124 STAT. 1648 PUBLIC LAW 111–203—JULY 21, 2010 SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES. (a) PROHIBITION ON FEDERAL ASSISTANCE.—Notwithstanding any other provision of law (including regulations), no Federal assist- ance may be provided to any swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity. (b) DEFINITIONS.—In this section: (1) FEDERAL ASSISTANCE.—The term ‘‘Federal assistance’’ means the use of any advances from any Federal Reserve credit facility or discount window that is not part of a program or facility with broad-based eligibility under section 13(3)(A) of the Federal Reserve Act, Federal Deposit Insurance Corpora- tion insurance or guarantees for the purpose of— (A) making any loan to, or purchasing any stock, equity interest, or debt obligation of, any swaps entity; (B) purchasing the assets of any swaps entity; (C) guaranteeing any loan or debt issuance of any swaps entity; or (D) entering into any assistance arrangement (including tax breaks), loss sharing, or profit sharing with any swaps entity. (2) SWAPS ENTITY.— (A) IN GENERAL.—The term ‘‘swaps entity’’ means any swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, that is registered under— (i) the Commodity Exchange Act (7 U.S.C. 1 et seq.); or (ii) the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). (B) EXCLUSION.—The term ‘‘swaps entity’’ does not include any major swap participant or major security-based swap participant that is an insured depository institution. (c) AFFILIATES OF INSURED DEPOSITORY INSTITUTIONS.—The prohibition on Federal assistance contained in subsection (a) does not apply to and shall not prevent an insured depository institution from having or establishing an affiliate which is a swaps entity, as long as such insured depository institution is part of a bank holding company, or savings and loan holding company, that is supervised by the Federal Reserve and such swaps entity affiliate complies with sections 23A and 23B of the Federal Reserve Act and such other requirements as the Commodity Futures Trading Commission or the Securities Exchange Commission, as appro- priate, and the Board of Governors of the Federal Reserve System, may determine to be necessary and appropriate. (d) ONLY BONA FIDE HEDGING AND TRADITIONAL BANK ACTIVI- TIES PERMITTED.—The prohibition in subsection (a) shall apply to any insured depository institution unless the insured depository institution limits its swap or security-based swap activities to: (1) Hedging and other similar risk mitigating activities directly related to the insured depository institution’s activities. (2) Acting as a swaps entity for swaps or security-based swaps involving rates or reference assets that are permissible for investment by a national bank under the paragraph des- ignated as ‘‘Seventh.’’ of section 5136 of the Revised Statutes of the United States ( 12 U.S.C. 24), other than as described in paragraph (3). Applicability. 15 USC 8305.
