Comprehensive Financial Stabilization Act, 1749

Comprehensive Financial Stabilization Act, 1749

Cortes Federales
Long title	An Act to establish a comprehensive framework for financial stabilization in response to the Federal trust crisis, to reform and strengthen federal deposit insurance, to enhance regulatory oversight of regional financial institutions, to promote transparency in corporate ownership structures, to provide targeted debt restructuring for viable businesses, to establish an independent commission to investigate the causes of the banking crisis, and for other purposes.
Introduced by	Defense Secretary José Manuel Montero, FHP
Extent	Federation of Nouvelle Alexandrie
Dates
Royal Assent	16.VII.1749 AN
Other legislation
Related legislation	Bank Run Prevention Act, 1718, Currency of Nouvelle Alexandrie Act, 1711

The Comprehensive Financial Stabilization Act, 1749 is federal legislation enacted by the 11th Cortes Federales in response to the Federal trust crisis of 1749. Passed during a 72-hour emergency session of the Cortes Federales and approved with a 612-137 supermajority vote, the act represents the most significant financial reform legislation since the Bank Run Prevention Act, 1718. The NAX€18.5 billion package reforms federal deposit insurance, enhances regulatory oversight of regional banks, requires transparency in corporate ownership, provides targeted debt relief for viable businesses, and creates an independent commission to investigate the causes of the crisis.

The legislation emerged from negotiations led by Defense Secretary José Manuel Montero, whose non-partisan approach bridged longstanding ideological divisions between the Federal Humanist Party, Federal Consensus Party, and moderate members of the Alliance for a Just Nouvelle Alexandrie. The act's passage ended a months-long legislative deadlock and produced immediate market stabilization, with the Nouvelle Alexandrie Stock Exchange rallying 8.4% upon announcement.

Background

The Federal trust crisis of 1749 began in VII.1749 AN when the Federal Bank of Nouvelle Alexandrie detected widespread liquidity problems across interconnected regional lenders. Five major regional banks, Beaufort Mutual, Coastal Savings of Lyrica, First Agricultural Bank of the South, Lyrica Commonwealth Trust, and Merchant's Bank of Fontainebleau, had all accumulated NAX€4.3 billion in non-performing loans, primarily concentrated in shell companies that had purchased undeveloped land at inflated valuations.

The crisis stemmed from the North Lyrica logging scandal and related speculation in South Lyrica's agricultural land markets. Regional banks had extended credit to entities with no employees, no revenue, and addresses matching law firms in Beaufort and Fontainebleau. These shell companies controlled 340,000 hectares of land acquired through loans totaling NAX€12 billion across the regional banking sector. When timber operations faced federal investigation and agricultural land failed to appreciate as projected, loan defaults cascaded through the banking system.

By early IX.1749 AN, credit markets had contracted severely. Businesses unrelated to the speculation found themselves unable to access capital. The Federal Bank implemented emergency liquidity measures, but Premier Juan Pablo Jimenez determined that comprehensive legislative reform was required to restore confidence and prevent future crises.

While the Bank Run Prevention Act, 1718 had established the Nouvelle Alexandrie Deposit Insurance Corporation and basic deposit insurance protections, the 1749 crisis exposed significant weaknesses in the existing framework. Regional variations in deposit insurance coverage created uncertainty, with limits ranging from NAX€50,000 to NAX€250,000 depending on jurisdiction. The NADIC lacked adequate examination authority over regional banks, and the absence of standardized stress testing meant that systemic risks went undetected until credit markets seized up.

Legislative History

Legislative History of the Comprehensive Financial Stabilization Act, 1749

Stage	Date	Chamber	Action	Votes (Y-N-A)	Details
1	11.IX.1749 AN	Federal Assembly	Emergency Session Convened	-	Convened by Premier Juan Pablo Jimenez in response to credit market paralysis
2	11.IX.1749 AN	Federal Assembly	Introduction	-	Introduced by Defense Secretary José Manuel Montero
3	12-14.IX.1749 AN	Federal Assembly	Negotiations	-	48 hours of intensive negotiations led by Secretary Montero
4	14.IX.1749 AN	Federal Assembly	Final Reading	612-137-0	Passed at 3:47 a.m. with supermajority support
5	15.IX.1749 AN	Chamber of Peers	Emergency Reading	45-2-0	Approved same day under emergency procedures
6	16.IX.1749 AN	-	Royal Assent	-	Signed into law by King Sinchi Roca II

Premier Jimenez convened an emergency session of the Cortes Federales on 11.VII.1749 AN after credit contraction began threatening businesses across multiple regions. Initial proposals from the Federal Humanist Party focused on direct capital injections to troubled banks, totaling NAX€12 billion. Opposition parties immediately criticized this approach as rewarding incompetence and failing to address systemic problems revealed by the crisis.

By the second day of the emergency session, negotiations had stalled completely. The Federal Consensus Party demanded enhanced oversight provisions and criminal prosecutions for fraudulent lending. The Alliance for a Just Nouvelle Alexandrie insisted on excluding banks involved in the North Lyrica logging scandal from assistance and called for wealth redistribution measures. The Federal Humanist Party argued that time constraints required immediate stabilization rather than comprehensive reform.

Defense Secretary José Manuel Montero, attending sessions as a Council of State member, requested permission to mediate on the evening of 13.VII.1749 AN. Montero set up operations in a room adjacent to the Assembly chamber and conducted back-to-back negotiating sessions, often continuing past midnight. Deputies from all parties described his approach as methodical, pragmatic, and free of political calculation.

The breakthrough came when Montero proposed separating immediate relief measures from longer-term structural reforms while ensuring both components received legislative authority. This framework allowed deputies concerned about rushed policy to support short-term stability while guaranteeing time for detailed regulatory changes. Montero also negotiated compromise language on federal versus regional oversight authority, a primary sticking point between the Federal Humanist Party and Federal Consensus Party.

By the morning of 14.VII.1749 AN, Montero had assembled a comprehensive package incorporating elements from all parties. The Federal Humanist Party secured reformed federal deposit insurance and debt restructuring programs. The Federal Consensus Party obtained enhanced oversight provisions and stress testing authority. The Alliance for a Just Nouvelle Alexandrie achieved the Independent Banking Crisis Commission with subpoena authority and beneficial ownership disclosure requirements.

The final vote occurred at 3:47 a.m. on 14.VII.1749 AN. The act passed 612-137, with 189 Federal Consensus Party deputies voting yes and eighteen Alliance for a Just Nouvelle Alexandrie members breaking with party leadership to support the package. King Sinchi Roca II granted Royal Assent on 16.VII.1749 AN, and the act took immediate effect.

Key provisions

Reform of Federal Deposit Insurance System

The act substantially amends and strengthens the deposit insurance framework established by the Bank Run Prevention Act, 1718. The Nouvelle Alexandrie Deposit Insurance Corporation is restructured into the Federal Deposit Insurance System, with standardized NAX€500,000 coverage per account at all federally chartered and regionally chartered banks operating in Nouvelle Alexandrie. This replaces the previous patchwork of regional guarantee schemes, which varied from NAX€50,000 to NAX€250,000 depending on region and created uncertainty during the crisis.

All banks operating in the Federation must participate in the reformed system. Premium rates are calibrated to each institution's risk profile, with higher-risk lenders paying proportionally higher premiums. The system is funded entirely through industry contributions rather than taxpayer money, addressing opposition concerns about socializing losses while privatizing gains.

The Federal Bank of Nouvelle Alexandrie assumes administration of the Federal Deposit Insurance System from the NADIC. Banks must submit quarterly risk assessments. The Federal Bank may adjust premium rates based on changes in institutional risk profiles. The act requires the system to maintain reserves equal to 2% of total insured deposits across the banking sector, a significant increase from previous requirements.

Enhanced regulatory oversight

The act creates the Division of Regional Financial Institutions within the Federal Bank of Nouvelle Alexandrie, with authority to conduct stress tests, examine loan portfolios, and intervene in unsafe lending practices. This federal role passed only after Montero negotiated compromise language preserving regional autonomy in day-to-day operations while establishing federal minimum standards. The Division represents a major expansion of federal oversight authority beyond what the Bank Run Prevention Act, 1718 provided to the NADIC.

The Division employs 200 federal banking examiners with expertise in credit analysis, asset valuation, and risk management. Examiners may access all books and records of federally chartered and regionally chartered banks. The Division conducts annual stress tests modeling severe but plausible adverse scenarios, including property price declines, commodity market volatility, and credit contraction.

Banks failing stress tests must submit capital restoration plans within 60 days. The Division may impose restrictions on dividend payments, executive compensation, and new lending until capital adequacy is restored. In cases of severe capital deficiency, the Division may place banks into temporary receivership to protect depositors.

The act preserves regional authority over bank chartering, branching, and consumer protection regulation. Federal oversight focuses exclusively on systemic risk, capital adequacy, and lending standards that could threaten the broader financial system.

Shell Company Transparency Initiative

The act requires beneficial ownership disclosure for all corporations purchasing real estate or receiving bank loans exceeding NAX€100,000. This provision directly targets the anonymous entities that facilitated speculation in North Lyrica's timber markets and South Lyrica's agricultural land bubble.

Corporations must file beneficial ownership reports with the Department of Treasury within 30 days of formation or first qualifying transaction. Reports must identify all individuals owning 25% or more of the entity, all individuals exercising substantial control over the entity, and the source of funds used for real estate purchases or loan collateral.

Violations carry criminal penalties up to five years imprisonment and fines equal to twice the value of the concealed ownership interest. The Department of Justice may also seek civil forfeiture of assets purchased through shell companies that fail to disclose beneficial ownership.

Banks must verify beneficial ownership before extending loans exceeding NAX€100,000 or accepting real property as collateral. Failure to verify subjects banks to civil penalties and potential loss of federal deposit insurance eligibility. The act provides a two-year transition period for existing loans, during which banks must obtain beneficial ownership information for all qualifying loans in their portfolios.

Targeted Debt Restructuring Program

The act establishes a NAX€8.5 billion Targeted Debt Restructuring Program providing federal loan guarantees for businesses deemed fundamentally viable but temporarily distressed. The program specifically excludes companies involved in illegal logging or speculative land schemes.

The Federal Bank of Nouvelle Alexandrie administers the program in consultation with the Department of Treasury. Eligible businesses must demonstrate three consecutive years of profitability prior to the crisis, employment of at least ten full-time workers, and no involvement in activities under federal investigation.

Federal guarantees cover 80% of restructured loan value, with participating banks retaining 20% exposure to ensure continued monitoring and responsible lending. Businesses receiving assistance must maintain employment levels for three years and accept restrictions on executive compensation and dividend payments during the guarantee period.

The program phases out over 24 months as credit markets normalize. The Federal Bank may extend the program an additional 12 months if economic conditions warrant. All guarantees expire five years after issuance, with earlier termination if borrowers restore normal creditworthiness.

Independent Banking Crisis Commission

The act creates an Independent Banking Crisis Commission to investigate regulatory failures that contributed to the crisis. The Commission has subpoena authority, may compel testimony under oath, and must recommend comprehensive reforms by VI.1750 AN.

The Commission consists of six members: two appointed by the Federal Assembly majority, two by the minority, and two selected by consensus of all party leaders. Members serve 18-month terms and may not hold elected office or financial industry positions during their service or for three years thereafter.

The Commission must examine the adequacy of existing banking regulations, the performance of federal and regional regulators, the role of shell companies in facilitating speculation, connections between the North Lyrica logging scandal and banking practices, and the effectiveness of reforms implemented under the Bank Run Prevention Act, 1718.

Public hearings must begin within 60 days of the Commission's formation. All testimony and evidence become public record unless classified for national security reasons. The Commission may recommend legislative changes, regulatory reforms, criminal referrals, and structural changes to banking supervision.

Text of the Act

COMPREHENSIVE FINANCIAL STABILIZATION ACT, 1749

Ordered, by the Cortes Federales of Nouvelle Alexandrie,
to be Printed, 1749 AN.

_______________________________

BE IT ENACTED by the King's Most Excellent Majesty, by and with the advice and consent of the Cortes Federales, in this present session assembled, and by the authority of the same, as follows:-

PART I
GENERAL PROVISIONS

1. SHORT TITLE.

1. This Act shall be officially cited as the "Comprehensive Financial Stabilization Act, 1749".

2. CONSTITUTIONAL AUTHORITY.

1. Chapter I, Article 2 of the Proclamation of Punta Santiago confers "all other subject matters which by their very nature or as a corollary to the subjects listed have to be centralized on the national level" to the federal government as part of its powers.
2. Chapter IV, Article 30, Clause 2 of the Proclamation of Punta Santiago states that "the Cortes Federales exercise the legislative powers of the Federation in accordance with this Proclamation and with the laws."
3. The authority to regulate banking, commerce, and interstate financial transactions falls within the federal government's enumerated powers under the Proclamation of Punta Santiago.

3. DEFINITIONS.

1. The term "bank" shall mean any institution chartered under federal or regional law that accepts deposits and makes loans, including but not limited to commercial banks, savings banks, credit unions, and trust companies.
2. The term "Federal Bank" shall mean the Federal Bank of Nouvelle Alexandrie, the central banking authority of the Federation.
3. The term "regional financial institution" shall mean any bank chartered under regional law and operating primarily within a single region of the Federation.
4. The term "deposit" shall mean funds placed with a bank subject to withdrawal on demand or after a specified term.
5. The term "shell company" shall mean any corporation, limited liability company, partnership, or other legal entity that has no significant assets, no operations, no employees, and exists primarily to hold title to property or receive financial benefits on behalf of undisclosed beneficial owners.
6. The term "beneficial owner" shall mean any natural person who, directly or indirectly, owns 25% or more of the equity interests of an entity or exercises substantial control over an entity.
7. The term "stress test" shall mean a forward-looking exercise that evaluates the potential impact of severe but plausible adverse economic scenarios on a bank's capital adequacy.
8. The term "systemic risk" shall mean the risk that failure of one or more financial institutions could trigger widespread financial instability affecting the broader economy.
9. The term "capital adequacy" shall mean the ratio of a bank's capital to its risk-weighted assets, as measured according to standards established by the Federal Bank.
10. Whenever the term "NAX€" is used in this Act, it shall refer to the New Alexandrian écu, the official currency of Nouvelle Alexandrie.
11. Whenever the term "year" is used in this Act without further specification, it shall be construed to refer to calendar years in the Anno Nortone system.

4. PURPOSES.

1. The purposes of this Act are to:
   1. Restore confidence in the banking system by reforming and strengthening federal deposit insurance established under the Bank Run Prevention Act, 1718;
   2. Prevent future financial crises through enhanced regulatory oversight and stress testing;
   3. Promote transparency in corporate ownership structures to prevent fraud and speculation;
   4. Provide targeted relief to viable businesses harmed by credit market dysfunction;
   5. Investigate the causes of the Federal trust crisis of 1749 and recommend comprehensive reforms;
   6. Protect depositors, taxpayers, and the broader economy from the consequences of irresponsible banking practices; and
   7. Establish clear federal standards for banking safety and soundness while respecting regional autonomy in appropriate matters.

PART II
AMENDMENTS TO THE BANK RUN PREVENTION ACT, 1718, AND REFORM OF FEDERAL DEPOSIT INSURANCE

5. RESTRUCTURING OF DEPOSIT INSURANCE SYSTEM.

1. The Nouvelle Alexandrie Deposit Insurance Corporation established under Article 4 of the Bank Run Prevention Act, 1718 is hereby restructured as the Federal Deposit Insurance System and shall be administered directly by the Federal Bank of Nouvelle Alexandrie.
2. All functions, powers, duties, assets, liabilities, and obligations of the Nouvelle Alexandrie Deposit Insurance Corporation are hereby transferred to the Federal Bank of Nouvelle Alexandrie.
3. The board of directors of the Nouvelle Alexandrie Deposit Insurance Corporation is hereby dissolved, and all authority previously vested in that board shall be exercised by the Governor of the Federal Bank of Nouvelle Alexandrie or by such officials as the Governor may designate.
4. The Federal Deposit Insurance System shall insure deposits at all federally chartered banks and all regionally chartered banks operating in Nouvelle Alexandrie.
5. All banks operating in the Federation must participate in the Federal Deposit Insurance System as a condition of maintaining their charter.
6. Banks may not represent to depositors that they provide deposit insurance other than through the Federal Deposit Insurance System unless separately licensed to provide private insurance subject to federal regulation.

6. STANDARDIZED COVERAGE LIMITS.

1. Notwithstanding any previous regulation or practice under the Bank Run Prevention Act, 1718, the Federal Deposit Insurance System shall insure deposits up to NAX€500,000 per depositor, per insured bank.
2. Insurance coverage shall apply separately to different categories of deposit accounts, including but not limited to:
   1. Individual accounts;
   2. Joint accounts;
   3. Retirement accounts;
   4. Trust accounts;
   5. Business accounts; and
   6. Government accounts.
3. The Federal Bank shall establish by regulation the specific rules for calculating insurance coverage for different account types.
4. Insurance coverage shall be automatic upon a bank's participation in the Federal Deposit Insurance System and shall require no action by depositors.
5. Regional variations in deposit insurance coverage limits are hereby superseded, and all banks in the Federation shall provide the standardized coverage established by this section.

7. RISK-BASED INSURANCE PREMIUMS.

1. Article 4 of the Bank Run Prevention Act, 1718 is hereby amended to require risk-based premium assessment.
2. All banks participating in the Federal Deposit Insurance System shall pay quarterly premiums to the Federal Bank.
3. Premium rates shall be calibrated to each institution's risk profile, as determined by the Federal Bank through examination and stress testing.
4. The Federal Bank shall establish by regulation the specific methodology for calculating risk-based premiums, which must consider at minimum:
   1. Capital adequacy ratios;
   2. Asset quality and loan portfolio concentration;
   3. Earnings stability and profitability;
   4. Liquidity and funding sources;
   5. Sensitivity to market risk; and
   6. Quality of management and governance.
5. Higher-risk institutions shall pay proportionally higher premiums than lower-risk institutions.
6. The Federal Bank may adjust premium rates quarterly based on changes in institutional risk profiles.

8. DEPOSIT INSURANCE FUND.

1. The Federal Deposit Insurance System shall maintain a Deposit Insurance Fund to pay claims to depositors of failed banks.
2. The Deposit Insurance Fund shall be funded entirely through premium payments from participating banks and investment earnings.
3. No taxpayer funds shall be used to capitalize or maintain the Deposit Insurance Fund except as provided in Section 9 of this Act.
4. The Federal Bank shall manage the Deposit Insurance Fund prudently, investing in high-quality liquid assets consistent with the Fund's obligation to pay claims on short notice.
5. The Federal Bank shall maintain reserves in the Deposit Insurance Fund equal to at least 2% of total insured deposits across all participating banks.
6. If the Deposit Insurance Fund falls below the 2% reserve ratio, the Federal Bank shall increase premium rates on all participating banks until the reserve ratio is restored.

9. EMERGENCY BORROWING AUTHORITY.

1. If the Deposit Insurance Fund is insufficient to pay depositor claims, the Federal Bank may borrow from the Department of Treasury such sums as are necessary to fulfill insurance obligations.
2. Any borrowing under this section shall be repaid through increased premiums on all participating banks within five years of the borrowing date.
3. Interest on borrowings from the Department of Treasury shall be set at the federal government's cost of funds plus 25 basis points.
4. The Federal Bank shall report to the Cortes Federales within 30 days of any borrowing under this section, explaining the circumstances necessitating the borrowing and the plan for repayment.
5. This section amends and supersedes Article 4, paragraph 7 of the Bank Run Prevention Act, 1718.

10. RESOLUTION OF FAILED BANKS.

1. When a bank fails, the Federal Bank shall act as receiver to protect depositor interests and minimize losses to the Deposit Insurance Fund.
2. The Federal Bank may:
   1. Pay insured depositors directly;
   2. Facilitate the acquisition of the failed bank by a healthy institution;
   3. Establish a bridge bank to maintain critical banking services while seeking a permanent solution;
   4. Liquidate the failed bank's assets; or
   5. Pursue any combination of these approaches that best protects depositors and minimizes costs.
3. The Federal Bank shall prioritize resolution approaches that maintain banking services in communities served by failed institutions.
4. Uninsured depositors and general creditors of failed banks shall receive pro rata distributions from the proceeds of asset liquidation after all insured deposits are paid in full.
5. This section supplements and clarifies the resolution authority established in Article 8 of the Bank Run Prevention Act, 1718.

PART III
ENHANCED REGULATORY OVERSIGHT

11. DIVISION OF REGIONAL FINANCIAL INSTITUTIONS.

1. There is hereby established within the Federal Bank of Nouvelle Alexandrie the Division of Regional Financial Institutions.
2. The Division shall be responsible for:
   1. Examining regional financial institutions for safety and soundness;
   2. Conducting annual stress tests of all banks with assets exceeding NAX€5 billion;
   3. Establishing minimum standards for capital adequacy, asset quality, and risk management;
   4. Intervening to correct unsafe or unsound banking practices; and
   5. Coordinating with regional banking supervisors.
3. The Federal Bank shall appoint a Director of the Division of Regional Financial Institutions, who shall serve at the pleasure of the Federal Bank's Governor.
4. The Division shall employ not fewer than 200 federal banking examiners with expertise in credit analysis, asset valuation, risk management, and financial institution supervision.
5. This Division supplements the examination authority established in Article 5 of the Bank Run Prevention Act, 1718.

12. EXAMINATION AUTHORITY.

1. The Division of Regional Financial Institutions may examine any bank participating in the Federal Deposit Insurance System.
2. Examinations may occur at any time but shall occur at least annually for banks with assets exceeding NAX€5 billion and at least biennially for smaller institutions.
3. During examinations, the Division shall have full access to all books, records, accounts, and documents of the examined institution.
4. The Division may require the attendance and testimony of any officer, director, employee, agent, or attorney of the examined institution.
5. The Division may administer oaths and examine witnesses.
6. Examination reports shall be confidential supervisory information but may be shared with regional banking supervisors and law enforcement authorities as appropriate.

13. STRESS TESTING.

1. The Division of Regional Financial Institutions shall conduct annual stress tests of all banks with assets exceeding NAX€5 billion.
2. Stress tests shall model severe but plausible adverse economic scenarios, including at minimum:
   1. A 30% decline in commercial and residential real estate values;
   2. A 50% decline in commodity prices, including Alexandrium;
   3. A credit contraction reducing access to wholesale funding by 40%;
   4. An increase in unemployment to 8%; and
   5. A decline in GDP growth to -2%.
3. The Division may develop additional stress scenarios as appropriate to capture emerging risks to the banking system.
4. Banks shall report to the Division the projected impact of stress scenarios on their capital ratios, loan losses, and liquidity positions.
5. The Division shall publish summary stress test results annually, identifying systemically important institutions that would fall below minimum capital requirements under adverse scenarios.

14. CAPITAL RESTORATION.

1. Any bank that fails a stress test or falls below minimum capital adequacy requirements established by the Federal Bank must submit a capital restoration plan within 60 days.
2. Capital restoration plans must demonstrate how the bank will return to compliance with capital requirements within 12 months.
3. Acceptable capital restoration strategies include:
   1. Raising additional equity capital from investors;
   2. Retaining earnings by suspending dividend payments;
   3. Reducing risk-weighted assets through loan portfolio sales or securitization;
   4. Merging with a well-capitalized institution; or
   5. Any combination of these approaches approved by the Division.
4. During the capital restoration period, the Division may impose restrictions on the bank, including but not limited to:
   1. Prohibiting dividend payments and stock buybacks;
   2. Limiting executive compensation increases;
   3. Restricting new lending in high-risk categories;
   4. Requiring approval for significant transactions; and
   5. Mandating enhanced reporting to the Division.

15. RECEIVERSHIP AUTHORITY.

1. If a bank fails to implement an acceptable capital restoration plan or if the Division determines that a bank poses imminent risk of failure, the Federal Bank may place the bank into temporary receivership.
2. During receivership, the Federal Bank shall:
   1. Assume control of the bank's operations;
   2. Replace management as necessary;
   3. Develop and implement a resolution plan to protect depositors; and
   4. Minimize losses to the Deposit Insurance Fund.
3. The Federal Bank shall operate the bank in receivership only as long as necessary to stabilize the institution or facilitate its orderly resolution.
4. The Federal Bank may sell the bank to a qualified acquirer, merge it with another institution, establish a bridge bank, or liquidate assets as appropriate.

16. COORDINATION WITH REGIONAL SUPERVISORS.

1. The Division of Regional Financial Institutions shall coordinate closely with regional banking supervisors.
2. Regional supervisors retain authority over:
   1. Bank chartering decisions;
   2. Branch approval and regulation;
   3. Consumer protection enforcement;
   4. Community reinvestment obligations; and
   5. Other matters of primarily regional concern not affecting systemic stability.
3. Federal oversight authority under this Act focuses exclusively on:
   1. Systemic risk management;
   2. Capital adequacy;
   3. Lending standards that could threaten the broader financial system; and
   4. Deposit insurance eligibility.
4. The Division shall share examination reports and supervisory concerns with regional supervisors to promote consistent oversight.
5. Conflicts between federal and regional supervisors shall be resolved through consultation, with federal minimum standards prevailing in cases where regional standards would permit unsafe or unsound practices affecting systemic stability.

PART IV
SHELL COMPANY TRANSPARENCY INITIATIVE

17. BENEFICIAL OWNERSHIP DISCLOSURE.

1. Any corporation, limited liability company, partnership, or other legal entity that purchases real estate in Nouvelle Alexandrie or receives a bank loan exceeding NAX€100,000 must file a beneficial ownership report with the Department of Treasury.
2. Beneficial ownership reports must be filed within 30 days of the entity's formation or within 30 days of the first qualifying transaction, whichever occurs later.
3. Beneficial ownership reports shall identify:
   1. All natural persons who own, directly or indirectly, 25% or more of the entity's equity interests;
   2. All natural persons who exercise substantial control over the entity; and
   3. The source and amount of funds used to purchase real estate or provide collateral for loans.
4. "Substantial control" includes the authority to appoint or remove officers or directors, direct significant business decisions, or otherwise exercise significant influence over the entity's affairs.

18. VERIFICATION AND PENALTIES.

1. The Department of Treasury shall establish a beneficial ownership registry accessible to law enforcement agencies and financial institutions.
2. Banks must verify beneficial ownership information before extending loans exceeding NAX€100,000 or accepting real property as collateral.
3. Banks that fail to verify beneficial ownership shall be subject to civil penalties of up to NAX€100,000 per violation and potential loss of federal deposit insurance eligibility.
4. Entities that fail to file required beneficial ownership reports, or that file false or misleading reports, shall be subject to:
   1. Criminal penalties of up to five years imprisonment;
   2. Fines equal to twice the value of the concealed ownership interest; and
   3. Civil forfeiture of assets purchased through the entity.
5. The Department of Justice shall have authority to prosecute violations of this Part.

19. EXEMPTIONS.

1. The following entities are exempt from beneficial ownership disclosure requirements:
   1. Publicly traded companies subject to securities disclosure requirements;
   2. Regulated financial institutions;
   3. Government entities;
   4. Nonprofit organizations recognized by the Department of Treasury; and
   5. Entities owned and controlled exclusively by exempt entities.
2. The Department of Treasury may establish additional exemptions by regulation where disclosure would serve no anti-fraud or transparency purpose.

20. TRANSITION PERIOD FOR EXISTING LOANS.

1. Banks have 24 months from the effective date of this Act to obtain beneficial ownership information for all existing loans exceeding NAX€100,000 that were originated prior to the effective date.
2. Banks that make good faith efforts to obtain beneficial ownership information but are unable to do so shall not be penalized if they document their efforts and report the noncompliance to the Federal Bank.
3. After the 24-month transition period, loans without verified beneficial ownership information shall be subject to increased capital requirements and enhanced monitoring by the Division of Regional Financial Institutions.

PART V
TARGETED DEBT RESTRUCTURING PROGRAM

21. ESTABLISHMENT OF TARGETED DEBT RESTRUCTURING PROGRAM.

1. There is hereby established the Targeted Debt Restructuring Program, to be administered by the Federal Bank of Nouvelle Alexandrie in consultation with the Department of Treasury.
2. The program shall provide up to NAX€8.5 billion in federal loan guarantees for businesses deemed fundamentally viable but temporarily distressed due to credit market dysfunction caused by the Federal trust crisis of 1749.
3. Federal guarantees shall cover 80% of restructured loan value, with participating banks retaining 20% exposure.
4. The program shall operate for 24 months from the effective date of this Act, with a possible 12-month extension at the discretion of the Federal Bank if economic conditions warrant.

22. ELIGIBILITY CRITERIA.

1. To be eligible for assistance under the Targeted Debt Restructuring Program, a business must demonstrate:
   1. Three consecutive years of profitability prior to 1748 AN;
   2. Employment of at least ten full-time workers;
   3. No involvement in activities currently under federal or regional criminal investigation;
   4. No involvement in illegal logging operations in North Lyrica;
   5. No involvement in speculative land purchases in South Lyrica through shell companies;
   6. Inability to access credit on reasonable terms due to generalized credit market dysfunction rather than business-specific problems; and
   7. A viable business plan demonstrating capacity to repay restructured debt.
2. The Federal Bank shall develop detailed eligibility criteria by regulation within 30 days of the effective date of this Act.

23. TERMS AND CONDITIONS.

1. Businesses receiving assistance under the Targeted Debt Restructuring Program must:
   1. Maintain employment levels at or above pre-crisis levels for three years;
   2. Accept restrictions on executive compensation increases during the guarantee period;
   3. Suspend dividend payments and stock buybacks during the guarantee period;
   4. Provide quarterly reports to the Federal Bank on financial performance and employment; and
   5. Cooperate with any investigations by the Independent Banking Crisis Commission.
2. Federal guarantees shall have maximum terms of five years, with earlier termination if borrowers restore normal creditworthiness.
3. Participating banks must share 20% of any losses on guaranteed loans but also receive 20% of any fees or recoveries.

24. EXCLUSIONS.

1. The following businesses are explicitly excluded from the Targeted Debt Restructuring Program:
   1. Any business under investigation for violations of environmental laws;
   2. Any business that has been convicted of fraud, corruption, or other serious crimes within the past ten years;
   3. Any business owned or controlled by shell companies that have not disclosed beneficial ownership;
   4. Any business that purchased timber from sources involved in the North Lyrica logging scandal;
   5. Any business that speculated in agricultural land in South Lyrica through undisclosed entities; and
   6. Financial institutions eligible for other federal assistance under this Act.

25. PROGRAM TERMINATION AND EXTENSION.

1. The Targeted Debt Restructuring Program shall terminate 24 months after the effective date of this Act unless extended.
2. The Federal Bank may extend the program for up to 12 additional months if:
   1. Credit markets have not fully normalized;
   2. Significant numbers of viable businesses continue to face credit access problems; and
   3. The Deposit Insurance Fund has adequate reserves.
3. All federal guarantees issued under the program shall expire five years after issuance, regardless of program termination or extension.
4. The Federal Bank shall report to the Cortes Federales annually on program utilization, costs, and effectiveness.

PART VI
INDEPENDENT BANKING CRISIS COMMISSION

26. ESTABLISHMENT OF INDEPENDENT BANKING CRISIS COMMISSION.

1. There is hereby established the Independent Banking Crisis Commission to investigate the causes of the Federal trust crisis of 1749 and recommend comprehensive reforms.
2. The Commission shall consist of six members:
   1. Two members appointed by the majority leadership of the Federal Assembly;
   2. Two members appointed by the minority leadership of the Federal Assembly; and
   3. Two members selected by consensus of all party leaders represented in the Federal Assembly.
3. Members shall be individuals of recognized expertise in banking, finance, economics, law, or public policy.
4. Members shall serve 18-month terms from the date of their appointment.
5. Members shall receive compensation equal to that of deputies in the Federal Assembly.

27. CONFLICTS OF INTEREST.

1. No person may serve on the Commission if they:
   1. Hold elected office;
   2. Have held elected office within the previous five years;
   3. Are officers, directors, or employees of any financial institution;
   4. Have been officers, directors, or employees of any financial institution within the previous five years;
   5. Own more than NAX€1 million in securities of any financial institution; or
   6. Have immediate family members who are officers or directors of financial institutions.
2. Commission members may not hold elected office or financial industry positions during their service on the Commission or for three years thereafter.
3. Commission members must disclose all financial interests and recuse themselves from any matters in which they have conflicts of interest.

28. POWERS AND DUTIES.

1. The Commission shall investigate:
   1. The adequacy of existing federal and regional banking regulations;
   2. The performance of federal and regional banking regulators in identifying and addressing emerging risks;
   3. The role of shell companies in facilitating speculation and fraud;
   4. Connections between the North Lyrica logging scandal and regional banking practices;
   5. The concentration of loan portfolios in speculative real estate and commodity investments;
   6. The effectiveness of reforms implemented under the Bank Run Prevention Act, 1718;
   7. The adequacy of bank capital requirements;
   8. The quality of risk management practices at regional financial institutions; and
   9. Any other matters relevant to understanding and preventing future financial crises.
2. The Commission shall have authority to:
   1. Compel testimony under oath from any person;
   2. Issue subpoenas for documents and records;
   3. Conduct public hearings;
   4. Retain expert advisors and consultants;
   5. Access confidential supervisory information from federal and regional regulators, subject to appropriate confidentiality protections; and
   6. Coordinate with law enforcement agencies.

29. PUBLIC HEARINGS AND TRANSPARENCY.

1. The Commission shall begin public hearings within 60 days of all members being appointed.
2. Public hearings shall be open to the public and the press unless closed session is necessary to protect classified information or confidential supervisory information.
3. All testimony and evidence presented at public hearings shall become part of the public record.
4. The Commission shall publish transcripts of all public hearings within 30 days.
5. The Commission shall maintain a public website providing information on its activities, upcoming hearings, and opportunities for public comment.

30. FINAL REPORT AND RECOMMENDATIONS.

1. The Commission shall submit a final report to the Cortes Federales and the King no later than VI.1750 AN.
2. The final report shall include:
   1. A comprehensive analysis of the causes of the Federal trust crisis of 1749;
   2. Findings regarding the adequacy of existing banking regulations and supervision under both this Act and the Bank Run Prevention Act, 1718;
   3. Identification of regulatory failures and misconduct that contributed to the crisis;
   4. Recommendations for legislative reforms;
   5. Recommendations for regulatory changes;
   6. Recommendations for structural reforms to banking supervision;
   7. Criminal referrals where appropriate; and
   8. Any dissenting views from Commission members.
3. The Commission shall present its findings and recommendations to the Federal Assembly in public session.
4. The Cortes Federales shall consider the Commission's recommendations and vote on whether to adopt them through legislation within 90 days of receiving the final report.

31. STAFF AND RESOURCES.

1. The Commission shall have authority to hire staff, retain consultants, and procure services necessary to fulfill its mandate.
2. The Department of Treasury shall provide up to NAX€15 million in funding for the Commission's operations over its 18-month term.
3. The Commission may request additional funding from the Cortes Federales if necessary to complete its work.

PART VII
APPROPRIATIONS

32. AUTHORIZATION OF APPROPRIATIONS.

1. There is hereby appropriated NAX€18.5 billion for the purposes of this Act, allocated as follows:
   1. NAX€5 billion for strengthening the capitalization of the Deposit Insurance Fund;
   2. NAX€500 million for establishment and operation of the Division of Regional Financial Institutions over three years;
   3. NAX€8.5 billion for federal loan guarantees under the Targeted Debt Restructuring Program;
   4. NAX€100 million for implementation of the Shell Company Transparency Initiative, including development of the beneficial ownership registry;
   5. NAX€15 million for operation of the Independent Banking Crisis Commission;
   6. NAX€4.385 billion for contingent expenses and program administration; and
   7. NAX€0 for transition costs associated with restructuring the Nouvelle Alexandrie Deposit Insurance Corporation into the Federal Deposit Insurance System.
2. Funds appropriated under this section shall remain available until expended or until the specific programs for which they are appropriated terminate, whichever occurs first.
3. Any funds remaining after program termination shall be returned to the general treasury.

33. EMERGENCY DESIGNATION.

1. All appropriations under this Act are designated as emergency requirements pursuant to the the budgetary laws of Nouvelle Alexandrie.
2. Emergency designation means these appropriations are not subject to ordinary budget limitations and may be made without offsetting spending reductions or revenue increases.
3. The emergency designation reflects the extraordinary circumstances of the Federal trust crisis of 1749 and the urgent need for comprehensive stabilization measures.

PART VIII
FINAL PROVISIONS

34. REGULATIONS.

1. The Federal Bank of Nouvelle Alexandrie shall promulgate regulations necessary to implement Parts II, III, and V of this Act within 90 days of the effective date.
2. The Department of Treasury shall promulgate regulations necessary to implement Part IV of this Act within 60 days of the effective date.
3. All regulations promulgated under this Act shall be published in the Federal Register and subject to public comment for at least 30 days before final adoption.
4. In developing regulations, the Federal Bank and Department of Treasury shall consult with regional banking supervisors, financial institutions, business organizations, consumer advocates, and other interested parties.

35. REPORTING REQUIREMENTS.

1. The Federal Bank of Nouvelle Alexandrie shall submit annual reports to the Cortes Federales on:
   1. The financial condition of the Deposit Insurance Fund;
   2. Results of stress tests conducted under Part III;
   3. Examination findings and supervisory actions;
   4. Utilization and effectiveness of the Targeted Debt Restructuring Program; and
   5. Recommendations for legislative or regulatory improvements.
2. The Department of Treasury shall submit annual reports to the Cortes Federales on implementation and enforcement of beneficial ownership disclosure requirements under Part IV.
3. All reports required by this section shall be published and made available to the public.

36. AMENDMENTS TO BANK RUN PREVENTION ACT, 1718.

1. The Bank Run Prevention Act, 1718 is hereby amended as follows:
   1. Article 4 is amended by this Act's provisions establishing the Federal Deposit Insurance System under the Federal Bank of Nouvelle Alexandrie;
   2. Article 5 is supplemented by this Act's establishment of the Division of Regional Financial Institutions;
   3. Article 7 remains in effect, preserving the Department of Treasury's authority to temporarily lift deposit insurance ceilings during acute financial stress; and
   4. Article 8 is supplemented by the enhanced resolution and receivership authorities established in this Act.
2. To the extent that any provision of the Bank Run Prevention Act, 1718 conflicts with this Act, the provisions of this Act shall prevail.
3. All provisions of the Bank Run Prevention Act, 1718 not expressly amended or superseded by this Act remain in full force and effect.

37. PREEMPTION.

1. To the extent that regional laws conflict with the provisions of this Act, this Act shall preempt regional law.
2. Regional laws that provide greater consumer protection, more stringent capital requirements, or enhanced disclosure obligations are not preempted and remain in full force and effect.
3. Regional banking supervisors may adopt regulations implementing this Act that are consistent with federal minimum standards established by the Federal Bank.

38. SEVERABILITY.

1. If any provision of this Act, or its application to any person or circumstance, is held invalid by a court of competent jurisdiction, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.
2. The Cortes Federales declares that it would have passed each provision of this Act independently, and that each provision is severable from all others.

39. EFFECTIVE DATE.

1. This Act shall take effect immediately upon receiving Royal Assent.
2. The provisions restructuring the deposit insurance system in Part II shall be implemented within 30 days of the effective date.
3. The provisions establishing the Division of Regional Financial Institutions in Part III shall be implemented within 90 days of the effective date.
4. The provisions establishing beneficial ownership disclosure requirements in Part IV shall take effect 60 days after promulgation of implementing regulations by the Department of Treasury.
5. The provisions establishing the Targeted Debt Restructuring Program in Part V shall be implemented within 15 days of the effective date.
6. The provisions establishing the Independent Banking Crisis Commission in Part VI shall be implemented within 30 days of the effective date, or upon appointment of all Commission members, whichever occurs later.

40. EXPIRATION OF TEMPORARY PROVISIONS.

1. The Targeted Debt Restructuring Program established in Part V shall expire 24 months after the effective date unless extended as provided in Section 25.
2. The Independent Banking Crisis Commission established in Part VI shall dissolve 18 months after all members are appointed, or upon submission of its final report, whichever occurs later.
3. All other provisions of this Act are permanent unless amended or repealed by subsequent legislation.

41. REVIEW AND AMENDMENT.

1. The Cortes Federales shall conduct a comprehensive review of this Act's implementation and effectiveness within three years of the effective date.
2. Based on the review, the experience of the Independent Banking Crisis Commission, and recommendations from the Federal Bank and Department of Treasury, the Cortes Federales may amend this Act to improve its effectiveness and address any unintended consequences.

Voting Record

Member	Region	Party	Vote	Comments
Fred Strong	North Lyrica	FHP	Yea
Martina Vásquez	Wechua Nation	AJNA	Nay
Jose Manuel Montero	Wechua Nation	FHP	Yea
Juan Pablo Jimenez	New Caputia	FHP	Yea
Ignacio Quispe	South Lyrica	FCP	Yea
Diane Lockhart	Alduria	FCP	Yea
Rodrigo Salazar	Valencia	AJNA	Yea	AJNA deputy who broke with party leadership

Criticism and controversy

Progressive activists criticized the act for failing to impose criminal penalties on bank executives who approved fraudulent loans. The Alliance for a Just Nouvelle Alexandrie argued that NAX€18.5 billion in public resources should not stabilize institutions whose leadership engaged in reckless lending.

Free market advocates, including members of the Federal Humanist Party's libertarian faction, opposed enhanced federal oversight as an unconstitutional intrusion into regional banking regulation. Several regional chambers of commerce filed suit challenging the Division of Regional Financial Institutions' authority, though courts consistently upheld federal power under the Proclamation of Punta Santiago's commerce clause.

Some economists questioned whether the enhanced federal deposit insurance would encourage moral hazard, with banks taking excessive risks knowing depositors faced no losses. The act's risk-based premium structure partially addressed this concern, but critics argued that no premium could fully internalize systemic risk.

Environmental organizations criticized the Targeted Debt Restructuring Program for potentially assisting companies involved in deforestation, even indirectly. The North Lyrica Environmental Coalition sought to intervene in program administration, arguing that any business purchasing timber from illegal clear-cutting operations should be excluded from assistance.

Regional banking associations objected to the beneficial ownership disclosure requirements, arguing that the NAX€100,000 threshold captured routine business transactions and imposed excessive compliance costs on small lenders. The Department of Treasury declined to raise the threshold, citing the prevalence of shell companies using multiple smaller transactions to avoid detection.

Implementation and impact

The Federal Bank of Nouvelle Alexandrie began implementing the reformed deposit insurance system within 30 days of enactment, completing the transition from the NADIC structure by X.1749 AN. Enhanced oversight provisions phased in over 90 days, with the Division of Regional Financial Institutions conducting its first comprehensive stress tests in XII.1749 AN.

Financial markets rallied immediately upon passage. The Nouvelle Alexandrie Stock Exchange gained 8.4% on 15.IX.1749 AN, with regional bank stocks rising 12.7% as investors priced in reduced bankruptcy risk. The New Alexandrian écu strengthened 2.3% against major currencies over the following week.

Federal Bank Governor Lucienne Martel reported that credit markets began normalizing within six weeks of passage. Interbank lending rates declined from crisis peaks of 12% to pre-crisis levels of 4.5% by XI.1749 AN. Businesses unaffected by speculation regained access to commercial credit, with loan originations returning to normal levels by year end.

Regional leaders praised the act's impact. North Lyrica Acting Governor Marie-Claude Arsenault credited the Targeted Debt Restructuring Program with preventing widespread business failures in the timber sector. South Lyrica Governor Philippe Montcalm noted that farmers caught in the speculation bubble but operating legitimate agricultural enterprises received relief without rewarding speculators.

The Independent Banking Crisis Commission began public hearings in XI.1749 AN. Early testimony revealed widespread regulatory failures at both federal and regional levels. Several senior banking executives acknowledged that loan underwriting standards had deteriorated significantly between 1746 AN and 1748 AN, with pressure to meet growth targets overriding risk management concerns.

See also

• Federal Deposit Insurance System
• Independent Banking Crisis Commission
• Federal trust crisis of 1749
• Federal Bank of Nouvelle Alexandrie
• North Lyrica logging scandal
• José Manuel Montero
• New Alexandrian general election, 1749
• Cortes Federales of Nouvelle Alexandrie
• Bank Run Prevention Act, 1718