[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3145 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 3145
To amend the securities laws to prohibit credit default swaps and to
provide the Securities and Exchange Commission with the authority to
regulate swap agreements.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 9, 2009
Ms. Waters introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the securities laws to prohibit credit default swaps and to
provide the Securities and Exchange Commission with the authority to
regulate swap agreements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit Default Swap Prohibition Act
of 2009''.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds the following:
(1) Credit default swaps were conceived as insurance
instruments, used to diffuse risk and increase liquidity
throughout our lending system.
(2) The credit default swap market has grown over the past
decade to include contracts that are entered into by persons
with no economic interest in the contract's underlying
reference event, also known as naked credit default swaps.
(3) Certain parties wrote credit default swap contracts
without posting collateral, leaving them overexposed to certain
asset classes and creating a systemic risk.
(4) Unconnected and uncollateralized speculation creates an
unnecessary risk for our financial system.
(5) Credit default swaps have proved to be harmful
financial instruments and have caused significant wealth
destruction during our economic crisis.
(b) Purpose.--The purposes of this Act are--
(1) to allow the Securities and Exchange Commission to have
oversight over all security-based swap agreements; and
(2) to prevent further damage to our economy by prohibiting
credit default swaps.
SEC. 3. ESTABLISHING SECURITIES AND EXCHANGE COMMISSION OVERSIGHT OF
CREDIT DEFAULT SWAPS.
(a) Definition of Credit Default Swap.--
(1) Section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a)) is amended by adding at the end the following:
``(17) Credit default swap.--The term `credit default swap'
means--
``(A) a swap agreement (as such term is defined in
section 206A of the Gramm-Leach-Bliley Act) that
protects a party to such agreement against the risk of
a loss of value because of the occurrence or non-
occurrence of an event or contingency specified in such
agreement relating to a security, loan, or other
reference asset; and
``(B) such other forms of credit risk protection as
the Commission may, by rule, prescribe as necessary or
appropriate in the public interest or for the
protection of investors.''.
(2) Section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)) is amended by adding at the end the following:
``(65) Credit default swap.--The term `credit default swap'
means--
``(A) a swap agreement (as such term is defined in
section 206A of the Gramm-Leach-Bliley Act) that
protects a party to such agreement against the risk of
a loss of value because of the occurrence or non-
occurrence of an event or contingency specified in such
agreement relating to a security, loan, or other
reference asset; and
``(B) such other forms of credit risk protection as
the Commission may, by rule, prescribe as necessary or
appropriate in the public interest or for the
protection of investors.''.
(b) Securities Act Jurisdiction Over Swaps.--Section 2A(b) of the
Securities Act of 1933 (15 U.S.C. 77b-1(b)) is amended--
(1) in paragraph (1), by striking ``does not'' and
inserting ``shall'';
(2) by amending paragraph (2) to read as follows:
``(2) The Commission may require the registration of any
security-based swap agreement under this title.''; and
(3) by amending paragraph (3) to read as follows:
``(3) The Commission may promulgate rules, interpret rules,
enforce rules, and issue orders of general applicability under
this title in a manner that imposes or specifies reporting or
recordkeeping requirements, procedures, or standards as
prophylactic measures against fraud, manipulation, or insider
trading with respect to any security-based swap agreement.''.
(c) Securities Exchange Act Jurisdiction Over Swaps.--Section 3A(b)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c-1(b)) is
amended--
(1) in paragraph (1), by striking ``does not'' and
inserting ``shall'';
(2) by amending paragraph (2) to read as follows:
``(2) The Commission may require registration of any
security-based swap agreement under this title.''; and
(3) by amending paragraph (3) to read as follows:
``(3) The Commission may promulgate rules, interpret rules,
enforce rules, and issue orders of general applicability under
this title in a manner that imposes or specifies reporting or
recordkeeping requirements, procedures, or standards as
prophylactic measures against fraud, manipulation, or insider
trading with respect to any security-based swap agreement.''.
(d) Technical and Conforming Amendment.--
(1) Section 17 of the Securities Act of 1933 (15 U.S.C.
77q) is amended by striking subsection (d).
(2) Section 9 of the Securities Exchange Act of 1934 (15
U.S.C. 78i) is amended by striking subsection (i).
(3) Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o) is amended by striking subsection (i) (as added by
section 303(f) of the Commodity Futures Modernization Act of
2000).
(4) Section 16 of the Securities Exchange Act of 1934 (15
U.S.C. 78p) is amended by striking subsection (g).
(5) Section 20 of the Securities Exchange Act of 1934 (15
U.S.C. 78t) is amended by striking subsection (f).
(6) Section 21A of the Securities Exchange Act of 1934 (15
U.S.C. 78u-1) is amended by striking subsection (g).
SEC. 4. PROHIBITION ON CREDIT DEFAULT SWAPS.
The Securities Exchange Act of 1934 is amended by inserting after
section 7 (15 U.S.C. 78g) the following new section:
``SEC. 7A. PROHIBITION ON CREDIT DEFAULT SWAPS.
``It shall be unlawful for any person to enter into a credit
default swap agreement or contract.''.
SEC. 5. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect with
respect to swap agreements (as such term is defined in section 206A of
the Gramm-Leach-Bliley Act) and credit default swaps (as such term is
defined in section 3(a)(65) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(65))) entered into after the end of the 180-day period
beginning on the date of the enactment of this Act.
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