Free Market Protection Act of 2008 - Government-Sponsored Enterprises Free Market Reform Act of 2008 - Directs the Director of the Federal Housing Finance Agency (FHFA) to: (1) determine the financial viability of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (government-sponsored enterprises or GSEs); (2) terminate the conservatorship of a GSE that is financially viable; or (3) appoint the FHFA as receiver for a GSE that is not financially viable.
Amends the Housing and Community Development Act of 1992 to limit the mortgage assets held by a GSE upon its emergence from conservatorship, including an increase in its minimum capital requirements.
Amends the Economic Stimulus Act of 2008 to repeal the temporary increase in conforming loan limits applicable to the GSEs.
Prohibits the GSEs from purchasing mortgages that exceed the median area home price.
Requires the GSEs to pay state and local taxes.
Directs the Comptroller General to study and report to Congress on recoupment of costs for the federal guarantee regarding the GSEs.
Requires the wind down of operations and dissolution of a GSE whose charter has not been renewed.
Price Stability Act of 2008 - Amends the Federal Reserve Act to direct the Board of Governors of the Federal Reserve System and the Federal Open Market Committee to: (1) establish an explicit numerical definition of "price stability"; and (2) maintain a monetary policy that promotes long-term price stability.
Repeals the Full Employment and Balanced Growth Act of 1978 (Humphrey-Hawkins Act).
Amends the Employment Act of 1946 and the Congressional Budget Act of 1974 to reflect the changes made by this Act.
Amends the Internal Revenue Code to: (1) prescribe a temporary zero percent capital gains rate for individuals and corporations; (2) substitute an indexed basis for the adjusted basis of certain assets in order to determine gain or loss upon disposition; (3) provide a five-year carryback of certain losses for taxable years ending during 2007, 20008, and 2009; and (4) modify the deduction for dividends received from controlled foreign corporations.
Directs the Securities and Exchange Commission to suspend the application of fair value reporting standards to troubled assets held by financial institutions.
Directs the General Accountability Office to analyze and report to certain congressional committees on the effect of fair value accounting standards upon financial institutions.
Makes the Secretary of the Treasury responsible to determine the terms of a program to insure payment of up to 100% of principal and interest on each mortgage-backed security held by a financial institution on or before September 24, 2008.
Establishes a Mortgage-Backed Securities Fund.
Treats gain or loss from the sale or exchange of preferred GSE stock by specified financial institutions as ordinary income or loss.
Requires an officer of an institution to pay to the Department of the Treasury any funds received as incentive-based or equity-based compensation during a specified period before the year in which the institution is subject to government intervention.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7223 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 7223
To suspend the capital gains tax, schedule the government-sponsored
enterprises for privatization, repeal the Humphrey-Hawkins Full
Employment Act, and suspend mark-to-market accounting requirements, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 29, 2008
Mr. Hensarling (for himself, Mr. Pearce, Mrs. Blackburn, Mr. Gohmert,
Mr. Brady of Texas, Mr. Doolittle, Mr. Gingrey, Mr. Jordan of Ohio,
Mrs. Bachmann, Mr. Westmoreland, Mr. McCaul of Texas, Mrs. Schmidt, Mr.
Sessions, Mr. Conaway, Mr. Garrett of New Jersey, Mr. Franks of
Arizona, Mr. Burton of Indiana, Mr. Flake, Mr. Aderholt, Mr. Price of
Georgia, Mr. Lamborn, Mr. Bishop of Utah, Mr. David Davis of Tennessee,
Mr. Broun of Georgia, Mr. Culberson, Mr. Deal of Georgia, Mrs. Myrick,
Mr. Kuhl of New York, Ms. Foxx, Mr. McCotter, Mr. Manzullo, Mr.
Marchant, Mr. Carter, Mr. Barrett of South Carolina, Mr. Pitts, Mr.
Thornberry, Mr. Wilson of South Carolina, Mr. Bartlett of Maryland, Mr.
Radanovich, Mr. Pence, Mr. Feeney, Mr. Kingston, Mr. Sullivan, Mrs.
Musgrave, Mr. McHenry, Mr. Akin, Mr. Sam Johnson of Texas, Mr. Linder,
Mr. Rehberg, Mr. Goodlatte, and Mr. Scalise) introduced the following
bill; which was referred to the Committee on Financial Services, and in
addition to the Committees on Ways and Means, the Budget, Education and
Labor, and Rules, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To suspend the capital gains tax, schedule the government-sponsored
enterprises for privatization, repeal the Humphrey-Hawkins Full
Employment Act, and suspend mark-to-market accounting requirements, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
Short Title.--This Act may be cited as the ``Free Market Protection
Act of 2008''.
TITLE I--PRIVATIZATION OF GOVERNMENT-SPONSORED ENTERPRISES
SEC. 101. SHORT TITLE.
This title may be cited as the ``Government-Sponsored Enterprises
Free Market Reform Act of 2008''.
SEC. 102. DEFINITIONS.
For purposes of this title, the following definitions shall apply:
(1) Charter.--The term ``charter'' means--
(A) with respect to the Federal National Mortgage
Association, the Federal National Mortgage Association
Charter Act (12 U.S.C. 1716 et seq.); and
(B) with respect to the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1451 et seq.).
(2) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(3) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association; and
(B) the Federal Home Loan Mortgage Corporation.
(4) Guarantee.--The term ``guarantee'' means, with respect
to an enterprise, the credit support of the enterprise that is
provided by the Federal Government through its charter as a
government-sponsored enterprise.
SEC. 103. TERMINATION OF CURRENT CONSERVATORSHIP.
(a) In General.--Upon the expiration of the period referred to in
subsection (b), the Director of the Federal Housing Finance Agency
shall determine, with respect to each enterprise, if the enterprise is
financially viable at that time and--
(1) if the Director determines that the enterprise is
financially viable, immediately take all actions necessary to
terminate the conservatorship for each of the enterprises; or
(2) if the Director determines that the enterprise is not
financially viable, immediately appoint the Federal Housing
Finance Agency as receiver under section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
and carry out such receivership under the authority of such
section.
(b) Timing.--The period referred to in this subsection is, with
respect to an enterprise--
(1) except as provided in paragraph (2), the 24-month
beginning upon the date of the enactment of this Act; or
(2) if the Director determines before the expiration of the
period referred to in paragraph (1) that the financial markets
would be adversely affected without the extension of such
period under this paragraph with respect to that enterprise,
the 30-month period beginning upon the date of the enactment of
this Act.
(c) Financial Viability.--The Director may not determine that an
enterprise is financially viable for purposes of subsection (a) if the
Director determines that any of the conditions for receivership set
forth in paragraph (3) or (4) of section 1367(a) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4617(a)) exists at the time with respect to the enterprise.
SEC. 104. LIMITATION OF ENTERPRISE AUTHORITY UPON EMERGENCE FROM
CONSERVATORSHIP.
(a) Revised Authority.--Upon the expiration of the period referred
to in section 103(b), if the Director makes the determination under
section 103(a)(1), the following provisions shall take effect:
(1) Portfolio limitations.--Subtitle B of title XIII of the
Housing and Community Development Act of 1992 (12 U.S.C. 4611
et seq.) is amended by adding at the end the following new
section:
``SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF ENTERPRISES.
``(a) Restriction.--No enterprise shall own, as of any applicable
date in this subsection or thereafter, mortgage assets in excess of--
``(1) upon the expiration of the period referred to in
section 103(b) of the Government-Sponsored Enterprises Free
Market Reform Act of 2008, $850,000,000,000; or
``(2) on December 31 of each year thereafter, 80.0 percent
of the aggregate amount of mortgage assets of the enterprise as
of December 31 of the immediately preceding calendar year;
except that in no event shall an enterprise be required under this
section to own less than $250,000,000,000 in mortgage assets.
``(b) Definition of Mortgage Assets.--For purposes of this section,
the term `mortgage assets' means, with respect to an enterprise, assets
of such enterprise consisting of mortgages, mortgage loans, mortgage-
related securities, participation certificates, mortgage-backed
commercial paper, obligations of real estate mortgage investment
conduits and similar assets, in each case to the extent such assets
would appear on the balance sheet of such enterprise in accordance with
generally accepted accounting principles in effect in the United States
as of September 7, 2008 (as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board from time to
time; and without giving any effect to any change that may be made
after September 7, 2008, in respect of Statement of Financial
Accounting Standards No. 140 or any similar accounting standard).''.
(2) Increase in minimum capital requirement.--Section 1362
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4612), as amended by section
1111 of the Housing and Economic Recovery Act of 2008 (Public
Law 110-289), is amended--
(A) in subsection (a), by striking ``For purposes
of this subtitle, the minimum capital level for each
enterprise shall be'' and inserting ``The minimum
capital level established under subsection (g) for each
enterprise may not be lower than'';
(B) in subsection (c)--
(i) by striking ``subsections (a) and'' and
inserting ``subsection'';
(ii) by striking ``regulated entities'' the
first place such term appears and inserting
``Federal Home Loan Banks'';
(iii) by striking ``for the enterprises,'';
(iv) by striking ``, or for both the
enterprises and the banks,'';
(v) by striking ``the level specified in
subsection (a) for the enterprises or''; and
(vi) by striking ``the regulated entities
operate'' and inserting ``such banks operate'';
(C) in subsection (d)(1)--
(i) by striking ``subsections (a) and'' and
inserting ``subsection''; and
(ii) by striking ``regulated entity'' each
place such term appears and inserting ``Federal
home loan bank'';
(D) in subsection (e), by striking ``regulated
entity'' each place such term appears and inserting
``Federal home loan bank'';
(E) in subsection (f)--
(i) by striking ``the amount of core
capital maintained by the enterprises,''; and
(ii) by striking ``regulated entities'' and
inserting ``banks''; and
(F) by adding at the end the following new
subsection:
``(g) Establishment of Revised Minimum Capital Levels.--
``(1) In general.--The Director shall cause the enterprises
to achieve and maintain adequate capital by establishing
minimum levels of capital for such the enterprises and by using
such other methods as the Director deems appropriate.
``(2) Authority.--The Director shall have the authority to
establish such minimum level of capital for an enterprise in
excess of the level specified under subsection (a) as the
Director, in the Director's discretion, deems to be necessary
or appropriate in light of the particular circumstances of the
enterprise.
``(h) Failure To Maintain Revised Minimum Capital Levels.--
``(1) Unsafe and unsound practice or condition.--Failure of
a enterprise to maintain capital at or above its minimum level
as established pursuant to subsection (c) of this section may
be deemed by the Director, in his discretion, to constitute an
unsafe and unsound practice or condition within the meaning of
this title.
``(2) Directive to achieve capital level.--
``(A) Authority.--In addition to, or in lieu of,
any other action authorized by law, including paragraph
(1), the Director may issue a directive to an
enterprise that fails to maintain capital at or above
its required level as established pursuant to
subsection (c) of this section.
``(B) Plan.--Such directive may require the
enterprise to submit and adhere to a plan acceptable to
the Director describing the means and timing by which
the enterprise shall achieve its required capital
level.
``(C) Enforcement.--Any such directive issued
pursuant to this paragraph, including plans submitted
pursuant thereto, shall be enforceable under the
provisions of subtitle C of this title to the same
extent as an effective and outstanding order issued
pursuant to subtitle C of this title which has become
final.
``(3) Adherence to plan.--
``(A) Consideration.--The Director may consider
such enterprise's progress in adhering to any plan
required under this subsection whenever such enterprise
seeks the requisite approval of the Director for any
proposal which would divert earnings, diminish capital,
or otherwise impede such enterprise's progress in
achieving its minimum capital level.
``(B) Denial.--The Director may deny such approval
where it determines that such proposal would adversely
affect the ability of the enterprise to comply with
such plan.''.
(3) Repeal of increases to conforming loan limits.--
(A) Repeal of temporary increase in economic
stimulus act.--Section 201 of the Economic Stimulus Act
of 2008 (Public Law 110-185) is hereby repealed.
(B) Repeal of general limit and permanent high-cost
area increase.--Paragraph (2) of section 302(b) of the
Federal National Mortgage Association Charter Act (12
U.S.C. 1717(b)(2)) and paragraph (2) of section 305(a)
of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) are each amended to read as such
sections were in effect immediately before the
enactment of the Housing and Economic Recovery Act of
2008 (Public Law 110-289).
(C) Repeal of new housing price index.--Section
1322 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992, as added by section
1124(d) of the Housing and Economic Recovery Act of
2008 (Public Law 110-289), is hereby repealed.
(D) Repeal.--Section 1124 of the Housing and
Economic Recovery Act of 2008 (Public Law 110-289) is
hereby repealed.
(E) Establishment of conforming loan limit.--For
the year in which the expiration of the period referred
to in section 103(b) of this title occurs, the
limitations governing the maximum original principal
obligation of conventional mortgages that may be
purchased by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation,
referred to in section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) and section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)),
respectively, shall be considered to be--
(i) $417,000 for a mortgage secured by a
single-family residence,
(ii) $533,850 for a mortgage secured by a
2-family residence,
(iii) $645,300 for a mortgage secured by a
3-family residence, and
(iv) $801,950 for a mortgage secured by a
4-family residence,
and such limits shall be adjusted effective each
January 1 thereafter in accordance with such sections
302(b)(2) and 305(a)(2).
(F) Prohibition of purchase of mortgages exceeding
median area home price.--
(i) Fannie mae.--Section 302(b)(2) of the
Federal National Mortgage Association Charter
Act (12 U.S.C. 1717(b)(2)) is amended by adding
at the end the following new sentence:
``Notwithstanding any other provision of this
title, the corporation may not purchase any
mortgage for a property having a principal
obligation that exceeds the median home price,
for properties of the same size, for the area
in which such property subject to the mortgage
is located.''.
(ii) Freddie mac.--Section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) is amended by adding at the
end the following new sentence:
``Notwithstanding any other provision of this
title, the Corporation may not purchase any
mortgage for a property having a principal
obligation that exceeds the median home price,
for properties of the same size, for the area
in which such property subject to the mortgage
is located.''.
(4) Requirement to pay state and local taxes.--
(A) Fannie mae.--Paragraph (2) of section 309(c) of
the Federal National Mortgage Association Charter Act
(12 U.S.C. 1723a(c)(2)) is amended--
(i) by striking ``shall be exempt from''
and inserting ``shall be subject to''; and
(ii) by striking ``except that any'' and
inserting ``and any''.
(B) Freddie mac.--Section 303(e) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1452(e))
is amended--
(i) by striking ``shall be exempt from''
and inserting ``shall be subject to''; and
(ii) by striking ``except that any'' and
inserting ``and any''.
(5) Repeals relating to registration of securities.--
(A) Fannie mae.--
(i) Mortgage-backed securities.--Section
304(d) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(d)) is
amended by striking the fourth sentence.
(ii) Subordinate obligations.--Section
304(e) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(e)) is
amended by striking the fourth sentence.
(B) Freddie mac.--Section 306 of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1455) is
amended by striking subsection (g).
(6) Recoupment of costs for federal guarantee.--
(A) Assessments.--The Director of the Federal
Housing Finance Agency shall establish and collect from
each enterprise assessments in the amount determined
under subparagraph (B). In determining the method and
timing for making such assessments, the Director shall
take into consideration the determinations and
conclusions of the study under subsection (b) of this
section.
(B) Determination of costs of guarantee.--
Assessments under subparagraph (A) with respect to an
enterprise shall be in such amount as the Director
determines necessary to recoup to the Federal
Government the full value of the benefit the enterprise
receives from the guarantee provided by the Federal
Government for the obligations and financial viability
of the enterprise, based upon the dollar value of such
benefit in the market to such enterprise when not
operating under conservatorship or receivership. To
determine such amount, the Director shall establish a
risk-based pricing mechanism as the Director considers
appropriate, taking into consideration the
determinations and conclusions of the study under
subsection (b) of this section.
(C) Treatment of recouped amounts.--The Director
shall cover into the general fund of the Treasury any
amounts received from assessments made under this
paragraph.
(b) GAO Study Regarding Recoupment of Costs for Federal Government
Guarantee.--The Comptroller General of the United States shall conduct
a study to determine a risk-based pricing mechanism to accurately
determine the value of the benefit the enterprises receive from the
guarantee provided by the Federal Government for the obligations and
financial viability of the enterprises. Such study shall establish a
dollar value of such benefit in the market to each enterprise when not
operating under conservatorship or receivership, shall analyze various
methods of the Federal Government assessing a charge for such value
received (including methods involving an annual fee or a fee for each
mortgage purchased or securitized), and shall make a recommendation of
the best such method for assessing such charge. Not later than 12
months after the date of the enactment of this Act, the Comptroller
General shall submit to the Congress a report setting forth the
determinations and conclusions of such study.
SEC. 105. REQUIREMENT TO PERIODICALLY RENEW CHARTER UNTIL WIND DOWN AND
DISSOLUTION.
(a) Required Renewal; Wind Down and Dissolution Upon Non-Renewal.--
Upon the expiration of the 3-year period that begins upon the
expiration of the period referred to in section 103(b), unless the
charter of an enterprise is renewed pursuant to subsection (b) of this
section, section 106 (relating to wind down of operations and
dissolution of enterprise) shall apply to the enterprise.
(b) Renewal Procedure.--
(1) Application; timing.--The Director shall provide for
each enterprise to apply to the Director, before the expiration
of the 3-year period under subsection (a), for renewal of the
charter of the enterprise.
(2) Standard.--The Director shall approve the application
of an enterprise for the renewal of the charter of the
enterprise if--
(A) the application includes a certification by the
enterprise that the enterprise is financially sound and
is complying with all provisions of, and amendments
made by, section 104 of this title applicable to such
enterprise; and
(B) the Director verifies that the certification
made pursuant to subparagraph (A) is accurate.
(c) Option To Reapply.--Nothing in this section may be construed to
require an enterprise to apply under this section for renewal of the
charter of the enterprise.
SEC. 106. REQUIRED WIND DOWN OF OPERATIONS AND DISSOLUTION OF
ENTERPRISE.
(a) Applicability.--This section shall apply to an enterprise--
(1) upon the expiration of the 3-year period referred to in
such section 105(a), to the extent provided in such section;
and
(2) if this section has not previously applied to the
enterprise, upon the expiration of the 6-year period that
begins upon the expiration of the period referred to in section
103(b).
(b) Wind Down.--Upon the applicability of this section to an
enterprise, the Director and the Secretary of the Treasury shall
jointly take such action, and may prescribe such regulations and
procedures, as may be necessary to wind down the operations of an
enterprise as an entity chartered by the United States Government over
the duration of the 10-year period beginning upon the applicability of
this section to the enterprise (pursuant to subsection (a)) in an
orderly manner consistent with this title and the ongoing obligations
of the enterprise.
(c) Division of Assets and Liabilities; Authority To Establish
Holding Corporation and Dissolution Trust Fund.--The action and
procedures required under subsection (b)--
(1) shall include the establishment and execution of plans
to provide for an equitable division and distribution of assets
and liabilities of the enterprise, including any liability of
the enterprise to the United States Government or a Federal
reserve bank that may continue after the end of the period
described in subsection(b); and
(2) may provide for establishment of--
(A) a holding corporation organized under the laws
of any State of the United States or the District of
Columbia for the purposes of the reorganization and
restructuring of the enterprise; and
(B) one or more trusts to which to transfer--
(i) remaining debt obligations of the
enterprise, for the benefit of holders of such
remaining obligations; or
(ii) remaining mortgages held for the
purpose of backing mortgage-backed securities,
for the benefit of holders of such remaining
securities.
(d) Repeal of Charter.--Effective upon the expiration of the 10-
year period referred to in subsection (b) for an enterprise, the
charter for the enterprise is repealed, except that the provisions of
such charter in effect immediately before such repeal shall continue to
apply with respect to the rights and obligations of any holders of
outstanding debt obligations and mortgage-backed securities of the
enterprise.
TITLE II--PRICE STABILITY
SEC. 201. SHORT TITLE.
This title may be cited as the ``Price Stability Act of 2008''.
SEC. 202. FINDINGS; STATEMENT OF POLICY.
(a) Findings.--The Congress finds the following:
(1) Price stability is a prerequisite for sustainable long-
term economic growth, job creation, and moderate interest
rates.
(2) Inflation erodes the value of Americans' income and
savings.
(3) Inflation distorts the pricing system and the efficient
allocation of resources in the economy.
(4) Inflation makes long-term planning difficult and raises
the effective tax rate on capital, thereby impeding investment.
(5) Through its determination of monetary policy, the Board
of Governors of the Federal Reserve System is ultimately
responsible for controlling the long-run rate of inflation in
the economy.
(6) The multiple policy goals of the Full Employment and
Balanced Growth Act of 1978 cause confusion and ambiguity about
the appropriate role and aims of monetary policy, which can add
to volatility in economic activity and financial markets.
(7) There is a need for the Congress to clarify the proper
role of the Board of Governors of the Federal Reserve System in
economic policymaking, in order to achieve the best environment
for long-term economic growth and job creation.
(8) An explicit price stability goal would promote
transparency, accountability and credibility in monetary
policy.
(9) Price stability should be the primary long-term goal of
the Board of Governors of the Federal Reserve.
(b) Statement of Policy.--It is the policy of the United States
that--
(1) the principal economic responsibilities of the
Government are to establish and ensure an environment that is
conducive to both long-term economic growth and increases in
living standards, by establishing and maintaining free markets,
low taxes, respect for private property, and the stable, long-
term purchasing power of the United States currency; and
(2) the primary long-term goal of the Board of Governors of
the Federal Reserve System should be to promote price
stability.
SEC. 203. MONETARY POLICY.
(a) Amendment to the Federal Reserve Act.--Section 2A of the
Federal Reserve Act (12 U.S.C. 225a) is amended to read as follows:
``SEC. 2A. MONETARY POLICY.
``(a) Price Stability.--The Board and the Federal Open Market
Committee (hereafter in this section referred to as the `Committee')
shall--
``(1) establish an explicit numerical definition of the
term `price stability'; and
``(2) maintain a monetary policy that effectively promotes
long-term price stability.
``(b) Market Stability and Liquidity.--Subsection (a) shall not be
construed as a limitation on the authority or responsibility of the
Board--
``(1) to provide liquidity to markets in the event of a
disruption that threatens the smooth functioning and stability
of the financial sector; or
``(2) to serve as a lender of last resort under this Act
when the Board determines such action is necessary.
``(c) Congressional Consultation.--Not later than February 20 and
July 20 of each year, the Board shall consult with the Congress at
semiannual hearings before the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House of Representatives, about the objectives and plans of the Board
and the Committee with respect to achieving and maintaining price
stability.
``(d) Congressional Oversight.--The Board shall, concurrent with
each semiannual hearing required by subsection (c), submit a written
report to the Congress containing--
``(1) numerical measures to help assess the extent to which
the Board and the Committee are achieving and maintaining price
stability in accordance with subsection (a);
``(2) a description of the intermediate variables used by
the Board to gauge the prospects for achieving the objective of
price stability; and
``(3) the definition, or any modifications thereto, of the
term `price stability' established in accordance with
subsection (a)(1).''.
(b) Compliance Estimate.--Concurrent with the first semiannual
hearing required by section 2A(b) of the Federal Reserve Act (as
amended by subsection (a) of this section) following the date of
enactment of this Act, the Board of Governors of the Federal Reserve
System shall submit to the Congress a written estimate of the length of
time it will take for the Board and the Federal Open Market Committee
to fully achieve price stability. The Board and the Committee shall
take into account any potential short-term effects on employment and
output in complying with the goal of price stability.
SEC. 204. REPEAL OF OBSOLETE PROVISIONS.
(a) Full Employment and Balanced Growth Act of 1978.--The Full
Employment and Balanced Growth Act of 1978 (15 U.S.C. 3101 et seq.) is
hereby repealed.
(b) Employment Act of 1946.--The Employment Act of 1946 (15 U.S.C.
1021 et seq.) is amended--
(1) in section 3 (15 U.S.C. 1022)--
(A) in the section heading, by striking ``and
short-term economic goals and policies'';
(B) by striking ``(a)''; and
(C) by striking ``in accord with section 11(c) of
this Act'' and all that follows through the end of the
section and inserting ``in accordance with section
5(c).'';
(2) in section 9(b) (15 U.S.C. 1022f(b)), by striking ``,
the Full Employment and Balanced Growth Act of 1978,'';
(3) in section 10 (15 U.S.C. 1023)--
(A) in subsection (a), by striking ``in the light
of the policy declared in section 2'';
(B) in subsection (e)(1), by striking ``section 9''
and inserting ``section 3''; and
(C) in the matter immediately following paragraph
(2) of subsection (e), by striking ``and the Full
Employment and Balanced Growth Act of 1978'';
(4) by striking section 2;
(5) by striking sections 4, 5, 6, 7, and 8; and
(6) by redesignating sections 3, 9, 10, and 11 as sections
2, 3, 4, and 5, respectively.
(c) Congressional Budget Act of 1974.--Title III of the
Congressional Budget Act of 1974 (2 U.S.C. 631 et seq.) is amended--
(1) in section 301--
(A) in subsection (b), by striking paragraph (1)
and redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;
(B) in subsection (d), in the second sentence, by
striking ``the fiscal policy'' and all that follows
through the end of the sentence and inserting ``fiscal
policy.'';
(C) in subsection (e)(1), in the second sentence,
by striking ``as to short-term and medium-term goals'';
and
(D) by striking subsection (f) and inserting the
following:
``(f) Repealed''; and
(2) in section 305--
(A) in subsection (a)(3), by inserting before the
period at the end ``, as described in section 2 of the
Price Stability Act of 2008'';
(B) in subsection (a)(4)--
(i) by striking ``House sets forth the
economic goals'' and all that follows through
``designed to achieve,'' and inserting ``House
of Representatives sets forth the economic
goals and policies, as described in section 2
of the Price Stability Act of 2008,''; and
(ii) by striking ``such goals,'' and all
that follows through the end of the paragraph
and inserting ``such goals and policies.'';
(C) in subsection (b)(3), by inserting before the
period at the end ``, as described in section 2 of the
Price Stability Act of 2008''; and
(D) in subsection (b)(4)--
(i) by striking ``goals (as'' and all that
follows through ``designed to achieve,'' and
inserting ``goals and policies, as described in
section 2 of the Price Stability Act of
2008,''; and
(ii) by striking ``such goals,'' and all
that follows through the end of the paragraph
and inserting ``such goals and policies.''.
TITLE III--TAX PROVISIONS
SEC. 301. TEMPORARY ZERO PERCENT CAPITAL GAINS RATE FOR INDIVIDUALS AND
CORPORATIONS.
(a) In General.--Subchapter A of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART VIII--TEMPORARY ZERO PERCENT CAPITAL GAINS RATE FOR INDIVIDUALS
AND CORPORATIONS
``Sec. 59B. Temporary zero percent capital gains rate for individuals
and corporations.
``SEC. 59B. TEMPORARY ZERO PERCENT CAPITAL GAINS RATE FOR INDIVIDUALS
AND CORPORATIONS.
``(a) Application to Individuals.--In the case of a specified
recognition event occurring on or after September 22, 2008, and on or
before December 31, 2010--
``(1) In general.--Section 1(h)(1) shall be applied by
substituting `shall not exceed a tax computed at the rates and
in the same manner as if this subsection had not been enacted
on taxable income reduced by the net capital gain.' for `shall
not exceed' and all that follows.
``(2) Alternative minimum tax.--Section 55(b)(3) shall be
applied by substituting `shall not exceed the amount determined
under such first sentence computed at the rates and in the same
manner as if this paragraph had not been enacted on the taxable
excess reduced by the net capital gain.' for `shall not exceed'
and all that follows through the end of the first sentence.
``(b) Application to Corporations.--In the case of a specified
recognition event occurring on or after September 22, 2008, and on or
before December 31, 2010--
``(1) In general.--Section 1201 shall be applied--
``(A) by substituting `0 percent' for `35 percent'
both places it appears, and
``(B) by treating `net capital gain' as having the
meaning given such term by section 1(h)(11).
``(2) Alternative minimum tax.--For purposes of section 55,
the amount determined under subsection (b)(1)(B)(i) of such
section shall not exceed the sum of--
``(A) the amount determined under such subsection
computed at the rates and in the same manner as if this
paragraph had not been enacted on the taxable excess
reduced by the net capital gain (as defined in section
1(h)(11)), plus
``(B) the amount determined under section 1201.
``(c) Technical Provisions.--In the case of a specified recognition
event occurring on or after September 22, 2008, and on or before
December 31, 2010--
``(1) Section 1445(e)(1) shall be applied by substituting
`0 percent' for `35 percent (or, to the extent provided in
regulations, 15 percent)'.
``(2) Section 1445(e)(2) shall be applied by substituting
`0 percent' for `35 percent'.
``(3) Section 7518(g)(6)(A) shall be applied by
substituting `0 percent' for `15 percent (34 percent in the
case of a corporation)'.
``(4) Section 607(h)(6)(A) of the Merchant Marine Act, 1936
shall be applied by substituting `0 percent' for `15 percent
(34 percent in the case of a corporation)'.
``(d) Specified Recognition Event.--For purposes of this section,
the term `specified recognition event' means--
``(1) the sale or exchange of a capital asset held for more
than 1 year, and
``(2) the receipt of qualified dividend income (as defined
in section 1(h)(11)).
``(e) Application to Transitional Years.--The Secretary shall issue
regulations providing appropriate transition rules for the application
of the provisions of this title referred to in subsections (a) or (b)
for taxable years which include September 22, 2008, or December 31,
2010.''.
(b) Conforming Amendment.--The table of parts for subchapter A of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part VIII--Temporary Zero Percent Capital Gains Rate for Individuals
and Corporations''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending after September 22, 2008.
(2) Withholding.--Paragraphs (1) and (2) of section 59B(c)
of the Internal Revenue Code of 1986, as added by this section,
shall apply to dispositions and distributions after such date.
SEC. 302. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN
OR LOSS.
(a) In General.--Part II of subchapter O of chapter 1 (relating to
basis rules of general application) is amended by redesignating section
1023 as section 1024 and by inserting after section 1022 the following
new section:
``SEC. 1023. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING
GAIN OR LOSS.
``(a) General Rule.--
``(1) Indexed basis substituted for adjusted basis.--Solely
for purposes of determining gain or loss on the sale or other
disposition by a taxpayer (other than a corporation) of an
indexed asset which has been held for more than 3 years, the
indexed basis of the asset shall be substituted for its
adjusted basis.
``(2) Exception for depreciation, etc.--The deductions for
depreciation, depletion, and amortization shall be determined
without regard to the application of paragraph (1) to the
taxpayer or any other person.
``(3) Written documentation requirement.--Paragraph (1)
shall apply only with respect to indexed assets for which the
taxpayer has written documentation of the original purchase
price paid or incurred by the taxpayer to acquire such asset.
``(b) Indexed Asset.--
``(1) In general.--For purposes of this section, the term
`indexed asset' means--
``(A) common stock in a C corporation (other than a
foreign corporation), or
``(B) tangible property,
which is a capital asset or property used in the trade or
business (as defined in section 1231(b)).
``(2) Stock in certain foreign corporations included.--For
purposes of this section--
``(A) In general.--The term `indexed asset'
includes common stock in a foreign corporation which is
regularly traded on an established securities market.
``(B) Exception.--Subparagraph (A) shall not apply
to--
``(i) stock of a foreign investment
company,
``(ii) stock in a passive foreign
investment company (as defined in section
1296),
``(iii) stock in a foreign corporation held
by a United States person who meets the
requirements of section 1248(a)(2), and
``(iv) stock in a foreign personal holding
company.
``(C) Treatment of american depository receipts.--
An American depository receipt for common stock in a
foreign corporation shall be treated as common stock in
such corporation.
``(c) Indexed Basis.--For purposes of this section--
``(1) General rule.--The indexed basis for any asset is--
``(A) the adjusted basis of the asset, increased by
``(B) the applicable inflation adjustment.
``(2) Applicable inflation adjustment.--The applicable
inflation adjustment for any asset is an amount equal to--
``(A) the adjusted basis of the asset, multiplied
by
``(B) the percentage (if any) by which--
``(i) the gross domestic product deflator
for the last calendar quarter ending before the
asset is disposed of, exceeds
``(ii) the gross domestic product deflator
for the last calendar quarter ending before the
asset was acquired by the taxpayer.
The percentage under subparagraph (B) shall be rounded to the
nearest \1/10\ of 1 percentage point.
``(3) Gross domestic product deflator.--The gross domestic
product deflator for any calendar quarter is the implicit price
deflator for the gross domestic product for such quarter (as
shown in the last revision thereof released by the Secretary of
Commerce before the close of the following calendar quarter).
``(d) Suspension of Holding Period Where Diminished Risk of Loss;
Treatment of Short Sales.--
``(1) In general.--If the taxpayer (or a related person)
enters into any transaction which substantially reduces the
risk of loss from holding any asset, such asset shall not be
treated as an indexed asset for the period of such reduced
risk.
``(2) Short sales.--
``(A) In general.--In the case of a short sale of
an indexed asset with a short sale period in excess of
3 years, for purposes of this title, the amount
realized shall be an amount equal to the amount
realized (determined without regard to this paragraph)
increased by the applicable inflation adjustment. In
applying subsection (c)(2) for purposes of the
preceding sentence, the date on which the property is
sold short shall be treated as the date of acquisition
and the closing date for the sale shall be treated as
the date of disposition.
``(B) Short sale period.--For purposes of
subparagraph (A), the short sale period begins on the
day that the property is sold and ends on the closing
date for the sale.
``(e) Treatment of Regulated Investment Companies and Real Estate
Investment Trusts.--
``(1) Adjustments at entity level.--
``(A) In general.--Except as otherwise provided in
this paragraph, the adjustment under subsection (a)
shall be allowed to any qualified investment entity
(including for purposes of determining the earnings and
profits of such entity).
``(B) Exception for corporate shareholders.--Under
regulations--
``(i) in the case of a distribution by a
qualified investment entity (directly or
indirectly) to a corporation--
``(I) the determination of whether
such distribution is a dividend shall
be made without regard to this section,
and
``(II) the amount treated as gain
by reason of the receipt of any capital
gain dividend shall be increased by the
percentage by which the entity's net
capital gain for the taxable year
(determined without regard to this
section) exceeds the entity's net
capital gain for such year determined
with regard to this section, and
``(ii) there shall be other appropriate
adjustments (including deemed distributions) so
as to ensure that the benefits of this section
are not allowed (directly or indirectly) to
corporate shareholders of qualified investment
entities.
For purposes of the preceding sentence, any amount
includible in gross income under section 852(b)(3)(D)
shall be treated as a capital gain dividend and an S
corporation shall not be treated as a corporation.
``(C) Exception for qualification purposes.--This
section shall not apply for purposes of sections 851(b)
and 856(c).
``(D) Exception for certain taxes imposed at entity
level.--
``(i) Tax on failure to distribute entire
gain.--If any amount is subject to tax under
section 852(b)(3)(A) for any taxable year, the
amount on which tax is imposed under such
section shall be increased by the percentage
determined under subparagraph (B)(i)(II). A
similar rule shall apply in the case of any
amount subject to tax under paragraph (2) or
(3) of section 857(b) to the extent
attributable to the excess of the net capital
gain over the deduction for dividends paid
determined with reference to capital gain
dividends only. The first sentence of this
clause shall not apply to so much of the amount
subject to tax under section 852(b)(3)(A) as is
designated by the company under section
852(b)(3)(D).
``(ii) Other taxes.--This section shall not
apply for purposes of determining the amount of
any tax imposed by paragraph (4), (5), or (6)
of section 857(b).
``(2) Adjustments to interests held in entity.--
``(A) Regulated investment companies.--Stock in a
regulated investment company (within the meaning of
section 851) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the average of the fair market values
of the indexed assets held by such company at
the close of each month during such quarter,
bears to
``(ii) the average of the fair market
values of all assets held by such company at
the close of each such month.
``(B) Real estate investment trusts.--Stock in a
real estate investment trust (within the meaning of
section 856) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the fair market value of the indexed
assets held by such trust at the close of such
quarter, bears to
``(ii) the fair market value of all assets
held by such trust at the close of such
quarter.
``(C) Ratio of 80 percent or more.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 80
percent or more, such ratio for such quarter shall be
100 percent.
``(D) Ratio of 20 percent or less.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 20
percent or less, such ratio for such quarter shall be
zero.
``(E) Look-thru of partnerships.--For purposes of
this paragraph, a qualified investment entity which
holds a partnership interest shall be treated (in lieu
of holding a partnership interest) as holding its
proportionate share of the assets held by the
partnership.
``(3) Treatment of return of capital distributions.--Except
as otherwise provided by the Secretary, a distribution with
respect to stock in a qualified investment entity which is not
a dividend and which results in a reduction in the adjusted
basis of such stock shall be treated as allocable to stock
acquired by the taxpayer in the order in which such stock was
acquired.
``(4) Qualified investment entity.--For purposes of this
subsection, the term `qualified investment entity' means--
``(A) a regulated investment company (within the
meaning of section 851), and
``(B) a real estate investment trust (within the
meaning of section 856).
``(f) Other Pass-Thru Entities.--
``(1) Partnerships.--
``(A) In general.--In the case of a partnership,
the adjustment made under subsection (a) at the
partnership level shall be passed through to the
partners.
``(B) Special rule in the case of section 754
elections.--In the case of a transfer of an interest in
a partnership with respect to which the election
provided in section 754 is in effect--
``(i) the adjustment under section
743(b)(1) shall, with respect to the transferor
partner, be treated as a sale of the
partnership assets for purposes of applying
this section, and
``(ii) with respect to the transferee
partner, the partnership's holding period for
purposes of this section in such assets shall
be treated as beginning on the date of such
adjustment.
``(2) S corporations.--In the case of an S corporation, the
adjustment made under subsection (a) at the corporate level
shall be passed through to the shareholders. This section shall
not apply for purposes of determining the amount of any tax
imposed by section 1374 or 1375.
``(3) Common trust funds.--In the case of a common trust
fund, the adjustment made under subsection (a) at the trust
level shall be passed through to the participants.
``(4) Indexing adjustment disregarded in determining loss
on sale of interest in entity.--Notwithstanding the preceding
provisions of this subsection, for purposes of determining the
amount of any loss on a sale or exchange of an interest in a
partnership, S corporation, or common trust fund, the
adjustment made under subsection (a) shall not be taken into
account in determining the adjusted basis of such interest.
``(g) Dispositions Between Related Persons.--
``(1) In general.--This section shall not apply to any sale
or other disposition of property between related persons except
to the extent that the basis of such property in the hands of
the transferee is a substituted basis.
``(2) Related persons defined.--For purposes of this
section, the term `related persons' means--
``(A) persons bearing a relationship set forth in
section 267(b), and
``(B) persons treated as single employer under
subsection (b) or (c) of section 414.
``(h) Transfers To Increase Indexing Adjustment.--If any person
transfers cash, debt, or any other property to another person and the
principal purpose of such transfer is to secure or increase an
adjustment under subsection (a), the Secretary may disallow part or all
of such adjustment or increase.
``(i) Special Rules.--For purposes of this section--
``(1) Treatment of improvements, etc.--If there is an
addition to the adjusted basis of any tangible property or of
any stock in a corporation during the taxable year by reason of
an improvement to such property or a contribution to capital of
such corporation--
``(A) such addition shall never be taken into
account under subsection (c)(1)(A) if the aggregate
amount thereof during the taxable year with respect to
such property or stock is less than $1,000, and
``(B) such addition shall be treated as a separate
asset acquired at the close of such taxable year if the
aggregate amount thereof during the taxable year with
respect to such property or stock is $1,000 or more.
A rule similar to the rule of the preceding sentence shall
apply to any other portion of an asset to the extent that
separate treatment of such portion is appropriate to carry out
the purposes of this section.
``(2) Assets which are not indexed assets throughout
holding period.--The applicable inflation adjustment shall be
appropriately reduced for periods during which the asset was
not an indexed asset.
``(3) Treatment of certain distributions.--A distribution
with respect to stock in a corporation which is not a dividend
shall be treated as a disposition.
``(4) Section cannot increase ordinary loss.--To the extent
that (but for this paragraph) this section would create or
increase a net ordinary loss to which section 1231(a)(2)
applies or an ordinary loss to which any other provision of
this title applies, such provision shall not apply. The
taxpayer shall be treated as having a long-term capital loss in
an amount equal to the amount of the ordinary loss to which the
preceding sentence applies.
``(5) Acquisition date where there has been prior
application of subsection (a)(1) with respect to the
taxpayer.--If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer,
the date of acquisition of such asset by the taxpayer shall be
treated as not earlier than the date of the most recent such
prior application.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(b) Clerical Amendment.--The table of sections for part II of
subchapter O of chapter 1 is amended by striking the item relating to
section 1023 and by inserting after the item relating to section 1022
the following new item:
``Sec. 1022. Indexing of certain assets for purposes of determining
gain or loss.
``Sec. 1023. Cross references.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales and other dispositions of indexed assets after the date
of the enactment of this Act, in taxable years ending after such date.
TITLE IV--FAIR VALUE ACCOUNTING REFORM ACT
SEC. 401. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds that--
(1) for many purposes, fair value accounting requirements
can inform and protect investors;
(2) in periods of market turmoil when there is an inactive
market, fair value accounting requirements can force financial
institutions to write down the value of a long-term, non-
trading asset below its true economic value even though the
cash flow on the asset remains unimpaired and other indicia of
value of the asset reflect value consistent with the cash flow;
and
(3) the application of fair value accounting requirements
on assets for which there is an inactive market has the
unintended effect of exacerbating economic downturns by
reducing the ability of financial institutions to provide
credit to consumers and businesses.
(b) Purpose.--The purpose of this Act is to--
(1) maintain the ability of all financial institutions to
provide credit in periods of market stress;
(2) permit financial institutions to maintain the economic
value of long term, non-trading assets in an inactive market;
and
(3) continue to provide transparency to investors.
SEC. 402. DEFINITIONS.
For purposes of this legislation, ``long-term, non-trading assets''
are defined as all instances in which fair value measurement is
required under U.S. Generally Accepted Accounting Principles for which
the company is not actively trading and for which the company has the
ability to hold those financial instruments for an extended period of
time.
SEC. 403. TEMPORARY SUSPENSION OF FAIR VALUE ACCOUNTING.
(a) In General.--Effective on the date of enactment of the Troubled
Asset Relief Act of 2008, the Securities and Exchange Commission shall
suspend the application of fair value reporting standards to troubled
assets held by financial institutions, as those terms are defined in
such Act. The suspension required by this subsection shall remain in
effect until the issuance of the guidance required in subsection (b).
Until such guidance is issued, the fair value of these assets should be
estimated using the best available information of the instrument's
value, including the entity's intended use of that asset, from the
point of view of the holder of that instrument.
(b) Guidance.--Within 90 days of the date of enactment of this Act,
the Securities and Exchange Commission shall issue guidance on the
reporting requirements for long-term, non-trading assets during periods
in which there is no active market for such assets. Such guidance
shall:
(1) define ``market participants'' eligible for such
guidance;
(2) define an inactive market which will trigger such
guidance;
(3) specify a valuation method that reflects the economic
value of such assets; and
(4) determine the period in which such assets should be
evaluated under this method.
SEC. 404. GAO ANALYSIS OF FAIR VALUE ACCOUNTING.
(a) In General.--The General Accountability Office shall prepare an
analysis of the effect of fair value accounting standards on financial
institutions. Such analysis shall--
(1) describe the current impact of fair value accounting on
financial institutions during different economic cycles and
under different market conditions, including periods in which
there is an inactive market for long-term, non-trading assets
held by such institutions;
(2) evaluate auditors' practices and procedures in
reviewing the application of fair value accounting on long-
term, non-trading assets in an inactive market; and
(3) describe the impact of the Securities and Exchange
Commission's application of fair value accounting, as
prescribed by such guidance required in Section 4 (b).
(b) Timing.--The analysis required by subsection (a) shall be
completed within 1 year of the date of enactment of this Act, and shall
be submitted to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing and Urban Affairs
of the Senate.
TITLE V--MORTGAGE-BACKED SECURITIES
SEC. 501. THE INSURANCE OF MORTGAGE-BACKED SECURITIES.
(a) Mortgage-Backed Security Insurance.--Upon the enactment of this
Act, the timely payment of up to 100 percent of principal of and
interest on each mortgage-backed security held by a financial
institution on or before September 24, 2008 is hereby insured on such
terms and conditions as determined by the Secretary consistent with
this title, as those terms are defined in Section 111.
(b) Necessary Actions.--The Secretary is authorized to take such
actions as he deems necessary to carry out the authorities in this
title, including--
(1) appointing such employees as may be required to carry
out the authorities in this title and defining their duties;
(2) entering into contracts, including contracts for the
services of experts and consultants as authorized by section
3109 of title 5, United States Code, without regard to any
other provision of law regarding public contracts;
(3) designating financial institutions as financial agents
of the Government, and they shall perform all such reasonable
duties related to this title as financial agents of the
Government as may be required of them;
(4) establishing vehicles that are authorized, subject to
supervision by the Secretary, to provide, and make payments on,
the insures referred to in subsection (a) and issue
obligations; and
(5) issuing such regulations and other guidance as may be
necessary or appropriate to define terms or carry out the
authorities of this title.
SEC. 502. CONSIDERATIONS.
(a) Secretary Consideration.--In exercising the authorities granted
in this title, the Secretary shall take into consideration means for--
(1) protecting the taxpayer;
(2) providing stability or preventing disruption to the
financial markets or banking system; and
(3) taking appropriate steps to manage any conflicts of
interest in the hiring of contractors or advisors.
(b) Rulemaking Exemption.--Any regulation issued under the
authority provided in this title shall not be subject to the rulemaking
provisions as set forth in section 553 of title 5, United States Code.
SEC. 503. INSURANCE PREMIUMS.
(a) Insurance Premiums.--The Secretary shall collect premiums from
each financial institution, as such term is defined in section 111 of
this title, in order to fund the Mortgage-Backed Securities Fund
established in section 105 and used to satisfy obligations incurred
under this title.
(b) Premium Collection.--The premium collected pursuant to
subsection (a) shall be collected from each financial institution
notwithstanding such institution's application, if any, for insures set
forth in section 101(a).
(c) Authority To Base Insurance Premium on Product Risk.--In
establishing the insurance premium under subsection (a), the Secretary
may provide for variations in such rates according to the credit risk
associated with the mortgage-backed security held by a financial
institution as such term is defined in section 111.
(d) Sufficient Level.--The premium referred to in subsection (a)
shall be set by the Secretary at a level necessary to maintain a level
of funding in the Mortgage-Backed Securities Fund, as established in
section 104, sufficient to meet anticipated claims based upon actuarial
analysis.
(e) Expiration.--The Secretary may cease collecting premiums set
forth in subsection (a) if he determines the Mortgage-Backed Securities
Fund has sufficient reserves to meet anticipated claims as described in
subsection (d).
SEC. 504. MORTGAGE-BACKED SECURITIES FUND.
(a) Collected Premiums.--The Secretary shall deposit premiums
collected pursuant to section 103(a) of this title into the Mortgage-
Backed Securities Fund as established in subsection (b).
(b) Mortgage-Backed Securities Fund.--There is hereby established a
Mortgage-Backed Securities Fund (in this title referred to as the
``Fund'').
(c) Authority.--Premiums deposited in the Fund pursuant to
subsection section (a) shall be invested in obligations of the United
States, or kept in cash on hand or on deposit, as necessary.
(d) Payments From the Fund.--The Secretary shall make payments from
amounts deposited in the Fund to fulfill the obligations of the
insurance provided to financial institutions as set forth in section
101(a).
(e) Fund Sufficiency.--The Secretary shall increase insurance
premiums if he determines, after consultation with the Government
Accountability Office, to a level sufficient to assure reserves in the
Fund will meet anticipated needs.
(f) Transfer Authority.--The Secretary of the Treasury is
authorized and directed to loan to the Fund, on such terms as may be
fixed by the Secretary, such funds as in the Secretary's judgment are
from time to time required for purposes of this title.
SEC. 505. PAYMENT OF INSURANCE PREMIUMS.
(a) Payment and Subrogation.--If a financial institution that holds
a mortgage-backed security on September 24, 2008, for which insurance
is provided pursuant to this title, is unable to make any payment of
principal of or interest on such security, the Secretary shall make
such payment as and when due, in cash, and upon such payment shall be
subrogated fully to the rights satisfied by such payment.
(b) Contract.--The Secretary is hereby authorized, in connection
with any insurance under this title, whether before or after any
default, to provide by contract with the holder, referred to in
subsection (a), for the extinguishment, upon default by the holder, of
any redemption, equitable, legal, or other right, title, or interest of
the holder in any mortgage or mortgages constituting the trust or pool
against which the mortgage-backed securities insured under this title
are issued; and with respect to any issue of such insured securities,
in the event of default and pursuant otherwise to the terms of the
contract, the mortgages that constitute such trust or pool backing the
security shall become the absolute property of the U.S. Treasury,
subject only to the unsatisfied rights of the holders of the mortgage-
backed securities based on and backed by such trust or pool.
(c) Limitation on Application of Law.--No State or local law, and
no Federal law, shall preclude or limit the exercise of the
Secretary's--
(1) power to contract with the issuer on the terms set
forth in subsection (b); or
(2) authorization to enforce any such contract with the
holder; or
(3) the rights, as provided in subsection (b), in the
mortgages constituting the trust or pool against which such
insured securities are issued.
(d) Full Faith and Credit.--The full faith and credit of the United
States is pledged to the payment of all amounts which may be required
to be paid under any insurance under this title.
SEC. 506. FUNDING.
For the purpose of the authorities granted in this title, and for
the costs of administering those authorities, the Secretary may use
funds from the amounts in the Mortgage-Backed Securities Fund. Any
funds expended from the Fund for actions authorized by this title,
including the payment of administrative expenses, shall be deemed
appropriated at the time of such expenditure.
SEC. 507. 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 denied 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), other than as expressly provided in a written
contract with the Secretary.
(4) Stays.--Any injunction or other form of equitable
relief issued aginst 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 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. 508. CREDIT REFORM.
(a) In General.--Subject to subsection (b), the costs of insures
made under this title 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)), the cost of each
guarantee of a mortgage-backed security under this title shall be
calculated by--
(1) adjusting the discount rate in section 502(5)(E) (2
U.S.C. 661a(5)(E)) for market risks; and
(2) using the difference between the current estimate,
consistent with subparagraph (b)(1) under the terms of the
insured mortgage-backed security and the current estimate
consistent with subparagraph (b)(1) under the terms of the
insured.
SEC. 509. REPORTS TO CONGRESS.
Within 60 days of the first exercise of the authority set forth in
section 101(a), and semiannually thereafter, the Secretary shall report
to the Committees on the Budget, Financial Services, and Ways and Means
of the House of Representatives and the Committees on the Budget,
Finance, and Banking, Housing, and Urban Affairs of the Senate with
respect to the authorities exercised under this title and the
considerations required by section 102.
SEC. 510. DEFINITIONS.
For purposes of this title, the following definitions shall apply:
(1) Financial institution.--The term ``financial
institution'' means any institution including, but not limited
to, banks, thrifts, credit unions, broker-dealers, insurance
companies, and the trustees administering mortgage-backed
securities trusts, having significant operations in the United
States; and, upon the Secretary's determination in consultation
with the Chairman of the Board of Governors of the Federal
Reserve, holds or has issued applicable mortgage-backed
securities.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(3) Mortgage-backed security.--The term ``mortgage-backed
security'' means securities, obligations, other instruments, or
other securities, other than those guaranteed by the Government
National Mortgage Association, as shall be based on and backed
by a trust or pool composed of mortgages that in each case was
originated or issued on or before September 24, 2008.
(4) United states.--The term ``United States'' means the
States, territories, and possessions of the United States and
the District of Columbia.
SEC. 511. ANNUAL REPORT AND AUDIT BY THE GOVERNMENT ACCOUNTABILITY
OFFICE.
(a) Annual Report on the Mortgage-Backed Securities Fund.--The
Secretary shall annually submit to Congress a full report of its
operations, activities, budget, receipts, and expenditures for the
preceding 12-month period. The report shall include, with respect to
the Mortgage-Backed Securities Fund, an analysis of--
(1) the current financial condition of such fund;
(2) the purpose, effect, and estimated cost of each
resolution action taken for payment of insurance during the
preceding year;
(3) the extent to which the actual costs provided to, or
for the benefit of, resulting from insurance during the
preceding year exceeded the estimated costs of such costs
reported in a previous year, as applicable;
(4) the exposure of the Mortgage-Backed Securities Fund to
changes in those economic factors most likely to affect the
condition of that Fund;
(5) a current estimate of the resources needed for the
Mortgage-Backed Securities Fund to achieve the purposes of this
title;
(6) an analysis of the sufficiency of the premium
collections, actual and projected, in meeting the costs of the
Fund; and
(7) any findings, conclusions, and recommendations for
legislative and administrative actions considered appropriate
to future activities of the Mortgage-Backed Securities Fund.
(b) Special Report.--Within 45 days of the enactment of this Act,
the Comptroller General shall provide to the committees of Congress
referred to in subsection (d), and other relevant committees, an
initial report on the Fund.
(c) Annual Audit of the Mortgage-Backed Securities Fund.--
(1) Audit required.--The Comptroller General shall audit
annually the financial transactions of the Mortgage-Backed
Securities Fund (the ``Fund'') in accordance with generally
accepted Government auditing standards.
(2) Access to books and records.--All books, records,
accounts, reports, files, and property belonging to or used by
the Department of the Treasury that are directly related to the
operations and determination as to the amounts in the Fund, or
by an independent certified public accountant retained to audit
the Fund's financial statements, shall be made available to the
Comptroller General.
(d) Report of the Audit.--A report of the audit conducted under
subsection (c) of this section shall be made by the Comptroller General
to the Congress not later than July 15th of the year following the year
covered by such audit. The report to the Congress shall set forth the
scope of the audit and shall include a statement of assets and
liabilities and surplus or deficit of the Fund; a statement of surplus
or deficit analysis; a statement of income and expenses; a statement of
sources and application of funds and such comments and information as
may be deemed necessary to inform Congress, together with such
recommendations with respect thereto as the Comptroller General may
deem advisable. The report shall also show specifically any program,
expenditure, or other financial transaction or undertaking observed in
the course of the audit, which, in the opinion of the Comptroller
General, has been carried on or made without authority of law. A copy
of each report shall be furnished to the President, to the Secretary of
the Treasury, and to Committee on Banking, Housing, and Urban Affairs,
the Committee on the Budget, and the Committee on Finance of the Senate
and the Committee on Financial Services, the Committee on the Budget,
and the Committee on Ways and Means of the House of Representatives.
(e) Assistance in Audit.--For the purpose of conducting such audit
the Comptroller General is authorized in his discretion to employ by
contract, without regard to section 5 of title 41 of the United States
Code, professional services of firms and organizations of certified
public accountants, with the concurrence of the Secretary, for
temporary periods or for special purposes.
TITLE VI--UNLEASHING PRIVATE CAPITAL
SEC. 601. 5-YEAR CARRYBACK OF LOSSES.
(a) In General.--Subparagraph (H) of section 172(b)(1) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(H) 5-year carryback of certain losses.--
``(i) Taxable years ending during 2001 and
2002.--In the case of a net operating loss for
any taxable year ending during 2001 or 2002,
subparagraph (A)(i) shall be applied by
substituting `5' for `2' and subparagraph (F)
shall not apply.
``(ii) Taxable years ending during 2007,
2008, and 2009.--In the case of a net operating
loss for any taxable year ending during 2007,
2008, or 2009--
``(I) subparagraph (A)(i) shall be
applied by substituting `5' for `2';
``(II) subparagraph (E)(ii) shall
be applied by substituting `4' for `2';
and
``(III) subparagraph (F) shall not
apply.''.
(b) Temporary Suspension of 90 Percent Limit on Certain NOL
Carrybacks and Carryovers.--
(1) In general.--Subclause (I) of section 56(d)(1)(A)(ii)
of such Code is amended--
(A) by inserting ``and 2007, 2008, or 2009'' after
``2001 or 2002''; and
(B) by inserting ``and 2007, 2008, and 2009'' after
``2001 and 2002''.
(2) Conforming amendment.--Subclause (I) of section
56(d)(1)(A)(i) of such Code is amended by inserting ``amount of
such'' before ``deduction described in clause (ii)(I)''.
(c) Anti-Abuse Rules.--The Secretary of the Treasury or the
Secretary's designee shall prescribe such rules as are necessary to
prevent the abuse of the purposes of the amendments made by this
section, including antistuffing rules, antichurning rules (including
rules relating to sale-leasebacks), and rules similar to the rules
under section 1091 of the Internal Revenue Code of 1986 relating to
losses from wash sales.
(d) Effective Dates.--
(1) Subsection (a).--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by subsection (a) shall apply
to net operating losses arising in taxable years ending
in 2007, 2008, or 2009.
(B) Election.--In the case of any taxpayer with a
net operating loss for a taxable year ending during
2007 or 2008--
(i) any election made under section
172(b)(3) of the Internal Revenue Code of 1986
may (notwithstanding such section) be revoked
before October 15, 2009; and
(ii) any election made under section 172(j)
of such Code shall (notwithstanding such
section) be treated as timely made if made
before October 15, 2009.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years ending after December 31, 2006.
SEC. 602. INCENTIVES TO REINVEST FOREIGN EARNINGS IN UNITED STATES.
(a) In General.--Section 965 of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 965. DEDUCTION FOR DIVIDENDS RECEIVED.
``(a) Deduction.--
``(1) In general.--In the case of a corporation which is a
United States shareholder and for which the election under this
section is in effect for the taxable year, there shall be
allowed as a deduction an amount equal to the applicable
percentage of cash dividends which are received during such
taxable year by such shareholder from controlled foreign
corporations.
``(2) Applicable percentage.--For purposes of paragraph
(1)--
``(A) In general.--Except as provided by
subparagraph (B), the term `applicable percentage'
means 85 percent.
``(B) Distressed debt.--In the case of dividends
received with respect to which the requirements of
subsection (b)(4)(B) are met, such term means 100
percent.
``(3) Dividends paid indirectly from controlled foreign
corporations.--If, within the taxable year for which the
election under this section is in effect, a United States
shareholder receives a cash distribution from a controlled
foreign corporation which is excluded from gross income under
section 959(a), such distribution shall be treated for purposes
of this section as a cash dividend to the extent of any amount
included in income by such United States shareholder under
section 951(a)(1)(A) as a result of any cash dividend during
such taxable year to--
``(A) such controlled foreign corporation from
another controlled foreign corporation that is in a
chain of ownership described in section 958(a); or
``(B) any other controlled foreign corporation in
such chain of ownership, but only to the extent of cash
distributions described in section 959(b) which are
made during such taxable year to the controlled foreign
corporation from which such United States shareholder
received such distribution.
``(b) Limitations.--
``(1) In general.--The amount of dividends taken into
account under subsection (a) shall not exceed the greater of--
``(A) $500,000,000;
``(B) the amount shown on the applicable financial
statement as earnings permanently reinvested outside
the United States; or
``(C) in the case of an applicable financial
statement which fails to show a specific amount of
earnings permanently reinvested outside the United
States and which shows a specific amount of tax
liability attributable to such earnings, the amount
equal to the amount of such liability divided by 0.35.
The amounts described in subparagraphs (B) and (C) shall be
treated as being zero if there is no such statement or such
statement fails to show a specific amount of such earnings or
liability, as the case may be.
``(2) Dividends must be extraordinary.--The amount of
dividends taken into account under subsection (a) shall not
exceed the excess (if any) of--
``(A) the cash dividends received during the
taxable year by such shareholder from controlled
foreign corporations; over--
``(B) the sum of--
``(i) the dividends received during the
base period year by such shareholder from
controlled foreign corporations;
``(ii) the amounts includible in such
shareholder's gross income for the base period
year under section 951(a)(1)(B) with respect to
controlled foreign corporations; and
``(iii) the amounts that would have been
included for the base period year but for
section 959(a) with respect to controlled
foreign corporations.
The amount taken into account under clause (iii) for
the base period year shall not include any amount which
is not includible in gross income by reason of an
amount described in clause (ii) with respect to a prior
taxable year. Amounts described in subparagraph (B) for
the base period year shall be such amounts as shown on
the most recent return filed for such year; except that
amended returns filed after June 30, 2007, shall not be
taken into account.
``(3) Reduction of benefit if increase in related party
indebtedness.--The amount of dividends which would (but for
this paragraph) be taken into account under subsection (a)
shall be reduced by the excess (if any) of--
``(A) the amount of indebtedness of the controlled
foreign corporation to any related person (as defined
in section 954(d)(3)) as of the close of the taxable
year for which the election under this section is in
effect; over
``(B) the amount of indebtedness of the controlled
foreign corporation to any related person (as so
defined) as of the close of September 26, 2008.
All controlled foreign corporations with respect to which the
taxpayer is a United States shareholder shall be treated as one
controlled foreign corporation for purposes of this paragraph.
The Secretary may prescribe such regulations as may be
necessary or appropriate to prevent the avoidance of the
purposes of this paragraph, including regulations which provide
that cash dividends shall not be taken into account under
subsection (a) to the extent such dividends are attributable to
the direct or indirect transfer (including through the use of
intervening entities or capital contributions) of cash or other
property from a related person (as so defined) to a controlled
foreign corporation.
``(4) Requirements.--
``(A) Requirement to invest in united states.--
Except as provided by subparagraph (B), subsection (a)
shall not apply to any dividend received by a United
States shareholder unless the amount of the dividend is
invested in the United States pursuant to a domestic
reinvestment plan which--
``(i) is approved by the taxpayer's
president, chief executive officer, or
comparable official before the payment of such
dividend and subsequently approved by the
taxpayer's board of directors, management
committee, executive committee, or similar
body; and
``(ii) provides for the reinvestment of
such dividend in the United States (other than
as payment for executive compensation),
including as a source for the funding of worker
hiring and training, infrastructure, research
and development, capital investments, or the
financial stabilization of the corporation for
the purposes of job retention or creation.
``(B) Distressed debt.--The requirements of this
subparagraph are met if amounts repatriated are
invested in distressed debt (as defined by the
Secretary) for at least 1 year.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Applicable financial statement.--The term `applicable
financial statement' means--
``(A) with respect to a United States shareholder
which is required to file a financial statement with
the Securities and Exchange Commission (or which is
included in such a statement so filed by another
person), the most recent audited annual financial
statement (including the notes which form an integral
part of such statement) of such shareholder (or which
includes such shareholder)--
``(i) which was so filed on or before June
30, 2007; and
``(ii) which was certified on or before
June 30, 2007, as being prepared in accordance
with generally accepted accounting principles;
and
``(B) with respect to any other United States
shareholder, the most recent audited financial
statement (including the notes which form an integral
part of such statement) of such shareholder (or which
includes such shareholder)--
``(i) which was certified on or before June
30, 2007, as being prepared in accordance with
generally accepted accounting principles; and
``(ii) which is used for the purposes of a
statement or report--
``(I) to creditors;
``(II) to shareholders; or
``(III) for any other substantial
nontax purpose.
``(2) Base period year.--
``(A) In general.--The base period year is the
first taxable year ending in 2007.
``(B) Mergers, acquisitions, etc.--
``(i) In general.--Rules similar to the
rules of subparagraphs (A) and (B) of section
41(f)(3) shall apply for purposes of this
paragraph.
``(ii) Spin-offs, etc.--If there is a
distribution to which section 355 (or so much
of section 356 as relates to section 355)
applies during the base period year and the
controlled corporation (within the meaning of
section 355) is a United States shareholder--
``(I) the controlled corporation
shall be treated as being in existence
during the period that the distributing
corporation (within the meaning of
section 355) is in existence; and
``(II) for purposes of applying
subsection (b)(2) to the controlled
corporation and the distributing
corporation, amounts described in
subsection (b)(2)(B) which are received
or includible by the distributing
corporation or controlled corporation
(as the case may be) before the
distribution referred to in subclause
(I) from a controlled foreign
corporation shall be allocated between
such corporations in proportion to
their respective interests as United
States shareholders of such controlled
foreign corporation immediately after
such distribution.
Subclause (II) shall not apply if neither the
controlled corporation nor the distributing
corporation is a United States shareholder of
such controlled foreign corporation immediately
after such distribution.
``(3) Dividend.--The term `dividend' shall not include
amounts includible in gross income as a dividend under section
78, 367, or 1248. In the case of a liquidation under section
332 to which section 367(b) applies, the preceding sentence
shall not apply to the extent the United States shareholder
actually receives cash as part of the liquidation.
``(4) Coordination with dividends received deduction.--No
deduction shall be allowed under section 243 or 245 for any
dividend for which a deduction is allowed under this section.
``(5) Controlled groups.--
``(A) In general.--All United States shareholders
which are members of an affiliated group filing a
consolidated return under section 1501 shall be treated
as one United States shareholder.
``(B) Application of $500,000,000 limit.--All
corporations which are treated as a single employer
under section 52(a) shall be limited to one
$500,000,000 amount in subsection (b)(1)(A), and such
amount shall be divided among such corporations under
regulations prescribed by the Secretary.
``(C) Permanently reinvested earnings.--If a
financial statement is an applicable financial
statement for more than one United States shareholder,
the amount applicable under subparagraph (B) or (C) of
subsection (b)(1) shall be divided among such
shareholders under regulations prescribed by the
Secretary.
``(d) Denial of Foreign Tax Credit; Denial of Certain Expenses.--
``(1) Foreign tax credit.--No credit shall be allowed under
section 901 for any taxes paid or accrued (or treated as paid
or accrued) with respect to the deductible portion of--
``(A) any dividend; or
``(B) any amount described in subsection (a)(2)
which is included in income under section 951(a)(1)(A).
No deduction shall be allowed under this chapter for any tax
for which credit is not allowable by reason of the preceding
sentence.
``(2) Expenses.--No deduction shall be allowed for expenses
properly allocated and apportioned to the deductible portion
described in paragraph (1).
``(3) Deductible portion.--For purposes of paragraph (1),
unless the taxpayer otherwise specifies, the deductible portion
of any dividend or other amount is the amount which bears the
same ratio to the amount of such dividend or other amount as
the amount allowed as a deduction under subsection (a) for the
taxable year bears to the amount described in subsection
(b)(2)(A) for such year.
``(4) Coordination with section 78.--Section 78 shall not
apply to any tax which is not allowable as a credit under
section 901 by reason of this subsection.
``(e) Increase in Tax on Included Amounts Not Reduced by Credits,
etc.--
``(1) In general.--Any tax under this chapter by reason of
nondeductible CFC dividends shall not be treated as tax imposed
by this chapter for purposes of determining--
``(A) the amount of any credit allowable under this
chapter; or
``(B) the amount of the tax imposed by section 55.
Subparagraph (A) shall not apply to the credit under section 53
or to the credit under section 27(a) with respect to taxes
which are imposed by foreign countries and possessions of the
United States and are attributable to such dividends.
``(2) Limitation on reduction in taxable income, etc.--
``(A) In general.--The taxable income of any United
States shareholder for any taxable year shall in no
event be less than the amount of nondeductible CFC
dividends received during such year.
``(B) Coordination with section 172.--The
nondeductible CFC dividends for any taxable year shall
not be taken into account--
``(i) in determining under section 172 the
amount of any net operating loss for such
taxable year; and
``(ii) in determining taxable income for
such taxable year for purposes of the second
sentence of section 172(b)(2).
``(3) Nondeductible cfc dividends.--For purposes of this
subsection, the term `nondeductible CFC dividends' means the
excess of the amount of dividends taken into account under
subsection (a) over the deduction allowed under subsection (a)
for such dividends.
``(f) Election.--The taxpayer may elect to apply this section to--
``(1) the taxpayer's last taxable year which begins before
the date of the enactment of this section; or
``(2) the taxpayer's first taxable year which begins during
the 1-year period beginning on such date.
Such election may be made for a taxable year only if made before the
due date (including extensions) for filing the return of tax for such
taxable year.''.
(b) Clerical Amendment.--The item in the table of sections for
subpart F of part III of subchapter N of chapter 1 of such Code
relating to section 965 is amended to read as follows:
``Sec. 965. Deduction for dividends received.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending on or after the date of the enactment of
this Act.
SEC. 603. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN PREFERRED
STOCK.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
gain or loss from the sale or exchange of any applicable preferred
stock by any applicable financial 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 Association,
established pursuant to the Federal National Mortgage
Association Charter Act (12 U.S.C. 1716 et seq.), or
(B) the Federal Home Loan Mortgage Corporation,
established pursuant to the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.), and
(2) which--
(A) was held by the applicable financial
institution on September 6, 2008, or
(B) was sold or exchanged by the applicable
financial institution on or after January 1, 2008, and
before September 7, 2008.
(c) Applicable Financial Institution.--For purposes of this
section:
(1) In general.--Except as provided in paragraph (2), the
term ``applicable financial institution'' means--
(A) a financial institution referred to 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 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 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.
TITLE VII--EXECUTIVE COMPENSATION ADJUSTMENTS AND MISCELLANEOUS
PROVISIONS
SEC. 701. COMPENSATION ADJUSTMENT.
(a) Compensation Adjustment Due to Government Intervention.--
(1) In general.--An officer of an institution shall pay to
the Department of the Treasury any amounts received by such
officer during a year as a bonus or other incentive-based or
equity-based compensation from the institution during--
(A) a year in which the institution is subject to a
government intervention; and
(B) the two years prior to a year in which the
institution is subject to a government intervention.
(2) Compensation adjustment defined.--For purposes of this
subsection, and with respect to an issuer, the term
``government intervention'' means--
(A) the placement of the issuer under
conservatorship, receivership, or other assumption of
the management, governance, and control of the issuer
by the Department of the Treasury or the Board of
Governors of the Federal Reserve; or
(B) an emergency loan of public funds made to the
issuer by the Department of the Treasury or the Board
of Governors of the Federal Reserve, if the Chairman of
the Board of Governors of the Federal Reserve
determines that such a loan is necessary to prevent the
imminent failure of the issuer.
(b) Effective Date.--This compensation adjustment shall take effect
on enactment of this Act, and shall have no effect after September 30,
2009.
SEC. 702. LIMITATIONS ON GSE SECURITIZATION AUTHORITY.
Part 2 of subtitle A of the Federal Housing Enterprise Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.), as amended
by the Housing and Economic Recovery Act of 2008 (Public Law 110-289)
is amended by adding at the end of the following new section:
``SEC. 1327. LIMITATIONS ON GSE SECURITIZATION AUTHORITY.
``(a) Prohibition.--The director shall, by regulation, prohibit
each enterprise from issuing, guaranteeing, or selling securities based
on or backed by mortgages described in subsection (b).
``(b) Covered Mortgages.--The mortgages described in this
subsection are--
``(1) mortgages commonly known as Alt-A or Alternative A-
paper mortgages, as defined by the Director, which shall
include mortgages that the Director determines to have an
increased level of credit risk due to borrower's not meeting
traditional or standard underwriting guidelines, including
guidelines with respect to--
``(A) documentation of amount or source of income
or assets;
``(B) debt-to-income ratio;
``(C) assets and type of property being financed;
``(D) credit history;
``(E) loan-to-value ratios; and
``(F) occupancy of the property being financed or
borrower characteristics involved; and
``(2) mortgages having characteristics that are not typical
of the lending practices of the mortgages that are made to
comply with a provision of Federal or State law or
regulation.''.
SEC. 703. FINANCIAL STATEMENT REVIEW.
(a) In General.--The Securities and Exchange Commission shall--
(1) review any financial statements required under section
13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) of
any rescued issuer for the rescued issuer's fiscal year 2005
and each succeeding fiscal year up to and including the fiscal
year in which such issuer became a rescued issuer; and
(2) examine each of the audits that were the basis of such
financial statements, and all the supporting books, papers,
correspondence, memoranda, or other records or materials on
which such audits were performed.
(b) Additional Action.--The Commission shall--
(1) if the Commission determines there was a material
misstatement made in any financial statement reviewed under
subsection (a), require the issuer to file with the Commission
a financial statement correcting such misstatement; and
(2) take all other appropriate actions under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
(c) Definition.--For purposes of this section, the term ``rescued
issuer'' means any issuer (as such term is defined in section 3(a)(8)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(8)) that has
received, prior to the date of 5 enactment of this Act, Federal
Government intervention through sale negotiation assistance, loan
guarantee, placement under conservatorship or receivership, or other
assumption of the management, governance, and control of the issuer by
the Department of the Treasury or the Board of Governors of the Federal
Reserve, an emergency loan of public funds made to the issuer by the
Department of the Treasury or the Board of Governors of the Federal
Reserve, or other similar Federal Government intervention.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, the Budget, Education and Labor, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.