[DISCUSSION DRAFT]SEPTEMBER 28, 2008H. R. ll110TH CONGRESS2D SESSIONTo provide authority for the Federal Government to purchase certain typesand insurecertain types of troubled assets for the purposes of providing stabilityto and preventing disruption in the economy and financial system andprotecting taxpayers, 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 purchaseand insure certain types of troubled assets for the pur poses of providing stability to and preventing disruptionin the economy and financial system and protecting tax payers, and for other purposes.Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.(a) SHORT TITLE.—This Act may be cited as the‘‘Emergency 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. Purposes.Sec. 3. Definitions.TITLE I—TROUBLED ASSETS RELIEF PROGRAMSec. 101. Purchases of troubled assets.Sec. 102. Insurance of troubled assets.Sec. 103. Considerations.Sec. 104. Financial Stability Oversight Board.Sec. 105. Reports.Sec. 106. Rights; management; sale of troubled assets; revenues and sale pro ceeds.Sec. 107. Contracting procedures.Sec. 108. Conflicts of interest.Sec. 109. Foreclosure mitigation efforts.Sec. 110. Assistance to homeowners and localities.Sec. 111. Executive compensation and corporate governance.Sec. 112. Coordination with foreign authorities and central banks.Sec. 113. Minimization of long-term costs and maximization of benefits for tax payers.Sec. 114. Market transparency.Sec. 115. Graduated authorization to purchase.Sec. 116. Oversight and audits.Sec. 117. Study and report on margin authority.Sec. 118. Funding.Sec. 119. Judicial review and related matters.Sec. 120. Termination of authority.Sec. 121. Special Inspector General For Tfor the Troubled Asset Relief Program.Sec. 122. Increase in statutory limit on the public debt.Sec. 123. Credit reform.Sec. 124. HOPE for Homeowners amendments.Sec. 125. Congressional Oversight Panel.Sec. 126. FDIC enforcement enhancementauthority.Sec. 127. Cooperation with the FBI.Sec. 128. Acceleration of effective date.Sec. 129. Disclosures on exercise of loan authority.Sec. 130. Technical corrections.Sec. 131. Exchange Stabilization Fund reimbursement.Sec. 132. Suspension ofAuthority to suspend mark-to-market accounting.Sec. 133. Study on mark-to-market accounting.Sec. 134. Recoupment.Sec. 135. Preservation of authority.TITLE II—BUDGET-RELATED 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 Budget.Sec. 204. Emergency treatment.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 of exclusion of income from discharge of qualified principalresidence indebtedness.SEC. 2. 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 financial systemof the United States; and(2) to ensure that such authority and such facilities are used in a manner that—(A) protects home values, college funds, retirement accounts, 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 ofthe Committee on the Budget, and the Committee on Appropriations 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)the Committee on the Budget, and the Committee onAppropriations 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) CORPORATION.—The term ‘‘Corporation’’means the Federal Deposit Insurance Corporation.<<(5) FINANCIAL(5) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ means any institution, including,but not limited to, any bank, savings association,credit union, security broker or dealer, or insurancecompany, organizestablished and regulated under the lawsof the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealthof Northern Mariana Islands, Guam, American Samoa,or the United StatesSamoa, or the United States Virgin Islands, andhaving significant operations in the United States, but exclud [Discussion Draft]but excluding any central bank of, or institutionowned by, a foreign government.>>(6) FUND.—The term ‘‘Fund’’ means the Troubled Assets Insurance Fund established under sectioninancing Fund establishedunder section 102.(7) SECRETARY.—The term ‘‘Secretary’’ meansthe Secretary of the Treasury.(8) 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(B) <<any other financial instrument thatthe any other financial instrument that theSecretary, after consultation with the Chairmanof the Board of Governors of the Federal Reserve System, determines the purchase ofwhich is necessary to promote financial market whichis necessary to promote financial market stability, but only upon transmittal of such de [Discussion Draft]termination, in writing, to the appropriate com mittees of Congress>>mittees of Congress.TITLE I—TROUBLED ASSETSRELIEF PROGRAMSEC. 101. PURCHASES OF TROUBLED ASSETS.(a) OFFICES; AUTHORITY.—<<(1) AUTHORITY.—The Secretary is authorizedto establish a troubled 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 developed and published by the Secretary.>>(2)(2) COMMENCEMENT OF PROGRAM.—Establishment of the policies and procedures and other similar administrative requirements imposed on the Secretary by this Act are not intended to delay the commencement of the TARP.(3) ESTABLISHMENT OF TREASURY OFFICE.—(A) IN GENERAL.—The Secretary shall implement any program under paragraph (1)through an Office of Financial Stability, estabO:\AYO\AYO08C04.xmllished 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, except that an interim AssistantSecretary may serve pending confirmation bythe Senate.(B) CLERICAL AMENDMENT.—Section5315 of title 5, S.—(i) TITLE 5.—Section 5315 of title 5,United States Code, is amended in theitem relating to Assistant Secretaries ofthe Treasury, by striking ‘‘(9)’’ and inserting‘‘(10) ‘‘(10)’’.(ii) TITLE 31.—Section 301(e) of title31, United States Code, is amended bystriking ‘‘9’’ and inserting ‘‘10’’.(b) CONSULTATION.—In exercising the authorityunder this section, the Secretary shall consult with theBoard of Governors of the Federal Reserve System, theFederal Reserve Bank of New York, the Corporation, theCorporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and the Secretaryof Housing and Urban 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) In 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 purchase troubled assets, hold, and selltroubled assets and 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 purchase of troubled assets pursuant to theauthority under this section or the end of the 45-day period beginning on the date of 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 sale 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 securities originated or issued prior to March 18, 200814, 2008, including such mortgage-backed securities.(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 shallmay be determined by categoryor class of the securitietroubled assets 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 Not later than 90 days after the dateof enactment of this Act, the Secretary shall report to theappropriate 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) (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 shall be in an amount that theSecretary determines necessary to meet the purposes ofthis Act and to provideof this Act and to provide sufficient reserves pursuant to 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. theappropriateness of the class of assets for participation in the program established under this section.The methodology shall ensure that the premium isconsistent with paragraph (3).(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 analysis,and 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 115ADJUSTMENT TO PURCHASE AUTHORITY.—The purchase authority limit in section 115 shall bereduced by an amount equal to the difference between the total of the outstanding guaranteed obligations and the balance in the Troubled Assets Insurance Fund.(d) TROUBLED ASSETS INSURANCE FINANCINGFUND.—(1) DEPOSITS.—The Secretary shall depositfees collected under this section into the TroubledAssets Insurance Fund established under paragraph(2).Fund established under paragraph (2).(2) ESTABLISHMENT.—There is established aTroubled Assets Insurance Fund that shall consistinancing Fund thatshall consist of the amounts collected pursuant to paragraph (1),and any balance ins such fund shall be invested byparagraph (1), and any balance in such fund shallbe invested by the 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 institutions of the guarantees providedto financial institutions under 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 toon the national debt;(2) providing stability and preventing disruption to financial markets in order to limit the impacton the economy and protect American jobs, savings,and retirement security;(3) the need to help families keep their homesand to stabilize communities;(4) 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;(5) ensuring that all financial institutions areeligible to participate in the program, without dis [Discussion Draft]crimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this Act;(6) providing assistance to financial institutions, including financial assistance to financialinstitutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets 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;(7) 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;<<(8) that nothing in this Act prevents the Sec19retary from (8) protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible retirement plan other thana plan described in section 409A of the InternalRevenue Code of 1986; and>>described in clause(iii), (iv), (v), or (vi) of section 402(c)(8)(B) of theInternal Revenue Code of 1986, except that such authority shall not extend to any compensation arrangements subject to section 409A of such Code;and(9) the utility of purchasing other real estateowned and instruments backed by mortgages onmultifamily properties.SEC. 104. 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) any action taken by the Secretary andthe Office of Financialpolicies implemented by the Secretaryand the Office of Financial Stability created undersection 101under sections 101 and 102, including the appointment of financial agents, the designationof asset classes to be purchased, and plans forthe 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, or malfeasance to the Inspector General forthe Department of the Treasury or the AttorneyGeneral of the UnitedSpecial Inspector General for the Troubled Assets Relief Program or theAttorney General of the United States, consistentwith section 535(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 Governors ofthe Federal Reserve System;(2) the Secretary;(3) the Director of the Federal Home FinanceAgency;(4) the chairman of the Securities and Exchange Commission; amChairman of the Securities ExchangeCommission; and(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) other than the Secretary.(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)ADDITIONAL AUTHORITIES.—The Financial StabilityOversight Board shall have the authority In addition to theresponsibilities described in subsection (a), the FinancialStability Oversight Board shall have the authority to ensure that the policies implemented by the Secretary are—(A1) in accordance with the purposes of thisAct;(B Act;(2) in the economic interests of the UnitedStates; and(C3) consistent with protecting taxpayers, in accordance with section 112(a).(f) CREDIT REVIEW COMMITTEE.—The executivecommittee established under subsection (e) may appointFinancialStability Oversight Board may appoint a credit reviewcommittee for the purpose of evaluatingthe exercise of the purchase authority provided under thisAct and the the exercise ofthe purchase authority provided under this Act and theassets acquired through the exercise of suchauthority, as the executive committee authority, asthe Financial Stability Oversight Board determines appropriate.(g) SHARING OF INFORMATION.—Any reports or recommendations submitted or proposed under this sectionshall also be submitted to the Congressional OversightPanel established under section 125.(h) REPORTS.—The Financial Stability OversightBoard shall report to the appropriate committees of Congress and the Congressional Oversight Panel establishedunder section 125, semiannually, on the matters describedunder subsection (a)(1).(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; or(2) the date of expiration of the last insurancecontract issued under section 102.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 granted in section 102, whicheveroccurs first, and every 30-day period thereafter, the Secretary shall report to the appropriate committees of Congress, with respect to each such period—(1) an overview of actions taken by the Secretary, including the considerations required by section 103 and the efforts under section 11209;(2) the actual obligation and expenditure of thefunds provided for administrative expenses by section 118 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;(D) the nature of the assets purchased;(E) all projected costs and liabilities;(F) operating expenses, including compensation for financial agents;(G) the valuation or pricing method usedfor each transaction; and(H) a description of the vehicles established to exercise such authority.(b) TRANCHE REPORTS TO CONGRESS.—(1) REPORTS.—The Secretary shall provide tothe 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 report 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.(c) 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 theregulatory system; and(B) enhancement of the clearing and settlement of over-the-counter swaps; and(2) the rationale underlying such recommendations.(d) SHARING INFORMATION.—Any report re OFquired under this section shall also be submitted to theCongressional Oversight Panel established under section125.(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; or(2) the date of expiration of the last insurancecontract issued under section 102.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(b) MANAGEMENT OF TROUBLED ASSETS.—TheOFSecretary, in consultation with the Corporation, shall have Secretary shall have authority to manage troubled assets purchased under this Act, including revenues and portfoliorisks therefrom.>>(c) SALE (c) SALE TROUBLED ASSETS.—The SecretaryOFmay, at any time, upon terms and conditions and at aprice determined by the Secretary, sell, or enter into securities loans, repurchase transactions, or other financialtransactions in regard to, any troubled asset purchasedunder 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 pro vided in paragraph (2).>><<(2) USEOF DEPOSITS.—Of the amount re 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) TRANSFERTO(d) TRANSFER TREASURY.—Revenues of,and proceeds from the sale of troubled assets pur chased under this Act, <<or from>> the andTOproceeds from the sale of troubled assets purchased underthis Act, or from the sale, exercise, or surrender of warrants or senior debt acquiredunder section <<113>>instruments acquired under section113 shall be paid into the generalfund of the Treasury for reduction of the publicdebt.>>(e) fund of the Treasuryfor reduction of the public debt.(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 120, or to purchase or fund the purchaseof a troubled asset under a commitment entered into before the termination date in section 120, is not subjectto the provisions of section 120.SEC. 107. CONTRACTING PROCEDURES.(a) STREAMLINED PROCESS.—For purposes of thisAct, the Secretary may waive specific provisions of theFederal Acquisition Regulation 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.—Inany solicitation or contract where the Secretary has, pursuant to subsection (a) waived the provisions, waived any provision 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 (assuch term is defined in section 1204(c) of the FinancialInstitutions Reform, Recovery, and Enforcement Act of1989 (12 U.S.C. 1811 note)) and women, and minorityand women-owned businesses (as such terms are definedin section 21A(r)(4) of the Federal Home Loan Bank Act(12 U.S.C. 1441a(r)(4)), in that solicitation or contract,including contracts to asset managers, servicers, propertymanagers, and other service providers or expert consultants.(c) ELIGIBILITY FDIC.—Notwithstanding sub OFsections (a) and (b), the Corporation—(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. 108. 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 enactment of this Act.SEC. 109. FORECLOSURE MITIGATION EFFORTS.(a) RESIDENTIAL MORTGAGE LOAN SERVICINGSTANDARDS.—To the extent that 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 for homeowners and use the authority of the Secretary to encourage the servicers of theunderlying 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 Corporation, 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 , as provided in section 110(a)(1)(C)), theFederal Housing Finance Agency, the Secretary of Housing and Urban Development, and other Federal Government entities that hold troubled assets to attempt to identify opportunities for the acquisition of classes of troubledassets that will improve the ability of the Secretary to improve the loan modification and restructuring process and,where permissible, to permit bona fide tenants who arecurrent on their rent to remain in their homes under theterms of the lease. In the case of a mortgage on a residential rental property, the plan required under this sectionshall include protecting Federal, State, and local rentalsubsidies and protections, and ensuring any modificationtakes into account the need for operating funds to maintain decent and safe conditions at the property.(c) CONSENT REASONABLE LOAN MODIFICATIONTOREQUESTS.—Upon any request arising under existing investment contracts, the Secretary shall consent, where appropriate, and 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. 110. 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, with 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, other thanmortgages or securities held, owned, or controlled in connection with open market operations under section 14 of the Federal ReserveAct (12 U.S.C. 353), or as collateral for an advance or discount that is not in default;(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) HOMEOWNER ASSISTANCE BY AGENCIES.—(1) IN GENERAL.—To the extent that the Federal property manager holds, owns, or controls mort [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 theirits authority to encouragethe servicers of the underlying mortgages, and considering net present value to the taxpayer, to takeadvantage of the HOPE for Homeowners Programunder section 257 of the National Housing 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 planrequired 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 plan 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) 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); and(2) assist in facilitating any such modifications,to the extent possible.(d) LIMITATION.—The requirements of this sectionshall not supersede any other duty or requirement imposedon the Federal property managers under otherwise applicable law.SEC. 111. EXECUTIVE COMPENSATION AND CORPORATEGOVERNANCE.(a) APPLICABILITY.—Any financial institution thatsells troubled assets to the Secretary under this Act shallbe subject to the executive compensation requirements ofsubsections (b) and (c) and the provisions under the Internal Revenue Code of 1986, as provided under the amendment by section 302, as applicable.(b) DIRECT 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 theor debt positionin the financial institution as a result of the transaction,the SecretaryO:\AYO\AYO08C04.xmlaction, the Secretary shall require that the financialinstitution meet appropriate standards for executivecompensation and corporate governance. The standardsrequired under this subsection shall be effective for required under this subsection shall be effectivefor the duration of the period that the Secretary holdsan equityholds an equity or debt position in the financial institution.(2) CRITERIA.—The standards required undersubsection shall this subsection shall include—(A) limits on compensation that exclude incentives 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)or debt position in the financialinstitution;(B) a provision for the recovery by the financial institution of any bonus or incentivecompensation paid to a <<senior executive offi10cer>> senior executive officerbased on statements of earnings, gains, orother criteria that are later othercriteria that are later proven to be materiallyinaccurate; and(C) a prohibition on the financial institution making any golden parachute payment toits <<senior executive officers>>senior executive officer during the periodthat the Secretary holds an equity position inthe financial institution.(b)or debt position in the financial institution.(3) DEFINITION.—For purposes of this section,the term ‘‘senior executive officer’’ means an individual who is one of the top 5 executives of a publiccompany, whose compensated is required to be disclosed pursuant to the Securities Exchange Act of1934, and any regulations issued thereunder, andnon-public company counterparts.(c) 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 per financial institution, in the aggregate exceed$300,000,000, t $300,000,000 (including direct purchases),the Secretary shall prohibit, for such financial institution,any new employment contract with a senior executive officer that provides a golden parachute in the event of aninvoluntary termination, bankruptcy filing, insolvency, orreceivership. The Secretary shall prohibit 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 shallissue guidance to carryout this paragraph not later than 2 months after the dateof enactment of this Act, and such guidance shall be effective upon issuance.<<(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 paragraph—‘‘(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 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 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 FROM 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 amendment 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 SUNSET.—The provisions of subsection (c) shallapply only to arrangements entered into during the periodduring which the authorities under section 101(a) are in effect (determined under section 120)effect, as 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. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS.(a) LONG-TERM COSTS AND BENEFITS.—(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 to 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—(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, inO:\AYO\AYO08C04.xmlcluding 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.—The Secretary may not purchase, or make any commitment to purchase, anytroubled 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 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 (2)(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 interestrate premium, in the case of a debt instrument; and(ii) to provide additional protectionfor the taxpayer against losses from sale ofassets by the Secretary under this Act andthe administrative expenses of the TARP.(B) AUTHORITY TO SELL, EXERCISE, ORSURRENDER.—The Secretary may sell, exercise,or surrender a warrant or any senior debt inO:\AYO\AYO08C04.xmlstrument 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 (1)(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 beO:\AYO\AYO08C04.xmlsection shall be set by the Secretary, in the 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, 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 an 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.—The Secretary shall establish de minimis exceptions to the requirements of this subsection, based on either—(i) the total consolidated assets of thefinancial institution, $500,000,000 or less;or(ii) the size of the size ofthe cumulative transactions of troubled assets purchased fromany one financial institution, at not morethan purchased from any one financial institution forthe duration of the program, at not more than$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. 114. 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 sells troubled assets to the Secretary under thisAct, the Secretary shall determine whether the public disclosure required for such financial institutions with respect to off-balance sheet transactions, derivatives instruments, contingent liabilities, and similar sources of potential exposure is adequate to provide to the public sufficientinformation as to the true financial position of the institutions. If such disclosure is not adequate for thatpurpose, the Secretary shall purpose,the Secretary shall make recommendations for additionaldisclosure requirements to the relevant regulators.SEC. 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 enactment 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 to theCongress a written certification that the Secretary isexercising the authority under this paragraph, needs to exercise the authority under this paragraph,effective upon such submission, such authority shallbe limited to $350,000,000,000 outstanding at anyone time.(3) If at any time after obligations of amountsdescribed in paragraphs (1) and (2) have, at any time after the certification inparagraph (2) has been made, the President transmits to the Congress a writtenreport detailing the plan of the Secretary to exercisethe authority under report detailing theplan of the Secretary to exercise the authority underthis paragraph, unless there is enacted, within 15 calendar days of such submission,calendar days of such transmission, a joint resolution described in subsection (c), effective upon theexpiration of such 15-day period, such authorityshall be limited to $700,000,000,000 outstanding atany one 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 assets held.(c) FAST TRACK CONSIDERATIONJOINT RESOLUTION OF DISAPPROVAL.—(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 105 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 theplanof the Secretary described in subsection (a)(3), thereis enacted into law a joint resolution disapprovingthe plan of the Secretary with respect to such additional amount.(2) CONTENTS OF JOINT RESOLUTION.—For the purpose of paragraph (1),the purpose of this section, the term ‘‘joint resolution’’ means onlya joint resolution introduced after the date on whichthe report of the Secretary referred to in subsection a joint resolution—(A) that is introduced not later than 3 calendar days after the date on which the reportof the plan of the Secretary referred to in subsection (a)(3) is received by Congress, the matter after theresolving clause of ;(B) which does not have a preamble;(C) the title of which is as follows: ‘‘Jointresolution relating to the disapproval of obligaO:\AYO\AYO08C04.xmltions under the Emergency Economic Stabilization Act of 2008’’; and(D) the matter after the resolving clause ofwhich is as follows: ‘‘That Congress disapprovesthe obligation of any amount exceeding theamounts obligated as described in paragraphs(1) and (2) of section 114(a) 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 SenateEconomic Stabilization Act of 2008.’’.(d) FAST TRACK CONSIDERATION IN HOUSE OF REPRESENTATIVES.—(1) RECONVENING.—Upon receipt of a reportunder subsection (a)(3), the Speaker, if the Housewould otherwise be adjourned, shall notify the Members of the House that, pursuant to this section, theHouse shall convene not later than the second calendar day after receipt of such report;(2) REPORTING AND DISCHARGE.—Any committee of the House of Representatives to which ajoint resolution is referred shall report it to theHouse not later than 5 calendar days after the dateof receipt of the report described in subsection(a)(3). If a committee fails to report the joint resolution within that period, the committee shall be discharged from further consideration of the joint resoO:\AYO\AYO08C04.xmllution and the joint resolution 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 introductionthe appropriate calendar.(3) PROCEEDING TO CONSIDERATION.—Aftereach committee authorized to consider a joint resolution reports it to the House or has been dischargedfrom its consideration, it shall be in order, not laterthan the sixth day after Congress receives the reportdescribed in subsection (a)(3), to move to proceed toconsider the joint resolution in the House. All pointsof order against the motion are waived. Such a motion shall not be in order after the House has disposed of a motion to proceed on the joint resolution.The previous question shall be considered as orderedon the motion to its adoption without interveningmotion. The motion shall not be debatable. A motionto reconsider the vote by which the motion is disposed of shall not be in order.(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 8CONSIDERATION.—The joint resolutionshall be considered as read. All points of orderagainst the joint resolution and against its consideration are waived. The previous question shall be considered as ordered on the joint resolution to its passage without intervening motion except two hours ofdebate equally divided and controlled by the proponent and an opponent. A motion to reconsider thevote on passage of the joint resolution shall not bein order.(e) FAST TRACK CONSIDERATION IN SENATE.—(1) RECONVENING.—Upon receipt of a reportunder subsection (a)(3), if the Senate has adjournedor recessed for more than 2 days, the majority leader of the Senate, after consultation with the minorityleader of the Senate, shall notify the Members of theSenate that, pursuant to this section, the Senateshall convene not later than the second calendar daysafter its introduction, such committee shall bedeemed to be discharged from further considerationof such resolution, and suchafter receipt of such message.(2) PLACEMENT ON CALENDAR.—Upon introduction in the Senate, the joint resolution shall beplaced on the appropriate calendar of the House involved.(5immediately on the calendar.(3) FLOOR CONSIDERATION.—(A) IN GENERAL.—When the committee 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 Notwithstanding RuleXXII of the Standing Rules of the Senate, it isin order at any time during the period beginning on the 4th day after the date on whichCongress receives a report of the plan of theSecretary described in subsection (a)(3) andending on the 6th day after the date on whichCongress receives a report of the plan of theSecretary described in subsection (a)(3) (eventhough a previous motion to the same effect hasbeen disagreed to) 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 is 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 businessjoint resolution, and allpoints of order against the joint resolution (andagainst consideration of the joint resolution)are waived. The motion to proceed is not debatable. The motion is not subject to a motion topostpone. A motion to reconsider the vote bywhich the motion is agreed to or disagreedto shall not be in order. If a motion to proceedto toshall not be in order. If a motion to proceed tothe consideration of the resolution is agreedto, the resolution shall to,the joint resolution shall remain the unfinishedbusiness of the respective House until disposed of.(B) DEBATE.—Debate on the resolution,joint resolution, and on all debatable motions and appealsin connection therewith, shall be limited to notmore than 10 hours, which shall be dividedequally between those favoring and those opposing the resolutione majority and minority leaders or their designees. A motion further to limitdebate is in order and not debatable. An amendment to, or a motion to postpone, or a motionamendment to, or a motion to postpone, or amotion to 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 tobusiness, or a motion to recommit the joint resolution is not in order.(C) VOTE ON PASSAGE.—Imme ON FINALdiately following the conclusion of the debate ona resolution described in paragraph (2), and aThe vote on passage shall occur immediately following the conO:\AYO\AYO08C04.xmlclusion of the debate on a joint resolution, anda single quorum call at the conclusion of the debate if requested in accordance with the rules ofthe appropriate House.(D)Senate.(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 , as the case may be, to the procedure relating to a resolution described in paragraph (2)joint resolution shall be decidedwithout debate.(6f) RULES RELATING SENATE HOUSETO AND OFREPRESENTATIVES.—(1) 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 shalljoint resolution of that House, that House receivesfrom the other House a joint resolution, then the following procedures shall apply:(A) The joint resolution of the other Houseshall not be referred to a committee.(B) With respect to a resolution describedin paragraph (2) of joint resolution ofthe House receiving the resolution—(i) the procedure in that House shallbe the same as if no resolution had beenreceived from the otherjoint resolution hadbeen received from the other House; but(ii) the vote on final passage shall beon the resolution of the other House.(7passage shall be onthe joint resolution of the other House.(2) TREATMENT OF JOINT RESOLUTION OFOTHER HOUSE.—If one House fails to introduce orconsider a joint resolution under this section, thejoint resolution of the other House shall be entitledto expedited floor procedures under this section.(3) TREATMENT OF COMPANION MEASURES.—If, following passage of the joint resolution in theSenate, the Senate then receives the companionmeasure from the House of Representatives, thecompanion measure shall not be debatable.(4) CONSIDERATION AFTER PASSAGE.—(A) IN GENERAL.—If Congress passes ajoint resolution, the period beginning on thedate the President is presented with the jointresolution and ending on the date the Presidenttakes action with respect to the joint resolutionshall be disregarded in computing the 15-calendar day period described in subsection (a)(3).(B) VETOES.—If the President vetoes thejoint resolution—(i) the period beginning on the datethe President vetoes the joint resolutionand ending on the date the Congress reO:\AYO\AYO08C04.xmlceives the veto message with respect to thejoint resolution shall be disregarded incomputing the 15-calendar day period described in subsection (a)(3), and(ii) debate on a veto message in theSenate under this section shall be 1 hourequally divided between the majority andminority leaders or their designees.(5) RULES OF HOUSE OF REPRESENTATIVESAND SENATE.—This subsection isand subsections (c),(d), and (e) are enacted by Congress—(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 befollowed in that House in the case of a resolution described in paragraph (2)jointresolution, and it supersedes other rules only tothe extent that it is inconsistent with suchrules; and(B) with full recognition of the constitutional 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. 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) the performance of the TARP in meeting the purposes of The performance of the TARP inmeeting the purposes of this Act, particularly thoseinvolvingthose involving—(i) foreclosure mitigation,;(ii) cost reduction,and;(iii) whether it has provided stabilityor prevented disruption to the financialmarkets or the banking system and; and(iv) whether it has 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 operations of theTARP in the use of appropriated funds.(F) Compliance with all applicable lawsand regulations by the TARP, its agents andrepresentatives.(G) tThe efforts of the TARP to prevent,identify, and minimize conflicts of interest involving any agent or representative performingactivities on behalf of or under the authority ofthe TARP.(H) The efficacy of contracting proceduresestablished under section 106, including the efforts of TARP in evaluating pursuant to section 107(b), including, as appliO:\AYO\AYO08C04.xmlcable, the efforts of the TARP in evaluatingproposals for inclusion and contracting to the maximum extentpossible of minorities, women, and minorityand maximum extent possible of minorities (as suchterm is defined in 1204(c) of the Financial Institutions Reform, Recovery, and EnhancementAct of 1989 (12 U.S.C. 1811 note), women,and minority- and women-owned businesses, includingascertaining andincluding ascertaining and reporting the totalamount of fees paid and other value delivered by TARP toby the TARP to all of its agents and representatives, and such amounts paid or delivered tosuch firms that are minority- and women-owned businesses (assuch terms are defined in section 21A of theFederal businesses (as such terms are defined in section21A of the Federal Home Loan Bank Act (12U.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 Act20.(B) ACCESS TO RECORDS.—To 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, financialadvisors, and other agents and representativesof the TARP (as related to the agent or representative’s activities on behalf of 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 facilities for verifyingtransactions with the balances or securities heldby depositaries, fiscal agents, and custodians.The Comptroller General may make and retaincopies of such books, accounts, 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 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 underthis 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 ac [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 O:\AYO\AYO08C04.xmlability 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 of—(A) the effectiveness and efficiency of operations, including the use of the resources 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 report or auditrequired under this section shall also be submitted to theCongressional Oversight Panel established under section125.(e) TERMINATION.—Any reporting or oversight, reporting, oraudit requirement under this section shall terminate on the later of—(1) the date of expiration of the last insurancecontract issued under section 102; or(2the later of—(1) 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; or(2) the date of expiration of the last insurancecontract issued under section 102.SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.(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.(b) CONTENT.—The study required by this sectionshall 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 excessive 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 its authority;(3) an analysis of the margin authority of theany usage of the margin authority by the Board; and(4) recommendations for the Board and 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 reporton the study required by this section to the Committeeon Banking, Housing, and Urban Affairs of the Senateand 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 section125.SEC. 118. 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, including theby the Secretary for actions authorized by this Act, including the payment of administrativeexpenses, shall be deemed appropriated at the time of suchexpenditure or obligation.SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.(a) JUDICIAL REVIEW.—(1) STANDARD.—Actions by the Secretary pursuant to the authority of this Act shall be subject tochapter 7 of title 5, United States Code, includingthat such final actions shall be held unlawful and setaside if found to be arbitrary, capricious, an abuseof discretion, or not in accordance with law.(2) LIMITATIONS ON EQUITABLE RELIEF.—(A) INJUNCTION.—No injunction or otherform of equitable relief shall be issued againstthe Secretary for actions pursuant to section101, 105, or 108, other than to remedy 2, 106, and 109, other than to remedya 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 deO:\AYO\AYO08C04.xmlnied 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.—Any injunction or other form ofequitable relief issued against the Secretary for actions pursuant to section 101, 105, or 108 shall be2, 106, and 109,shall be automatically stayed. The stay shall be lifted unless the Secretary seeks a stay from a highercourt within 3 calendar days after the date on whichthe relief is issued.(b) RELATED MATTERS.—<<(1) TREATMENT(1) TREATMENT OF HOMEOWNERS’ RIGHTS.—The terms of any residential mortgage loan that ispart of any purchase by the Secretary under this Actshall remain subject to all claims 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 that would otherwise availableto any other personpply with respect to persons other than theSecretary. Except as established in any contract, aservicer of pooled residential mortgages owes anyduty to determine whether the net presentvalue of the payments on the value ofthe payments on the loan, as modified, is likely tobe greater than the anticipated net recovery thatwould result from foreclosure to all investors andholders of beneficial interests in such investment,but not to any individual or groups of investors or beneficial interest holders, and shall bedeemed to beneficial interest holders, and shall be deemed toact 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 agrees to orimplements a modification or workout plan when theservicer takes reasonable loss mitigation actions, including partial payments.SEC. 120. TERMINATION OF AUTHORITY.(a) TERMINATION.—The authorities provided undersections 101(a) <<and 102>>and 102 shall terminate on December 31,2009.(b) EXTENSION UPON CERTIFICATION.—The Secretary, upon submission of a written certification to Congress, may extend the authority provided under this Actto expire not later than 2 years from the date of enact [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 cost to the taxpayers for such an extension.SEC. 121. 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 objective 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 objective leadership and coordination of, and recommendations on, policies designed to—(A) promote economy, efficiency, and effectiveness in the administration of such program;and(B) prevent and detect fraud and abuse insuch program.(3) To provide for an independent and objectivemeans 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.(b) OFFICE INSPECTOR GENERAL.—There isOFhereby established the Office of the Special Inspector General for the Troubled Asset Relief Program.(cb) 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‘‘Special Inspector General’’), who shall be appointed by the President, by and with the advice and consent of the Senate.(2) The appointment of the Special Inspector Generalshall be made on the basis of integrity and demonstratedability in accounting, auditing, financial analysis, law,management analysis, public administration, or investigations.(3) The nomination of an individual as Special Inspector General shall be made <<as as soon as practicable>>after afterthe establishment of any program under section 101s 101 and102.(4) The Special Inspector General 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 shall not beconsidered an employee who determines policies to be pur [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 shall 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 7cial 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.>>(e(c) DUTIES.—(1) It shall be the duty of the SpecialInspector General to conduct, supervise, and coordinateaudits and investigations of the purchase, management,and sale of assets by the Secretary of the Treasury underany program established by the Secretary under section101 and, and the management by the Secretary of any program established under section 102, including by collecting and summarizing the following information:(A) A description of the categories of troubledassets purchased or otherwise procured by the Secretary.(B) A listing of the troubled assets purchasedin each such category described under subparagraph(A).(C) An explanation of the reasons the Secretarydeemed 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 information 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.(G) A listing of the insurance contracts issuedunder section 102.(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 d) POWERS AND AUTHORITIES.—(1) In carrying outANDthe duties specified in subsection (ec), the Special InspectorGeneral shall have the authorities provided in section 6of the Inspector General Act of 1978.(2) The Special Inspector General shall carry out theduties specified in subsection (ec)(1) in accordance withsection 4(b)(1) of the Inspector General Act of 1978.(ge) PERSONNEL, FACILITIES, OTHER RE ANDSOURCES.—(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 competitiveservice, 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 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 such title.(3) The Special Inspector General may enter intocontracts and other arrangements for audits, studies,analyses, 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 Generalfor 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 requested bythe Special Inspector General is, in the judgment of theSpecial Inspector General, unreasonably refused or notprovided, the Special Inspector General shall report thecircumstances to the appropriate committees of Congresswithout delay.(hf) REPORTS.—(1) Not later than October 31, 2008,and every 60 days after theconfirmation of the Special Inspector General, and everycalendar quarter thereafter, the Special Inspector Generalshall submit to the appropriate committees of Congressa report summarizing the activities of the Special Inspector General during the 120-day period ending on the dateof such report. Each report shall include, for the periodcovered by such report, a detailed statement of all purchases, obligations, expenditures, and revenuesassociated with any program established by the Secretaryof the Treasury under section 101 associatedwith any program established by the Secretary of theTreasury under sections 101 and 102, as well as the information collected under subsection (ec)(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.(i5.(g) FUNDING.—(1) Of the amounts made availableto the Secretary of the Treasury under section 118,$7550,000,000 shall be available to the Special InspectorGeneral to carry out this section.(2) The amount available under paragraph (1) shallremain available until expended.(jh) 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; or(2) the date of expiration of the last insurancecontract issued under section 102.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 limitation contained in such subsection and inserting‘‘$11,315,000,000,000’’.SEC. 123. CREDIT REFORM.(a) IN GENERAL.—Subject to subsection (b), thecosts of purchases of troubled assets made under section101(a) and guarantees of troubled assets under section102, and any cash flows associated with the activities authorized in section 102 and subsections (a), (b), and (c) of section 106shall be determined as provided under the Federal Creditof section 106 shall be determined as provided under theFederal Credit Reform Act of 1990 (2 U.S.C. 661 et.seq.), as applicable.(b) COSTS.—For the purposes of section 502(5) ofthe Federal Credit Reform Act of 1990 (2 U.S.C.661a(5))—(1) the cost of troubled 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 or guarantee of a troubled asset shall be thedifference between the current estimate consistentwith paragraph (1) under the terms of the troubledasset or guarantee of the troubled asset and the current estimate consistent with paragraph (1) underthe terms of the troubled asset or guarantee of thetroubled asset, as modified.SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.Section 257 of the National Housing Act (12 U.S.C.1715z-23) is amended—(1) in subsection (e)—(A) in paragraph (1)(B), by inserting before ‘‘a ratio’’ the following: ‘‘, or thereafter islikely 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 the Board)’’; and(C) in paragraph (4(C) in paragraph (4)(A)—(i) in the first sentence, by insertingafter ‘‘insured loan’’ the following: ‘‘andany payments made under this paragraph,’’; and(ii) by insertadding 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 use by the Secretary of authority under this Act, including with reO:\AYO\AYO08C04.xmlspect 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), or102, 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 and protectingconsumers, 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 , therationale underlying such recommendation, andwhether there are any gaps in existing consumerprotections.(c) MEMBERSHIP.—(1) IN GENERAL.—The Oversight Panel shallconsist of 5 members, as follows:(A) 1 member appointed by the Speaker ofthe 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 minorityleader of the Senate.(E) 1 member appointed by the Speaker ofthe House of Representatives and the majorityleader of the Senate, inafter 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 equivalent 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 vacancy on the OversightPanel shall be filled in the manner in which theoriginal 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 section, 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 6 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. 126. FDIC ENFORCEMENT ENHANCEMENTAUTHORITY.(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 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, obligaO:\AYO\AYO08C04.xmltion, 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, or 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 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) UNENFORCEABILITY CERTAIN AGREE OFMENTS.—Section 13(c) of the Federal Deposit InsuranceAct (12 U.S.C. 1823(c)) is amended by adding at the endthe following new paragraph:‘‘(11) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—No provision contained in any existing orfuture standstill, confidentiality, or other agreementthat, directly or indirectly—‘‘(A) affects, restricts, or limits the abilityof any person to offer to acquire or acquire,‘‘(B) prohibits any person from offering toacquire or acquiring, or‘‘(C) prohibits any person from using anypreviously disclosed information in connectionwith any such offer to acquire or acquisition of,all or part of any insured depository institution, including any liabilities, assets, or interest therein, inconnection with any transaction in which the Corporation exercises its authority under section 11 or13, shall be enforceable against or impose any liability on such person, as such enforcement or liabilityshall be contrary to public policy.’’.(d) 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. 127. 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. 128. 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. 129. 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, available information concerning the value ofany collateral held with respect to 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 60 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 occurringduring the period beginning on March 1, 2008 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 section125.SEC. 130. 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 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 subsequently 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. 131. 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, from fundsunder this Act.(b) LIMITS USE EXCHANGE STABILIZATIONON OFFUND.—The Secretary is prohibited from using the Exchange Stabilization Fund for the establishment of anyfuture guaranty programs for the United States moneymarket mutual fund industry.(c) CONSULTATIONS.—In carrying out any guaranteeprogram, the Secretary shall consult with the Board ofDirectors of the Corporation and the Securities and Exchange Commission.SEC. 132. SUSPENSION OFAUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.(a) AUTHORITY.—The Securities and Exchange Commission shall have the authority under securities laws (assuch term is defined underthe securities laws(as such term is defined in 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 rder, the application ofStatement Number 157 of the Financial AccountingStandards Board for any issuer (as such term is definedin section 3(a)(8) of such Act) or with respect to any classor category of transaction if the Commission determines thatis necessary or appropriate in the public interest and isthat is necessary or appropriate in the public interest andis consistent with the protection of investors.(b) SAVINGS PROVISION.—Nothing in subsection (a)shall be construed to restrict or limit any authority of theSecurities and Exchange Commission under securitieslaws as in 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, and the Secretary,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 deterO:\AYO\AYO08C04.xmlminations 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 whichwhere there is a shortfall, the President shall submit to the Congress a legislative proposal that recoupsfrom entities benefitting from the program an amount from the financial industry an amount equal to the shortfall in order to ensurethat the Troubled Asset Relief Program does not add to the budget deficitor thethe deficit or 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, and to the extent otherwise consistentwith law, all information used by the Secretary in connection with activities authorized under this ActO:\AYO\AYO08C04.xmltion 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 committees 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 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 , and guarantees of the troubled assets, determined in accordance with section <<123/118>>;(2) the information123;(2) the information used to derive the estimate,including assets purchased, prices or guaranteed, pricespaid, revenues received, the impact on the deficitand 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 guarantees 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 Emergency Economic Stabilization Actof 2008, including—‘‘(A) an estimate of the current value of allassets purchased and sold under the authorityprovided in the Emergency Economic , sold, and guaranteed underthe authority provided in the Emergency Economic Stabilization Act of 2008 using methodology required by the Federal Credit ReformAct of 1990 (2 U.S.C. 661 et seq.) and section <<123/118>> ofthe Emergency Economic Stabilization Act of123 of the Emergency Economic StabilizationAct of 2008;‘‘(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 Emergency Economic 23 ofthe Emergency Economic Stabilization Act of2008;‘‘(C) an estimate of the current value of allassets purchased and sold under the authorityprovided in the Emergency Economic , sold, and guaranteed underthe authority provided in the Emergency Economic Stabilization Act of 2008 calculated on acash 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<<123/118>> of the Emergency Economic Sta 9bilization Act of 123of the Emergency Economic Stabilization Act of2008; and‘‘(E) the portion of the deficit which canbe attributed to any action taken by the Secretary using authority provided by the Emergency Economic Stabilization Act of 2008O:\AYO\AYO08C04.xmlgency 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 of 1990 and section<<123/118>> of the Emergency Economic Sta19bilization Act of 2008.’’(b)123 of the Emergency Economic StabilizationAct of 2008.’’(b) CONSULTATION.—In implementing this section,the Director of Office of Management and Budget shallconsult periodically, but at least annually, with 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.SEC. 204. EMERGENCY TREATMENT.All provisions of this Act are designated as an emergency requirement and necessary to meet emergency needspursuant to section 204(a) of S. Con. Res 21 (110th Congress), the concurrent resolution on the budget for fiscalyear 2008 and rescissions of any amounts provided in thisAct shall not be counted for purposes of budget enforcement.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 Federal 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 $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 paragraph—‘‘(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 Emergency Economic Stabilization Act of 2008if the aggregate amount of the assets soacquired for all taxable years exceeds$300,000,000.‘‘(ii) DISREGARD OF CERTAIN ASSETSPURCHASE.—IfSOLD THROUGH DIRECTthe only sales of troubled assets by an employer under the program described inclause (i) are through 1 or more directpurchases (within the meaning of section113(c) of the Emergency Economic Stabilization Act of 2008), such assets shallnot be taken into account under clause (i)in determining 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 theEmergency Economic StabilizationAct of 2008 are in effect (determinedunder section 120 thereof), and‘‘(II) in which the aggregateamount of troubled assets acquiredfrom the employer during the taxableyear pursuant to such authorities(other than assets to which subparagraph (B)(ii) applies), when added tothe aggregate amount so acquired forall preceding taxable years, 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 Emergency EconomicStabilization Act of 2008 are in effect(determined under section 120 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 compensaO:\AYO\AYO08C04.xmltion 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 andfor all subsequent taxable years in whichdeferred deduction executive remunerationwith respect to services performed in allsuch applicable taxable years would (butfor this paragraph) be deductible.‘‘(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 EmergencyEconomic Stabilization Act of 2008, includingthe extent to which this paragraph applies inthe case of any acquisition, merger, or reorganization of an applicable employer.’’.(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 section 101(a) of the Emergency Economic Stabilization Act of 2008 are in effect (determined under section 120 of such Act), thissection shall be applied to payments to such 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 emO:\AYO\AYO08C04.xmlployment 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 FROM EMPLOYMENT.—The term ‘applicable severancefrom employment’ means any severance fromemployment of a covered executive—‘‘(i) by reason of an involuntary termination of the executive by the employer,or‘‘(ii) in connection with any bankruptcy, liquidation, or receivership of theemployer.‘‘(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 EmergencyEconomic Stabilization Act of 2008,including the extent to which this subsection applies in the case of any acquisition, merger, or reorganization ofan applicable employer,‘‘(II) to apply this section andsection 4999 in cases where one ormore payments with respect to any individual are treated as parachute payO:\AYO\AYO08C04.xmlments by reason of this subsection,and other payments with respect tosuch individual are treated as parachute payments under this sectionwithout regard to this subsection, and‘‘(III) to prevent the avoidance ofthe application of this section throughthe mischaracterization of a severancefrom employment as other than anapplicable severance from employment.’’.(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 payments with respect to severances occurring duringthe period during which the authorities under section 101(a) of this Act are in effect (determinedunder section 120 of this Act).SEC. 303. EXTENSION 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) EFFECTIVE DATE.—The amendment made bythis subsection shall apply to discharges of indebtednessoccurring on or after January 1, 2010.