S.Amdt. 1569

SA 1569. Mr. SASSE submitted an amendment intended to be proposed by
him to the bill H.R. 748, to amend the Internal Revenue Code of 1986 to
repeal the excise tax on high cost employer-sponsored health coverage;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. ___. CONDITIONS ON LOAN OR PURCHASE AUTHORITY FOR
WARRANTS AND DEBT INSTRUMENTS.

(1) In general.--The Secretary may not make any loan, or
make any commitment to loan, any funds authorized,
appropriated, or otherwise dedicated under this Act or
purchase, or make any commitment to purchase, any asset under
the authority of this Act, unless the Secretary receives from
the institution to which such loans are to be made or from
which such assets are to be purchased--
(A) in the case of an institution, the securities of which
are traded on a national securities exchange, a warrant
giving the right to the Secretary to receive nonvoting common
stock or preferred stock in such institution, or voting stock
with respect to which, the Secretary agrees not to exercise
voting power, as the Secretary determines appropriate; or
(B) in the case of any institution other than one described
in subparagraph (A), a warrant for common or preferred stock,
or a senior debt instrument from such institution, as
described in paragraph (2)(C).
(2) Terms and conditions.--The terms and conditions of any
warrant or senior debt instrument required under paragraph
(1) shall meet the following requirements:
(A) Purposes.--Such terms and conditions shall, at a
minimum, be designed--
(i) to provide for reasonable participation by the
Secretary, for the benefit of taxpayers, in equity
appreciation in the case of a warrant or other equity
security, or a reasonable interest rate premium, in the case
of a debt instrument; and
(ii) to provide additional protection for the taxpayer
against losses from sale of assets by the Secretary under
this Act.

[[Page S1971]]

(B) Authority to sell, exercise, or surrender.--The
Secretary may sell, exercise, or surrender a warrant or any
senior debt instrument received under this subsection, based
on the conditions established under subparagraph (A).
(C) Conversion.--The warrant shall provide that if, after
the warrant is received by the Secretary under this
subsection, the institution that issued the warrant is no
longer listed or traded on a national securities exchange or
securities association, as described in paragraph (1)(A),
such warrants shall convert to senior debt, or contain
appropriate protections for the Secretary to ensure that the
Treasury is appropriately compensated for the value of the
warrant, in an amount determined by the Secretary.
(D) Protections.--Any warrant representing securities to be
received by the Secretary under this subsection shall contain
anti-dilution provisions of the type employed in capital
market transactions, as determined by the Secretary. Such
provisions shall protect the value of the securities from
market transactions such as stock splits, stock
distributions, dividends, and other distributions, mergers,
and other forms of reorganization or recapitalization.
(E) Exercise price.--The exercise price for any warrant
issued pursuant to this subsection shall be set by the
Secretary to make a profit for the taxpayers.
(F) Sufficiency.--The institution shall guarantee to the
Secretary that it has authorized shares of nonvoting stock
available to fulfill its obligations under this subsection.
Should the institution not have sufficient authorized shares,
including preferred shares that may carry dividend rights
equal to a multiple number of common shares, the Secretary
may, to the extent necessary, accept a senior debt note in an
amount, and on such terms as will compensate the Secretary
with equivalent value, in the event that a sufficient
shareholder vote to authorize the necessary additional shares
cannot be obtained.
(3) Exceptions.--
(A) De minimis.--The Secretary shall establish de minimis
exceptions to the requirements of this subsection, based on
the size of the cumulative loans to and transactions of
assets purchased from any one institution for the duration of
the program, at not more than $100,000,000.
(B) Other exceptions.--The Secretary shall establish an
exception to the requirements of this subsection and
appropriate alternative requirements for any participating
institution that is legally prohibited from issuing
securities and debt instruments, so as not to allow
circumvention of the requirements of this section.
______