§5212 — Title 12 Banks and Banking | U.S. Code

Summary

If the Secretary creates the earlier program under section 5211, the Secretary must also set up a program to guarantee troubled assets that were issued before March 14, 2008, including mortgage-backed securities. The Secretary can design different kinds of guarantees and charge fees for them. At a bank’s request, the Secretary may guarantee up to 100 percent of the principal and interest payments on those troubled assets, on terms the Secretary decides. The Secretary must report to Congress within 90 days after October 3, 2008. The Secretary must collect premiums from participating financial institutions. Premiums can vary by the asset’s credit risk, and the Secretary must publish how rates are set and why each class of assets can join. Premiums must build reserves based on an actuarial analysis to protect taxpayers. Fees go into a Troubled Assets Insurance Financing Fund, which the Secretary will invest in U.S. Treasury securities or keep as cash and use to pay guarantee claims. The limit in section 5225 is reduced by the difference between total outstanding guaranteed obligations and the Fund balance.

Title 12, §5212

Banks and Banking — Source: USLM XML via OLRC

(a)(1)If the Secretary establishes the program authorized under section 5211 of this title, then the Secretary shall establish a program to guarantee troubled assets originated or issued prior to March 14, 2008, including mortgage-backed securities.

(2)In establishing any program under this subsection, the Secretary may develop guarantees of troubled assets and the associated premiums for such guarantees. Such guarantees and premiums may be determined by category or class of the troubled assets to be guaranteed.

(3)Upon request of a financial institution, the Secretary may guarantee the timely payment of principal of, and interest on, troubled assets in amounts not to exceed 100 percent of such payments. Such guarantee may be on such terms and conditions as are determined by the Secretary, provided that such terms and conditions are consistent with the purposes of this chapter.

(b)Not later than 90 days after October 3, 2008, the Secretary shall report to the appropriate committees of Congress on the program established under subsection (a).

(c)(1)The Secretary shall collect premiums from any financial institution participating in the program established under subsection (a). Such premiums shall be in an amount that the Secretary determines necessary to meet the purposes of this chapter and to provide sufficient reserves pursuant to paragraph (3).

(2)In establishing any premium under paragraph (1), the Secretary may provide for variations in such rates according to the credit risk associated with the particular troubled asset that is being guaranteed. The Secretary shall publish the methodology for setting the premium for a class of troubled assets together with an explanation of the appropriateness of the class of assets for participation in the program established under this section. The methodology shall ensure that the premium is consistent with paragraph (3).

(3)The premiums referred to in paragraph (1) shall be set by the Secretary at a level necessary to create reserves sufficient to meet anticipated claims, based on an actuarial analysis, and to ensure that taxpayers are fully protected.

(4)The purchase authority limit in section 5225 of this title shall be reduced by an amount equal to the difference between the total of the outstanding guaranteed obligations and the balance in the Troubled Assets Insurance Financing Fund.

(d)(1)The Secretary shall deposit fees collected under this section into the Fund established under paragraph (2).

(2)There is established a Troubled Assets Insurance Financing Fund that shall consist of the amounts collected pursuant to paragraph (1), and any balance in such fund shall be invested by the Secretary in United States Treasury securities, or kept in cash on hand or on deposit, as necessary.

(3)The Secretary shall make payments from amounts deposited in the Fund to fulfill obligations of the guarantees provided to financial institutions under subsection (a).

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsecs. (a)(3) and (c)(1), was in the original “this Act” and was translated as reading “this division”, meaning div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, known as the Emergency Economic Stabilization Act of 2008, to reflect the probable intent of Congress. For complete classification of division A to the Code, see

Short Title

note set out under section 5201 of this title and Tables.

§5212 Insurance of Troubled Assets