TERMINATION OF GUARANTY AGENCY AGREEMENTS; ASSUMPTION OF GUARANTY AGENCY FUNCTIONS BY THE SECRETARY.

SEC. 4045. TERMINATION OF GUARANTY AGENCY AGREEMENTS; ASSUMPTION OF GUARANTY AGENCY FUNCTIONS BY THE SECRETARY. Section 428(c)(10) of the Act is amended— (1) in subparagraph (C), by inserting “, as appropriate,” after “the Secretary shall require”; (2) in subparagraph (D)— (A) by inserting the clause designation “(i)” before “Each”; (B) by striking “Each” and inserting “If the Secretary is not seeking to terminate the guaranty agency’s agreement under subparagraph (E), or assuming the guaranty agency’s functions under subparagraph (F), a”; (C) by adding at the end the following new clause: “(ii) If the Secretary is seeking to terminate the guaranty agency’s agreement under subparagraph (E), or assuming the guaranty agency’s functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the Secretary and the guaranty agency shall work together to ensure the orderly termination of the operations, and liquidation of the assets, of the guaranty agency.”; (3) in subparagraph (E)— (A) in clause (ii), by striking “or” after the semicolon; (B) in clause (iii), by striking the period and inserting a semicolon; and (C) by adding at the end the following new clauses: “(iv) the Secretary determines that such action is necessary to protect the Federal fiscal interest; “(v) the Secretary determines that such action is necessary to ensure the continued availability of loans to student or parent borrowers; or “(vi) the Secretary determines that such action is necessary to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part D of this title.”; (4) in subparagraph (F)— (A) in the matter preceding clause (i), by striking “Except as provided in subparagraph (G), if” and inserting “If”; (B) by amending clause (v) to read as follows: “(v) provide the guaranty agency with additional advance funds in accordance with section 422(c)(7), with such restrictions on the use of such funds as is determined appropriate by the Secretary, in order to— “(I) meet the immediate cash needs of the guaranty agency; “(II) ensure the uninterrupted payment of claims; or “(III) ensure that the guaranty agency will make loans as the lender-of-last-resort, in accordance with subsection (j);”; (C) in clause (vi)— (i) by striking “and to avoid” and inserting “to avoid”; (ii) by striking the period and inserting a comma and “and to ensure an orderly transition from the 107 STAT. 360loan programs under this part to the direct student loan programs under part D of this title.”; and (iii) by redesignating such clause as clause (vii); and (D) by inserting after clause (v) the following new clause: “(vi) use all funds and assets of the guaranty agency to assist in the activities undertaken in accordance with this subparagraph and take appropriate action to require the return, to the guaranty agency or the Secretary, of any funds or assets provided by the guaranty agency, under contract or otherwise, to any person or organization; or”; (5) by striking subparagraph (G); (6) by redesignating subparagraphs (H), (I), and (J) as subparagraphs (I), (J), and (K), respectively, (7) by inserting after subparagraph (F) the following new subparagraphs: “(G) Notwithstanding any other provision of Federal or State law, if the Secretary has terminated or is seeking to terminate a guaranty agency’s agreement under subparagraph (E), or has assumed a guaranty agency’s functions under subparagraph (F)— “(i) no State court may issue any order affecting the Secretary’s actions with respect to such guaranty agency; “(ii) any contract with respect to the administration of a guaranty agency’s reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after the date of enactment of this subparagraph shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section; and “(iii) no provision of State law shall apply to the actions of the Secretary in terminating the operations of a guaranty agency. “(H) Notwithstanding any other provision of law, the Secretary’s liability for any outstanding liabilities of a guaranty agency (other than outstanding student loan guarantees under this part), the functions of which the Secretary has assumed, shall not exceed the fair market value of the reserves of the guaranty agency, minus any necessary liquidation or other administrative costs.”; and (8) in subparagraph (K) (as redesignated by paragraph (5)), by striking all Beginning with “system, together” through the period and inserting “system and the progress of the transition from the loan programs under this part to the direct student loan programs under part D of this title.”.