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Full Text of this Amendment

SA 1034. Mr. ENSIGN submitted an amendment intended to be proposed to amendment SA 1018 submitted by Mr. Dodd (for himself and Mr. Shelby) to the bill S. 896, to prevent mortgage foreclosures and enhance mortgage credit availability; which was ordered to lie on the table; as follows:

On page 64, after line 16, add the following:
TITLE V--PUBLIC-PRIVATE INVESTMENT PROGRAMS


SEC. 501 PUBLIC-PRIVATE INVESTMENT PROGRAMS.
(a) In General.--Subsection (b) shall apply to any program established by the Secretary of the Treasury or the Board of Directors of the Federal Deposit Insurance Corporation that--
(1) creates a public-private investment fund;
(2) makes available any funds from the Troubled Asset Relief Program established under title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) or the Federal Deposit Insurance Corporation for--
(A) a public-private investment fund; or
(B) a loan to a private investor to fund the purchase of a mortgage-backed security or an asset-backed security;
(3) employs or contracts with a private sector partner to manage assets for a public-private investment program; or
(4) guarantees any debt or asset for purposes of a public-private investment program.
(b) Requirements.--Any program described in subsection (a) shall--
(1) impose strict conflict of interest rules on managers of public-private investment funds that--
(A) specifically describe the extent, if any, to which such managers may--
(i) invest the assets of a public-private investment fund in assets that are held or managed by such managers or the clients of such managers; and
(ii) conduct transactions involving a public-private investment fund and an entity in which such manager or a client of such manager has invested;
(B) take into consideration that there is a trade-off between hiring a manager having significant experience as an asset manager that has complex conflicts of interest, and hiring a manager having less expertise that has no conflicts of interest; and
(C) acknowledge that the types of entities that are permitted to make investment decisions for a public-private investment fund may need to be limited to mitigate conflicts of interest;
(2) require the disclosure of information regarding participation in and management of public-private investment funds, including any transaction undertaken in a public-private investment fund;
(3) require each public-private investment fund to make a certified report to the Secretary of the Treasury that describes each transaction of such fund and the current value of any assets held by such fund, which report shall be publicly disclosed by the Secretary of the Treasury;
(4) require each manager of a public-private investment fund to report to the Secretary of the Treasury any holding or transaction by such manager or a client of such manager in the same type of asset that is held by the public-private investment fund;
(5) allow the Special Inspector General of the Troubled Asset Relief Program, access to all books and records of a public-private investment fund;
(6) require each manager of a public-private investment fund to retain all books, documents, and records relating to such public-private investment fund, including electronic messages;
(7) allow the Special Inspector General of the Troubled Asset Relief Program, the Secretary of the Treasury, and any other Federal agency having oversight responsibilities with respect to a public-private investment fund access to--
(A) the books, documents, records, and employees of each manager of a public-private investment fund; and
(B) the books, documents, and records of each private investor in a public-private investment fund that relate to the public-private investment fund;
(8) require each manager of a public-private investment fund to give such public-private investment fund terms that are at least as favorable as those given to any other person for whom such manager manages a fund;
(9) require each manager of a public-private investment fund to acknowledge a fiduciary duty to the public and private investors in such fund;
(10) require each manager of a public-private investment fund to develop a robust ethics policy that includes methods to ensure compliance with such policy;
(11) require stringent investor screening procedures for public-private investment funds that include ``know your customer'' requirements that are at least as rigorous as those of a commercial bank or retail brokerage operation;
(12) require each manager of a public-private investment fund to identify for the Secretary of the Treasury each beneficial owner of a private interest in such fund; and
(13) require the Secretary of the Treasury to ensure that all investors in a public-private investment fund are legitimate.
(c) Report.--Not later than 45 days after the date of the establishment of a program described in subsection (a), the Special Inspector General of the Troubled Asset Relief Program shall submit to Congress a report on the implementation of this section.
(d) Definition.--In this section, the term ``public-private investment fund'' means a financial vehicle that is--
(1) established by the Federal Government to purchase pools of loans, securities, or assets from a financial institution described in section 101(a)(1) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211(a)(1)); and
(2) funded by a combination of cash or equity from private investors and funds provided by the Secretary of the Treasury, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System.


(As printed in the Congressional Record for the Senate on May 1, 2009.)