HR 2589 IHCommentsClose CommentsPermalink

To establish the Office of Public Finance in the Department of the Treasury to make available Federal reinsurance for insurers of tax-exempt municipal bonds.CommentsClose CommentsPermalink

May 21, 2009CommentsClose CommentsPermalink

Mr. CLEAVER (for himself, Mr. HIMES, Mr. FRANK of Massachusetts, 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

To establish the Office of Public Finance in the Department of the Treasury to make available Federal reinsurance for insurers of tax-exempt municipal bonds.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Municipal Bond Insurance Enhancement Act of 2009’.CommentsClose CommentsPermalink

SEC. 2. OFFICE OF PUBLIC FINANCE AND FEDERAL REINSURANCE FOR INSURERS OF TAX-EXEMPT MUNICIPAL BONDS.

(a) In General- Subchapter I of chapter 3 of title 31, United States Code, is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 314. THE OFFICE OF PUBLIC FINANCE.

‘(a) Establishment and Personnel-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT- There is hereby established in the Department of the Treasury an office to be known as the ‘Office of Public Finance’ (in this section referred to as the ‘Office’).CommentsClose CommentsPermalink





‘(2) DIRECTOR; STAFFING- The Secretary of the Treasury shall appoint the Director of the Office, as well as such other staff as the Secretary believes necessary for the Office to carry out its duties under this Act.CommentsClose CommentsPermalink





‘(b) Federal Reinsurance for Insurers of Tax-Exempt Municipal Bonds-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT- The Director of the Office of Public Finance shall carry out a program under this subsection to provide reinsurance for insured losses of qualified municipal bond insurers.CommentsClose CommentsPermalink





‘(2) QUALIFIED MUNICIPAL BOND INSURERS- Reinsurance coverage under this subsection may be made available only for an insurer, including an insurer that is an affiliate of another entity--CommentsClose CommentsPermalink





‘(A) that is licensed or admitted to engage in the business, in any State, of providing insurance for the payment of principal and interest due under--CommentsClose CommentsPermalink





‘(i) any municipal bond; orCommentsClose CommentsPermalink





‘(ii) any bond, note, security, or other debt obligation issued by a special purpose corporation, trust, or other entity to finance a project serving a substantial public purpose; andCommentsClose CommentsPermalink





‘(B) that has, as of the date of purchase of reinsurance coverage under this subsection--CommentsClose CommentsPermalink





‘(i) a corporate or other governing charter that prohibits the insurer from providing coverage for risks other than the risks specified in subparagraph (A) and such bonds issued by public purpose issuers or ultimate obligors as are not inconsistent with the intent of Municipal Bond Insurance Enhancement Act of 2009 and as may be approved generally or specifically by the Director of the Office of Public Finance or the relevant insurance regulator; orCommentsClose CommentsPermalink





‘(ii) entered into an agreement with the Director to only provide coverage for the risks specified in clause (i).CommentsClose CommentsPermalink





A qualified municipal bond insurer shall not be precluded from retaining or performing any obligations in place prior to entering into such an agreement with the Office.CommentsClose CommentsPermalink





‘(3) TERMS OF REINSURANCE- Reinsurance coverage under this subsection shall be subject to the following requirements:CommentsClose CommentsPermalink





‘(A) PREMIUMS- The Director shall establish and collect risk-based premiums for such coverage. Premium charges under this subparagraph shall be established in amounts that are sufficient, but do not exceed, the minimum amounts necessary to cover the costs (as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661(a)) of such reinsurance coverage and to cover administrative costs of the Secretary that are associated with the program for such coverage.CommentsClose CommentsPermalink





‘(B) OTHERS- The Director shall establish such other terms for such coverage as the Director determines are appropriate to provide additional capacity in the market for insurance of State and local bonds in the most cost-efficient manner.CommentsClose CommentsPermalink





‘(4) PROGRAM LIMIT- The aggregate par value of bonds, notes, security, and other debt obligations for which reinsurance is provided under the program under this subsection in any of fiscal years 2010 through 2014 may not exceed $50,000,000,000.CommentsClose CommentsPermalink





‘(5) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated such sums as may be necessary for administrative costs of carrying out the program under this subsection during the first 12 months of the operation of such program.CommentsClose CommentsPermalink





‘(6) DIVESTMENT- Not later than the expiration of the 5-year period beginning on the date of the enactment of this Act, the Secretary of the Treasury shall--CommentsClose CommentsPermalink





‘(A) establish and submit to the Congress a plan providing for the sale of the reinsurance assets acquired under the program under this subsection, except that any such sale shall not reduce the credit rating of bonds insured under such program or the relevant qualified municipal bond insurer through the submission of offers to purchase such assets; andCommentsClose CommentsPermalink





‘(B) implement such plan, including soliciting offers for the purchase of such operations.CommentsClose CommentsPermalink





‘(7) DEFINITIONS- For purposes of this subsection, the following definitions shall apply:CommentsClose CommentsPermalink





‘(A) INSURED LOSS- The term ‘insured loss’ means any loss resulting from any municipal bond that is covered by insurance provided by a qualified municipal bond insurer.CommentsClose CommentsPermalink





‘(B) MUNICIPAL BOND- The term ‘municipal bond’ means any bond, note, security, or other debt obligation issued by any State or political subdivision thereof, or by any other entity eligible to issue bonds 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





‘(C) QUALIFIED MUNICIPAL BOND INSURER- The term ‘qualified municipal bond insurer’ means an insurer that meets the requirements in paragraph (2) for reinsurance coverage under this subsection.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for subchapter I of chapter 3 of title 31, United States Code, is amended by adding at the end the following:CommentsClose CommentsPermalink





‘314. The Office of Public Finance.’.CommentsClose CommentsPermalink

SEC. 3. REINSURANCE BY OFFICE OF PUBLIC FINANCE NOT TREATED AS FEDERAL GUARANTEE UNDER TAX EXEMPT BOND REQUIREMENTS.

(a) In General- 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





‘(iv) any guarantee by the Office of Public Finance.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink