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H.R.2551 - Municipal Market Liquidity Enhancement Act of 2009
To amend the Federal Reserve Act to provide for lending authority for certain securities purchases, and for other purposes.
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Mr. FOSTER (for himself, Mr. KANJORSKI, Ms. WATERS, Mr. FRANK of Massachusetts, Mr. CLEAVER, Mr. BACA, Mr. MORAN of Virginia, Mr. ANDREWS, and Mr. CONNOLLY of Virginia) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concernedCommentsClose CommentsPermalink
SECTION 1. SHORT TITLE.
SEC. 2. FEDERAL RESERVE LENDING AUTHORITY FOR CERTAIN SECURITIES PURCHASES.
‘(A) IN GENERAL- In unusual and exigent circumstances, the Board, by the affirmative vote of not less than five members, and subject to such limitations, restrictions, and regulations as the Board may prescribe, may authorize any Federal reserve bank to make advances to a special purpose vehicle or a designated corporate entity on the promissory notes of such special purpose vehicle or designated corporate entity secured to the satisfaction of such Federal reserve bank by the securities described in subparagraph (B) or by other forms of security.CommentsClose CommentsPermalink
where such purchase is made under an agreement between the special purpose vehicle or designated corporate entity and the obligation or note issuer whereby the special purpose vehicle or designated corporate entity agrees to purchase obligations or notes that are made publicly available for purchase, but are not otherwise purchased; andCommentsClose CommentsPermalink
‘(C) COOPERATION NOT PROHIBITED- Nothing shall prohibit a Federal reserve bank from cooperating with the Department of the Treasury or other Government agency or department in making such advances authorized by this paragraph.CommentsClose CommentsPermalink
‘(D) NOT TO BE CONSTRUED AS A LIMITATION- Nothing in this paragraph shall be construed to limit the authority of the Federal reserve banks or the Board under other paragraphs of this section.CommentsClose CommentsPermalink
‘(E) MUNICIPAL SECURITY ISSUER DEFINED- For purposes of this paragraph, the term ‘municipal security issuer’ means any entity that has the ability to issue a bond treated as a ‘State or local bond’ (as such term is defined in section 103(c) of the Internal Revenue Code of 1986 and the regulations issued thereunder).’.CommentsClose CommentsPermalink
SEC. 3. AUTHORITY UNDER THE EMERGENCY ECONOMIC STABILIZATION ACT OF 2008.
‘(1) CLARIFICATION- The authority of the Secretary to take any action under this title includes the authority to provide credit enhancement in connection with municipal securities whose purchase is financed under any facility designed to enhance liquidity in the municipal market that is provided by the Board or any Federal reserve bank.CommentsClose CommentsPermalink
‘(B) the Secretary shall not be required to consider the total dollar amount of securities subject to such credit enhancements as outstanding for purposes of authorization to purchase limitations under section 115.CommentsClose CommentsPermalink
‘(3) DEFINITION- For purposes of this subsection, the term ‘municipal security’ means any bond treated as a ‘State or local bond’ (as such term is defined in section 103(c) of the Internal Revenue Code of 1986 and the regulations issued thereunder).’.CommentsClose CommentsPermalink
SEC. 4. CERTAIN FEDERAL RESERVE LENDING AUTHORITY NOT TREATED AS FEDERAL GUARANTEE UNDER TAX EXEMPT BOND REQUIREMENTS.
Subparagraph (A) of section 149(b)(3) of the Internal Revenue Code of 1986 is amended by striking ‘or’ at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ‘, or’, and by adding at the end the following new clause:CommentsClose CommentsPermalink