S.Amdt. 3830

SA 3830. Mr. VITTER submitted an amendment intended to be proposed by
Mr. Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to the bill S.
3217, to promote the financial stability of the United States by
improving accountability and transparency in the financial system, to
end ``too big to fail'', to protect the American taxpayer by ending
bailouts, to protect consumers from abusive financial services
practices, and for other purposes; which was ordered to lie on the
table; as follows:

At the end of title II, add the following:

SEC. 212. PROHIBITION ON ALL BAILOUTS.

(a) Prohibition.-- The United States Government shall not
use any funds to bail out creditors or shareholders of any
company by paying to any creditor or shareholder, under this
or any title, any funds for the purpose of covering the
losses of such creditor or shareholder on its investments in
such company or ensuring that the amount that such claimant
receives on a claim is more than such claimant is entitled to
receive on such claim under the Bankruptcy Code. The United
States Government shall not coordinate with or participate in
any effort involving any foreign or multi-national entity to
use foreign or multi-national resources to circumvent the
purposes of this title.
(b) Reestablishing the Federal Reserve Lender of Last
Resort Function.--
(1) Rulemaking required.--Notwithstanding any provision of
this Act or any other provision of law, the Board of
Governors, in consultation with the Secretary, shall, not
later than 12 months after the date of enactment of this Act,
issue rules that shall govern the creation of any emergency
stabilization actions by the Board of Governors.
(2) Requirements.--At a minimum, rules required under this
subsection shall--
(A) prescribe under what circumstances the program may and
may not be used in the future;
(B) prescribe how the program shall ensure that it will
only be used by solvent companies and will not be used to
prevent failure of otherwise failing firms;
(C) determine what type of collateral the Board of
Governors will accept against emergency lending to ensure
that all lending is done against good collateral;
(D) prescribe how much that collateral will be discounted
in order to ensure against taxpayer losses;
(E) address how the Board of Governors and the Secretary
shall ensure that the program does not allocate credit or
artificially prop up certain segments of the economy;
(F) address how the Board of Governors will transfer any
assets associated with losses to the lending program to the
Secretary to ensure that losses from emergency lending do not
lead to inflationary pressures;
(G) establish procedures by which the Board of Governors
would modify and change such rules to ensure a proper notice
and comment period, including publicly documenting the need
for the rule change; and
(H) include any other factors that the Board of Governors
and the Secretary deem appropriate.
(c) Liquidation Required.--All financial companies put into
receivership under this title shall be liquidated within 2
years of being put into receivership. No taxpayer funds may
be used
(1) to provide assistance to--
(A) a company that is in bankruptcy, in receivership under
title II, or in any other insolvency proceeding; or
(B) any company that would otherwise need to be placed into
receivership under Federal or State laws; or
(2) to prevent the liquidation of any financial company
under this title.
(d) Recovery of Funds.--All funds expended in the
liquidation of a financial company under this title shall be
recovered from the disposition of assets of such financial
company.
(e) No Losses to Taxpayers.--Taxpayers shall bear no losses
from the exercise of any authority under this title.
(f) No FDIC Bailouts--Section 13(c)(4)(G) of the Federal
Deposit Insurance Act (12 U.S.C. 1823 (c)(4)G)) is amended--
(1) in clause (i)--
(A) in subclause (I), by inserting ``for which the
Corporation has been appointed receiver'' before ``would have
serious''; and
(B) in the undesignated matter following subclause (II), by
inserting ``for the winding up of the insured depository
institution for which the Corporation has been appointed
receiver'' after ``provide assistance under this section''
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