12 U.S.C. § 5211 — Purchases of troubled assets

Page 1800 TITLE 12—BANKS AND BANKING § 5211 (7) Secretary The term ‘‘Secretary’’ means the Secretary of the Treasury. (8) TARP The term ‘‘TARP’’ means the Troubled Asset Relief Program established under section 5211 of this title. (9) Troubled assets The term ‘‘troubled assets’’ means— (A) residential or commercial mortgages and any securities, obligations, or other in- struments that are based on or related to such mortgages, that in each case was origi- nated or issued on or before March 14, 2008, the purchase of which the Secretary deter- mines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writ- ing, to the appropriate committees of Con- gress. (Pub. L. 110–343, div. A, § 3, Oct. 3, 2008, 122 Stat. 3766.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’ and was translated as reading ‘‘this divi- sion’’, meaning div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, known as the Emergency Economic Sta- bilization Act of 2008, to reflect the probable intent of Congress. For complete classification of division A to the Code, see Short Title note set out under section 5201 of this title and Tables. SUBCHAPTER I—TROUBLED ASSETS RELIEF PROGRAM § 5211. Purchases of troubled assets (a) Offices; authority (1) Authority The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘‘TARP’’) to purchase, and to make and fund commit- ments to purchase, troubled assets from any financial institution, on such terms and condi- tions as are determined by the Secretary, and in accordance with this chapter and the poli- cies and procedures developed and published by the Secretary. (2) Commencement of program Establishment of the policies and procedures and other similar administrative requirements imposed on the Secretary by this chapter are not intended to delay the commencement of the TARP. (3) Establishment of Treasury office (A) In general The Secretary shall implement any pro- gram under paragraph (1) through an Office of Financial Stability, established for such purpose within the Office of Domestic Fi- nance of the Department of the Treasury, which office shall be headed by an Assistant Secretary of the Treasury, appointed by the President, by and with the advice and con- sent of the Senate, except that an interim Assistant Secretary may be appointed by the Secretary. (B) Omitted (b) Consultation In exercising the authority under this section, the Secretary shall consult with the Board, the Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Chairman of the National Credit Union Ad- ministration Board, and the Secretary of Hous- ing and Urban Development. (c) Necessary actions The Secretary is authorized to take such ac- tions as the Secretary deems necessary to carry out the authorities in this chapter, including, without limitation, the following: (1) The Secretary shall have direct hiring authority with respect to the appointment of employees to administer this chapter. (2) Entering into contracts, including con- tracts for services authorized by section 3109 of title 5. (3) Designating financial institutions as fi- nancial agents of the Federal Government, and such institutions shall perform all such reasonable duties related to this chapter as fi- nancial agents of the Federal Government as may be required. (4) In order to provide the Secretary with the flexibility to manage troubled assets in a manner designed to minimize cost to the tax- payers, establishing vehicles that are author- ized, subject to supervision by the Secretary, to purchase, hold, and sell troubled assets and issue obligations. (5) Issuing such regulations and other guid- ance as may be necessary or appropriate to de- fine terms or carry out the authorities or pur- poses of this chapter. (d) Program guidelines Before the earlier of the end of the 2-business- day period beginning on the date of the first purchase of troubled assets pursuant to the au- thority under this section or the end of the 45- day period beginning on October 3, 2008, the Sec- retary shall publish program guidelines, includ- ing the following: (1) Mechanisms for purchasing troubled as- sets. (2) Methods for pricing and valuing troubled assets. (3) Procedures for selecting asset managers. (4) Criteria for identifying troubled assets for purchase. (e) Preventing unjust enrichment In making purchases under the authority of this chapter, the Secretary shall take such steps as may be necessary to prevent unjust enrich- ment of financial institutions participating in a program established under this section, includ- ing by preventing the sale of a troubled asset to the Secretary at a higher price than what the Page 1801 TITLE 12—BANKS AND BANKING § 5213 seller paid to purchase the asset. This sub- section does not apply to troubled assets ac- quired in a merger or acquisition, or a purchase of assets from a financial institution in con- servatorship or receivership, or that has initi- ated bankruptcy proceedings under title 11. (Pub. L. 110–343, div. A, title I, § 101, Oct. 3, 2008, 122 Stat. 3767.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(1), (2), (c), and (e), was in the original ‘‘this Act’’ and was translated as reading ‘‘this division’’, meaning div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, known as the Emer- gency Economic Stabilization Act of 2008, to reflect the probable intent of Congress. For complete classifica- tion of division A to the Code, see Short Title note set out under section 5201 of this title and Tables. CODIFICATION Section is comprised of section 101 of div. A of Pub. L. 110–343. Subsec. (a)(3)(B) of section 101 of div. A of Pub. L. 110–343 amended section 5315 of Title 5, Govern- ment Organization and Employees, and section 301 of Title 31, Money and Finance. § 5212. Insurance of troubled assets (a) Authority (1) In general If the Secretary establishes the program au- thorized under section 5211 of this title, then the Secretary shall establish a program to guarantee troubled assets originated or issued prior to March 14, 2008, including mortgage- backed securities. (2) Guarantees In establishing any program under this sub- section, the Secretary may develop guarantees of troubled assets and the associated pre- miums for such guarantees. Such guarantees and premiums may be determined by category or class of the troubled assets to be guaran- teed. (3) Extent of guarantee Upon request of a financial institution, the Secretary may guarantee the timely payment of principal of, and interest on, troubled assets in amounts not to exceed 100 percent of such payments. Such guarantee may be on such terms and conditions as are determined by the Secretary, provided that such terms and con- ditions are consistent with the purposes of this chapter. (b) Reports Not later than 90 days after October 3, 2008, the Secretary shall report to the appropriate committees of Congress on the program estab- lished under subsection (a). (c) Premiums (1) In general The Secretary shall collect premiums from any financial institution participating in the program established under subsection (a). Such premiums shall be in an amount that the Secretary determines necessary to meet the purposes of this chapter and to provide suffi- cient reserves pursuant to paragraph (3). (2) Authority to base premiums on product risk In establishing any premium under para- graph (1), the Secretary may provide for vari- ations in such rates according to the credit risk associated with the particular troubled asset that is being guaranteed. The Secretary shall publish the methodology for setting the premium for a class of troubled assets to- gether with an explanation of the appropriate- ness of the class of assets for participation in the program established under this section. The methodology shall ensure that the pre- mium is consistent with paragraph (3). (3) Minimum level The premiums referred to in paragraph (1) shall be set by the Secretary at a level nec- essary to create reserves sufficient to meet an- ticipated claims, based on an actuarial anal- ysis, and to ensure that taxpayers are fully protected. (4) Adjustment to purchase authority The purchase authority limit in section 5225 of this title shall be reduced by an amount equal to the difference between the total of the outstanding guaranteed obligations and the balance in the Troubled Assets Insurance Financing Fund. (d) Troubled Assets Insurance Financing Fund (1) Deposits The Secretary shall deposit fees collected under this section into the Fund established under paragraph (2). (2) Establishment There is established a Troubled Assets Insur- ance Financing Fund that shall consist of the amounts collected pursuant to paragraph (1), and any balance in such fund shall be invested by the Secretary in United States Treasury se- curities, or kept in cash on hand or on deposit, as necessary. (3) Payments from Fund The Secretary shall make payments from amounts deposited in the Fund to fulfill obli- gations of the guarantees provided to financial institutions under subsection (a). (Pub. L. 110–343, div. A, title I, § 102, Oct. 3, 2008, 122 Stat. 3768.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(3) and (c)(1), was in the original ‘‘this Act’’ and was translated as reading ‘‘this division’’, meaning div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, known as the Emer- gency Economic Stabilization Act of 2008, to reflect the probable intent of Congress. For complete classifica- tion of division A to the Code, see Short Title note set out under section 5201 of this title and Tables. § 5213. Considerations In exercising the authorities granted in this chapter, the Secretary shall take into consider- ation— (1) protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt;