text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Public Retiree's Investment Act of 
  2009''.
  
  SEC. 2. FINDINGS.
  
      Congress finds the following:
              (1) The United States banking system's ability to extend 
          credit on a basis consistent with healthy economic activity is 
          restricted by a need or desire to conserve capital in the face 
          of anticipated losses.
              (2) A shortage of banking capital may continue to exist 
          because private investors are generally unwilling to provide 
          such capital given their inability to accurately assess the 
          risk exposure of any individual institution while the Federal 
          Government's ability to function as a capital provider may be 
          constrained by concerns regarding Federal control of the 
          banking system as well its desire to use Federal funds in 
          numerous areas besides capitalization of the banking system.
              (3) State and local public pension funds are long term 
          investors whose constituents benefit from a well-capitalized 
          banking system with the ability to extend credit broadly at all 
          levels of the economy.
              (4) Certain State and local pension plans have broad 
          investment powers under State law which would include the 
          ability to form cooperative business endeavors solely owned by 
          them or in concert with public pension plans in other States.
              (5) Certain of these public pension plans have indicated 
          their willingness and ability to rapidly form and fund a 
          vehicle to be mutually owned by them for the sole purpose of 
          investing in preferred stocks of United States banking 
          institutions subject to certain guaranties provided by the 
          Secretary of the Treasury or other appropriate Federal 
          Government officer or agency.
  
  SEC. 3. DEFINITIONS.
  
      For purposes of this Act, the following definitions shall apply:
              (1) Eligible investments.--The term ``eligible investment'' 
          means any preferred stock investment which meets the 
          requirements of this Act by any public pension bank capital 
          infusion fund.
              (2) Public pension plans.--The term ``public pension plan'' 
          means any State and local pension plan that has broad 
          investment powers and authority under State law, including the 
          authority to establish, administer, and participate in 
          cooperative business endeavors solely owned by the plan or 
          other public pension plans.
              (3) Public pension bank capital infusion fund.--The term 
          ``public pension bank capital infusion fund'' means any 
          investment vehicle mutually owned by public pension plans for 
          the sole purpose of investing in preferred stocks of United 
          States banking institutions, subject to certain guarantees 
          provided by the Secretary of the Treasury or other appropriate 
          Federal Government officer or agency, that meets the 
          requirements of this Act for such capital infusion funds.
              (4) Qualified equity offering.--The term ``qualified equity 
          offering'' means the sale for cash, by a financial institution 
          after the date of an investment by a public pension bank 
          capital infusion fund in any eligible investment issued by such 
          institution, of perpetual preferred stock or common stock which 
          qualifies as Tier 1 capital of such financial institution.
              (5) Reguarantee.--The term ``reguarantee'' means a 
          guarantee issued by a guarantor of the payment of, or the 
          fulfillment of any other obligation under, a guarantee issued 
          by another guarantor.
              (6) Secretary.--The term ``Secretary'' means the Secretary 
          of the Treasury.
  
  SEC. 4. PUBLIC PENSION PLAN INVESTMENTS IN CERTAIN BANK PREFERRED STOCK 
                INSTRUMENTS.
  
      (a) Guarantee and Reguarantee Authority.--The Secretary may 
  guarantee eligible investments or reguarantee a guarantee of eligible 
  investments.
      (b) Requirements and Procedures for Guarantees.--
              (1) Term and other conditions of guarantees.--Any guarantee 
          or reguarantee provided by the Secretary under subsection (a) 
          with respect to an eligible investment shall--
                      (A) be an unconditional guarantee for the life of 
                  the eligible investment; and
                      (B) shall cover the timely payment of dividends on, 
                  and the ultimate return of principal of, such eligible 
                  investment, in accordance with the terms of the 
                  eligible investment.
              (2) Procedures.--The process by which the Secretary shall 
          be notified of a need to perform under a guarantee or 
          reguarantee issue under subsection (a) and the manner in which 
          the Secretary shall perform the duties of guarantor or 
          reguarantor shall be mutually agreed to by the Secretary, the 
          other guarantor, in the case of a reguarantee from the 
          Secretary, and the public pension bank capital infusion fund.
      (c) Terms of Eligibility for Public Pension Plans.--
              (1) Authorized under state law.--The Secretary may not 
          guarantee or reguarantee eligible investments of a public 
          pension bank capital infusion fund under subsection (a) unless 
          each public pension plan which has a mutual ownership interest 
          in such capital infusion fund is authorized under State law to 
          establish, or participate in the formation of, a wholly owned 
          mutual fund or a limited liability corporation, in the case of 
          joint ownership with other public pension plans.
              (2) Choice of law issue.--The powers of any public pension 
          plan for purposes of this subsection shall--
                      (A) in all instances be determined by the law of 
                  the domicile State of such public pension plans; and
                      (B) in the case of a joint endeavor among public 
                  pension plans from different States, by a choice of law 
                  agreement (among the participating public pension 
                  plans) to which each State represented by a plan has 
                  granted full faith and credit.
      (d) Terms of Eligibility for Eligible Investments by a Public 
  Pension Bank Capital Infusion Fund.--
              (1) Maximum amount per fund.--The eligible investments of a 
          public pension bank capital infusion fund shall be eligible for 
          a guarantee or reguarantee under this section only if the 
          aggregate amount of such investments by the fund do not exceed 
          $50,000,000,000.
              (2) Institution eligible for investments.--Only an 
          investment in preferred stock that meets the requirements of 
          subsection (e) and has been issued by a financial institution 
          which meets the definition of a qualifying financial 
          institution under the TARP Capital Purchase Program established 
          under the authority of the Emergency Economic Stabilization Act 
          of 2008 may be treated as an eligible investment for purposes 
          of this Act.
      (e) Preferred Stock Requirements.--Preferred stock meets the 
  requirements of this subsection if the following terms and conditions 
  are met by such stock:
              (1) Security.--The stock bears senior preferred status with 
          a liquidation preference of $1,000 per share or higher as 
          provided in the TARP Capital Purchase Program.
              (2) Ranking.--The stock is senior to common stock and pari 
          passu with existing preferred shares other than preferred 
          shares which by their terms rank junior to any existing 
          preferred shares.
              (3) Regulatory capital status.--The preferred stock meets 
          the requirement for treatment as Tier I capital for the 
          financial institution which issued it.
              (4) Term.--The term of the stock is perpetual.
              (5) Dividends.--
                      (A) In general.--The stock pays cumulative 
                  dividends at--
                              (i) an initial rate of 8.5 percent per 
                          year; and
                              (ii) after the end of the 1-year period 
                          beginning on the date of the enactment of this 
                          Act, at the prevailing reset rate determined in 
                          accordance with subparagraph (B).
                      (B) Reset rate.--The term ``reset rate'' means the 
                  rate determined at the end of the 1-year period 
                  beginning on the date of the enactment of this Act and 
                  each 1-year period thereafter by adding together--
                              (i) the yield prevailing as of the close of 
                          business of the date of the determination on 
                          10-year United States treasury notes; and
                              (ii) the difference between 8.5 percent and 
                          the yield prevailing as of the close of 
                          business on the date of the enactment of this 
                          Act on 10-year United States treasury notes.
              (6) Redemption.--
                      (A) Timing.--The redemption of the stock is subject 
                  to the following conditions:
                              (i) The stock may not be redeemed for a 
                          period of 3 years from the date of the initial 
                          investment by the public pension bank capital 
                          infusion fund, except with the proceeds from a 
                          qualified equity offering which results in 
                          aggregate gross proceeds to the financial 
                          institution which issued the stock of not less 
                          than 25 percent of the issue price of the 
                          stock.
                              (ii) After the third anniversary of the 
                          date of the investment, the stock may be 
                          redeemed, in whole or in part, at any time and 
                          from time to time, at the option of the 
                          financial institution.
                      (B) Amount.--All redemptions of the stock are at 
                  100 percent of the issue price, plus any accrued and 
                  unpaid dividends and shall be subject to the approval 
                  of the primary Federal financial regulator of the 
                  issuing financial institution.
              (7) Restrictions on dividends.--For as long as the 
          preferred stock is outstanding, no dividends may be declared or 
          paid on junior preferred shares, preferred shares ranking pari 
          passu with the preferred stock, or common shares (other than in 
          the case of pari passu preferred shares' dividends on a pro 
          rata basis with the preferred stock) nor may the financial 
          institution which issued the preferred stock repurchase or 
          redeem any junior preferred shares, preferred shares ranking 
          pari passu with the preferred stock, or common shares until 
          such time as the preferred stock has been redeemed in whole.
              (8) Voting rights.--The preferred stock is nonvoting, other 
          than class voting rights on--
                      (A) any authorization or issuance of shares ranking 
                  senior to the preferred stock;
                      (B) any amendment to the rights of the preferred 
                  stock; or
                      (C) any merger, exchange or similar transaction 
                  which would adversely affect the rights of the 
                  preferred stock.
              (9) Appoint of directors.--The stock instrument provides 
          that if dividends on the preferred stock are not paid in full 
          for more than 4 consecutive dividend periods, the Secretary may 
          elect 2 directors to serve on the board of directors of the 
          issuing financial institution until such time as full dividends 
          have been paid for 4 consecutive dividend periods.
              (10) Timing of guaranty payments.--The payment of guaranty 
          payments under this Act shall be pursuant to a policy mutually 
          agreed to by the Secretary, the other guarantor, in the case of 
          a reguarantee from the Secretary, and the public pension bank 
          capital infusion fund which policy shall be consistent with the 
          intent of the guarantee, as specified in section 4(b).
      (f) Effective Period of Guarantee Authority.--Notwithstanding any 
  other provision of this section, any guarantee or reguarantee under 
  this subsection may only be provided on an eligible investment whose 
  initial issuance is made before the end of the 3-year period beginning 
  on the date of the enactment of this Act .
      (g) Treatment Under Other Law.--A public pension bank capital 
  infusion fund that is a mutual fund vehicle or limited liability 
  corporation owned by one or more public pension plans and managed under 
  contract by an appropriate service vender (as approved by the 
  Secretary) who reports to the fund directly or through its chief 
  investment officer shall be deemed to be a political subdivision of a 
  State as that term is defined in section 414(d) of the Internal Revenue 
  Code of 1986 and shall be exempt from taxation pursuant to section 115 
  of such Code.
      (h) Reports.--
              (1) In general.--In the case of any guarantee or 
          reguarantee issued by the Secretary, under subsection (a), with 
          respect to eligible investments, the guarantor of such eligible 
          investments shall submit a report to the Congress (and to the 
          Secretary, in any case in which the Secretary is the 
          reguarantor) on the status of the guarantee or reguarantee.
              (2) Contents.--Each report submitted under paragraph (1) 
          shall include, at a minimum--
                      (A) the name of any institution issuing eligible 
                  investments for which a guarantee is in effect;
                      (B) the face amount of each eligible investment 
                  covered by the guarantee;
                      (C) the amount of dividends paid, declared and due 
                  under the terms of the eligible investment; and
                      (D) the amount of any payments made by the 
                  guarantor as a result of the enactment of this Act.
target: Public Retiree's Investment Act of 2009 - Authorizes the Secretary of the Treasury to guarantee eligible investments, or reguarantee a guarantee of eligible investments, by any public pension bank capital infusion fund mutually owned by state and local pension plans for the sole purpose of investing in preferred stocks of U.S. banking institutions.
  
  Requires each public pension plan with a mutual ownership interest in a capital infusion fund to be authorized by state law to establish, or participate in the formation of, a wholly owned mutual fund or a limited liability corporation, in the case of joint ownership with other public pension plans.
  
  Caps the maximum amount of investments by such such a capital infusion fund at $50 billion.
  
  Restricts eligible investments to those in the preferred stock of a qualifying financial institution under the Troubled Asset Relief Program (TARP) Capital Purchase Program established under the Emergency Economic Stabilization Act of 2008 (EESA).
feat_title: To secure additional Tier I capital for the United States banking system from parties other than the Federal Government by providing authority to the Secretary of the Treasury to guaranty certain new preferred stock investments made by public pensions acting in a collective fashion, and for other purposes.