HOLDING OBLIGOR’S CASH AS COLLATERAL UNDER TITLE XI OF MERCHANT MARINE ACT, 1936.

SEC. 3503. HOLDING OBLIGOR’S CASH AS COLLATERAL UNDER TITLE XI OF MERCHANT MARINE ACT, 1936. Title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1271 et seq.) is amended by inserting after section 1108 the following: “SEC. 1109. DEPOSIT FUND. “(a) Establishment of Deposit Fund.—There is established in the Treasury a deposit fund for purposes of this section. The Secretary may, in accordance with an agreement under subsection (b), deposit into and hold in the deposit fund cash belonging to an obligor to serve as collateral for a guarantee under this title made with respect to the obligor. “(b) Agreement.— “(1) In general.—The Secretary and an obligor shall enter into a reserve fund or other collateral account agreement to govern the deposit, withdrawal, retention, use, and reinvestment of cash of the obligor held in the deposit fund established by subsection (a). “(2) Terms.—The agreement shall contain such terms and conditions as are required under this section and such additional terms as are considered by the Secretary to be necessary to protect fully the interests of the United States. “(3) Security interest of united states.—The agreement shall include terms that grant to the United States a security interest in all amounts deposited into the deposit fund. “(c) Investment.—The Secretary may invest and reinvest any part of the amounts in the deposit fund established by subsection (a) in obligations of the United States with such maturities as ensure that amounts in the deposit fund will be available as required for purposes of agreements under subsection (b). Cash balances of the deposit fund in excess of current requirements shall be maintained in a form of uninvested funds and the Secretary of the Treasury shall pay interest on these funds. “(d) Withdrawals.— 115 STAT. 1393 “(1) In general.—The cash deposited into the deposit fund established by subsection (a) may not be withdrawn without the consent of the Secretary. “(2) Use of income.—Subject to paragraph (3), the Secretary may pay any income earned on cash of an obligor deposited into the deposit fund in accordance with the terms of the agreement with the obligor under subsection (b). “(3) Retention against default.—The Secretary may retain and offset any or all of the cash of an obligor in the deposit fund, and any income realized thereon, as part of the Secretary’s recovery against the obligor in case of a default by the obligor on an obligation.”.