Looks pretty good to me...
The Dodd Mark:
IN THE SENATE OF THE UNITED STATES
[BLANK] introduced the following bill; which was read twice and referred to the Committee on [BLANK]
A BILL To provide authority for the Federal Government to purchase certain types of troubled assets for the purposes of pro- viding stability or preventing disruption to the financial markets and banking system and protecting taxpayers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORTTITLE.—This Act may be cited as the [BLANK] Act of 2008’’.
(b) TABLEOFCONTENTS.—The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Authority to purchase troubled assets.
Sec. 3. Considerations.
Sec. 4. Oversight.
Sec. 5. Rights; management; sale of troubled assets.
Sec. 6. Maximum amount of authorized purchases.
Sec. 7. Funding.
Sec. 8. Limits on review.
Sec. 9. Assistance to homeowners and localities.
Sec. 10. Maintaining insurance parity.
Sec. 11. Minimizing foreclosures.
Sec. 12. Termination of authority.
Sec. 13. Increase in statutory limit on the public debt.
Sec. 14. Credit reform.
Sec. 15. Annual financial reports and audits.
Sec. 16. Conflicts of interest.
Sec. 17. Executive compensation.
Sec. 18. Studies and reports.
Sec. 19. Disclosures on exercise of loan authority.
Sec. 20. Special inspector general for the troubled asset program.
Sec. 21. Definitions.
SEC. 2. AUTHORITY TO PURCHASE TROUBLED ASSETS.
(a) OFFICES; AUTHORITY.—
(1) AUTHORITY.—The Secretary is authorized to establish a program to purchase, and to make and fund commitments to purchase troubled assets from any financial institution, on such terms and condi- tions as are determined by the Secretary, and in ac- cordance with policies and procedures developed by the Secretary.
(2) ESTABLISHMENT OF TREASURY OFFICE.—
The Secretary shall implement any program under paragraph (1) through an Office of Financial Stability, established for such purpose within the Office of Domestic Finance of the Department of the Treasury, which office shall be headed by an Assistant Secretary of the Treasury.
(b) NECESSARYACTIONS.—The Secretary is authorized to take such actions as the Secretary deems necessary to carry out a program established under subsection (a), including, without limitation—
(1) appointing such employees as may be required for such purpose and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code;
(3) designating appropriate entities as financial agents of the Federal Government, authorized to perform in such capacity all such reasonable duties related to this Act as may be required;
(4) establishing vehicles that are authorized to purchase troubled assets and issue obligations, subject to approval and supervision by the Secretary; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out this Act.
(c) LIMITATION ON AUTHORITY.—
(1) IN GENERAL.—The Secretary may not purchase, or make any commitment to purchase, any troubled asset unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased.
(i) IN GENERAL.—The contingent shares to be received by the Secretary under paragraph (1) may, at the determination of the Secretary, include shares of the financial institution, its parent company, its holding company, any of its subsidiaries, or any other entity which is owned, controlled, or managed by such institution.
(ii) DEBT INSTRUMENTS.—In the event that the equity of the financial institution from which such troubled assets were purchased is not publicly traded on a national securities exchange, the Secretary shall acquire a senior contingent debt instrument in lieu of contingent shares, which shall automatically vest to the Secretary on behalf of the United States Treasury in an amount equal to 125 percent of the dollar amount of the difference between the amount the Secretary paid for the troubled assets and the disposition price of such assets. The Secretary may demand payment of such contingent debt instrument under such terms and condi- tions as determined appropriate by the Secretary.
(B) MULTIPLE CLASS OF SHARES.—If the
9 financial institution from which troubled assets
10 are to be purchased has more than 1 class of
11 shares, the contingent shares to be received by
12 the Secretary shall be that class of shares with
13 the highest trading price during the 14 business
14 days prior to the date of the purchase of such
(C) CONTENT.—The instrument rep-
17 resenting the contingent shares shall contain
18 anti-dilution provisions of the type employed in
19 capital market transactions, as determined by
20 the Secretary, to protect the Secretary from
21 transactions such as stock splits, stock distribu-
22 tions, dividends, and other distributions, merg-
23 ers, and other reorganizations and recapitaliza-
(3) VESTING OF SHARES.—If, after the pur-
1 chase of troubled assets from a financial institution,
2 the amount the Secretary receives in disposing of
3 such assets is less than the amount that the Sec-
4 retary paid for such assets, the contingent shares re-
5 ceived by the Secretary under paragraph (1) shall
6 automatically vest to the Secretary on behalf of the
7 United States Treasury in an amount equal to—
8 (A) 125 percent of the dollar amount of
9 the difference between the amount that the Sec-
10 retary paid for the troubled assets and the dis-
11 position price of such assets; divided by
12 (B) the amount of the average share price
13 of the financial institution from which such as-
14 sets were purchased during the 14 business
15 days prior to the date of such purchase.
16 (4) DEFINITION.—As used in this subsection,
17 the term ‘‘contingent share’’ means any equity secu-
18 rity traded on a national securities exchange.
SEC. 3. FINDINGS.
Before establishing a program under this Act, the
21 Secretary shall make a finding that such program is nec-
(1) to provide stability or preventing disruption
24 to the financial markets or banking system; and
(2) to protect the taxpayer.
SEC. 4. OVERSIGHT.
(1) ESTABLISHMENT.—There is established the
4 Emergency Oversight Board, which shall be respon-
5 sible for—
6 (A) reviewing the exercise of authority
7 under a program developed in accordance with
8 this Act, including—
(i) all actions taken by the Secretary
10 and the office created under section 2, in-
11 cluding the appointment of financial
12 agents, the designation of asset classes to
13 be purchased, and plans for the structure
14 of vehicles used to purchase troubled as-
15 sets; and
(ii) the effect of such actions in assist-
17 ing American families in preserving home
18 ownership, stabilizing financial markets,
19 and protecting taxpayers; and
20 (B) making recommendations, as appro-
21 priate, to the Secretary regarding use of the au-
22 thority under this Act.
(2) MEMBERSHIP.—The Emergency Oversight
24 Board shall be comprised of—
(A) the Chairman of the Board of Gov-
1 ernors of the Federal Reserve System, who
2 shall serve as the chairperson of the Emergency
3 Oversight Board;
(B) the chairperson of the Board of Direc-
5 tors of the Federal Deposit Insurance Corpora-
(C) the chairperson of the Securities and
8 Exchange Commission;
(D) one member who is not a government
10 employee, having appropriate financial expertise
11 in both the public and private sectors, ap-
12 pointed jointly by the Majority leadership of the
13 Senate and the House of Representatives; and
(E) one member who is not a government
15 employee, having appropriate financial expertise
16 in both the public and private sectors, ap-
17 pointed jointly by the Minority leadership of the
18 Senate and the House of Representatives.
(3) MEETINGS.—The Emergency Oversight
20 Board shall meet 2 weeks after the first exercise of
21 the purchase authority of the Secretary under this
22 Act and monthly thereafter.
(4) CREDIT REVIEW COMMITTEE.—The Emer-
24 gency Oversight Board may appoint a credit review
25 committee for the purpose of evaluating the exercise
1 of the purchase authority provided under and the as-
2 sets acquired through such exercise, as the Oversight
3 Board determines appropriate, and the employees of
4 such credit review committee shall be employees of
5 the Federal Government.
(5) COSTS.—The costs of the Emergency Over-
7 sight Board and a credit review committee appointed
8 by the Emergency Oversight Board shall be reim-
9 bursed by the Secretary.
(1) MONTHLY REPORTS TO CONGRESS.—Not
12 later than one month after the date of the first exer-
13 cise of the authority granted in section 2(a)(2), and
14 monthly thereafter, the Secretary shall provide to
15 the Committee on Banking, Housing, and Urban Af-
16 fairs, the Committee on the Budget, and the Com-
17 mittee on Finance of the Senate and the Committee
18 on Financial Services, the Committee on the Budget,
19 and the Committee on Ways and Means of the
20 House of Representatives a written explanation of
21 the overall actions taken by the Secretary during the
22 reporting period and a detailed financial statement
23 with respect to the exercise of authority under this
24 Act, including—
(A) all agreements made or renewed;
(B) all transactions occurring during the
2 month, including the parties involved;
(C) the nature of the assets purchased;
(D) all projected costs and liabilities;
(E) operating expenses, including com-
6 pensation for financial agents;
(F) the valuation method used for each
8 transaction; and
(G) a description of the vehicles estab-
10 lished to exercise such authority.
(2) WEEKLY PUBLIC REPORTS.—On a weekly
12 basis, every Friday, the Secretary shall make public
13 the total value of assets held and the total amount
14 of assets purchased and sold during that week under
15 the authority of this Act.
SEC. 5. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS.
(a) EXERCISE OF RIGHTS.—The Secretary may, at
19 any time, exercise any rights received in connection with
20 troubled assets purchased under this Act.
(b) MANAGEMENT OF TROUBLED ASSETS.—
(1) IN GENERAL.—Except as provided in para-
23 graph (2), the Secretary shall have authority to
manage troubled assets purchased under this Act,
1 including revenues and portfolio risks there from.
(2) CORPORATION AUTHORITY.—
(A) IN GENERAL.—The Corporation, shall
manage all residential mortgages and residen-
5 tial mortgage-backed securities purchased by
6 the Secretary under this Act.
(B) REIMBURSEMENT OF COSTS.—All
8 costs and expenses of the Corporation in car-
9 rying out this paragraph shall be reimbursed to
10 the Corporation by the Secretary.
(C) SYSTEMATIC APPROACH.—In carrying
12 out this paragraph, the Corporation shall utilize
13 a systematic approach for preventing fore-
14 closures and ensuring long-term, sustainable
15 homeownership through loan modifications and
16 use of the HOPE for Homeowners Program es-
17 tablished under section 257 of the National
18 Housing Act and any other programs that may
19 be available for such purposes.
(D) REPORTS TO CONGRESS.—The Cor-
21 poration shall provide to Congress a monthly
22 report on its activities under this paragraph
23 during the reporting period, including specific
24 information on the number and types of loan
25 modifications made and the number of actual
1 foreclosures occurring with respect to such
2 loans during the reporting period.
(E) SALE OF TROUBLED ASSETS.—The
4 Corporation may, at any time, upon terms and
5 conditions and at prices determined by the Sec-
6 retary, sell, or enter into securities loans, repur-
7 chase transactions, or other financial trans-
8 actions in regard to any troubled asset man-
9 aged by the Corporation under this paragraph.
(3) ACQUISITION OF SECURITIZATION POOLS AND MORTGAGE LOANS.—The Secretary shall, to the
12 extent practicable, acquire—
13 (A) sufficient ownership or control of
14 pooled residential mortgage loans, or a
15 securitization vehicle for such loans so that the
16 Corporation has authority to modify the under-
17 lying residential mortgage loans, either directly
18 or through a designee; and
19 (B) whole residential mortgage loans, so
20 that the Corporation may use its authority to
21 modify the underlying residential mortgage
22 loans, either directly or through a designee.
(c) SALE OF TROUBLED ASSETS.—The Secretary
24 may, at any time, upon terms and conditions and at prices
25 determined by the Secretary, sell, or enter into securities
1 loans, repurchase transactions, or other financial trans-
2 actions in regard to any troubled asset purchased under
3 this Act.
(d) TRANSFER OF A PERCENTAGE O FPROFITS.—
(1) DEPOSITS.—Not less than 20 percent of
6 any profit realized on the sale of each troubled asset
7 purchased under this Act shall be deposited as pro-
8 vided in paragraph (2).
(2) USE OF DEPOSITS.—Of the amount referred
10 to in paragraph (1)—
(A) 65 percent shall be deposited into the
12 Housing Trust Fund established under section
13 1338 of the Federal Housing Enterprises Regu-
14 latory Reform Act of 1992 (12 U.S.C. 4568);
(B) 35 percent shall be deposited into the
17 Capital Magnet Fund established under section
18 1339 of that Act (12 U.S.C. 4569).
(3) REMAINDER DEPOSITED IN THE TREASURY.—All amounts remaining after payments under
21 paragraph (1) shall be paid into the General Fund
22 of the Treasury for reduction of the public debt.
SEC. 6. MAXIMUM AMOUNT OF AUTHORIZED PURCHASES.
The authority of the Secretary to purchase troubled
2 assets under this Act shall be limited to $700,000,000,000
3 outstanding at any one time, by aggregating the purchase
4 prices of all troubled assets held and any expenditures
5 made under section 10(a).
SEC. 7. FUNDING.
For the purpose of the authorities granted under this
8 Act, and for the costs of administering such authorities,
9 the Secretary may use the proceeds of the sale of any secu-
10 rities issued under chapter 31 of title 31, United States
11 Code, and the purposes for which securities may be issued
12 under chapter 31 of title 31, United States Code, are ex-
13 tended to include actions authorized by this Act, including
14 the payment of administrative expenses. Any funds ex-
15 pended for actions authorized by this Act, including the
16 payment of administrative expenses, shall be deemed ap-
17 propriated at the time of such expenditure.
SEC. 8. LIMITS ON REVIEW.
(a) IN GENERAL.—Any determination of the Sec-
20 retary with regard to any particular troubled asset pursu-
21 ant to this Act shall be final, and shall not be set aside
22 unless such determination is found to be arbitrary, capri-
23 cious, an abuse of discretion, or not in accordance with
(b) EXCEPTION.—Notwithstanding subsection (a),
1 the terms of a residential mortgage loan that is part of
2 any purchase by the Secretary under this Act shall remain
3 subject to all claims and defenses that would otherwise
4 apply notwithstanding the exercise of authority by the Sec-
5 retary or the Corporation under this Act.
SEC. 9. ASSISTANCE TO HOMEOWNERS AND LOCALITIES.
(a) DEFINITIONS.—As used in this section—
(1) the term ‘‘Federal property manager’’
(A) the Federal Housing Finance Agency,
11 in its capacity as conservator of the Federal
12 National Mortgage Association and the Federal
13 Home Loan Mortgage Corporation;
(B) the Corporation, in its capacity as con-
15 servator or receiver of an insured depository in-
16 stitution; and
(C) the Board of Governors of the Federal
18 Reserve System, with respect to any mortgage
19 or mortgage-backed securities or pool of securi-
20 ties held, owned, or controlled by or on behalf
21 of a Federal reserve bank;
(2) the term ‘‘consumer’’ has the same meaning
23 as in section 103 of the Truth in Lending Act (15
24 U.S.C. 1602);
(3) the term ‘‘insured depository institution’’
1 has the same meaning as in section 3 of the Federal
2 Deposit Insurance Act (12 U.S.C. 1813); and
(4) the term ‘‘servicer’’ has the same meaning
4 as in section 6(i)(2) of the Real Estate Settlement
5 Procedures Act of 1974 (12 U.S.C. 2605(i)(2)).
(b) SYSTEMATIC HOMEOWNER ASSISTANCE BY AGENCIES.—
(1) INGENERAL.—Each Federal property man-
9 ager shall, with respect to any residential mortgage
10 loans and any mortgage-backed securities that it
11 holds, owns, or controls on or after the date of en-
12 actment of this Act, develop a program that is des-
13 ignated to provide a systematic approach for pre-
14 venting foreclosure on the properties securing such
15 loans and securities, and ensuring long-term, sus-
16 tainable homeownership through loan modifications
17 and use of the HOPE for Homeowners Program es-
18 tablished under section 257 of the National Housing
19 Act and any other programs that may be available
20 for such purposes.
(2) MODIFICATIONS.—In the case of a residen-
22 tial mortgage loan, modifications made under para-
23 graph (1) may include—
(A) reduction in interest rates;
(B) reduction of loan principal; and
(C) other similar modifications.
(3) TIMING.—Each Federal property manager
3 shall develop and begin implementation of the pro-
4 gram required by this subsection not later than 60
5 days after the date of enactment of this Act.
(4) REPORTS TO CONGRESS.—Each Federal
7 property manager shall, 60 days after the date of
8 enactment of this Act and every 30 days thereafter,
9 report to Congress specific information on the num-
10 ber and types of loan modifications made and the
11 number of actual foreclosures occurring during the
12 reporting period in accordance with this section.
(5) CONSULTATION.—In developing the pro-
14 gram required by this subsection, the Federal prop-
15 erty managers shall consult with one another and, to
16 the extent possible, utilize consistent approaches to
17 implement the requirements of this subsection.
(c) AVAILABILITY OF FORECLOSED PROPERTIES TO STATES AND LOCALITIES.—
(1) INGENERAL.—Each Federal property man-
21 ager shall make available to any State or local gov-
22 ernment that is receiving emergency assistance
23 under section 2301 of the Foreclosure Prevention
24 Act of 2008 (Public Law 110-289) for purchase at
25 a discount, any properties that it owns through fore-
1 closure in that State or locality, in order to facilitate
2 the sale of such properties and to stabilize neighbor-
3 hoods affected by foreclosures.
(A) PROVISION OF INFORMATION TO THE SECRETARY.—Each Federal property manager
7 shall make available to the Secretary of Hous-
8 ing and Urban Development (in this section re-
9 ferred to as the ‘‘Secretary’’) information on
10 properties available for purchase under this
(B) CLEARINGHOUSE.—The Secretary and
13 the Federal property managers shall develop a
14 clearinghouse for the information compiled
15 under this paragraph, and make such clearing-
16 house easily accessible by States and local gov- 17 ernments described in paragraph (1).
(d) ACTIONS WITH RESPECT TO SERVICERS.—In any
19 case in which an Federal property manager is not the
20 owner of a residential mortgage loan, but holds an interest
21 in obligations or pools of obligations secured by residential
22 mortgage loans, the Federal property manager shall—
(1) encourage implementation by the loan
1 servicers of loan modifications developed under sub-
2 section (b);
(2) encourage the loan servicers to make fore-
4 closed properties available for sale to State and local
5 governments at a discount, as described in sub-
6 section (c); and
(3) assist in facilitating any such modifications
8 or sales, to the extent possible.
(e) LIMITATION.—The requirements of this section
10 shall not supersede any other duty or requirement imposed
11 on the Federal property managers under otherwise appli-
12 cable law.
SEC. 10. MAINTAINING INSURANCE PARITY.
(a) REIMBURSEMENT.—The Secretary shall reim-
15 burse the Exchange Stabilization Fund established under
16 section 5302 of title 31, United States Code, for any funds
17 used for the temporary guaranty program for the United
18 States money market mutual fund industry during the pe-
19 riod when the Exchange Stabilization Fund was used as
20 the source for the guarantee.
(b) LIMITATION ON USE OF FUND.—The Secretary
22 is prohibited from using the Exchange Stabilization Fund
23 for the establishment of any guaranty programs for the
24 United States money market mutual fund industry.
(c) MONEY MARKET FUND AUTHORITY.—
(1) IN GENERAL.—The Secretary is authorized
2 to establish an insurance or guarantee program for
3 money market mutual funds in connection with the
4 program authorized by this Act.
(2) APPLICABILITY.—The authority of this sub-
6 section shall remain in effect—
(A) for 120 days following the date of en-
8 actment of this Act; or
(B) such longer period, not to exceed 365
10 days after the date of enactment of this Act, as
11 the Secretary certifies in writing to Congress is
12 necessary to continue the insurance or guar-
13 antee program for money market mutual funds.
(d) LIMITATION ON INSURED AMOUNTS.—
(1) DEPOSIT INSURANCE MODEL.—Any action
16 by the Secretary or a program to provide guarantees
17 or insurance to the money market mutual fund in-
18 dustry shall not provide insurance in excess of the
19 amount of insurance provided to any depositor under
20 the Federal Deposit Insurance Act (12 U.S.C. 1811
21 et seq.).
(2) PREMIUMS.—In exchange for providing
23 such a guarantee or insurance, the Secretary shall
24 charge premiums to those money market funds
25 which receive the insurance. The rate charged by the
1 Secretary shall be equivalent to the rate charged by
2 the Corporation to deposit insurance providers, re-
3 spectively, for such insurance.
(e) CONSULTATIONS.—In carrying out the duties of
5 the Secretary under this section, the Secretary shall con-
6 sult with the Board of Directors of the Corporation and
7 the Securities and Exchange Commission.
SEC. 11. MINIMIZING FORECLOSURES.
(a) SPECIAL RULES FOR MODIFICATION OF LOANS SECURED BY RESIDENCES.—
(1) IN GENERAL.—Section 1322(b) of title 11,
12 United States Code, is amended—
(A) in paragraph (10), by striking ‘‘and’’
14 at the end;
(B) by redesignating paragraph (11) as
16 paragraph (12); and
(C) by inserting after paragraph (10) the
19 ‘‘(11) notwithstanding paragraph (2) and other-
20 wise applicable nonbankruptcy law—
21 ‘‘(A) modify an allowed secured claim for
22 a debt secured by the principal residence of the
23 debtor, as described in subparagraph (B), if,
24 after deduction from the debtors current
25 monthly income of the expenses permitted for
1 debtors described in section 1325(b)(3) of this
2 title (other than amounts contractually due to
3 creditors holding such allowed secured claims
4 and additional payments necessary to maintain
5 possession of that residence), the debtor has in-
6 sufficient remaining income to retain possession
7 of the residence by curing a default and main-
8 taining payments while the case is pending, as
9 provided under paragraph (5); and
10 ‘‘(B) provide for payment of such claim—
11 ‘‘(i) in an amount equal to the
12 amount of the allowed secured claim;
13 ‘‘(ii) for a period that is not longer
14 than 40 years; and
15 ‘‘(iii) at a rate of interest accruing
16 after such date calculated at a fixed an-
17 nual percentage rate, in an amount equal
18 to the most recently published annual yield
19 on conventional mortgages published by
20 the Board of Governors of the Federal Re-
21 serve System, as of the applicable time set
22 forth in the rules of the Board, plus a rea-
23 sonable premium for risk; and’’.
(2) CONFORMING AMENDMENT.—Section
1 1325(a)(5) of title 11, United States Code, is
2 amended by inserting before ‘‘with respect’’ the fol-
3 lowing: ‘‘except as otherwise provided in section
4 1322(b)(11) of this title,’’.
(b) WAIVER OF COUNSELING REQUIREMENT WHEN HOMES ARE .—Section 109(h) of title
7 11, United States Code, is amended by adding at the end
8 the following:
9 ‘‘(5) Paragraph (1) shall not apply with respect
10 to a debtor who files with the court a certification
11 that a foreclosure sale of the debtor’s principal resi-
12 dence has been scheduled.’’.
(c) COMBATING EXCESSIVE FEES.—Section 1322(c)
14 of title 11, the United States Code, is amended—
15 (1) in paragraph (1), by striking ‘‘and’’ at the
17 (2) in paragraph (2), by striking the period at
18 the end and inserting a semicolon; and
19 (3) by adding at the end the following:
20 ‘‘(3) the plan need not provide for the payment
21 of, and the debtor, the debtor’s property, and prop-
22 erty of the debtor’s estate shall not be liable for, any
23 fee, cost, or charge, notwithstanding section 506(b),
24 that arises in connection with a claim secured by the
25 debtor’s principal residence, if the event that gives
1 rise to such fee, cost, or charge occurs while the case
2 is pending but before the discharge order, except to
3 the extent that—
4 ‘‘(A) notice of such fees, costs, or charges
5 is filed with the court, and served on the debtor
6 and the trustee, before the expiration of the
7 earlier of—
8 ‘‘(i) 1 year after the event that gives
9 rise to such fee, cost, or charge occurs; or
10 ‘‘(ii) 60 days before the closing of the
11 case; and
12 ‘‘(B) such fees, costs, or charges are law-
13 ful, reasonable, and provided for in the agree-
14 ment under which such claim or security inter-
15 est arose;
16 ‘‘(4) the failure of a party to give notice de-
17 scribed in paragraph (3) shall be deemed a waiver
18 of any claim for fees, costs, or charges described in
19 paragraph (3) for all purposes, and any attempt to
20 collect such fees, costs, or charges shall constitute a
21 violation of section 524(a)(2) of this title or, if the
22 violation occurs before the date of discharge, of sec-
23 tion 362(a) of this title; and
24 ‘‘(5) a plan may provide for the waiver of any
1 prepayment penalty on a claim secured by the prin-
2 cipal residence of the debtor.’’.
(d) APPLICATION OF AMENDMENTS.—The amend-
4 ments made to title 11, United States Code, by this sec-
5 tion shall apply with respect to cases commenced under
6 that title 11 on or after the date of enactment of this Act,
7 or pending on the date of enactment of this Act.
(e) HOPE FOR HOMEOWNER AMENDMENTS.—Sec-
9 tion 257(e) of the National Housing Act (12 U.S.C.
10 1715z-23(e)) is amended—
11 (1) in paragraph (1)(B), by inserting before ‘‘a
12 ratio’’ the following: ‘‘, or thereafter is likely to
13 have, due to the terms of the mortgage being
14 reset,’’; and
15 (2) in paragraph (2)(B), by inserting before the
16 period at the end ‘‘(or such higher percentage as the
17 Board determines, in the discretion of the Board)’’.
SEC. 12. TERMINATION OF AUTHORITY.
(1) IN GENERAL.—Except as provided in para-
21 graph (2), the authorities provided under this Act
22 shall terminate on December 31, 2009.
(2) EXCEPTION.—Paragraph (1) does not apply
1 to the authorities granted in sections 2(b)(5), 5, and
(b) EXTENSION UPON CERTIFICATION.—The Sec-
4 retary, upon submission of a written certification to Con-
5 gress, may extend the authority provided under this Act
6 to expire not later than 2 years from the date of enact-
7 ment of this Act. Such certification shall include a jus-
8 tification of why the extension is necessary to assist Amer-
9 ican families and stabilize financial markets, as well as
10 the expected costs to the taxpayer for such an extension.
(c) APPLICATION OF SUNSET TO TROUBLED ASSETS.—The authority of the Secretary to hold any trou-
13 bled asset purchased under this Act before the termination
14 date under this section, or to purchase or fund the pur-
15 chase of a troubled asset under a commitment entered into
16 before the termination date under this section shall not
17 terminate in accordance with this section.
SEC. 13. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.
Section 3101(b) of title 31, United States Code, is
21 amended by striking ‘‘$10,615,000,000,000’’ and insert-
22 ing ‘‘$11,315,000,000,000’’.
SEC. 14. CREDIT REFORM.
øTo Be Supplied by Budget Committee¿.
SEC. 15. ANNUAL FINANCIAL REPORTS AND AUDITS.
(a) COMPTROLLER GENERAL AUDITS.—
(1) IN GENERAL.—The Secretary shall annually
3 prepare and submit to the Congress, and make
4 available to the public, audited financial statements
5 prepared in accordance with generally accepted ac-
6 counting principles, such statements to be audited
7 annually by the Comptroller General, in accordance
8 with generally accepted government auditing stand-
9 ards. The Comptroller General shall annually issue
10 an advisory opinion on the adequacy of the internal
11 financial controls of the office established under sec-
12 tion 2 (in this section referred to as the ‘‘office’’).
13 The Secretary shall reimburse the Government Ac-
14 countability Office for the full cost of any such audit
15 as billed therefor by the Comptroller General.
(2) SCOPE OF AUTHORITY.—The Comptroller
17 General may audit the programs, activities, receipts,
18 expenditures, and financial transactions of the office,
19 and any contractor or agent of the office with re-
20 spect to any contract with or service performed for
21 the office or the Secretary in carrying out this Act.
(3) PROFESSIONAL SERVICES.—For the pur-
23 pose of conducting an audit under this subsection,
24 the Comptroller General is authorized in the discre-
25 tion of the Comptroller General, to employ by con-
26 tract without regard to section 3709 of the Revised
1 Statutes of the United States (41 U.S.C. 5), profes-
2 sional services of firms and organizations of certified
3 public accountants for temporary periods or for spe-
4 cial purposes.
(b) COMPTROLLER GENERAL ACCESS.—In order to
6 conduct audits under subsection (a), representatives of the
7 Comptroller General shall have access, upon request, to
8 any information, data, schedules, books, accounts, finan-
9 cial records, reports, files, or other papers, things, or prop-
10 erty belonging to or in use by the office or the Secretary,
11 and to the employees, accountants, financial advisors, and
12 other agents thereof, all at such reasonable times as the
13 representatives of the Comptroller General may request.
14 The representatives of the Comptroller General shall be
15 afforded full facilities for verifying transactions with the
16 balances or securities held by depositories, fiscal agents,
17 and custodians. The representatives of the Comptroller
18 General may make and retain copies of such books, ac-
19 counts, and other records as they deem appropriate.
(c) CORRECTIVE RESPONSES TO AUDIT PROBLEMS.—The Secretary and the office shall—
(1) take action to address deficiencies identified
23 by the Comptroller General, any other auditor en-
24 gaged by the office, and any audit committee; or
(2) certify that no action is necessary or appro-
(d) INTERNAL CONTROLS.—
(1) SYSTEM.—The office shall establish and
4 maintain an effective system of internal controls,
5 consistent with the standards prescribed under sec-
6 tion 3512(c) of title 31, United States Code, that
7 provides reasonable assurance over—
(A) the effectiveness and efficiency of oper-
9 ations, including the use of office resources;
(B) the reliability of financial reporting, in-
11 cluding financial statements and other reports
12 for internal and external use; and
(C) compliance with applicable laws and
(2) ANNUAL STATEMENTS.—In conjunction
16 with each annual financial statement issued under
17 subsection (a), the office shall—
(A) state the responsibility of management
19 for establishing and maintaining adequate in-
20 ternal control over financial reporting; and
(B) state its assessment, as of the end of
22 the most recent year covered by such financial
23 statement of the Office, of the effectiveness of
24 the internal control over financial reporting.
SEC. 16. CONFLICTS OF INTEREST.
(a) REGULATIONS REQUIRED.—The Secretary shall
2 promulgate regulations necessary to address and manage
3 or to prohibit conflicts of interest that may arise in con-
4 nection with the administration and execution of the au-
5 thorities provided under this Act, including—
(1) conflicts arising in the selection or hiring of
7 contractors or advisors, including asset managers;
(2) the purchase of troubled assets;
(3) the management of the troubled assets held;
(4) post-employment restrictions on employees;
(5) any other potential conflict of interest, as
13 the Secretary deems necessary or appropriate in the
14 public interest.
(b) TIMING.—Regulations required by this section
16 shall be issued in final form not later than 120 days after
17 the date of enactment of this Act.
SEC. 17. EXECUTIVE COMPENSATION.
The Secretary shall require that all entities seeking
20 to sell assets through a program established under this
21 Act meet appropriate standards for executive compensa-
22 tion and shareholder disclosure in order to be eligible,
23 which standards shall include—
(1) limits on compensation to exclude incentives
1 for executives to take risks that the Secretary deems
2 to be inappropriate or excessive;
(2) a claw-back provision for incentive com-
4 pensation paid to a senior executive based on earn-
5 ings, gains, or other criteria that are later proven to
6 be inaccurate; and
(3) such limitations on the entity paying sever-
8 ance compensation to its senior executives as are de-
9 termined to be appropriate in the public interest in
10 light of the assistance being given to the entity.
SEC. 18. STUDIES AND REPORTS.
(a) MARGIN AUTHORITY.—
(1) STUDY.—The Comptroller General shall un-
14 dertake a study to determine the extent to which le-
15 verage and sudden deleveraging of financial institu-
16 tions was a factor behind the current financial crisis.
(2) CONTENT.—The study required by this sec-
18 tion shall include—
(A) an analysis of the roles and respon-
20 sibilities of the Board, the Securities and Ex-
21 change Commission, the Secretary of the Treas-
22 ury, and banking regulators with respect to
23 monitoring leverage and acting to curtail exces-
24 sive leveraging;
(B) an analysis of the authority of the
1 Board to regulate leverage, including by setting
2 margin requirements, and what process the
3 Board used to decide whether or not use its au-
4 thority; and
(C) recommendations for the Board and
6 Congress with respect to the existing authority
7 of the Board.
(3) REPORT.—Not later than June 1, 2009, the
9 Comptroller General shall complete and submit to
10 Congress a report on the study required by this sub-
(b) IMPACT ASSESSMENT.—
(1) STUDY.—The Comptroller General shall
14 conduct a study to assess the impact of the program
15 authorized by this Act, including—
(A) whether it has—
17 (i) provided stability or prevented dis-
18 ruption to the financial markets or the
19 banking system; and
(ii) protected taxpayers;
(B) with respect to the processes for pur-
22 chasing, pricing, and disposing of troubled as-
(2) SUBMISSIONS TO CONGRESS.—Not later
1 than 15 days after the date of enactment of this Act
2 and each 3 months thereafter, the Comptroller Gen-
3 eral shall submit a report on the study required by
4 this subsection to the Committee on Banking, Hous-
5 ing, and Urban Affairs of the Senate and the Com-
6 mittee on Financial Services of the House of Rep-
SEC. 19. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.
(a) IN GENERAL.—Not later than 7 days after the
10 date on which the Board exercises its authority under the
11 third paragraph of section 13 of the Federal Reserve Act
12 ((12 U.S.C. 343), relating to discounts for individuals,
13 partnerships, and corporations) the Board shall provide to
14 the Committee on Banking, Housing, and Urban Affairs
15 of the Senate and the Committee on Financial Services
16 of the House of Representatives a report which includes—
(1) the justification for exercising the authority;
(2) the specific terms of the actions of the
20 Board, including the size and duration of the lend-
21 ing, the value of any collateral held with respect to
22 such a loan, the recipient of warrants or any other
23 potential equity in exchange for the loan, and any
24 expected cost to the taxpayer for such exercise.
(b) PERIODIC UPDATES.—The Board shall provide
1 updates to the Committees specified in subsection (a) not
2 less frequently than once every 30 days while the subject
3 loan is outstanding, including—
(1) the status of the loan;
(2) the value of the collateral held by the Fed-
6 eral reserve bank which initiated the loan; and
(3) the projected cost to the taxpayer of the
(c) CONFIDENTIALITY.—The information submitted
10 to the Congress under this section may be kept confiden-
11 tial, upon the written request of the Chairman of the
12 Board, in which case it will made available only to the
13 Chairpersons and Ranking Members of the Committees
14 described in subsection (a).
(d) APPLICABILITY.—The provisions of this section
16 shall be in force for all uses of the authority provided
17 under this Act occurring on or after March 1, 2008, and
18 reports shall be required beginning not later than 30 days
19 after the date of enactment of this Act.
SEC. 20. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET PROGRAM.
(a) PURPOSES.—The purposes of this section are as
(1) To provide for the independent and objec-
1 tive conduct and supervision of audits and investiga-
2 tions relating to the programs and operations of the
3 program authorized to be established under section
(2) To provide for the independent and objec-
6 tive leadership and coordination of, and rec-
7 ommendations on, policies designed to—
(A) promote economy efficiency, and effec-
9 tiveness in the administration of such program;
(B) prevent and detect fraud and abuse in
12 such program.
(3) To provide for an independent and objective
14 means of keeping the Congress fully and currently
15 informed about problems and deficiencies relating to
16 the administration of such program and the neces-
17 sity for and progress for corrective action.
(b) OFFICE OF INSPECTOR GENERAL.—There is
19 hereby established the Office of the Special Inspector Gen-
20 eral for the Troubled Asset Program.
(c) APPOINTMENT OF INSPECTOR GENERAL; REMOVAL.—
(1) The head of the Office of the Special Inspec-
23 tor General for the Troubled Asset Program is the Special
24 Inspector General for the Troubled Asset Program, who
1 shall be appointed by the President.
(2) The appointment of the Special Inspector General
3 for the Troubled Asset Program shall be made solely on
4 the basis of integrity and demonstrated ability in account-
5 ing, auditing, financial analysis, law, management anal-
6 ysis, public administration, or investigations.
(3) The nomination of an individual as Special In-
8 spector General for the Troubled Asset Program shall be
9 made not later than 30 days after the establishment of
10 any program under section 2.
(4) The Special Inspector General for the Troubled
12 Asset Program shall be removable from office in accord-
13 ance with the provisions of section 3(b) of the Inspector
14 General Act of 1978 (5 U.S.C. App.).
(5) For purposes of section 7324 of title 5, United
16 States Code, the Special Inspector General for the Trou-
17 bled Asset Program shall not be considered an employee
18 who determines policies to be pursued by the United
19 States in the nationwide administration of Federal law.
(6) The annual rate of basic pay of the Special In-
21 spector General for the Troubled Asset Program shall be
22 the annual rate of basic pay provided for positions at level
23 IV of the Executive Schedule under section 5315 of title
24 5, United States Code.
(d) ASSISTANT INSPECTORS GENERAL.—The Special
1 Inspector General for the Troubled Asset Program shall,
2 in accordance with applicable laws and regulations gov-
3 erning the civil service—
(1) appoint an Assistant Inspector General for
5 Auditing who shall have the responsibility for super-
6 vising the performance of auditing activities relating
7 to any program established under section 2; and
(2) appoint an Assistant Inspector General for
9 Investigations who shall have the responsibility for
10 supervising the performance of investigative activi-
11 ties relating to such program.
(e) DUTIES.—(1) It shall be the duty of the Special
13 Inspector General for the Troubled Asset Program to con-
14 duct, supervise, and coordinate audits and investigations
15 of the purchase, management, and sale of assets by the
16 Secretary of the Treasury under any program established
17 by the Secretary under section 2, including by collecting
18 and summarizing the following information:
(A) A description of the categories of troubled
20 assets purchased or otherwise procured by the Sec-
(B) A listing of the troubled assets purchased
23 in each such category described under subparagraph
(C) An explanation of the reasons the Secretary
1 deemed it necessary to purchase each such troubled
(D) A listing of each financial institution that
4 such troubled assets were purchased from.
(E) A listing of and detailed biographical infor-
6 mation on each person or entity hired to manage
7 such troubled assets.
(F) A current estimate of the total amount of
9 troubled assets purchased pursuant to any program
10 established under section 2, the amount of troubled
11 assets on the books of the Treasury, the amount of
12 troubled assets sold, and the profit and loss incurred
13 on each sale or disposition of each such troubled
(2) The Special Inspector General for the Troubled
16 Asset Program shall establish, maintain, and oversee such
17 systems, procedures, and controls as the Special Inspector
18 General considers appropriate to discharge the duty under
19 paragraph (1).
(3) In addition to the duties specified in paragraphs
21 (1) and (2), the Inspector General shall also have the du-
22 ties and responsibilities of inspectors general under the In-
23 spector General Act of 1978.
(f) POWERS AND AUTHORITIES.—(1) In carrying out
1 the duties specified in subsection (e), the Special Inspector
2 General for the Troubled Asset Program shall have the
3 authorities provided in section 6 of the Inspector General
4 Act of 1978.
(2) The Special Inspector General for the Troubled
6 Asset Program shall carry out the duties specified in sub-
7 section (e)(1) in accordance with section 4(b)(1) of the
8 Inspector General Act of 1978.
(g) PERSONNEL, FACILITIES, AND OTHER RESOURCES.—
(1) The Special Inspector General for the
11 Troubled Asset Program may select, appoint, and employ
12 such officers and employees as may be necessary for car-
13 rying out the duties of the Special Inspector General, sub-
14 ject to the provisions of title 5, United States Code, gov-
15 erning appointments in the competitive service, and the
16 provisions of chapter 51 and subchapter III of chapter 53
17 of such title, relating to classification and General Sched-
18 ule pay rates.
(2) The Special Inspector General for the Troubled
20 Asset Program may obtain services as authorized by sec-
21 tion 3109 of title 5, United States Code, at daily rates
22 not to exceed the equivalent rate prescribed for grade GS–
23 15 of the General Schedule by section 5332 of such title.
(3) The Special Inspector General for the Troubled
1 Asset Program may enter into contracts and other ar-
2 rangements for audits, studies, analyses, and other serv-
3 ices with public agencies and with private persons, and
4 make such payments as may be necessary to carry out
5 the duties of the Inspector General.
(4)(A) Upon request of the Special Inspector General
7 for the Troubled Asset Program for information or assist-
8 ance from any department, agency, or other entity of the
9 Federal Government, the head of such entity shall, insofar
10 as is practicable and not in contravention of any existing
11 law, furnish such information or assistance to the Special
12 Inspector General, or an authorized designee.
(B) Whenever information or assistance requested by
14 the Special Inspector General for the Troubled Asset Pro-
15 gram is, in the judgment of the Special Inspector General,
16 unreasonably refused or not provided, the Special Inspec-
17 tor General shall report the circumstances to the appro-
18 priate committees of Congress without delay.
(h) REPORTS.—(1) Not later than October 31, 2008,
20 and every calendar quarter thereafter, the Special Inspec-
21 tor General for the Troubled Asset Program shall submit
22 to the appropriate committees of Congress a report sum-
23 marizing the activities of the Special Inspector General
24 during the 120-day period ending on the date of such re-
25 port. Each report shall include, for the period covered by
1 such report, a detailed statement of all purchases, obliga-
2 tions, expenditures, and revenues associated with any pro-
3 gram established by the Secretary of the Treasury under
4 section 2, as well as the information collected under sub-
5 section (e)(1).
(2) Nothing in this subsection shall be construed to
7 authorize the public disclosure of information that is—
(A) specifically prohibited from disclosure by
9 any other provision of law;
(B) specifically required by Executive order to
11 be protected from disclosure in the interest of na-
12 tional defense or national security or in the conduct
13 of foreign affairs; or
(C) a part of an ongoing criminal investigation.
(i) APPROPRIATE COMMITTEES OF CONGRESS DEFINED.—
In this section, the term ‘‘appropriate commit-
17 tees of Congress’’ means—
(1) the Committees on Finance, Budget, and
19 Banking, Housing, and Urban Affairs of the Senate;
(2) the Committees on Ways and Means, Budg-
22 et, and Financial Services of the House of Rep-
(1) Of the amounts made available to
1 the Secretary of the Treasury under section 6,
2 $75,000,000 shall be available to the Special Inspector
3 General for the Troubled Asset Program to carry out this
(2) The amount available under paragraph (1) shall
6 remain available until expended.
SEC. 21. DEFINITIONS.
For purposes of this Act, the following definitions
9 shall apply:
(1) BOARD.—The term ‘‘Board’’ means the
11 Board of Governors of the Federal Reserve System.
(2) COMPTROLLER GENERAL.—The term
13 ‘‘Comptroller General’’ means the Comptroller Gen-
14 eral of the United States.
(3) CORPORATION.—The term ‘‘Corporation’’
16 means the Federal Deposit Insurance Corporation.
(4) FINANCIAL INSTITUTION.—The term ‘‘fi-
18 nancial institution’’ means—
(A) any institution, including banks, sav-
20 ings associations, credit unions, securities
21 broker and dealers, and insurance companies,
22 having significant operations in the United
23 States; and
(B) upon the determination of the Sec-
1 retary, in consultation with the Chairman of the
2 Board of Governors of the Federal Reserve Sys-
3 tem, any other institution that the Secretary
4 determines necessary to promote financial mar-
5 ket stability.
(5) RESIDENTIAL MORTGAGE LOAN.—The term
7 ‘‘residential mortgage loan’’ means a consumer cred-
8 it transaction that is secured by the principal resi-
9 dence of a consumer.
(6) SECRETARY.—The term ‘‘Secretary’’ means
11 the Secretary of the Treasury.
(7) TROUBLED ASSETS.—The term ‘‘troubled
13 assets’’ means—
(A) residential or commercial mortgages,
15 and any securities, obligations, or other instru-
16 ments that are based on or related to such
17 mortgages, that in each case were originated or
18 issued on or before March 14, 2008; and
(B) upon the determination of the Sec-
20 retary, in consultation with the Chairman of the
21 Board of Governors of the Federal Reserve Sys-
22 tem, any other financial instrument, as the Sec-
23 retary determines necessary to promote finan-
24 cial market stability.
(8) UNITED STATES.—The term ‘‘United
1 States’’ means the States, territories, and posses-
2 sions of the United States and the District of Co-
3 lumbia. 4