No Easy Answers

Michelle Malkin Article

O:\AYO\AYO08C04.xml 

[DISCUSSION DRAFT] 

110TH CONGRESS 
2D SESSION 

H. R. _______

To provide authority for the Federal Government to purchase and insure 
certain types of troubled assets for the purposes of providing stability 
to and preventing disruption in the economy and financial system and 
protecting taxpayers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

M. _________________ introduced the following bill; which was referred to the 
Committee on _________________

A BILL 

To provide authority for the Federal Government to purchase 
and insure certain types of troubled assets for the purposes 
of providing stability to and preventing disruption 
in the economy and financial system and protecting taxpayers, 
and for other purposes. 

Be it enacted by the Senate and House of Representa
tives 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’’. 

2 

(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 

Sec. 1. Short title and table of contents. 
Sec. 2. Purposes. 
Sec. 3. Definitions. 

TITLE I—TROUBLED ASSETS RELIEF PROGRAM 

Sec. 101. Purchases of troubled assets. 
Sec. 102. Insurance of troubled assets. 
Sec. 103. Considerations. 
Sec. 104. Financial Stability Oversight Board. 
Sec. 105. Reports. 
Sec. 106. Rights; management; sale of troubled assets; revenues and sale pro
ceeds. 
Sec. 107. Contracting procedures. 
Sec. 108. Conflicts of interest. 
Sec. 109. Foreclosure mitigation efforts. 
Sec. 110. Assistance to homeowners. 
Sec. 111. Executive compensation and corporate governance. 
Sec. 112. Coordination with foreign authorities and central banks. 
Sec. 113. Minimization of long-term costs and maximization of benefits for tax
payers. 
Sec. 114. Market transparency. 
Sec. 115. Graduated authorization to purchase. 
Sec. 116. Oversight and audits. 
Sec. 117. Study and report on margin authority. 
Sec. 118. Funding. 
Sec. 119. Judicial review and related matters. 
Sec. 120. Termination of authority. 
Sec. 121. Special Inspector General for the Troubled Asset Relief Program. 
Sec. 122. Increase in statutory limit on the public debt. 
Sec. 123. Credit reform. 
Sec. 124. HOPE for Homeowners amendments. 
Sec. 125. Congressional Oversight Panel. 
Sec. 126. FDIC authority. 
Sec. 127. Cooperation with the FBI. 
Sec. 128. Acceleration of effective date. 
Sec. 129. Disclosures on exercise of loan authority. 
Sec. 130. Technical corrections. 
Sec. 131. Exchange Stabilization Fund reimbursement. 
Sec. 132. Authority to suspend mark-to-market accounting. 
Sec. 133. Study on mark-to-market accounting. 
Sec. 134. Recoupment. 
Sec. 135. Preservation of authority. 

TITLE II—BUDGET-RELATED PROVISIONS 

Sec. 201. Information for congressional support agencies. 
Sec. 202. Reports by the Office of Management and Budget and the Congres
sional Budget Office. 
Sec. 203. Analysis in President’s Budget. 
Sec. 204. Emergency treatment. 

3 

TITLE III—TAX PROVISIONS 

Sec. 301. Gain or loss from sale or exchange of certain preferred stock. 
Sec. 302. Special rules for tax treatment of executive compensation of employers 
participating in the troubled assets relief program. 
Sec. 303. Extension of exclusion of income from discharge of qualified principal 
residence indebtedness. 

 
SEC. 2. PURPOSES. 
 
The purposes of this Act are— 
(1) to immediately provide authority and facili
ties that the Secretary of the Treasury can use to 
restore liquidity and stability to the financial system 
of the United States; and 
(2) to ensure that such authority and such fa 
cilities are used in a manner that— 
(A) protects home values, college funds, re
tirement accounts, and life savings; 
(B) preserves homeownership and pro
motes jobs and economic growth; 
(C) maximizes overall returns to the tax
payers of the United States; and 
(D) provides public accountability for the 
exercise of such authority. 
SEC. 3. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 

(1) APPROPRIATE COMMITTEES OF CON21 
GRESS.—The term ‘‘appropriate committees of Con22 
gress’’ means— 

4 

(A) the Committee on Banking, Housing, 
and Urban Affairs, the Committee on Finance, 
the 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, the Committee 
on the Budget, and the Committee on 
Appropriations of the House of Representatives. 
(2) BOARD.—The term ‘‘Board’’ means the 
Board of Governors of the Federal Reserve System. 
(3) CONGRESSIONAL SUPPORT AGENCIES.—The 
term ‘‘congressional support agencies’’ means the 
Congressional Budget Office and the Joint Committee 
on Taxation. 
(4) CORPORATION.—The term ‘‘Corporation’’ 
means the Federal Deposit Insurance Corporation. 
(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 insurance 
company, established and regulated under the laws 
of the United States or any State, territory, or possession 
of the United States, the District of Columbia, 
Commonwealth of Puerto Rico, Commonwealth 
of Northern Mariana Islands, Guam, American 

5 

Samoa, or the United States Virgin Islands, and 
having significant operations in the United States, 
but excluding any central bank of, or institution 
owned by, a foreign government. 

(6) FUND.—The term ‘‘Fund’’ means the Troubled 
Assets Insurance Financing Fund established 
under section 102. 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(8) TARP.—The term ‘‘TARP’’ means the 
troubled asset relief program established under section 
101. 
(9) TROUBLED ASSETS.—The term ‘‘troubled 
assets’’ means— 
(A) residential or commercial mortgages 
and any securities, obligations, or other instruments 
that are based on or related to such 
mortgages, that in each case was originated or 
issued on or before March 14, 2008, the purchase 
of which the Secretary determines promotes 
financial market stability; and 
(B) any other financial instrument that the 
Secretary, after consultation with the Chairman 
of the Board of Governors of the Federal Reserve 
System, determines the purchase of which 

6 

is necessary to promote financial market stability, 
but only upon transmittal of such determination, 
in writing, to the appropriate committees 
of Congress. 

TITLE I—TROUBLED ASSETS 
RELIEF PROGRAM 


SEC. 101. PURCHASES OF TROUBLED ASSETS. 

(a) OFFICES; AUTHORITY.— 
(1) AUTHORITY.—The Secretary is authorized 
to 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 as 
are determined by the Secretary, and in accordance 
with this Act and the policies and procedures developed 
and published by the Secretary. 
(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, estab

7 

lished 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 the 
President, by and with the advice and consent 
of the Senate, except that an interim Assistant 
Secretary may serve pending confirmation by 
the Senate. 

(B) CLERICAL AMENDMENTS.— 
(i) TITLE 5.—Section 5315 of title 5, 
United States Code, is amended in the 
item relating to Assistant Secretaries of 
the Treasury, by striking ‘‘(9)’’ and inserting 
‘‘(10)’’. 
(ii) TITLE 31.—Section 301(e) of title 
31, United States Code, is amended by 
striking ‘‘9’’ and inserting ‘‘10’’. 
(b) CONSULTATION.—In exercising the authority 
under this section, the Secretary shall consult with the 
Board of Governors of the Federal Reserve System, the 
Corporation, the Comptroller of the Currency, the Director 
of the Office of Thrift Supervision, and the Secretary 
of Housing and Urban Development. 
(c) NECESSARY ACTIONS.—The Secretary is authorized 
to take such actions as the Secretary deems necessary 

8 

to carry out the authorities in this Act, including, without 
limitation, the following: 

(1) The Secretary shall have direct hiring authority 
with respect to the appointment of employees 
to administer this Act. 
(2) Entering into contracts, including contracts 
for services authorized by section 3109 of title 5, 
United States Code. 
(3) Designating financial institutions as financial 
agents of the Federal Government, and such institutions 
shall perform all such reasonable duties 
related to this Act as financial agents of the Federal 
Government as may be required. 
(4) In order to provide the Secretary with the 
flexibility 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, hold, and sell 
troubled assets and issue obligations. 
(5) Issuing such regulations and other guidance 
as may be necessary or appropriate to define terms 
or carry out the authorities or purposes of this Act. 
(d) PROGRAM GUIDELINES.—Before the earlier of 
the end of the 2-business-day period beginning on the date 
of the first purchase of troubled assets pursuant to the 

9 

authority under this section or the end of the 45-day period 
beginning on the date of enactment of this Act, the 
Secretary shall publish program guidelines, including the 
following: 

(1) Mechanisms for purchasing troubled assets. 
(2) Methods for pricing and valuing troubled 
assets. 
(3) Procedures for selecting asset managers. 
(4) Criteria for identifying troubled assets for 
purchase. 
(e) PREVENTING UNJUST ENRICHMENT.—In making 
purchases under the authority of this Act, the Secretary 
shall take such steps as may be necessary to prevent unjust 
enrichment of financial institutions participating in 
a program established under this section, including by preventing 
the sale of a troubled asset to the Secretary at 
a higher price than what the seller paid to purchase the 
asset. This subsection does not apply to troubled assets 
acquired in a merger or acquisition, or a purchase of assets 
from a financial institution in conservatorship or receivership, 
or that has initiated bankruptcy proceedings 
under title 11, United States Code. 
SEC. 102. INSURANCE OF TROUBLED ASSETS. 

10 

(1) IN GENERAL.—If the Secretary establishes 
the program authorized under section 101, then the 
Secretary shall establish a program to guarantee 
troubled assets originated or issued prior to March 
14, 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 may be determined by category 
or class of the troubled assets to be guaranteed. 
(3) EXTENT OF GUARANTEE.—Upon request of 
a financial institution, the Secretary may guarantee 
the timely payment of principal of, and interest on, 
troubled assets in amounts not to exceed 100 percent 
of such payments. Such guarantee may be on 
such terms and conditions as are determined by the 
Secretary, provided that such terms and conditions 
are consistent with the purposes of this Act. 
(b) REPORTS.—Not later than 90 days after the date 
of enactment of this Act, the Secretary shall report to the 
appropriate committees of Congress on the program established 
under subsection (a). 
(c) PREMIUMS.— 

11 

(1) IN GENERAL.—The Secretary shall collect 
premiums from any financial institution participating 
in the program established under subsection 
(a). Such premiums shall be in an amount that the 
Secretary determines necessary to meet the purposes 
of this Act and to provide sufficient reserves pursuant 
to paragraph (3). 
(2) AUTHORITY TO BASE PREMIUMS ON PRODUCT 
RISK.—In establishing any premium under 
paragraph (1), the Secretary may provide for variations 
in such rates according to the credit risk associated 
with the particular troubled asset that is 
being guaranteed. The Secretary shall publish the 
methodology for setting the premium for a class of 
troubled assets together with an explanation of the 
appropriateness of the class of assets for participation 
in the program established under this section. 
The methodology shall ensure that the premium is 
consistent with paragraph (3). 
(3) MINIMUM LEVEL.—The premiums referred 
to in paragraph (1) shall be set by the Secretary at 
a level necessary to create reserves sufficient to meet 
anticipated claims, based on an actuarial analysis, 
and to ensure that taxpayers are fully protected. 

12 

(4) ADJUSTMENT TO PURCHASE AUTHORITY.— 
The purchase authority limit in section 115 shall be 
reduced 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 FINANCING 
FUND.— 
(1) DEPOSITS.—The Secretary shall deposit 
fees collected under this section into the Fund established 
under paragraph (2). 
(2) ESTABLISHMENT.—There is established a 
Troubled Assets Insurance Financing Fund that 
shall consist of the amounts collected pursuant to 
paragraph (1), and any balance in such fund shall 
be 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 Secretary 
shall make payments from amounts deposited in the 
Fund to fulfill obligations of the guarantees provided 
to financial institutions under subsection (a). 
SEC. 103. CONSIDERATIONS. 

In exercising the authorities granted in this Act, the 
Secretary shall take into consideration— 

13 

(1) protecting the interests of taxpayers by 
maximizing overall returns and minimizing the impact 
on the national debt; 
(2) providing stability and preventing disruption 
to financial markets in order to limit the impact 
on the economy and protect American jobs, savings, 
and retirement security; 
(3) the need to help families keep their homes 
and 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 represents 
the most efficient use of funds under this Act; 
(5) ensuring that all financial institutions are 
eligible to participate in the program, without discrimination 
based on size, geography, form of organization, 
or the size, type, and number of assets eligible 
for purchase under this Act; 
(6) providing financial assistance to financial 
institutions, including those serving low- and moderate-
income populations and other underserved 
communities, and that have assets less than 
$1,000,000,000, that were well or adequately capitalized 
as of June 30, 2008, and that as a result 

14 

of the devaluation of the preferred government-sponsored 
enterprises stock will drop one or more capital 
levels, in a manner sufficient to restore the financial 
institutions to at least an adequately capitalized 
level; 

(7) the need to ensure stability for United 
States public instrumentalities, such as counties and 
cities, that may have suffered significant increased 
costs or losses in the current market turmoil; 
(8) protecting the retirement security of Americans 
by purchasing troubled assets held by or on behalf 
of an eligible retirement plan described in clause 
(iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the 
Internal 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 estate 
owned and instruments backed by mortgages on 
multifamily properties. 
SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD. 

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

15 

(1) reviewing the exercise of authority under a 
program developed in accordance with this Act, including— 
(A) policies implemented by the Secretary 
and the Office of Financial Stability created 
under sections 101 and 102, including the appointment 
of financial agents, the designation 
of asset classes to be purchased, and plans for 
the structure of vehicles used to purchase troubled 
assets; and 
(B) the effect of such actions in assisting 
American families in preserving home ownership, 
stabilizing financial markets, and protecting 
taxpayers; 
(2) making recommendations, as appropriate, to 
the Secretary regarding use of the authority under 
this Act; and 
(3) reporting any suspected fraud, misrepresentation, 
or malfeasance to the Special Inspector General 
for the Troubled Assets Relief Program or the 
Attorney General of the United States, consistent 
with section 535(b) of title 28, United States Code. 
(b) MEMBERSHIP.—The Financial Stability Oversight 
Board shall be comprised of— 

16 

(1) the Chairman of the Board of Governors of 
the Federal Reserve System; 
(2) the Secretary; 
(3) the Director of the Federal Home Finance 
Agency; 
(4) the Chairman of the Securities Exchange 
Commission; and 
(5) the Secretary of Housing and Urban Development. 
(c) CHAIRPERSON.—The chairperson of the Financial 
Stability Oversight Board shall be elected by the members 
of the Board from among the members other than the Secretary. 
(d) MEETINGS.—The Financial Stability Oversight 
Board shall meet 2 weeks after the first exercise of the 
purchase authority of the Secretary under this Act, and 
monthly thereafter. 
(e) ADDITIONAL AUTHORITIES.—In addition to the 
responsibilities described in subsection (a), the Financial 
Stability Oversight Board shall have the authority to ensure 
that the policies implemented by the Secretary are— 
(1) in accordance with the purposes of this Act; 
(2) in the economic interests of the United 
States; and 

17 

(3) consistent with protecting taxpayers, in accordance 
with section 112(a). 
(f) CREDIT REVIEW COMMITTEE.—The Financial 
Stability Oversight Board may appoint a credit review 
committee for the purpose of evaluating the exercise of 
the purchase authority provided under this Act and the 
assets acquired through the exercise of such authority, as 
the Financial Stability Oversight Board determines appropriate. 
(g) REPORTS.—The Financial Stability Oversight 
Board shall report to the appropriate committees of Congress 
and the Congressional Oversight Panel established 
under section 125, semiannually, on the matters described 
under subsection (a)(1). 
(h) TERMINATION.—The Financial Stability Oversight 
Board, and the authority of the Oversight Board 
under this section, shall terminate on the expiration of the 
15-day period beginning upon the later of— 
(1) the date that the last troubled asset acquired 
by the Secretary under section 101 has been 
sold or transferred out of the ownership or control 
of the Federal Government; or 
(2) the date of expiration of the last insurance 
contract issued under section 102. 

18 

SEC. 105. REPORTS. 

(a) IN GENERAL.—Before the expiration of the 60day 
period beginning on the date of the first exercise of 
the authority granted in section 101(a), or of the first exercise 
of the authority granted in section 102, whichever 
occurs 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 109; 
(2) the actual obligation and expenditure of the 
funds 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 respect 
to the exercise of authority under this Act, including— 
(A) all agreements made or renewed; 
(B) all insurance contracts entered into 
pursuant to section 102; 
(C) all transactions occurring during such 
period, including the types of parties involved; 
(D) the nature of the assets purchased; 
(E) all projected costs and liabilities; 

19 

(F) operating expenses, including compensation 
for financial agents; 
(G) the valuation or pricing method used 
for 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 to 
the appropriate committees of Congress, at the times 
specified in paragraph (2), a written report, including— 
(A) a description of all of the transactions 
made during the reporting period; 
(B) a description of the pricing mechanism 
for the transactions; 
(C) a justification of the price paid for and 
other financial terms associated with the transactions; 
(D) a description of the impact of the exercise 
of such authority on the financial system, 
supported, to the extent possible, by specific 
data; 
(E) a description of challenges that remain 
in the financial system, including any benchmarks 
yet to be achieved; and 

20 

(F) an estimate of additional actions under 
the authority provided under this Act that may 
be necessary to address such challenges. 
(2) TIMING.—The report required by this subsection 
shall be submitted not later than 7 days 
after the date on which commitments to purchase 
troubled assets under the authorities provided in this 
Act first reach an aggregate of $50,000,000,000 and 
not later than 7 days after each $50,000,000,000 interval 
of such commitments is reached thereafter. 
(c) REGULATORY MODERNIZATION REPORT.—The 
Secretary shall review the current state of the financial 
markets and the regulatory system and submit a written 
report to the appropriate committees of Congress not later 
than April 30, 2009, analyzing the current state of the 
regulatory system and its effectiveness at overseeing the 
participants in the financial markets, including the overthe-
counter swaps market and government-sponsored enterprises, 
and providing recommendations for improvement, 
including— 
(1) recommendations regarding— 
(A) whether any participants in the financial 
markets that are currently outside the regulatory 
system should become subject to the 
regulatory system; and 

21 

(B) enhancement of the clearing and settlement 
of over-the-counter swaps; and 
(2) the rationale underlying such recommendations. 
(d) SHARING OF INFORMATION.—Any report required 
under this section shall also be submitted to the 
Congressional Oversight Panel established under section 
125. 
(e) SUNSET.—The reporting requirements under this 
section shall terminate on the later of— 
(1) the date that the last troubled asset acquired 
by the Secretary under section 101 has been 
sold or transferred out of the ownership or control 
of the Federal Government; or 
(2) the date of expiration of the last insurance 
contract issued under section 102. 

SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED AS
SETS; REVENUES AND SALE PROCEEDS. 

(a) EXERCISE OF RIGHTS.—The Secretary may, at 
any time, exercise any rights received in connection with 
troubled assets purchased under this Act. 
(b) MANAGEMENT OF TROUBLED ASSETS.—The Secretary 
shall have authority to manage troubled assets purchased 
under this Act, including revenues and portfolio 
risks therefrom. 

22 

(c) SALE OF TROUBLED ASSETS.—The Secretary 
may, at any time, upon terms and conditions and at a 
price determined by the Secretary, sell, or enter into securities 
loans, repurchase transactions, or other financial 
transactions in regard to, any troubled asset purchased 
under this Act. 
(d) TRANSFER TO TREASURY.—Revenues of, and 
proceeds from the sale of troubled assets purchased under 
this Act, or from the sale, exercise, or surrender of warrants 
or senior debt instruments acquired under section 
113 shall be paid into the general fund of the Treasury 
for reduction of the public debt. 
(e) APPLICATION OF SUNSET TO TROUBLED AS-
SETS.—The authority of the Secretary to hold any troubled 
asset purchased under this Act before the termination 
date in section 120, or to purchase or fund the purchase 
of a troubled asset under a commitment entered into before 
the termination date in section 120, is not subject 
to the provisions of section 120. 

SEC. 107. CONTRACTING PROCEDURES. 

(a) STREAMLINED PROCESS.—For purposes of this 
Act, the Secretary may waive specific provisions of the 
Federal Acquisition Regulation upon a determination that 
urgent and compelling circumstances make compliance 
with such provisions contrary to the public interest. Any 

23 

such determination, and the justification for such determination, 
shall be submitted to the Committees on Oversight 
and Government Reform and Financial Services of 
the House of Representatives and the Committees on 
Homeland Security and Governmental Affairs and Banking, 
Housing, and Urban Affairs of the Senate within 7 
days. 

(b) ADDITIONAL CONTRACTING REQUIREMENTS.—In 
any solicitation or contract where the Secretary has, pursuant 
to subsection (a), 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 extent 
practicable, the inclusion and utilization of minorities (as 
such term is defined in section 1204(c) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 1811 note)) and women, and minority-
and women-owned businesses (as such terms are defined 
in 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, property 
managers, and other service providers or expert consultants. 
(c) ELIGIBILITY OF FDIC.—Notwithstanding subsections 
(a) and (b), the Corporation— 

24 

(1) shall be eligible for, and shall be considered 
in, the selection of asset managers for residential 
mortgage loans and residential mortgage-backed securities; 
and 
(2) shall be reimbursed by the Secretary for 
any services provided. 

SEC. 108. CONFLICTS OF INTEREST. 

(a) STANDARDS REQUIRED.—The Secretary shall 
issue regulations or guidelines necessary to address and 
manage or to prohibit conflicts of interest that may arise 
in connection with the administration and execution of the 
authorities provided under this Act, including— 
(1) conflicts arising in the selection or hiring of 
contractors or advisors, including asset managers; 
(2) the purchase of troubled assets; 
(3) the management of the troubled assets held; 
(4) post-employment restrictions on employees; 
and 
(5) any other potential conflict of interest, as 
the Secretary deems necessary or appropriate in the 
public interest. 
(b) TIMING.—Regulations or guidelines required by 
this section shall be issued as soon as practicable after 
the date of enactment of this Act. 

25 

SEC. 109. FORECLOSURE MITIGATION EFFORTS. 

(a) RESIDENTIAL MORTGAGE LOAN SERVICING 
STANDARDS.—To the extent that the Secretary acquires 
mortgages, mortgage backed securities, and other assets 
secured by residential real estate, including multifamily 
housing, the Secretary shall implement a plan that seeks 
to maximize assistance for homeowners and use the authority 
of the Secretary to encourage the servicers of the 
underlying mortgages, considering net present value to the 
taxpayer, 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 coordinate 
with the Corporation, the Board (with respect to any 
mortgage or mortgage-backed securities or pool of securities 
held, owned, or controlled by or on behalf of a Federal 
reserve bank, as provided in section 110(a)(1)(C)), the 
Federal Housing Finance Agency, the Secretary of Housing 
and Urban Development, and other Federal Government 
entities that hold troubled assets to attempt to identify 
opportunities for the acquisition of classes of troubled 
assets that will improve the ability of the Secretary to improve 
the loan modification and restructuring process and, 

26 

where permissible, to permit bona fide tenants who are 
current on their rent to remain in their homes under the 
terms of the lease. In the case of a mortgage on a residential 
rental property, the plan required under this section 
shall include protecting Federal, State, and local rental 
subsidies and protections, and ensuring any modification 
takes into account the need for operating funds to maintain 
decent and safe conditions at the property. 

(c) CONSENT TO REASONABLE LOAN MODIFICATION 
REQUESTS.—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 write 
downs, increases in the proportion of loans within a trust 
or other structure allowed to be modified, or removal of 
other limitation on modifications. 

SEC. 110. ASSISTANCE TO HOMEOWNERS. 

(a) DEFINITIONS.—As used in this section— 
(1) the term ‘‘Federal property manager’’ 
means— 
(A) the Federal Housing Finance Agency, 
in its capacity as conservator of the Federal 
National Mortgage Association and the Federal 
Home Loan Mortgage Corporation; 

27 

(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 Federal 
Deposit Insurance Act; and 
(C) the Board, with respect to any mortgage 
or mortgage-backed securities or pool of 
securities held, owned, or controlled by or on 
behalf of a Federal reserve bank, other than 
mortgages or securities held, owned, or controlled 
in connection with open market operations 
under section 14 of the Federal Reserve 
Act (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 meaning 
as in section 103 of the Truth in Lending Act (15 
U.S.C. 1602); 
(3) the term ‘‘insured depository institution’’ 
has the same meaning as in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813); and 
(4) the term ‘‘servicer’’ has the same meaning 
as in section 6(i)(2) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(i)(2)). 
(b) HOMEOWNER ASSISTANCE BY AGENCIES.— 

28 

(1) IN GENERAL.—To the extent that the Federal 
property manager holds, owns, or controls mortgages, 
mortgage backed securities, and other assets 
secured by residential real estate, including multifamily 
housing, the Federal property manager shall 
implement a plan that seeks to maximize assistance 
for homeowners and use its authority to encourage 
the servicers of the underlying mortgages, and considering 
net present value to the taxpayer, to take 
advantage of the HOPE for Homeowners Program 
under section 257 of the National Housing Act or 
other 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 of 
mortgages on residential rental properties, modifications 
made under paragraph (1) shall ensure— 
(A) the continuation of any existing Federal, 
State, and local rental subsidies and protections; 
and 

29 

(B) that modifications take into account 
the need for operating funds to maintain decent 
and safe conditions at the property. 
(4) TIMING.—Each Federal property manager 
shall develop and begin implementation of the plan 
required by this subsection not later than 60 days 
after the date of enactment of this Act. 
(5) REPORTS TO CONGRESS.—Each Federal 
property manager shall, 60 days after the date of 
enactment of this Act and every 30 days thereafter, 
report to Congress specific information on the number 
and types of loan modifications made and the 
number of actual foreclosures occurring during the 
reporting period in accordance with this section. 
(6) CONSULTATION.—In developing the 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 any 
case in which a Federal property manager is not the owner 
of a residential mortgage loan, but holds an interest in 
obligations or pools of obligations secured by residential 
mortgage loans, the Federal property manager shall— 

30 

(1) encourage implementation by the loan 
servicers 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 section 
shall not supersede any other duty or requirement imposed 
on the Federal property managers under otherwise applicable 
law. 

SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE 
GOVERNANCE. 

(a) APPLICABILITY.—Any financial institution that 
sells troubled assets to the Secretary under this Act shall 
be subject to the executive compensation requirements of 
subsections (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 met 
through direct purchases of troubled assets from an 
individual financial institution where no bidding 
process or market prices are available, and the Secretary 
receives a meaningful equity or debt position 
in the financial institution as a result of the trans

31 

action, the Secretary shall require that the financial 
institution meet appropriate standards for executive 
compensation and corporate governance. The standards 
required under this subsection shall be effective 
for the duration of the period that the Secretary 
holds an equity or debt position in the financial institution. 

(2) CRITERIA.—The standards required under 
this subsection shall include— 
(A) limits on compensation that exclude incentives 
for executive officers of a financial institution 
to take unnecessary and excessive 
risks that threaten the value of the financial institution 
during the period that the Secretary 
holds an equity or debt position in the financial 
institution; 
(B) a provision for the recovery by the financial 
institution of any bonus or incentive 
compensation paid to a senior executive officer 
based on statements of earnings, gains, or other 
criteria that are later proven to be materially 
inaccurate; and 
(C) a prohibition on the financial institution 
making any golden parachute payment to 
its senior executive officer during the period 

32 

that the Secretary holds an equity 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 public 
company, whose compensated is required to be disclosed 
pursuant to the Securities Exchange Act of 
1934, and any regulations issued thereunder, and 
non-public company counterparts. 
(c) AUCTION PURCHASES.—Where the Secretary determines 
that the purposes of this Act are best met 
through auction purchases of troubled assets, and only 
where such purchases per financial institution, in the aggregate 
exceed $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 an 
involuntary termination, bankruptcy filing, insolvency, or 
receivership. The Secretary shall issue guidance to carry 
out this paragraph not later than 2 months after the date 
of enactment of this Act, and such guidance shall be effective 
upon issuance. 
(d) SUNSET.—The provisions of subsection (c) shall 
apply only to arrangements entered into during the period 

33 

during which the authorities under section 101(a) are in 
effect, as determined under section 120. 

SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES 
AND CENTRAL BANKS. 

The Secretary shall coordinate, as appropriate, with 
foreign financial authorities and central banks to work toward 
the establishment of similar programs by such authorities 
and central banks. To the extent that such foreign 
financial authorities or banks hold troubled assets as 
a result of extending financing to financial institutions 
that have failed or defaulted on such financing, such troubled 
assets qualify for purchase under section 101. 

SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXI
MIZATION OF BENEFITS FOR TAXPAYERS. 

(a) LONG-TERM COSTS AND BENEFITS.— 
(1) MINIMIZING NEGATIVE IMPACT.—The Secretary 
shall use the authority under this Act in a 
manner that will minimize any potential long-term 
negative impact on the taxpayer, taking into account 
the direct outlays, potential long-term returns on assets 
purchased, and the overall economic benefits of 
the program, including economic benefits due to improvements 
in economic activity and the availability 
of credit, the impact on the savings and pensions of 

34 

individuals, and reductions in losses to the Federal 
Government. 

(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 Secretary 
determines that the market is optimal for selling 
such assets, in order to maximize the value 
for taxpayers; and 
(B) sell such assets at a price that the Secretary 
determines, based on available financial 
analysis, will maximize return on investment for 
the Federal Government. 
(3) PRIVATE SECTOR PARTICIPATION.—The 
Secretary 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 OF MARKET MECHANISMS.—In making purchases 
under this Act, the Secretary shall— 
(1) make such purchases at the lowest price 
that the Secretary determines to be consistent with 
the purposes of this Act; and 
(2) maximize the efficiency of the use of taxpayer 
resources by using market mechanisms, in

35 

cluding auctions or reverse auctions, where appropriate. 

(c) DIRECT PURCHASES.—If the Secretary determines 
that use of a market mechanism under subsection 
(b) is not feasible or appropriate, and the purposes of the 
Act are best met through direct purchases from an individual 
financial institution, the Secretary shall pursue additional 
measures to ensure that prices paid for assets are 
reasonable and reflect the underlying value of the asset. 
(d) CONDITIONS ON PURCHASE AUTHORITY FOR 
WARRANTS AND DEBT INSTRUMENTS.— 
(1) IN GENERAL.—The Secretary may not purchase, 
or make any commitment to purchase, any 
troubled asset under the authority of this Act, unless 
the Secretary receives from the financial institution 
from which such assets are to be purchased— 
(A) in the case of a financial institution 
that is registered (or approved for registration) 
and traded on a national securities exchange or 
a national securities association registered pursuant 
to section 15A of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o-3), a warrant giving 
the right to the Secretary to receive nonvoting 
common stock or preferred stock in such 

36 

financial institution, as the Secretary determines 
appropriate; or 

(B) in the case of any financial institution 
other than one described in subparagraph (A), 
a senior debt instrument from such financial institution, 
as described in paragraph (2)(C). 
(2) TERMS AND CONDITIONS.—The terms and 
conditions of any warrant or senior debt instrument 
required under paragraph (1) shall meet the following 
requirements: 
(A) PURPOSES.—Such terms and conditions 
shall, at a minimum, be designed— 
(i) to provide for reasonable participation 
by the Secretary, for the benefit of 
taxpayers, in equity appreciation in the 
case of a warrant, or a reasonable interest 
rate premium, in the case of a debt instrument; 
and 
(ii) to provide additional protection 
for the taxpayer against losses from sale of 
assets by the Secretary under this Act and 
the administrative expenses of the TARP. 
(B) AUTHORITY TO SELL, EXERCISE, OR 
SURRENDER.—The Secretary may sell, exercise, 
or surrender a warrant or any senior debt in

37 

strument received under this subsection, based 
on the conditions established under subparagraph 
(A). 

(C) CONVERSION.—The warrant shall provide 
that if, after the warrant is received by the 
Secretary under this subsection, the financial 
institution that issued the warrant is no longer 
listed or traded on a national securities exchange 
or securities association, as described in 
paragraph (1)(A), such warrants shall convert 
to senior debt, in an amount determined by the 
Secretary. 
(D) PROTECTIONS.—Any warrant representing 
securities to be received by the Secretary 
under this subsection shall contain anti-
dilution provisions of the type employed in capital 
market transactions, as determined by the 
Secretary. Such provisions shall protect the 
value of the securities from market transactions 
such as stock splits, stock distributions, dividends, 
and other distributions, mergers, and 
other forms of reorganization or recapitalization. 
(E) EXERCISE PRICE.—The exercise price 
for any warrant issued pursuant to this sub

38 

section shall be set by the Secretary, in the interest 
of the taxpayers. 

(F) SUFFICIENCY.—The financial institution 
shall guarantee to the Secretary that it has 
authorized shares of nonvoting stock available 
to fulfill its obligations under this subsection. 
Should the financial institution not have sufficient 
authorized shares, including preferred 
shares that may carry dividend rights equal to 
a multiple number of common shares, the Secretary 
may, to the extent necessary, accept a 
senior debt note in an amount, and on such 
terms, as will compensate the Secretary equivalently, 
in the event that a sufficient shareholder 
vote to authorize the necessary additional 
shares cannot be obtained. 
(3) EXCEPTIONS.— 
(A) DE MINIMIS.—The Secretary shall establish 
de minimis exceptions to the requirements 
of this subsection, based on the size of 
the cumulative transactions of troubled assets 
purchased from any one financial institution for 
the duration of the program, at not more than 
$100,000,000. 

39 

(B) OTHER EXCEPTIONS.—The Secretary 
shall establish an exception to the requirements 
of this subsection and appropriate alternative 
requirements for any participating financial institution 
that is legally prohibited from issuing 
securities and debt instruments, so as not to 
allow circumvention of the requirements of this 
section. 

SEC. 114. MARKET TRANSPARENCY. 

(a) PRICING.—To facilitate market transparency, the 
Secretary shall make available to the public, in electronic 
form, a description, amounts, and pricing of assets acquired 
under this Act, within 2 business days of purchase, 
trade, or other disposition. 
(b) DISCLOSURE.—For each type of financial institutions 
that sells troubled assets to the Secretary under this 
Act, the Secretary shall determine whether the public disclosure 
required for such financial institutions with respect 
to off-balance sheet transactions, derivatives instruments, 
contingent liabilities, and similar sources of potential 
exposure is adequate to provide to the public sufficient 
information as to the true financial position of the institutions. 
If such disclosure is not adequate for that purpose, 
the Secretary shall make recommendations for additional 
disclosure requirements to the relevant regulators. 

40 

SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE. 

(a) AUTHORITY.—The authority of the Secretary to 
purchase troubled assets under this Act shall be limited 
as follows: 
(1) Effective upon the date of enactment of this 
Act, such authority shall be limited to 
$250,000,000,000 outstanding at any one time. 
(2) If at any time, the President submits to the 
Congress a written certification that the Secretary 
needs to exercise the authority under this paragraph, 
effective upon such submission, such authority shall 
be limited to $350,000,000,000 outstanding at any 
one time. 
(3) If, at any time after the certification in 
paragraph (2) has been made, the President transmits 
to the Congress a written report detailing the 
plan of the Secretary to exercise the authority under 
this paragraph, unless there is enacted, within 15 
calendar days of such transmission, a joint resolution 
described in subsection (c), effective upon the 
expiration of such 15-day period, such authority 
shall be limited to $700,000,000,000 outstanding at 
any one time. 
(b) AGGREGATION OF PURCHASE PRICES.—The 
amount of troubled assets purchased by the Secretary outstanding 
at any one time shall be determined for purposes 

41 

of the dollar amount limitations under subsection (a) by 
aggregating the purchase prices of all troubled assets held. 

(c) JOINT RESOLUTION OF DISAPPROVAL.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of this section, the Secretary may not exercise 
any authority to make purchases under this Act 
with regard to any amount in excess of 
$350,000,000,000 previously obligated, as described 
in this section if, within 15 calendar days after the 
date on which Congress receives a report of the plan 
of the Secretary described in subsection (a)(3), there 
is enacted into law a joint resolution disapproving 
the plan of the Secretary with respect to such additional 
amount. 
(2) CONTENTS OF JOINT RESOLUTION.—For 
the purpose of this section, the term ‘‘joint resolution’’ 
means only a joint resolution— 
(A) that is introduced not later than 3 calendar 
days after the date on which the report 
of the plan of the Secretary referred to in subsection 
(a)(3) is received by Congress; 
(B) which does not have a preamble; 
(C) the title of which is as follows: ‘‘Joint 
resolution relating to the disapproval of obliga

42 

tions under the Emergency Economic Stabilization 
Act of 2008’’; and 

(D) the matter after the resolving clause of 
which is as follows: ‘‘That Congress disapproves 
the obligation of any amount exceeding the 
amounts obligated as described in paragraphs 
(1) and (2) of section 114(a) of the Emergency 
Economic Stabilization Act of 2008.’’. 
(d) FAST TRACK CONSIDERATION IN HOUSE OF REPRESENTATIVES.— 
(1) RECONVENING.—Upon receipt of a report 
under subsection (a)(3), the Speaker, if the House 
would otherwise be adjourned, shall notify the Members 
of the House that, pursuant to this section, the 
House 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 a 
joint resolution is referred shall report it to the 
House not later than 5 calendar days after the date 
of 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 reso

43 

lution and the joint resolution shall be referred to 
the appropriate calendar. 

(3) PROCEEDING TO CONSIDERATION.—After 
each committee authorized to consider a joint resolution 
reports it to the House or has been discharged 
from its consideration, it shall be in order, not later 
than the sixth day after Congress receives the report 
described in subsection (a)(3), to move to proceed to 
consider the joint resolution in the House. All points 
of 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 ordered 
on the motion to its adoption without intervening 
motion. The motion shall not be debatable. A motion 
to reconsider the vote by which the motion is disposed 
of shall not be in order. 
(4) CONSIDERATION.—The joint resolution 
shall be considered as read. All points of order 
against 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 of 
debate equally divided and controlled by the proponent 
and an opponent. A motion to reconsider the 

44 

vote on passage of the joint resolution shall not be 
in order. 

(e) FAST TRACK CONSIDERATION IN SENATE.— 
(1) RECONVENING.—Upon receipt of a report 
under subsection (a)(3), if the Senate has adjourned 
or recessed for more than 2 days, the majority leader 
of the Senate, after consultation with the minority 
leader of the Senate, shall notify the Members of the 
Senate that, pursuant to this section, the Senate 
shall convene not later than the second calendar day 
after receipt of such message. 
(2) PLACEMENT ON CALENDAR.—Upon introduction 
in the Senate, the joint resolution shall be 
placed immediately on the calendar. 
(3) FLOOR CONSIDERATION.— 
(A) IN GENERAL.—Notwithstanding Rule 
XXII of the Standing Rules of the Senate, it is 
in order at any time during the period beginning 
on the 4th day after the date on which 
Congress receives a report of the plan of the 
Secretary described in subsection (a)(3) and 
ending on the 6th day after the date on which 
Congress receives a report of the plan of the 
Secretary described in subsection (a)(3) (even 
though a previous motion to the same effect has 

45 

been disagreed to) to move to proceed to the 
consideration of the joint resolution, and all 
points of order against the joint resolution (and 
against consideration of the joint resolution) 
are waived. The motion to proceed is not debatable. 
The motion is not subject to a motion to 
postpone. A motion to reconsider the vote by 
which the motion is agreed to or disagreed to 
shall not be in order. If a motion to proceed to 
the consideration of the resolution is agreed to, 
the joint resolution shall remain the unfinished 
business until disposed of. 

(B) DEBATE.—Debate on the joint resolution, 
and on all debatable motions and appeals 
in connection therewith, shall be limited to not 
more than 10 hours, which shall be divided 
equally between the majority and minority leaders 
or their designees. A motion further to limit 
debate is in order and not debatable. An 
amendment to, or a motion to postpone, or a 
motion to proceed to the consideration of other 
business, or a motion to recommit the joint resolution 
is not in order. 
(C) VOTE ON PASSAGE.—The vote on passage 
shall occur immediately following the con

46 

clusion of the debate on a joint resolution, and 
a single quorum call at the conclusion of the debate 
if requested in accordance with the rules of 
the Senate. 

(D) RULINGS OF THE CHAIR ON PROCEDURE.—
Appeals from the decisions of the Chair 
relating to the application of the rules of the 
Senate, as the case may be, to the procedure relating 
to a joint resolution shall be decided 
without debate. 
(f) RULES RELATING TO SENATE AND HOUSE OF 
REPRESENTATIVES.— 
(1) COORDINATION WITH ACTION BY OTHER 
HOUSE.—If, before the passage by one House of a 
joint resolution of that House, that House receives 
from the other House a joint resolution, then the following 
procedures shall apply: 
(A) The joint resolution of the other House 
shall not be referred to a committee. 
(B) With respect to a joint resolution of 
the House receiving the resolution— 
(i) the procedure in that House shall 
be the same as if no joint resolution had 
been received from the other House; but 

47 

(ii) the vote on passage shall be on 
the joint resolution of the other House. 
(2) TREATMENT OF JOINT RESOLUTION OF 
OTHER HOUSE.—If one House fails to introduce or 
consider a joint resolution under this section, the 
joint resolution of the other House shall be entitled 
to expedited floor procedures under this section. 
(3) TREATMENT OF COMPANION MEASURES.— 
If, following passage of the joint resolution in the 
Senate, the Senate then receives the companion 
measure from the House of Representatives, the 
companion measure shall not be debatable. 
(4) CONSIDERATION AFTER PASSAGE.— 
(A) IN GENERAL.—If Congress passes a 
joint resolution, the period beginning on the 
date the President is presented with the joint 
resolution and ending on the date the President 
takes action with respect to the joint resolution 
shall be disregarded in computing the 15-calendar 
day period described in subsection (a)(3). 
(B) VETOES.—If the President vetoes the 
joint resolution— 
(i) the period beginning on the date 
the President vetoes the joint resolution 
and ending on the date the Congress re

48 

ceives the veto message with respect to the 
joint resolution shall be disregarded in 
computing the 15-calendar day period described 
in subsection (a)(3), and 

(ii) debate on a veto message in the 
Senate under this section shall be 1 hour 
equally divided between the majority and 
minority leaders or their designees. 
(5) RULES OF HOUSE OF REPRESENTATIVES 
AND SENATE.—This subsection and subsections (c), 
(d), and (e) are enacted by Congress— 
(A) as an exercise of the rulemaking power 
of the Senate and House of Representatives, respectively, 
and as such it is deemed a part of 
the rules of each House, respectively, but applicable 
only with respect to the procedure to be 
followed in that House in the case of a joint 
resolution, and it supersedes other rules only to 
the extent that it is inconsistent with such 
rules; and 
(B) with full recognition of the constitutional 
right of either House to change the rules 
(so far as relating to the procedure of that 
House) at any time, in the same manner, and 

49 

to the same extent as in the case of any other 
rule of that House. 

SEC. 116. OVERSIGHT AND AUDITS. 

(a) COMPTROLLER GENERAL OVERSIGHT.— 
(1) SCOPE OF OVERSIGHT.—The Comptroller 
General of the United States shall, upon establishment 
of the troubled assets relief program under 
this Act (in this section referred to as the ‘‘TARP’’), 
commence ongoing oversight of the activities and 
performance of the TARP and of any agents and 
representatives of the TARP (as related to the agent 
or representative’s activities on behalf of or under 
the authority of the TARP), including vehicles established 
by the Secretary under this Act. The subjects 
of such oversight shall include the following: 
(A) The performance of the TARP in 
meeting the purposes of this Act, particularly 
those involving— 
(i) foreclosure mitigation; 
(ii) cost reduction; 
(iii) whether it has provided stability 
or prevented disruption to the financial 
markets or the banking system; and 
(iv) whether it has protected taxpayers. 

50 

(B) The financial condition and internal 
controls of the TARP, its representatives and 
agents. 
(C) Characteristics of transactions and 
commitments entered into, including transaction 
type, frequency, size, prices paid, and all 
other relevant terms and conditions, and the 
timing, duration and terms of any future commitments 
to purchase assets. 
(D) Characteristics and disposition of acquired 
assets, including type, acquisition price, 
current market value, sale prices and terms, 
and use of proceeds from sales. 
(E) Efficiency of the operations of the 
TARP in the use of appropriated funds. 
(F) Compliance with all applicable laws 
and regulations by the TARP, its agents and 
representatives. 
(G) The efforts of the TARP to prevent, 
identify, and minimize conflicts of interest involving 
any agent or representative performing 
activities on behalf of or under the authority of 
the TARP. 
(H) The efficacy of contracting procedures 
pursuant to section 107(b), including, as appli

51 

cable, the efforts of the TARP in evaluating 
proposals for inclusion and contracting to the 
maximum extent possible of minorities (as such 
term is defined in 1204(c) of the Financial Institutions 
Reform, Recovery, and Enhancement 
Act of 1989 (12 U.S.C. 1811 note), women, 
and minority- and women-owned businesses, including 
ascertaining and reporting the total 
amount of fees paid and other value delivered 
by the TARP to all of its agents and representatives, 
and such amounts paid or delivered to 
such firms that are minority- and women-owned 
businesses (as such terms are defined in section 
21A of the Federal Home Loan Bank Act (12 
U.S.C. 1441a)). 
(2) CONDUCT AND ADMINISTRATION OF OVERSIGHT.— 
(A) GAO PRESENCE.—The Secretary shall 
provide the Comptroller General with appropriate 
space and facilities in the Department of 
the Treasury as necessary to facilitate oversight 
of the TARP until the termination date established 
in section 120. 
(B) ACCESS TO RECORDS.—To the extent 
otherwise consistent with law, the Comptroller 

52 

General shall have access, upon request, to any 
information, data, schedules, books, accounts, 
financial records, reports, files, electronic communications, 
or other papers, things, or property 
belonging to or in use by the TARP, or 
any vehicles established by the Secretary under 
this Act, and to the officers, directors, employees, 
independent public accountants, financial 
advisors, and other agents and representatives 
of the TARP (as related to the agent or representative’s 
activities on behalf of or under the 
authority of the TARP) or any such vehicle at 
such reasonable time as the Comptroller General 
may request. The Comptroller General 
shall be afforded full facilities for verifying 
transactions with the balances or securities held 
by depositaries, fiscal agents, and custodians. 
The Comptroller General may make and retain 
copies of such books, accounts, and other 
records as the Comptroller General deems appropriate. 

(C) REIMBURSEMENT OF COSTS.—The 
Treasury shall reimburse the Government Accountability 
Office for the full cost of any such 
oversight activities as billed therefor by the 

53 

Comptroller General of the United States. Such 
reimbursements shall be credited to the appropriation 
account ‘‘Salaries and Expenses, Government 
Accountability Office’’ current when 
the payment is received and remain available 
until expended. 

(3) REPORTING.—The Comptroller General 
shall submit reports of findings under this section, 
regularly and no less frequently than once every 60 
days, to the appropriate committees of Congress, 
and the Special Inspector General for the Troubled 
Asset Relief Program established under this Act on 
the activities and performance of the TARP. The 
Comptroller may also submit special reports under 
this subsection as warranted by the findings of its 
oversight activities. 
(b) COMPTROLLER GENERAL AUDITS.— 
(1) ANNUAL AUDIT.—The TARP shall annually 
prepare and issue to the appropriate committees of 
Congress and the public audited financial statements 
prepared in accordance with generally accepted accounting 
principles, and the Comptroller General 
shall annually audit such statements in accordance 
with generally accepted auditing standards. The 
Treasury shall reimburse the Government Account

54 

ability Office for the full cost of any such audit as 
billed therefor by the Comptroller General. Such reimbursements 
shall be credited to the appropriation 
account ‘‘Salaries and Expenses, Government Accountability 
Office’’ current when the payment is received 
and remain available until expended. The financial 
statements prepared under this paragraph 
shall be on the fiscal year basis prescribed under 
section 1102 of title 31, United States Code. 

(2) AUTHORITY.—The Comptroller General 
may audit the programs, activities, receipts, expenditures, 
and financial transactions of the TARP and 
any agents and representatives of the TARP (as related 
to the agent or representative’s activities on 
behalf of or under the authority of the TARP), including 
vehicles established by the Secretary under 
this Act. 
(3) CORRECTIVE RESPONSES TO AUDIT PROB-
LEMS.—The TARP shall— 
(A) take action to address deficiencies 
identified by the Comptroller General or other 
auditor engaged by the TARP; or 
(B) certify to appropriate committees of 
Congress that no action is necessary or appropriate. 

55 

(c) INTERNAL CONTROL.— 
(1) ESTABLISHMENT.—The TARP shall establish 
and maintain an effective system of internal 
control, consistent with the standards prescribed 
under section 3512(c) of title 31, United States 
Code, that provides reasonable assurance of— 
(A) the effectiveness and efficiency of operations, 
including the use of the resources of the 
TARP; 
(B) the reliability of financial reporting, including 
financial statements and other reports 
for internal and external use; and 
(C) compliance with applicable laws and 
regulations. 
(2) REPORTING.—In conjunction with each annual 
financial statement issued under this section, 
the TARP shall— 
(A) state the responsibility of management 
for establishing and maintaining adequate internal 
control over financial reporting; and 
(B) state its assessment, as of the end of 
the most recent year covered by such financial 
statement of the TARP, of the effectiveness of 
the internal control over financial reporting. 

56 

(d) SHARING OF INFORMATION.—Any report or audit 
required under this section shall also be submitted to the 
Congressional Oversight Panel established under section 
125. 
(e) TERMINATION.—Any oversight, reporting, or 
audit requirement under this section shall terminate on 
the later of— 
(1) the date that the last troubled asset acquired 
by the Secretary under section 101 has been 
sold or transferred out of the ownership or control 
of the Federal Government; or 
(2) the date of expiration of the last insurance 
contract 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 leverage 
and sudden deleveraging of financial institutions was a 
factor behind the current financial crisis. 
(b) CONTENT.—The study required by this section 
shall include— 
(1) an analysis of the roles and responsibilities 
of the Board, the Securities and Exchange Commission, 
the Secretary, and other Federal banking agencies 
with respect to monitoring leverage and acting 
to curtail excessive leveraging; 

57 

(2) an analysis of the authority of the Board to 
regulate leverage, including by setting margin requirements, 
and what process the Board used to decide 
whether or not to use its authority; 
(3) an analysis of any usage of the margin authority 
by the Board; and 
(4) recommendations for the Board and appropriate 
committees of Congress with respect to the 
existing authority of the Board. 
(c) REPORT.—Not later than June 1, 2009, the 
Comptroller General shall complete and submit a report 
on the study required by this section to the Committee 
on Banking, Housing, and Urban Affairs of the Senate 
and the Committee on Financial Services of the House of 
Representatives. 
(d) SHARING OF INFORMATION.—Any reports required 
under this section shall also be submitted to the 
Congressional Oversight Panel established under section 
125. 

SEC. 118. FUNDING. 

For the purpose of the authorities granted in this 
Act, and for the costs of administering those authorities, 
the Secretary may use the proceeds of the sale of any securities 
issued under chapter 31 of title 31, United States 
Code, and the purposes for which securities may be issued 

58 

under chapter 31 of title 31, United States Code, are extended 
to include actions authorized by this Act, including 
the payment of administrative expenses. Any funds expended 
or obligated by the Secretary for actions authorized 
by this Act, including the payment of administrative 
expenses, shall be deemed appropriated at the time of such 
expenditure 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 to 
chapter 7 of title 5, United States Code, including 
that such final actions shall be held unlawful and set 
aside if found to be arbitrary, capricious, an abuse 
of discretion, or not in accordance with law. 
(2) LIMITATIONS ON EQUITABLE RELIEF.— 
(A) INJUNCTION.—No injunction or other 
form of equitable relief shall be issued against 
the Secretary for actions pursuant to section 
101, 102, 106, and 109, other than to remedy 
a violation of the Constitution. 
(B) TEMPORARY RESTRAINING ORDER.— 
Any request for a temporary restraining order 
against the Secretary for actions pursuant to 
this Act shall be considered and granted or de

59 

nied by the court within 3 days of the date of 
the request. 

(C) PRELIMINARY INJUNCTION.—Any request 
for a preliminary injunction against the 
Secretary for actions pursuant to this Act shall 
be considered and granted or denied by the 
court on an expedited basis consistent with the 
provisions of rule 65(b)(3) of the Federal Rules 
of Civil Procedure, or any successor thereto. 
(D) PERMANENT INJUNCTION.—Any request 
for a permanent injunction against the 
Secretary for actions pursuant to this Act shall 
be considered and granted or denied by the 
court on an expedited basis. Whenever possible, 
the court shall consolidate trial on the merits 
with any hearing on a request for a preliminary 
injunction, consistent with the provisions of rule 
65(a)(2) of the Federal Rules of Civil Procedure, 
or any successor thereto. 
(3) LIMITATION ON ACTIONS BY PARTICIPATING 
COMPANIES.—No action or claims may be brought 
against the Secretary by any person that divests its 
assets with respect to its participation in a program 
under this Act, except as provided in paragraph (1), 

60 

other than as expressly provided in a written contract 
with the Secretary. 

(4) STAYS.—Any injunction or other form of 
equitable relief issued against the Secretary for actions 
pursuant to section 101, 102, 106, and 109, 
shall be automatically stayed. The stay shall be lifted 
unless the Secretary seeks a stay from a higher 
court within 3 calendar days after the date on which 
the relief is issued. 
(b) RELATED MATTERS.— 
(1) TREATMENT OF HOMEOWNERS’ RIGHTS.— 
The terms of any residential mortgage loan that is 
part of any purchase by the Secretary under this Act 
shall remain subject to all claims and defenses that 
would otherwise apply, notwithstanding the exercise 
of authority by the Secretary under this Act. 
(2) SAVINGS CLAUSE.—Any exercise of the authority 
of the Secretary pursuant to this Act shall 
not impair the claims or defenses that would otherwise 
apply with respect to persons other than the 
Secretary. Except as established in any contract, a 
servicer of pooled residential mortgages owes any 
duty to determine whether the net present value of 
the payments on the loan, as modified, is likely to 
be greater than the anticipated net recovery that 

61 

would result from foreclosure to all investors and 
holders of beneficial interests in such investment, 
but not to any individual or groups of investors or 
beneficial interest holders, and shall be deemed to 
act in the best interests of all such investors or holders 
of beneficial interests if the servicer agrees to or 
implements a modification or workout plan when the 
servicer takes reasonable loss mitigation actions, including 
partial payments. 

SEC. 120. TERMINATION OF AUTHORITY. 

(a) TERMINATION.—The authorities provided under 
sections 101(a) 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 Act 
to expire not later than 2 years from the date of enactment 
of this Act. Such certification shall include a justification 
of why the extension is necessary to assist American 
families and stabilize financial markets, as well as 
the expected cost to the taxpayers for such an extension. 

62 

SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROU
BLED ASSET RELIEF PROGRAM. 

(a) OFFICE OF INSPECTOR GENERAL.—There is 
hereby established the Office of the Special Inspector General 
for the Troubled Asset Relief Program. 
(b) APPOINTMENT OF INSPECTOR GENERAL; REMOVAL.—(
1) The head of the Office of the Special Inspector 
General for the Troubled Asset Relief Program is the 
Special Inspector General for the Troubled Asset Relief 
Program (in this section referred to as the ‘‘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 General 
shall be made on the basis of integrity and demonstrated 
ability 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 soon as practicable after 
the establishment of any program under sections 101 and 
102. 
(4) The Special Inspector General shall be removable 
from office in accordance with the provisions of section 
3(b) of the Inspector General Act of 1978 (5 U.S.C. App.). 
(5) For purposes of section 7324 of title 5, United 
States Code, the Special Inspector General shall not be 

63 

considered an employee who determines policies to be pursued 
by the United States in the nationwide administration 
of Federal law. 

(6) The annual rate of basic pay of the Special Inspector 
General shall be the annual rate of basic pay provided 
for positions at level IV of the Executive Schedule 
under section 5315 of title 5, United States Code. 
(c) DUTIES.—(1) It shall be the duty of the Special 
Inspector General to conduct, supervise, and coordinate 
audits and investigations of the purchase, management, 
and sale of assets by the Secretary of the Treasury under 
any program established by the Secretary under section 
101, 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 troubled 
assets purchased or otherwise procured by the Secretary. 
(B) A listing of the troubled assets purchased 
in each such category described under subparagraph 
(A). 
(C) An explanation of the reasons the Secretary 
deemed it necessary to purchase each such troubled 
asset. 

64 

(D) A listing of each financial institution that 
such troubled assets were purchased from. 
(E) A listing of and detailed biographical information 
on each person or entity hired to manage 
such troubled assets. 
(F) A current estimate of the total amount of 
troubled assets purchased pursuant to any program 
established under section 101, the amount of troubled 
assets on the books of the Treasury, the 
amount of troubled assets sold, and the profit and 
loss incurred on each sale or disposition of each such 
troubled asset. 
(G) A listing of the insurance contracts issued 
under 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. 
(d) POWERS AND AUTHORITIES.—(1) In carrying out 
the duties specified in subsection (c), the Special Inspector 

65 

General shall have the authorities provided in section 6 
of the Inspector General Act of 1978. 

(2) The Special Inspector General shall carry out the 
duties specified in subsection (c)(1) in accordance with 
section 4(b)(1) of the Inspector General Act of 1978. 
(e) PERSONNEL, FACILITIES, AND OTHER RESOURCES.—(
1) The Special Inspector General may select, 
appoint, and employ such officers and employees as may 
be necessary for carrying out the duties of the Special Inspector 
General, subject to the provisions of title 5, United 
States Code, governing appointments in the competitive 
service, and the provisions of chapter 51 and subchapter 
III of chapter 53 of such title, relating to classification 
and General Schedule pay rates. 
(2) The Special Inspector General may obtain services 
as authorized by section 3109 of title 5, United States 
Code, at daily rates not to exceed the equivalent rate prescribed 
for grade GS–15 of the General Schedule by section 
5332 of such title. 
(3) The Special Inspector General may enter into 
contracts and other arrangements for audits, studies, 
analyses, and other services with public agencies and with 
private persons, and make such payments as may be necessary 
to carry out the duties of the Inspector General. 

66 

(4)(A) Upon request of the Special Inspector General 
for information or assistance from any department, agency, 
or other entity of the Federal Government, the head 
of such entity shall, insofar as is practicable and not in 
contravention of any existing law, furnish such information 
or assistance to the Special Inspector General, or an 
authorized designee. 

(B) Whenever information or assistance requested by 
the Special Inspector General is, in the judgment of the 
Special Inspector General, unreasonably refused or not 
provided, the Special Inspector General shall report the 
circumstances to the appropriate committees of Congress 
without delay. 
(f) REPORTS.—(1) Not later than 60 days after the 
confirmation of the Special Inspector General, and every 
calendar quarter thereafter, the Special Inspector General 
shall submit to the appropriate committees of Congress 
a report summarizing the activities of the Special Inspector 
General during the 120-day period ending on the date 
of such report. Each report shall include, for the period 
covered by such report, a detailed statement of all purchases, 
obligations, expenditures, and revenues associated 
with any program established by the Secretary of the 
Treasury under sections 101 and 102, as well as the information 
collected under subsection (c)(1). 

67 

(2) Nothing in this subsection shall be construed to 
authorize the public disclosure of information that is— 
(A) specifically prohibited from disclosure by 
any other provision of law; 
(B) specifically required by Executive order to 
be protected from disclosure in the interest of national 
defense or national security or in the conduct 
of foreign affairs; or 
(C) a part of an ongoing criminal investigation. 
(3) Any reports required under this section shall also 
be submitted to the Congressional Oversight Panel established 
under section 125. 
(g) FUNDING.—(1) Of the amounts made available 
to the Secretary of the Treasury under section 118, 
$50,000,000 shall be available to the Special Inspector 
General to carry out this section. 
(2) The amount available under paragraph (1) shall 
remain available until expended. 
(h) TERMINATION.—The Office of the Special Inspector 
General shall terminate on the later of— 
(1) the date that the last troubled asset acquired 
by the Secretary under section 101 has been 
sold or transferred out of the ownership or control 
of the Federal Government; or 

68 

(2) the date of expiration of the last insurance 
contract issued under section 102. 

SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC 
DEBT. 

Subsection (b) of section 3101 of title 31, United 
States 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), the 
costs of purchases of troubled assets made under section 
101(a) and guarantees of troubled assets under section 
102, and any cash flows associated with the activities authorized 
in section 102 and subsections (a), (b), and (c) 
of section 106 shall be determined as provided under the 
Federal Credit Reform Act of 1990 (2 U.S.C. 661 et. 
seq.), as applicable. 
(b) COSTS.—For the purposes of section 502(5) of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 
661a(5))— 
(1) the cost of troubled assets and guarantees 
of troubled assets shall be calculated by adjusting 
the discount rate in section 502(5)(E) (2 U.S.C. 
661a(5)(E)) for market risks; and 

69 

(2) the cost of a modification of a troubled 
asset or guarantee of a troubled asset shall be the 
difference between the current estimate consistent 
with paragraph (1) under the terms of the troubled 
asset or guarantee of the troubled asset and the current 
estimate consistent with paragraph (1) under 
the terms of the troubled asset or guarantee of the 
troubled 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 is 
likely to have, due to the terms of the mortgage 
being 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)’’; 
(C) in paragraph (4)(A)— 
(i) in the first sentence, by inserting 
after ‘‘insured loan’’ the following: ‘‘and 
any payments made under this paragraph,’’; 
and 

70 

(ii) by adding at the end the following: 
‘‘Such actions may include making 
payments, which shall be accepted as payment 
in full of all indebtedness under the 
eligible mortgage, to any holder of an existing 
subordinate mortgage, in lieu of any 
future appreciation payments authorized 
under subparagraph (B).’’; and 
(2) in subsection (w), by inserting after ‘‘administrative 
costs’’ the following: ‘‘and payments 
pursuant to subsection (e)(4)(A)’’. 

SEC. 125. CONGRESSIONAL OVERSIGHT PANEL. 

(a) ESTABLISHMENT.—There is hereby established 
the 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 the 
current state of the financial markets and the regulatory 
system and submit the following reports to Congress: 
(1) REGULAR REPORTS.— 
(A) IN GENERAL.—Regular reports of the 
Oversight Panel shall include the following: 
(i) The use by the Secretary of authority 
under this Act, including with re

71 

spect to the use of contracting authority 
and administration of the program. 

(ii) The impact of purchases made 
under the Act on the financial markets and 
financial institutions. 
(iii) The extent to which the information 
made available on transactions under 
the program has contributed to market 
transparency. 
(iv) The effectiveness of foreclosure 
mitigation efforts, and the effectiveness of 
the program from the standpoint of minimizing 
long-term costs to the taxpayers 
and maximizing the benefits for taxpayers. 
(B) TIMING.—The reports required under 
this paragraph shall be submitted not later 
than 30 days after the first exercise by the Secretary 
of the authority under section 101(a) or 
102, and every 30 days thereafter. 
(2) SPECIAL REPORT ON REGULATORY RE-
FORM.—The Oversight Panel shall submit a special 
report on regulatory reform not later than January 
20, 2009, analyzing the current state of the regulatory 
system and its effectiveness at overseeing the 
participants in the financial system and protecting 

72 

consumers, and providing recommendations for improvement, 
including recommendations regarding 
whether any participants in the financial markets 
that are currently outside the regulatory system 
should become subject to the regulatory system, the 
rationale underlying such recommendation, and 
whether there are any gaps in existing consumer 
protections. 

(c) MEMBERSHIP.— 
(1) IN GENERAL.—The Oversight Panel shall 
consist of 5 members, as follows: 
(A) 1 member appointed by the Speaker of 
the House of Representatives. 
(B) 1 member appointed by the minority 
leader of the House of Representatives. 
(C) 1 member appointed by the majority 
leader of the Senate. 
(D) 1 member appointed by the minority 
leader of the Senate. 
(E) 1 member appointed by the Speaker of 
the House of Representatives and the majority 
leader of the Senate, after consultation with the 
minority leader of the Senate and the minority 
leader of the House of Representatives. 

73 

(2) PAY.—Each member of the Oversight Panel 
shall each be paid at a rate equal to the daily equivalent 
of the annual rate of basic pay for level I of 
the Executive Schedule for each day (including travel 
time) during which such member is engaged in 
the actual performance of duties vested in the Commission. 
(3) PROHIBITION OF COMPENSATION OF FEDERAL 
EMPLOYEES.—Members of the Oversight 
Panel who are full-time officers or employees of the 
United 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 shall 
receive travel expenses, including per diem in lieu of 
subsistence, in accordance with applicable provisions 
under subchapter I of chapter 57 of title 5, United 
States Code. 
(5) QUORUM.—Four members of the Oversight 
Panel shall constitute a quorum but a lesser number 
may hold hearings. 
(6) VACANCIES.—A vacancy on the Oversight 
Panel shall be filled in the manner in which the 
original appointment was made. 

74 

(7) MEETINGS.—The Oversight Panel shall 
meet at the call of the Chairperson or a majority of 
its members. 
(d) STAFF.— 
(1) IN GENERAL.—The Oversight Panel may 
appoint and fix the pay of any personnel as the 
Commission considers appropriate. 
(2) EXPERTS AND CONSULTANTS.—The Oversight 
Panel may procure temporary and intermittent 
services under section 3109(b) of title 5, United 
States Code. 
(3) STAFF OF AGENCIES.—Upon request of the 
Oversight Panel, the head of any Federal department 
or agency may detail, on a reimbursable basis, 
any of the personnel of that department or agency 
to the Oversight Panel to assist it in carrying out its 
duties under this Act. 
(e) POWERS.— 
(1) HEARINGS AND SESSIONS.—The Oversight 
Panel 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 Panel 
considers appropriate and may administer oaths or 
affirmations to witnesses appearing before it. 

75 

(2) POWERS OF MEMBERS AND AGENTS.—Any 
member or agent of the Oversight Panel may, if authorized 
by the Oversight Panel, take any action 
which the Oversight Panel is authorized to take by 
this section. 
(3) OBTAINING OFFICIAL DATA.—The Oversight 
Panel may secure directly from any department 
or agency of the United States information 
necessary to enable it to carry out this section. Upon 
request of the Chairperson of the Oversight Panel, 
the head of that department or agency shall furnish 
that 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 OF APPROPRIATIONS.— 
There is authorized to be appropriated to the Oversight 
Panel such sums as may be necessary for any 
fiscal year, half of which shall be derived from the 
applicable account of the House of Representatives, 

76 

and half of which shall be derived from the contingent 
fund of the Senate. 

(2) REIMBURSEMENT OF AMOUNTS.—An 
amount equal to the expenses of the Oversight Panel 
shall be promptly transferred by the Secretary, from 
time to time upon the presentment of a statement 
of such expenses by the Chairperson of the Oversight 
Panel, from funds made available to the Secretary 
under this Act to the applicable fund of the 
House of Representatives and the contingent fund of 
the Senate, as appropriate, as reimbursement for 
amounts expended from such account and fund 
under paragraph (1). 

SEC. 126. FDIC AUTHORITY. 

(a) IN GENERAL.—Section 18(a) of the Federal Deposit 
Insurance Act (12 U.S.C. 1828(a)) is amended by 
adding at the end the following new paragraph: 
‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC 
NAMES, AND MISREPRESENTATION TO INDICATE INSURED 
STATUS.— 

‘‘(A) PROHIBITION ON FALSE ADVERTISING 
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 such 

77 

deposit liability, obligation, certificate, or share 
is not insured or guaranteed by the Corpora
tion— 
‘‘(i) by using the terms ‘Federal Deposit’, 
‘Federal Deposit Insurance’, ‘Federal 
Deposit Insurance Corporation’, any 
combination of such terms, or the abbreviation 
‘FDIC’ as part of the business 
name or firm name of any person, including 
any corporation, partnership, business 
trust, association, or other business entity; 
or 
‘‘(ii) by using such terms or any other 
terms, sign, or symbol as part of an advertisement, 
solicitation, or other document. 
‘‘(B) PROHIBITION ON MISREPRESENTA
TIONS OF INSURED STATUS.—No person may 
knowingly misrepresent— 
‘‘(i) that any deposit liability, obligation, 
certificate, or share is insured, under 
this 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, obliga

78 

tion, certificate, or share is insured under 
this 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 APPROPRIATE 
FEDERAL BANKING AGENCY.—The appropriate 
Federal banking agency shall have enforcement 
authority in the case of a violation of this paragraph 
by any person for which the agency is the 
appropriate Federal banking agency, or any institution-
affiliated party thereof. 

‘‘(D) CORPORATION AUTHORITY IF THE 
APPROPRIATE FEDERAL BANKING AGENCY 
FAILS TO FOLLOW RECOMMENDATION.— 

‘‘(i) RECOMMENDATION.—The Corporation 
may recommend in writing to the 
appropriate Federal banking agency that 
the agency take any enforcement action 
authorized under section 8 for purposes of 
enforcement of this paragraph with respect 
to any person for which the agency is the 
appropriate Federal banking agency or any 
institution-affiliated party thereof. 

‘‘(ii) AGENCY RESPONSE.—If the appropriate 
Federal banking agency does not, 

79 

within 30 days of the date of receipt of a 
recommendation under clause (i), take the 
enforcement action with respect to this 
paragraph recommended by the Corporation 
or provide a plan acceptable to the 
Corporation for responding to the situation 
presented, the Corporation may take the 
recommended enforcement action against 
such person or institution-affiliated party. 
‘‘(E) ADDITIONAL AUTHORITY.—In addition 
to its authority under subparagraphs (C) 
and (D), for purposes of this paragraph, the 
Corporation shall have, in the same manner and 
to the same extent as with respect to a State 
nonmember insured bank— 
‘‘(i) jurisdiction over— 
‘‘(I) any person other than a person 
for which another agency is the 
appropriate Federal banking agency 
or any institution-affiliated party 
thereof; and 
‘‘(II) any person that aids or 
abets a violation of this paragraph by 
a person described in subclause (I); 
and 

80 

‘‘(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 ACTIONS PRESERVED.—No 
provision of this paragraph shall be construed 
as barring any action otherwise available, under 
the laws of the United States or any State, to 
any Federal or State agency or individual.’’. 

(b) ENFORCEMENT ORDERS.—Section 8(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818(c)) is 
amended by adding at the end the following new paragraph: 
‘‘(4) FALSE ADVERTISING OR MISUSE OF 
NAMES TO INDICATE INSURED STATUS.— 
‘‘(A) TEMPORARY ORDER.— 

‘‘(i) IN GENERAL.—If a notice of 
charges served under subsection (b)(1) 
specifies on the basis of particular facts 
that any person engaged or is engaging in 
conduct described in section 18(a)(4), the 

81 

Corporation or other appropriate Federal 
banking agency may issue a temporary 
order requiring— 

‘‘(I) the immediate cessation of 
any activity or practice described, 
which gave rise to the notice of 
charges; and 
‘‘(II) affirmative action to prevent 
any further, or to remedy any existing, 
violation. 
‘‘(ii) EFFECT OF ORDER.—Any tem
porary order issued under this subparagraph 
shall take effect upon service. 
‘‘(B) EFFECTIVE PERIOD OF TEMPORARY 
ORDER.—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 of 
charges— 

‘‘(i) until such time as the Corporation 
or other appropriate Federal banking 
agency dismisses the charges specified in 
such notice; or 

82 

‘‘(ii) if a cease-and-desist order is 
issued against such person, until the effective 
date of such order. 
‘‘(C) CIVIL MONEY PENALTIES.—Any vio
lation of section 18(a)(4) shall be subject to 
civil 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 this 
paragraph, the Corporation or other appropriate 
Federal banking agency shall not be required 
to demonstrate any loss to an insured 
depository institution.’’. 

(c) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—
Section 13(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1823(c)) is amended by adding at the end 
the following new paragraph: 
‘‘(11) UNENFORCEABILITY OF CERTAIN AGREE-
MENTS.—No provision contained in any existing or 
future standstill, confidentiality, or other agreement 
that, directly or indirectly— 

‘‘(A) affects, restricts, or limits the ability 
of any person to offer to acquire or acquire, 
‘‘(B) prohibits any person from offering to 
acquire or acquiring, or 

83 

‘‘(C) prohibits any person from using any 
previously disclosed information in connection 
with any such offer to acquire or acquisition of, 
all or part of any insured depository institution, including 
any liabilities, assets, or interest therein, in 
connection with any transaction in which the Corporation 
exercises its authority under section 11 or 
13, shall be enforceable against or impose any liability 
on such person, as such enforcement or liability 
shall be contrary to public policy.’’. 

(d) TECHNICAL AND CONFORMING AMENDMENTS.— 
Section 18 of the Federal Deposit Insurance Act (12 
U.S.C. 1828) is amended— 
(1) in subsection (a)(3)— 
(A) by striking ‘‘this subsection’’ the first 
place 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 ‘‘REPRESENTATIONS 
OF DEPOSIT INSURANCE.—’’. 

84 

SEC. 127. COOPERATION WITH THE FBI. 

Any Federal financial regulatory agency shall cooperate 
with the Federal Bureau of Investigation and other 
law 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 AUTHOR
ITY. 

(a) IN GENERAL.—Not later than 7 days after the 
date on which the Board exercises its authority under the 
third paragraph of section 13 of the Federal Reserve Act 
(12 U.S.C. 343; relating to discounts for individuals, partnerships, 
and corporations) the Board shall provide to the 
Committee on Banking, Housing, and Urban Affairs of 
the Senate and the Committee on Financial Services of 
the House of Representatives a report which includes— 
(1) the justification for exercising the authority; 
and 
(2) the specific terms of the actions of the 
Board, including the size and duration of the lending, 
available information concerning the value of 
any collateral held with respect to such a loan, the 

85 

recipient of warrants or any other potential equity in 
exchange for the loan, and any expected cost to the 
taxpayers for such exercise. 

(b) PERIODIC UPDATES.—The Board shall provide 
updates to the Committees specified in subsection (a) not 
less frequently than once every 60 days while the subject 
loan 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 the 
loan. 
(c) CONFIDENTIALITY.—The information submitted 
to the Congress under this section may be kept confidential, 
upon the written request of the Chairman of the 
Board, in which case it shall made available only to the 
Chairpersons and Ranking Members of the Committees 
described in subsection (a). 
(d) APPLICABILITY.—The provisions of this section 
shall be in force for all uses of the authority provided 
under section 13 of the Federal Reserve Act occurring 
during the period beginning on March 1, 2008 and ending 
on the after the date of enactment of this Act, and reports 
described in subsection (a) shall be required beginning not 

86 

later than 30 days after that date of enactment, with respect 
to any such exercise of authority. 

(e) SHARING OF INFORMATION.—Any reports required 
under this section shall also be submitted to the 
Congressional Oversight Panel established under section 
125. 

SEC. 130. TECHNICAL CORRECTIONS. 

(a) IN GENERAL.—Section 128(b)(2) of the Truth in 
Lending Act (15 U.S.C. 1638(b)(2)), as amended by section 
2502 of the Mortgage Disclosure Improvement Act 
of 2008 (Public Law 110-289), is amended— 
(1) in subparagraph (A), by striking ‘‘In the 
case’’ and inserting ‘‘Except as provided in subparagraph 
(G), in the case’’; and 
(2) by amending subparagraph (G) to read as 
follows: 
‘‘(G)(i) In the case of an extension of cred
it relating to a plan described in section 
101(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) shall 
be made in accordance with regulations of 

87 

the Board under section 121(c) before 
such credit is extended, or shall be delivered 
or placed in the mail not later than 
3 business days after the date on which 
the creditor receives the written application 
of the consumer for such credit, whichever 
is earlier. 
‘‘(ii) If a disclosure statement furnished 
within 3 business days of the written application 
(as provided under clause (i)(II)) contains 
an annual percentage rate which is subsequently 
rendered inaccurate, within the meaning 
of section 107(c), the creditor shall furnish 
another disclosure statement at the time of settlement 
or consummation of the transaction.’’. 

(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect as if included in the 
amendments made by section 2502 of the Mortgage Disclosure 
Improvement Act of 2008 (Public Law 110-289). 

SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSE
MENT. 

(a) REIMBURSEMENT.—The Secretary shall reimburse 
the Exchange Stabilization Fund established under 
section 5302 of title 31, United States Code, for any funds 
used for the temporary guaranty program for the United 

88 

States money market mutual fund industry, from funds 
under this Act. 

(b) LIMITS ON USE OF EXCHANGE STABILIZATION 
FUND.—The Secretary is prohibited from using the Exchange 
Stabilization Fund for the establishment of any 
future guaranty programs for the United States money 
market mutual fund industry. 

SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC
COUNTING. 

(a) AUTHORITY.—The Securities and Exchange Commission 
shall have the authority under the securities laws 
(as such term is defined in section 3(a)(47) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, 
by rule, regulation, or order, the application of 
Statement Number 157 of the Financial Accounting 
Standards Board for any issuer (as such term is defined 
in section 3(a)(8) of such Act) or with respect to any class 
or category of transaction if the Commission determines 
that is necessary or appropriate in the public interest and 
is consistent with the protection of investors. 
(b) SAVINGS PROVISION.—Nothing in subsection (a) 
shall be construed to restrict or limit any authority of the 
Securities and Exchange Commission under securities 
laws as in effect on the date of enactment of this Act. 

89 

SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING. 

(a) STUDY.—The Securities and Exchange Commission, 
in consultation with the Board and the Secretary, 
shall conduct a study on mark-to-market accounting 
standards as provided in Statement Number 157 of the 
Financial Accounting Standards Board, as such standards 
are applicable to financial institutions, including depository 
institutions. Such a study shall consider at a minimum— 
(1) the effects of such accounting standards on 
a financial institution’s balance sheet; 
(2) the impacts of such accounting on bank failures 
in 2008; 
(3) the impact of such standards on the quality 
of financial information available to investors; 
(4) the process used by the Financial Accounting 
Standards Board in developing accounting 
standards; 
(5) the advisability and feasibility of modifications 
to such standards; and 
(6) alternative accounting standards to those 
provided in such Statement Number 157. 
(b) REPORT.—The Securities and Exchange Commission 
shall submit to Congress a report of such study before 
the end of the 90-day period beginning on the date of the 
enactment of this Act containing the findings and deter

90 

minations of the Commission, including such administrative 
and legislative recommendations as the Commission 
determines appropriate. 

SEC. 134. RECOUPMENT. 

Upon the expiration of the 5-year period beginning 
upon the date of the enactment of this Act, the Director 
of the Office of Management and Budget, in consultation 
with the Director of the Congressional Budget Office, shall 
submit a report to the Congress on the net amount within 
the Troubled Asset Relief Program under this Act. In any 
case where there is a shortfall, the President shall submit 
a legislative proposal that recoups from the financial industry 
an amount equal to the shortfall in order to ensure 
that the Troubled Asset Relief Program does not add to 
the deficit or national debt. 

SEC. 135. PRESERVATION OF AUTHORITY. 

With the exception of section 131, nothing in this Act 
may be construed to limit the authority of the Secretary 
or the Board under any other provision of law. 

TITLE II—BUDGET-RELATED 
PROVISIONS 

SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT 
AGENCIES. 

Upon request, and to the extent otherwise consistent 
with law, all information used by the Secretary in connec

91 

tion with activities authorized under this Act (including 
the records to which the Comptroller General is entitled 
under this Act) shall be made available to congressional 
support agencies (in accordance with their obligations to 
support the Congress as set out in their authorizing statutes) 
for the purposes of assisting the committees of Congress 
with conducting oversight, monitoring, and analysis 
of the activities authorized under this Act. 

SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND 
BUDGET AND THE CONGRESSIONAL BUDGET 
OFFICE. 

(a) REPORTS BY THE OFFICE OF MANAGEMENT AND 
BUDGET.—Within 60 days of the first exercise of the authority 
granted in section 101(a), but in no case later than 
December 31, 2008, and semiannually thereafter, the Office 
of Management and Budget shall report to the President 
and the Congress— 
(1) the estimate, notwithstanding section 
502(5)(F) of the Federal Credit Reform Act of 1990 
(2 U.S.C. 661a(5)(F)), as of the first business day 
that is at least 30 days prior to the issuance of the 
report, of the cost of the troubled assets, and guarantees 
of the troubled assets, determined in accordance 
with section 123; 

92 

(2) the information used to derive the estimate, 
including assets purchased or guaranteed, prices 
paid, revenues received, the impact on the deficit 
and debt, and a description of any outstanding commitments 
to purchase troubled assets; and 
(3) a detailed analysis of how the estimate has 
changed from the previous report. 
Beginning with the second report under subsection (a), the 
Office of Management and Budget shall explain the differences 
between the Congressional Budget Office estimates 
delivered in accordance with subsection (b) and 
prior Office of Management and Budget estimates. 

(b) REPORTS BY THE CONGRESSIONAL BUDGET OF-
FICE.—Within 45 days of receipt by the Congress of each 
report from the Office of Management and Budget under 
subsection (a), the Congressional Budget Office shall report 
to the Congress the Congressional Budget Office’s 
assessment of the report submitted by the Office of Management 
and Budget, including— 
(1) the cost of the troubled assets and guarantees 
of the troubled assets, 
(2) the information and valuation methods used 
to calculate such cost, and 
(3) the impact on the deficit and the debt. 

93 

(c) FINANCIAL EXPERTISE.—In carrying out the duties 
in this subsection or performing analyses of activities 
under this Act, the Director of the Congressional Budget 
Office may employ personnel and procure the services of 
experts and consultants. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary 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 the 
following new paragraph: 
‘‘(35) as supplementary materials, a separate 
analysis of the budgetary effects for all prior fiscal 
years, the current fiscal year, the fiscal year for 
which the budget is submitted, and ensuing fiscal 
years of the actions the Secretary of the Treasury 
has taken or plans to take using any authority provided 
in the Emergency Economic Stabilization Act 
of 2008, including— 
‘‘(A) an estimate of the current value of all 
assets purchased, sold, and guaranteed under 
the authority provided in the Emergency Economic 
Stabilization Act of 2008 using methodology 
required by the Federal Credit Reform 

94 

Act of 1990 (2 U.S.C. 661 et seq.) and section 
123 of the Emergency Economic Stabilization 
Act of 2008; 

‘‘(B) an estimate of the deficit, the debt 
held by the public, and the gross Federal debt 
using methodology required by the Federal 
Credit Reform Act of 1990 and section 123 of 
the Emergency Economic Stabilization Act of 
2008; 
‘‘(C) an estimate of the current value of all 
assets purchased, sold, and guaranteed under 
the authority provided in the Emergency Economic 
Stabilization Act of 2008 calculated on a 
cash basis; 
‘‘(D) a revised estimate of the deficit, the 
debt held by the public, and the gross Federal 
debt, substituting the cash-based estimates in 
subparagraph (C) for the estimates calculated 
under subparagraph (A) pursuant to the Federal 
Credit Reform Act of 1990 and section 123 
of the Emergency Economic Stabilization Act of 
2008; and 
‘‘(E) the portion of the deficit which can 
be attributed to any action taken by the Secretary 
using authority provided by the Emer

95 

gency Economic Stabilization Act of 2008 and 
the extent to which the change in the deficit 
since the most recent estimate is due to a reestimate 
using the methodology required by the 
Federal Credit Reform Act of 1990 and section 
123 of the Emergency Economic Stabilization 
Act of 2008.’’ 

(b) CONSULTATION.—In implementing this section, 
the Director of Office of Management and Budget shall 
consult periodically, but at least annually, with the Committee 
on the Budget of the House of Representatives, the 
Committee on the Budget of the Senate, and the Director 
of 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 the 
President. 

SEC. 204. EMERGENCY TREATMENT. 

All provisions of this Act are designated as an emergency 
requirement and necessary to meet emergency needs 
pursuant to section 204(a) of S. Con. Res 21 (110th Congress), 
the concurrent resolution on the budget for fiscal 
year 2008 and rescissions of any amounts provided in this 
Act shall not be counted for purposes of budget enforcement. 

96 

TITLE III—TAX PROVISIONS 
 
SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF 
CERTAIN PREFERRED STOCK. 
 
(a) IN GENERAL.—For purposes of the Internal Rev
enue Code of 1986, gain or loss from the sale or exchange 
of any applicable preferred stock by any applicable finan 
cial institution shall be treated as ordinary income or loss. 
(b) APPLICABLE PREFERRED STOCK.—For purposes 
of this section, the term ‘‘applicable preferred stock’’ 
means any stock— 
(1) which is preferred stock in— 
(A) the Federal National Mortgage Asso
ciation, established pursuant to the Federal Na
tional Mortgage Association Charter Act (12 
U.S.C. 1716 et seq.), or 
(B) the Federal Home Loan Mortgage 
Corporation, established pursuant to the Fed
eral Home Loan Mortgage Corporation Act (12 
U.S.C. 1451 et seq.), and 
(2) which— 
(A) was held by the applicable financial in
stitution on September 6, 2008, or 
(B) was sold or exchanged by the applica
ble financial institution on or after January 1, 
2008, and before September 7, 2008. 

97 

(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 in 
section 582(c)(2) of the Internal Revenue Code 
of 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.—In 
the case of— 
(A) a sale or exchange described in subsection 
(b)(2)(B), an entity shall be treated as 
an applicable financial institution only if it was 
an 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) of 

98 

paragraph (1) at all times during the period beginning 
on September 6, 2008, and ending on 
the date of the sale or exchange of the preferred 
stock. 

(d) SPECIAL RULE FOR CERTAIN PROPERTY NOT 
HELD ON SEPTEMBER 6, 2008.—The Secretary of the 
Treasury or the Secretary’s delegate may extend the application 
of this section to all or a portion of the gain or 
loss from a sale or exchange in any case where— 
(1) an applicable financial institution sells or 
exchanges applicable preferred stock after September 
6, 2008, which the applicable financial institution 
did not hold on such date, but the basis of 
which in the hands of the applicable financial institution 
at the time of the sale or exchange is the 
same as the basis in the hands of the person which 
held 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 during 
the period described in subsection (b)(2)(B). 
(e) REGULATORY AUTHORITY.—The Secretary of the 
Treasury or the Secretary’s delegate may prescribe such 

99 

guidance, rules, or regulations as are necessary to carry 
out the purposes of this section. 

(f) EFFECTIVE DATE.—This section shall apply to 
sales or exchanges occurring after December 31, 2007, in 
taxable years ending after such date. 

SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECU
TIVE COMPENSATION OF EMPLOYERS PAR
TICIPATING IN THE TROUBLED ASSETS RE
LIEF PROGRAM. 

(a) DENIAL OF DEDUCTION.—Subsection (m) of section 
162 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new paragraph: 
‘‘(5) SPECIAL RULE FOR APPLICATION TO EMPLOYERS 
PARTICIPATING IN THE TROUBLED ASSETS 
RELIEF PROGRAM.— 

‘‘(A) IN GENERAL.—In the case of an ap
plicable employer, no deduction shall be allowed 
under this chapter— 
‘‘(i) in the case of executive remuneration 
for any applicable taxable year which 
is attributable to services performed by a 
covered executive during such applicable 
taxable year, to the extent that the amount 
of such remuneration exceeds $500,000, or 

100 

‘‘(ii) in the case of deferred deduction 
executive remuneration for any taxable 
year for services performed during any applicable 
taxable year by a covered executive, 
to the extent that the amount of such 
remuneration exceeds $500,000 reduced 
(but not below zero) by the sum of— 
‘‘(I) the executive remuneration 
for such applicable taxable year, plus 
‘‘(II) the portion of the deferred 
deduction executive remuneration for 
such services which was taken into account 
under this clause in a preceding 
taxable year. 
‘‘(B) APPLICABLE EMPLOYER.—For pur
poses of this paragraph— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), the term ‘applicable 
employer’ means any employer from whom 
1 or more troubled assets are acquired 
under a program established by the Secretary 
under section 101(a) of the Emergency 
Economic Stabilization Act of 2008 
if the aggregate amount of the assets so 

101 

acquired for all taxable years exceeds 
$300,000,000. 

‘‘(ii) DISREGARD OF CERTAIN ASSETS 
SOLD THROUGH DIRECT PURCHASE.—If 
the only sales of troubled assets by an employer 
under the program described in 
clause (i) are through 1 or more direct 
purchases (within the meaning of section 
113(c) of the Emergency Economic Stabilization 
Act of 2008), such assets shall 
not be taken into account under clause (i) 
in determining whether the employer is an 
applicable employer for purposes of this 
paragraph. 
‘‘(iii) AGGREGATION RULES.—Two or 
more persons who are treated as a single 
employer under subsection (b) or (c) of 
section 414 shall be treated as a single employer, 
except that in applying section 
1563(a) for purposes of either such subsection, 
paragraphs (2) and (3) thereof 
shall be disregarded. 
‘‘(C) APPLICABLE TAXABLE YEAR.—For 
purposes of this paragraph, the term ‘applicable 

102 

taxable year’ means, with respect to any employer— 
‘‘(i) the first taxable year of the employer— 
‘‘(I) which includes any portion 
of the period during which the authorities 
under section 101(a) of the 
Emergency Economic Stabilization 
Act of 2008 are in effect (determined 
under section 120 thereof), and 
‘‘(II) in which the aggregate 
amount of troubled assets acquired 
from the employer during the taxable 
year pursuant to such authorities 
(other than assets to which subpara
graph (B)(ii) applies), when added to 
the aggregate amount so acquired for 
all preceding taxable years, exceeds 
$300,000,000, and 
‘‘(ii) any subsequent taxable year 
which includes any portion of such period. 
‘‘(D) COVERED EXECUTIVE.—For pur
poses of this paragraph— 

103 

‘‘(i) IN GENERAL.—The term ‘covered 
executive’ means, with respect to any applicable 
taxable year, any employee— 

‘‘(I) who, at any time during the 
portion of the taxable year during 
which the authorities under section 
101(a) of the Emergency Economic 
Stabilization Act of 2008 are in effect 
(determined under section 120 thereof), 
is the chief executive officer of the 
applicable employer or the chief financial 
officer of the applicable employer, 
or an individual acting in either such 
capacity, or 
‘‘(II) who is described in clause 
(ii). 
‘‘(ii) HIGHEST COMPENSATED EM-
PLOYEES.—An employee is described in 
this clause if the employee is 1 of the 3 
highest compensated officers of the applicable 
employer for the taxable year (other 
than an individual described in clause 
(i)(I)), determined— 
‘‘(I) on the basis of the shareholder 
disclosure rules for compensa

104 

tion under the Securities Exchange 
Act of 1934 (without regard to whether 
those rules apply to the employer), 
and 
‘‘(II) by only taking into account 
employees employed during the portion 
of the taxable year described in 
clause (i)(I). 
‘‘(iii) EMPLOYEE REMAINS COVERED 
EXECUTIVE.—If an employee is a covered 
executive with respect to an applicable employer 
for any applicable taxable year, such 
employee shall be treated as a covered executive 
with respect to such employer for 
all subsequent applicable taxable years and 
for all subsequent taxable years in which 
deferred deduction executive remuneration 
with respect to services performed in all 
such applicable taxable years would (but 
for this paragraph) be deductible. 
‘‘(E) EXECUTIVE REMUNERATION.—For 
purposes of this paragraph, the term ‘executive 
remuneration’ means the applicable employee 
remuneration of the covered executive, as determined 
under paragraph (4) without regard to 

105 

subparagraphs (B), (C), and (D) thereof. Such 
term shall not include any deferred deduction 
executive remuneration with respect to services 
performed in a prior applicable taxable year. 

‘‘(F) DEFERRED DEDUCTION EXECUTIVE 
REMUNERATION.—For purposes of this paragraph, 
the term ‘deferred deduction executive 
remuneration’ means remuneration which would 
be executive remuneration for services performed 
in an applicable taxable year but for the 
fact that the deduction under this chapter (determined 
without regard to this paragraph) for 
such remuneration is allowable in a subsequent 
taxable year. 

‘‘(G) COORDINATION.—Rules similar to 
the 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, or 
regulations as are necessary to carry out the 
purposes of this paragraph and the Emergency 
Economic Stabilization Act of 2008, including 
the extent to which this paragraph applies in 

106 

the case of any acquisition, merger, or reorganization 
of an applicable employer.’’. 

(b) GOLDEN PARACHUTE RULE.—Section 280G of 
the 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 FOR APPLICATION TO EMPLOYERS 
PARTICIPATING IN THE TROUBLED ASSETS RELIEF 
PROGRAM.— 
‘‘(1) IN GENERAL.—In the case of the severance 
from employment of a covered executive of an 
applicable employer during the period during which 
the authorities under section 101(a) of the Emergency 
Economic Stabilization Act of 2008 are in effect 
(determined under section 120 of such Act), this 
section 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 be 
treated as a reference to a covered executive. 
‘‘(B) Any reference to a change described 
in subsection (b)(2)(A)(i) shall be treated as a 
reference to an applicable severance from em

107 

ployment of a covered executive, and any reference 
to a payment contingent on such a 
change shall be treated as a reference to any 
payment made during an applicable taxable 
year of the employer on account of such applicable 
severance from employment. 
‘‘(C) Any reference to a corporation shall 
be treated as a reference to an applicable employer. 
‘‘(D) The provisions of subsections 
(b)(2)(C), (b)(4), (b)(5), and (d)(5) shall not 
apply. 
‘‘(2) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection: 
‘‘(A) DEFINITIONS.—Any term used in 
this subsection which is also used in section 
162(m)(5) shall have the meaning given such 
term by such section. 
‘‘(B) APPLICABLE SEVERANCE FROM EM-
PLOYMENT.—The term ‘applicable severance 
from employment’ means any severance from 
employment of a covered executive— 
‘‘(i) by reason of an involuntary termination 
of the executive by the employer, 
or 

108 

‘‘(ii) in connection with any bankruptcy, 
liquidation, or receivership of the 
employer. 
‘‘(C) COORDINATION AND OTHER 
RULES.— 
‘‘(i) IN GENERAL.—If a payment 
which is treated as a parachute payment 
by reason of this subsection is also a parachute 
payment determined without regard 
to this subsection, this subsection shall not 
apply to such payment. 
‘‘(ii) REGULATORY AUTHORITY.—The 
Secretary may prescribe such guidance, 
rules, or regulations as are necessary— 
‘‘(I) to carry out the purposes of 
this subsection and the Emergency 
Economic Stabilization Act of 2008, 
including the extent to which this subsection 
applies in the case of any acquisition, 
merger, or reorganization of 
an applicable employer, 
‘‘(II) to apply this section and 
section 4999 in cases where one or 
more payments with respect to any individual 
are treated as parachute pay

109 

ments by reason of this subsection, 
and other payments with respect to 
such individual are treated as parachute 
payments under this section 
without regard to this subsection, and 
‘‘(III) to prevent the avoidance of 
the application of this section through 
the mischaracterization of a severance 
from employment as other than an 
applicable severance from employment.’’. 


(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendment made by 
subsection (a) shall apply to taxable years ending on 
or 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 during 
the period during which the authorities under section 
101(a) of this Act are in effect (determined 
under section 120 of this Act). 

110 


SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM 
DISCHARGE OF QUALIFIED PRINCIPAL RESI
DENCE INDEBTEDNESS. 

(a) EXTENSION.—Subparagraph (E) of section 
108(a)(1) of the Internal Revenue Code of 1986 is amended 
by striking ‘‘January 1, 2010’’ and inserting ‘‘January 
1, 2013’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to discharges of indebtedness 
occurring on or after January 1, 2010.

posted by cboldt  # 9/28/2008 06:40:00 PM