12 U.S.C. § 4406a — Treatment of contracts with uninsured

Page 1636 TITLE 12—BANKS AND BANKING § 4404 § 4404. Clearing organization netting (a) General rule Notwithstanding any other provision of State or Federal law (other than section 1821(e) of this title, section 1787(c) of this title, and any order authorized under section 78eee(b)(2) of title 15), the covered contractual payment obligations and the covered contractual payment entitle- ments of a member of a clearing organization to and from all other members of a clearing organi- zation shall be terminated, liquidated, acceler- ated, and netted in accordance with and subject to the conditions of any applicable netting con- tract (except as provided in section 561(b)(2) of title 11). (b) Limitation of obligation to make payment The only obligation, if any, of a member of a clearing organization to make payment with re- spect to covered contractual payment obliga- tions arising under a single netting contract to any other member of a clearing organization shall be equal to its net obligation arising under that netting contract, and no such obligation shall exist if there is no net obligation. (c) Limitation on right to receive payment The only right, if any, of a member of a clear- ing organization to receive payment with re- spect to a covered contractual payment entitle- ment arising under a single netting contract from other members of a clearing organization shall be equal to its net entitlement arising under that netting contract, and no such right shall exist if there is no net entitlement. (d) Entitlement of failed members The net entitlement, if any, of any failed member of a clearing organization shall be paid to the failed member in accordance with, and subject to the conditions of, the applicable net- ting contract. (e) Obligations of failed members The net obligation, if any, of any failed mem- ber of a clearing organization shall be deter- mined in accordance with, and subject to the conditions of, the applicable netting contract. (f) Limitation on claims for entitlement A failed member of a clearing organization shall have no recognizable claim against any member of a clearing organization for any amount based on such covered contractual pay- ment entitlements other than its net entitle- ment. (g) Effectiveness notwithstanding status as mem- ber This section shall be given effect notwith- standing that a member is a failed member. (h) Enforceability of security agreements The provisions of any security agreement or arrangement or other credit enhancement re- lated to one or more netting contracts between any 2 members of a clearing organization shall be enforceable in accordance with their terms (except as provided in section 561(b)(2) of title 11), and shall not be stayed, avoided, or other- wise limited by any State or Federal law (other than section 1821(e) of this title, section 1787(c) of this title, and section 78eee(b)(2) of title 15). (Pub. L. 102–242, title IV, § 404, Dec. 19, 1991, 105 Stat. 2374; Pub. L. 109–8, title IX, § 906(c), Apr. 20, 2005, 119 Stat. 168; Pub. L. 109–390, § 4(b), Dec. 12, 2006, 120 Stat. 2695.) Editorial Notes AMENDMENTS 2006—Subsec. (a). Pub. L. 109–390 struck out ‘‘para- graphs (8)(E), (8)(F), and (10)(B) of’’ before ‘‘section 1821(e)’’ and ‘‘section 1787(c)’’ and inserted ‘‘terminated, liquidated, accelerated, and’’ after ‘‘organization shall be’’. Subsec. (h). Pub. L. 109–390, § 4(b)(1), struck out ‘‘para- graphs (8)(E), (8)(F), and (10)(B) of’’ before ‘‘section 1821(e)’’ and ‘‘section 1787(c)’’. 2005—Subsec. (a). Pub. L. 109–8, § 906(c)(1), added sub- sec. (a) and struck out heading and text of former sub- sec. (a). Text read as follows: ‘‘Notwithstanding any other provision of law, the covered contractual pay- ment obligations and covered contractual payment en- titlements of a member of a clearing organization to and from all other members of a clearing organization shall be netted in accordance with and subject to the conditions of any applicable netting contract.’’ Subsec. (h). Pub. L. 109–8, § 906(c)(2), added subsec. (h). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–390 not applicable to any cases commenced under Title 11, Bankruptcy, or to ap- pointments made under any Federal or State law, be- fore Dec. 12, 2006, see section 7 of Pub. L. 109–390, set out as a note under section 101 of Title 11, Bankruptcy. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under Title 11, Bankruptcy, before such ef- fective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of Title 11. § 4405. Preemption No stay, injunction, avoidance, moratorium, or similar proceeding or order, whether issued or granted by a court, administrative agency, or otherwise, shall limit or delay application of otherwise enforceable netting contracts in ac- cordance with sections 4403 and 4404 of this title. (Pub. L. 102–242, title IV, § 405, Dec. 19, 1991, 105 Stat. 2375.) § 4406. Relationship to other payments systems This chapter shall have no effect by implica- tion or otherwise on the validity or legal en- forceability of a netting arrangement of any payment system which is not subject to this chapter. (Pub. L. 102–242, title IV, § 406, Dec. 19, 1991, 105 Stat. 2375.) § 4406a. Treatment of contracts with uninsured national banks, uninsured Federal branches and agencies, certain uninsured State mem- ber banks, and Edge Act corporations (a) In general Notwithstanding any other provision of law, paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal Deposit Insurance Act [12 U.S.C. 1821(e)] shall apply to an uninsured national Page 1637 TITLE 12—BANKS AND BANKING § 4407 1 See References in Text note below. bank or uninsured Federal branch or Federal agency, a corporation chartered under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.], or an uninsured State member bank which operates, or operates as, a multilateral clearing organization pursuant to section 4422 1 of this title, except that for such purpose— (1) any reference to the ‘‘Corporation as re- ceiver’’ or ‘‘the receiver or the Corporation’’ shall refer to the receiver appointed by the Comptroller of the Currency in the case of an uninsured national bank or uninsured Federal branch or agency, or to the receiver appointed by the Board of Governors of the Federal Re- serve System in the case of a corporation chartered under section 25A of the Federal Re- serve Act [12 U.S.C. 611 et seq.] or an unin- sured State member bank; (2) any reference to the ‘‘Corporation’’ (other than in section 11(e)(8)(D) of such Act [12 U.S.C. 1821(e)(8)(D)]), the ‘‘Corporation, whether acting as such or as conservator or re- ceiver’’, a ‘‘receiver’’, or a ‘‘conservator’’ shall refer to the receiver or conservator appointed by the Comptroller of the Currency in the case of an uninsured national bank or uninsured Federal branch or agency, or to the receiver or conservator appointed by the Board of Gov- ernors of the Federal Reserve System in the case of a corporation chartered under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.] or an uninsured State member bank; and (3) any reference to an ‘‘insured depository institution’’ or ‘‘depository institution’’ shall refer to an uninsured national bank, an unin- sured Federal branch or Federal agency, a cor- poration chartered under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.], or an uninsured State member bank which oper- ates, or operates as, a multilateral clearing or- ganization pursuant to section 4422 1 of this title. (b) Liability The liability of a receiver or conservator of an uninsured national bank, uninsured Federal branch or agency, a corporation chartered under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.], or an uninsured State member bank which operates, or operates as, a multilateral clearing organization pursuant to section 4422 1 of this title, shall be determined in the same manner and subject to the same limitations that apply to receivers and conservators of insured depository institutions under section 11(e) of the Federal Deposit Insurance Act [12 U.S.C. 1821(e)]. (c) Regulatory authority (1) In general The Comptroller of the Currency in the case of an uninsured national bank or uninsured Federal branch or agency and the Board of Governors of the Federal Reserve System in the case of a corporation chartered under sec- tion 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.], or an uninsured State member bank that operates, or operates as, a multilat- eral clearing organization pursuant to section 4422 1 of this title, in consultation with the Federal Deposit Insurance Corporation, may each promulgate regulations solely to imple- ment this section. (2) Specific requirement In promulgating regulations, limited solely to implementing paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal Deposit In- surance Act [12 U.S.C. 1821(e)], the Comp- troller of the Currency and the Board of Gov- ernors of the Federal Reserve System each shall ensure that the regulations generally are consistent with the regulations and policies of the Federal Deposit Insurance Corporation adopted pursuant to the Federal Deposit In- surance Act [12 U.S.C. 1811 et seq.]. (d) Definitions For purposes of this section, the terms ‘‘Fed- eral branch’’, ‘‘Federal agency’’, and ‘‘foreign bank’’ have the same meanings as in section 3101 of this title. (Pub. L. 102–242, title IV, § 407, as added Pub. L. 109–8, title IX, § 906(d)(2), Apr. 20, 2005, 119 Stat. 169.) Editorial Notes REFERENCES IN TEXT Section 25A of the Federal Reserve Act, referred to in subsecs. (a), (b), and (c)(1), popularly known as the Edge Act, is classified to subchapter II (§ 611 et seq.) of chap- ter 6 of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 611 of this title and Tables. Section 4422 of this title, referred to in subsecs. (a) to (c)(1), was repealed by Pub. L. 111–203, title VII, § 740, July 21, 2010, 124 Stat. 1729. Section 11(e)(8)(D) of such Act, referred to in subsec. (a)(2), probably means section 11(e)(8)(D) of the Federal Deposit Insurance Act, which is classified to section 1821(e)(8)(D) of this title. The Federal Deposit Insurance Act, referred to in subsec. (c)(2), is act Sept. 21, 1950, ch. 967, § 2, 64 Stat. 873, which is classified generally to chapter 16 (§ 1811 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 1811 of this title and Tables. PRIOR PROVISIONS A prior section 407 of Pub. L. 102–242 was renumbered section 407A and is classified to section 4407 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as an Effective Date of 2005 Amendment note under section 101 of Title 11. § 4407. National emergencies The provisions of this chapter may not be con- strued to limit the authority of the President under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.) [now 50 U.S.C. 4301 et seq.] or the International Emergency Economic Pow- ers Act (50 U.S.C. 1701 et seq.). (Pub. L. 102–242, title IV, § 407A, formerly § 407, Dec. 19, 1991, 105 Stat. 2375; renumbered § 407A,