12 U.S.C. § 5390 — Powers and duties of the Corporation

Page 1881 TITLE 12—BANKS AND BANKING § 5390 case commenced under the Bankruptcy Code), and upon notice to SIPC (with respect to a cov- ered broker or dealer) and no such case or pro- ceeding may be commenced with respect to a covered financial company at any time while the orderly liquidation is pending. (b) Revesting of assets Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial company shall, to the extent they have vested in any entity other than the covered fi- nancial company as a result of any case or pro- ceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), or any similar provision of State liquidation or insolvency law applicable to the covered financial company, revest in the covered financial company. (c) Limitation Notwithstanding subsections (a) and (b), any order entered or other relief granted by a bank- ruptcy court prior to the date of appointment of the Corporation as receiver shall continue with the same validity as if an orderly liquidation had not been commenced. (Pub. L. 111–203, title II, § 208, July 21, 2010, 124 Stat. 1459.) Editorial Notes REFERENCES IN TEXT The Securities Investor Protection Act of 1970, re- ferred to in subsecs. (a) and (b), is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, which is classified generally to chapter 2B–1 (§ 78aaa et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78aaa of Title 15 and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5389. Rulemaking; non-conflicting law The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appro- priate to implement this subchapter, including rules and regulations with respect to the rights, interests, and priorities of creditors, counterparties, security entitlement holders, or other persons with respect to any covered finan- cial company or any assets or other property of or held by such covered financial company, and address the potential for conflicts of interest be- tween or among individual receiverships estab- lished under this subchapter or under the Fed- eral Deposit Insurance Act [12 U.S.C. 1811 et seq.]. To the extent possible, the Corporation shall seek to harmonize applicable rules and reg- ulations promulgated under this section with the insolvency laws that would otherwise apply to a covered financial company. (Pub. L. 111–203, title II, § 209, July 21, 2010, 124 Stat. 1460.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables. The Federal Deposit Insurance Act, referred to in text, 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 section 1811 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5390. Powers and duties of the Corporation (a) Powers and authorities (1) General powers (A) Successor to covered financial company The Corporation shall, upon appointment as receiver for a covered financial company under this subchapter, succeed to— (i) all rights, titles, powers, and privi- leges of the covered financial company and its assets, and of any stockholder, mem- ber, officer, or director of such company; and (ii) title to the books, records, and assets of any previous receiver or other legal cus- todian of such covered financial company. (B) Operation of the covered financial com- pany during the period of orderly liq- uidation The Corporation, as receiver for a covered financial company, may— (i) take over the assets of and operate the covered financial company with all of the powers of the members or share- holders, the directors, and the officers of the covered financial company, and con- duct all business of the covered financial company; (ii) collect all obligations and money owed to the covered financial company; (iii) perform all functions of the covered financial company, in the name of the cov- ered financial company; (iv) manage the assets and property of the covered financial company, consistent with maximization of the value of the as- sets in the context of the orderly liquida- tion; and (v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver. (C) Functions of covered financial company officers, directors, and shareholders The Corporation may provide for the exer- cise of any function by any member or stockholder, director, or officer of any cov- ered financial company for which the Cor- poration has been appointed as receiver under this subchapter. Page 1882 TITLE 12—BANKS AND BANKING § 5390 1 So in original. Probably should be ‘‘wind up’’. (D) Additional powers as receiver The Corporation shall, as receiver for a covered financial company, and subject to all legally enforceable and perfected secu- rity interests and all legally enforceable se- curity entitlements in respect of assets held by the covered financial company, liquidate, and wind-up 1 the affairs of a covered finan- cial company, including taking steps to real- ize upon the assets of the covered financial company, in such manner as the Corporation deems appropriate, including through the sale of assets, the transfer of assets to a bridge financial company established under subsection (h), or the exercise of any other rights or privileges granted to the receiver under this section. (E) Additional powers with respect to failing subsidiaries of a covered financial com- pany (i) In general In any case in which a receiver is ap- pointed for a covered financial company under section 5382 of this title, the Cor- poration may appoint itself as receiver of any covered subsidiary of the covered fi- nancial company that is organized under Federal law or the laws of any State, if the Corporation and the Secretary jointly de- termine that— (I) the covered subsidiary is in default or in danger of default; (II) such action would avoid or miti- gate serious adverse effects on the finan- cial stability or economic conditions of the United States; and (III) such action would facilitate the orderly liquidation of the covered finan- cial company. (ii) Treatment as covered financial com- pany If the Corporation is appointed as re- ceiver of a covered subsidiary of a covered financial company under clause (i), the covered subsidiary shall thereafter be con- sidered a covered financial company under this subchapter, and the Corporation shall thereafter have all the powers and rights with respect to that covered subsidiary as it has with respect to a covered financial company under this subchapter. (F) Organization of bridge companies The Corporation, as receiver for a covered financial company, may organize a bridge fi- nancial company under subsection (h). (G) Merger; transfer of assets and liabilities (i) In general Subject to clauses (ii) and (iii), the Cor- poration, as receiver for a covered finan- cial company, may— (I) merge the covered financial com- pany with another company; or (II) transfer any asset or liability of the covered financial company (includ- ing any assets and liabilities held by the covered financial company for security entitlement holders, any customer prop- erty, or any assets and liabilities associ- ated with any trust or custody business) without obtaining any approval, assign- ment, or consent with respect to such transfer. (ii) Federal agency approval; antitrust re- view With respect to a transaction described in clause (i)(I) that requires approval by a Federal agency— (I) the transaction may not be con- summated before the 5th calendar day after the date of approval by the Federal agency responsible for such approval; (II) if, in connection with any such ap- proval, a report on competitive factors is required, the Federal agency responsible for such approval shall promptly notify the Attorney General of the United States of the proposed transaction, and the Attorney General shall provide the required report not later than 10 days after the date of the request; and (III) if notification under section 18a of title 15 is required with respect to such transaction, then the required waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting pe- riod is terminated earlier under sub- section (b)(2) of such section 18a, or is extended pursuant to subsection (e)(2) of such section 18a. (iii) Setoff Subject to the other provisions of this subchapter, any transferee of assets from a receiver, including a bridge financial com- pany, shall be subject to such claims or rights as would prevail over the rights of such transferee in such assets under appli- cable noninsolvency law. (H) Payment of valid obligations The Corporation, as receiver for a covered financial company, shall, to the extent that funds are available, pay all valid obligations of the covered financial company that are due and payable at the time of the appoint- ment of the Corporation as receiver, in ac- cordance with the prescriptions and limita- tions of this subchapter. (I) Applicable noninsolvency law Except as may otherwise be provided in this subchapter, the applicable noninsol- vency law shall be determined by the non- insolvency choice of law rules otherwise ap- plicable to the claims, rights, titles, persons, or entities at issue. (J) Subpoena authority (i) In general The Corporation, as receiver for a cov- ered financial company, may, for purposes of carrying out any power, authority, or duty with respect to the covered financial company (including determining any claim Page 1883 TITLE 12—BANKS AND BANKING § 5390 against the covered financial company and determining and realizing upon any asset of any person in the course of collecting money due the covered financial com- pany), exercise any power established under section 1818(n) of this title, as if the Corporation were the appropriate Federal banking agency for the covered financial company, and the covered financial com- pany were an insured depository institu- tion. (ii) Rule of construction This subparagraph may not be construed as limiting any rights that the Corpora- tion, in any capacity, might otherwise have to exercise any powers described in clause (i) or under any other provision of law. (K) Incidental powers The Corporation, as receiver for a covered financial company, may exercise all powers and authorities specifically granted to re- ceivers under this subchapter, and such inci- dental powers as shall be necessary to carry out such powers under this subchapter. (L) Utilization of private sector In carrying out its responsibilities in the management and disposition of assets from the covered financial company, the Corpora- tion, as receiver for a covered financial com- pany, may utilize the services of private per- sons, including real estate and loan portfolio asset management, property management, auction marketing, legal, and brokerage services, if such services are available in the private sector, and the Corporation deter- mines that utilization of such services is practicable, efficient, and cost effective. (M) Shareholders and creditors of covered fi- nancial company Notwithstanding any other provision of law, the Corporation, as receiver for a cov- ered financial company, shall succeed by op- eration of law to the rights, titles, powers, and privileges described in subparagraph (A), and shall terminate all rights and claims that the stockholders and creditors of the covered financial company may have against the assets of the covered financial company or the Corporation arising out of their sta- tus as stockholders or creditors, except for their right to payment, resolution, or other satisfaction of their claims, as permitted under this section. The Corporation shall en- sure that shareholders and unsecured credi- tors bear losses, consistent with the priority of claims provisions under this section. (N) Coordination with foreign financial au- thorities The Corporation, as receiver for a covered financial company, shall coordinate, to the maximum extent possible, with the appro- priate foreign financial authorities regard- ing the orderly liquidation of any covered fi- nancial company that has assets or oper- ations in a country other than the United States. (O) Restriction on transfers (i) Selection of accounts for transfer If the Corporation establishes one or more bridge financial companies with re- spect to a covered broker or dealer, the Corporation shall transfer to one of such bridge financial companies, all customer accounts of the covered broker or dealer, and all associated customer name securi- ties and customer property, unless the Corporation, after consulting with the Commission and SIPC, determines that— (I) the customer accounts, customer name securities, and customer property are likely to be promptly transferred to another broker or dealer that is reg- istered with the Commission under sec- tion 78o(b) of title 15 and is a member of SIPC; or (II) the transfer of the accounts to a bridge financial company would materi- ally interfere with the ability of the Cor- poration to avoid or mitigate serious ad- verse effects on financial stability or economic conditions in the United States. (ii) Transfer of property SIPC, as trustee for the liquidation of the covered broker or dealer, and the Com- mission shall provide any and all reason- able assistance necessary to complete such transfers by the Corporation. (iii) Customer consent and court approval not required Neither customer consent nor court ap- proval shall be required to transfer any customer accounts or associated customer name securities or customer property to a bridge financial company in accordance with this section. (iv) Notification of SIPC and sharing of in- formation The Corporation shall identify to SIPC the customer accounts and associated cus- tomer name securities and customer prop- erty transferred to the bridge financial company. The Corporation and SIPC shall cooperate in the sharing of any informa- tion necessary for each entity to discharge its obligations under this subchapter and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) includ- ing by providing access to the books and records of the covered financial company and any bridge financial company estab- lished in accordance with this subchapter. (2) Determination of claims (A) In general The Corporation, as receiver for a covered financial company, shall report on claims, as set forth in section 5383(c)(3) of this title. Subject to paragraph (4) of this subsection, the Corporation, as receiver for a covered fi- nancial company, shall determine claims in accordance with the requirements of this subsection and regulations prescribed under section 5389 of this title. Page 1884 TITLE 12—BANKS AND BANKING § 5390 (B) Notice requirements The Corporation, as receiver for a covered financial company, in any case involving the liquidation or winding up of the affairs of a covered financial company, shall— (i) promptly publish a notice to the creditors of the covered financial company to present their claims, together with proof, to the receiver by a date specified in the notice, which shall be not earlier than 90 days after the date of publication of such notice; and (ii) republish such notice 1 month and 2 months, respectively, after the date of publication under clause (i). (C) Mailing required The Corporation as receiver shall mail a notice similar to the notice published under clause (i) or (ii) of subparagraph (B), at the time of such publication, to any creditor shown on the books and records of the cov- ered financial company— (i) at the last address of the creditor ap- pearing in such books; (ii) in any claim filed by the claimant; or (iii) upon discovery of the name and ad- dress of a claimant not appearing on the books and records of the covered financial company, not later than 30 days after the date of the discovery of such name and ad- dress. (3) Procedures for resolution of claims (A) Decision period (i) In general Prior to the 180th day after the date on which a claim against a covered financial company is filed with the Corporation as receiver, or such later date as may be agreed as provided in clause (ii), the Cor- poration shall notify the claimant whether it allows or disallows the claim, in accord- ance with subparagraphs (B), (C), and (D). (ii) Extension of time By written agreement executed not later than 180 days after the date on which a claim against a covered financial company is filed with the Corporation, the period described in clause (i) may be extended by written agreement between the claimant and the Corporation. Failure to notify the claimant of any disallowance within the time period set forth in clause (i), as it may be extended by agreement under this clause, shall be deemed to be a disallow- ance of such claim, and the claimant may file or continue an action in court, as pro- vided in paragraph (4). (iii) Mailing of notice sufficient The requirements of clause (i) shall be deemed to be satisfied if the notice of any decision with respect to any claim is mailed to the last address of the claimant which appears— (I) on the books, records, or both of the covered financial company; (II) in the claim filed by the claimant; or (III) in documents submitted in proof of the claim. (iv) Contents of notice of disallowance If the Corporation as receiver disallows any claim filed under clause (i), the notice to the claimant shall contain— (I) a statement of each reason for the disallowance; and (II) the procedures required to file or continue an action in court, as provided in paragraph (4). (B) Allowance of proven claim The receiver shall allow any claim re- ceived by the receiver on or before the date specified in the notice under paragraph (2)(B)(i), which is proved to the satisfaction of the receiver. (C) Disallowance of claims filed after end of filing period (i) In general Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (2)(B)(i) shall be disallowed, and such disallowance shall be final. (ii) Certain exceptions Clause (i) shall not apply with respect to any claim filed by a claimant after the date specified in the notice published under paragraph (2)(B)(i), and such claim may be considered by the receiver under subparagraph (B), if— (I) the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; and (II) such claim is filed in time to per- mit payment of such claim. (D) Authority to disallow claims (i) In general The Corporation may disallow any por- tion of any claim by a creditor or claim of a security, preference, setoff, or priority which is not proved to the satisfaction of the Corporation. (ii) Payments to undersecured creditors In the case of a claim against a covered financial company that is secured by any property or other asset of such covered fi- nancial company, the receiver— (I) may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim; and (II) may not make any payment with respect to such unsecured portion of the claim, other than in connection with the disposition of all claims of unsecured creditors of the covered financial com- pany. (iii) Exceptions No provision of this paragraph shall apply with respect to— (I) any extension of credit from any Federal reserve bank, or the Corpora- tion, to any covered financial company; or Page 1885 TITLE 12—BANKS AND BANKING § 5390 2 So in original. A closing parenthesis probably should appear after ‘‘receiver’’. (II) subject to clause (ii), any legally enforceable and perfected security inter- est in the assets of the covered financial company securing any such extension of credit. (E) Legal effect of filing (i) Statute of limitations tolled For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action. (ii) No prejudice to other actions Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the date of appointment of the receiver for the cov- ered financial company. (4) Judicial determination of claims (A) In general Subject to subparagraph (B), a claimant may file suit on a claim (or continue an ac- tion commenced before the date of appoint- ment of the Corporation as receiver) in the district or territorial court of the United States for the district within which the prin- cipal place of business of the covered finan- cial company is located (and such court shall have jurisdiction to hear such claim). (B) Timing A claim under subparagraph (A) may be filed before the end of the 60-day period be- ginning on the earlier of— (i) the end of the period described in paragraph (3)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in para- graph (3)(A)(ii)) with respect to any claim against a covered financial company for which the Corporation is receiver; or (ii) the date of any notice of disallow- ance of such claim pursuant to paragraph (3)(A)(i). (C) Statute of limitations If any claimant fails to file suit on such claim (or to continue an action on such claim commenced before the date of appoint- ment of the Corporation as receiver) prior to the end of the 60-day period described in sub- paragraph (B), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the re- ceiver) as of the end of such period, such dis- allowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim. (5) Expedited determination of claims (A) Procedure required The Corporation shall establish a proce- dure for expedited relief outside of the claims process established under paragraph (3), for any claimant that alleges— (i) having a legally valid and enforceable or perfected security interest in property of a covered financial company or control of any legally valid and enforceable secu- rity entitlement in respect of any asset held by the covered financial company for which the Corporation has been appointed receiver; and (ii) that irreparable injury will occur if the claims procedure established under paragraph (3) is followed. (B) Determination period Prior to the end of the 90-day period begin- ning on the date on which a claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Corpora- tion shall— (i) determine— (I) whether to allow or disallow such claim, or any portion thereof; or (II) whether such claim should be de- termined pursuant to the procedures es- tablished pursuant to paragraph (3); (ii) notify the claimant of the determina- tion; and (iii) if the claim is disallowed, provide a statement of each reason for the disallow- ance and the procedure for obtaining a ju- dicial determination. (C) Period for filing or renewing suit Any claimant who files a request for expe- dited relief shall be permitted to file suit (or continue a suit filed before the date of ap- pointment of the Corporation as receiver 2 seeking a determination of the rights of the claimant with respect to such security inter- est (or such security entitlement) after the earlier of— (i) the end of the 90-day period beginning on the date of the filing of a request for ex- pedited relief; or (ii) the date on which the Corporation denies the claim or a portion thereof. (D) Statute of limitations If an action described in subparagraph (C) is not filed, or the motion to renew a pre- viously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed in accordance with subparagraph (C), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the re- ceiver), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim. (E) Legal effect of filing (i) Statute of limitations tolled For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action. (ii) No prejudice to other actions Subject to paragraph (8), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appoint- ment of the Corporation as receiver for the covered financial company. Page 1886 TITLE 12—BANKS AND BANKING § 5390 (6) Agreements against interest of the receiver No agreement that tends to diminish or de- feat the interest of the Corporation as receiver in any asset acquired by the receiver under this section shall be valid against the receiver, unless such agreement— (A) is in writing; (B) was executed by an authorized officer or representative of the covered financial company, or confirmed in the ordinary course of business by the covered financial company; and (C) has been, since the time of its execu- tion, an official record of the company or the party claiming under the agreement pro- vides documentation, acceptable to the re- ceiver, of such agreement and its authorized execution or confirmation by the covered fi- nancial company. (7) Payment of claims (A) In general Subject to subparagraph (B), the Corpora- tion as receiver may, in its discretion and to the extent that funds are available, pay creditor claims, in such manner and amounts as are authorized under this sec- tion, which are— (i) allowed by the receiver; (ii) approved by the receiver pursuant to a final determination pursuant to para- graph (3) or (5), as applicable; or (iii) determined by the final judgment of a court of competent jurisdiction. (B) Limitation A creditor shall, in no event, receive less than the amount that the creditor is enti- tled to receive under paragraphs (2) and (3) of subsection (d), as applicable. (C) Payment of dividends on claims The Corporation as receiver may, in its sole discretion, and to the extent otherwise permitted by this section, pay dividends on proven claims at any time, and no liability shall attach to the Corporation as receiver, by reason of any such payment or for failure to pay dividends to a claimant whose claim is not proved at the time of any such pay- ment. (D) Rulemaking by the Corporation The Corporation may prescribe such rules, including definitions of terms, as the Cor- poration deems appropriate to establish an interest rate for or to make payments of post-insolvency interest to creditors holding proven claims against the receivership es- tate of a covered financial company, except that no such interest shall be paid until the Corporation as receiver has satisfied the principal amount of all creditor claims. (8) Suspension of legal actions (A) In general After the appointment of the Corporation as receiver for a covered financial company, the Corporation may request a stay in any judicial action or proceeding in which such covered financial company is or becomes a party, for a period of not to exceed 90 days. (B) Grant of stay by all courts required Upon receipt of a request by the Corpora- tion pursuant to subparagraph (A), the court shall grant such stay as to all parties. (9) Additional rights and duties (A) Prior final adjudication The Corporation shall abide by any final, non-appealable judgment of any court of competent jurisdiction that was rendered be- fore the appointment of the Corporation as receiver. (B) Rights and remedies of receiver In the event of any appealable judgment, the Corporation as receiver shall— (i) have all the rights and remedies available to the covered financial company (before the date of appointment of the Cor- poration as receiver under section 5382 of this title) and the Corporation, including removal to Federal court and all appellate rights; and (ii) not be required to post any bond in order to pursue such remedies. (C) No attachment or execution No attachment or execution may be issued by any court upon assets in the possession of the Corporation as receiver for a covered fi- nancial company. (D) Limitation on judicial review Except as otherwise provided in this sub- chapter, no court shall have jurisdiction over— (i) any claim or action for payment from, or any action seeking a determina- tion of rights with respect to, the assets of any covered financial company for which the Corporation has been appointed re- ceiver, including any assets which the Cor- poration may acquire from itself as such receiver; or (ii) any claim relating to any act or omission of such covered financial com- pany or the Corporation as receiver. (E) Disposition of assets In exercising any right, power, privilege, or authority as receiver in connection with any covered financial company for which the Corporation is acting as receiver under this section, the Corporation shall, to the great- est extent practicable, conduct its oper- ations in a manner that— (i) maximizes the net present value re- turn from the sale or disposition of such assets; (ii) minimizes the amount of any loss re- alized in the resolution of cases; (iii) mitigates the potential for serious adverse effects to the financial system; (iv) ensures timely and adequate com- petition and fair and consistent treatment of offerors; and (v) prohibits discrimination on the basis of race, sex, or ethnic group in the solici- tation and consideration of offers. (10) Statute of limitations for actions brought by receiver (A) In general Notwithstanding any provision of any con- tract, the applicable statute of limitations Page 1887 TITLE 12—BANKS AND BANKING § 5390 with regard to any action brought by the Corporation as receiver for a covered finan- cial company shall be— (i) in the case of any contract claim, the longer of— (I) the 6-year period beginning on the date on which the claim accrues; or (II) the period applicable under State law; and (ii) in the case of any tort claim, the longer of— (I) the 3-year period beginning on the date on which the claim accrues; or (II) the period applicable under State law. (B) Date on which a claim accrues For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in subparagraph (A) shall be the later of— (i) the date of the appointment of the Corporation as receiver under this sub- chapter; or (ii) the date on which the cause of action accrues. (C) Revival of expired State causes of action (i) In general In the case of any tort claim described in clause (ii) for which the applicable statute of limitations under State law has expired not more than 5 years before the date of appointment of the Corporation as re- ceiver for a covered financial company, the Corporation may bring an action as re- ceiver on such claim without regard to the expiration of the statute of limitations. (ii) Claims described A tort claim referred to in clause (i) is a claim arising from fraud, intentional mis- conduct resulting in unjust enrichment, or intentional misconduct resulting in sub- stantial loss to the covered financial com- pany. (11) Avoidable transfers (A) Fraudulent transfers The Corporation, as receiver for any cov- ered financial company, may avoid a trans- fer of any interest of the covered financial company in property, or any obligation in- curred by the covered financial company, that was made or incurred at or within 2 years before the date on which the Corpora- tion was appointed receiver, if— (i) the covered financial company volun- tarily or involuntarily— (I) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the covered financial company was or be- came, on or after the date on which such transfer was made or such obligation was incurred, indebted; or (II) received less than a reasonably equivalent value in exchange for such transferor obligation; and (ii) the covered financial company volun- tarily or involuntarily— (I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation; (II) was engaged in business or a trans- action, or was about to engage in busi- ness or a transaction, for which any property remaining with the covered fi- nancial company was an unreasonably small capital; (III) intended to incur, or believed that the covered financial company would incur, debts that would be beyond the ability of the covered financial company to pay as such debts matured; or (IV) made such transfer to or for the benefit of an insider, or incurred such ob- ligation to or for the benefit of an in- sider, under an employment contract and not in the ordinary course of business. (B) Preferential transfers The Corporation as receiver for any cov- ered financial company may avoid a transfer of an interest of the covered financial com- pany in property— (i) to or for the benefit of a creditor; (ii) for or on account of an antecedent debt that was owed by the covered finan- cial company before the transfer was made; (iii) that was made while the covered fi- nancial company was insolvent; (iv) that was made— (I) 90 days or less before the date on which the Corporation was appointed re- ceiver; or (II) more than 90 days, but less than 1 year before the date on which the Cor- poration was appointed receiver, if such creditor at the time of the transfer was an insider; and (v) that enables the creditor to receive more than the creditor would receive if— (I) the covered financial company had been liquidated under chapter 7 of the Bankruptcy Code; (II) the transfer had not been made; and (III) the creditor received payment of such debt to the extent provided by the provisions of chapter 7 of the Bank- ruptcy Code. (C) Post-receivership transactions The Corporation as receiver for any cov- ered financial company may avoid a transfer of property of the receivership that occurred after the Corporation was appointed receiver that was not authorized under this sub- chapter by the Corporation as receiver. (D) Right of recovery To the extent that a transfer is avoided under subparagraph (A), (B), or (C), the Cor- poration may recover, for the benefit of the covered financial company, the property transferred or, if a court so orders, the value of such property (at the time of such trans- fer) from— (i) the initial transferee of such transfer or the person for whose benefit such trans- fer was made; or Page 1888 TITLE 12—BANKS AND BANKING § 5390 (ii) any immediate or mediate transferee of any such initial transferee. (E) Rights of transferee or obligee The Corporation may not recover under subparagraph (D)(ii) from— (i) any transferee that takes for value, including in satisfaction of or to secure a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; or (ii) any immediate or mediate good faith transferee of such transferee. (F) Defenses Subject to the other provisions of this sub- chapter— (i) a transferee or obligee from which the Corporation seeks to recover a transfer or to avoid an obligation under subparagraph (A), (B), (C), or (D) shall have the same de- fenses available to a transferee or obligee from which a trustee seeks to recover a transfer or avoid an obligation under sec- tions 547, 548, and 549 of the Bankruptcy Code; and (ii) the authority of the Corporation to recover a transfer or avoid an obligation shall be subject to subsections (b) and (c) of section 546, section 547(c), and section 548(c) of the Bankruptcy Code. (G) Rights under this section The rights of the Corporation as receiver under this section shall be superior to any rights of a trustee or any other party (other than a Federal agency) under the Bank- ruptcy Code. (H) Rules of construction; definitions For purposes of— (i) subparagraphs (A) and (B)— (I) the term ‘‘insider’’ has the same meaning as in section 101(31) of the Bankruptcy Code; (II) a transfer is made when such trans- fer is so perfected that a bona fide pur- chaser from the covered financial com- pany against whom applicable law per- mits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the inter- est in such property of the transferee, but if such transfer is not so perfected before the date on which the Corporation is appointed as receiver for the covered financial company, such transfer is made immediately before the date of such ap- pointment; and (III) the term ‘‘value’’ means property, or satisfaction or securing of a present or antecedent debt of the covered finan- cial company, but does not include an unperformed promise to furnish support to the covered financial company; and (ii) subparagraph (B)— (I) the covered financial company is presumed to have been insolvent on and during the 90-day period immediately preceding the date of appointment of the Corporation as receiver; and (II) the term ‘‘insolvent’’ has the same meaning as in section 101(32) of the Bankruptcy Code. (12) Setoff (A) Generally Except as otherwise provided in this sub- chapter, any right of a creditor to offset a mutual debt owed by the creditor to any covered financial company that arose before the Corporation was appointed as receiver for the covered financial company against a claim of such creditor may be asserted if en- forceable under applicable noninsolvency law, except to the extent that— (i) the claim of the creditor against the covered financial company is disallowed; (ii) the claim was transferred, by an en- tity other than the covered financial com- pany, to the creditor— (I) after the Corporation was appointed as receiver of the covered financial com- pany; or (II)(aa) after the 90-day period pre- ceding the date on which the Corpora- tion was appointed as receiver for the covered financial company; and (bb) while the covered financial com- pany was insolvent (except for a setoff in connection with a qualified financial contract); or (iii) the debt owed to the covered finan- cial company was incurred by the covered financial company— (I) after the 90-day period preceding the date on which the Corporation was appointed as receiver for the covered fi- nancial company; (II) while the covered financial com- pany was insolvent; and (III) for the purpose of obtaining a right of setoff against the covered finan- cial company (except for a setoff in con- nection with a qualified financial con- tract). (B) Insufficiency (i) In general Except with respect to a setoff in con- nection with a qualified financial contract, if a creditor offsets a mutual debt owed to the covered financial company against a claim of the covered financial company on or within the 90-day period preceding the date on which the Corporation is appointed as receiver for the covered financial com- pany, the Corporation may recover from the creditor the amount so offset, to the extent that any insufficiency on the date of such setoff is less than the insufficiency on the later of— (I) the date that is 90 days before the date on which the Corporation is ap- pointed as receiver for the covered finan- cial company; or (II) the first day on which there is an insufficiency during the 90-day period preceding the date on which the Corpora- tion is appointed as receiver for the cov- ered financial company. (ii) Definition of insufficiency In this subparagraph, the term ‘‘insuffi- ciency’’ means the amount, if any, by Page 1889 TITLE 12—BANKS AND BANKING § 5390 which a claim against the covered finan- cial company exceeds a mutual debt owed to the covered financial company by the holder of such claim. (C) Insolvency The term ‘‘insolvent’’ has the same mean- ing as in section 101(32) of the Bankruptcy Code. (D) Presumption of insolvency For purposes of this paragraph, the cov- ered financial company is presumed to have been insolvent on and during the 90-day pe- riod preceding the date of appointment of the Corporation as receiver. (E) Limitation Nothing in this paragraph (12) shall be the basis for any right of setoff where no such right exists under applicable noninsolvency law. (F) Priority claim Except as otherwise provided in this sub- chapter, the Corporation as receiver for the covered financial company may sell or transfer any assets free and clear of the setoff rights of any party, except that such party shall be entitled to a claim, subordi- nate to the claims payable under subpara- graphs (A), (B), (C), and (D) of subsection (b)(1), but senior to all other unsecured li- abilities defined in subsection (b)(1)(E), in an amount equal to the value of such setoff rights. (13) Attachment of assets and other injunctive relief Subject to paragraph (14), any court of com- petent jurisdiction may, at the request of the Corporation as receiver for a covered financial company, issue an order in accordance with Rule 65 of the Federal Rules of Civil Proce- dure, including an order placing the assets of any person designated by the Corporation under the control of the court and appointing a trustee to hold such assets. (14) Standards (A) Showing Rule 65 of the Federal Rules of Civil Proce- dure shall apply with respect to any pro- ceeding under paragraph (13), without regard to the requirement that the applicant show that the injury, loss, or damage is irrep- arable and immediate. (B) State proceeding If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of the State provide substantially similar pro- tections of the right of the parties to due process as provided under Rule 65 (as modi- fied with respect to such proceeding by sub- paragraph (A)), the relief sought by the Cor- poration pursuant to paragraph (14) may be requested under the laws of such State. (15) Treatment of claims arising from breach of contracts executed by the Corporation as receiver Notwithstanding any other provision of this subchapter, any final and non-appealable judg- ment for monetary damages entered against the Corporation as receiver for a covered fi- nancial company for the breach of an agree- ment executed or approved by the Corporation after the date of its appointment shall be paid as an administrative expense of the receiver. Nothing in this paragraph shall be construed to limit the power of a receiver to exercise any rights under contract or law, including to ter- minate, breach, cancel, or otherwise dis- continue such agreement. (16) Accounting and recordkeeping require- ments (A) In general The Corporation as receiver for a covered financial company shall, consistent with the accounting and reporting practices and pro- cedures established by the Corporation, maintain a full accounting of each receiver- ship or other disposition of any covered fi- nancial company. (B) Annual accounting or report With respect to each receivership to which the Corporation is appointed, the Corpora- tion shall make an annual accounting or re- port, as appropriate, available to the Sec- retary and the Comptroller General of the United States. (C) Availability of reports Any report prepared pursuant to subpara- graph (B) and section 5383(c)(3) of this title shall be made available to the public by the Corporation. (D) Recordkeeping requirement (i) In general The Corporation shall prescribe such regulations and establish such retention schedules as are necessary to maintain the documents and records of the Corporation generated in exercising the authorities of this subchapter and the records of a cov- ered financial company for which the Cor- poration is appointed receiver, with due regard for— (I) the avoidance of duplicative record retention; and (II) the expected evidentiary needs of the Corporation as receiver for a covered financial company and the public regard- ing the records of covered financial com- panies. (ii) Retention of records Unless otherwise required by applicable Federal law or court order, the Corpora- tion may not, at any time, destroy any records that are subject to clause (i). (iii) Records defined As used in this subparagraph, the terms ‘‘records’’ and ‘‘records of a covered finan- cial company’’ mean any document, book, paper, map, photograph, microfiche, microfilm, computer or electronically-cre- ated record generated or maintained by the covered financial company in the course of and necessary to its transaction of business. Page 1890 TITLE 12—BANKS AND BANKING § 5390 (b) Priority of expenses and unsecured claims (1) In general Unsecured claims against a covered financial company, or the Corporation as receiver for such covered financial company under this section, that are proven to the satisfaction of the receiver shall have priority in the fol- lowing order: (A) Administrative expenses of the re- ceiver. (B) Any amounts owed to the United States, unless the United States agrees or consents otherwise. (C) Wages, salaries, or commissions, in- cluding vacation, severance, and sick leave pay earned by an individual (other than an individual described in subparagraph (G)), but only to the extent of $11,725 for each in- dividual (as indexed for inflation, by regula- tion of the Corporation) earned not later than 180 days before the date of appointment of the Corporation as receiver. (D) Contributions owed to employee ben- efit plans arising from services rendered not later than 180 days before the date of ap- pointment of the Corporation as receiver, to the extent of the number of employees cov- ered by each such plan, multiplied by $11,725 (as indexed for inflation, by regulation of the Corporation), less the aggregate amount paid to such employees under subparagraph (C), plus the aggregate amount paid by the receivership on behalf of such employees to any other employee benefit plan. (E) Any other general or senior liability of the covered financial company (which is not a liability described under subparagraph (F), (G), or (H)). (F) Any obligation subordinated to general creditors (which is not an obligation de- scribed under subparagraph (G) or (H)). (G) Any wages, salaries, or commissions, including vacation, severance, and sick leave pay earned, owed to senior executives and directors of the covered financial company. (H) Any obligation to shareholders, mem- bers, general partners, limited partners, or other persons, with interests in the equity of the covered financial company arising as a result of their status as shareholders, mem- bers, general partners, limited partners, or other persons with interests in the equity of the covered financial company. (2) Post-receivership financing priority In the event that the Corporation, as re- ceiver for a covered financial company, is un- able to obtain unsecured credit for the covered financial company from commercial sources, the Corporation as receiver may obtain credit or incur debt on the part of the covered finan- cial company, which shall have priority over any or all administrative expenses of the re- ceiver under paragraph (1)(A). (3) Claims of the United States Unsecured claims of the United States shall, at a minimum, have a higher priority than li- abilities of the covered financial company that count as regulatory capital. (4) Creditors similarly situated All claimants of a covered financial com- pany that are similarly situated under para- graph (1) shall be treated in a similar manner, except that the Corporation may take any ac- tion (including making payments, subject to subsection (o)(1)(D)(i)) that does not comply with this subsection, if— (A) the Corporation determines that such action is necessary— (i) to maximize the value of the assets of the covered financial company; (ii) to initiate and continue operations essential to implementation of the receiv- ership or any bridge financial company; (iii) to maximize the present value re- turn from the sale or other disposition of the assets of the covered financial com- pany; or (iv) to minimize the amount of any loss realized upon the sale or other disposition of the assets of the covered financial com- pany; and (B) all claimants that are similarly situ- ated under paragraph (1) receive not less than the amount provided in paragraphs (2) and (3) of subsection (d). (5) Secured claims unaffected This section shall not affect secured claims or security entitlements in respect of assets or property held by the covered financial com- pany, except to the extent that the security is insufficient to satisfy the claim, and then only with regard to the difference between the claim and the amount realized from the secu- rity. (6) Priority of expenses and unsecured claims in the orderly liquidation of SIPC member Where the Corporation is appointed as re- ceiver for a covered broker or dealer, unse- cured claims against such covered broker or dealer, or the Corporation as receiver for such covered broker or dealer under this section, that are proven to the satisfaction of the re- ceiver under section 5385(e) of this title, shall have the priority prescribed in paragraph (1), except that— (A) SIPC shall be entitled to recover ad- ministrative expenses incurred in per- forming its responsibilities under section 5385 of this title on an equal basis with the Corporation, in accordance with paragraph (1)(A); (B) the Corporation shall be entitled to re- cover any amounts paid to customers or to SIPC pursuant to section 5385(f) of this title, in accordance with paragraph (1)(B); (C) SIPC shall be entitled to recover any amounts paid out of the SIPC Fund to meet its obligations under section 5385 of this title and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall be subordinate to the claims payable under subparagraphs (A) and (B) of paragraph (1), but senior to all other claims; and (D) the Corporation may, after paying any proven claims to customers under section 5385 of this title and the Securities Investor Page 1891 TITLE 12—BANKS AND BANKING § 5390 Protection Act of 1970 (15 U.S.C. 78aaa et seq.), and as provided above, pay dividends on other proven claims, in its discretion, and to the extent that funds are available, in ac- cordance with the priorities set forth in paragraph (1). (c) Provisions relating to contracts entered into before appointment of receiver (1) Authority to repudiate contracts In addition to any other rights that a re- ceiver may have, the Corporation as receiver for any covered financial company may dis- affirm or repudiate any contract or lease— (A) to which the covered financial com- pany is a party; (B) the performance of which the Corpora- tion as receiver, in the discretion of the Cor- poration, determines to be burdensome; and (C) the disaffirmance or repudiation of which the Corporation as receiver deter- mines, in the discretion of the Corporation, will promote the orderly administration of the affairs of the covered financial company. (2) Timing of repudiation The Corporation, as receiver for any covered financial company, shall determine whether or not to exercise the rights of repudiation under this section within a reasonable period of time. (3) Claims for damages for repudiation (A) In general Except as provided in paragraphs (4), (5), and (6) and in subparagraphs (C), (D), and (E) of this paragraph, the liability of the Cor- poration as receiver for a covered financial company for the disaffirmance or repudi- ation of any contract pursuant to paragraph (1) shall be— (i) limited to actual direct compensatory damages; and (ii) determined as of— (I) the date of the appointment of the Corporation as receiver; or (II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudi- ation of such contract or agreement. (B) No liability for other damages For purposes of subparagraph (A), the term ‘‘actual direct compensatory damages’’ does not include— (i) punitive or exemplary damages; (ii) damages for lost profits or oppor- tunity; or (iii) damages for pain and suffering. (C) Measure of damages for repudiation of qualified financial contracts In the case of any qualified financial con- tract or agreement to which paragraph (8) applies, compensatory damages shall be— (i) deemed to include normal and reason- able costs of cover or other reasonable measures of damages utilized in the indus- tries for such contract and agreement claims; and (ii) paid in accordance with this para- graph and subsection (d), except as other- wise specifically provided in this sub- section. (D) Measure of damages for repudiation or disaffirmance of debt obligation In the case of any debt for borrowed money or evidenced by a security, actual direct compensatory damages shall be no less than the amount lent plus accrued interest plus any accreted original issue discount as of the date the Corporation was appointed re- ceiver of the covered financial company and, to the extent that an allowed secured claim is secured by property the value of which is greater than the amount of such claim and any accrued interest through the date of re- pudiation or disaffirmance, such accrued in- terest pursuant to paragraph (1). (E) Measure of damages for repudiation or disaffirmance of contingent obligation In the case of any contingent obligation of a covered financial company consisting of any obligation under a guarantee, letter of credit, loan commitment, or similar credit obligation, the Corporation may, by rule or regulation, prescribe that actual direct com- pensatory damages shall be no less than the estimated value of the claim as of the date the Corporation was appointed receiver of the covered financial company, as such value is measured based on the likelihood that such contingent claim would become fixed and the probable magnitude thereof. (4) Leases under which the covered financial company is the lessee (A) In general If the Corporation as receiver disaffirms or repudiates a lease under which the covered financial company is the lessee, the receiver shall not be liable for any damages (other than damages determined pursuant to sub- paragraph (B)) for the disaffirmance or repu- diation of such lease. (B) Payments of rent Notwithstanding subparagraph (A), the lessor under a lease to which subparagraph (A) would otherwise apply shall— (i) be entitled to the contractual rent ac- cruing before the later of the date on which— (I) the notice of disaffirmance or repu- diation is mailed; or (II) the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease; (ii) have no claim for damages under any acceleration clause or other penalty provi- sion in the lease; and (iii) have a claim for any unpaid rent, subject to all appropriate offsets and de- fenses, due as of the date of the appoint- ment which shall be paid in accordance with this paragraph and subsection (d). (5) Leases under which the covered financial company is the lessor (A) In general If the Corporation as receiver for a covered financial company repudiates an unexpired Page 1892 TITLE 12—BANKS AND BANKING § 5390 written lease of real property of the covered financial company under which the covered financial company is the lessor and the les- see is not, as of the date of such repudiation, in default, the lessee under such lease may either— (i) treat the lease as terminated by such repudiation; or (ii) remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such re- pudiation. (B) Provisions applicable to lessee remaining in possession If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of subparagraph (A)— (i) the lessee— (I) shall continue to pay the contrac- tual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and (II) may offset against any rent pay- ment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the covered financial company under the lease after such date; and (ii) the Corporation as receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II). (6) Contracts for the sale of real property (A) In general If the receiver repudiates any contract (which meets the requirements of subsection (a)(6)) for the sale of real property, and the purchaser of such real property under such contract is in possession and is not, as of the date of such repudiation, in default, such purchaser may either— (i) treat the contract as terminated by such repudiation; or (ii) remain in possession of such real property. (B) Provisions applicable to purchaser re- maining in possession If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pur- suant to clause (ii) of subparagraph (A)— (i) the purchaser— (I) shall continue to make all pay- ments due under the contract after the date of the repudiation of the contract; and (II) may offset against any such pay- ments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the covered financial company under the contract; and (ii) the Corporation as receiver shall— (I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II); (II) deliver title to the purchaser in ac- cordance with the provisions of the con- tract; and (III) have no obligation under the con- tract other than the performance re- quired under subclause (II). (C) Assignment and sale allowed (i) In general No provision of this paragraph shall be construed as limiting the right of the Cor- poration as receiver to assign the contract described in subparagraph (A) and sell the property, subject to the contract and the provisions of this paragraph. (ii) No liability after assignment and sale If an assignment and sale described in clause (i) is consummated, the Corporation as receiver shall have no further liability under the contract described in subpara- graph (A) or with respect to the real prop- erty which was the subject of such con- tract. (7) Provisions applicable to service contracts (A) Services performed before appointment In the case of any contract for services be- tween any person and any covered financial company for which the Corporation has been appointed receiver, any claim of such person for services performed before the date of ap- pointment shall be— (i) a claim to be paid in accordance with subsections (a), (b), and (d); and (ii) deemed to have arisen as of the date on which the receiver was appointed. (B) Services performed after appointment and prior to repudiation If, in the case of any contract for services described in subparagraph (A), the Corpora- tion as receiver accepts performance by the other person before making any determina- tion to exercise the right of repudiation of such contract under this section— (i) the other party shall be paid under the terms of the contract for the services performed; and (ii) the amount of such payment shall be treated as an administrative expense of the receivership. (C) Acceptance of performance no bar to sub- sequent repudiation The acceptance by the Corporation as re- ceiver for services referred to in subpara- graph (B) in connection with a contract de- scribed in subparagraph (B) shall not affect the right of the Corporation as receiver to repudiate such contract under this section at any time after such performance. (8) Certain qualified financial contracts (A) Rights of parties to contracts Subject to subsection (a)(8) and paragraphs (9) and (10) of this subsection, and notwith- standing any other provision of this section, any other provision of Federal law, or the Page 1893 TITLE 12—BANKS AND BANKING § 5390 law of any State, no person shall be stayed or prohibited from exercising— (i) any right that such person has to cause the termination, liquidation, or ac- celeration of any qualified financial con- tract with a covered financial company which arises upon the date of appointment of the Corporation as receiver for such covered financial company or at any time after such appointment; (ii) any right under any security agree- ment or arrangement or other credit en- hancement related to one or more quali- fied financial contracts described in clause (i); or (iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts or agreements described in clause (i), includ- ing any master agreement for such con- tracts or agreements. (B) Applicability of other provisions Subsection (a)(8) shall apply in the case of any judicial action or proceeding brought against the Corporation as receiver referred to in subparagraph (A), or the subject cov- ered financial company, by any party to a contract or agreement described in subpara- graph (A)(i) with such covered financial company. (C) Certain transfers not avoidable (i) In general Notwithstanding subsection (a)(11), (a)(12), or (c)(12), section 91 of this title, or any other provision of Federal or State law relating to the avoidance of pref- erential or fraudulent transfers, the Cor- poration, whether acting as the Corpora- tion or as receiver for a covered financial company, may not avoid any transfer of money or other property in connection with any qualified financial contract with a covered financial company. (ii) Exception for certain transfers Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with a covered financial company if the trans- feree had actual intent to hinder, delay, or defraud such company, the creditors of such company, or the Corporation as re- ceiver appointed for such company. (D) Certain contracts and agreements de- fined For purposes of this subsection, the fol- lowing definitions shall apply: (i) Qualified financial contract The term ‘‘qualified financial contract’’ means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any simi- lar agreement that the Corporation deter- mines by regulation, resolution, or order to be a qualified financial contract for pur- poses of this paragraph. (ii) Securities contract The term ‘‘securities contract’’— (I) means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (in- cluding any interest therein or based on the value thereof), or any option on any of the foregoing, including any option to purchase or sell any such security, cer- tificate of deposit, mortgage loan, inter- est, group or index, or option, and in- cluding any repurchase or reverse repur- chase transaction on any such security, certificate of deposit, mortgage loan, in- terest, group or index, or option (wheth- er or not such repurchase or reverse re- purchase transaction is a ‘‘repurchase agreement’’, as defined in clause (v)); (II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Corporation determines by regulation, resolution, or order to in- clude any such agreement within the meaning of such term; (III) means any option entered into on a national securities exchange relating to foreign currencies; (IV) means the guarantee (including by novation) by or to any securities clear- ing agency of any settlement of cash, se- curities, certificates of deposit, mort- gage loans or interests therein, group or index of securities, certificates of deposit or mortgage loans or interests therein (including any interest therein or based on the value thereof) or an option on any of the foregoing, including any option to purchase or sell any such security, cer- tificate of deposit, mortgage loan, inter- est, group or index, or option (whether or not such settlement is in connection with any agreement or transaction re- ferred to in subclauses (I) through (XII) (other than subclause (II))); (V) means any margin loan; (VI) means any extension of credit for the clearance or settlement of securities transactions; (VII) means any loan transaction cou- pled with a securities collar transaction, any prepaid securities forward trans- action, or any total return swap trans- action coupled with a securities sale transaction; (VIII) means any other agreement or transaction that is similar to any agree- ment or transaction referred to in this clause; (IX) means any combination of the agreements or transactions referred to in this clause; (X) means any option to enter into any agreement or transaction referred to in this clause; (XI) means a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (X), other than subclause (II), together with all supplements to any Page 1894 TITLE 12—BANKS AND BANKING § 5390 such master agreement, without regard to whether the master agreement pro- vides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a se- curities contract under this clause only with respect to each agreement or trans- action under the master agreement that is referred to in any of subclauses (I) through (X), other than subclause (II); and (XII) means any security agreement or arrangement or other credit enhance- ment related to any agreement or trans- action referred to in this clause, includ- ing any guarantee or reimbursement ob- ligation in connection with any agree- ment or transaction referred to in this clause. (iii) Commodity contract The term ‘‘commodity contract’’ means— (I) with respect to a futures commis- sion merchant, a contract for the pur- chase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade; (II) with respect to a foreign futures commission merchant, a foreign future; (III) with respect to a leverage trans- action merchant, a leverage transaction; (IV) with respect to a clearing organi- zation, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or com- modity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization; (V) with respect to a commodity op- tions dealer, a commodity option; (VI) any other agreement or trans- action that is similar to any agreement or transaction referred to in this clause; (VII) any combination of the agree- ments or transactions referred to in this clause; (VIII) any option to enter into any agreement or transaction referred to in this clause; (IX) a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement pro- vides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in any of subclauses (I) through (VIII); or (X) any security agreement or arrange- ment or other credit enhancement re- lated to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause. (iv) Forward contract The term ‘‘forward contract’’ means— (I) a contract (other than a commodity contract) for the purchase, sale, or trans- fer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward con- tract trade, or product or byproduct thereof, with a maturity date that is more than 2 days after the date on which the contract is entered into, including a repurchase or reverse repurchase trans- action (whether or not such repurchase or reverse repurchase transaction is a ‘‘repurchase agreement’’, as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated trans- action, or any other similar agreement; (II) any combination of agreements or transactions referred to in subclauses (I) and (III); (III) any option to enter into any agreement or transaction referred to in subclause (I) or (II); (IV) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, ex- cept that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or (V) any security agreement or arrange- ment or other credit enhancement re- lated to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reim- bursement obligation in connection with any agreement or transaction referred to in any such subclause. (v) Repurchase agreement The term ‘‘repurchase agreement’’ (which definition also applies to a reverse repurchase agreement)— (I) means an agreement, including re- lated terms, which provides for the transfer of one or more certificates of de- posit, mortgage related securities (as such term is defined in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c]), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (which, for purposes of this clause, means a security that is a direct obliga- tion of, or that is fully guaranteed by, Page 1895 TITLE 12—BANKS AND BANKING § 5390 the central government of a member of the Organization for Economic Coopera- tion and Development, as determined by regulation or order adopted by the Board of Governors), or securities that are di- rect obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mort- gage loans, or interests with a simulta- neous agreement by such transferee to transfer to the transferor thereof certifi- cates of deposit, eligible bankers’ accept- ances, securities, mortgage loans, or in- terests as described above, at a date cer- tain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement; (II) does not include any repurchase obligation under a participation in a commercial mortgage loan, unless the Corporation determines, by regulation, resolution, or order to include any such participation within the meaning of such term; (III) means any combination of agree- ments or transactions referred to in sub- clauses (I) and (IV); (IV) means any option to enter into any agreement or transaction referred to in subclause (I) or (III); (V) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement pro- vides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a re- purchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and (VI) means any security agreement or arrangement or other credit enhance- ment related to any agreement or trans- action referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction re- ferred to in any such subclause. (vi) Swap agreement The term ‘‘swap agreement’’ means— (I) any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an in- terest rate swap, option, future, or for- ward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day- tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a cur- rency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agree- ment; a debt index or debt swap, option, future, or forward agreement; a total re- turn, credit spread or credit swap, op- tion, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an in- flation swap, option, future, or forward agreement; (II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is pres- ently, or in the future becomes, the sub- ject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, cur- rencies, commodities, equity securities or other equity instruments, debt securi- ties or other debt instruments, quan- titative measures associated with an oc- currence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or meas- ures of economic or financial risk or value; (III) any combination of agreements or transactions referred to in this clause; (IV) any option to enter into any agreement or transaction referred to in this clause; (V) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), to- gether with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, ex- cept that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the mas- ter agreement that is referred to in sub- clause (I), (II), (III), or (IV); and (VI) any security agreement or ar- rangement or other credit enhancement related to any agreement or transaction referred to in any of subclauses (I) through (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction re- ferred to in any such clause. (vii) Definitions relating to default When used in this paragraph and para- graphs (9) and (10)— (I) the term ‘‘default’’ means, with re- spect to a covered financial company, any adjudication or other official deci- sion by any court of competent jurisdic- tion, or other public authority pursuant to which the Corporation has been ap- pointed receiver; and Page 1896 TITLE 12—BANKS AND BANKING § 5390 (II) the term ‘‘in danger of default’’ means a covered financial company with respect to which the Corporation or ap- propriate State authority has deter- mined that— (aa) in the opinion of the Corporation or such authority— (AA) the covered financial com- pany is not likely to be able to pay its obligations in the normal course of business; and (BB) there is no reasonable pros- pect that the covered financial com- pany will be able to pay such obliga- tions without Federal assistance; or (bb) in the opinion of the Corporation or such authority— (AA) the covered financial com- pany has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and (BB) there is no reasonable pros- pect that the capital will be replen- ished without Federal assistance. (viii) Treatment of master agreement as one agreement Any master agreement for any contract or agreement described in any of clauses (i) through (vi) (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a single agreement and a single qualified fi- nancial contact. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a quali- fied financial contract only with respect to those transactions that are themselves qualified financial contracts. (ix) Transfer The term ‘‘transfer’’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an inter- est in property, including retention of title as a security interest and foreclosure of the equity of redemption of the covered fi- nancial company. (x) Person The term ‘‘person’’ includes any govern- mental entity in addition to any entity in- cluded in the definition of such term in section 1, title 1. (E) Clarification No provision of law shall be construed as limiting the right or power of the Corpora- tion, or authorizing any court or agency to limit or delay, in any manner, the right or power of the Corporation to transfer any qualified financial contract or to disaffirm or repudiate any such contract in accord- ance with this subsection. (F) Walkaway clauses not effective (i) In general Notwithstanding the provisions of sub- paragraph (A) of this paragraph and sec- tions 403 and 404 of the Federal Deposit In- surance Corporation Improvement Act of 1991 [12 U.S.C. 4403, 4404], no walkaway clause shall be enforceable in a qualified financial contract of a covered financial company in default. (ii) Limited suspension of certain obliga- tions In the case of a qualified financial con- tract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time at which the Corporation is appointed as receiver until the earlier of— (I) the time at which such party re- ceives notice that such contract has been transferred pursuant to paragraph (10)(A); or (II) 5:00 p.m. (eastern time) on the busi- ness day following the date of the ap- pointment of the Corporation as re- ceiver. (iii) Walkaway clause defined For purposes of this subparagraph, the term ‘‘walkaway clause’’ means any provi- sion in a qualified financial contract that suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create a payment obli- gation of a party that would otherwise exist, solely because of the status of such party as a nondefaulting party in connec- tion with the insolvency of a covered fi- nancial company that is a party to the contract or the appointment of or the ex- ercise of rights or powers by the Corpora- tion as receiver for such covered financial company, and not as a result of the exer- cise by a party of any right to offset, setoff, or net obligations that exist under the contract, any other contract between those parties, or applicable law. (G) Certain obligations to clearing organiza- tions In the event that the Corporation has been appointed as receiver for a covered financial company which is a party to any qualified fi- nancial contract cleared by or subject to the rules of a clearing organization (as defined in paragraph (9)(D)), the receiver shall use its best efforts to meet all margin, collat- eral, and settlement obligations of the cov- ered financial company that arise under qualified financial contracts (other than any margin, collateral, or settlement obligation that is not enforceable against the receiver under paragraph (8)(F)(i) or paragraph (10)(B)), as required by the rules of the clear- ing organization when due. Notwithstanding any other provision of this subchapter, if the receiver fails to satisfy any such margin, collateral, or settlement obligations under the rules of the clearing organization, the clearing organization shall have the imme- diate right to exercise, and shall not be stayed from exercising, all of its rights and remedies under its rules and applicable law with respect to any qualified financial con- Page 1897 TITLE 12—BANKS AND BANKING § 5390 tract of the covered financial company, in- cluding, without limitation, the right to liq- uidate all positions and collateral of such covered financial company under the com- pany’s qualified financial contracts, and sus- pend or cease to act for such covered finan- cial company, all in accordance with the rules of the clearing organization. (H) Recordkeeping (i) Joint rulemaking The Federal primary financial regu- latory agencies shall jointly prescribe reg- ulations requiring that financial compa- nies maintain such records with respect to qualified financial contracts (including market valuations) that the Federal pri- mary financial regulatory agencies deter- mine to be necessary or appropriate in order to assist the Corporation as receiver for a covered financial company in being able to exercise its rights and fulfill its ob- ligations under this paragraph or para- graph (9) or (10). (ii) Time frame The Federal primary financial regu- latory agencies shall prescribe joint final or interim final regulations not later than 24 months after July 21, 2010. (iii) Back-up rulemaking authority If the Federal primary financial regu- latory agencies do not prescribe joint final or interim final regulations within the time frame in clause (ii), the Chairperson of the Council shall prescribe, in consulta- tion with the Corporation, the regulations required by clause (i). (iv) Categorization and tiering The joint regulations prescribed under clause (i) shall, as appropriate, differen- tiate among financial companies by taking into consideration their size, risk, com- plexity, leverage, frequency and dollar amount of qualified financial contracts, interconnectedness to the financial sys- tem, and any other factors deemed appro- priate. (9) Transfer of qualified financial contracts (A) In general In making any transfer of assets or liabil- ities of a covered financial company in de- fault, which includes any qualified financial contract, the Corporation as receiver for such covered financial company shall ei- ther— (i) transfer to one financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency pro- ceeding— (I) all qualified financial contracts be- tween any person or any affiliate of such person and the covered financial com- pany in default; (II) all claims of such person or any af- filiate of such person against such cov- ered financial company under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general un- secured creditors of such company); (III) all claims of such covered finan- cial company against such person or any affiliate of such person under any such contract; and (IV) all property securing or any other credit enhancement for any contract de- scribed in subclause (I) or any claim de- scribed in subclause (II) or (III) under any such contract; or (ii) transfer none of the qualified finan- cial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any af- filiate of such person). (B) Transfer to foreign bank, financial insti- tution, or branch or agency thereof In transferring any qualified financial con- tracts and related claims and property under subparagraph (A)(i), the Corporation as re- ceiver for the covered financial company shall not make such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch or agency of a foreign bank or financial institu- tion unless, under the law applicable to such bank, financial institution, branch or agen- cy, to the qualified financial contracts, and to any netting contract, any security agree- ment or arrangement or other credit en- hancement related to one or more qualified financial contracts, the contractual rights of the parties to such qualified financial con- tracts, netting contracts, security agree- ments or arrangements, or other credit en- hancements are enforceable substantially to the same extent as permitted under this sec- tion. (C) Transfer of contracts subject to the rules of a clearing organization In the event that the Corporation as re- ceiver for a financial institution transfers any qualified financial contract and related claims, property, or credit enhancement pur- suant to subparagraph (A)(i) and such con- tract is cleared by or subject to the rules of a clearing organization, the clearing organi- zation shall not be required to accept the transferee as a member by virtue of the transfer. (D) Definitions For purposes of this paragraph— (i) the term ‘‘financial institution’’ means a broker or dealer, a depository in- stitution, a futures commission merchant, a bridge financial company, or any other institution determined by the Corporation, by regulation, to be a financial institu- tion; and (ii) the term ‘‘clearing organization’’ has the same meaning as in section 402 of the Federal Deposit Insurance Corporation Im- provement Act of 1991 [12 U.S.C. 4402]. Page 1898 TITLE 12—BANKS AND BANKING § 5390 (10) Notification of transfer (A) In general (i) Notice The Corporation shall provide notice in accordance with clause (ii), if— (I) the Corporation as receiver for a covered financial company in default or in danger of default transfers any assets or liabilities of the covered financial company; and (II) the transfer includes any qualified financial contract. (ii) Timing The Corporation as receiver for a cov- ered financial company shall notify any person who is a party to any contract de- scribed in clause (i) of such transfer not later than 5:00 p.m. (eastern time) on the business day following the date of the ap- pointment of the Corporation as receiver. (B) Certain rights not enforceable (i) Receivership A person who is a party to a qualified fi- nancial contract with a covered financial company may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) solely by reason of or incidental to the ap- pointment under this section of the Cor- poration as receiver for the covered finan- cial company (or the insolvency or finan- cial condition of the covered financial company for which the Corporation has been appointed as receiver)— (I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment; or (II) after the person has received no- tice that the contract has been trans- ferred pursuant to paragraph (9)(A). (ii) Notice For purposes of this paragraph, the Cor- poration as receiver for a covered financial company shall be deemed to have notified a person who is a party to a qualified fi- nancial contract with such covered finan- cial company, if the Corporation has taken steps reasonably calculated to provide no- tice to such person by the time specified in subparagraph (A). (C) Treatment of bridge financial company For purposes of paragraph (9), a bridge fi- nancial company shall not be considered to be a financial institution for which a conser- vator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bank- ruptcy or insolvency proceeding. (D) Business day defined For purposes of this paragraph, the term ‘‘business day’’ means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed. (11) Disaffirmance or repudiation of qualified financial contracts In exercising the rights of disaffirmance or repudiation of the Corporation as receiver with respect to any qualified financial con- tract to which a covered financial company is a party, the Corporation shall either— (A) disaffirm or repudiate all qualified fi- nancial contracts between— (i) any person or any affiliate of such person; and (ii) the covered financial company in de- fault; or (B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such per- son or any affiliate of such person). (12) Certain security and customer interests not avoidable No provision of this subsection shall be con- strued as permitting the avoidance of any— (A) legally enforceable or perfected secu- rity interest in any of the assets of any cov- ered financial company, except in accord- ance with subsection (a)(11); or (B) legally enforceable interest in cus- tomer property, security entitlements in re- spect of assets or property held by the cov- ered financial company for any security en- titlement holder. (13) Authority to enforce contracts (A) In general The Corporation, as receiver for a covered financial company, may enforce any con- tract, other than a liability insurance con- tract of a director or officer, a financial in- stitution bond entered into by the covered financial company, notwithstanding any provision of the contract providing for ter- mination, default, acceleration, or exercise of rights upon, or solely by reason of, insol- vency, the appointment of or the exercise of rights or powers by the Corporation as re- ceiver, the filing of the petition pursuant to section 5382(a)(1) of this title, or the issuance of the recommendations or deter- mination, or any actions or events occurring in connection therewith or as a result there- of, pursuant to section 5383 of this title. (B) Certain rights not affected No provision of this paragraph may be con- strued as impairing or affecting any right of the Corporation as receiver to enforce or re- cover under a liability insurance contract of a director or officer or financial institution bond under other applicable law. (C) Consent requirement and ipso facto clauses (i) In general Except as otherwise provided by this sec- tion, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which the covered financial company is a party (and no provision in any such contract pro- viding for such default, termination, or ac- celeration shall be enforceable), or to ob- tain possession of or exercise control over any property of the covered financial com- pany or affect any contractual rights of the covered financial company, without Page 1899 TITLE 12—BANKS AND BANKING § 5390 the consent of the Corporation as receiver for the covered financial company during the 90 day period beginning from the ap- pointment of the Corporation as receiver. (ii) Exceptions No provision of this subparagraph shall apply to a director or officer liability in- surance contract or a financial institution bond, to the rights of parties to certain qualified financial contracts pursuant to paragraph (8), or to the rights of parties to netting contracts pursuant to subtitle A of title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.), or shall be construed as permitting the Corporation as receiver to fail to comply with otherwise enforce- able provisions of such contract. (D) Contracts to extend credit Notwithstanding any other provision in this subchapter, if the Corporation as re- ceiver enforces any contract to extend credit to the covered financial company or bridge financial company, any valid and enforce- able obligation to repay such debt shall be paid by the Corporation as receiver, as an administrative expense of the receivership. (14) Exception for Federal reserve banks and Corporation security interest No provision of this subsection shall apply with respect to— (A) any extension of credit from any Fed- eral reserve bank or the Corporation to any covered financial company; or (B) any security interest in the assets of the covered financial company securing any such extension of credit. (15) Savings clause The meanings of terms used in this sub- section are applicable for purposes of this sub- section only, and shall not be construed or ap- plied so as to challenge or affect the charac- terization, definition, or treatment of any similar terms under any other statute, regula- tion, or rule, including the Gramm-Leach-Bli- ley Act, the Legal Certainty for Bank Prod- ucts Act of 2000 [7 U.S.C. 27 to 27f], the securi- ties laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(47)]), and the Commodity Ex- change Act [7 U.S.C. 1 et seq.]. (16) Enforcement of contracts guaranteed by the covered financial company (A) In general The Corporation, as receiver for a covered financial company or as receiver for a sub- sidiary of a covered financial company (in- cluding an insured depository institution) shall have the power to enforce contracts of subsidiaries or affiliates of the covered fi- nancial company, the obligations under which are guaranteed or otherwise supported by or linked to the covered financial com- pany, notwithstanding any contractual right to cause the termination, liquidation, or ac- celeration of such contracts based solely on the insolvency, financial condition, or re- ceivership of the covered financial company, if— (i) such guaranty or other support and all related assets and liabilities are trans- ferred to and assumed by a bridge financial company or a third party (other than a third party for which a conservator, re- ceiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bank- ruptcy or insolvency proceeding) within the same period of time as the Corporation is entitled to transfer the qualified finan- cial contracts of such covered financial company; or (ii) the Corporation, as receiver, other- wise provides adequate protection with re- spect to such obligations. (B) Rule of construction For purposes of this paragraph, a bridge fi- nancial company shall not be considered to be a third party for which a conservator, re- ceiver, trustee in bankruptcy, or other legal custodian has been appointed, or which is otherwise the subject of a bankruptcy or in- solvency proceeding. (d) Valuation of claims in default (1) In general Notwithstanding any other provision of Fed- eral law or the law of any State, and regard- less of the method utilized by the Corporation for a covered financial company, including transactions authorized under subsection (h), this subsection shall govern the rights of the creditors of any such covered financial com- pany. (2) Maximum liability The maximum liability of the Corporation, acting as receiver for a covered financial com- pany or in any other capacity, to any person having a claim against the Corporation as re- ceiver or the covered financial company for which the Corporation is appointed shall equal the amount that such claimant would have re- ceived if— (A) the Corporation had not been ap- pointed receiver with respect to the covered financial company; and (B) the covered financial company had been liquidated under chapter 7 of the Bank- ruptcy Code, or any similar provision of State insolvency law applicable to the cov- ered financial company. (3) Special provision for orderly liquidation by SIPC The maximum liability of the Corporation, acting as receiver or in its corporate capacity for any covered broker or dealer to any cus- tomer of such covered broker or dealer, with respect to customer property of such cus- tomer, shall be— (A) equal to the amount that such cus- tomer would have received with respect to such customer property in a case initiated by SIPC under the Securities Investor Pro- tection Act of 1970 (15 U.S.C. 78aaa et seq.); and (B) determined as of the close of business on the date on which the Corporation is ap- pointed as receiver. Page 1900 TITLE 12—BANKS AND BANKING § 5390 (4) Additional payments authorized (A) In general Subject to subsection (o)(1)(D)(i), the Cor- poration, with the approval of the Secretary, may make additional payments or credit ad- ditional amounts to or with respect to or for the account of any claimant or category of claimants of the covered financial company, if the Corporation determines that such pay- ments or credits are necessary or appro- priate to minimize losses to the Corporation as receiver from the orderly liquidation of the covered financial company under this section. (B) Limitations (i) Prohibition The Corporation shall not make any pay- ments or credit amounts to any claimant or category of claimants that would result in any claimant receiving more than the face value amount of any claim that is proven to the satisfaction of the Corpora- tion. (ii) No obligation Notwithstanding any other provision of Federal or State law, or the Constitution of any State, the Corporation shall not be obligated, as a result of having made any payment under subparagraph (A) or cred- ited any amount described in subparagraph (A) to or with respect to, or for the ac- count, of any claimant or category of claimants, to make payments to any other claimant or category of claimants. (C) Manner of payment The Corporation may make payments or credit amounts under subparagraph (A) di- rectly to the claimants or may make such payments or credit such amounts to a com- pany other than a covered financial com- pany or a bridge financial company estab- lished with respect thereto in order to in- duce such other company to accept liability for such claims. (e) Limitation on court action Except as provided in this subchapter, no court may take any action to restrain or affect the exercise of powers or functions of the re- ceiver hereunder, and any remedy against the Corporation or receiver shall be limited to money damages determined in accordance with this subchapter. (f) Liability of directors and officers (1) In general A director or officer of a covered financial company may be held personally liable for monetary damages in any civil action de- scribed in paragraph (2) by, on behalf of, or at the request or direction of the Corporation, which action is prosecuted wholly or partially for the benefit of the Corporation— (A) acting as receiver for such covered fi- nancial company; (B) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by the Corporation as receiver; or (C) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by a covered financial company or its affiliate in connection with assistance provided under this subchapter. (2) Actions covered Paragraph (1) shall apply with respect to ac- tions for gross negligence, including any simi- lar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious con- duct, as such terms are defined and deter- mined under applicable State law. (3) Savings clause Nothing in this subsection shall impair or affect any right of the Corporation under other applicable law. (g) Damages In any proceeding related to any claim against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company, or any other party employed by or providing services to a covered financial com- pany, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the covered finan- cial company shall include principal losses and appropriate interest. (h) Bridge financial companies (1) Organization (A) Purpose The Corporation, as receiver for one or more covered financial companies or in an- ticipation of being appointed receiver for one or more covered financial companies, may organize one or more bridge financial companies in accordance with this sub- section. (B) Authorities Upon the creation of a bridge financial company under subparagraph (A) with re- spect to a covered financial company, such bridge financial company may— (i) assume such liabilities (including li- abilities associated with any trust or cus- tody business, but excluding any liabilities that count as regulatory capital) of such covered financial company as the Corpora- tion may, in its discretion, determine to be appropriate; (ii) purchase such assets (including as- sets associated with any trust or custody business) of such covered financial com- pany as the Corporation may, in its discre- tion, determine to be appropriate; and (iii) perform any other temporary func- tion which the Corporation may, in its dis- cretion, prescribe in accordance with this section. (2) Charter and establishment (A) Establishment Except as provided in subparagraph (H), where the covered financial company is a covered broker or dealer, the Corporation, as receiver for a covered financial company, Page 1901 TITLE 12—BANKS AND BANKING § 5390 may grant a Federal charter to and approve articles of association for one or more bridge financial company or companies, with re- spect to such covered financial company which shall, by operation of law and imme- diately upon issuance of its charter and ap- proval of its articles of association, be estab- lished and operate in accordance with, and subject to, such charter, articles, and this section. (B) Management Upon its establishment, a bridge financial company shall be under the management of a board of directors appointed by the Cor- poration. (C) Articles of association The articles of association and organiza- tion certificate of a bridge financial com- pany shall have such terms as the Corpora- tion may provide, and shall be executed by such representatives as the Corporation may designate. (D) Terms of charter; rights and privileges Subject to and in accordance with the pro- visions of this subsection, the Corporation shall— (i) establish the terms of the charter of a bridge financial company and the rights, powers, authorities, and privileges of a bridge financial company granted by the charter or as an incident thereto; and (ii) provide for, and establish the terms and conditions governing, the manage- ment (including the bylaws and the num- ber of directors of the board of directors) and operations of the bridge financial com- pany. (E) Transfer of rights and privileges of cov- ered financial company (i) In general Notwithstanding any other provision of Federal or State law, the Corporation may provide for a bridge financial company to succeed to and assume any rights, powers, authorities, or privileges of the covered fi- nancial company with respect to which the bridge financial company was established and, upon such determination by the Cor- poration, the bridge financial company shall immediately and by operation of law succeed to and assume such rights, powers, authorities, and privileges. (ii) Effective without approval Any succession to or assumption by a bridge financial company of rights, pow- ers, authorities, or privileges of a covered financial company under clause (i) or oth- erwise shall be effective without any fur- ther approval under Federal or State law, assignment, or consent with respect there- to. (F) Corporate governance and election and designation of body of law To the extent permitted by the Corpora- tion and consistent with this section and any rules, regulations, or directives issued by the Corporation under this section, a bridge financial company may elect to fol- low the corporate governance practices and procedures that are applicable to a corpora- tion incorporated under the general corpora- tion law of the State of Delaware, or the State of incorporation or organization of the covered financial company with respect to which the bridge financial company was es- tablished, as such law may be amended from time to time. (G) Capital (i) Capital not required Notwithstanding any other provision of Federal or State law, a bridge financial company may, if permitted by the Cor- poration, operate without any capital or surplus, or with such capital or surplus as the Corporation may in its discretion de- termine to be appropriate. (ii) No contribution by the Corporation re- quired The Corporation is not required to pay capital into a bridge financial company or to issue any capital stock on behalf of a bridge financial company established under this subsection. (iii) Authority If the Corporation determines that such action is advisable, the Corporation may cause capital stock or other securities of a bridge financial company established with respect to a covered financial company to be issued and offered for sale in such amounts and on such terms and conditions as the Corporation may, in its discretion, determine. (iv) Operating funds in lieu of capital and implementation plan Upon the organization of a bridge finan- cial company, and thereafter as the Cor- poration may, in its discretion, determine to be necessary or advisable, the Corpora- tion may make available to the bridge fi- nancial company, subject to the plan de- scribed in subsection (n)(9), funds for the operation of the bridge financial company in lieu of capital. (H) Bridge brokers or dealers (i) In general The Corporation, as receiver for a cov- ered broker or dealer, may approve arti- cles of association for one or more bridge financial companies with respect to such covered broker or dealer, which bridge fi- nancial company or companies shall, by operation of law and immediately upon ap- proval of its articles of association— (I) be established and deemed reg- istered with the Commission under the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.] and a member of SIPC; (II) operate in accordance with such articles and this section; and (III) succeed to any and all registra- tions and memberships of the covered fi- nancial company with or in any self-reg- ulatory organizations. Page 1902 TITLE 12—BANKS AND BANKING § 5390 (ii) Other requirements Except as provided in clause (i), and not- withstanding any other provision of this section, the bridge financial company shall be subject to the Federal securities laws and all requirements with respect to being a member of a self-regulatory organiza- tion, unless exempted from any such re- quirements by the Commission, as is nec- essary or appropriate in the public interest or for the protection of investors. (iii) Treatment of customers Except as otherwise provided by this subchapter, any customer of the covered broker or dealer whose account is trans- ferred to a bridge financial company shall have all the rights, privileges, and protec- tions under section 5385(f) of this title and under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), that such customer would have had if the ac- count were not transferred from the cov- ered financial company under this sub- paragraph. (iv) Operation of bridge brokers or dealers Notwithstanding any other provision of this subchapter, the Corporation shall not operate any bridge financial company cre- ated by the Corporation under this sub- chapter with respect to a covered broker or dealer in such a manner as to adversely affect the ability of customers to promptly access their customer property in accord- ance with applicable law. (3) Interests in and assets and obligations of covered financial company Notwithstanding paragraph (1) or (2) or any other provision of law— (A) a bridge financial company shall as- sume, acquire, or succeed to the assets or li- abilities of a covered financial company (in- cluding the assets or liabilities associated with any trust or custody business) only to the extent that such assets or liabilities are transferred by the Corporation to the bridge financial company in accordance with, and subject to the restrictions set forth in, para- graph (1)(B); and (B) a bridge financial company shall not assume, acquire, or succeed to any obliga- tion that a covered financial company for which the Corporation has been appointed receiver may have to any shareholder, mem- ber, general partner, limited partner, or other person with an interest in the equity of the covered financial company that arises as a result of the status of that person hav- ing an equity claim in the covered financial company. (4) Bridge financial company treated as being in default for certain purposes A bridge financial company shall be treated as a covered financial company in default at such times and for such purposes as the Cor- poration may, in its discretion, determine. (5) Transfer of assets and liabilities (A) Authority of Corporation The Corporation, as receiver for a covered financial company, may transfer any assets and liabilities of a covered financial com- pany (including any assets or liabilities as- sociated with any trust or custody business) to one or more bridge financial companies, in accordance with and subject to the re- strictions of paragraph (1). (B) Subsequent transfers At any time after the establishment of a bridge financial company with respect to a covered financial company, the Corporation, as receiver, may transfer any assets and li- abilities of such covered financial company as the Corporation may, in its discretion, de- termine to be appropriate in accordance with and subject to the restrictions of para- graph (1). (C) Treatment of trust or custody business For purposes of this paragraph, the trust or custody business, including fiduciary ap- pointments, held by any covered financial company is included among its assets and li- abilities. (D) Effective without approval The transfer of any assets or liabilities, in- cluding those associated with any trust or custody business of a covered financial com- pany, to a bridge financial company shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto. (E) Equitable treatment of similarly situated creditors The Corporation shall treat all creditors of a covered financial company that are simi- larly situated under subsection (b)(1), in a similar manner in exercising the authority of the Corporation under this subsection to transfer any assets or liabilities of the cov- ered financial company to one or more bridge financial companies established with respect to such covered financial company, except that the Corporation may take any action (including making payments, subject to subsection (o)(1)(D)(i)) that does not com- ply with this subparagraph, if— (i) the Corporation determines that such action is necessary— (I) to maximize the value of the assets of the covered financial company; (II) to maximize the present value re- turn from the sale or other disposition of the assets of the covered financial com- pany; or (III) to minimize the amount of any loss realized upon the sale or other dis- position of the assets of the covered fi- nancial company; and (ii) all creditors that are similarly situ- ated under subsection (b)(1) receive not less than the amount provided under para- graphs (2) and (3) of subsection (d). (F) Limitation on transfer of liabilities Notwithstanding any other provision of law, the aggregate amount of liabilities of a covered financial company that are trans- ferred to, or assumed by, a bridge financial company from a covered financial company Page 1903 TITLE 12—BANKS AND BANKING § 5390 may not exceed the aggregate amount of the assets of the covered financial company that are transferred to, or purchased by, the bridge financial company from the covered financial company. (6) Stay of judicial action Any judicial action to which a bridge finan- cial company becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of a covered financial company shall be stayed from further proceedings for a pe- riod of not longer than 45 days (or such longer period as may be agreed to upon the consent of all parties) at the request of the bridge finan- cial company. (7) Agreements against interest of the bridge financial company No agreement that tends to diminish or de- feat the interest of the bridge financial com- pany in any asset of a covered financial com- pany acquired by the bridge financial company shall be valid against the bridge financial company, unless such agreement— (A) is in writing; (B) was executed by an authorized officer or representative of the covered financial company or confirmed in the ordinary course of business by the covered financial company; and (C) has been on the official record of the company, since the time of its execution, or with which, the party claiming under the agreement provides documentation of such agreement and its authorized execution or confirmation by the covered financial com- pany that is acceptable to the receiver. (8) No Federal status (A) Agency status A bridge financial company is not an agen- cy, establishment, or instrumentality of the United States. (B) Employee status Representatives for purposes of paragraph (1)(B), directors, officers, employees, or agents of a bridge financial company are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation or of any Federal instrumentality who serves at the request of the Corporation as a rep- resentative for purposes of paragraph (1)(B), director, officer, employee, or agent of a bridge financial company shall not— (i) solely by virtue of service in any such capacity lose any existing status as an of- ficer or employee of the United States for purposes of title 5 or any other provision of law; or (ii) receive any salary or benefits for service in any such capacity with respect to a bridge financial company in addition to such salary or benefits as are obtained through employment with the Corporation or such Federal instrumentality. (9) Funding authorized The Corporation may, subject to the plan de- scribed in subsection (n)(9), provide funding to facilitate any transaction described in sub- paragraph (A), (B), (C), or (D) of paragraph (13) with respect to any bridge financial company, or facilitate the acquisition by a bridge finan- cial company of any assets, or the assumption of any liabilities, of a covered financial com- pany for which the Corporation has been ap- pointed receiver. (10) Exempt tax status Notwithstanding any other provision of Fed- eral or State law, a bridge financial company, its franchise, property, and income shall be ex- empt from all taxation now or hereafter im- posed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. (11) Federal agency approval; antitrust review If a transaction involving the merger or sale of a bridge financial company requires ap- proval by a Federal agency, the transaction may not be consummated before the 5th cal- endar day after the date of approval by the Federal agency responsible for such approval with respect thereto. If, in connection with any such approval a report on competitive fac- tors from the Attorney General is required, the Federal agency responsible for such ap- proval shall promptly notify the Attorney General of the proposed transaction and the Attorney General shall provide the required report within 10 days of the request. If a noti- fication is required under section 18a of title 15 with respect to such transaction, the re- quired waiting period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under section 18a(b)(2) of title 15, or extended under section 18a(e)(2) of title 15. (12) Duration of bridge financial company Subject to paragraphs (13) and (14), the sta- tus of a bridge financial company as such shall terminate at the end of the 2-year period fol- lowing the date on which it was granted a charter. The Corporation may, in its discre- tion, extend the status of the bridge financial company as such for no more than 3 additional 1-year periods. (13) Termination of bridge financial company status The status of any bridge financial company as such shall terminate upon the earliest of— (A) the date of the merger or consolidation of the bridge financial company with a com- pany that is not a bridge financial company; (B) at the election of the Corporation, the sale of a majority of the capital stock of the bridge financial company to a company other than the Corporation and other than another bridge financial company; (C) the sale of 80 percent, or more, of the capital stock of the bridge financial com- pany to a person other than the Corporation and other than another bridge financial company; (D) at the election of the Corporation, ei- ther the assumption of all or substantially Page 1904 TITLE 12—BANKS AND BANKING § 5390 all of the liabilities of the bridge financial company by a company that is not a bridge financial company, or the acquisition of all or substantially all of the assets of the bridge financial company by a company that is not a bridge financial company, or other entity as permitted under applicable law; and (E) the expiration of the period provided in paragraph (12), or the earlier dissolution of the bridge financial company, as provided in paragraph (15). (14) Effect of termination events (A) Merger or consolidation A merger or consolidation, described in paragraph (13)(A) shall be conducted in ac- cordance with, and shall have the effect pro- vided in, the provisions of applicable law. For the purpose of effecting such a merger or consolidation, the bridge financial com- pany shall be treated as a corporation orga- nized under the laws of the State of Dela- ware (unless the law of another State has been selected by the bridge financial com- pany in accordance with paragraph (2)(F)), and the Corporation shall be treated as the sole shareholder thereof, notwithstanding any other provision of State or Federal law. (B) Charter conversion Following the sale of a majority of the capital stock of the bridge financial com- pany, as provided in paragraph (13)(B), the Corporation may amend the charter of the bridge financial company to reflect the ter- mination of the status of the bridge finan- cial company as such, whereupon the com- pany shall have all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. In con- nection therewith, the Corporation may take such steps as may be necessary or con- venient to reincorporate the bridge financial company under the laws of a State and, not- withstanding any provisions of Federal or State law, such State-chartered corporation shall be deemed to succeed by operation of law to such rights, titles, powers, and inter- ests of the bridge financial company as the Corporation may provide, with the same ef- fect as if the bridge financial company had merged with the State-chartered corpora- tion under provisions of the corporate laws of such State. (C) Sale of stock Following the sale of 80 percent or more of the capital stock of a bridge financial com- pany, as provided in paragraph (13)(C), the company shall have all of the rights, powers, and privileges under its constituent docu- ments and applicable Federal or State law. In connection therewith, the Corporation may take such steps as may be necessary or convenient to reincorporate the bridge fi- nancial company under the laws of a State and, notwithstanding any provisions of Fed- eral or State law, the State-chartered cor- poration shall be deemed to succeed by oper- ation of law to such rights, titles, powers and interests of the bridge financial com- pany as the Corporation may provide, with the same effect as if the bridge financial company had merged with the State-char- tered corporation under provisions of the corporate laws of such State. (D) Assumption of liabilities and sale of as- sets Following the assumption of all or sub- stantially all of the liabilities of the bridge financial company, or the sale of all or sub- stantially all of the assets of the bridge fi- nancial company, as provided in paragraph (13)(D), at the election of the Corporation, the bridge financial company may retain its status as such for the period provided in paragraph (12) or may be dissolved at the election of the Corporation. (E) Amendments to charter Following the consummation of a trans- action described in subparagraph (A), (B), (C), or (D) of paragraph (13), the charter of the resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate. (15) Dissolution of bridge financial company (A) In general Notwithstanding any other provision of Federal or State law, if the status of a bridge financial company as such has not previously been terminated by the occur- rence of an event specified in subparagraph (A), (B), (C), or (D) of paragraph (13)— (i) the Corporation may, in its discre- tion, dissolve the bridge financial company in accordance with this paragraph at any time; and (ii) the Corporation shall promptly com- mence dissolution proceedings in accord- ance with this paragraph upon the expira- tion of the 2-year period following the date on which the bridge financial company was chartered, or any extension thereof, as provided in paragraph (12). (B) Procedures The Corporation shall remain the receiver for a bridge financial company for the pur- pose of dissolving the bridge financial com- pany. The Corporation as receiver for a bridge financial company shall wind up the affairs of the bridge financial company in conformity with the provisions of law relat- ing to the liquidation of covered financial companies under this subchapter. With re- spect to any such bridge financial company, the Corporation as receiver shall have all the rights, powers, and privileges and shall perform the duties related to the exercise of such rights, powers, or privileges granted by law to the Corporation as receiver for a cov- ered financial company under this sub- chapter and, notwithstanding any other pro- vision of law, in the exercise of such rights, powers, and privileges, the Corporation shall not be subject to the direction or super- vision of any State agency or other Federal agency. Page 1905 TITLE 12—BANKS AND BANKING § 5390 (16) Authority to obtain credit (A) In general A bridge financial company may obtain unsecured credit and issue unsecured debt. (B) Inability to obtain credit If a bridge financial company is unable to obtain unsecured credit or issue unsecured debt, the Corporation may authorize the ob- taining of credit or the issuance of debt by the bridge financial company— (i) with priority over any or all of the ob- ligations of the bridge financial company; (ii) secured by a lien on property of the bridge financial company that is not oth- erwise subject to a lien; or (iii) secured by a junior lien on property of the bridge financial company that is subject to a lien. (C) Limitations (i) In general The Corporation, after notice and a hear- ing, may authorize the obtaining of credit or the issuance of debt by a bridge finan- cial company that is secured by a senior or equal lien on property of the bridge finan- cial company that is subject to a lien, only if— (I) the bridge financial company is un- able to otherwise obtain such credit or issue such debt; and (II) there is adequate protection of the interest of the holder of the lien on the property with respect to which such sen- ior or equal lien is proposed to be grant- ed. (ii) Hearing The hearing required pursuant to this subparagraph shall be before a court of the United States, which shall have jurisdic- tion to conduct such hearing and to au- thorize a bridge financial company to ob- tain secured credit under clause (i). (D) Burden of proof In any hearing under this paragraph, the Corporation has the burden of proof on the issue of adequate protection. (E) Qualified financial contracts No credit or debt obtained or issued by a bridge financial company may contain terms that impair the rights of a counterparty to a qualified financial contract upon a default by the bridge financial company, other than the priority of such counterparty’s unse- cured claim (after the exercise of rights) rel- ative to the priority of the bridge financial company’s obligations in respect of such credit or debt, unless such counterparty con- sents in writing to any such impairment. (17) Effect on debts and liens The reversal or modification on appeal of an authorization under this subsection to obtain credit or issue debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so issued, or any pri- ority or lien so granted, to an entity that ex- tended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the issuance of such debt, or the granting of such priority or lien, were stayed pending appeal. (i) Sharing records If the Corporation has been appointed as re- ceiver for a covered financial company, other Federal regulators shall make all records relat- ing to the covered financial company available to the Corporation, which may be used by the Corporation in any manner that the Corporation determines to be appropriate. (j) Expedited procedures for certain claims (1) Time for filing notice of appeal The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a director, officer, employee, agent, attorney, account- ant, or appraiser of the covered financial com- pany, or any other person employed by or pro- viding services to a covered financial com- pany, shall be filed not later than 30 days after the date of entry of the order. The hearing of the appeal shall be held not later than 120 days after the date of the notice of appeal. The ap- peal shall be decided not later than 180 days after the date of the notice of appeal. (2) Scheduling The court shall expedite the consideration of any case brought by the Corporation against a director, officer, employee, agent, attorney, accountant, or appraiser of a covered financial company or any other person employed by or providing services to a covered financial com- pany. As far as practicable, the court shall give such case priority on its docket. (3) Judicial discretion The court may modify the schedule and lim- itations stated in paragraphs (1) and (2) in a particular case, based on a specific finding that the ends of justice that would be served by making such a modification would out- weigh the best interest of the public in having the case resolved expeditiously. (k) Foreign investigations The Corporation, as receiver for any covered financial company, and for purposes of carrying out any power, authority, or duty with respect to a covered financial company— (1) may request the assistance of any foreign financial authority and provide assistance to any foreign financial authority in accordance with section 1818(v) of this title, as if the cov- ered financial company were an insured depos- itory institution, the Corporation were the ap- propriate Federal banking agency for the com- pany, and any foreign financial authority were the foreign banking authority; and (2) may maintain an office to coordinate for- eign investigations or investigations on behalf of foreign financial authorities. (l) Prohibition on entering secrecy agreements and protective orders The Corporation may not enter into any agreement or approve any protective order which prohibits the Corporation from disclosing the terms of any settlement of an administra- Page 1906 TITLE 12—BANKS AND BANKING § 5390 3 So in original. Probably should be followed by ‘‘of’’. tive or other action for damages or restitution brought by the Corporation in its capacity as re- ceiver for a covered financial company. (m) Liquidation of certain covered financial com- panies or bridge financial companies (1) In general Except as specifically provided in this sec- tion, and notwithstanding any other provision of law, the Corporation, in connection with the liquidation of any covered financial com- pany or bridge financial company with respect to which the Corporation has been appointed as receiver, shall— (A) in the case of any covered financial company or bridge financial company that is a stockbroker, but is not a member of the Securities Investor Protection Corporation, apply the provisions of subchapter III of chapter 7 of the Bankruptcy Code, in respect of the distribution to any customer of all customer name security and customer prop- erty and member property, as if such cov- ered financial company or bridge financial company were a debtor for purposes of such subchapter; or (B) in the case of any covered financial company or bridge financial company that is a commodity broker, apply the provisions of subchapter IV of chapter 7 3 the Bankruptcy Code, in respect of the distribution to any customer of all customer property and mem- ber property, as if such covered financial company or bridge financial company were a debtor for purposes of such subchapter. (2) Definitions For purposes of this subsection— (A) the terms ‘‘customer’’, ‘‘customer name security’’, and ‘‘customer property and member property’’ have the same meanings as in sections 741 and 761 of title 11; and (B) the terms ‘‘commodity broker’’ and ‘‘stockbroker’’ have the same meanings as in section 101 of the Bankruptcy Code. (n) Orderly Liquidation Fund (1) Establishment There is established in the Treasury of the United States a separate fund to be known as the ‘‘Orderly Liquidation Fund’’, which shall be available to the Corporation to carry out the authorities contained in this subchapter, for the cost of actions authorized by this sub- chapter, including the orderly liquidation of covered financial companies, payment of ad- ministrative expenses, the payment of prin- cipal and interest by the Corporation on obli- gations issued under paragraph (5), and the ex- ercise of the authorities of the Corporation under this subchapter. (2) Proceeds Amounts received by the Corporation, in- cluding assessments received under subsection (o), proceeds of obligations issued under para- graph (5), interest and other earnings from in- vestments, and repayments to the Corporation by covered financial companies, shall be de- posited into the Fund. (3) Management The Corporation shall manage the Fund in accordance with this subsection and the poli- cies and procedures established under section 5383(d) of this title. (4) Investments At the request of the Corporation, the Sec- retary may invest such portion of amounts held in the Fund that are not, in the judgment of the Corporation, required to meet the cur- rent needs of the Corporation, in obligations of the United States having suitable matu- rities, as determined by the Corporation. The interest on and the proceeds from the sale or redemption of such obligations shall be cred- ited to the Fund. (5) Authority to issue obligations (A) Corporation authorized to issue obliga- tions Upon appointment by the Secretary of the Corporation as receiver for a covered finan- cial company, the Corporation is authorized to issue obligations to the Secretary. (B) Secretary authorized to purchase obliga- tions The Secretary may, under such terms and conditions as the Secretary may require, purchase or agree to purchase any obliga- tions issued under subparagraph (A), and for such purpose, the Secretary is authorized to use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under chap- ter 31 of title 31 are extended to include such purchases. (C) Interest rate Each purchase of obligations by the Sec- retary under this paragraph shall be upon such terms and conditions as to yield a re- turn at a rate determined by the Secretary, taking into consideration the current aver- age yield on outstanding marketable obliga- tions of the United States of comparable ma- turity, plus an interest rate surcharge to be determined by the Secretary, which shall be greater than the difference between— (i) the current average rate on an index of corporate obligations of comparable ma- turity; and (ii) the current average rate on out- standing marketable obligations of the United States of comparable maturity. (D) Secretary authorized to sell obligations The Secretary may sell, upon such terms and conditions as the Secretary shall deter- mine, any of the obligations acquired under this paragraph. (E) Public debt transactions All purchases and sales by the Secretary of such obligations under this paragraph shall be treated as public debt transactions of the United States, and the proceeds from the sale of any obligations acquired by the Sec- retary under this paragraph shall be depos- ited into the Treasury of the United States as miscellaneous receipts. Page 1907 TITLE 12—BANKS AND BANKING § 5390 (6) Maximum obligation limitation The Corporation may not, in connection with the orderly liquidation of a covered fi- nancial company, issue or incur any obliga- tion, if, after issuing or incurring the obliga- tion, the aggregate amount of such obligations outstanding under this subsection for each covered financial company would exceed— (A) an amount that is equal to 10 percent of the total consolidated assets of the cov- ered financial company, based on the most recent financial statement available, during the 30-day period immediately following the date of appointment of the Corporation as receiver (or a shorter time period if the Cor- poration has calculated the amount de- scribed under subparagraph (B)); and (B) the amount that is equal to 90 percent of the fair value of the total consolidated as- sets of each covered financial company that are available for repayment, after the time period described in subparagraph (A). (7) Rulemaking The Corporation and the Secretary shall jointly, in consultation with the Council, pre- scribe regulations governing the calculation of the maximum obligation limitation defined in this paragraph. (8) Rule of construction (A) In general Nothing in this section shall be construed to affect the authority of the Corporation under subsection (a) or (b) of section 1824 of this title or section 1825(c)(5) of this title, the management of the Deposit Insurance Fund by the Corporation, or the resolution of insured depository institutions, provided that— (i) the authorities of the Corporation contained in this subchapter shall not be used to assist the Deposit Insurance Fund or to assist any financial company under applicable law other than this Act; (ii) the authorities of the Corporation re- lating to the Deposit Insurance Fund, or any other responsibilities of the Corpora- tion under applicable law other than this subchapter, shall not be used to assist a covered financial company pursuant to this subchapter; and (iii) the Deposit Insurance Fund may not be used in any manner to otherwise cir- cumvent the purposes of this subchapter. (B) Valuation For purposes of determining the amount of obligations under this subsection— (i) the Corporation shall include as an obligation any contingent liability of the Corporation pursuant to this subchapter; and (ii) the Corporation shall value any con- tingent liability at its expected cost to the Corporation. (9) Orderly liquidation and repayment plans (A) Orderly liquidation plan Amounts in the Fund shall be available to the Corporation with regard to a covered fi- nancial company for which the Corporation is appointed receiver after the Corporation has developed an orderly liquidation plan that is acceptable to the Secretary with re- gard to such covered financial company, in- cluding the provision and use of funds, in- cluding taking any actions specified under section 5384(d) of this title and subsection (h)(2)(G)(iv) and (h)(9) of this section, and payments to third parties. The orderly liq- uidation plan shall take into account ac- tions to avoid or mitigate potential adverse effects on low income, minority, or under- served communities affected by the failure of the covered financial company, and shall provide for coordination with the primary fi- nancial regulatory agencies, as appropriate, to ensure that such actions are taken. The Corporation may, at any time, amend any orderly liquidation plan approved by the Secretary with the concurrence of the Sec- retary. (B) Mandatory repayment plan (i) In general No amount authorized under paragraph (6)(B) may be provided by the Secretary to the Corporation under paragraph (5), un- less an agreement is in effect between the Secretary and the Corporation that— (I) provides a specific plan and sched- ule to achieve the repayment of the out- standing amount of any borrowing under paragraph (5); and (II) demonstrates that income to the Corporation from the liquidated assets of the covered financial company and as- sessments under subsection (o) will be sufficient to amortize the outstanding balance within the period established in the repayment schedule and pay the in- terest accruing on such balance within the time provided in subsection (o)(1)(B). (ii) Consultation with and report to Con- gress The Secretary and the Corporation shall— (I) consult with the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Finan- cial Services of the House of Representa- tives on the terms of any repayment schedule agreement; and (II) submit a copy of the repayment schedule agreement to the Committees described in subclause (I) before the end of the 30-day period beginning on the date on which any amount is provided by the Secretary to the Corporation under paragraph (5). (10) Implementation expenses (A) In general Reasonable implementation expenses of the Corporation incurred after July 21, 2010, shall be treated as expenses of the Council. (B) Requests for reimbursement The Corporation shall periodically submit a request for reimbursement for implemen- tation expenses to the Chairperson of the Page 1908 TITLE 12—BANKS AND BANKING § 5390 4 So in original. Probably should be ‘‘subsections’’. Council, who shall arrange for prompt reim- bursement to the Corporation of reasonable implementation expenses. (C) Definition As used in this paragraph, the term ‘‘im- plementation expenses’’— (i) means costs incurred by the Corpora- tion beginning on July 21, 2010, as part of its efforts to implement this subchapter that do not relate to a particular covered financial company; and (ii) includes the costs incurred in con- nection with the development of policies, procedures, rules, and regulations and other planning activities of the Corpora- tion consistent with carrying out this sub- chapter. (o) Assessments (1) Risk-based assessments (A) Eligible financial companies defined For purposes of this subsection, the term ‘‘eligible financial company’’ means any bank holding company with total consoli- dated assets equal to or greater than $50,000,000,000 and any nonbank financial company supervised by the Board of Gov- ernors. (B) Assessments The Corporation shall charge one or more risk-based assessments in accordance with the provisions of subparagraph (D), if such assessments are necessary to pay in full the obligations issued by the Corporation to the Secretary under this subchapter within 60 months of the date of issuance of such obli- gations. (C) Extensions authorized The Corporation may, with the approval of the Secretary, extend the time period under subparagraph (B), if the Corporation deter- mines that an extension is necessary to avoid a serious adverse effect on the finan- cial system of the United States. (D) Application of assessments To meet the requirements of subparagraph (B), the Corporation shall— (i) impose assessments, as soon as prac- ticable, on any claimant that received ad- ditional payments or amounts from the Corporation pursuant to subsection (b)(4), (d)(4), or (h)(5)(E), except for payments or amounts necessary to initiate and con- tinue operations essential to implementa- tion of the receivership or any bridge fi- nancial company, to recover on a cumu- lative basis, the entire difference be- tween— (I) the aggregate value the claimant received from the Corporation on a claim pursuant to this subchapter (including pursuant to subsection 4 (b)(4), (d)(4), and (h)(5)(E)), as of the date on which such value was received; and (II) the value the claimant was enti- tled to receive from the Corporation on such claim solely from the proceeds of the liquidation of the covered financial company under this subchapter; and (ii) if the amounts to be recovered on a cumulative basis under clause (i) are insuf- ficient to meet the requirements of sub- paragraph (B), after taking into account the considerations set forth in paragraph (4), impose assessments on— (I) eligible financial companies; and (II) financial companies with total con- solidated assets equal to or greater than $50,000,000,000 that are not eligible finan- cial companies. (E) Provision of financing Payments or amounts necessary to ini- tiate and continue operations essential to implementation of the receivership or any bridge financial company described in sub- paragraph (D)(i) shall not include the provi- sion of financing, as defined by rule of the Corporation, to third parties. (2) Graduated assessment rate The Corporation shall impose assessments on a graduated basis, with financial companies having greater assets and risk being assessed at a higher rate. (3) Notification and payment The Corporation shall notify each financial company of that company’s assessment under this subsection. Any financial company sub- ject to assessment under this subsection shall pay such assessment in accordance with the regulations prescribed pursuant to paragraph (6). (4) Risk-based assessment considerations In imposing assessments under paragraph (1)(D)(ii), the Corporation shall use a risk ma- trix. The Council shall make a recommenda- tion to the Corporation on the risk matrix to be used in imposing such assessments, and the Corporation shall take into account any such recommendation in the establishment of the risk matrix to be used to impose such assess- ments. In recommending or establishing such risk matrix, the Council and the Corporation, respectively, shall take into account— (A) economic conditions generally affect- ing financial companies so as to allow as- sessments to increase during more favorable economic conditions and to decrease during less favorable economic conditions; (B) any assessments imposed on a financial company or an affiliate of a financial com- pany that— (i) is an insured depository institution, assessed pursuant to section 1817 or 1823(c)(4)(G) of this title; (ii) is a member of the Securities Inves- tor Protection Corporation, assessed pur- suant to section 4 of the Securities Inves- tor Protection Act of 1970 (15 U.S.C. 78ddd); (iii) is an insured credit union, assessed pursuant to section 1782(c)(1)(A)(i) of this title; or (iv) is an insurance company, assessed pursuant to applicable State law to cover (or reimburse payments made to cover) the Page 1909 TITLE 12—BANKS AND BANKING § 5390 costs of the rehabilitation, liquidation, or other State insolvency proceeding with re- spect to 1 or more insurance companies; (C) the risks presented by the financial company to the financial system and the ex- tent to which the financial company has benefitted, or likely would benefit, from the orderly liquidation of a financial company under this subchapter, including— (i) the amount, different categories, and concentrations of assets of the financial company and its affiliates, including both on-balance sheet and off-balance sheet as- sets; (ii) the activities of the financial com- pany and its affiliates; (iii) the relevant market share of the fi- nancial company and its affiliates; (iv) the extent to which the financial company is leveraged; (v) the potential exposure to sudden calls on liquidity precipitated by economic dis- tress; (vi) the amount, maturity, volatility, and stability of the company’s financial obligations to, and relationship with, other financial companies; (vii) the amount, maturity, volatility, and stability of the liabilities of the com- pany, including the degree of reliance on short-term funding, taking into consider- ation existing systems for measuring a company’s risk-based capital; (viii) the stability and variety of the company’s sources of funding; (ix) the company’s importance as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the financial sys- tem; (x) the extent to which assets are simply managed and not owned by the financial company and the extent to which owner- ship of assets under management is dif- fuse; and (xi) the amount, different categories, and concentrations of liabilities, both insured and uninsured, contingent and noncontin- gent, including both on-balance sheet and off-balance sheet liabilities, of the finan- cial company and its affiliates; (D) any risks presented by the financial company during the 10-year period imme- diately prior to the appointment of the Cor- poration as receiver for the covered financial company that contributed to the failure of the covered financial company; and (E) such other risk-related factors as the Corporation, or the Council, as applicable, may determine to be appropriate. (5) Collection of information The Corporation may impose on covered fi- nancial companies such collection of informa- tion requirements as the Corporation deems necessary to carry out this subsection after the appointment of the Corporation as re- ceiver under this subchapter. (6) Rulemaking (A) In general The Corporation shall prescribe regula- tions to carry out this subsection. The Cor- poration shall consult with the Secretary in the development and finalization of such regulations. (B) Equitable treatment The regulations prescribed under subpara- graph (A) shall take into account the dif- ferences in risks posed to the financial sta- bility of the United States by financial com- panies, the differences in the liability struc- tures of financial companies, and the dif- ferent bases for other assessments that such financial companies may be required to pay, to ensure that assessed financial companies are treated equitably and that assessments under this subsection reflect such dif- ferences. (p) Unenforceability of certain agreements (1) In general No provision described in paragraph (2) shall be enforceable against or impose any liability on any person, as such enforcement or liabil- ity shall be contrary to public policy. (2) Prohibited provisions A provision described in this paragraph is any term contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly— (A) affects, restricts, or limits the ability of any person to offer to acquire or acquire; (B) prohibits any person from offering to acquire or acquiring; or (C) prohibits any person from using any previously disclosed information in connec- tion with any such offer to acquire or acqui- sition of, all or part of any covered financial company, including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under this subchapter. (q) Other exemptions (1) In general When acting as a receiver under this sub- chapter— (A) the Corporation, including its fran- chise, its capital, reserves and surplus, and its income, shall be exempt from all tax- ation imposed by any State, county, munici- pality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, munic- ipal, or local taxation to the same extent ac- cording to its value as other real property is taxed, except that, notwithstanding the fail- ure of any person to challenge an assessment under State law of the value of such prop- erty, such value, and the tax thereon, shall be determined as of the period for which such tax is imposed; (B) no property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corpora- tion; and (C) the Corporation shall not be liable for any amounts in the nature of penalties or Page 1910 TITLE 12—BANKS AND BANKING § 5390 fines, including those arising from the fail- ure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due; and (D) the Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local author- ity for any criminal offense arising under Federal, State, county, municipal, or local law, which was allegedly committed by the covered financial company, or persons act- ing on behalf of the covered financial com- pany, prior to the appointment of the Cor- poration as receiver. (2) Limitation Paragraph (1) shall not apply with respect to any tax imposed (or other amount arising) under the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.]. (r) Certain sales of assets prohibited (1) Persons who engaged in improper conduct with, or caused losses to, covered financial companies The Corporation shall prescribe regulations which, at a minimum, shall prohibit the sale of assets of a covered financial company by the Corporation to— (A) any person who— (i) has defaulted, or was a member of a partnership or an officer or director of a corporation that has defaulted, on 1 or more obligations, the aggregate amount of which exceeds $1,000,000, to such covered fi- nancial company; (ii) has been found to have engaged in fraudulent activity in connection with any obligation referred to in clause (i); and (iii) proposes to purchase any such asset in whole or in part through the use of the proceeds of a loan or advance of credit from the Corporation or from any covered financial company; (B) any person who participated, as an offi- cer or director of such covered financial company or of any affiliate of such com- pany, in a material way in any transaction that resulted in a substantial loss to such covered financial company; or (C) any person who has demonstrated a pattern or practice of defalcation regarding obligations to such covered financial com- pany. (2) Convicted debtors Except as provided in paragraph (3), a person may not purchase any asset of such institu- tion from the receiver, if that person— (A) has been convicted of an offense under section 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 1343, or 1344 of title 18, or of con- spiring to commit such an offense, affecting any covered financial company; and (B) is in default on any loan or other ex- tension of credit from such covered financial company which, if not paid, will cause sub- stantial loss to the Fund or the Corporation. (3) Settlement of claims Paragraphs (1) and (2) shall not apply to the sale or transfer by the Corporation of any asset of any covered financial company to any person, if the sale or transfer of the asset re- solves or settles, or is part of the resolution or settlement, of 1 or more claims that have been, or could have been, asserted by the Cor- poration against the person. (4) Definition of default For purposes of this subsection, the term ‘‘default’’ means a failure to comply with the terms of a loan or other obligation to such an extent that the property securing the obliga- tion is foreclosed upon. (s) Recoupment of compensation from senior ex- ecutives and directors (1) In general The Corporation, as receiver of a covered fi- nancial company, may recover from any cur- rent or former senior executive or director substantially responsible for the failed condi- tion of the covered financial company any compensation received during the 2-year pe- riod preceding the date on which the Corpora- tion was appointed as the receiver of the cov- ered financial company, except that, in the case of fraud, no time limit shall apply. (2) Cost considerations In seeking to recover any such compensa- tion, the Corporation shall weigh the financial and deterrent benefits of such recovery against the cost of executing the recovery. (3) Rulemaking The Corporation shall promulgate regula- tions to implement the requirements of this subsection, including defining the term ‘‘com- pensation’’ to mean any financial remunera- tion, including salary, bonuses, incentives, benefits, severance, deferred compensation, or golden parachute benefits, and any profits re- alized from the sale of the securities of the covered financial company. (Pub. L. 111–203, title II, § 210, July 21, 2010, 124 Stat. 1460.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables. The Securities Investor Protection Act of 1970, re- ferred to in subsecs. (a)(1)(O)(iv), (b)(6)(C), (D), (d)(3)(A), and (h)(2)(H)(iii), is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, which is classified generally to chapter 2B–1 (§ 78aaa et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see sec- tion 78aaa of Title 15 and Tables. The Federal Rules of Civil Procedure, referred to in subsec. (a)(13), (14), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure. The Federal Deposit Insurance Corporation Improve- ment Act of 1991, referred to in subsec. (c)(13)(C)(ii), is Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2236. Subtitle A of title IV of the Act is classified generally to sub- chapter I (§ 4401 et seq.) of chapter 45 of this title. For complete classification of this Act to the Code, see Short Title of 1991 Amendment note set out under sec- tion 1811 of this title and Tables. The Gramm-Leach-Bliley Act, referred to in subsec. (c)(15), is Pub. L. 106–102, Nov. 12, 1999, 113 Stat. 1338. Page 1911 TITLE 12—BANKS AND BANKING § 5391 1 See References in Text note below. For complete classification of this Act to the Code, see Short Title of 1999 Amendment note set out under sec- tion 1811 of this title and Tables. The Legal Certainty for Bank Products Act of 2000, referred to in subsec. (c)(15), is title IV of H.R. 5660, as enacted by Pub. L. 106–554, § 1(a)(5), Dec. 21, 2000, 114 Stat. 2763, 2763A–457, which is classified to sections 27 to 27f of Title 7, Agriculture. For complete classifica- tion of this Act to the Code, see Short Title of 2000 Amendment note set out under section 1 of Title 7 and Tables. The Commodity Exchange Act, referred to in subsec. (c)(15), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. The Securities Exchange Act of 1934, referred to in subsec. (h)(2)(H)(i)(I), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78a of Title 15 and Tables. This Act, referred to in subsec. (n)(8)(A)(i), is Pub. L. 111–203, July 21, 2010, 124 Stat. 1376, known as the Dodd- Frank Wall Street Reform and Consumer Protection Act, which enacted this chapter and chapters 108 (§ 8201 et seq.) and 109 (§ 8301 et seq.) of Title 15, Commerce and Trade, and enacted, amended, and repealed numerous other sections and notes in the Code. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. The Internal Revenue Code of 1986, referred to in sub- sec. (q)(2), is classified generally to Title 26, Internal Revenue Code. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5391. Inspector General reviews (a) to (c) Omitted (d) FDIC Inspector General reviews (1) Scope The Inspector General of the Corporation shall conduct, supervise, and coordinate audits and investigations of the liquidation of any covered financial company by the Corporation as receiver under this subchapter, including collecting and summarizing— (A) a description of actions taken by the Corporation as receiver; (B) a description of any material sales, transfers, mergers, obligations, purchases, and other material transactions entered into by the Corporation; (C) an evaluation of the adequacy of the policies and procedures of the Corporation under section 5383(d) of this title and orderly liquidation plan under section 5390(n)(14) 1 of this title; (D) an evaluation of the utilization by the Corporation of the private sector in carrying out its functions, including the adequacy of any conflict-of-interest reviews; and (E) an evaluation of the overall perform- ance of the Corporation in liquidating the covered financial company, including admin- istrative costs, timeliness of liquidation process, and impact on the financial system. (2) Frequency Not later than 6 months after the date of ap- pointment of the Corporation as receiver under this subchapter and every 6 months thereafter, the Inspector General of the Cor- poration shall conduct the audit and inves- tigation described in paragraph (1). (3) Reports and testimony The Inspector General of the Corporation shall include in the semiannual reports re- quired by section 405(b) of title 5, a summary of the findings and evaluations under para- graph (1), and shall appear before the appro- priate committees of Congress, if requested, to present each such report. (4) Funding (A) Initial funding The expenses of the Inspector General of the Corporation in carrying out this sub- section shall be considered administrative expenses of the receivership. (B) Additional funding If the maximum amount available to the Corporation as receiver under this sub- chapter is insufficient to enable the Inspec- tor General of the Corporation to carry out the duties under this subsection, the Cor- poration shall pay such additional amounts from assessments imposed under section 5390 of this title. (5) Termination of responsibilities The duties and responsibilities of the Inspec- tor General of the Corporation under this sub- section shall terminate 1 year after the date of termination of the receivership under this sub- chapter. (e) Treasury Inspector General reviews (1) Scope The Inspector General of the Department of the Treasury shall conduct, supervise, and co- ordinate audits and investigations of actions taken by the Secretary related to the liquida- tion of any covered financial company under this subchapter, including collecting and sum- marizing— (A) a description of actions taken by the Secretary under this subchapter; (B) an analysis of the approval by the Sec- retary of the policies and procedures of the Corporation under section 5383 of this title and acceptance of the orderly liquidation plan of the Corporation under section 5390 of this title; and (C) an assessment of the terms and condi- tions underlying the purchase by the Sec- retary of obligations of the Corporation under section 5390 of this title. (2) Frequency Not later than 6 months after the date of ap- pointment of the Corporation as receiver under this subchapter and every 6 months thereafter, the Inspector General of the De- partment of the Treasury shall conduct the audit and investigation described in paragraph (1). (3) Reports and testimony The Inspector General of the Department of the Treasury shall include in the semiannual