—Notwithstanding sub OFsections (a) and (b), the Federal Deposit Insurance Corporation shall be eligible and shall be considered in theselection of asset managers for residential mortgage loansand residential mortgage-backed securitiesCorporation—(1) shall be eligible for, and shall be consideredin, the selection of asset managers for residentialmortgage loans and residential mortgage-backed securities; and(2) shall be reimbursed by the Secretary forany services provided.SEC. 1078. CONFLICTS OF INTEREST.(a) STANDARDS REQUIRED.—The Secretary shallissue regulations or guidelines necessary to address andmanage or to prohibit conflicts of interest that may arisein connection with the administration and execution of theauthorities provided under this Act, including—(1) conflicts arising in the selection or hiring ofcontractors 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, asthe Secretary deems necessary or appropriate in thepublic interest.(b) TIMING.—Regulations or guidelines required bythis section shall be issued as soon as practicable afterthe date of the enactment of this Act.SEC. 1089. FORECLOSURE MITIGATION EFFORTS.(a) RESIDENTIAL MORTGAGE LOAN SERVICINGSTANDARDS.—To the extent the Secretary acquires mortgages, mortgage at the Secretary acquiresmortgages, mortgage backed securities, and other assetssecured by residential real estate, including multifamilyhousing, the Secretary shall implement a plan that seeksto maximize assistance forhomeowners and use the Secretary’s authority as investor homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages,consistent with a reasonable return to the taxpayer, tounderlying mortgages, considering net present value to thetaxpayer, to 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 coordinatewith the Federal Deposit Insurance Corporation, theBoardCorporation, the Board (with respect to anymortgage or mortgage-backed securities or pool of securities held, owned, or controlled by or on behalf of a Federalreserve bank), the Federal Housing Finance Agency, theSecretary of Housing and Urban Development, and otherFederal Government entities that hold troubled assets toattempt to identify opportunities for the acquisition ofclasses of troubled assets that will improve the Secretary’sabilitability ofthe Secretary to improve the loan modification and restructuring process and, where permissible, to permit bonafide tenants who are current on their rent to remain intheir homes under the terms of the lease. (c) SYSTEMATIC APPROACH.—In carrying out thissection, the Secretary shall utilize a systematic approachfor preventing foreclosures and ensuring long-term, sustainable homeownership through loan modifications andthe use of the HOPE for Homeowners Program established under section 257 of the National Housing Act andany other programs that may be available for such purposes. In the case of a mortgage on a residential rentalproperty, the systematic approach required under this subIn the case ofa mortgage on a residential rental property, the plan required under this section shall include protecting Federal,State, and local rental subsidies and protections, and ensuring any modification takes into account the need foroperating funds to maintain decent and safe conditions at the property.(d)the property.(c) CONSENT REASONABLE LOAN MODIFICATIONTOREQUESTS.—For residential mortgages underlying troubled assets purchased under this Act, the Secretary shallrequest loan servicers servicing the mortgage loans toavoid preventable foreclosures, to the greatest extent possible, to the extent that the Secretary, as an investor, hasdiscretion to do so under existing investment contracts.Upon any request arising under existing investment contracts, the Secretary shall consent, where appropriate, toand considering net present value to the taxpayer, to reasonable requests for loss mitigation measures,including term extensions, rate reductions, principal writedowns, increases in the proportion of loans within a trustor other structure allowed to be modified, or removal ofother limitation on modifications.SEC. 10910. 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 FederalNational Mortgage Association and the FederalHome Loan Mortgage Corporation;(B) the Corporation, in its capacity as conservator or receiver of an insured depository institutionwith respect to residential mortgage loans and mortgage-backed securities held by any bridge depository institution pursuant to section 11(n) of the FederalDeposit Insurance Act; and(C) the Board, with respect to any mortgage or mortgage-backed securities or pool ofsecurities held, owned, or controlled by or onbehalf of a Federal reserve bank;(2) the term ‘‘consumer’’ has the same meaningas in section 103 of the Truth in Lending Act (15U.S.C. 1602);(3) the term ‘‘insured depository institution’’has the same meaning as in section 3 of the FederalDeposit Insurance Act (12 U.S.C. 1813); and(4) the term ‘‘servicer’’ has the same meaningas in section 6(i)(2) of the Real Estate SettlementProcedures Act of 1974 (12 U.S.C. 2605(i)(2)).(b) SYSTEMATIC HOMEOWNER ASSISTANCE BY AGENCIES.—(1) IN GENERAL.—Each To the extent that the Federal property manager shall, with respect to any residential mortgageloans and any mortgage-backed securities that itholds, 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 suchloans and securities, and ensuring long-term, sustainable homeownership through loan modificationsand use of themort [Discussion Draft]gages, mortgage backed securities, and other assetssecured by residential real estate, including multifamily housing, the Federal property manager shallimplement a plan that seeks to maximize assistancefor homeowners and use their authority to encouragethe servicers of the underlying mortgages, and considering net present value to the taxpayer, to takeadvantage of the HOPE for Homeowners Program established under section 257 of the National HousingAct and any other programs that may be availablefor such purposes.(2) Act orother available programs to minimize foreclosures.(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 ofmortgages 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 accountthe need for operating funds to maintain decentand safe conditions at the property.(4) TIMING.—Each Federal property managershall develop and begin implementation of the program lanrequired by this subsection not later than 60 daysafter the date of enactment of this Act.(5) REPORTS CONGRESS.—Each FederalTOproperty manager shall, 60 days after the date ofenactment of this Act and every 30 days thereafter,report to Congress specific information on the number and types of loan modifications made and thenumber of actual foreclosures occurring during thereporting period in accordance with this section.(6) CONSULTATION.—In developing the program required by this subsection, the Federal propertylan required by this subsection, the Federal property managers shall consult with one another and, to the extent possible, utilize consistent approaches to implement the requirements of this subsection.<<(c) AVAILABILITYFORECLOSED PROPERTIESOF TOSTATES AND LOCALITIES.—>><<(1) INGENERAL.—Each Federal propertymanager shall make available to any State or localgovernment that is receiving emergency assistanceunder section 2301 of the Foreclosure PreventionAct of 2008 (Public Law 110-289) for purchase, ata discount, residential properties that it ownsthrough foreclosure in that State or locality, in orderto facilitate the sale of such properties and to sta bilize neighborhoods affected by foreclosures.>><<(2) INFORMATIONCLEARINGHOUSE.—<<(A) PROVISIONOF INFORMATION TO THESECRETARY.—Each Federal property managershall make available to the Secretary of Housing and Urban Development information onproperties available for purchase under thissubsection.>><<(B) CLEARINGHOUSE.—The Secretary ofHousing and Urban Development and the Federal property managers shall develop a clearinghouse for the information compiled under thisparagraph, and make such clearinghouse easilyaccessible by States and local governments de scribed in paragraph (1).>>(d(c) ACTIONS WITH RESPECT TO SERVICERS.—In anycase in which a Federal property manager is not the ownerof a residential mortgage loan, but holds an interest inobligations or pools of obligations secured by residentialmortgage loans, the Federal property manager shall—(1) encourage implementation by the loanservicers of loan modifications developed under subsection (b);(2) encourage the loan servicers to make foreclosed properties available for sale to State and localgovernments at a discount, as described in subsection (c); and(3 and(2) assist in facilitating any such modificationsor sales, to the extent ,to the extent possible.(ed) LIMITATION.—The requirements of this sectionshall not supersede any other duty or requirement imposedon the Federal property managers under otherwise applicable law.SEC. 1101. EXECUTIVE COMPENSATION AND CORPORATEGOVERNANCE.(a) IN GENERAL.—The Secretary shall require thatall financial institutions seeking to sell assets through theprogram under this ActDIRECT PURCHASES.—(1) IN GENERAL.—Where the Secretary determines that the purposes of this Act are best metthrough direct purchases of troubled assets from anindividual financial institution where no biddingprocess or market prices are available, and the Secretary receives a meaningful equity position in thefinancial institution as a result of the transaction,the Secretary shall require that the financial institution meet appropriate standards forsenior executive officer executive compensation and corporate governance in order to be eligible.(b) CRITERIA STANDARDS. The standardsrequired under this subsection shall be effective forthe duration of the period that the Secretary holdsan equity position in the financial institution.(2) CRITERIA.—The standardsFORunder this section shall include with respect to any financial institution participating in the program under thisAct, and effective for the 2 years after entry by the financial institution into such participation—(1 required undersubsection shall include—(A) limits on compensation tohat exclude incentivesfor senior executive officers to take risks that theSecretary deems to be inappropriate or excessiveduring such participation;(2 for executive officers of a financial institution to take unnecessary and excessiverisks that threaten the value of the financial institution during the period that the Secretaryholds an equity position in the financial institution;(B) a provision for the recovery by the financialinstitution of any bonus or other incentive institution of any bonus or incentivecompensation paid to a senior executive officer based on<<senior executive offi10cer>> based on statements of earnings, gains, orother criteria that are later proven to be false ormaterially inaccurate; and(3C) a prohibition on the financial institutionpaying inappropriate or excessive severance compensation, or change of control compensation, to itssenior executive officers during such period.(c) ADDITIONAL STANDARD DIRECT PUR FORCHASES.—The standards prescribed by the Secretaryunder this section shall include additional standards withrespect to financial institutions, in which the Secretarymakes a direct purchase from an individual financial institution. Such standards shall be effective for the longer of2 years or the duration of the holding by the Secretaryof an equity position in such financial institution pursuantto section 112(c), and shall include—(1) a requirement that the financial institutionpermit any shareholder or group of shareholdersholding, in the aggregate, equity securities of the financial institution representing 3 percent or more ofthe equity securities of the financial institution, access to the proxy solicitation and shareholder votefor any election of the board of directors of the institution for the purposes of nominating and electinga designated individual to the board of directors ofthe financial institution;(2) a requirement that the financial institutionafford to all shareholders the opportunity to cast anon-binding vote, in any annual proxy solicitationand shareholder vote, on the executive compensationto be provide to the executive officers of the financialinstitution; and(3) a prohibition on the financial institutionpaying severance compensation, or change of controlcompensation, to its senior executive officers duringany period in which the Secretary continues to holdmaking any golden parachute payment toits <<senior executive officers>> during the periodthat the Secretary holds an equity position in the financial institution.(d) TIMELY IMPLEMENTATION.—(1) IN GENERAL.—The standards requiredunder this section shall be issued not later than 2weeks after the date of enactment of this Act.(2) AGREEMENTS.—Until the standards required under this section are issued, the Secretarymay not exercise the authority under section 101(a)to purchase troubled assets from a financial institution unless the institution enters into such agreements asthe financial institution.(b) AUCTION PURCHASES.—Where the Secretary determines that the purposes of this Act are best metthrough auction purchases of troubled assets, and onlywhere such purchases in the aggregate exceed$300,000,000, the Secretary shall require to comply withsuch standardsprohibit any goldenparachute for any employee hired after the successful participation in such an auction who also qualifies as a cov [Discussion Draft]ered executive under section 162(m)(5)(D) of the InternalRevenue Code of 1986. The Secretary shall issue guidanceto carry out this paragraph not later than 2 months afterthe date of enactment of this Act, and such guidance shallbe effective upon issuance.(e) DEFINITIONS<<(c) GOLDEN PARACHUTE DEFINED.—In this sec 6tion, the term ‘‘golden parachute’’ means any payment (orany agreement to make any payment) in the nature ofcompensation by any financial institution for the benefitof an individual pursuant to an obligation of the financialinstitution that—>><<(1) is contingent on the termination of the af12filiation of such individual with the financial institu tion; and>><<(2) is received on or after the date on which—>><<(A) the financial institution becomes in17solvent;>><<(B) any conservator or receiver is ap19pointed for the financial institution;>><<(C) the financial institution files forbankruptcy protection under title 11, UnitedStates Code; or>><<(D) the financial institution is in a trou24bled condition.>>(d) SPECIAL RULES TAX TREATMENT EXEC FOR OFCOMPENSATION EMPLOYERS PARTICIPATINGUTIVE OF INTROUBLED ASSETS RELIEF PROGRAM.—THE(1) DENIAL OF DEDUCTION.—Subsection (m)of section 162 of the Internal Revenue Code of 1986is amended by adding at the end the following newparagraph:‘‘(5) SPECIAL RULE FOR APPLICATION TO EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETSRELIEF PROGRAM.—‘‘(A) IN GENERAL.—In the case of an applicable employer, no deduction shall be allowedunder this chapter—‘‘(i) in the case of executive remuneration for any applicable taxable year whichis attributable to services performed by acovered executive during such applicabletaxable year, to the extent that the amountof such remuneration exceeds $500,000, or‘‘(ii) in the case of deferred deductionexecutive remuneration for any taxableyear for services performed during any applicable taxable year by a covered executive, to the extent that the amount of suchremuneration exceeds $500,000 reduced(but not below zero) by the sum of—‘‘(I) the executive remunerationfor such applicable taxable year, plus‘‘(II) the portion of the deferreddeduction executive remuneration forsuch services which was taken into account under this clause in a precedingtaxable year.‘‘(B) APPLICABLE EMPLOYER.—For purposes of this section, thefollowing definitions shall apply:(1) SENIOR EXECUTIVE OFFICER.—The term‘‘senior executive officer’’ means the same individuals that are the most highlyparagraph—‘‘(i) IN GENERAL.—Except as provided in clause (ii), the term ‘applicableemployer’ means any employer from whom1 or more troubled assets are acquiredunder a program established by the Secretary under section 101(a) of the Economic Recovery and Corporate Accountability Act of 2008 if the aggregateamount of the assets so acquired for alltaxable years exceeds $300,000,000.‘‘(ii) DISREGARD OF ASSETS SOLDTHROUGH DIRECT PURCHASE.—If an employer sells any troubled assets to the Secretary through a direct purchase (withinthe meaning of section 112(c) of the Economic Recovery and Corporate Accountability Act of 2008), such assets shall notbe taken into account under clause (i) indetermining whether the employer is anapplicable employer for purposes of thisparagraph.‘‘(iii) AGGREGATION RULES.—Two ormore persons who are treated as a singleemployer under subsection (b) or (c) ofsection 414 shall be treated as a single employer, except that in applying section1563(a) for purposes of either such subsection, paragraphs (2) and (3) thereofshall be disregarded.‘‘(C) APPLICABLE TAXABLE YEAR.—Forpurposes of this paragraph, the term ‘applicabletaxable year’ means, with respect to any employer—‘‘(i) the first taxable year of the employer—‘‘(I) which includes any portionof the period during which the authorities under section 101(a) of theEconomic Recovery and Corporate Ac [Discussion Draft]countability Act of 2008 are in effect(determined under section 119 thereof), and‘‘(II) in which the aggregateamount of troubled assets acquiredfrom the employer during the taxableyear pursuant to such authorities,when added to the aggregate amountso acquired for all preceding taxableyears, exceeds $300,000,000, and‘‘(ii) any subsequent taxable yearwhich includes any portion of such period.‘‘(D) COVERED EXECUTIVE.—For purposes of this paragraph—‘‘(i) IN GENERAL.—The term ‘coveredexecutive’ means, with respect to any applicable taxable year, any employee—‘‘(I) who, at any time during theportion of the taxable year duringwhich the authorities under section101(a) of the Economic Recovery andCorporate Accountability Act of 2008are in effect (determined under section 119 thereof), is the chief executive officer of the applicable employeror the chief financial officer of the applicable employer, or an individualacting in either such capacity, or‘‘(II) who is described in clause(ii).‘‘(ii) HIGHEST EM COMPENSATEDPLOYEES.—An employee is described inthis clause if the employee is 1 of the 3highest compensated executiveofficers of a publicly traded company that is subjectto the compensationofficers of the applicable employer for the taxable year (otherthan an individual described in clause(i)(I)), determined—‘‘(I) on the basis of the shareholder disclosure requirements of theSecurities Exchange Act of 1934, and their counterparts in a non-public companyules for compensation under the Securities ExchangeAct of 1934 (without regard to whether those rules apply to the employer),and‘‘(II) by only taking into accountemployees employed during the portion of the taxable year described inclause (i)(I).‘‘(iii) EMPLOYEE REMAINS COVEREDEXECUTIVE.—If an employee is a coveredexecutive with respect to an applicable em [Discussion Draft]ployer for any applicable taxable year, suchemployee shall be treated as a covered executive with respect to such employer forall subsequent applicable taxable years andfor all subsequent taxable years in whichdeferred deduction executive remunerationwith respect to services performed in allsuch applicable taxable years is paid.‘‘(E) EXECUTIVE REMUNERATION.—Forpurposes of this paragraph, the term ‘executiveremuneration’ means the applicable employeeremuneration of the covered executive, as determined under paragraph (4) without regard tosubparagraphs (B), (C), and (D) thereof. Suchterm shall not include any deferred deductionexecutive remuneration with respect to servicesperformed in a prior applicable taxable year.‘‘(F) DEFERRED DEDUCTION EXECUTIVEREMUNERATION.—For purposes of this paragraph, the term ‘deferred deduction executiveremuneration’ means remuneration which wouldbe executive remuneration for services performed in an applicable taxable year but for thefact that the deduction under this chapter (determined without regard to this paragraph) forsuch remuneration is allowable in a subsequenttaxable year.‘‘(G) COORDINATION.—Rules similar tothe rules of subparagraphs (F) and (G) of paragraph (4) shall apply for purposes of this paragraph.‘‘(H) REGULATORY AUTHORITY.—The Secretary may prescribe such guidance, rules, orregulations as are necessary to carry out thepurposes of this paragraph and the EconomicRecovery and Corporate Accountability Act of2008, including the extent to which this paragraph applies in the case of any acquisition,merger, or reorganization of an applicable employer.’’.(2) GOLDEN PARACHUTE RULE.—Section 280Gof the Internal Revenue Code of 1986 is amended—(A) by redesignating subsection (e) as subsection (f), and(B) by inserting after subsection (d) thefollowing new subsection:‘‘(e) SPECIAL RULE APPLICATION EMPLOY FOR TOPARTICIPATING TROUBLED ASSETS RELIEFERS IN THEPROGRAM.—‘‘(1) IN GENERAL.—In the case of the severance from employment of a covered executive of anapplicable employer during any applicable taxableyear, this section shall be applied to payments tosuch executive with the following modifications:‘‘(A) Any reference to a disqualified individual (other than in subsection (c)) shall betreated as a reference to a covered executive.‘‘(B) Any reference to a change describedin subsection (b)(2)(A)(i) shall be treated as areference to an applicable severance from employment of a covered executive, and any reference to a payment contingent on such achange shall be treated as a reference to anypayment made during an applicable taxableyear of the employer on account of such applicable severance from employment.‘‘(C) Any reference to a corporation shallbe treated as a reference to an applicable employer.‘‘(D) The provisions of subsections(b)(2)(C), (b)(4), (b)(5), and (d)(5) shall notapply.‘‘(2) DEFINITIONS AND SPECIAL RULES.—Forpurposes of this subsection—‘‘(A) DEFINITIONS.—Any term used inthis subsection which is also used in section162(m)(5) shall have the meaning given suchterm by such section.‘‘(B) APPLICABLE SEVERANCE COMPENSATIONFROM EMPLOYMENT.—The term ‘applicable severancefrom employment’ means any severance fromemployment of a covered executive by reasonof—‘‘(i) an involuntary termination of theexecutive by the employer,‘‘(ii) any bankruptcy or liquidation ofthe employer, or‘‘(iii) the placement of the employer inreceivership.‘‘(C) COORDINATION AND OTHERRULES.—‘‘(i) IN GENERAL.—If a paymentwhich is treated as a parachute paymentby reason of this subsection is also a parachute payment determined without regardto this subsection, this subsection shall notapply to such payment.‘‘(ii) REGULATORY AUTHORITY.—TheSecretary may prescribe such guidance,rules, or regulations as are necessary—‘‘(I) to carry out the purposes ofthis subsection and the Economic Recovery and Corporate AccountabilityAct of 2008, including the extent towhich this subsection applies in thecase of any acquisition, merger, or reorganization of an applicable employer, and‘‘(II) to apply this section andsection 4999 in cases where one ormore payments with respect to any individual are treated as parachute payments by reason of this subsection,and other payments with respect tosuch individual are treated as parachute payments under this sectionwithout regard to this subsection.’’.(3) EFFECTIVE DATES.—(A) IN GENERAL.—The term‘‘severance compensation’’ means any compensationthat is awarded to a senior executive officer on thebasis of the termination of such executive officer’sservice with the financial institution, other than apension plan or a retirement plan in which the executive officer’s rights were fully vested prior to thedate of entry of such financial institution into participation in the program under this Act.SEC. 111amendment madeby paragraph (1) shall apply to taxable yearsending on or after the date of the enactment ofthis Act.(B) GOLDEN RULE.—ThePARACHUTEamendments made by paragraph (2) shall applyto payments with respect to severances occurring during the period during which the authorities under section 101(a) are in effect (determined under section 120).SEC. 112. COORDINATION WITH FOREIGN AUTHORITIESAND CENTRAL BANKS.The Secretary shall coordinate, as appropriate, withforeign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets asa result of extending financing to financial institutionsthat have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.SEC. 1123. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS.(a) LONG-TERM COSTS AND BENEFITS.—The Sec ANDretary shall use the authority under this Act in a manner(1) MINIMIZING NEGATIVE IMPACT.—The Secretary shall use the authority under this Act in amanner that will minimize any potential long-termnegative impact on the taxpayer, taking into accountthe direct outlays, potential long-term returns on assets purchased, and the overall economic benefits ofthe program, including economic benefits due to improvements in economic activity and the availabilityof credit, the impact on the savings and pensions ofindividuals, and reductions in losses tothe Federal Government the FederalGovernment.(2) AUTHORITY.—In carrying out paragraph(1), the Secretary shall—(A) hold the assets to maturity or for resale for and until such time as the Secretarydetermines that the market is optimal for selling such assets, in order to maximize the valuefor taxpayers; and(B) sell such assets at a price that the Secretary determines, based on available financialanalysis, will maximize return on investment forthe Federal Government.(3) PRIVATE PARTICIPATION.—TheSECTORSecretary shall encourage the private sector to participate in purchases of troubled assets, and to invest in financial institutions, consistent with the provisions of this section.(b) USE MARKET MECHANISMS.—In making pur OFchases under this Act, the Secretary shall maximize theefficiency of its—(1) make such purchases at the lowest pricethat the Secretary determines to be consistent withthe purposes of this Act; and(2) maximize the efficiency of the 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 theAct are best met through direct purchases from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid for assets arereasonable and reflect the underlying value of the asset.(d) CONDITIONS PURCHASE AUTHORITYON FORWARRANTS AND DEBT INSTRUMENTS.—(1) IN GENERAL.—Except as provided in paragraph (3), the Secretary may notThe Secretary may not purchase, or make any commitment to purchase, any troubled assetunder the authority of this Act, unless the Secretaryreceives from the financial institution from whichtroubled asset under the authority of this Act, unlessthe Secretary receives from the financial institutionfrom which such assets are to be purchased—(A) in the case of a financial institutionthat is registered (or approved for registration)and traded on a national securities exchange ora national securities association registered pur [Discussion Draft]suant to section 15A of the Securities ExchangeAct 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 suchfinancial institution, as the Secretary determines appropriate; or(B) in the case of any financial institutionother than one described in subparagraph (A),a senior debt instrument from such financial institution, as described in paragraph (32)(C).(2) TERMS AND CONDITIONS.—The terms andconditions of any warrant or senior debt instrumentrequired 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, for the benefit oftaxpayers, in equity appreciation in thecase of a warrant, or a reasonable interest rate premium, in the case ofa rate premium, in the case of a debt instrument for the benefit of taxpayers;(ii) to cover any potential losses thatwould be realized by the Secretary fromthe sale of troubled assets purchased fromthe financial institution that issued suchwarrants or instruments; and(iii) to cover ; and(ii) to provide additional protectionfor the taxpayer against losses from sale ofassets by the Secretary under this Act andthe administrative costsincurred by the Secretary for buying, managing, and disposing of such troubled assets.(B) AUTHORITY expenses of the TARP.(B) AUTHORITY TO SELL, EXERCISE, ORSURRENDER.—The Secretary may sell, exercise,or surrender a warrant or any senior debt instrument received under this subsection, basedon the conditions established under subparagraph (A).(C) CONVERSION.—The warrant shall provide that if, after the warrant is received by theSecretary under this subsection, the financialinstitution that issued the warrant is no longerlisted or traded on a national securities exchange or securities association, as described inparagraph (21)(A), such warrants shall convertto senior debt, in an amount determined by theSecretary.(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 theSecretary. Such provisions shall protect thevalue of the securities from market transactionssuch as stock splits, stock distributions, divi [Discussion Draft]dends, and other distributions, mergers, andother forms of reorganization or recapitalization.(E) EXERCISE PRICE.—The exercise pricefor any warrant issued pursuant to this subsection shall be set by the Secretary, in thepublic interest interest of the taxpayers.(F) SUFFICIENCY.—The financial institution shall guarantee to the Secretary that it hasauthorized shares of nonvoting stock availableto fulfill its obligations under this subsection.Should the financial institution not have sufficient authorized shares, the Secretary may accept a contingent including preferredshares that may carry dividend rights equal toa multiple number of common shares, the Secretary may, to the extent necessary, accept asenior 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 amount, and on suchterms, as will compensate the Secretary equivalently, in the event that a sufficient shareholdervote to authorize the necessary additionalshares cannot be obtained.(3) EXCEPTIONS.—(A) DE MINIMIS EXCEPTION.—The Secretaryshall establish a.—The Secretary shall establish de minimis exceptions to the requirements of this subsection, based on the size of the financial institution oreither—(i) the total consolidated assets of thefinancial institution, $500,000,000 or less;or(ii) the size of the transacumulative transactions of troubled assets purchased fromany one financial institution, at not morethan $100,000,000.(B) OTHER EXCEPTIONS.—The Secretaryshall establish an exception to the requirementsof this subsection and appropriate alternativerequirements for any participating financial institution that is legally prohibited from issuingsecurities and debt instruments, so as not toallow circumvention of the requirements of thissection.SEC. 1134. MARKET TRANSPARENCY.(a) PRICING.—To facilitate market transparency, theSecretary shall make available to the public, in electronicform, 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 establishedunder this Act, the Secretary shall determine whether thepublic disclosure required for such financial institutionswith respect to off-balance sheet transactions, derivativesinstruments, contingent liabilities, and similar sources ofpotential exposure is adequate to provide to the public sufficient information as to the true financial position of theinstitutions. If such disclosure is not adequate for thatpurpose, the Secretary shall make recommendations foradditional disclosure requirements to the relevant regulators.<<SEC. 114. MAXIMUM AMOUNT OF AUTHORIZED PURCHASES.The authority of the Secretary to purchase troubledassets under this Act shall be limited to $700,000,000,000outstanding at any one time, by aggregating the purchaseprices of all troubled assets held.>><<SEC. 114SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.>><<(a) AUTHORITY.—The authority of the Secretary topurchase troubled assets under this Act shall be limitedas follows:>><<(1) Effective upon the date of the enactmentof this Act, such authority shall beenactment of thisAct, 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 theCongress a written notification that the Secretaryis exercising the authority certification that the Secretary isexercising the authority under this paragraph, effective upon such submission, such authority shall belimited to $350,000,000,000 outstanding at any onetime.>><<(3) If at any time (3) If at any time after obligations of amountsdescribed in paragraphs (1) and (2) have been made,the President submits tothe Congress a written transmits to the Congress a writtenreport detailing the plan ofthe Secretary to exercise the authority under this the Secretary to exercisethe authority under this paragraph, unless there isenacted, within <<15>> cal 4endar days of such submission, 15 calendar days of such submission,a joint resolution described in subsection (c), effective upon the expira tion of such <<15-day>> period, such authority shall betion of such 15-day period, suchauthority shall be limited to $700,000,000,000 outstanding at any onetime.>><<(b) AGGREGATION time.(b) AGGREGATION PURCHASE PRICES.—TheOFamount of troubled assets purchased by the Secretary outstanding at any one time shall be determined for purposesof the dollar amount limitations under subsection (a) byaggregating the purchase prices of all troubled assetsheld.>><< held.(c) FAST TRACK CONSIDERATION.—>><<(1) IN(1) IN GENERAL.—Notwithstanding any otherprovision of this section, the Secretary may not exercise any authority to make purchases under this Actwith regard to any amount in excess of$350,000,000,000 previously obligated, as describedin this section if, within <<15>> calendar days afterthe date on which Congress receives a report of theSecretary described in subsection (a)(3), Congress10 calendar days after thedate on which Congress receives a report of the Secretary described in subsection (a)(3), Congress enacts a joint resolution disapproving the plan of theSecretary with respect to such additional amount.>><<(2) CONTENTSRESOLUTION.—For theOFpurpose of paragraph(2) CONTENTS OF RESOLUTION.—For the purpose of paragraph (1), ‘‘joint resolution’’ means onlya joint resolution introduced after the date onwhich the report of the Secretary referred to in subsection whichthe report of the Secretary referred to in subsection(a)(3) is received by Congress, the matter after theresolving 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)of the Economic Recovery and Corporate Account ability Act of 2008.’’.>><<(3) REFERRAL of the Emergency Economic Stabilization Act of 2008.’’.(3) REFERRAL TO COMMITTEE.—A resolutiondescribed in paragraph (2) introduced in the Houseof 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 theCommittee on Committee on Banking, Housing, andUrban Affairs of the Senate. Such a resolution maynot be reported before the 8th day after its introduc tion.>><<(4) DISCHARGEtion.(4) DISCHARGE OF COMMITTEE.—If the committee to which is referred a resolution described inparagraph (2) has not reported such resolution (oran identical resolution) at the end of <<10>> calendardays 8 calendar daysafter its introduction, such committee shall bedeemed to be discharged from further considerationof such resolution, and such resolution shall beplaced on the appropriate calendar of the House in volved.>><<(5) FLOORCONSIDERATION.—<<(A) INvolved.(5) FLOOR CONSIDERATION.—(A) IN GENERAL.—When the committeeto which a resolution described in paragraph(2) is towhich a resolution described in paragraph (2) isreferred has reported, or has been deemed to bedischarged (under paragraph (4)) from furtherconsideration 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)for any Member of the respective House tomove to proceed to the for any Member ofthe respective House to move to proceed to theconsideration of the resolution, and all points oforder against the resolution (and against consideration of the resolution) are waived. Themotion is highly privileged in the House of Representatives and isprivileged in the Senate and is not debatable.The motion is not subject to amendment, or toa motion to postpone, or to a motion to proceedto the consideration of other business. A motion privileged in the Senate andis not debatable. The motion is not subject toamendment, or to a motion to postpone, or toa motion to proceed to the consideration ofother business. A motion to reconsider the vote by which the motion isagreed to or disagreed to shall not beby which the motion is agreed to or disagreedto shall not be in order. If a motion to proceedto the consideration of the resolution is agreed to, the resolution shallremain the unfinished business of the respectiveto, the resolution shall remain the unfinishedbusiness of the respective House until disposed of.>><<of.(B) DEBATE.—Debate on the resolution,and on all debatable motions and appeals inconnection therewith, shall be limited to notmore than 10 hours, which shall be dividedequally 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 motionto proceed to the consideration of other business, or a motion to recommit the resolution isnot in order. A motion to reconsider the vote bywhich the resolution is agreed to or disagreed tois not in order.>><<(C) VOTEON FINAL(C) VOTE PASSAGE.—Immediately following the ON FINALdiately following the conclusion of the debate ona resolution described in paragraph (2), and asingle quorum call at the conclusion of the debate if requested in accordance with the rules ofthe appropriate House, the vote on final pas sage of the resolution shall occur.>><<(D) RULINGS.(D) RULINGS OF THE CHAIR ON PROCEDURE.—Appeals from the decisions of the Chairrelating to the application of the rules of theSenate or the House of Representatives, as thecase may be, to the procedure relating to a resolution described in paragraph (2) shall be decided without debate.>><<(6) COORDINATION(6) COORDINATION WITH ACTION BY OTHERHOUSE.—If, before the passage by one House of aresolution of that House described in paragraph (2),that House receives from the other House a resolution described in paragraph (2), then the followingprocedures shall apply:>><<(A) The resolution of the other House shallnot be referred to a committee.>><<(B) With respect to a resolution describedin paragraph (2) of the House receiving the res olution—>><<olution—(i) the procedure in that House shallbe the same as if no resolution had beenreceived from the other House; but>><<(ii) the vote on final passage shall beon the resolution of the other House.>><<(7) RULES(7) RULES OF HOUSE OF REPRESENTATIVESAND SENATE.—This subsection is enacted by Con gress—>><<gress—(A) as an exercise of the rulemaking powerof the Senate and House of Representatives, respectively, and as such it is deemed a part ofthe rules of each House, respectively, but applicable only with respect to the procedure to be followed in that House in the caseof a resolution described in paragraph (2), andprocedure to befollowed in that House in the case of a resolution described in paragraph (2), and 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 thatHouse) at any time, in the same manner, andto the same extent as in the case of any otherrule of that House.>><<SEC. 115SEC. 116. OVERSIGHT AND AUDITS.>>(a) COMPTROLLER GENERAL OVERSIGHT.—(1) SCOPE OF OVERSIGHT.—The ComptrollerGeneral of the United States shall, upon establishment of the troubled assets relief program underthis Act (in this section referred to as the ‘‘TARP’’),commence ongoing oversight of the activities andperformance of the TARP and of any agents andrepresentatives of the TARP (as related to the agentor representative’s activities on behalf of or underthe 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 inthe performance of the TARP in meeting the purposes of this Act, particularly thoseinvolving foreclosure mitigation, consumer protection, cost reduction, and stabilization of the financial systemand whether it has provided stability or prevented disruption to the financial markets orthe banking system and protected taxpayers.(B) The financial condition and internalcontrols of the TARP, its representatives andagents.(C) Characteristics of transactions andcommitments entered into, including transaction type, frequency, size, prices paid, and allother relevant terms and conditions, and thetiming, 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 inoperations of theTARP in the use of appropriated funds.(F) Compliance with all applicable lawsand regulations by the TARP, its agents and representatives.(G) TARP’s efforts to prevent, identify,representatives.(G) the efforts of the TARP to prevent,identify, and minimize conflicts of interest involving any agent or representative performing activities onbehalf of or under the authority of activities on behalf of or under the authority ofthe TARP.(H) The efficacy of contracting proceduresestablished under section 106, includingTARP’s effortsincluding the efforts of TARP in evaluating proposals for inclusion and contracting to the maximum extentpossible of minorities, women, and minorityand women-owned businesses, includingascertaining and reporting the total amount offees paid and other value delivered by TARP toall of its agents and representatives, and suchamounts paid or delivered to such firms thatare minority- and women-owned businesses (assuch terms are defined in section 21A of theFederal Home Loan Bank Act (12 U.S.C.1441a)).(2) CONDUCT AND ADMINISTRATION OF OVERSIGHT.—(A) GAO PRESENCE.—The Secretary shallprovide the Comptroller General with appropriate space and facilities in the Department ofthe Treasury as necessary to facilitate oversightof the TARP until the termination date established in section 119 of this Act.(B) ACCESS TO RECORDS.—The Comptroller o the extentotherwise consistent with law, the ComptrollerGeneral shall have access, upon request, to anyinformation, data, schedules, books, accounts,financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the TARP, orany vehicles established by the Secretary underthis Act, and to the officers, directors, employees, independent public accountants, financial advisors, and other agents andrepresentatives of the TARP advisors, and other agents and representativesof the TARP (as related to the agent or representative’s activities on behalf ofor under the authority of the TARP) or anysuch vehicle at such reasonable time as theComptroller General may or under theauthority of the TARP) or any such vehicle atsuch reasonable time as the Comptroller General may request. The Comptroller Generalshall be afforded full facilitiesfor verifying transactions with the balances orsecurities held for verifyingtransactions with the balances or securities heldby depositaries, fiscal agents,and custodians. The Comptroller General maymake and retain and custodians.The Comptroller General may make and retaincopies of such books, accounts,and other records as the Comptroller Generaldeems appropriate.(C) and otherrecords as the Comptroller General deems appropriate.(C) REIMBURSEMENT COSTS.—TheOFTreasury shall reimburse the Government Accountability Office for the full cost of any suchoversight activities as billed therefor by theComptroller General of the United States. Suchreimbursements shall be credited to the appropriation account ‘‘Salaries and Expenses, Government Accountability Office’’ current whenthe payment is received and remain availableuntil expended.(3) REPORTING.—The Comptroller Generalshall submit reports of findings under this section,regularly and no less frequently than once every 60days, to the appropriate committees of Congress,and the Inspector General for the Department of theTreasury on the activities and performance of theTARP. The Special Inspector General for the TroubledAsset Relief Program established under this Act onthe activities and performance of the TARP. TheComptroller may also submit special reports under this subsection as warranted by thefindings of its this subsection as warranted by the findings of itsoversight activities.(b) COMPTROLLER GENERAL AUDITS.—(1) ANNUAL AUDIT.—The TARP shall annuallyprepare and issue to the appropriate committees ofCongress and the public audited financial statementsprepared in accordance with generally accepted accounting principles [Discussion Draft]counting principles, and the Comptroller Generalshall annually audit such statements in accordancewith generally accepted auditing standards. TheTreasury shall reimburse the Government Accountability Office for the full cost of any such audit asbilled therefor by the Comptroller General. Such reimbursements shall be credited to the appropriationaccount ‘‘Salaries and Expenses, Government Accountability Office’’ current when the payment is received and remain available until expended. The financial statements prepared under this paragraphshall be on the fiscal year basis prescribed undersection 1102 of title 31, United States Code.(2) AUTHORITY.—The Comptroller Generalmay audit the programs, activities, receipts, expenditures, and financial transactions of the TARP andany agents and representatives of the TARP (as related to the agent or representative’s activities onbehalf of or under the authority of the TARP), including vehicles established by the Secretary underthis Act.(3) CORRECTIVE RESPONSES TO AUDIT PROBLEMS.—The TARP shall—(A) take action to address deficienciesidentified by the Comptroller General or otherauditor engaged by the TARP; or(B) certify to appropriate committees ofCongress that no action is necessary or appropriate.(c) INTERNAL CONTROL.—(1) ESTABLISHMENT.—The TARP shall establish and maintain an effective system of internalcontrol, consistent with the standards prescribedunder section 3512(c)) of title 31, United StatesCode, that provides reasonable assurance overf—(A) the effectiveness and efficiency of operations, including the use of the TARP’s resourcesresources of theTARP;(B) the reliability of financial reporting, including financial statements and other reportsfor internal and external use; and(C) compliance with applicable laws andregulations.(2) REPORTING.—In conjunction with each annual financial statement issued under this section,the TARP shall—(A) state the responsibility of managementfor establishing and maintaining adequate internal control over financial reporting; and(B) state its assessment, as of the end ofthe most recent year covered by such financialstatement of the TARP, of the effectiveness ofthe internal control over financial reporting.(d) SHARING OF INFORMATION.—Any reports or audits required under thisreport or auditrequired under this section shall also be submittedto the Congressional Oversight Panel established undersection 124.SEC. 116. STUDIES AND REPORTS.(a) to theCongressional Oversight Panel established under section125.(e) TERMINATION.—Any reporting or audit requirement under this section shall terminate on the later of—(1) the date of expiration of the last insurancecontract issued under section 102; or(2) the date that the last troubled asset acquired by the Secretary under section 101 has beensold or transferred out of the ownership or controlof the Federal Government.SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.—(1(a) STUDY.—The Comptroller General shall undertake a study to determine the extent to which leverageand sudden deleveraging of financial institutions was afactor behind the current financial crisis.(2b) CONTENT.—The study required by this section shall include—(Ashall include—(1) an analysis of the roles and responsibilitiesof the Board, the Securities and Exchange Commission, the Secretary, and other Federal banking agencies with respect to monitoring leverage and actingto curtail excessiveleveraging;(B) an leveraging;(2) an analysis of the authority of the Board toregulate leverage, including by setting margin requirements, and what process the Board used to decide whether or not to use itsauthority;(C authority;(3) an analysis of the margin authority ofthe Board; and(D theBoard; and(4) recommendations for the Board andappropriate committees of Congress with respect to the existing authority of the Board.(3 appropriate committees of Congress with respect to theexisting authority of the Board.(c) REPORT.—Not later than June 1, 2009, theComptroller General shall complete and submit a report on the study required by this subsection to theCommittee on Banking, Housing, and Urban Affairsof the Senate and the Committee on Financial Services of the House of Representatives.(b) IMPACT ASSESSMENT.—(1) STUDY.—The Comptroller General shallconduct a study to assess the impact of the programauthorized by this Act, including—(A) whether it has—(i) provided stability or prevented disruption to the financial markets or thebanking system; and(ii) protected taxpayers; and(B) with respect to the processes for purchasing, pricing, and disposing of troubled assets.(2) SUBMISSIONS TO CONGRESS.—Before theexpiration of the 15-day period beginning upon thedate of the enactment of this Act and each 3 monthsthereafter, the Comptroller General shall submit areport on the study required by this subsection tothe Committee on the study required by this section to the Committeeon Banking, Housing, and Urban Affairs of the Senate and the Committee on FinancialServices of the House of Representatives.(cand the Committee on Financial Services of the House ofRepresentatives.(d) SHARING INFORMATION.—Any reports re OFquired under this section shall also be submitted to theCongressional Oversight Panel established under section1245.SEC. 1178. FUNDING.<<For the purpose of the authorities granted in thisAct, 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 StatesCode, and the purposes for which securities may be issuedunder chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, includingthe payment of administrative expenses.>> Any funds expended or obligated for actions authorized by this Act, in [Discussion Draft]cluding the cluding the payment of administrative expenses, shall bedeemed appropriated at the time of such expenditure orobligation.<<SEC. 118.SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.(a) JUDICIAL REVIEW.>><<(a) IN GENERAL.—>><<—(1) STANDARD.—Actions by the Secretarypursuant to the authority of this Act shall be heldunlawful and set aside only pursuant to the authority of this Act shall be subject tochapter 7 of title 5, United States Code, includingthat such actions shall be held unlawful and setaside if found to be arbitrary,capricious, or otherwise inconsistent with the law or<<an abuse capricious, an abuseof discretion, or not in accordance withthe law>>.>><<(2) LIMITATIONRELIEF.—ON EQUITABLEOther than in cases involving constitutional claims,no injunction or other law.(2) LIMITATIONS ON EQUITABLE RELIEF.—(A) INJUNCTION.—No injunction or otherform of equitable relief shallbe issued against the Secretary for actions pursuantto the authority of this Act except under extraordinary circumstances involving clearly irreparableharm or <<injury>>.>><<(3) be issued againstthe Secretary for actions pursuant to section101, 105, or 108, other than to remedy a violation of the Constitution.(B) TEMPORARY RESTRAINING ORDER.—Any request for a temporary restraining orderagainst the Secretary for actions pursuant tothis Act shall be considered and granted or denied by the court within 3 days of the date ofthe request.(C) PRELIMINARY INJUNCTION.—Any request for a preliminary injunction against theSecretary for actions pursuant to this Act shallbe considered and granted or denied by thecourt on an expedited basis consistent with theprovisions of rule 65(b)(3) of the Federal Rulesof Civil Procedure, or any successor thereto.(D) PERMANENT INJUNCTION.—Any request for a permanent injunction against theSecretary for actions pursuant to this Act shallbe considered and granted or denied by thecourt on an expedited basis. Whenever possible,the court shall consolidate trial on the meritswith any hearing on a request for a preliminaryinjunction, consistent with the provisions of rule65(a)(2) of the Federal Rules of Civil Procedure, or any successor thereto.(3) LIMITATION ON ACTIONS BY PARTICIPATINGCOMPANIES.—No action or claims may be broughtagainst the Secretary by any person that divests itsassets with respect to its participation in a programunder this Act, except as provided in paragraph (1),other than as expressly provided in a written contract with the Secretary.(4) 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 ofequitable relief issued against the Secretary for actions pursuant to section 101, 105, or 108 shall beautomatically stayed. The stay shall be lifted unlessthe Secretary seeks a stay from a higher court and suchhigher court has ruled on the stay.>><<(b) TREATMENTwithin 3 calendar days after the date on which the reliefis issued.(b) RELATED MATTERS.—<<(1) TREATMENTOF HOMEOWNERS’ RIGHTS.—Not OFwithstanding subsection (a), the terms of any residentialmortgage loan that is part of any purchase by the Secretary under this Act The terms of any residential mortgage loan that ispart of any purchase by the Secretary under this Actshall remain subject to all claimsand defenses that would otherwise apply notwithstandingthe exercise of authority by the Secretary under this Act.>>(c) RULE CONSTRUCTION.—Any exercise of theOFauthority of the Secretary pursuant to this Act shall not and defenses thatwould otherwise apply, notwithstanding the exerciseof authority by the Secretary under this Act.>>(2) SAVINGS CLAUSE.—Any exercise of the authority of the Secretary pursuant to this Act shallnot impair the claims or defenses available to any other personotherwise availableto any other person. Except as established in anycontract, a servicer of pooled residential mortgagesowes any duty to determine whether the net presentvalue of the payments on the loan, as modified, islikely to be greater than the anticipated net recoverythat would result from foreclosure to all investorsand holders of beneficial interests in such investment, but not to any individual or groups of investors or beneficial interest holders, and shall bedeemed to act in the best interests of all such investors or holders of beneficial interests if the serviceragrees to or implements a modification or workoutplan when the servicer takes reasonable loss mitigation actions, including partial payments.SEC. 11920. TERMINATION OF AUTHORITY.(a) TERMINATION.—The authorities provided undersection 101(a)s 101(a) <<and 102>> shall terminate on December31, 2009.(b) EXTENSION UPON CERTIFICATION.—The Secretary, upon submission of a written certification to Congress, may extend the authority provided under this Actto expire not later than 2 years from the date of the enactenact [Discussion Draft]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 asthe expected costs to the taxpayer to the taxpayers for such an extension.SEC. 1201. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM.<<(a) PURPOSES.—The purposes of this section are asfollows:>><<(1) To provide for the independent and objec 1tive conduct and supervision of audits and investigations relating to the programs and operations of theprogram authorized to be established under section101.>><<(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>><<gram;and(B) prevent and detect fraud and abusein such program.>><< insuch program.(3) To provide for an independent and objec14tive tivemeans of keeping the Congress fully and currentlyinformed about problems and deficiencies relating tothe administration of such program and the necessity for and progress for corrective action.<<De18lete this subsection?>>>>(b) OFFICE INSPECTOR GENERAL.—There isOFhereby established the Office of the Special Inspector General for the Troubled Asset Relief Program.(c) APPOINTMENT INSPECTOR GENERAL; RE OFMOVAL.—(1) The head of the Office of the Special Inspector General for the Troubled Asset Relief Program is theSpecial Inspector General for the Troubled Asset ReliefProgram (in this section referred to as the Special Inspector General), who shall be appointed by the President.(2) The appointment of the Special Inspector Generalfor the Troubled Asset Relief Program shall be made solely on the shall be made on the basis of integrity and demonstratedability in accounting, auditing, financial analysis, law, managementanalysis, publicmanagement analysis, public administration, 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 shall be made <<as soon as practicable>>after the establishment of any program under section 101.(4) The Special Inspector General for the TroubledAsset Relief Program shall be removable from office inaccordance with the provisions of section shall be removablefrom office in accordance with the provisions of section3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).(5) For purposes of section 7324 of title 5, UnitedStates Code, the Special Inspector General for the Troubled Asset Relief Program shall not be shall not beconsidered an employee who determines policies to be pursued by the [Discussion Draft]sued 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 Scheduleunder section 5315 of title 5, United States Code.<<(d) ASSISTANT INSPECTORS GENERAL.—The Spe 3cial Inspector General for the Troubled Asset Relief Program7cial Inspector General shall, in accordance with applicablelaws and regulations governing the civil service—>><<(1) appoint an Assistant Inspector General forAuditing who shall have the responsibility for supervising the performance of auditing activities relatingto any program established under section 2; and>><<(2) appoint an Assistant Inspector General forInvestigations who shall have the responsibility forsupervising the performance of investigative activi ties relating to such program.<<Delete this sub14section?>>>>(e) DUTIES.—(1) It shall be the duty of the SpecialInspector General for the Troubled Asset Relief Programto conduct, supervise, and coordinateaudits and investigations of the purchase, management, and sale of assets bythe Secretary of the Treasury under any program established by the Secretary under section 101, <<including bycollecting and summarizing the following information:<<Delete these provisions?>>>><<and sale of assets by the Secretary of the Treasury underany program established by the Secretary under section101 and 102, including by collecting and summarizing thefollowing information:(A) A description of the categories of troubledassets purchased or otherwise procured by the Sec retary.>><<(B) retary.(B) A listing of the troubled assets purchasedin each such category described under subparagraph(A).>><<(C) An explanation of the reasons the Sec 7retary deemed it necessary to purchase each suchtroubled asset.>><<retarydeemed it necessary to purchase each such troubledasset.(D) A listing of each financial institution thatsuch troubled assets were purchased from.>><<(E) A listing of and detailed biographical in12formation on each person or entity hired to managesuch troubled assets.>><<(F) A current estimate of the total amount oftroubled assets purchased pursuant to any programestablished under section 101, the amount of troubled assets on the books of the Treasury, theamount of troubled assets sold, and the profit andloss incurred on each sale or disposition of each suchtroubled asset.>>(2) The Special Inspector General for the TroubledAsset Relief Program shall establish, (2) The Special Inspector General shall establish,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 outANDthe duties specified in subsection (e), the Special InspectorGeneral for the Troubled Asset Relief Program shall haveshall have the authorities provided in section 6of the Inspector General Act of 1978.(2) The Special Inspector General for the TroubledAsset Relief Program shall carry out the duties specifiedin subsection (e)(1) in accordance with section 4(b)(1) ofshall carry out theduties specified in subsection (e)(1) in accordance withsection 4(b)(1) of the Inspector General Act of 1978.<<(g) PERSONNEL, FACILITIES, OTHER RE ANDSOURCES.—>>(1)The Special Inspector General for theTroubled Asset Relief Program may select, appoint, and(1) The Special Inspector General may select,appoint, and employ such officers and employees as maybe necessary for carrying out the duties of the Special Inspector General, subject to the provisions of title 5, UnitedStates Code, governing appointments in the competitive service,and the service, and the provisions of chapter 51 and subchapterIII of chapter 53 of such title, relating to classificationand General Schedule pay rates.>><<(2) The Special Inspector General for the TroubledAsset Relief Program(2) The Special Inspector General may obtain services as authorized by section 3109 of title 5, United StatesCode, at daily rates not to exceed the equivalent rate prescribed for grade GS–15 of the General Schedule by section 5332 of suchtitle.>><<(3) The Special Inspector General for the TroubledAsset Relief Program may enter into contracts and other title.(3) The Special Inspector General may enter intocontracts and other arrangements for audits, studies, analyses, and other services with public agencies and with private persons, andmake such payments as may be necessary to carry outanalyses, and other services with public agencies and withprivate persons, and make such payments as may be necessary to carry out the duties of the Inspector General.>><<(4)(A) Upon request of the Special Inspector Gen13eral for the Troubled Asset Relief Program for information or eralfor information or assistance from any department, agency, or other entity of the Federal Government, the headof such entity shall, insofar as is practicable and not incontravention of any existing law, furnish such information or assistance to the Special Inspector General, or anauthorized designee.>><<(B) Whenever information or assistance requestedby the Special Inspector General for the Troubled AssetRelief Program bythe Special Inspector General is, in the judgment of theSpecial Inspector General, unreasonably refused or not provided, theSpecial Inspector General shall report the circumstancesto the appropriate committees of Congress withoutprovided, the Special Inspector General shall report thecircumstances to the appropriate committees of Congresswithout delay.<<Delete this subsection?>>>>(h) REPORTS.—(1)(h) REPORTS.—(1) Not later than October 31, 2008,and every calendar quarter thereafter, the Special Inspector General for the Troubled Asset Relief Program shallsubmit to the appropriate committees of Congress a reportshall submit to the appropriate committees ofCongress a report summarizing the activities of the Special Inspector General during the 120-day period endingon the date of such report. Each report shall include, forthe period covered by such report, a detailed statementof all purchases, obligations, expenditures, and revenues associated with anyprogram established by the Secretary of the Treasuryassociated with any program established by the Secretaryof the Treasury under section 101, as well as the information collected under subsection (e)(1).(2) Nothing in this subsection shall be construed toauthorize the public disclosure of information that is—(A) specifically prohibited from disclosure byany other provision of law;(B) specifically required by Executive order tobe protected from disclosure in the interest of national defense or national security or in the conductof foreign affairs; or(C) a part of an ongoing criminal investigation.(3) Any reports required under this section shall alsobe submitted to the Congressional Oversight Panel established under section 124.(i) APPROPRIATE COMMITTEES CONGRESS DE OFFINED.—In this section, the term ‘‘appropriate committees of Congress’’ means—(1) the Committee on Banking, Housing, andUrban Affairs, the Committee on Finance, and theCommittee on the Budget of the Senate; and(A) the Committee on Financial Services,the Committee on Ways and Means, and theCommittee on the Budget of the House of Representatives.<<(j)FUNDING.—>>(1) Of the amounts made available tothe Secretary of the Treasury under section 1178,$75,000,000 shall be available to the Special InspectorGeneral for the Troubled Asset Relief Program to carryout this section.>><<(2) The amount availableto carry out this section.(2) The amount available under paragraph (1) shallremain available until expended.<<Delete this subsection?>>>>SEC. 121(j) TERMINATION.—The Office of the Special Inspector General shall terminate on the later of—(1) the date of expiration of the last insurancecontract issued under section 102; or(2) the date that the last troubled asset acquired by the Secretary under section 101 has beensold or transferred out of the ownership or controlof the Federal Government.SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLICDEBT.Subsection (b) of section 3101 of title 31, UnitedStates Code, is amended by striking out the dollar limita [Discussion Draft]tion contained in such subsection and inserting‘‘$11,315,000,000,000’’.SEC. 1223. CREDIT REFORM.(a) IN GENERAL.—Subject to subsection (b), thecosts of purchases of troubled assets made under section101(a) of this Actand guarantees of troubled assets under section102, and any cash flows associated with theexercise of rights or management or sale of troubled assetsunder section 104 of this Act activities authorized in subsections (a), (b), and (c) of section 106shall be determined as provided under the Federal CreditReform Act of 1990 (2 U.S.C. 661 et. seq.), as applicable.(b) COSTS.—For the purposes of Ssection 502(5) ofthe Federal Credit Reform Act of 1990 (2 U.S.C.661a(5))—(1) the cost of each troubled assettroubled assets and guaranteesof troubled assets shall be calculated by adjustingthe discount rate in section 502(5)(E) (2 U.S.C.661a(5)(E)) for market risks; and(2) the cost of a modification of a troubledasset shall be the or guarantee of a troubled asset shall be thedifference between the current estimate consistent with paragraph (1) under theterms of the troubled with paragraph (1) under the terms of the troubledasset or guarantee of the troubled asset and the current estimate consistent with paragraph (1) under the terms of thetroubled assetthe terms of the troubled asset or guarantee of thetroubled asset, as modified.SEC. 123. MINIMIZING FORECLOSURES.(a) SPECIAL RULES MODIFICATION LOANSFOR OFSECURED BY RESIDENCES.—(1) IN GENERAL.—Section 1322(b) of title 11,United States Code, is amended—(A) in paragraph (10), by striking ‘‘and’’at the end;(B) by redesignating paragraph (11) asparagraph (12); and(C) by inserting after paragraph (10) thefollowing:‘‘(11) notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law—‘‘(A) modify an allowed secured claim fora debt secured by the principal residence of thedebtor, as described in subparagraph (B), if,after deduction from the debtors currentmonthly income of the expenses permitted fordebtors described in section 1325(b)(3) of thistitle (other than amounts contractually due tocreditors holding such allowed secured claimsand additional payments necessary to maintainpossession of that residence), the debtor has insufficient remaining income to retain possessionof the residence by curing a default and main [Discussion Draft]taining payments while the case is pending, asprovided under paragraph (5); and‘‘(B) provide for payment of such claim—‘‘(i) in an amount equal to theamount of the allowed secured claim;‘‘(ii) for a period that is not longerthan 40 years; and‘‘(iii) at a rate of interest accruingafter such date calculated at a fixed annual percentage rate, in an amount equalto the most recently published annual yieldon conventional mortgages published bythe Board of Governors of the Federal Reserve System, as of the applicable time setforth in the rules of the Board, plus a reasonable premium for risk; and’’.(2) CONFORMING AMENDMENT.—Section1325(a)(5) of title 11, United States Code, isamended by inserting before ‘‘with respect’’ the following: ‘‘except as otherwise provided in section1322(b)(11) of this title,’’.(b) WAIVER COUNSELING REQUIREMENT WHENOFHOMES ARE FORECLOSURE.—Section 109(h) of titleIN11, United States Code, is amended by adding at the endthe following:‘‘(5) Paragraph (1) shall not apply with respectto a debtor who files with the court a certificationthat a foreclosure sale of the debtor’s principal residence has been scheduled.’’.(c) COMBATING EXCESSIVE FEES.—Section 1322(c)of title 11, the United States Code, is amended—(1) in paragraph (1), by striking ‘‘and’’ at theend;(2) in paragraph (2), by striking the period atthe end and inserting a semicolon; and(3) by adding at the end the following:‘‘(3) the plan need not provide for the paymentof, and the debtor, the debtor’s property, and property of the debtor’s estate shall not be liable for, anyfee, cost, or charge, notwithstanding section 506(b),that arises in connection with a claim secured by thedebtor’s principal residence, if the event that givesrise to such fee, cost, or charge occurs while the caseis pending but before the discharge order, except tothe extent that—‘‘(A) notice of such fees, costs, or chargesis filed with the court, and served on the debtorand the trustee, before the expiration of theearlier of—‘‘(i) 1 year after the event that givesrise to such fee, cost, or charge occurs; or‘‘(ii) 60 days before the closing of thecase; and‘‘(B) such fees, costs, or charges are lawful, reasonable, and provided for in the agreement under which such claim or security interest arose;‘‘(4) the failure of a party to give notice described in paragraph (3) shall be deemed a waiverof any claim for fees, costs, or charges described inparagraph (3) for all purposes, and any attempt tocollect such fees, costs, or charges shall constitute aviolation of section 524(a)(2) of this title or, if theviolation occurs before the date of discharge, of section 362(a) of this title; and‘‘(5) a plan may provide for the waiver of anyprepayment penalty on a claim secured by the principal residence of the debtor.’’.(d) APPLICATION AMENDMENTS.—The amend OFments made to title 11, United States Code, by this section shall apply with respect to cases commenced underthat title on or after the date of enactment of this Act,or pending on the date of enactment of this Act.<<(e) HOPE4. HOPE FOR HOMEOWNERS AMENDMENTS.—FORSection 257(e)Section 257 of the National Housing Act (12 U.S.C.1715z-23(e)) is amended—>><<(1) in paragraph (1)(B), by inserting before) is amended—(1) in subsection (e)—(A) in paragraph (1)(B), by inserting before ‘‘a ratio’’ the following: ‘‘, or thereafter is likely tohave, due to the terms of the mortgage beingreset,’’; and>><<(2) in paragraph (2)(B), by inserting beforethe period at the endlikely to have, due to the terms of the mortgagebeing reset,’’;(B) in paragraph (2)(B), by inserting before the period at the end ‘‘(or such higher percentage as the Board determines, in the discretion of theBoard)’’.>>SEC. 124 Board)’’; and(C) in paragraph (4)—(i) in the first sentence, by insertingafter ‘‘insured loan’’ the following: ‘‘andany payments made under this paragraph,’’; and(ii) by inserting at the end the following ‘‘Such actions may include makingpayments, which shall be accepted as payment in full of all indebtedness under theeligible mortgage, to any holder of an existing subordinate mortgage in lieu of anyfuture appreciation payments authorizedunder subparagraph (B).’’; and(2) in subsection (w), by inserting after ‘‘administrative costs’’ the following: ‘‘and paymentspursuant to subsection (e)(4)(A)’’.SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.(a) ESTABLISHMENT.—There is hereby establishedthe Congressional Oversight Panel (hereafter in this section referred to as the ‘‘Oversight Panel’’) as an establishment in the legislative branch.(b) DUTIES.—The Oversight Panel shall review thecurrent state of the financial markets and the regulatorysystem and submit the following reports to Congress:(1) REGULAR REPORTS.—(A) IN GENERAL.—Regular reports of theOversight Panel shall include the following:(i) The Secretary’s use of authorityunder this Act, including with respect tothe use of contracting authority anduse by the Secretary of authority under this Act, including with respect to the use of contracting authorityand administration of the program.(ii) The impact of purchases madeunder the Act on the financial markets andfinancial institutions.(iii) The extent to which the information made available on transactions underthe program has contributed to markettransparency.(iv) The effectiveness of foreclosuremitigation efforts, and the effectiveness ofthe program from the standpoint of minimizing long-term costs to the taxpayersand maximizing the benefits for taxpayers.(B) TIMING.—The reports required underthis paragraph shall be submitted not laterthan 30 days after the first exercise by the Secretary of the authority under section 101(a),and every 30 days thereafter.(2) SPECIAL RE REPORT ON REGULATORYFORM.—The Oversight Panel shall submit a specialreport on regulatory reform not later than January20, 2009, analyzing the current state of the regu [Discussion Draft]latory system and its effectiveness at overseeing theparticipants in the financial system, protecting con [Discussion Draft]sumers, and providing recommendations for improvement including recommendations regardingwhether any participants in the financial marketsthat are currently outside the regulatory systemshould become subject to the regulatory system andthe rationale underlying such recommendation andwhether there are any gaps in existing consumerprotections.(c) MEMBERSHIP.—(1) IN GENERAL.—3 members of the OversightPanel shall beThe Oversight Panel shallconsist of 5 members, as follows:(A) 1 member appointed by the Speaker of theHouse of Representatives, 2 on the basis of recommendations made by the majority leader of suchHouse and 1 by the minority leader of such House,and 3 members of the Oversight Panel shall bethe House of Representatives.(B) 1 member appointed by the minorityleader of the House of Representatives.(C) 1 member appointed by the majorityleader of the Senate.(D) 1 member appointed by the president pro tempore of the Senate,2 on the basis of recommendations made by the majority leader of the Senate and 1 by the minorityleader of the Senate.(2) 7TH MEMBER.—The 7th member of theOversight Panel shall beE) 1 member appointed by the membersappointed under paragraph (1) and shall serve asthe Chairperson of the Oversight Panel.(3Speaker ofthe House of Representatives and the majorityleader of the Senate, in consultation with theminority leader of the Senate and the minorityleader of the House of Representatives.(2) PAY.—Each member of the Oversight Panelshall each be paid at a rate equal to the daily equiv [Discussion Draft]alent of the annual rate of basic pay for level I ofthe Executive Schedule for each day (including travel time) during which such member is engaged inthe actual performance of duties vested in the Commission.(3) PROHIBITION OF COMPENSATION OF FEDEMPLOYEES.—Members of the OversightERALPanel who are full-time officers or employees of theUnited States or Members of Congress may not receive additional pay, allowances, or benefits by reason of their service on the Oversight Panel.(4) TRAVEL EXPENSES.—Each member shallreceive travel expenses, including per diem in lieu ofsubsistence, in accordance with applicable provisionsunder subchapter I of chapter 57 of title 5, UnitedStates Code.(5) QUORUM.—Four members of the OversightPanel shall constitute a quorum but a lesser numbermay hold hearings.(6) VACANCIES.—Any member appointed to filla vacancy occurring before the expiration of theterm for which a member’s predecessor was appointed shall be appointed only for the remainder ofthat term. A member may serve after the expirationof that member’s term until a successor has takenoffice. A vacancy in the Oversight Panel shall befilled in the manner in which the original appointment was made.(7) MEETINGS.—The Oversight Panel shallmeet at the call of the Chairperson or a majority ofits members.(d) STAFF.—(1) IN GENERAL.—The Oversight Panel mayappoint and fix the pay of any personnel as theCommission considers appropriate.(2) EXPERTS AND CONSULTANTS.—The Oversight Panel may procure temporary and intermittentservices under section 3109(b) of title 5, UnitedStates Code.(3) STAFF OF AGENCIES.—Upon request of theOversight Panel, the head of any Federal department or agency may detail, on a reimbursable basis,any of the personnel of that department or agencyto the Oversight Panel to assist it in carrying out itsduties under this Act.(e) POWERS.—(1) HEARINGS AND SESSIONS.—The OversightPanel may, for the purpose of carrying out this sec [Discussion Draft]tion, hold hearings, sit and act at times and places,take testimony, and receive evidence as the Panelconsiders appropriate and may administer oaths oraffirmations to witnesses appearing before it.(2) POWERS OF MEMBERS AND AGENTS.—Anymember or agent of the Oversight Panel may, if authorized by the Oversight Panel, take any actionwhich the Oversight Panel is authorized to take bythis section.(3) OBTAINING OFFICIAL DATA.—The Oversight Panel may secure directly from any department or agency of the United States informationnecessary to enable it to carry out this section. Uponrequest of the Chairperson of the Oversight Panel,the head of that department or agency shall furnishthat information to the Oversight Panel.(4) REPORTS .—The Oversight Panel shall receive and consider all reports required to be submitted to the Oversight Panel under this Act.(f) TERMINATION.—The Oversight Panel shall terminate as of the date on which the report required undersubsection (b)(1) is filed by the Oversight Panel after thelast troubled asset acquired by the Secretary under thisAct has been sold or transferred out of the ownership orcontrol of the Federal Government6 months after the termination date specified in section 120.(g) FUNDING FOR EXPENSES.—(1) AUTHORIZATION APPROPRIATIONS.—OFThere is authorized to be appropriated to the Oversight Panel such sums as may be necessary for anyfiscal year, half of which shall be derived from theapplicable account of the House of Representatives,and half of which shall be derived from the contingent fund of the Senate.(2) REIMBURSEMENT AMOUNTS.—AnOFamount equal to the expenses of the Oversight Panelshall be promptly transferred by the Secretary, fromtime to time upon the presentment of a statementof such expenses by the Chairperson of the Oversight Panel, from funds made available to the Secretary under this Act to the applicable fund of theHouse of Representatives and the contingent fund ofthe Senate, as appropriate, as reimbursement foramounts expended from such account and fundunder paragraph (1).SEC. 1256. FDIC ENFORCEMENT ENHANCEMENT.(a) IN GENERAL.—Section 18(a) of the Federal Deposit Insurance Act (12 U.S.C. 1828(a)) is amended byadding at the end the following new paragraph:‘‘(4) FALSE ADVERTISING, MISUSE OF FDICNAMES, AND MISREPRESENTATION TO INDICATE INSURED STATUS.—‘‘(A) PROHIBITION ADVER ON FALSETISING AND MISUSE OF FDIC NAMES.—No person may represent or imply that any deposit liability, obligation, certificate, or share is insured or guaranteed by the Federal Deposit Insurance Corporation, if such deposit liability,Corporation, if suchdeposit liability, obligation, certificate, or shareis not insured or guaranteed by the Corporation—‘‘(i) by using the terms ‘Federal Deposit’, ‘Federal Deposit Insurance’, ‘Federal Deposit Insurance Corporation’, anycombination of such terms, or the abbreviation ‘FDIC’ as part of the businessname or firm name of any person, including any corporation, partnership, businesstrust, association, or other business entity;or‘‘(ii) by using such terms or any otherterms, sign, or symbol as part of an advertisement, solicitation, or other document.‘‘(B) PROHIBITION ON MISREPRESENTATIONS OF INSURED STATUS.—No person mayknowingly misrepresent—‘‘(i) that any deposit liability, obligation, certificate, or share is insured, underthis Act, if such deposit liability, obligation, certificate, or share is not so insured;or‘‘(ii) the extent to which or the manner in which any deposit liability, obligation, certificate, or share is insured underthis Act, if such deposit liability, obligation, certificate, or share is not so insured,to the extent or in the manner represented.‘‘(C) AUTHORITY OF THE APPROPRIATEFEDERAL BANKING AGENCY.—The appropriateFederal banking agency shall have enforcementauthority in the case of a violation of this paragraph by any person for which the agency is theappropriate Federal banking agency, by an insured depository institution, or any institutionor any institution-affiliated party thereof.‘‘(D) CORPORATION AUTHORITY IF THEAPPROPRIATE FEDERAL BANKING AGENCYFAILS TO FOLLOW RECOMMENDATION.—‘‘(i) RECOMMENDATION.—The Corporation may recommend in writing to theappropriate Federal banking agency thatthe agency take any enforcement actionauthorized under section 8 for purposes ofenforcement of this paragraph with respectto any person for which the agency is theappropriate Federal banking agency or anyinstitution-affiliated party thereof.‘‘(ii) AGENCY RESPONSE.—If the appropriate Federal banking agency does not,within 30 days of the date of receipt of arecommendation under clause (i), take theenforcement action with respect to thisparagraph recommended by the Corporation or provide a plan acceptable to theCorporation for responding to the situationpresented, the Corporation may take therecommended enforcement action againstsuch person or institution-affiliated party.‘‘(E) ADDITIONAL AUTHORITY.—In addition to its authority under subparagraphs (C)and (D), for purposes of this paragraph, theCorporation shall have, in the same manner andto the same extent as with respect to a Statenonmember insured bank—‘‘(i) jurisdiction over—‘‘(I) any person other than a person for which the agency is the appropriate Federal banking agency or anyinstitution-affiliated party thereof;and‘‘(II) any person that another agency is theappropriate Federal banking agencyor any institution-affiliated partythereof; and‘‘(II) any person that aids orabets a violation of this paragraph bya person described in subclause (I);and‘‘(ii) for purposes of enforcing the requirements of this paragraph, the authority of the Corporation under—‘‘(I) section 10(c) to conduct investigations; and‘‘(II) subsections (b), (c), (d) and(i) of section 8 to conduct enforcement actions.‘‘(F) OTHER PRESERVED.—NoACTIONSprovision of this paragraph shall be construedas barring any action otherwise available, underthe laws of the United States or any State, toany Federal or State agency or individual.’’.(b) ENFORCEMENT ORDERS.—Section 8(c) of theFederal Deposit Insurance Act (12 U.S.C. 1818(c)) isamended by adding at the end the following new paragraph:‘‘(4) FALSE ADVERTISING OR MISUSE OFNAMES TO INDICATE INSURED STATUS.—‘‘(A) TEMPORARY ORDER.—‘‘(i) IN GENERAL.—If a notice ofcharges served under subsection (b)(1)specifies on the basis of particular factsthat any person engaged or is engaging inconduct described in section 18(a)(4), theCorporation or other appropriate Federalbanking agency may issue a temporaryorder requiring—‘‘(I) the immediate cessation ofany activity or practice described,which gave rise to the notice ofcharges; and‘‘(II) affirmative action to prevent any further, or to remedy any existing, violation.‘‘(ii) EFFECT OF ORDER.—Any temporary order issued under this subparagraph shall take effect upon service.‘‘(B) EFFECTIVE PERIOD OF TEMPORARYORDER.—A temporary order issued under subparagraph (A) shall remain effective and enforceable, pending the completion of an administrative proceeding pursuant to subsection(b)(1) in connection with the notice ofcharges—‘‘(i) until such time as the Corporation or other appropriate Federal bankingagency dismisses the charges specified insuch notice; or‘‘(ii) if a cease-and-desist order isissued against such person, until the effective date of such order.‘‘(C) CIVIL MONEY PENALTIES.—Any violation of section 18(a)(4) shall be subject tocivil money penalties, as set forth in subsection(i), except that for any person other than an insured depository institution or an institution-affiliated party that is found to have violated thisparagraph, the Corporation or other appropriate Federal banking agency shall not be required to demonstrate any loss to an insureddepository institution.’’.(c) TECHNICAL CONFORMING AMENDMENTS.—ANDSection 18 of the Federal Deposit Insurance Act (12U.S.C. 1828) is amended—(1) in subsection (a)(3)—(A) by striking ‘‘this subsection’’ the firstplace that term appears and inserting ‘‘paragraph (1)’’; and(B) by striking ‘‘this subsection’’ the second place that term appears and inserting‘‘paragraph (2)’’; and(2) in the heading for subsection (a), by striking ‘‘INSURANCE LOGO.—’’ and inserting ‘‘REPDEPOSIT INSURANCE.—’’.RESENTATIONS OFSEC. 1267. COOPERATION WITH THE FBI.Any Federal financial regulatory agency shall cooperate with the Federal Bureau of Investigation and otherlaw enforcement agencies investigating fraud, misrepresentation, and malfeasance with respect to development,advertising, and sale of financial products.SEC. 1278. ACCELERATION OF EFFECTIVE DATE.Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.SEC. 1289. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.(a) IN GENERAL.—Not later than 7 days after thedate on which the Board exercises its authority under thethird paragraph of section 13 of the Federal Reserve Act(12 U.S.C. 343; relating to discounts for individuals, part [Discussion Draft]nerships, and corporations) the Board shall provide to theCommittee on Banking, Housing, and Urban Affairs ofthe Senate and the Committee on Financial Services ofthe House of Representatives a report which includes—(1) the justification for exercising the authority;and(2) the specific terms of the actions of theBoard, including the size and duration of the lending, the value of available information concerning the value ofany collateral held with respect tosuch a loan, the recipient of warrants or any otherpotential equity in exchange for the loan, and anyexpected cost to the taxpayer such a loan, therecipient of warrants or any other potential equity inexchange for the loan, and any expected cost to thetaxpayers for such exercise.(b) PERIODIC UPDATES.—The Board shall provideupdates to the Committees specified in subsection (a) notless frequently than once every 360 days while the subjectloan is outstanding, including—(1) the status of the loan;(2) the value of the collateral held by the Federal reserve bank which initiated the loan; and(3) the projected cost to the taxpayers of theloan.(c) CONFIDENTIALITY.—The information submittedto the Congress under this section may be kept confidential, upon the written request of the Chairman of theBoard, in which case it shall made available only to theChairpersons and Ranking Members of the Committeesdescribed in subsection (a).(d) APPLICABILITY.—The provisions of this sectionshall be in force for all uses of the authority providedunder section 13 of the Federal Reserve Act occurring onor afterduring the period beginning on March 1, 2008, and reports shall be required beginning not later than 30 days after the date of enactmentof this Act.(e) and endingon the after the date of enactment of this Act, and reportsdescribed in subsection (a) shall be required beginning notlater than 30 days after that date of enactment, with respect to any such exercise of authority.(e) SHARING INFORMATION.—Any reports re OFquired under this section shall also be submitted to theCongressional Oversight Panel established under section1245.SEC. 12930. TECHNICAL CORRECTIONS.(a) IN GENERAL.—Section 128(b)(2) of the Truth inLending Act (15 U.S.C. 1638(b)(2)), as amended by section 2502 of the Mortgage Disclosure Improvement Actof 2008 (Public Law 110-289), is amended—(1) in subparagraph (A), by striking ‘‘In thecase’’ and inserting ‘‘Except as provided in subparagraph (G), in the case’’; and(2) by amending subparagraph (G) to read asfollows:‘‘(G)(i) In the case of an extension of credit relating to a plan described in section101(53D) of title 11, United States Code—‘‘(I) the requirements of subparagraphs (A) through (E) shall not apply;and‘‘(II) a good faith estimate of the disclosures required under subsection (a) shallbe made in accordance with regulations ofthe Board under section 121(c) beforesuch credit is extended, or shall be delivered or placed in the mail not later than3 business days after the date on whichthe creditor receives the consumer’s written applicationof the consumer for such credit, whicheveris earlier.‘‘(ii) If a disclosure statement furnishedwithin 3 business days of the written application (as provided under clause (i)(II)) containsan annual percentage rate which is subse [Discussion Draft]quently rendered inaccurate, within the meaning of section 107(c), the creditor shall furnishanother disclosure statement at the time of settlement or consummation of the transaction.’’.(b) EFFECTIVE DATE.—The amendments made bysubsection (a) shall take effect as if included in theamendments made by section 2502 of the Mortgage Disclosure Improvement Act of 2008 (Public Law 110-289).SEC. 130. TEMPORARY MONEY MARKET FUND AUTHORITY1. EXCHANGE STABILIZATION FUND REIMBURSEMENT.(a) REIMBURSEMENT.—The Secretary shall reimburse the Exchange Stabilization Fund established undersection 5302 of title 31, United States Code, for any fundsused for the temporary guaranty program for the UnitedStates money market mutual fund industry during the period when the Exchange Stabilization Fund was used asthe source for the guarantee, from fundsunder this Act.(b) LIMITATION S USE FUND.—The SecretaryON OFEXCHANGE STABILIZATIONON OFFUND.—The Secretary is prohibited from using the Exchange Stabilization Fundfor the establishment of any for the establishment of anyfuture guaranty programs for the United States moneymarket mutual fund industry.(c) MONEY MARKET FUND AUTHORITY.—(1) IN GENERAL.—The Secretary is authorizedto establish a temporary insurance or guarantee program for money market mutual funds in connectionwith the program authorized by this Act.(2) APPLICABILITY.—The authority of this subsection shall remain in effect—(A) for 120 days following the date of enactment of this Act; or(B) such longer period, not to exceed 365days after the date of enactment of this Act, asthe Secretary certifies in writing to Congress isnecessary to continue the insurance or guarantee program for money market mutual funds.(d) CONSULTATIONS.—In carrying out the duties ofthe Secretary under this section, the Secretary shall consult with the Board of Directors of the Corporation andany guaranteeprogram, the Secretary shall consult with the Board ofDirectors of the Corporation and the Securities and Exchange Commission.SEC. 132. SUSPENSION OF MARK-TO-MARKET ACCOUNTING.(a) AUTHORITY.—The Securities and Exchange Commission shall have the authority under securities laws (assuch term is defined under section 3(a)(47) of the Securi [Discussion Draft]ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by rule, regulation, or oder, the application of Statement Number 157 of the Financial Accounting StandardsBoard for any issuer (as such term is defined in section3(a)(8) of such Act) or with respect to any class or category of transaction if the Commission determines thatis necessary or appropriate in the public interest and isconsistent with the protection of investors.(b) SAVINGS PROVISION.—Nothing in subsection (a)shall be construed to restrict or limit any authority of theSecurities Exchange Commission under securities laws asin effect on the date of enactment of this Act.SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.(a) STUDY.—The Securities and Exchange Commission, in consultation with the Board of Governors of theFederal Reserve System and the Secretary of the Treasury, shall conduct a study on mark-to-market accountingstandards as provided in Statement Number 157 of theFinancial Accounting Standards Board, as such standardsare applicable to financial institutions, including depository institutions. Such a study shall consider at a minimum—(1) the effects of such accounting standards ona financial institution’s balance sheet;(2) the impacts of such accounting on bank failures in 2008;(3) the impact of such standards on the qualityof financial information available to investors;(4) the process used by the Financial Accounting Standards Board in developing accountingstandards;(5) the advisability and feasibility of modifications to such standards; and(6) alternative accounting standards to thoseprovided in such Statement Number 157.(b) REPORT.—The Securities and Exchange Commission shall submit to Congress a report of such study beforethe end of the 90-day period beginning on the date of theenactment of this Act containing the findings and determinations of the Commission, including such administrative and legislative recommendations as the Commissiondetermines appropriate.SEC. 134. RECOUPMENT.Upon the expiration of the 5-year period beginningupon the date of the enactment of this Act, the Directorof the Office of Management and Budget, in consultationwith the Director of the Congressional Budget Office, shallsubmit a report to the Congress on the net amount withinthe Troubled Asset Relief Program under this Act. In anycase in which there is a shortfall, the President shall submit to the Congress a legislative proposal that recoupsfrom entities benefitting from the program an amountequal to the shortfall in order to ensure that the TroubledAsset Relief Program does not add to the budget deficitor the national debt.SEC. 135. PRESERVATION OF AUTHORITY.With the exception of section 131, nothing in this Actmay be construed to limit the authority of the Secretaryor the Board under any other provision of law.TITLE II—BUDGET-RELATEDPROVISIONSSEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORTAGENCIES.Upon request, all information used by the Secretarynd to the extent otherwise consistentwith law, all information used by the Secretary in connection with activities authorized under this Act (includingthe records to which the Comptroller General is entitledunder this Act) shall be made available to congressionalsupport agencies (in accordance with their obligations tosupport the Congress as set out in their authorizing statutes) for the purposes of assisting the commit [Discussion Draft]tees of Congress withtees of Congress with conducting oversight, monitoring, and analysisof the activities authorized under this Act.SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT ANDBUDGET AND THE CONGRESSIONAL BUDGETOFFICE.(a) REPORTS OFFICE MANAGEMENTBY THE OF ANDBUDGET.—Within 60 days of the first exercise of the authority granted in section 101(a), but in no case later thanDecember 31, 2008, and quarterly thereafter, the Officeof semiannually thereafter, the Office of Management and Budget shall report to the President and the Congress—(1) the estimate, notwithstanding section502(5)(F) of the Federal Credit Reform Act of 1990(2 U.S.C. 661a(5)(F)), as of the first business daythat is at least 30 days prior to the issuance of thereport, of the cost of the troubled assets determinedin accordance with section 118;(2) the information <<123/118>>;(2) the information used to derive the estimate,including assets purchased, prices paid, revenues received, the impact on the deficit and debt, and a description of any outstanding commitments to purchase troubled assets; and(3) a detailed analysis of how the estimate haschanged from the previous report.Beginning with the second report under subsection (a), theOffice of Management and Budget shall explain the differences between the Congressional Budget Office esti [Discussion Draft]mates delivered in accordance with subsection (b) andprior Office of Management and Budget estimates.(b) REPORTS CONGRESSIONAL BUDGET OF BY THEFICE.—Within 45 days of receipt by the Congress of eachreport from the Office of Management and Budget undersubsection (a), the Congressional Budget Office shall report to the Congress the Congressional Budget Office’sassessment of the report submitted by the Office of Management and Budget, including—(1) the cost of the troubled assets,(2) the information and valuation methods usedto calculate such cost, and(3) the impact on the deficit and the debt.(c) FINANCIAL EXPERTISE.—In carrying out the duties in this subsection or performing analyses of activitiesunder this Act, the Director of the Congressional BudgetOffice may employ personnel and procure the services ofexperts and consultants.(d) AUTHORIZATION APPROPRIATIONS.—ThereOFare authorized to be appropriated such sums as may benecessary to produce reports required by this section.SEC. 203. ANALYSIS IN PRESIDENT’S BUDGET.(a) IN GENERAL.—Section 1105(a) of title 31,United States Code, is amended by adding at the end thefollowing new paragraph:‘‘(35) as supplementary materials, a separateanalysis of the budgetary effects for all prior fiscalyears, the current fiscal year, the fiscal year forwhich the budget is submitted, and ensuing fiscalyears of the actions the Secretary of the Treasuryhas taken or plans to take using any authority provided in the Economic Recovery and Corporate Accountability Act mergency Economic Stabilization Actof 2008, including—‘‘(A) an estimate of the current value of allassets purchased and sold under the authorityprovided in the Economic Recovery and Corporate Accountability Act of 2008 mergency Economic Stabilization Act of 2008 using methodology required bythe Federal Credit Reform Act of 1990 (2U.S.C. 661 et seq.) and section118 of the Economic Recovery and CorporateAccountability Act of <<123/118>> ofthe Emergency Economic Stabilization Act of2008;‘‘(B) an estimate of the deficit, the debtheld by the public, and the gross Federal debtusing methodology required by the FederalCredit Reform Act of 1990 and section 118 ofthe Economic Recovery and Corporate Accountability Act of mergency Economic Stabilization Act of2008;‘‘(C) an estimate of the current value of allassets purchased and sold under the authorityprovided in the Economic Recovery and Corporate Accountability Act of 2008 calculated onmergency Economic Stabilization Act of 2008 calculated on a cash basis;‘‘(D) a revised estimate of the deficit, thedebt held by the public, and the gross Federaldebt, substituting the cash-based estimates insubparagraph (C) for the estimates calculatedunder subparagraph (A) pursuant to the Federal Credit Reform Act of 1990 and section 118of the Economic Recovery and Corporate Accountability<<123/118>> of the Emergency Economic Sta 9bilization Act of 2008; and‘‘(E) the portion of the deficit which canbe attributed to any action taken by the Secretary using authority provided by the Economic Recovery and Corporate AccountabilityAct of 2008 and the extent to which the changein the deficit mergency Economic Stabilization Act of 2008 andthe extent to which the change in the deficitsince the most recent estimate is due to a reestimate using the methodology required by theFederal Credit Reform Act of1990 and section 118 of the Economic Recoveryand Corporate Accountability Act of 2008.’’(b) 1990 and section<<123/118>> of the Emergency Economic Sta19bilization Act of 2008.’’(b) CONSULTATION.—In implementing this section,the Director of Office of Management and Budget is di [Discussion Draft]rected to shallconsult periodically, but at least annually, withthe Committee on the Budget of the House of Representatives, the Committee on the Budget of the Senate, andthe Director the Committee on the Budget of the House of Representatives, theCommittee on the Budget of the Senate, and the Directorof the Congressional Budget Office.(c) EFFECTIVE DATE.—This section and the amendment made by this section shall apply beginning with respect to the fiscal year 2010 budget submission of thePresident.TITLE III—TAX PROVISIONSSEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OFCERTAIN PREFERRED STOCK.(a) IN GENERAL.—For purposes of the Internal Revenue Code of 1986, gain or loss from the sale or exchangeof any applicable preferred stock by any applicable financial institution shall be treated as ordinary income or loss.(b) APPLICABLE PREFERRED STOCK.—For purposesof this section, the term ‘‘applicable preferred stock’’means any stock—(1) which is preferred stock in—(A) the Federal National Mortgage Association, established pursuant to the Federal National Mortgage Association Charter Act (12U.S.C. 1716 et seq.), or(B) the Federal Home Loan MortgageCorporation, established pursuant to the Fed [Discussion Draft]eral Home Loan Mortgage Corporation Act (12U.S.C. 1451 et seq.), and(2) which—(A) was held by the applicable financial institution on September 6, 2008, or(B) was sold or exchanged by the applicable financial institution on or after January 1,2008, and before September 7, 2008.(c) APPLICABLE FINANCIAL INSTITUTION.—For purposes of this section:(1) IN GENERAL.—Except as provided in paragraph (2), the term ‘‘applicable financial institution’’means—(A) a financial institution referred to insection 582(c)(2) of the Internal Revenue Codeof 1986, or(B) a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C.1813(w)(1))).(2) SPECIAL RULES FOR CERTAIN SALES.—Inthe case of —(A) a sale or exchange described in subsection (b)(2)(B), an entity shall be treated asan applicable financial institution only if it wasan entity described in subparagraph (A) or (B)of paragraph (1) at the time of the sale or exchange, and(B) a sale or exchange after September 6,2008, of preferred stock described in subsection(b)(2)(A), an entity shall be treated as an applicable financial institution only if it was an entity described in subparagraph (A) or (B) ofparagraph (1) at all times during the period beginning on September 6, 2008, and ending onthe date of the sale or exchange of the preferred stock.(d) SPECIAL RULE CERTAIN PROPERTY NOTFORHELD SEPTEMBER 6, 2008.—The Secretary of theONTreasury or the Secretary’s delegate may extend the application of this section to all or a portion of the gain orloss from a sale or exchange in any case where—(1) an applicable financial institution sells orexchanges applicable preferred stock after September 6, 2008, which the applicable financial institution did not hold on such date, but the basis ofwhich in the hands of the applicable financial institution at the time of the sale or exchange is thesame as the basis in the hands of the person whichheld such stock on such date, or(2) the applicable financial institution is a partner in a partnership which—(A) held such stock on September 6, 2008,and later sold or exchanged such stock, or(B) sold or exchanged such stock duringthe period described in subsection (b)(2)(B).(e) REGULATORY AUTHORITY.—The Secretary of theTreasury or the Secretary’s delegate may prescribe suchguidance, rules, or regulations as are necessary to carryout the purposes of this section.(f) EFFECTIVE DATE.—This section shall apply tosales or exchanges occurring after December 31, 2007, intaxable years ending after such date.SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECUTIVE COMPENSATION OF EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF PROGRAM.(a) DENIAL DEDUCTION.—Subsection (m) of sec OFtion 162 of the Internal Revenue Code of 1986 is amendedby adding at the end the following new paragraph:‘‘(5) SPECIAL RULE FOR APPLICATION TO EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETSRELIEF PROGRAM.—‘‘(A) IN GENERAL.—In the case of an applicable employer, no deduction shall be allowedunder this chapter—‘‘(i) in the case of executive remuneration for any applicable taxable year whichis attributable to services performed by acovered executive during such applicabletaxable year, to the extent that the amountof such remuneration exceeds $400,000, or‘‘(ii) in the case of deferred deductionexecutive remuneration for any taxableyear for services performed during any applicable taxable year by a covered executive, to the extent that the amount of suchremuneration exceeds $400,000 reduced bythe sum of—‘‘(I) the executive remunerationfor such applicable taxable year, plus‘‘(II) the portion of the deferreddeduction executive remuneration forsuch services which was taken into account under this clause in a precedingtaxable year.‘‘(B) APPLICABLE EMPLOYER.—For purposes of this paragraph—‘‘(i) IN GENERAL.—The term ‘applicable employer’ means any employer fromwhom any troubled asset is acquired undera program established by the Secretaryunder section 2 of the Emergency Economic Stabilization Act of 2008.‘‘(ii) AGGREGATION RULES.—Two ormore persons who are treated as a singleemployer under subsection (b) or (c) ofsection 414 shall be treated as a single employer, except that in applying section1563(a) for purposes of either such subsection, paragraphs (2) and (3) thereofshall be disregarded.‘‘(C) APPLICABLE TAXABLE YEAR.—Forpurposes of this paragraph, the term ‘applicabletaxable year’ means any taxable year which includes any portion of the period during whichthe authorities under the Emergency EconomicStabilization Act of 2008 are in effect, determined without regard to section 12(a)(2) thereof.‘‘(D) COVERED EXECUTIVE.—For purposes of this paragraph—‘‘(i) IN GENERAL.—The term ‘coveredexecutive’ means, with respect to any applicable taxable year, any employee—‘‘(I) who, at any time during theportion of the taxable year duringwhich the authorities under the Emergency Economic Stabilization Act of2008 are in effect (determined without regard to section 12(a)(2) thereof), is the chief executive officer of theapplicable employer or the chief financial officer of the applicable employer,or an individual acting in either suchcapacity, or‘‘(II) who is described in clause(ii).‘‘(ii) HIGHEST EM COMPENSATEDPLOYEES.—An employee is described inthis clause if the employee is 1 of the 3highest compensated officers of the applicable employer for the taxable year (otherthan an individual described in clause(i)(I)), determined—‘‘(I) on the basis of the shareholder disclosure rules for compensa [Discussion Draft]tion under the Securities ExchangeAct of 1934 (without regard to whether those rules apply to the employer),and‘‘(II) by only taking into accountemployees employed during the portion of the taxable year described inclause (i)(I).‘‘(iii) EMPLOYEE REMAINS COVEREDEXECUTIVE.—If an employee is a coveredexecutive with respect to an applicable employer for any applicable taxable year, suchemployee shall be treated as a covered executive with respect to such employer forall subsequent applicable taxable years.‘‘(E) EXECUTIVE REMUNERATION.—Forpurposes of this paragraph, the term ‘executiveremuneration’ means the applicable employeeremuneration of the covered executive, as determined under paragraph (4) without regard tosubparagraphs (B), (C), and (D) thereof. Suchterm shall not include any deferred deductionexecutive remuneration with respect to servicesperformed in a prior applicable taxable year.‘‘(F) DEFERRED DEDUCTION EXECUTIVEREMUNERATION.—For purposes of this paragraph, the term ‘deferred deduction executiveremuneration’ means remuneration which wouldbe executive remuneration for services performed in an applicable taxable year but for thefact that the deduction under this chapter (determined without regard to this paragraph) forsuch remuneration is allowable in a subsequenttaxable year.‘‘(G) COORDINATION.—Rules similar tothe rules of subparagraphs (F) and (G) of paragraph (4) shall apply for purposes of this paragraph.’’.(b) GOLDEN PARACHUTE RULE.—Section 280G ofthe Internal Revenue Code of 1986 is amended—(1) by redesignating subsection (e) as subsection (f), and(2) by inserting after subsection (d) the following new subsection:‘‘(e) SPECIAL RULE APPLICATION EMPLOY FOR TOPARTICIPATING TROUBLED ASSETS RELIEFERS IN THEPROGRAM.—‘‘(1) IN GENERAL.—In the case of the severance from employment of a covered executive of anapplicable employer during the period during whichthe authorities under the Emergency Economic Stabilization Act of 2008 are in effect (determined without regard to section 12(a)(2) thereof), this sectionshall be applied to payments to such executive withthe following modifications:‘‘(A) Any reference to a disqualified individual (other than in subsection (c)) shall betreated as a reference to a covered executive.‘‘(B) Any reference to a change describedin subsection (b)(2)(A)(i) shall be treated as areference to severance from employment of acovered executive, and any reference to a payment contingent on such a change shall betreated as a reference to a payment made onaccount of such severance from employment.‘‘(C) Any reference to a corporation shallbe treated as a reference to an applicable employer.‘‘(D) The provisions of subsections(b)(2)(C), (b)(4), (b)(5), and (d)(5) shall notapply.‘‘(2) DEFINITIONS AND SPECIAL RULES.—‘‘(A) DEFINITIONS.—Any term used inthis subsection which is also used in section162(m)(5) shall have the meaning given suchterm by such section.‘‘(B) COORDINATION.—‘‘(i) IN GENERAL.—If a paymentwhich is treated as a parachute paymentby reason of this subsection is also a parachute payment determined without regardto this subsection, this subsection shall notapply to such payment.‘‘(ii) REGULATORY AUTHORITY.—TheSecretary shall prescribe rules for the application of this section and section 4999in cases where one or more payments withrespect to any individual are treated asparachute payments by reason of this subsection, and other payments with respectto such individual are treated as parachutepayments under this section without regard to this subsection.’’.(c) EFFECTIVE DATES.—(1) IN GENERAL.—The amendment made bysubsection (a) shall apply to taxable years ending onor after the date of the enactment of this Act.(2) GOLDEN PARACHUTE RULE.—The amendments made by subsection (b) shall apply to pay [Discussion Draft]ments with respect to severances occurring duringthe period during which the authorities under thisAct are in effect (determined without regard to section 12(a)(2) thereof).<<SEC. 303. EXTENSION AND MODIFICATION OF EXCLUSIONEXTENSION OF EXCLUSION OF INCOME FROMDISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.>><<(a) EXTENSION.—Subparagraph (E) of section108(a)(1) of the Internal Revenue Code of 1986 is amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January1, 2013’’.>><<(b) INCLUSIONHOME EQUITY INDEBTED OFNESS.—>><<(1) INGENERAL.—Section 108(h)(2) of theInternal Revenue Code of 1986 is amended by inserting ‘‘and home equity indebtedness (within themeaning of section 163(h)(3)(C))’’ after ‘‘there of)’’.>><<(2) EFFECTIVE(b) EFFECTIVE DATE.—The amendment madeby this subsection shall bythis subsection shall apply to discharges of indebtedness occurring on or after the date of the enactment of this Act, but only with respect to homeequity indebtedness outstanding on such date.>>occurring on or after January 1, 2010.