Federal Housing Finance Reform Act of 2005 - Title I: Reform of Regulation of Enterprises and Federal Home Loan Banks - Subtitle A: Improvement of Safety and Soundness - (Sec. 101) Amends the Housing and Community Development Act of 1992 (Act) to establish the Federal Housing Finance Agency (FHFA), which shall have supervisory and regulatory authority over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (both hereinafter referred to as the "enterprises") and the Federal Home Loan Banks.
(Sec. 102) Sets forth duties and authorities of the Director of FHFA, which include regulating and overseeing the operations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (all three of which referred to as "regulated entities").
(Sec. 103) Establishes the Housing Finance Oversight Board to advise the Director.
(Sec. 104) States that the Director, with respect to regulated entities: (1) may require regular reports on condition, management, activities, or operations, and any special reports; (2) shall require reports of fraudulent financial transactions; (3) shall require annual reports of charitable contributions; (4) shall collect annual assessments; and (5) shall establish risk-based capital requirements for the regulated entities.
(Sec. 112) Authorizes the Director to: (1) raise minimum capital levels to ensure that regulated entities operate in a safe and sound manner; (2) establish temporary minimum capital increases; and (3) establish additional capital and reserve requirements for a particular program.
Requires the Director to periodically review, and adjust as necessary, the capital levels of regulated entities.
(Sec. 113) Requires the Director to periodically review enterprise assets and liabilities. Authorizes the Director to require the disposition or acquisition of certain assets and liabilities as appropriate.
(Sec. 114) Sets forth enterprise governing provisions.
(Sec. 115) Requires each regulated entity to register at least one class of stock with the Securities and Exchange Commission (SEC).
(Sec. 116) Amends the Federal Financial Institutions Examination Council Act of 1978 to include the Director on the Federal Financial Institutions Examination Council (FFIEC).
(Sec. 117) Directs the Government Accountability Office (GAO) to study regulated entity pricing, transparency, and reporting of guarantee fees.
Subtitle B: Improvement of Mission Supervision - (Sec. 121) Amends the Act to transfer authority to approve programs and to oversee the mission requirements of the enterprises from the Department of Housing and Urban Development (HUD) to FHFA.
(Sec. 122) Requires Director review and approval of an enterprise's new programs and activities, including pilot programs. Sets forth review and approval provisions.
(Sec. 123) Sets forth enterprise conforming loan limits for single-, two-family, three-family, and four-family residences.
Provides for: (1) annual loan limit increases or decreases; and (2) loan limit increases in areas where the median home price is greater than the conforming loan limit.
Requires the Director to: (1) develop a Housing Price Index, which shall be subject to a GAO audit on Index methodology and timing; and (2) conduct a study of issues related to loan limits in high cost areas.
(Sec. 124) Requires the Director to report annually to the appropriate congressional committees respecting each regulated entity's activities.
(Sec. 125) Replaces current housing goals with three single-family housing goals and a multifamily special affordable housing goal, to be established annually.
Requires: (1) an enterprise to disclose information to allow the Director to assess if there are interest rate disparities between minorities and non-minorities of similar creditworthiness; and (2) that if interest rate disparities exist, those findings must be reported to Congress and the Director must instruct the enterprise to take appropriate remedial action.
Requires the Director to establish (and authorizes increases of) an annual purchase goal for each enterprise for conventional, conforming, single-family, owner-occupied, and purchase money mortgages financing housing for: (1) low-income families; (2) families residing in low-income areas; and (3) very low-income families.
Requires the Director to establish a Multifamily Special Affordable Goal for mortgages that finance dwelling units: (1) for low-income families; (2) for very low-income families; and (3) assisted by the low-income housing tax credit. Requires the Director to establish additional requirements within the Multifamily Special Affordable Goal for small loans measured by either mortgage amounts or number of dwelling units in the project or both.
Authorizes an enterprise to petition the Director for a housing goal reduction.
(Sec. 126) States that each enterprise shall: (1) undertake activities relating to mortgages on housing for very low-, low-, and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities; and (2) have the duty to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets.
(Sec. 127) Sets forth housing goal monitoring and enforcement provisions.
(Sec. 128) Requires each enterprise to establish an affordable housing fund to: (1) increase homeownership for extremely low- and very low-income families, (2) increase investment in housing in low-income areas and areas designated as qualified census tracts or an area of chronic economic distress; (3) increase and preserve the supply of rental and owner-occupied housing for extremely low- and very low-income families; and (4) increase investment in economic and community development in economically underserved areas.
Sets forth fund allocation provisions. Sunsets such required funding five years after the sixth month after enactment of this Act.
Sets forth recipient (for-profit, governmental, and other than for-profit entities) and activity (including leveraged grants and homeownership) eligibility provisions.
Requires each enterprise to submit quarterly reports to the Director and the affordable housing board.
Requires the Director to appoint an affordable housing board.
(Sec. 130) Authorizes the Director to issue cease and desist orders and impose civil money penalties on an enterprise that has failed to: (1) meet a housing goal; (2) submit certain reports; (3) submit an acceptable housing plan; or (4) comply with a housing plan.
Subtitle C: Prompt Corrective Action - (Sec. 141) Amends the Act to require the Director to establish capital classifications for regulated entities.
Revises capital classification provisions. Prohibits, with a specified exception, a regulated entity from making a capital distribution that would result in such entity's undercapitalization.
(Sec. 142) Sets forth supervisory action applicable to undercapitalized regulated entities, including restrictions on asset growth.
(Sec. 143) Sets forth supervisory actions applicable to significantly undercapitalized regulated entities, including: (1) making current discretionary actions mandatory; and (2) limiting executive officer compensation or bonuses.
(Sec. 144) Authorizes the Director to establish a conservatorship or receivership over a critically undercapitalized regulated entity in order to reorganize, rehabilitate, or terminate the entity's affairs. Requires that FHFA be appointed as conservator or receiver.
Sets forth provisions respecting: (1) grounds for conservator or receiver appointment; (2) FHFA duties and powers as conservator or receiver; and (3) judicial review.
Subtitle D: Enforcement Actions - (Sec. 161) Authorizes the Director to: (1) issue a cease and desist order if a regulated entity or affiliated party is engaged in an unsafe or an unsound practice or is violating a rule or condition; and (2) deem a regulated entity to be engaged in unsafe and unsound practices if such entity receives a less than satisfactory rating for asset quality, management, earnings, or liquidity in its most recent exam.
(Sec. 162) Authorizes the Director to: (1) issue a temporary cease and desist order if the violation or threatened violation or unsafe or unsound practice specified in the notice of charges is likely to cause insolvency or a significant dissipation of assets or earnings or is likely to weaken the condition of the regulated entity prior to completion of the proceedings for issuance of a permanent cease-and-desist order; and (2) enforce such orders by a court injunction.
(Sec. 163) Authorizes the Director to seek prejudgment attachment.
(Sec. 164) Authorizes the Director to seek judicial enforcement of this title in U.S. district court.
(Sec. 165) Sets forth civil money penalties.
(Sec. 166) Authorizes the Director to issue removal and prohibition orders against a party for the protection of the regulated entity, including suspension or removal of a party charged with a felony.
(Sec. 167) Provides that a person who is subject to a removal or prohibition order and who knowingly participated in the conduct of the affairs of any regulated entity shall be fined not more than $1 million, imprisoned for up to five years, or both.
(Sec. 168) Grants the Director subpoena authority.
Subtitle E: General Provisions - (Sec. 181) States that the boards of directors of Fannie Mae and Freddie Mac, respectively, shall have between 7 and 15 members. (Current law requires 18 members.)
(Sec. 182) Requires the Director to report to Congress respecting: (1) the portfolio holdings of Fannie Mae and Freddie Mac; and (2) alternative secondary market systems.
Title II: Federal Home Loan Banks - (Sec. 201) Amends the Federal Home Loan Bank Act to define "Director" and "Agency" (FHFA) for purposes of such Act.
(Sec. 202) Revises Federal Home Loan Bank board of director provisions, including the number of directors for each bank and their qualifications and terms of office.
(Sec. 203) Replaces the Federal Housing Finance Board with FHFA.
(Sec. 204) Authorizes two or more Federal Home Loan Banks to establish a joint office in order to perform functions for, or providing services to, the Banks on a common or collective basis.
(Sec. 205) Requires the Director to prescribe rules to ensure that each Federal Home Loan Bank has access to information to determine the nature and extent of its joint and several liability.
(Sec. 206) Authorizes Bank mergers.
(Sec. 207) Exempts Federal Home Loan Banks from certain disclosure requirements respecting: (1) capital stock; (2) tender requirements; and (3) reporting requirements.
(Sec. 208) Redefines "community financial institution" to raise the maximum asset level to $1 billion. Permits such institutions to use advances for community development lending.
(Sec. 210) Directs that GAO study the use of the Federal Home Loan Banks' affordable housing program to fund long-term care facilities for low- and moderate-income individuals.
Title III: Transfer of Functions, Personnel, and Property of Office of Federal Housing Enterprise Oversight, Federal Housing Finance Board, and Department of Housing and Urban Development - Subtitle A: Office of Federal Housing Enterprise Oversight - (Sec. 301) Abolishes the Office of Federal Housing Enterprise Oversight (OFHEO) of HUD and the positions of the Director and Deputy Director six months after enactment of this Act.
(Sec. 302) Sets forth provisions respecting: (1) continuation and coordination of operations; and (2) transfer (and rights) of OFHEO employees, property, and facilities to FHFA.
Subtitle B: Federal Housing Finance Board - (Sec. 321) Abolishes the Federal Housing Finance Board six months after enactment of this Act.
(Sec. 322) Sets forth provisions respecting: (1) continuation and coordination of operations; and (2) transfer (and rights) of Board employees, property, and facilities to FHFA.
Subtitle C: Department of Housing and Urban Development - (Sec. 341) Directs the Secretary of HUD to determine and transfer the enterprise-related functions and employees of HUD to FHFA within six months of enactment of this Act. Provides that during the six-month period after enactment of this Act HUD will continue to oversee the affordable housing goals, new programs, and mission of the enterprises.
(Sec. 342) Sets forth provisions respecting: (1) continuation and coordination of operations; and (2) transfer (and rights) of employees, property, and facilities.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1461 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 1461
To reform the regulation of certain housing-related Government-
sponsored enterprises, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 5, 2005
Mr. Baker (for himself, Mr. Oxley, Mr. Ryun of Kansas, Mr. Hensarling,
Mr. Jones of North Carolina, Mr. Davis of Kentucky, Mr. Fitzpatrick of
Pennsylvania, and Mr. Shays) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To reform the regulation of certain housing-related Government-
sponsored enterprises, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Federal Housing
Finance Reform Act of 2005''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Definitions.
TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN
BANKS
Subtitle A --Improvement of Safety and Soundness
Sec. 101. Establishment of the Federal Housing Finance Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Housing Finance Oversight Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Assessments.
Sec. 106. Examiners and accountants.
Sec. 107. Prohibition and withholding of executive compensation.
Sec. 108. Reviews of regulated entities.
Sec. 109. Regulations and orders.
Sec. 110. Risk-based capital requirements.
Sec. 111. Minimum and critical capital levels.
Sec. 112. Review of and authority over enterprise assets and
obligations.
Sec. 113. Corporate governance of enterprises.
Sec. 114. Conforming amendments.
Subtitle B--Improvement of Mission Supervision
Sec. 121. Transfer of program and activities approval and housing goal
oversight.
Sec. 122. Review by director of new programs and activities of
enterprises.
Sec. 123. Conforming loan limits.
Sec. 124. Annual housing report regarding regulated entities.
Sec. 125. Establishment of housing goals.
Sec. 126. Home purchase goal and additions, modifications, and
rescissions to goals.
Sec. 127. Other requirements.
Sec. 128. Monitoring and enforcing compliance with housing goals.
Sec. 129. Enforcement.
Sec. 130. Conforming amendments.
Subtitle C--Prompt Corrective Action
Sec. 141. Capital classifications.
Sec. 142. Supervisory actions applicable to undercapitalized regulated
entities.
Sec. 143. Supervisory actions applicable to significantly
undercapitalized regulated entities.
Sec. 144. Authority over critically undercapitalized regulated
entities.
Sec. 145. Conforming amendments.
Subtitle D--Enforcement Actions
Sec. 161. Cease-and-desist proceedings.
Sec. 162. Temporary cease-and-desist proceedings.
Sec. 163. Enforcement and jurisdiction.
Sec. 164. Civil money penalties.
Sec. 165. Removal and prohibition authority.
Sec. 166. Criminal penalty.
Sec. 167. Conforming amendments.
Subtitle E--General Provisions
Sec. 181. Presidentially appointed Directors of enterprises.
Sec. 182. Report on portfolio operations, safety and soundness, and
mission of enterprises.
Sec. 183. Conforming and technical amendments.
Sec. 184. Effective date.
TITLE II--FEDERAL HOME LOAN BANKS
Sec. 201. Definitions.
Sec. 202. Directors.
Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan
Banks.
Sec. 204. Debt issuing facility.
Sec. 205. Securities and Exchange Commission disclosure.
Sec. 206. Community financial institution members.
TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF
FEDERAL HOUSING ENTERPRISE OVERSIGHT AND FEDERAL HOUSING FINANCE BOARD
Subtitle A--Office of Federal Housing Enterprise Oversight
Sec. 301. Abolishment of OFHEO.
Sec. 302. Continuation and coordination of certain regulations.
Sec. 303. Transfer and rights of employees of OFHEO.
Sec. 304. Transfer of property and facilities.
Subtitle B--Federal Housing Finance Board
Sec. 321. Abolishment of the Federal Housing Finance Board.
Sec. 322. Continuation and coordination of certain regulations.
Sec. 323. Transfer and rights of employees of the Federal Housing
Finance Board.
Sec. 324. Transfer of property and facilities.
SEC. 2. DEFINITIONS.
Section 1303 of the Housing and Community Development Act of 1992
(12 U.S.C. 4502) is amended--
(1) by striking ``an enterprise'' each place such term
appears (except in paragraphs (4), (13)(A), and (18)) and
inserting ``a regulated entity'';
(2) by striking ``the enterprise'' each place such term
appears (except in paragraphs (4) and (18)) and inserting ``the
regulated entity'';
(3) in paragraph (5), by striking ``Office of Federal
Housing Enterprise Oversight of the Department of Housing and
Urban Development'' and inserting ``Federal Housing Finance
Agency'';
(4) in each of paragraphs (8), (9), (10), and (19), by
striking ``Secretary'' each place that term appears and
inserting ``Director'';
(5) in paragraph (13), by inserting ``, with respect to an
enterprise,'' after ``means'';
(6) by redesignating paragraphs (16) through (19) as
paragraphs (19) through (22), respectively;
(7) by striking paragraphs (14) and (15) and inserting the
following new paragraphs:
``(17) Regulated entity.--The term `regulated entity'
means--
``(A) the Federal National Mortgage Association and
any affiliate thereof;
``(B) the Federal Home Loan Mortgage Corporation
and any affiliate thereof; and
``(C) each Federal home loan bank.
``(18) Regulated entity-affiliated party.--The term
`regulated entity-affiliated party' means--
``(A) any director, officer, employee, or
controlling stockholder of, or agent for, a regulated
entity;
``(B) any shareholder, affiliate, consultant, or
joint venture partner of a regulated entity, and any
other person, as determined by the Director (by
regulation or on a case-by-case basis) that
participates in the conduct of the affairs of a
regulated entity; and
``(C) any independent contractor for a regulated
entity (including any attorney, appraiser, or
accountant), if--
``(i) the independent contractor knowingly
or recklessly participates in--
``(I) any violation of any law or
regulation;
``(II) any breach of fiduciary
duty; or
``(III) any unsafe or unsound
practice; and
``(ii) such violation, breach, or practice
caused, or is likely to cause, more than a
minimal financial loss to, or a significant
adverse effect on, the regulated entity; and
``(D) any not-for-profit corporation that receives
its principal funding, on an ongoing basis, from any
regulated entity.'';
(8) by redesignating paragraphs (2) through (13) as
paragraphs (5) through (16), respectively; and
(9) by inserting after paragraph (1) the following new
paragraphs:
``(2) Agency.--The term `Agency' means the Federal Housing
Finance Agency.
``(3) Authorizing statutes.--The term `authorizing
statutes' means--
``(A) the Federal National Mortgage Association
Charter Act;
``(B) the Federal Home Loan Mortgage Corporation
Act; and
``(C) the Federal Home Loan Bank Act.
``(4) Board.--The term `Board' means the Housing Finance
Oversight Board established under section 1313.''.
TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN
BANKS
Subtitle A --Improvement of Safety and Soundness
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE AGENCY.
The Housing and Community Development Act of 1992 (12 U.S.C. 4501
et seq.) is amended by striking sections 1311 and 1312 and inserting
the following:
``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE AGENCY.
``(a) Establishment.--There is established the Federal Housing
Finance Agency, which shall be an independent agency of the Federal
Government.
``(b) General Supervisory and Regulatory Authority.--
``(1) In general.--Each regulated entity shall, to the
extent provided in this title, be subject to the supervision
and regulation of the Agency.
``(2) Authority over fannie mae and freddie mac, federal
home loan banks, and federal home loan bank finance
corporation.--The Director of the Federal Housing Finance
Agency shall have general supervisory and regulatory authority
over each regulated entity and the Federal Home Loan Bank
Finance Corporation, and shall exercise such general regulatory
authority, including such duties and authorities set forth
under section 1313 of this Act, to ensure that the purposes of
this Act, the authorizing statutes, and any other applicable
law are carried out.
``(c) Savings Provision.--The authority of the Director to take
actions under subtitles B and C shall not in any way limit the general
supervisory and regulatory authority granted to the Director under
subsection (b).
``SEC. 1312. DIRECTOR.
``(a) Establishment of Position.--There is established the position
of the Director of the Federal Housing Finance Agency, who shall be the
head of the Agency.
``(b) Appointment; Term.--
``(1) Appointment.--The Director shall be appointed by the
President, by and with the advice and consent of the Senate,
from among individuals who are citizens of the United States,
have a demonstrated understanding of financial management or
oversight, and have a demonstrated understanding of capital
markets, including the mortgage securities markets and housing
finance.
``(2) Term.--The Director shall be appointed for a term of
5 years.
``(3) Vacancy.--A vacancy in the position of Director that
occurs before the expiration of the term for which a Director
was appointed shall be filled in the manner established under
paragraph (1), and the Director appointed to fill such vacancy
shall be appointed only for the remainder of such term.
``(4) Service after end of term.--An individual may serve
as the Director after the expiration of the term for which
appointed until a successor has been appointed.
``(5) Transitional provision.--Notwithstanding paragraphs
(1) and (2), the person serving as the Director of the Office
of Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development on the effective date under
section 184 of the Federal Housing Finance Reform Act of 2005,
shall serve as the Director until a successor has been
appointed under paragraph (1).
``(c) Deputy Director of the Division of Enterprise Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Enterprise Regulation, who shall be
designated by the Director from among individuals who are
citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a
demonstrated understanding of mortgage securities markets and
housing finance.
``(2) Functions.--The Deputy Director of the Division of
Enterprise Regulation shall have such functions, powers, and
duties with respect to the oversight of the enterprises as the
Director shall prescribe.
``(d) Deputy Director of the Division of Federal Home Loan Bank
Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Federal Home Loan Bank Regulation, who shall
be designated by the Director from among individuals who are
citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a
demonstrated understanding of the Federal Home Loan Bank System
and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Federal Home Loan Bank Regulation shall have such functions,
powers, and duties with respect to the oversight of the Federal
home loan banks as the Director shall prescribe.
``(e) Deputy Director for Housing.--
``(1) In general.--The Agency shall have a Deputy Director
for Housing, who shall be designated by the Director from among
individuals who are citizens of the United States, and have a
demonstrated understanding of the housing markets and housing
finance.
``(2) Functions.--The Deputy Director for Housing shall
have such functions, powers, and duties with respect to the
oversight of the housing mission and goals of the enterprises
as the Director shall prescribe.
``(f) Acting Director.--In the event of the death, resignation,
sickness, or absence of the Director, the Board shall, by a majority
vote, designate either the Deputy Director of the Division of
Enterprise Regulation, the Deputy Director of the Division of Federal
Home Loan Bank Regulation, or the Deputy Director for Housing, to serve
as acting Director until the return of the Director, or the appointment
of a successor pursuant to subsection (b).
``(g) Limitations.--The Director and each of the Deputy Directors
may not--
``(1) have any direct or indirect financial interest in any
regulated entity or regulated entity-affiliated party;
``(2) hold any office, position, or employment in any
regulated entity or regulated entity-affiliated party; or
``(3) have served as an executive officer or director of
any regulated entity, or regulated entity-affiliated party, at
any time during the 3-year period ending on the date of
appointment of such individual as Director or Deputy
Director.''.
SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.
(a) In General.--The Housing and Community Development Act of 1992
(12 U.S.C. 4513) is amended by striking section 1313 and inserting the
following new sections:
``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.
``(a) Duties.--
``(1) Principal duties.--The principal duties of the
Director shall be--
``(A) to oversee the prudential operations of each
regulated entity, on a consolidated basis; and
``(B) to ensure that--
``(i) each regulated entity operates in a
safe and sound manner, including maintenance of
adequate capital and internal controls;
``(ii) the operations and activities of
each regulated entity foster liquid, efficient,
competitive, and resilient national housing
finance markets (including activities relating
to mortgages on housing for low- and moderate-
income families involving a reasonable economic
return that may be less than the return earned
on other activities);
``(iii) each regulated entity complies with
this title and the rules, regulations,
guidelines, and orders issued under this title
and the authorizing statutes; and
``(iv) each regulated entity carries out
its statutory mission only through activities
that are consistent with this title and the
authorizing statutes.
``(2) Scope of authority.--The authority of the Director
shall include the authority--
``(A) to review and, if warranted based on the
principal duties described in paragraph (1), reject any
acquisition or transfer of a controlling interest in an
enterprise; and
``(B) to exercise such incidental powers as may be
necessary or appropriate to fulfill the duties and
responsibilities of the Director in the supervision and
regulation of each regulated entity.
``(b) Delegation of Authority.--The Director may delegate to
officers and employees of the Agency any of the functions, powers, or
duties of the Director, as the Director considers appropriate.
``(c) Litigation Authority.--
``(1) In general.--In enforcing any provision of this
title, any regulation or order prescribed under this title, or
any other provision of law, rule, regulation, or order, or in
any other action, suit, or proceeding to which the Director is
a party or in which the Director is interested, and in the
administration of conservatorships and receiverships, the
Director may act in the Director's own name and through the
Director's own attorneys.
``(2) Subject to suit.--Except as otherwise provided by
law, the Director shall be subject to suit (other than suits on
claims for money damages) by a regulated entity or director or
officer thereof with respect to any matter under this title or
any other applicable provision of law, rule, order, or
regulation under this title, in the United States district
court for the judicial district in which the regulated entity
has its principal place of business, or in the United States
District Court for the District of Columbia, and the Director
may be served with process in the manner prescribed by the
Federal Rules of Civil Procedure.
``SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.
``(a) Standards.--The Director shall establish standards, by
regulation, guideline, or order, for each regulated entity relating
to--
``(1) adequacy of internal controls and information systems
taking into account the nature and scale of business
operations;
``(2) independence and adequacy of internal audit systems;
``(3) management of credit and counterparty risk, including
systems to identify concentrations of credit risk and
prudential limits to restrict exposure of the regulated entity
to a single counterparty or groups of related counterparties;
``(4) management of interest rate risk exposure;
``(5) management of market risk, including standards that
provide for systems that accurately measure, monitor, and
control market risks and, as warranted, that establish
limitations on market risk;
``(6) adequacy and maintenance of liquidity and reserves;
``(7) management of any asset and investment portfolio;
``(8) investments and acquisitions by a regulated entity,
to ensure that they are consistent with the purposes of this
Act and the Federal National Mortgage Association Charter Act,
the Federal Home Loan Mortgage Corporation Act, or the Federal
Home Loan Bank Act, as appropriate;
``(9) maintenance of adequate records, in accordance with
consistent accounting policies and practices that enable the
Director to evaluate the financial condition of the regulated
entity;
``(10) issuance of subordinated debt by that particular
regulated entity, as the Director considers necessary;
``(11) overall risk management processes, including
adequacy of oversight by senior management and the board of
directors and of processes and policies to identify, measure,
monitor, and control material risks, including reputational
risks, and for adequate, well-tested business resumption plans
for all major systems with remote site facilities to protect
against disruptive events; and
``(12) such other operational and management standards as
the Director determines to be appropriate.
``(b) Failure to Meet Standards.--
``(1) Plan requirement.--
``(A) In general.--If the Director determines that
a regulated entity fails to meet any standard
established under subsection (a)--
``(i) if such standard is established by
regulation, the Director shall require the
regulated entity to submit an acceptable plan
to the Director within the time allowed under
subparagraph (C); and
``(ii) if such standard is established by
guideline, the Director may require the
regulated entity to submit a plan described in
clause (i).
``(B) Contents.--Any plan required under
subparagraph (A) shall specify the actions that the
regulated entity will take to correct the deficiency.
If the regulated entity is undercapitalized, the plan
may be a part of the capital restoration plan for the
regulated entity under section 1369C.
``(C) Deadlines for submission and review.--The
Director shall by regulation establish deadlines that--
``(i) provide the regulated entities with
reasonable time to submit plans required under
subparagraph (A), and generally require a
regulated entity to submit a plan not later
than 30 days after the Director determines that
the entity fails to meet any standard
established under subsection (a); and
``(ii) require the Director to act on plans
expeditiously, and generally not later than 30
days after the plan is submitted.
``(2) Required order upon failure to submit or implement
plan.--If a regulated entity fails to submit an acceptable plan
within the time allowed under paragraph (1)(C), or fails in any
material respect to implement a plan accepted by the Director,
the following shall apply:
``(A) Required correction of deficiency.--The
Director shall, by order, require the regulated entity
to correct the deficiency.
``(B) Other authority.--The Director may, by order,
take one or more of the following actions until the
deficiency is corrected:
``(i) Prohibit the regulated entity from
permitting its average total assets (as such
term is defined in section 1316(b)) during any
calendar quarter to exceed its average total
assets during the preceding calendar quarter,
or restrict the rate at which the average total
assets of the entity may increase from one
calendar quarter to another.
``(ii) Require the regulated entity--
``(I) in the case of an enterprise,
to increase its ratio of core capital
to assets.
``(II) in the case of a Federal
home loan bank, to increase its ratio
of total capital (as such term is
defined in section 6(a)(5) of the
Federal Home Loan Bank Act (12 U.S.C.
1426(a)(5)) to assets.
``(iii) Require the regulated entity to
take any other action that the Director
determines will better carry out the purposes
of subtitle C than any of the actions described
in this subparagraph
``(3) Mandatory restrictions.--In complying with paragraph
(2), the Director shall take one or more of the actions
described in clauses (i) through (iii) of paragraph (2)(B) if--
``(A) the Director determines that the regulated
entity fails to meet any standard prescribed under
subsection (a);
``(B) the regulated entity has not corrected the
deficiency; and
``(C) during the 18-month period before the date on
which the regulated entity first failed to meet the
standard, the entity underwent extraordinary growth, as
defined by the Director.
``(c) Other Enforcement Authority not Affected.--The authority of
the Director under this section is in addition to any other authority
of the Director.''.
(b) Independence in Congressional Testimony and Recommendations.--
Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by striking
``the Federal Housing Finance Board'' and inserting ``the Director of
the Federal Housing Finance Agency''.
SEC. 103. HOUSING FINANCE OVERSIGHT BOARD.
(a) In General.--Title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4501 et seq.) is amended by
inserting after section 1313A, as added by section 102 of this Act, the
following new section:
``SEC. 1313B. HOUSING FINANCE OVERSIGHT BOARD.
``(a) In General.--There is established the Housing Finance
Oversight Board.
``(b) Duties.--The Board shall advise the Director with respect to
overall strategies and policies in carrying out the duties of the
Director under this title. Except as otherwise provided under this Act,
the Board shall not exercise any executive authority.
``(c) Composition.--The Board shall be comprised of 5 members, as
follows:
``(1) One member shall be the Director, who shall serve as
the Chairperson of the Board.
``(2) One member shall be the Secretary of the Treasury or
the designee of the Secretary.
``(3) One member shall be the Secretary of Housing and
Urban Development or the designee of the Secretary.
``(4) Two members shall be appointed by the President, by
and with the advice and consent of the Senate, who shall
include--
``(A) one individual who has extensive experience
and expertise in the capital markets (including debt
markets), the secondary mortgage market, and mortgage-
backed securities; and
``(B) one individual who has extensive experience
and expertise in mortgage finance (including single
family and multifamily housing mortgage finance),
development of affordable housing, and economic
development and revitalization.
``(d) Full-Time Members and Staff.--
``(1) Full-time members.--The members of the Board pursuant
to subsection (c)(4) shall serve on a full-time basis.
``(2) Staff.--The Board may appoint and fix the
compensation of such staff as the Board considers necessary to
carry out the functions of the Board.
``(e) Meetings.--
``(1) In general.--The Board shall meet upon notice by the
Director, but in no event shall the Board meet less frequently
than once every 3 months.
``(2) Special meetings.--Any member of the Board may, upon
giving written notice to the Director, require a special
meeting of the Board, which shall be convened by the Director
within 30 days after such notice.
``(f) Testimony.--On an annual basis, the Board shall testify
before Congress regarding--
``(1) the safety and soundness of the regulated entities;
``(2) any material deficiencies in the conduct of the
operations of the regulated entities;
``(3) the overall operational status of the regulated
entities;
``(4) an evaluation of the performance of the regulated
entities in carrying out their respective missions;
``(5) operations, resources, and performance of the Agency
and the Board; and
``(6) such other matters relating to the Agency, the Board,
and the regulated entities, and their fulfillment of their
missions, as the Board determines appropriate.
``(g) Costs.--Costs of the Board, including staff, shall be paid by
the Agency as a cost and expense of the Agency.''.
(b) Annual Report of the Director.--Section 1319B(a) of the Housing
and Community Development Act of 1992 (12 U.S.C. 4521 (a)) is amended--
(1) in paragraph (3), by striking ``and'' at the end; and
(2) by striking paragraph (4) and inserting the following
new paragraphs:
``(4) an assessment of the Board with respect to--
``(A) the safety and soundness of the regulated
entities;
``(B) any material deficiencies in the conduct of
the operations of the regulated entities;
``(C) the overall operational status of the
regulated entities;
``(D) an evaluation of the performance of the
regulated entities in carrying out their missions,
including compliance of the enterprises with the
housing goals under subpart B of part 2 of this
subtitle and compliance of the Federal home loan banks
with the community investment and affordable housing
programs under subsections (i) and (j) of section 10 of
the Federal Home Loan Bank Act;
``(E) an evaluation of the performance of the
Agency in fulfilling its duties and responsibilities
under law; and
``(F) such other matters relating to the Board and
the fulfillment of its duties as the Board considers
appropriate;
``(5) operations, resources, and performance of the Agency;
and
``(6) such other matters relating to the Agency and its
fulfillment of its mission.''.
SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES.
Section 1314 of the Housing and Community Development Act of 1992
(12 U.S.C. 4514) is amended--
(1) in the section heading, by striking ``enterprises'' and
inserting ``regulated entities''; and
(2) in subsection (a)--
(A) in the subsection heading, by striking
``Special Reports and Reports of Financial Condition''
and inserting ``Regular and Special Reports'';
(B) in paragraph (1)--
(i) in the paragraph heading, by striking
``Financial condition'' and inserting ``Regular
reports''; and
(ii) by striking ``reports of financial
condition and operations'' and inserting
``regular reports on the condition (including
financial condition), management, activities,
or operations of the regulated entity, as the
Director considers appropriate''; and
(C) in paragraph (2), after ``submit special
reports'' insert ``on any of the topics specified in
paragraph (1) or such other topics''.
SEC. 105. ASSESSMENTS.
Section 1316 of the Housing and Community Development Act of 1992
(12 U.S.C. 4516) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Annual Assessments.--The Director shall establish and collect
from the regulated entities annual assessments in an amount not
exceeding the amount sufficient to provide for reasonable costs and
expenses of the Agency, including--
``(1) the expenses of any examinations under section 1317
of this Act and under section 20 of the Federal Home Loan Bank
Act;
``(2) the expenses of obtaining any reviews and credit
assessments under section 1319; and
``(3) such amounts in excess of actual expenses for any
given year as deemed necessary by the Director to maintain a
working capital fund in accordance with subsection (e).'';
(2) in subsection (b)--
(A) in the subsection heading, by striking
``Enterprises'' and inserting ``Regulated Entities'';
(B) by realigning paragraph (2) two ems from the
left margin, so as to align the left margin of such
paragraph with the left margins of paragraph (1);
(C) in paragraph (1)--
(i) by striking ``Each enterprise'' and
inserting ``Each regulated entity'';
(ii) by striking ``each enterprise'' and
inserting ``each regulated entity''; and
(iii) by striking ``both enterprises'' and
inserting ``all of the regulated entities'';
and
(D) in paragraph (3)----
(i) in subparagraph (B), by striking
``subparagraph (A)'' and inserting ``clause
(i)'';
(ii) by redesignating subparagraphs (A),
(B), and (C) as clauses (i), (ii) and (ii),
respectively, and realigning such clauses, as
so redesignated, so as to be indented 6 ems
from the left margin;
(iii) by striking the matter that precedes
clause (i), as so redesignated, and inserting
the following:
``(3) Definition of total assets.--For purposes of this
section, the term `total assets' means as follows:
``(A) Enterprises.--With respect to an enterprise,
the sum of--''; and
(iv) by adding at the end the following new
subparagraph:
``(B) Federal home loan banks.--With respect to a
Federal home loan bank, the total assets of the Bank,
as determined by the Director in accordance with
generally accepted accounting principles.''.
(3) in subsection (c), by inserting after the period at the
end the following: ``The Director may adjust the amounts of any
semiannual assessments for an assessment under subsection (a)
that are to be paid pursuant to subsection (b) by a regulated
entity, as necessary in the discretion of the Director, to
ensure that the costs of enforcement activities under subtitles
B and C for a regulated entity are borne only by that
entity.'';
(4) in subsection (d), by striking ``If'' and inserting
``Except with respect to amounts collected pursuant to
subsection (a)(3), if''; and
(5) by striking subsections (e) through (g) and inserting
the following new subsections:
``(e) Working Capital Fund.--At the end of each year for which an
assessment under this section is made, the Director shall remit to each
regulated entity any amount of assessment collected from such regulated
entity that is attributable to subsection (a)(3) and is in excess of
the amount the Director deems necessary to maintain a working capital
fund.
``(f) Treatment of Assessments.--
``(1) Deposit.--Amounts received by the Director from
assessments under this section may be deposited in the manner
provided in section 5234 of the Revised Statutes (12 U.S.C.
192) with respect to assessments by the Comptroller of the
Currency.
``(2) Not government funds.--The amounts received by the
Director from any assessment under this section shall not be
construed to be Government or public funds or appropriated
money.
``(3) No apportionment of funds.--Notwithstanding any other
provision of law, the amounts received by the Director from any
assessment under this section shall not be subject to
apportionment for the purpose of chapter 15 of title 31, United
States Code, or under any other authority.
``(4) Use of funds.--The Director may use any amounts
received by the Director from assessments under this section
for compensation of the Director and other employees of the
Agency and for all other expenses of the Director and the
Agency.
``(5) Availability of oversight fund amounts.--
Notwithstanding any other provision of law, any amounts
remaining in the Federal Housing Enterprises Oversight Fund
established under this section (as in effect before the
effective date under section 184 of the Federal Housing Finance
Reform Act of 2005), and any amounts remaining from assessments
on the Federal Home Loan banks pursuant to section 18(b) of the
Federal Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon
such effective date, be treated for purposes of this subsection
as amounts received from assessments under this section.
``(g) Budget and Financial Reports.--
``(1) Financial operating plans and forecasts.--The
Director shall provide to the Director of the Office of
Management and Budget copies of the Director's financial
operating plans and forecasts as prepared by the Director in
the ordinary course of the Agency's operations, and copies of
the quarterly reports of the Agency's financial condition and
results of operations as prepared by the Director in the
ordinary course of the Agency's operations.
``(2) Rule of construction.--This subsection may not be
construed as implying any obligation on the part of the
Director to consult with or obtain the consent or approval of
the Director of the Office of Management and Budget with
respect to any reports, plans, forecasts, or other information
referred to in paragraph (1) or any jurisdiction or oversight
over the affairs or operations of the Agency.
``(h) Audit of Agency.--
``(1) In general.--The financial transactions of the Agency
shall be audited by the Government Accountability Office in
accordance with the principles and procedures applicable to
commercial corporate transactions and under such rules and
regulations as may be prescribed by the Comptroller General of
the United States. The audit shall be conducted at the place or
places where accounts of the Agency are normally kept. The
representatives of the Government Accountability Office shall
have access to all books, accounts, records, reports, files,
and all other papers, things, or property belonging to or in
use by the Agency pertaining to its financial transactions and
necessary to facilitate the audit, and they shall be afforded
full facilities for verifying transactions with the balances or
securities held by depositaries, fiscal agents, and custodians.
All such books, accounts, records, reports, files, papers, and
property of the Agency shall remain in possession and custody
of the Agency. The Agency shall be audited at least once in
every three years.
``(2) Report.--A report of each audit conducted under this
subsection shall be made by the Comptroller General to the
Congress not later than six and one-half months following the
close of the last year covered by such audit. The report to the
Congress shall set forth the scope of the audit and shall
include a statement of assets and liabilities and surplus or
deficit; a statement of surplus or deficit analysis; a
statement of income and expenses; a statement of sources and
application of funds and such comments and information as may
be deemed necessary to inform Congress of the financial
operations and condition of the Agency, together with such
recommendations with respect thereto as the Comptroller General
may deem advisable. The report shall also show specifically any
program, expenditure, or other financial transaction or
undertaking observed in the course of the audit, which, in the
opinion of the Comptroller General, has been carried on or made
without authority of law. A copy of each report shall be
furnished to the President and to the Agency at the time
submitted to the Congress.
``(3) Assistance and costs.--For the purpose of conducting
an audit under this subsection, the Comptroller General may, in
the discretion of the Comptroller General, employ by contract,
without regard to section 5 of title 41, professional services
of firms and organizations of certified public accountants,
with the concurrence of the Agency, for temporary periods or
for special purposes. The Agency shall reimburse the Government
Accountability Office for the cost of any such audit as billed
therefor by the Comptroller General, and the Government
Accountability Office shall deposit the sums so reimbursed into
the Treasury as miscellaneous receipts.''.
SEC. 106. EXAMINERS AND ACCOUNTANTS.
(a) Examinations.--Section 1317 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4517) is amended--
(1) in subsection (b)--
(A) by inserting ``of a regulated entity'' after
``under this section''; and
(B) by striking ``to determine the condition of an
enterprise for the purpose of ensuring its financial
safety and soundness'' and inserting ``or appropriate''
; and
(2) in subsection (c)--
(A) in the second sentence--
(i) by striking ``The'' and inserting
``During the 3-year period that begins upon the
date of the enactment of the Federal Housing
Finance Reform Act of 2005, the''; and
(ii) by inserting ``to conduct examinations
under this section'' before the period; and
(B) in the third sentence, by striking ``from
amounts available in the Federal Housing Enterprises
Oversight Fund''.
(b) Enhanced Authority to Hire Examiners and Accountants.--Section
1317 of the Housing and Community Development Act of 1992 (12 U.S.C.
4517) is amended by adding at the end the following new subsection:
``(g) Appointment of Accountants, Economists, and Examiners.--
``(1) Applicability.--This section applies with respect to
any position of examiner, accountant, and economist at the
Agency, with respect to supervision and regulation of the
regulated entities, that is in the competitive service.
``(2) Appointment authority.--The Director may appoint
candidates to any position described in paragraph (1)--
``(A) in accordance with the statutes, rules, and
regulations governing appointments in the excepted
service; and
``(B) notwithstanding any statutes, rules, and
regulations governing appointments in the competitive
service.''.
(c) Repeal.--Section 20 of the Federal Home Loan Bank Act (12
U.S.C. 1440) is amended--
(1) in the section heading, by striking ``reports'' and
inserting ``gao audits'';
(2) in the third sentence, by striking ``the Board and''
each place such term appears; and
(3) by striking the first two sentences and inserting the
following: ``The Federal home loan banks shall be subject to
examinations by the Director to the extent provided in section
1317 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4517).''.
(d) Effective Date.--This section and the amendments made by this
section shall take effect on the date of the enactment of this Act.
SEC. 107. PROHIBITION AND WITHHOLDING OF EXECUTIVE COMPENSATION.
(a) In General.--Section 1318 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4518) is amended--
(1) in the section heading, by striking ``of excessive''
and inserting ``and withholding of executive'';
(2) by redesignating subsection (b) as subsection (d); and
(3) by inserting after subsection (a) the following new
subsections:
``(b) Factors.--In making any determination under subsection (a),
the Director may take into consideration any factors the Director
considers relevant, including any wrongdoing on the part of the
executive officer, and such wrongdoing shall include any fraudulent act
or omission, breach of trust or fiduciary duty, violation of law, rule,
regulation, order, or written agreement, and insider abuse with respect
to the regulated entity.
``(c) Withholding of Compensation.--In carrying out subsection (a),
the Director may require a regulated entity to withhold any payment,
transfer, or disbursement of compensation to an executive officer, or
to place such compensation in an escrow account, during the review of
the reasonableness and comparability of compensation.''.
(b) Conforming Amendments.--
(1) Fannie mae.--Section 309(d) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is
amended by adding at the end the following new paragraph:
``(4) The corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an agreement with
such executive officer, without the approval of the Director, for
matters being reviewed under section 1318 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4518).''.
(2) Freddie mac.--Section 303(h) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by
adding at the end the following new paragraph:
``(4) The Corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an agreement with
such executive officer, without the approval of the Director, for
matters being reviewed under section 1318 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4518).''.
(3) Federal home loan banks.--Section 7 of the Federal Home
Loan Bank Act (12 U.S.C. 1427) is amended by adding at the end
the following new subsection:
``(l) Director's Approval of Compensation.--Notwithstanding any
other provision of this section, a Federal home loan bank shall not
transfer, disburse, or pay compensation to any executive officer, or
enter into an agreement with such executive officer, without the
approval of the Director, for matters being reviewed under section 1318
of the Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4518).''.
SEC. 108. REVIEWS OF REGULATED ENTITIES.
Section 1319 of the Housing and Community Development Act of 1992
(12 U.S.C. 4519) is amended--
(1) by striking the section designation and heading and
inserting the following:
``SEC. 1319. REVIEWS OF REGULATED ENTITIES.''; AND
(2) by inserting after ``any entity'' the following: ``that
the Director considers appropriate, including an entity''.
SEC. 109. REGULATIONS AND ORDERS.
Section 1319G of the Housing and Community Development Act of 1992
(12 U.S.C. 4526) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Authority.--The Director shall issue any regulations,
guidelines, and orders necessary to carry out the duties of the
Director under this title, the Federal National Mortgage Association
Charter Act, the Federal Home Loan Mortgage Corporation Act, and the
Federal Home Loan Bank Act to ensure that the purposes of this title
and such Acts are accomplished.''; and
(2) by striking subsection (c).
SEC. 110. RISK-BASED CAPITAL REQUIREMENTS.
(a) In General.--Section 1361 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4611) is amended to read as follows:
``SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED ENTITIES.
``(a) In General.--
``(1) Enterprises.--The Director shall, by regulation,
establish risk-based capital requirements for the enterprises
to ensure that the enterprises operate in a safe and sound
manner, maintaining sufficient capital and reserves to support
the risks that arise in the operations and management of the
enterprises.
``(2) Federal home loan banks.--The Director shall
establish risk-based capital standards under section 6 of the
Federal Home Loan Bank Act for the Federal home loan banks.
``(b) Required Registration Under the Securities Exchange Act of
1934.--
``(1) In general.--Each regulated entity shall register at
least one class of the capital stock of such regulated entity,
and maintain such registration with the Securities and Exchange
Commission, under the Securities Exchange Act of 1934.
``(2) Enterprises.--Each enterprise shall comply with
sections 14 and 16 of the Securities Exchange Act of 1934.
``(c) No Limitation.--Nothing in this section shall limit the
authority of the Director to require other reports or undertakings, or
take other action, in furtherance of the responsibilities of the
Director under this Act.''.
(b) Federal Home Loan Banks Risk-Based Capital.--Section 6(a)(3) of
the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3)) is amended--
(1) by striking subparagraph (A) and inserting the
following new subparagraph:
``(A) Risk-based capital standards.--The Director
shall, by regulation, establish risk-based capital
standards for the Federal home loan banks to ensure
that the Federal home loan banks operate in a safe and
sound manner, with sufficient permanent capital and
reserves to support the risks that arise in the
operations and management of the Federal home loans
banks.''; and
(2) in subparagraph (B), by striking ``(A)(ii)'' and
inserting ``(A)''.
SEC. 111. MINIMUM AND CRITICAL CAPITAL LEVELS.
(a) Minimum Capital Level.--Section 1362 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4612) is amended--
(1) in subsection (a), by striking the subsection heading
and inserting ``Enterprises'' ; and
(2) by striking subsection (b) and inserting the following
new subsections:
``(b) Federal Home Loan Banks.--For purposes of this subtitle, the
minimum capital level for each Federal home loan bank shall be the
minimum capital required to be maintained to comply with the leverage
requirement for the bank established under section 6(a)(2) of the
Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)).
``(c) Regulatory Discretion to Increase Level.--Notwithstanding
subsections (a) and (b), the Director may, by regulations issued under
section 1319G(b), establish a minimum capital level that is higher than
the level specified in subsection (a) for an enterprise or the level
specified in subsection (b) for a Federal home loan bank.
``(d) Authority to Require Temporary Increase.--Notwithstanding
subsections (a) and (b) and any minimum capital level established
pursuant to subsection (c), the Director may, by order, increase the
minimum capital level for a regulated entity for such period as the
Director may provide if the Director--
``(1) makes any of the determinations specified in
subparagraphs (A) through (C) of section 1364(c)(1); or
``(2) determines that the regulated entity has violated any
of the prudential management and operations standards
established pursuant to section 1313A and, as a result of such
violation, is operating in an unsafe and unsound manner.
``(e) Authority to Establish Additional Capital and Reserve
Requirements for Particular Programs.--The Director may, at any time by
order or regulation, establish such capital or reserve requirements
with respect to any program or activity of a regulated entity as the
Director considers appropriate to ensure that the regulated entity
operates in a safe and sound manner, with sufficient capital and
reserves to support the risks that arise in the operations and
management of the regulated entity.''.
(b) Critical Capital Levels.--
(1) In general.--Section 1363 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4613) is amended--
(A) by striking ``For'' and inserting ``(a)
Enterprises.--For''; and
(B) by adding at the end the following new
subsection:
``(b) Federal Home Loan Banks.--
``(1) In general.--For purposes of this subtitle, the
critical capital level for each Federal home loan bank shall be
such amount of capital as the Director shall, by regulation
require.
``(2) Consideration of other critical capital levels.--In
establishing the critical capital level under paragraph (1) for
the Federal home loan banks, the Director shall take due
consideration of the critical capital level established under
subsection (a) for the enterprises, with such modifications as
the Director determines to be appropriate to reflect the
difference in operations between the banks and the
enterprises.''.
(2) Regulations.--Not later than the expiration of the 120-
day period beginning on the effective date under section 184,
the Director of the Federal Housing Finance Agency shall issue
regulations pursuant to section 1363(b) of the Housing and
Community Development Act of 1992 (as added by paragraph (1) of
this subsection) establishing the critical capital level under
such section.
SEC. 112. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND
OBLIGATIONS.
Subtitle B of title XIII of the Housing and Community Development
Act of 1992 (12 U.S.C. 4611 et seq.) is amended--
(1) by striking the subtitle designation and heading and
inserting the following:
``Subtitle B--Required Capital Levels for Regulated Entities, Special
Enforcement Powers, and Reviews of Assets and Obligations''; and
(2) by adding at the end the following new section:
``SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND OBLIGATIONS.
``(a) In General.--The Director shall conduct, on a periodic basis,
a review of the on-balance sheet assets and off-balance sheet
obligations of each enterprise.
``(b) Authority to Require Disposition or Acquisition.--Pursuant to
such a review, the Director may by order require an enterprise, under
such terms and conditions as the Director determines to be appropriate,
to dispose of or acquire any asset or obligation, if the Director
determines that such action is consistent with the safe and sound
operation of the enterprise or with the purposes of this Act, the
Federal National Mortgage Association Charter Act, or the Federal Home
Loan Mortgage Corporation Act.''.
SEC. 113. CORPORATE GOVERNANCE OF ENTERPRISES.
The Housing and Community Development Act of 1992 is amended by
inserting before section 1323 (12 U.S.C. 4543) the following new
section:
``SEC. 1322A CORPORATE GOVERNANCE OF ENTERPRISES.
``(a) Board of Directors.--
``(1) Membership.--
``(A) In general.--No person may serve on the board
of directors of an enterprise for more than 10 years or
past the age of 72, whichever comes first; except that
a member of a board of directors may serve his or her
full term if he or she has served less than 10 years or
is 72 years on the date of his or her election or
appointment to the board.
``(B) Waiver.--Upon the written request of an
enterprise, the Director may waive, in the Director's
sole discretion and for good cause, the limits on the
service of a board member under subparagraph (A).
``(2) Independence.--A majority of seated members of the
board of directors of each enterprise shall be independent
board members, as defined under rules set forth by the New York
Stock Exchange, as such rules may be amended from time to time.
``(3) Frequency of meetings.--To carry out its obligations
and duties under applicable laws, rules, regulations, and
guidelines, the board of directors of an enterprise shall meet
at least eight times a year and not less than once a calendar
quarter.
``(4) Non-management board member meetings.--The non-
management directors of an enterprise shall meet at regularly
scheduled executive sessions without management participation.
``(5) Quorums; prohibition on proxies.--For the transaction
of business, a quorum of the board of directors of an
enterprise shall be at least a majority of the seated board of
directors and a board member may not vote by proxy.
``(6) Information.--The management of an enterprise shall
provide a board member of the enterprise with such adequate and
appropriate information that a reasonable board member would
find important to the fulfillment of his or her fiduciary
duties and obligations.
``(7) Annual review.--At least annually, the board of
directors of each enterprise shall review, with appropriate
professional assistance, the requirements of laws, rules,
regulations, and guidelines that are applicable to its
activities and duties.
``(b) Committees of Boards of Directors.--
``(1) Frequency of meetings.--Any committee of the board of
directors of an enterprise shall meet with sufficient frequency
to carry out its obligations and duties under applicable laws,
rules, regulations, and guidelines.
``(2) Required committees.--Each enterprise shall provide
for the establishment, however styled, of the following
committees of the board of directors:
``(A) Audit committee.
``(B) Compensation committee.
``(C) Nominating/corporate governance committee.
Such committees shall be in compliance with the charter,
independence, composition, expertise, duties, responsibilities,
and other requirements set forth under section 10A(m) of the
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m)), with
respect to the audit committee, and under rules issued by the
New York Stock Exchange, as such rules may be amended from time
to time.
``(c) Compensation.--
``(1) In general.--The compensation of board members,
executive officers, and employees of an enterprise--
``(A) shall not be in excess of that which is
reasonable and appropriate;
``(B) shall be commensurate with the duties and
responsibilities of such persons,
``(C) shall be consistent with the long-term goals
of the enterprise;
``(D) shall not focus solely on earnings
performance, but shall take into account risk
management, operational stability and legal and
regulatory compliance as well; and
``(E) shall be undertaken in a manner that complies
with applicable laws, rules, and regulations.
``(2) Reimbursement.--If an enterprise is required to
prepare an accounting restatement due to the material
noncompliance of the enterprise, as a result of misconduct,
with any financial reporting requirement under the securities
laws, the chief executive officer and chief financial officer
of the enterprise shall reimburse the enterprise as provided
under section 304 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7243). This provision does not otherwise limit the authority of
the Agency to employ remedies available to it under its
enforcement authorities.
``(d) Code of Conduct and Ethics.--
``(1) In general.--An enterprise shall establish and
administer a written code of conduct and ethics that is
reasonably designed to assure the ability of board members,
executive officers, and employees of the enterprise to
discharge their duties and responsibilities, on behalf of the
enterprise, in an objective and impartial manner, and that
includes standards required under section 406 of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7264) and other applicable laws,
rules, and regulations.
``(2) Review.--Not less than once every three years, an
enterprise shall review the adequacy of its code of conduct and
ethics for consistency with practices appropriate to the
enterprise and make any appropriate revisions to such code.
``(e) Conduct and Responsibilities of Board of Directors.--The
board of directors of an enterprise shall be responsible for directing
the conduct and affairs of the enterprise in furtherance of the safe
and sound operation of the enterprise and shall remain reasonably
informed of the condition, activities, and operations of the
enterprise. The responsibilities of the board of directors shall
include having in place adequate policies and procedures to assure its
oversight of, among other matters, the following:
``(1) Corporate strategy, major plans of action, risk
policy, programs for legal and regulatory compliance and
corporate performance, including prudent plans for growth and
allocation of adequate resources to manage operations risk.
``(2) Hiring and retention of qualified senior executive
officers and succession planning for such senior executive
officers.
``(3) Compensation programs of the enterprise.
``(4) Integrity of accounting and financial reporting
systems of the enterprise, including independent audits and
systems of internal control.
``(5) Process and adequacy of reporting, disclosures, and
communications to shareholders, investors, and potential
investors.
``(6) Extensions of credit to board members and executive
officers.
``(7) Responsiveness of executive officers in providing
accurate and timely reports to Federal regulators and in
addressing the supervisory concerns of Federal regulators in a
timely and appropriate manner.
``(f) Prohibition of Extensions of Credit.--An enterprise may not
directly or indirectly, including through any subsidiary, extend or
maintain credit, arrange for the extension of credit, or renew an
extension of credit, in the form of a personal loan to or for any board
member or executive officer of the enterprise, as provided by section
13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(k)).
``(g) Certification of Disclosures.--The chief executive officer
and the chief financial officer of an enterprise shall review each
quarterly report and annual report issued by the enterprise and such
reports shall include certifications by such officers as required by
section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241).
``(h) Change of Audit Partner.--An enterprise may not accept audit
services from an external auditing firm if the lead or coordinating
audit partner who has primary responsibility for the external audit of
the enterprise, or the external audit partner who has responsibility
for reviewing the external audit has performed audit services for the
enterprise in each of the five previous fiscal years.
``(i) Compliance Program.--
``(1) Requirement.--Each enterprise shall establish and
maintain a compliance program that is reasonably designed to
assure that the enterprise complies with applicable laws,
rules, regulations, and internal controls.
``(2) Compliance officer.--The compliance program of an
enterprise shall be headed by a compliance officer, however
styled, who reports directly to the chief executive officer of
the enterprise. The compliance officer shall report regularly
to the board of directors or an appropriate committee of the
board of directors on compliance with and the adequacy of
current compliance policies and procedures of the enterprise,
and shall recommend any adjustments to such policies and
procedures that the compliance officer considers necessary and
appropriate.
``(j) Risk Management Program.--
``(1) Requirement.--Each enterprise shall establish and
maintain a risk management program that is reasonably designed
to manage the risks of the operations of the enterprise.
``(2) Risk management officer.--The risk management program
of an enterprise shall be headed by a risk management officer,
however styled, who reports directly to the chief executive
officer of the enterprise. The risk management officer shall
report regularly to the board of directors or an appropriate
committee of the board of directors on compliance with and the
adequacy of current risk management policies and procedures of
the enterprise, and shall recommend any adjustments to such
policies and procedures that the risk management officer
considers necessary and appropriate.
``(k) Compliance With Other Laws.--
``(1) Deregistered or unregistered common stock.--If an
enterprise deregisters or has not registered its common stock
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, the enterprise shall comply or
continue to comply with sections 10A(m) and 13(k) of the
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k))
and sections 302, 304, and 406 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7241, 7243, 7264), subject to such requirements
as provided by subsection (l) of this section.
``(2) Registered common stock.--An enterprise that has its
common stock registered with the Securities and Exchange
Commission shall maintain such registered status, unless it
provides 60 days prior written notice to the Director stating
its intent to deregister and its understanding that it will
remain subject to the requirements of the sections of the
Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of
2002, subject to such requirements as provided by subsection
(l) of this section.
``(l) Modification of Certain Provisions.--In connection with
standards of Federal or State law (including the Revised Model
Corporation Act) or New York Stock Exchange rules that are made
applicable to an enterprise by section 1710.10 of the Director's rules
(12 C.F.R. 1710.10) and by subsections (a), (b), (g), (i), (j), and (k)
of this section, the Director, in the Director's sole discretion, may
modify the standards contained in this section or in part 1710 of the
Director's rules (12 U.S.C. Part 1710) in accordance with section 553
of title 5, United States Code, and upon written notice to the
enterprise.''.
SEC. 114. CONFORMING AMENDMENTS.
(a) 1992 Act.--Part 1 of subtitle A of title XIII of the Housing
and Community Development Act of 1992 (12 U.S.C. 4511 et seq.), as
amended by the preceding provisions of this Act, is further amended--
(1) by striking ``an enterprise'' each place such term
appears in such part (except in sections 1313(a)(2)(A),
1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) and inserting ``a
regulated entity'';
(2) by striking ``the enterprise'' each place such term
appears in such part (except in section 1316(b)(3)) and
inserting ``the regulated entity'';
(3) by striking ``the enterprises'' each place such term
appears in such part (except in sections 1312(c)(2),
1312(e)(2), 1317(g)(1), and 1319B(a)(4)(D)) and inserting ``the
regulated entities'';
(4) by striking ``each enterprise'' each place such term
appears in such part and inserting ``each regulated entity'';
(5) by striking ``Office'' each place such term appears in
such part (except in sections 1312(b)(5), 1315(b), and 1316(g),
and subsections (c) and (d) of section 1317) and inserting
``Agency'';
(6) in section 1315 (12 U.S.C. 4515)--
(A) in subsection (a)--
(i) in the subsection heading, by striking
``Office Personnel'' and inserting ``In
General''; and
(ii) by striking ``The'' and inserting
``Subject to titles III and IV of the Federal
Housing Finance Reform Act of 2005, the'';
(B) by striking subsection (d); and
(C) by redesignating subsections (e) and (f) as
subsections (d) and (e), respectively;
(7) in section 1316(c) (12 U.S.C. 4516(c)), by striking
``any enterprise'' and inserting ``any regulated entity'';
(8) in section 1319A (12 U.S.C. 4520)--
(A) by striking ``(a) In General.--Each
enterprise'' and inserting ``Each regulated entity'';
and
(B) by striking subsection (b);
(9) in section 1319B (12 U.S.C. 4521), by striking
``Committee on Banking, Finance and Urban Affairs'' each place
such term appears and inserting ``Committee on Financial
Services''; and
(10) in section 1319F (12 U.S.C. 4525), striking all that
follows ``United States Code'' and inserting ``, the Agency
shall be considered an agency responsible for the regulation or
supervision of financial institutions.''.
(b) Amendments to Fannie Mae Charter Act.--The Federal National
Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) is amended--
(1) by striking ``Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' each place such term appears, and inserting
``Director of the Federal Housing Finance Agency'', in--
(A) section 303(c)(2) (12 U.S.C. 1718(c)(2));
(B) section 309(d)(3)(B) (12 U.S.C.
1723a(d)(3)(B)); and
(C) section 309(k)(1); and
(2) in section 309--
(A) in subsections (d)(3)(A) and (n)(1), by
striking ``Banking, Finance and Urban Affairs'' each
place such term appears and inserting ``Financial
Services''; and
(B) in subsection (n)(1), by inserting ``the
Director of the Federal Housing Finance Agency,'' after
``Senate,''.
(c) Amendments to Freddie Mac Act.--The Federal Home Loan Mortgage
Corporation Act is amended--
(1) by striking ``Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' each place such term appears, and inserting
``Director of the Federal Housing Finance Agency'', in--
(A) section 303(b)(2) (12 U.S.C. 1452(b)(2));
(B) section 303(h)(2) (12 U.S.C. 1452(h)(2)); and
(C) section 307(c)(1) (12 U.S.C. 1456(c)(1));
(2) in sections 303(h)(1) and 307(f)(1) (12 U.S.C.
1452(h)(1), 1456(f)(1)), by striking ``Banking, Finance and
Urban Affairs'' each place such term appears and inserting
``Financial Services'';
(3) in section 306(i) (12 U.S.C. 1455(i))--
(A) by striking ``section 1316(c)'' and inserting
``section 306(c)''; and
(B) by striking ``section 106'' and inserting
``section 1316''; and
(4) in section 307(f)(1) (12 U.S.C. 1456(f)(1)), by
inserting ``the Director of the Federal Housing Finance
Agency,'' after ``Senate,''.
Subtitle B--Improvement of Mission Supervision
SEC. 121. TRANSFER OF PROGRAM AND ACTIVITIES APPROVAL AND HOUSING GOAL
OVERSIGHT.
Part 2 of subtitle A of title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking the designation and heading for the part
and inserting the following:
``PART 2--PROGRAM AND ACTIVITIES APPROVAL BY DIRECTOR, CORPORATE
GOVERNANCE, AND ESTABLISHMENT OF HOUSING GOALS''; and
(2) by striking sections 1321 and 1322.
SEC. 122. REVIEW BY DIRECTOR OF NEW PROGRAMS AND ACTIVITIES OF
ENTERPRISES.
(a) In General.--Part 2 of subtitle A of title XIII of the Housing
and Community Development Act of 1992 is amended by inserting before
section 1323 (12 U.S.C. 4543) the following new section:
``SEC. 1321. REVIEW AND APPROVAL BY DIRECTOR OF NEW PROGRAMS AND
BUSINESS ACTIVITIES OF ENTERPRISES.
``(a) Limitation on Authority to Undertake Programs and
Activities.--An enterprise may not undertake any new program, including
a pilot program, or any new business activity except in accordance with
the procedures set forth in this section and orders and regulations
issued under this section.
``(b) New Programs.--
``(1) Prior approval requirement.--An enterprise may not
commence any new program before it has obtained the approval of
the Director, pursuant to this subsection, for the new program.
``(2) Application.--The Director shall, by order or
regulation, require that an enterprise shall, to obtain a
determination by the Director regarding approval of a new
program by the enterprise, submit to the Director a written
application for the new program in a format as prescribed by
the Director.
``(3) Notice.--Immediately upon receipt of a complete
application for a new program, the Director shall cause to be
published in the Federal Register notice of the receipt of such
application and of the period for public comment pursuant to
paragraph (4) regarding such new program, and a description of
the new program proposed by the application.
``(4) Public comment period.--During the 30-day period
beginning upon publication pursuant to paragraph (3) of a
notice regarding such an application, the Director shall
receive public comments regarding the new program.
``(5) Determination.--Not less than 15 days after the
conclusion of the public comment period pursuant to paragraph
(4) regarding an application but not more than 30 days after
the conclusion of such comment period, the Director shall
approve, conditionally approve, or reject such program, in
writing.
``(6) Standard for approval.--The Director may approve, or
conditionally approve, a new program of an enterprise only if
the Director determines, taking into consideration any relevant
information and comments received during the public comment
period, that such new program--
``(A) does not contravene and is not inconsistent
with the purposes of this title, the Federal National
Mortgage Association Charter Act, or the Federal Home
Loan Mortgage Corporation Act, as such purposes are
determined taking into consideration the definitions of
the terms `primary mortgage market' and `secondary
mortgage market' pursuant to section 1303;
``(B) is not otherwise inconsistent with the safety
and soundness of the enterprise; and
``(C) is in the public interest.
``(c) Business Activities.--
``(1) Authority of director to prohibit activities.--The
Director shall have authority to prohibit any business activity
by an enterprise if the Director determines, in writing, that
such activity--
``(A) contravenes or is inconsistent with the
purposes of this title, the Federal National Mortgage
Association Charter Act, or the Federal Home Loan
Mortgage Corporation Act;
``(B) is otherwise inconsistent with the safety and
soundness of the enterprise; or
``(C) is not in the public interest.
``(2) Notification of new business activities.-- An
enterprise that undertakes any new business activity shall
provide written notice of the activity to the Director and may
commence the new business activity only in accordance with
paragraph (4).
``(3) Director determination of applicable procedure.--
``(A) Timing.--Immediately upon receipt of any
notice under paragraph (2) regarding a new business
activity, the Director shall undertake a determination
under subparagraph (B) of this paragraph regarding the
business activity.
``(B) Determination and treatment as new program.--
If the Director determines that any new business
activity consists of, relates to, or involves any new
program--
``(i) the Director shall notify the
enterprise of the determination;
``(ii) the new business activity described
in the notice shall be considered a new program
for purposes of this section; and
``(iii) the Director shall prohibit the
enterprise from carrying out the activity
except to the extent that approval for the
activity is obtained pursuant to subsection
(b).
``(4) Commencement.--An enterprise may commence a new
business activity--
``(A) if the Director issues a written approval
regarding such business activity, immediately upon such
issuance or at such other time as provided by the
Director in such letter; or
``(B) if, during the 30-day period beginning upon
receipt by the Director of notice pursuant to paragraph
(2) regarding a new business activity, the Director has
not issued to the enterprise a written approval or
denial of the new business activity, upon the
expiration of such 30-day period.
``(d) Approval and Conditional Approval.--The Director may at any
time conditionally approve the undertaking of a particular new program
or business activity by an enterprise and set forth the terms and
conditions that apply to the program or activity with which the
enterprise shall comply if it undertakes the new program or activity.
Such approval may, in the discretion of the Director, be in the form of
a written agreement between the enterprise and the Director and shall
be subject to such terms and conditions therein. Such a written
agreement or conditional approval shall be enforceable under subtitle
C.
``(e) Effect on Other Authorities.--
``(1) Examinations.--Nothing in this section may be
construed to limit, in any manner, any other authority or right
the Director may have under other provisions of law to conduct
an examination of an enterprise.
``(2) Requests for information.--Nothing in this section
may be construed to limit the right of the Director at any time
to request additional information from an enterprise concerning
any business activity.
``(3) No implied right of action.--This section shall not
create any private right of action against an enterprise or any
director or executive officer of an enterprise, or impair any
private right of action under other applicable law.
``(4) No limitation.--Nothing in this section may be
construed to restrict the general supervisory and regulatory
authority of the Director over all programs, products,
activities, or business operations of any kind.
``(f) Report on Programs and Business Activities.--Not later than
the expiration of the 180-day period beginning on the effective date
under section 184 of the Federal Housing Finance Reform Act of 2005,
each enterprise shall submit to the Director a report identifying and
describing each program and business activity of the enterprise engaged
in or existing as of the submission of the report.
``(g) Regulations.--The Director shall by order or regulation issue
rules and procedures to implement this section, including in the
discretion of the Director, such definitions, interpretations, forms,
and other guidances as the Director considers appropriate.''.
(b) Definitions.--Section 1303 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4502), as amended by section 2 of
this Act, is further amended--
(1) by redesignating paragraphs (16) through (22) as
paragraphs (19) through (25), respectively;
(2) by inserting after paragraph (15) the following new
paragraph:
``(18) New business activity.--The term `new business
activity' means, with respect to an enterprise, any business
activity of the enterprise that--
``(A) the enterprise was not engaging in on the
effective date under section 184 of the Federal Housing
Finance Reform Act of 2005; and
``(B) that the enterprise is not authorized,
pursuant to the provisions of section 1321(c), to
offer, undertake, transact, conduct, or engage in.'';
(3) by redesignating paragraphs (14) and (15) as paragraphs
(16) and (17), respectively;
(4) by inserting after paragraph (13) the following new
paragraph:
``(15) Mortgage markets.--The terms `primary mortgage
market' and `secondary mortgage market' shall have such
meanings as the Director shall, by regulation, prescribe
consistent with the Federal National Mortgage Association
Charter Act and the Federal Home Loan Mortgage Corporation Act.
The Director shall issue such regulations not later than the
expiration of the 6-month period beginning on the effective
date under section 184 of the Federal Housing Finance Reform
Act of 2005.'';
(5) by redesignating paragraphs (5) through (13) as
paragraphs (6) through (14), respectively; and
(6) by inserting after paragraph (4) the following new
paragraph:
``(5) Business activity.--The term `business activity'
means, with respect to an enterprise any offering, undertaking,
transacting, conducting, or engaging in any conduct or activity
by an enterprise, as the Director shall provide.''.
SEC. 123. CONFORMING LOAN LIMITS.
(a) Fannie Mae.--Section 302(b)(2) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1717(b)(2)) is amended by striking
the 7th and 8th sentences and inserting the following new sentences:
``Such limitations shall not exceed $359,650 for a mortgage secured by
a single-family residence, $460,400 for a mortgage secured by a 2-
family residence, $556,500 for a mortgage secured by a 3-family
residence, and $694,600 for a mortgage secured by a 4-family residence,
except that such maximum limitations shall be adjusted effective
January 1 of each year beginning with 2006, subject to the limitations
in this paragraph. Each adjustment shall be made by adding to or
subtracting from each such amount (as it may have been previously
adjusted) a percentage thereof equal to the percentage increase or
decrease during the 12-month period ending with the previous October in
the housing price index maintained by the Director of the Federal
Housing Finance Agency (pursuant to section 1322 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541)).''.
(b) Freddie Mac.--Section 305(a)(2) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1454(a)(2)) is amended by
striking the 6th and 7th sentences and inserting the following new
sentences: ``Such limitations shall not exceed $359,650 for a mortgage
secured by a single-family residence, $460,400 for a mortgage secured
by a 2-family residence, $556,500 for a mortgage secured by a 3-family
residence, and $694,600 for a mortgage secured by a 4-family residence,
except that such maximum limitations shall be adjusted effective
January 1 of each year beginning with 2006, subject to the limitations
in this paragraph. Each adjustment shall be made by adding to or
subtracting from each such amount (as it may have been previously
adjusted) a percentage thereof equal to the percentage increase or
decrease during the 12-month period ending with the previous October in
the housing price index maintained by the Director of the Federal
Housing Finance Agency (pursuant to section 1322 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541)).''.
(c) Housing Price Index.--Subpart A of part 2 of subtitle A of
title XIII of the Housing and Community Development Act of 1992 (as
amended by the preceding provisions of this Act) is amended by
inserting after section 1321 (as added by section 122 of this Act) the
following new section:
``SEC. 1322. HOUSING PRICE INDEX.
``(a) In General.--The Director shall establish and maintain a
method of assessing the national average 1-family house price for use
for adjusting the conforming loan limitations of the enterprises. In
establishing such method, the Director shall take into consideration
the monthly survey of all major lenders conducted by the Federal
Housing Finance Agency to determine the national average 1-family house
price, the House Price Index maintained by the Office of Federal
Housing Enterprise Oversight of the Department of Housing and Urban
Development before the effective date of the Federal Housing Finance
Reform Act of 2005, any appropriate house price indexes of the Bureau
of the Census of the Department of Commerce, and any other indexes or
measures that the Director considers appropriate.
``(b) GAO Audit.--
``(1) In general.--At such times as are required under
paragraph (2), the Comptroller General of the United States
shall conduct an audit of the methodology established by the
Director under subsection (a) to determine whether the
methodology established is an accurate and appropriate means of
measuring changes to the national average 1-family house price.
``(2) Timing.--An audit referred to in paragraph (1) shall
be conducted and completed not later than the expiration of the
180-day period that begins upon each of the following dates:
``(A) Establishment.--The date upon which such
methodology is initially established under subsection
(a) in final form by the Director.
``(B) Modification or amendment.--Each date upon
which any modification or amendment to such methodology
is adopted in final form by the Director.
``(3) Report.--Within 30 days of the completion of any
audit conducted under this subsection, the Comptroller General
shall submit a report detailing the results and conclusions of
the audit to the Director, the Committee on Financial Services
of the House of Representatives, and the Committee on Banking,
Housing, and Urban Affairs of the Senate.''.
SEC. 124. ANNUAL HOUSING REPORT REGARDING REGULATED ENTITIES.
The Housing and Community Development Act of 1992 is amended by
striking section 1324 (12 U.S.C. 4544) and inserting the following new
section:
``SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGULATED ENTITIES.
``(a) In General.--After reviewing and analyzing the reports
submitted under section 309(n) of the Federal National Mortgage
Association Charter Act, section 307(f) of the Federal Home Loan
Mortgage Corporation Act, and section 10(j)(12) of the Federal Home
Loan Bank Act (12 U.S.C. 1430(j)(12)), the Director shall submit a
report, as part of the annual report under section 1328, not later than
October 30 of each year, to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate, on the activities of each regulated
entity.
``(b) Contents.--The report shall--
``(1) discuss the extent to which--
``(A) each enterprise is achieving the annual
housing goals established under subpart B of this part;
``(B) each Federal home loan bank is meeting the
contribution requirements under section 10(j)(5) of the
Federal Home Loan Bank Act; and
``(C) each regulated entity is achieving the
purposes of the regulated entity established by law;
``(2) aggregate and analyze census tract and other relevant
data to assess the compliance of each enterprise with the
central cities, rural areas, and other underserved areas
housing goal and to determine levels of business in central
cities, rural areas, underserved areas, low- and moderate-
income census tracts, minority census tracts, and other
geographical areas deemed appropriate by the Director;
``(3) aggregate and analyze relevant data on income to
assess the compliance of each enterprise with the housing goals
under subpart B;
``(4) aggregate and analyze data on income, race, and
gender by census tract and other relevant classifications, and
compare such data with larger demographic, housing, and
economic trends;
``(5) examine actions that--
``(A) each enterprise has undertaken or could
undertake to promote and expand the annual goals
established under subpart B and the purposes of the
enterprise established by law; and
``(B) each Federal home loan bank has taken or
could undertake to promote and expand the community
investment program and affordable housing program of
the bank established under section subsections (i) and
(j) of section 10 of the Federal Home Loan Bank Act;
``(6) examine the primary and secondary multifamily housing
mortgage markets and describe--
``(A) the availability and liquidity of mortgage
credit;
``(B) the status of efforts to provide standard
credit terms and underwriting guidelines for
multifamily housing and to securitize such mortgage
products; and
``(C) any factors inhibiting such standardization
and securitization;
``(7) examine actions each regulated entity has undertaken
and could undertake to promote and expand opportunities for
first-time homebuyers;
``(8) describe any actions taken under section 1325(5) with
respect to originators found to violate fair lending
procedures; and
``(9) discuss and analyze existing conditions and trends,
including conditions and trends relating to pricing, in the
housing markets and mortgage markets.
``(c) Data Collection and Reporting.--
``(1) In general.--To assist the Director in analyzing the
matters described in subsection (b) and establishing the
methodology described in section 1322, the Director shall
conduct, on a monthly basis, a survey of mortgage markets in
accordance with this subsection.
``(2) Data points.--Each monthly survey conducted by the
Director under paragraph (1) shall collect data on--
``(A) the characteristics of individual mortgages
that are eligible for purchase by the enterprises and
the characteristics of individual mortgages that are
not eligible for purchase by the enterprises including,
in both cases, information concerning--
``(i) the price of the house that secures
the mortgage;
``(ii) the loan-to-value ratio of the
mortgage, which shall reflect any secondary
liens on the relevant property;
``(iii) the terms of the mortgage;
``(iv) the creditworthiness of the borrower
or borrowers; and
``(v) whether the mortgage, in the case of
a conforming mortgage, was purchased by an
enterprise; and
``(B) such other matters as the Director determines
to be appropriate.
``(3) Public availability.--The Director shall make any
data collected by the Director in connection with the conduct
of a monthly survey available to the public in a timely manner,
provided that the Director may modify the data released to the
public to ensure that the data is not released in an
identifiable form.
``(4) Definition.--For purposes of this subsection, the
term `identifiable form' means any representation of
information that permits the identity of a borrower to which
the information relates to be reasonably inferred by either
direct or indirect means.''.
SEC. 125. ESTABLISHMENT OF HOUSING GOALS.
Section 1331 of the Housing and Community Development Act of 1992
(12 U.S.C. 4561) is amended by striking subsection (a) and inserting
the following new subsection:
``(a) In General.--The Director shall establish, by regulation,
housing goals under this subpart for each enterprise. The housing goals
shall include a low- and moderate-income housing goal pursuant to
section 1332, a special affordable housing goal pursuant to section
1333, a central cities, rural areas, and other underserved areas
housing goal pursuant to section 1334, a home purchase goal under
section 1334A, and such other goals as the Director may establish under
section 1334B. The Director shall implement this subpart in a manner
consistent with section 301(3) of the Federal National Mortgage
Association Charter Act and section 301(b)(3) of the Federal Home Loan
Mortgage Corporation Act.''.
SEC. 126. HOME PURCHASE GOAL AND ADDITIONS, MODIFICATIONS, AND
RESCISSIONS TO GOALS.
The Housing and Community Development Act of 1992 is amended by
inserting after section 1334 (12 U.S.C. 4564) the following new
sections:
``SEC. 1334A. HOME PURCHASE GOAL.
``(a) In General.--The Director shall establish an annual home
purchase goal for the purchase by each enterprise of mortgages
financing the purchase of owner-occupied single family dwelling units.
The Director may, by regulation, establish components for such goal to
include any or all of the following: first-time homebuyers; low- and
moderate-income homebuyers; homebuyers in central cities, rural areas,
and other underserved areas; and homebuyers of special affordable
housing. The Director may, by regulation, establish the goal with
components as percentages of enterprise business or by such other means
as necessary to increase the enterprises' secondary market financing of
mortgages for home purchases consistent with the enterprises' charter
missions. The components of the goal established by the Director shall
be enforceable as goals. The goal under this section with its
components must be established for metropolitan and rural areas for
which data is available.
``(b) Factors to Be Applied.--In establishing the home purchase
goal under this section for an enterprise, the Director shall
consider--
``(1) national housing needs;
``(2) economic, housing, and demographic conditions;
``(3) the performance and effort of the enterprises toward
achieving the home purchase goal in previous years;
``(4) the size of the conventional mortgage market serving
home purchasers relative to the size of the overall
conventional mortgage market;
``(5) the ability of the enterprises to lead the industry
in making mortgage credit available for home purchasers; and
``(6) the need to maintain the sound financial condition of
the enterprises.
``(c) Transition.--In order to permit a transition to the goal
established under this section, the Director shall phase in the goal
over a period of one year. Such goal shall not be enforceable during
the one-year transition period.
``(d) Implementation During Transition.--The Director shall
establish any requirements necessary to implement the transition
provisions under this section by notice, after providing the
enterprises with an opportunity to review and comment not less than 30
days before the issuance of such notice.
``SEC. 1334B. HOUSING GOALS: ADDITIONS, MODIFICATIONS, AND RESCISSIONS.
``(a) In General.--The Director may, by regulation, establish
additional annual housing goals, or modify or rescind existing housing
goals, to address national housing needs consistent with the
enterprises' charters for the purchase of mortgages where the Director
determines by regulation that the housing need is greatest. The
Director may issue a regulation which establishes or modifies any goal
under this subsection--
``(1) as a percentage of the mortgage purchases of each
enterprise;
``(2) as a dollar amount of each enterprise's mortgage
purchases; or
``(3) by such other means as necessary to increase the
enterprises' secondary market financing of mortgages addressed
by the goal.
``(b) Factors to Be Applied.--In establishing, modifying, or
rescinding a goal, the Director shall consider--
``(1) national housing needs;
``(2) economic, housing, and demographic conditions;
``(3) the performance and effort of the enterprises toward
achieving the need addressed by such goal in previous years;
``(4) the size of the conventional mortgage market serving
the need addressed by the goal relative to the size of the
overall conventional mortgage market;
``(5) the ability of the enterprises to lead the industry
in making mortgage credit available to meet the need addressed
by the goal; and
``(6) the need to maintain the sound financial condition of
the enterprises.
``(c) Timing.--The Director may exercise the authority under this
section to issue regulations to establish, modify, or rescind housing
goals not more than once per calendar year. Such regulations for a
calendar year may establish, or make modifications or rescissions with
respect to, more than one annual housing goal, but all such regulations
for a calendar year shall be issued concurrently.
``(d) Transition.--In order to permit a transition to any goal
established under this section, the Director shall phase in such goal
over a period of one year. Such goal shall not be enforceable during
the one-year transition period.
``(e) Implementation During Transition.--The Director shall
establish any requirements necessary to implement the transition
provisions under this section by notice, after providing the
enterprises with an opportunity to review and comment not less than 30
days before the issuance of such notice.''.
SEC. 127. OTHER REQUIREMENTS.
The first sentence of section 1335(a) of the Housing and Community
Development Act of 1992 (12 U.S.C. 4565(a)) is amended by striking
``low-'' and all that follows through ``1334'' and inserting ``goals
under this subpart''.
SEC. 128. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS.
Section 1336 of the Housing and Community Development Act of 1992
(12 U.S.C. 4566) is amended--
(1) in subsection (a)(1), by striking ``established'' and
all that follows through ``1334'' and inserting ``under this
subpart'';
(2) in subsection (b)--
(A) in the subsection heading, by inserting
``Preliminary'' before ``Determination'';
(B) by striking paragraph (1) and inserting the
following new paragraph:
``(1) Notice.--If the Director preliminarily determines
that an enterprise has failed, or that there is a substantial
probability that an enterprise will fail, to meet any housing
goal under this subpart, the Director shall provide written
notice to the enterprise of such a preliminary determination,
the reasons for such determination, and the information on
which the Director based the determination.'';
(C) in paragraph (2)--
(i) in subparagraph (A), by inserting
``finally'' before ``determining'';
(ii) by striking subparagraphs (B) and (C)
and inserting the following new subparagraph:
``(B) Extension or shortening of period.--The
Director may--
``(i) extend the period under subparagraph
(A) for good cause for not more than 30
additional days; and
``(ii) shorten the period under
subparagraph (A) for good cause.''; and
(iii) by redesignating subparagraph (D) as
subparagraph (C); and
(D) in paragraph (3)--
(i) in subparagraph (A), by striking
``determine'' and inserting ``issue a final
determination of'';
(ii) in subparagraph (B), by inserting
``final'' before ``determinations''; and
(iii) in subparagraph (C)--
(I) by striking ``Committee on
Banking, Finance and Urban Affairs''
and inserting ``Committee on Financial
Services''; and
(II) by inserting ``final'' before
``determination'' each place such term
appears; and
(3) in subsection (c)--
(A) by striking the subsection designation and
heading and all that follows through the end of
paragraph (1) and inserting the following:
``(c) Cease and Desist Orders, Civil Money Penalties, and Remedies
Including Housing Plans.--
``(1) Requirement.--If the Director finds, pursuant to
subsection (b), that there is a substantial probability that an
enterprise will fail, or has actually failed, to meet any
housing goal under this subpart and that the achievement of the
housing goal was or is feasible, the Director may require that
the enterprise submit a housing plan under this subsection. If
the Director makes such a finding and the enterprise refuses to
submit such a plan, submits an unacceptable plan, fails to
comply with the plan or the Director finds that the enterprise
has failed to meet any housing goal under this subpart, in
addition to requiring an enterprise to submit a housing plan,
the Director may issue a cease and desist order in accordance
with section 1341, impose civil money penalties in accordance
with section 1345, or order other remedies as set forth in
paragraph (7) of this subsection.'';
(B) in paragraph (2)--
(i) by striking ``Contents.--Each housing
plan'' and inserting ``Housing plan.--If the
Director requires a housing plan under this
section, such a plan''; and
(ii) in subparagraph (B), by inserting
``and changes in its operations'' after
``improvements'';
(C) in paragraph (3)--
(i) by inserting ``comply with any remedial
action or'' before ``submit a housing plan'';
and
(ii) by striking ``under subsection (b)(3)
that a housing plan is required'';
(D) in paragraph (4), by striking the first two
sentences and inserting the following: ``The Director
shall review each submission by an enterprise,
including a housing plan submitted under this
subsection, and not later than 30 days after
submission, approve or disapprove the plan or other
action. The Director may extend the period for approval
or disapproval for a single additional 30-day period if
the Director determines such extension necessary.'';
and
(E) by adding at the end the following new
paragraph:
``(7) Additional remedies for failure to meet goals.--In
addition to ordering a housing plan under this section, issuing
cease and desist orders under section 1341, and ordering civil
money penalties under section 1345, the Director may seek other
actions when an enterprise fails to meet a goal, and exercise
appropriate enforcement authority available to the Director
under this Act to prohibit the enterprise from entering into
new programs and new business activities and to order the
enterprise to suspend programs and business activities pending
its achievement of the goal.''.
SEC. 129. ENFORCEMENT.
(a) Cease-and-Desist Proceedings.--Section 1341 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4581) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Grounds for Issuance.--The Director may issue and serve a
notice of charges under this section upon an enterprise if the Director
determines--
``(1) the enterprise has failed to meet any housing goal
established under subpart B, following a written notice and
determination of such failure in accordance with section 1336;
``(2) the enterprise has failed to submit a report under
section 1314, following a notice of such failure, an
opportunity for comment by the enterprise, and a final
determination by the Director;
``(3) the enterprise has failed to submit the information
required under subsection (m) or (n) of section 309 of the
Federal National Mortgage Association Charter Act, or
subsection (e) or (f) of section 307 of the Federal Home Loan
Mortgage Corporation Act;
``(4) the enterprise has violated any provision of this
part or any order, rule or regulation under this part;
``(5) the enterprise has failed to submit a housing plan
that complies with section 1336(c) within the applicable
period; or
``(6) the enterprise has failed to comply with a housing
plan under section 1336(c).'';
(2) in subsection (b)(2), by striking ``requiring the
enterprise to'' and all that follows through the end of the
paragraph and inserting the following:
``requiring the enterprise to--
``(A) comply with the goal or goals;
``(B) submit a report under section 1314;
``(C) comply with any provision this part or any
order, rule or regulation under such part;
``(D) submit a housing plan in compliance with
section 1336(c);
``(E) comply with a housing plan submitted under
section 1336(c); or
``(F) provide the information required under
subsection (m) or (n) of section 309 of the Federal
National Mortgage Association Charter Act or subsection
(e) or (f) of section 307 of the Federal Home Loan
Mortgage Corporation Act, as applicable.'';
(3) in subsection (c), by inserting ``date of the'' before
``service of the order''; and
(4) by striking subsection (d).
(b) Authority of Director to Enforce Notices and Orders.--Section
1344 of the Housing and Community Development Act of 1992 (12 U.S.C.
4584) is amended by striking subsection (a) and inserting the following
new subsection:
``(a) Enforcement.--The Director may, in the discretion of the
Director, apply to the United States District Court for the District of
Columbia, or the United States district court within the jurisdiction
of which the headquarters of the enterprise is located, for the
enforcement of any effective and outstanding notice or order issued
under section 1341 or 1345, or request that the Attorney General of the
United States bring such an action. Such court shall have jurisdiction
and power to order and require compliance with such notice or order.''.
(c) Civil Money Penalties.--Section 1345 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4585) is amended--
(1) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Authority.--The Director may impose a civil money penalty, in
accordance with the provisions of this section, on any enterprise that
has failed to--
``(1) meet any housing goal established under subpart B,
following a written notice and determination of such failure in
accordance with section 1336(b);
``(2) submit a report under section 1314, following a
notice of such failure, an opportunity for comment by the
enterprise, and a final determination by the Director;
``(3) submit the information required under subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act, or subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act;
``(4) comply with any provision of this part or any order,
rule or regulation under this part;
``(5) submit a housing plan pursuant to section 1336(c)
within the required period; or
``(6) comply with a housing plan for the enterprise under
section 1336(c).
``(b) Amount of Penalty.--The amount of the penalty, as determined
by the Director, may not exceed--
``(1) for any failure described in paragraph (1), (5), or
(6) of subsection (a), $50,000 for each day that the failure
occurs; and
``(2) for any failure described in paragraph (2), (3), or
(4) of subsection (a), $20,000 for each day that the failure
occurs.'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in subparagraph (A), by inserting
``and'' after the semicolon at the end;
(ii) in subparagraph (B), by striking ``;
and'' and inserting a period; and
(iii) by striking subparagraph (C); and
(B) in paragraph (2), by inserting after the period
at the end the following: ``In determining the penalty
under subsection (a)(1), the Director shall give
consideration to the length of time the enterprise
should reasonably take to achieve the goal.'';
(3) in the first sentence of subsection (d)--
(A) by striking ``request the Attorney General of
the United States to'' and inserting ``, in the
discretion of the Director,''; and
(B) by inserting ``, or request that the Attorney
General of the United States bring such an action''
before the period at the end;
(4) by striking subsection (f); and
(5) by redesignating subsection (g) as subsection (f).
(d) Conforming Amendment.--The heading for subpart C of part 2 of
subtitle A of the Housing and Community Development Act of 1992 is
amended to read as follows:
``Subpart C--Enforcement''.
SEC. 130. CONFORMING AMENDMENTS.
Part 2 of subtitle A of title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking ``Secretary'' each place such term appears
in such part and inserting ``Director'';
(2) in the section heading for section 1323 (12 U.S.C.
4543), by inserting ``of enterprises'' before the period at the
end;
(3) in section 1326 (12 U.S.C. 4546)--
(A) in subsection (a)--
(i) by striking ``or'' the last place it
appears; and
(ii) by inserting ``, or section 10(j)(12)
of the Federal Home Loan Bank Act (12 U.S.C.
1441a)'' before the period at the end; and
(B) in subsection (b)--
(i) by striking ``or'' the last place it
appears and inserting a comma; and
(ii) by inserting ``, or section 10(j)(12)
of the Federal Home Loan Bank Act (12 U.S.C.
1441a'' before the period at the end;
(4) by striking section 1327 (12 U.S.C. 4547);
(5) by striking section 1328 (12 U.S.C. 4548);
(6) in section 1332 (12 U.S.C. 4562), by striking
subsection (d);
(7) in section 1333 (12 U.S.C. 4563), by striking
subsection (d);
(8) in section 1334 (12 U.S.C. 4564), by striking
subsection (d);
(9) by striking sections 1337 and 1338 (12 U.S.C. 4567,
4562 note);
(10) in sections 1345(c)(1)(A) and 1346(b) (12 U.S.C.
4585(c)(1)(A), 4586(b)), by striking ``Secretary's'' each place
such term appears and inserting ``Director's''; and
(11) by striking section 1349 (12 U.S.C. 4589).
Subtitle C--Prompt Corrective Action
SEC. 141. CAPITAL CLASSIFICATIONS.
(a) In General.--Section 1364 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4614) is amended--
(1) in the heading for subsection (a) by striking ``In
General'' and inserting ``Enterprises'';
(2) in subsection (c)--
(A) by striking ``subsection (b)'' and inserting
``subsection (c)'';
(B) by striking ``enterprises'' and inserting
``regulated entities''; and
(C) by striking the last sentence;
(3) by redesignating subsections (c) (as so amended by
paragraph (2) of this subsection) and (d) as subsections (d)
and (f), respectively;
(4) by striking subsection (b) and inserting the following
new subsections:
``(b) Federal Home Loan Banks.--
``(1) Establishment and criteria.--For purposes of this
subtitle, the Director shall, by regulation--
``(A) establish the capital classifications
specified under paragraph (2) for the Federal home loan
banks;
``(B) establish criteria for each such capital
classification based on the amount and types of capital
held by a bank and the risk-based, minimum, and
critical capital levels for the banks and taking due
consideration of the capital classifications
established under subsection (a) for the enterprises,
with such modifications as the Director determines to
be appropriate to reflect the difference in operations
between the banks and the enterprises; and
``(C) shall classify the Federal home loan banks
according to such capital classifications.
``(2) Classifications.--The capital classifications
specified under this paragraph are--
``(A) adequately capitalized;
``(B) undercapitalized;
``(C) significantly undercapitalized; and
``(D) critically undercapitalized.
``(c) Discretionary Classification.--
``(1) Grounds for reclassification.--The Director may
reclassify a regulated entity under paragraph (2) if--
``(A) at any time, the Director determines in
writing that the regulated entity is engaging in
conduct that could result in a rapid depletion of core
or total capital or, in the case of an enterprise, that
the value of the property subject to mortgages held or
securitized by the enterprise has decreased
significantly;
``(B) after notice and an opportunity for hearing,
the Director determines that the regulated entity is in
an unsafe or unsound condition; or
``(C) pursuant to section 1371(b), the Director
deems the regulated entity to be engaging in an unsafe
or unsound practice.
``(2) Reclassification.--In addition to any other action
authorized under this title, including the reclassification of
a regulated entity for any reason not specified in this
subsection, if the Director takes any action described in
paragraph (1) the Director may classify a regulated entity--
``(A) as undercapitalized, if the regulated entity
is otherwise classified as adequately capitalized;
``(B) as significantly undercapitalized, if the
regulated entity is otherwise classified as
undercapitalized; and
``(C) as critically undercapitalized, if the
regulated entity is otherwise classified as
significantly undercapitalized.''; and
(5) by inserting after subsection (d) (as so redesignated
by paragraph (3) of this subsection), the following new
subsection:
``(e) Restriction on Capital Distributions.--
``(1) In general.--A regulated entity shall make no capital
distribution if, after making the distribution, the regulated
entity would be undercapitalized.
``(2) Exception.--Notwithstanding paragraph (1), the
Director may permit a regulated entity, to the extent
appropriate or applicable, to repurchase, redeem, retire, or
otherwise acquire shares or ownership interests if the
repurchase, redemption, retirement, or other acquisition--
``(A) is made in connection with the issuance of
additional shares or obligations of the regulated
entity in at least an equivalent amount; and
``(B) will reduce the financial obligations of the
regulated entity or otherwise improve the financial
condition of the entity.''.
(b) Regulations.--Not later than the expiration of the 120-day
period beginning on the effective date under section 184, the Director
of the Federal Housing Finance Agency shall issue regulations to carry
out section 1364(b) of the Housing and Community Development Act of
1992 (as added by paragraph (4) of this subsection), relating to
capital classifications for the Federal home loan banks.
SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED REGULATED
ENTITIES.
Section 1365 of the Housing and Community Development Act of 1992
(12 U.S.C. 4615) is amended--
(1) in the section heading, by striking ``enterprises'' and
inserting ``entities'';
(2) in subsection (a)--
(A) by redesignating paragraphs (1) and (2) as
paragraphs (2) and (3), respectively;
(B) by inserting before paragraph (2) the following
paragraph:
``(1) Required monitoring.--The Director shall--
``(A) closely monitor the condition of any
regulated entity that is classified as
undercapitalized;
``(B) closely monitor compliance with the capital
restoration plan, restrictions, and requirements
imposed under this section; and
``(C) periodically review the plan, restrictions,
and requirements applicable to the undercapitalized
regulated entity to determine whether the plan,
restrictions, and requirements are achieving the
purpose of this section.''; and
(C) by inserting at the end the following new
paragraphs:
``(4) Restriction of asset growth.--A regulated entity that
is classified as undercapitalized shall not permit its average
total assets (as such term is defined in section 1316(b) during
any calendar quarter to exceed its average total assets during
the preceding calendar quarter unless--
``(A) the Director has accepted the capital
restoration plan of the regulated entity;
``(B) any increase in total assets is consistent
with the plan; and
``(C) the ratio of core or total capital to assets
for the regulated entity increases during the calendar
quarter at a rate sufficient to enable the entity to
become adequately capitalized within a reasonable time.
``(5) Prior approval of acquisitions, new programs, and new
business activities.--A regulated entity that is classified as
undercapitalized shall not, directly or indirectly, acquire any
interest in any entity or engage in any new program or new
business activity unless--
``(A) the Director has accepted the capital
restoration plan of the regulated entity, the entity is
implementing the plan, and the Director determines that
the proposed action is consistent with and will further
the achievement of the plan; or
``(B) the Director determines that the proposed
action will further the purpose of this section.'';
(3) in the subsection heading for subsection (b), by
striking ``From Undercapitalized to Significantly
Undercapitalized''; and
(4) by striking subsection (c) and inserting the following
new subsection:
``(c) Other Discretionary Safeguards.--The Director may take, with
respect to a regulated entity that is classified as undercapitalized,
any of the actions authorized to be taken under section 1366 with
respect to a regulated entity that is classified as significantly
undercapitalized, if the Director determines that such actions are
necessary to carry out the purpose of this subtitle.''.
SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED REGULATED ENTITIES.
Section 1366 of the Housing and Community Development Act of 1992
(12 U.S.C. 4616) is amended--
(1) in the section heading, by striking ``enterprises'' and
inserting ``entities'';
(2) in subsection (a)(2)(A), by striking ``enterprise'' the
last place such term appears;
(3) in subsection (b)--
(A) in the subsection heading, by striking
``Discretionary Supervisory Actions'' and inserting
``Specific Actions'';
(B) in the matter preceding paragraph (1), by
striking ``may, at any time, take any'' and inserting
``shall carry out this section by taking, at any time,
one or more'';
(C) by redesignating paragraphs (5) and (6) as
paragraphs (6) and (7), respectively;
(D) by inserting after paragraph (4) the following
new paragraph:
``(5) Improvement of management.--Take one or more of the
following actions:
``(A) New election of board.--Order a new election
for the board of directors of the regulated entity.
``(B) Dismissal of directors or executive
officers.--Require the regulated entity to dismiss from
office any director or executive officer who had held
office for more than 180 days immediately before the
entity became undercapitalized. Dismissal under this
subparagraph shall not be construed to be a removal
pursuant to the Director's enforcement powers provided
in section 1377.
``(C) Employ qualified executive officers.--Require
the regulated entity to employ qualified executive
officers (who, if the Director so specifies, shall be
subject to approval by the Director).''; and
(E) by inserting at the end the following new
paragraph:
``(8) Other action.--Require the regulated entity to take
any other action that the Director determines will better carry
out the purpose of this section than any of the actions
specified in this paragraph.'';
(4) by redesignating subsection (c) as subsection (d); and
(5) by inserting after subsection (b) the following new
subsection:
``(c) Restriction on Compensation of Executive Officers.--A
regulated entity that is classified as significantly undercapitalized
may not, without prior written approval by the Director--
``(1) pay any bonus to any executive officer; or
``(2) provide compensation to any executive officer at a
rate exceeding that officer's average rate of compensation
(excluding bonuses, stock options, and profit sharing) during
the 12 calendar months preceding the calendar month in which
the regulated entity became undercapitalized.''.
SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED REGULATED
ENTITIES.
(a) Enterprises.--Section 1367 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4617) is amended to read as follows:
``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED ENTERPRISES.
``(a) Appointment of Agency as Conservator or Receiver.--
``(1) In general.--Notwithstanding any other provision of
Federal law, the Director may establish a conservatorship or
receivership in the manner provided under paragraph (2).
``(2) Appointment.--The Agency may, at the discretion of
the Director, be appointed conservator or receiver for the
purpose of reorganizing, rehabilitating, or winding up the
affairs of an enterprise
``(3) Grounds for appointment.--The grounds for appointing
a conservator or receiver for any enterprise are as follows:
``(A) Assets insufficient for obligations.--The
assets of the enterprise are less than the obligations
of the enterprise to its creditors and others.
``(B) Substantial dissipation.--Substantial
dissipation of assets or earnings due to--
``(i) any violation of any provision of
Federal or State law; or
``(ii) any unsafe or unsound practice.
``(C) Unsafe or unsound condition.--An unsafe or
unsound condition to transact business.
``(D) Cease-and-desist orders.--Any willful
violation of a cease-and-desist order that has become
final.
``(E) Concealment.--Any concealment of the books,
papers, records, or assets of the enterprise, or any
refusal to submit the books, papers, records, or
affairs of the enterprise, for inspection to any
examiner or to any lawful agent of the Director.
``(F) Inability to meet obligations.--The
enterprise is likely to be unable to pay its
obligations or meet the demands of its creditors in the
normal course of business.
``(G) Losses.--The enterprise has incurred or is
likely to incur losses that will deplete all or
substantially all of its capital, and there is no
reasonable prospect for the enterprise to become
adequately capitalized (as defined in section
1364(a)(1)).
``(H) Violations of law.--Any violation of any law
or regulation, or any unsafe or unsound practice or
condition that is likely to--
``(i) cause insolvency or substantial
dissipation of assets or earnings; or
``(ii) weaken the condition of the
enterprise.
``(I) Consent.--The enterprise, by resolution of
its board of directors or its shareholders or members,
consents to the appointment.
``(J) Undercapitalization.--The enterprise is
undercapitalized or significantly undercapitalized (as
defined in section 1364(a)(3)), and--
``(i) has no reasonable prospect of
becoming adequately capitalized;
``(ii) fails to become adequately
capitalized, as required by--
``(I) section 1365(a)(1) with
respect to an undercapitalized
enterprise; or
``(II) section 1366(a)(1) with
respect to a significantly
undercapitalized enterprise;
``(iii) fails to submit a capital
restoration plan acceptable to the Agency
within the time prescribed under section 1369C;
or
``(iv) materially fails to implement a
capital restoration plan submitted and accepted
under section 1369C.
``(K) Critical undercapitalization.--The enterprise
is critically undercapitalized, as defined in section
1364(a)(4).
``(L) Money laundering.--The Attorney General
notifies the Director in writing that the enterprise
has been found guilty of a criminal offense under
section 1956 or 1957 of title 18, United States Code,
or section 5322 or 5324 of title 31, United States
Code.
``(4) Judicial review.--
``(A) In general.--If the Agency is appointed
conservator or receiver under this section, the
enterprise may, within 30 days of such appointment,
bring an action in the United States District Court for
the judicial district in which the home office of such
enterprise is located, or in the United States District
Court for the District of Columbia, for an order
requiring the Agency to remove itself as conservator or
receiver.
``(B) Review.--Upon the filing of an action under
subparagraph (A), the court shall, upon the merits,
dismiss such action or direct the Agency to remove
itself as such conservator or receiver.
``(5) Directors not liable for acquiescing in appointment
of conservator or receiver.--The members of the board of
directors of an enterprise shall not be liable to the
shareholders or creditors of the enterprise for acquiescing in
or consenting in good faith to the appointment of the Agency as
conservator or receiver for that enterprise.
``(6) Agency not subject to any other federal agency.--When
acting as conservator or receiver, the Agency shall not be
subject to the direction or supervision of any other agency of
the United States or any State in the exercise of the rights,
powers, and privileges of the Agency.
``(b) Powers and Duties of the Agency as Conservator or Receiver.--
``(1) Rulemaking authority of the agency.--The Agency may
prescribe such regulations as the Agency determines to be
appropriate regarding the conduct of conservatorships or
receiverships.
``(2) General powers.--
``(A) Successor to enterprise.--The Agency shall,
as conservator or receiver, and by operation of law,
immediately succeed to--
``(i) all rights, titles, powers, and
privileges of the enterprise, and of any
stockholder, officer, or director of such
enterprise with respect to the enterprise and
the assets of the enterprise; and
``(ii) title to the books, records, and
assets of any other legal custodian of such
enterprise.
``(B) Operate the enterprise.--The Agency may, as
conservator or receiver--
``(i) take over the assets of and operate
the enterprise with all the powers of the
shareholders, the directors, and the officers
of the enterprise and conduct all business of
the enterprise;
``(ii) collect all obligations and money
due the enterprise;
``(iii) perform all functions of the
enterprise in the name of the enterprise which
are consistent with the appointment as
conservator or receiver; and
``(iv) preserve and conserve the assets and
property of such enterprise.
``(C) Functions of officers, directors, and
shareholders of an enterprise.--The Agency may, by
regulation or order, provide for the exercise of any
function by any stockholder, director, or officer of
any enterprise for which the Agency has been named
conservator or receiver.
``(D) Powers as conservator.--The Agency may, as
conservator, take such action as may be--
``(i) necessary to put the enterprise in a
sound and solvent condition; and
``(ii) appropriate to carry on the business
of the enterprise and preserve and conserve the
assets and property of the enterprise.
``(E) Additional powers as receiver.--The Agency
may, as receiver, place the enterprise in liquidation
and proceed to realize upon the assets of the
enterprise, having due regard to the conditions of the
housing finance market.
``(F) Organization of new enterprises.--The Agency
may, as receiver, organize a successor enterprise that
will operate pursuant to subsection (i).
``(G) Transfer of assets and liabilities.--The
Agency may, as conservator or receiver, transfer any
asset or liability of the enterprise in default without
any approval, assignment, or consent with respect to
such transfer.
``(H) Payment of valid obligations.--The Agency, as
conservator or receiver, shall, to the extent of
proceeds realized from the performance of contracts or
sale of the assets of an enterprise, pay all valid
obligations of the enterprise in accordance with the
prescriptions and limitations of this section.
``(I) Subpoena authority.--
``(i) In general.--
``(I) In general.--The Agency may,
as conservator or receiver, and for
purposes of carrying out any power,
authority, or duty with respect to an
enterprise (including determining any
claim against the enterprise and
determining and realizing upon any
asset of any person in the course of
collecting money due the enterprise),
exercise any power established under
section 1348.
``(II) Applicability of law.--The
provisions of section 1348 shall apply
with respect to the exercise of any
power exercised under this subparagraph
in the same manner as such provisions
apply under that section.
``(ii) Authority of director.--A subpoena
or subpoena duces tecum may be issued under
clause (i) only by, or with the written
approval of, the Director, or the designee of
the Director.
``(iii) Rule of construction.--This
subsection shall not be construed to limit any
rights that the Agency, in any capacity, might
otherwise have under section 1317 or 1379B.
``(J) Incidental powers.--The Agency may, as
conservator or receiver--
``(i) exercise all powers and authorities
specifically granted to conservators or
receivers, respectively, under this section,
and such incidental powers as shall be
necessary to carry out such powers; and
``(ii) take any action authorized by this
section, which the Agency determines is in the
best interests of the enterprise or the Agency.
``(3) Authority of receiver to determine claims.--
``(A) In general.--The Agency may, as receiver,
determine claims in accordance with the requirements of
this subsection and any regulations prescribed under
paragraph (4).
``(B) Notice requirements.--The receiver, in any
case involving the liquidation or winding up of the
affairs of a closed enterprise, shall--
``(i) promptly publish a notice to the
creditors of the enterprise to present their
claims, together with proof, to the receiver by
a date specified in the notice which shall be
not less than 90 days after the publication of
such notice; and
``(ii) republish such notice approximately
1 month and 2 months, respectively, after the
publication under clause (i).
``(C) Mailing required.--The receiver shall mail a
notice similar to the notice published under
subparagraph (B)(i) at the time of such publication to
any creditor shown on the books of the enterprise--
``(i) at the last address of the creditor
appearing in such books; or
``(ii) upon discovery of the name and
address of a claimant not appearing on the
books of the enterprise within 30 days after
the discovery of such name and address.
``(4) Rulemaking authority relating to determination of
claims.--Subject to subsection (c), the Director may prescribe
regulations regarding the allowance or disallowance of claims
by the receiver and providing for administrative determination
of claims and review of such determination.
``(5) Procedures for determination of claims.--
``(A) Determination period.--
``(i) In general.--Before the end of the
180-day period beginning on the date on which
any claim against an enterprise is filed with
the Agency as receiver, the Agency shall
determine whether to allow or disallow the
claim and shall notify the claimant of any
determination with respect to such claim.
``(ii) Extension of time.--The period
described in clause (i) may be extended by a
written agreement between the claimant and the
Agency.
``(iii) Mailing of notice sufficient.--The
requirements of clause (i) shall be deemed to
be satisfied if the notice of any determination
with respect to any claim is mailed to the last
address of the claimant which appears--
``(I) on the books of the
enterprise;
``(II) in the claim filed by the
claimant; or
``(III) in documents submitted in
proof of the claim.
``(iv) Contents of notice of
disallowance.--If any claim filed under clause
(i) is disallowed, the notice to the claimant
shall contain--
``(I) a statement of each reason
for the disallowance; and
``(II) the procedures available for
obtaining agency review of the
determination to disallow the claim or
judicial determination of the claim.
``(B) Allowance of proven claim.--The receiver
shall allow any claim received on or before the date
specified in the notice published under paragraph
(3)(B)(i) by the receiver from any claimant which is
proved to the satisfaction of the receiver.
``(C) Disallowance of claims filed after end of
filing period.--Claims filed after the date specified
in the notice published under paragraph (3)(B)(i), or
the date specified under paragraph (3)(C), shall be
disallowed and such disallowance shall be final.
``(D) Authority to disallow claims.--
``(i) In general.--The receiver may
disallow any portion of any claim by a creditor
or claim of security, preference, or priority
which is not proved to the satisfaction of the
receiver.
``(ii) Payments to less than fully secured
creditors.--In the case of a claim of a
creditor against an enterprise which is secured
by any property or other asset of such
enterprise, the receiver--
``(I) may treat the portion of such
claim which exceeds an amount equal to
the fair market value of such property
or other asset as an unsecured claim
against the enterprise; and
``(II) may not make any payment
with respect to such unsecured portion
of the claim other than in connection
with the disposition of all claims of
unsecured creditors of the enterprise.
``(iii) Exceptions.--No provision of this
paragraph shall apply with respect to--
``(I) any extension of credit from
any Federal Reserve Bank or the United
States Treasury; or
``(II) any security interest in the
assets of the enterprise securing any
such extension of credit.
``(E) No judicial review of determination pursuant
to subparagraph (d).--No court may review the
determination of the Agency under subparagraph (D) to
disallow a claim.
``(F) Legal effect of filing.--
``(i) Statute of limitation tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
``(ii) No prejudice to other actions.--
Subject to paragraph (10), the filing of a
claim with the receiver shall not prejudice any
right of the claimant to continue any action
which was filed before the date of the
appointment of the receiver, subject to the
determination of claims by the receiver.
``(6) Provision for judicial determination of claims.--
``(A) In general.--The claimant may file suit on a
claim (or continue an action commenced before the
appointment of the receiver) in the district or
territorial court of the United States for the district
within which the principal place of business of the
enterprise is located or the United States District
Court for the District of Columbia (and such court
shall have jurisdiction to hear such claim), before the
end of the 60-day period beginning on the earlier of--
``(i) the end of the period described in
paragraph (5)(A)(i) with respect to any claim
against an enterprise for which the Agency is
receiver; or
``(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (5)(A)(i).
``(B) Statute of limitations.--A claim shall be
deemed to be disallowed (other than any portion of such
claim which was allowed by the receiver), and such
disallowance shall be final, and the claimant shall
have no further rights or remedies with respect to such
claim, if the claimant fails, before the end of the 60-
day period described under subparagraph (A), to file
suit on such claim (or continue an action commenced
before the appointment of the receiver).
``(7) Review of claims.--
``(A) Other review procedures.--
``(i) In general.--The Agency shall
establish such alternative dispute resolution
processes as may be appropriate for the
resolution of claims filed under paragraph
(5)(A)(i).
``(ii) Criteria.--In establishing
alternative dispute resolution processes, the
Agency shall strive for procedures which are
expeditious, fair, independent, and low cost.
``(iii) Voluntary binding or nonbinding
procedures.--The Agency may establish both
binding and nonbinding processes, which may be
conducted by any government or private party.
All parties, including the claimant and the
Agency, must agree to the use of the process in
a particular case.
``(B) Consideration of incentives.--The Agency
shall seek to develop incentives for claimants to
participate in the alternative dispute resolution
process.
``(8) Expedited determination of claims.--
``(A) Establishment required.--The Agency shall
establish a procedure for expedited relief outside of
the routine claims process established under paragraph
(5) for claimants who--
``(i) allege the existence of legally valid
and enforceable or perfected security interests
in assets of any enterprise for which the
Agency has been appointed receiver; and
``(ii) allege that irreparable injury will
occur if the routine claims procedure is
followed.
``(B) Determination period.--Before the end of the
90-day period beginning on the date any claim is filed
in accordance with the procedures established under
subparagraph (A), the Director shall--
``(i) determine--
``(I) whether to allow or disallow
such claim; or
``(II) whether such claim should be
determined pursuant to the procedures
established under paragraph (5); and
``(ii) notify the claimant of the
determination, and if the claim is disallowed,
provide a statement of each reason for the
disallowance and the procedure for obtaining
agency review or judicial determination.
``(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited relief shall
be permitted to file a suit, or to continue a suit
filed before the appointment of the receiver, seeking a
determination of the rights of the claimant with
respect to such security interest after the earlier
of--
``(i) the end of the 90-day period
beginning on the date of the filing of a
request for expedited relief; or
``(ii) the date the Agency denies the
claim.
``(D) Statute of limitations.--If an action
described under subparagraph (C) is not filed, or the
motion to renew a previously filed suit is not made,
before the end of the 30-day period beginning on the
date on which such action or motion may be filed under
subparagraph (B), the claim shall be deemed to be
disallowed as of the end of such period (other than any
portion of such claim which was allowed by the
receiver), such disallowance shall be final, and the
claimant shall have no further rights or remedies with
respect to such claim.
``(E) Legal effect of filing.--
``(i) Statute of limitation tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
``(ii) No prejudice to other actions.--
Subject to paragraph (10), the filing of a
claim with the receiver shall not prejudice any
right of the claimant to continue any action
that was filed before the appointment of the
receiver, subject to the determination of
claims by the receiver.
``(9) Payment of claims.--
``(A) In general.--The receiver may, in the
discretion of the receiver, and to the extent funds are
available from the assets of the enterprise, pay
creditor claims, in such manner and amounts as are
authorized under this section, which are--
``(i) allowed by the receiver;
``(ii) approved by the Agency pursuant to a
final determination pursuant to paragraph (7)
or (8); or
``(iii) determined by the final judgment of
any court of competent jurisdiction.
``(B) Agreements against the interest of the
agency.--No agreement that tends to diminish or defeat
the interest of the Agency in any asset acquired by the
Agency as receiver under this section shall be valid
against the Agency unless such agreement is in writing.
``(C) Payment of dividends on claims.--The receiver
may, in the sole discretion of the receiver, pay from
the assets of the enterprise dividends on proved claims
at any time, and no liability shall attach to the
Agency, by reason of any such payment, for failure to
pay dividends to a claimant whose claim is not proved
at the time of any such payment.
``(D) Rulemaking authority of the director.--The
Director may prescribe such rules, including
definitions of terms, as the Director deems appropriate
to establish a single uniform interest rate for, or to
make payments of post-insolvency interest to creditors
holding proven claims against the receivership estates
of enterprises following satisfaction by the receiver
of the principal amount of all creditor claims.
``(10) Suspension of legal actions.--
``(A) In general.--After the appointment of a
conservator or receiver for an enterprise, the
conservator or receiver may, in any judicial action or
proceeding to which such enterprise is or becomes a
party, request a stay for a period not to exceed--
``(i) 45 days, in the case of any
conservator; and
``(ii) 90 days, in the case of any
receiver.
``(B) Grant of stay by all courts required.--Upon
receipt of a request by any conservator or receiver
under subparagraph (A) for a stay of any judicial
action or proceeding in any court with jurisdiction of
such action or proceeding, the court shall grant such
stay as to all parties.
``(11) Additional rights and duties.--
``(A) Prior final adjudication.--The Agency shall
abide by any final unappealable judgment of any court
of competent jurisdiction which was rendered before the
appointment of the Agency as conservator or receiver.
``(B) Rights and remedies of conservator or
receiver.--In the event of any appealable judgment, the
Agency as conservator or receiver shall--
``(i) have all the rights and remedies
available to the enterprise (before the
appointment of such conservator or receiver)
and the Agency, including removal to Federal
court and all appellate rights; and
``(ii) not be required to post any bond in
order to pursue such remedies.
``(C) No attachment or execution.--No attachment or
execution may issue by any court upon assets in the
possession of the receiver.
``(D) Limitation on judicial review.--Except as
otherwise provided in this subsection, no court shall
have jurisdiction over--
``(i) any claim or action for payment from,
or any action seeking a determination of rights
with respect to, the assets of any enterprise
for which the Agency has been appointed
receiver; or
``(ii) any claim relating to any act or
omission of such enterprise or the Agency as
receiver.
``(E) Disposition of assets.--In exercising any
right, power, privilege, or authority as conservator or
receiver in connection with any sale or disposition of
assets of an enterprise for which the Agency has been
appointed conservator or receiver, the Agency shall
conduct its operations in a manner which--
``(i) maximizes the net present value
return from the sale or disposition of such
assets;
``(ii) minimizes the amount of any loss
realized in the resolution of cases; and
``(iii) ensures adequate competition and
fair and consistent treatment of offerors.
``(12) Statute of limitations for actions brought by
conservator or receiver.--
``(A) In general.--Notwithstanding any provision of
any contract, the applicable statute of limitations
with regard to any action brought by the Agency as
conservator or receiver shall be--
``(i) in the case of any contract claim,
the longer of--
``(I) the 6-year period beginning
on the date the claim accrues; or
``(II) the period applicable under
State law; and
``(ii) in the case of any tort claim, the
longer of--
``(I) the 3-year period beginning
on the date the claim accrues; or
``(II) the period applicable under
State law.
``(B) Determination of the date on which a claim
accrues.--For purposes of subparagraph (A), the date on
which the statute of limitations begins to run on any
claim described in such subparagraph shall be the later
of--
``(i) the date of the appointment of the
Agency as conservator or receiver; or
``(ii) the date on which the cause of
action accrues.
``(13) Revival of expired state causes of action.--
``(A) In general.--In the case of any tort claim
described under subparagraph (B) for which the statute
of limitations applicable under State law with respect
to such claim has expired not more than 5 years before
the appointment of the Agency as conservator or
receiver, the Agency may bring an action as conservator
or receiver on such claim without regard to the
expiration of the statute of limitation applicable
under State law.
``(B) Claims described.--A tort claim referred to
under subparagraph (A) is a claim arising from fraud,
intentional misconduct resulting in unjust enrichment,
or intentional misconduct resulting in substantial loss
to the enterprise.
``(14) Accounting and recordkeeping requirements.--
``(A) In general.--The Agency as conservator or
receiver shall, consistent with the accounting and
reporting practices and procedures established by the
Agency, maintain a full accounting of each
conservatorship and receivership or other disposition
of an enterprise in default.
``(B) Annual accounting or report.--With respect to
each conservatorship or receivership, the Agency shall
make an annual accounting or report available to the
Board, the Comptroller General of the United States,
the Committee on Banking, Housing, and Urban Affairs of
the Senate, and the Committee on Financial Services of
the House of Representatives.
``(C) Availability of reports.--Any report prepared
under subparagraph (B) shall be made available by the
Agency upon request to any shareholder of an enterprise
or any member of the public.
``(D) Recordkeeping requirement.--After the end of
the 6-year period beginning on the date that the
conservatorship or receivership is terminated by the
Director, the Agency may destroy any records of such
enterprise which the Agency, in the discretion of the
Agency, determines to be unnecessary unless directed
not to do so by a court of competent jurisdiction or
governmental agency, or prohibited by law.
``(15) Fraudulent transfers.--
``(A) In general.--The Agency, as conservator or
receiver, may avoid a transfer of any interest of an
enterprise-affiliated party, or any person who the
conservator or receiver determines is a debtor of the
enterprise, in property, or any obligation incurred by
such party or person, that was made within 5 years of
the date on which the Agency was appointed conservator
or receiver, if such party or person voluntarily or
involuntarily made such transfer or incurred such
liability with the intent to hinder, delay, or defraud
the enterprise, the Agency, the conservator, or
receiver.
``(B) Right of recovery.--To the extent a transfer
is avoided under subparagraph (A), the conservator or
receiver may recover, for the benefit of the
enterprise, the property transferred, or, if a court so
orders, the value of such property (at the time of such
transfer) from--
``(i) the initial transferee of such
transfer or the enterprise-affiliated party or
person for whose benefit such transfer was
made; or
``(ii) any immediate or mediate transferee
of any such initial transferee.
``(C) Rights of transferee or obligee.--The
conservator or receiver may not recover under
subparagraph (B) from--
``(i) any transferee that takes for value,
including satisfaction or securing of a present
or antecedent debt, in good faith; or
``(ii) any immediate or mediate good faith
transferee of such transferee.
``(D) Rights under this paragraph.--The rights
under this paragraph of the conservator or receiver
described under subparagraph (A) shall be superior to
any rights of a trustee or any other party (other than
any party which is a Federal agency) under title 11,
United States Code.
``(16) Attachment of assets and other injunctive relief.--
Subject to paragraph (17), any court of competent jurisdiction
may, at the request of the conservator or receiver, issue an
order in accordance with Rule 65 of the Federal Rules of Civil
Procedure, including an order placing the assets of any person
designated by the Agency or such conservator under the control
of the court, and appointing a trustee to hold such assets.
``(17) Standards of proof.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any proceeding
under paragraph (16) without regard to the requirement of such
rule that the applicant show that the injury, loss, or damage
is irreparable and immediate.
``(18) Treatment of claims arising from breach of contracts
executed by the receiver or conservator.--
``(A) In general.--Notwithstanding any other
provision of this subsection, any final and
unappealable judgment for monetary damages entered
against a receiver or conservator for the breach of an
agreement executed or approved in writing by such
receiver or conservator after the date of its
appointment, shall be paid as an administrative expense
of the receiver or conservator.
``(B) No limitation of power.--Nothing in this
paragraph shall be construed to limit the power of a
receiver or conservator to exercise any rights under
contract or law, including to terminate, breach,
cancel, or otherwise discontinue such agreement.
``(19) General exceptions.--
``(A) Limitations.--The rights of a conservator or
receiver appointed under this section shall be subject
to the limitations on the powers of a receiver under
sections 402 through 407 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4402 through 4407).
``(B) Mortgages held in trust.--
``(i) In general.--Any mortgage, pool of
mortgages, or interest in a pool of mortgages,
held in trust, custodial, or agency capacity by
an enterprise for the benefit of persons other
than the enterprise shall not be available to
satisfy the claims of creditors generally.
``(ii) Holding of mortgages.--Any mortgage,
pool of mortgages, or interest in a pool of
mortgages, described under clause (i) shall be
held by the conservator or receiver appointed
under this section for the beneficial owners of
such mortgage, pool of mortgages, or interest
in a pool of mortgages in accordance with the
terms of the agreement creating such trust,
custodial, or other agency arrangement.
``(iii) Liability of receiver.--The
liability of a receiver appointed under this
section for damages shall, in the case of any
contingent or unliquidated claim relating to
the mortgages held in trust, be estimated in
accordance set forth in the regulations of the
Director.
``(c) Priority of Expenses and Unsecured Claims.--
``(1) In general.--Unsecured claims against an enterprise,
or a receiver, that are proven to the satisfaction of the
receiver shall have priority in the following order:
``(A) Administrative expenses of the receiver.
``(B) Any other general or senior liability of the
enterprise (which is not a liability described under
subparagraph (C) or (D).
``(C) Any obligation subordinated to general
creditors (which is not an obligation described under
subparagraph (D)).
``(D) Any obligation to shareholders or members
arising as a result of their status as shareholder or
members.
``(2) Creditors similarly situated.--All creditors that are
similarly situated under paragraph (1) shall be treated in a
similar manner.
``(3) Definition.--The term `administrative expenses of the
receiver' shall include the actual, necessary costs and
expenses incurred by the receiver in preserving the assets of a
failed enterprise or liquidating or otherwise resolving the
affairs of the failed enterprise. Such expenses shall include
obligations that are incurred by the receiver after appointment
as receiver that the Director determines are necessary and
appropriate to facilitate the smooth and orderly liquidation or
other resolution of the enterprise.
``(d) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
``(1) Authority to repudiate contracts.--In addition to any
other rights a conservator or receiver may have, the
conservator or receiver for any enterprise may disaffirm or
repudiate any contract or lease--
``(A) to which such enterprise is a party;
``(B) the performance of which the conservator or
receiver, in its sole discretion, determines to be
burdensome; and
``(C) the disaffirmance or repudiation of which the
conservator or receiver determines, in its sole
discretion, will promote the orderly administration of
the affairs of the enterprise.
``(2) Timing of repudiation.--The conservator or receiver
shall determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable period
following such appointment.
``(3) Claims for damages for repudiation.--
``(A) In general.--Except as otherwise provided
under subparagraph (C) and paragraphs (4), (5), and
(6), the liability of the conservator or receiver for
the disaffirmance or repudiation of any contract
pursuant to paragraph (1) shall be--
``(i) limited to actual direct compensatory
damages; and
``(ii) determined as of--
``(I) the date of the appointment
of the conservator or receiver; or
``(II) in the case of any contract
or agreement referred to in paragraph
(8), the date of the disaffirmance or
repudiation of such contract or
agreement.
``(B) No liability for other damages.--For purposes
of subparagraph (A), the term `actual direct
compensatory damages' shall not include--
``(i) punitive or exemplary damages;
``(ii) damages for lost profits or
opportunity; or
``(iii) damages for pain and suffering.
``(C) Measure of damages for repudiation of
financial contracts.--In the case of any qualified
financial contract or agreement to which paragraph (8)
applies, compensatory damages shall be--
``(i) deemed to include normal and
reasonable costs of cover or other reasonable
measures of damages utilized in the industries
for such contract and agreement claims; and
``(ii) paid in accordance with this
subsection and subsection (e), except as
otherwise specifically provided in this
section.
``(4) Leases under which the enterprise is the lessee.--
``(A) In general.--If the conservator or receiver
disaffirms or repudiates a lease under which the
enterprise was the lessee, the conservator or receiver
shall not be liable for any damages (other than damages
determined under subparagraph (B)) for the
disaffirmance or repudiation of such lease.
``(B) Payments of rent.--Notwithstanding
subparagraph (A), the lessor under a lease to which
that subparagraph applies shall--
``(i) be entitled to the contractual rent
accruing before the later of the date--
``(I) the notice of disaffirmance
or repudiation is mailed; or
``(II) the disaffirmance or
repudiation becomes effective, unless
the lessor is in default or breach of
the terms of the lease;
``(ii) have no claim for damages under any
acceleration clause or other penalty provision
in the lease; and
``(iii) have a claim for any unpaid rent,
subject to all appropriate offsets and
defenses, due as of the date of the
appointment, which shall be paid in accordance
with this subsection and subsection (e).
``(5) Leases under which the enterprise is the lessor.--
``(A) In general.--If the conservator or receiver
repudiates an unexpired written lease of real property
of the enterprise under which the enterprise is the
lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease
may either--
``(i) treat the lease as terminated by such
repudiation; or
``(ii) remain in possession of the
leasehold interest for the balance of the term
of the lease, unless the lessee defaults under
the terms of the lease after the date of such
repudiation.
``(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described
under subparagraph (A) remains in possession of a
leasehold interest under clause (ii) of such
subparagraph--
``(i) the lessee--
``(I) shall continue to pay the
contractual rent pursuant to the terms
of the lease after the date of the
repudiation of such lease; and
``(II) may offset against any rent
payment which accrues after the date of
the repudiation of the lease, and any
damages which accrue after such date
due to the nonperformance of any
obligation of the enterprise under the
lease after such date; and
``(ii) the conservator or receiver shall
not be liable to the lessee for any damages
arising after such date as a result of the
repudiation other than the amount of any offset
allowed under clause (i)(II).
``(6) Contracts for the sale of real property.--
``(A) In general.--If the conservator or receiver
repudiates any contract for the sale of real property
and the purchaser of such real property under such
contract is in possession, and is not, as of the date
of such repudiation, in default, such purchaser may
either--
``(i) treat the contract as terminated by
such repudiation; or
``(ii) remain in possession of such real
property.
``(B) Provisions applicable to purchaser remaining
in possession.--If any purchaser of real property under
any contract described under subparagraph (A) remains
in possession of such property under clause (ii) of
such subparagraph--
``(i) the purchaser--
``(I) shall continue to make all
payments due under the contract after
the date of the repudiation of the
contract; and
``(II) may offset against any such
payments any damages which accrue after
such date due to the nonperformance
(after such date) of any obligation of
the enterprise under the contract; and
``(ii) the conservator or receiver shall--
``(I) not be liable to the
purchaser for any damages arising after
such date as a result of the
repudiation other than the amount of
any offset allowed under clause
(i)(II);
``(II) deliver title to the
purchaser in accordance with the
provisions of the contract; and
``(III) have no obligation under
the contract other than the performance
required under subclause (II).
``(C) Assignment and sale allowed.--
``(i) In general.--No provision of this
paragraph shall be construed as limiting the
right of the conservator or receiver to assign
the contract described under subparagraph (A),
and sell the property subject to the contract
and the provisions of this paragraph.
``(ii) No liability after assignment and
sale.--If an assignment and sale described
under clause (i) is consummated, the
conservator or receiver shall have no further
liability under the contract described under
subparagraph (A), or with respect to the real
property which was the subject of such
contract.
``(7) Provisions applicable to service contracts.--
``(A) Services performed before appointment.--In
the case of any contract for services between any
person and any enterprise for which the Agency has been
appointed conservator or receiver, any claim of such
person for services performed before the appointment of
the conservator or the receiver shall be--
``(i) a claim to be paid in accordance with
subsections (b) and (e); and
``(ii) deemed to have arisen as of the date
the conservator or receiver was appointed.
``(B) Services performed after appointment and
prior to repudiation.--If, in the case of any contract
for services described under subparagraph (A), the
conservator or receiver accepts performance by the
other person before the conservator or receiver makes
any determination to exercise the right of repudiation
of such contract under this section--
``(i) the other party shall be paid under
the terms of the contract for the services
performed; and
``(ii) the amount of such payment shall be
treated as an administrative expense of the
conservatorship or receivership.
``(C) Acceptance of performance no bar to
subsequent repudiation.--The acceptance by any
conservator or receiver of services referred to under
subparagraph (B) in connection with a contract
described in such subparagraph shall not affect the
right of the conservator or receiver to repudiate such
contract under this section at any time after such
performance.
``(8) Certain qualified financial contracts.--
``(A) Rights of parties to contracts.--Subject to
paragraph (10) and notwithstanding any other provision
of this Act, any other Federal law, or the law of any
State, no person shall be stayed or prohibited from
exercising--
``(i) any right to cause the termination or
liquidation of any qualified financial contract
with an enterprise that arises upon the
appointment of the Agency as receiver for such
enterprise at any time after such appointment;
``(ii) any right under any security
arrangement relating to any contract or
agreement described in clause (i); or
``(iii) any right to offset or net out any
termination value, payment amount, or other
transfer obligation arising under or in
connection with 1 or more contracts and
agreements described in clause (i), including
any master agreement for such contracts or
agreements.
``(B) Applicability of other provisions.--
Paragraphs (10) and (12) of subsection (b) shall apply
in the case of any judicial action or proceeding
brought against any receiver referred to under
subparagraph (A), or the enterprise for which such
receiver was appointed, by any party to a contract or
agreement described under subparagraph (A)(i) with such
enterprise.
``(C) Certain transfers not avoidable.--
``(i) In general.--Notwithstanding
paragraph (11), the Agency, whether acting as
such or as conservator or receiver of an
enterprise, may not avoid any transfer of money
or other property in connection with any
qualified financial contract with an
enterprise.
``(ii) Exception for certain transfers.--
Clause (i) shall not apply to any transfer of
money or other property in connection with any
qualified financial contract with an enterprise
if the Agency determines that the transferee
had actual intent to hinder, delay, or defraud
such enterprise, the creditors of such
enterprise, or any conservator or receiver
appointed for such enterprise.
``(D) Certain contracts and agreements defined.--In
this subsection:
``(i) Qualified financial contract.--The
term `qualified financial contract' means any
securities contract, commodity contract,
forward contract, repurchase agreement, swap
agreement, and any similar agreement that the
Agency determines by regulation to be a
qualified financial contract for purposes of
this paragraph.
``(ii) Securities contract.--The term
`securities contract' has the meaning given to
such term under section 741 of title 11, United
States Code, except that the term `security'
(as used in such section) shall be deemed to
include any mortgage loan, any mortgage-related
security (as defined in section 3(a)(41) of the
Securities Exchange Act of 1934), and any
interest in any mortgage loan or mortgage-
related security, and does not include any
participation in a commercial mortgage loan.
``(iii) Commodity contract.--The term
`commodity contract' has the meaning given to
such term in section 761 of title 11, United
States Code.
``(iv) Forward contract.--The term `forward
contract' has the meaning given to such term in
section 101 of title 11, United States Code.
``(v) Repurchase agreement.--The term
`repurchase agreement' has the meaning given to
such term in section 101 of title 11, the
United States Code, except that the items (as
described in such section) which may be subject
to any such agreement shall be deemed to
include mortgage-related securities (as such
term is defined in section 3(a)(41) of the
Securities Exchange Act of 1934), any mortgage
loan, and any interest in any mortgage loan and
does not include any participation in a
commercial mortgage loan unless the Agency
determines by regulation, resolution, or order
to include any such participation within the
meaning of such term.
``(vi) Swap agreement.--The term `swap
agreement'--
``(I) means any agreement,
including the terms and conditions
incorporated by reference in any such
agreement, which is a rate swap
agreement, basis swap, commodity swap,
forward rate agreement, interest rate
future, interest rate option purchased,
forward foreign exchange agreement,
rate cap agreement, rate floor
agreement, rate collar agreement,
currency swap agreement, cross-currency
rate swap agreement, currency future,
or currency option purchased or any
other similar agreement; and
``(II) includes any combination of
such agreements and any option to enter
into any such agreement.
``(vii) Treatment of master agreement as 1
qualified financial contract.--Any master
agreement for any agreements described under
this subparagraph, together with all
supplements to such master agreement, shall be
treated as 1 qualified financial contract.
``(viii) Transfer.--The term `transfer' has
the meaning given to such term in section 101
of title 11, United States Code.
``(E) Certain protections in event of appointment
of conservator.--Notwithstanding any other provision of
this Act (other than paragraph (12) of this
subsection), any other Federal law, or the law of any
State, no person shall be stayed or prohibited from
exercising--
``(i) any right such person has to cause
the termination, liquidation, or acceleration
of any qualified financial contract with an
enterprise in a conservatorship based upon a
default under such financial contract which is
enforceable under applicable noninsolvency law;
``(ii) any right under any security
arrangement relating to such qualified
financial contracts; or
``(iii) any right to offset or net out any
termination values, payment amounts, or other
transfer obligations arising under or in
connection with such qualified financial
contracts.
``(9) Transfer of qualified financial contracts.--In making
any transfer of assets or liabilities of an enterprise in
default which includes any qualified financial contract, the
conservator or receiver for such enterprise shall either--
``(A) transfer to 1 person--
``(i) all qualified financial contracts
between--
``(I) any person (or any affiliate
of such person); and
``(II) the enterprise in default;
``(ii) all claims of such person (or any
affiliate of such person) against such
enterprise under any such contract (other than
any claim which, under the terms of any such
contract, is subordinated to the claims of
general unsecured creditors of such
enterprise);
``(iii) all claims of such enterprise
against such person (or any affiliate of such
person) under any such contract; and
``(iv) all property securing any claim
described in clause (ii) or (iii) under any
such contract; or
``(B) transfer none of the financial contracts,
claims, or property referred to under subparagraph (A)
(with respect to such person and any affiliate of such
person).
``(10) Notification of transfer.--
``(A) In general.--If--
``(i) the conservator or receiver for an
enterprise in default makes any transfer of the
assets and liabilities of such enterprise, and
``(ii) the transfer includes any qualified
financial contract,
the conservator or receiver shall use best efforts to
notify any person who is a party to any such contract
of such transfer by 12 p.m. (noon) (Eastern Standard
Time) on the business day following such transfer.
``(B) Business day defined.--For purposes of this
paragraph, the term `business day' means any day other
than any Saturday, Sunday, or any day on which either
the New York Stock Exchange or the Federal Reserve Bank
of New York is closed.
``(11) Certain security interests not avoidable.--No
provision of this subsection shall be construed as permitting
the avoidance of any legally enforceable or perfected security
interest in any of the assets of any enterprise, except where
such an interest is taken in contemplation of the insolvency of
the enterprise, or with the intent to hinder, delay, or defraud
the enterprise or the creditors of such enterprise.
``(12) Authority to enforce contracts.--
``(A) In general.--Notwithstanding any provision of
a contract providing for termination, default,
acceleration, or exercise of rights upon, or solely by
reason of, insolvency or the appointment of a
conservator or receiver, the conservator or receiver
may enforce any contract, other than a contract for
director's or officer's liability or an enterprise
bond, entered into by the enterprise.
``(B) Certain rights not affected.--No provision of
this paragraph may be construed as impairing or
affecting any right of the conservator or receiver to
enforce or recover under a director's or officer's
liability insurance contract or enterprise bond under
other applicable law.
``(C) Consent requirement.--
``(i) In general.--Except as otherwise
provided under this section, no person may
exercise any right or power to terminate,
accelerate, or declare a default under any
contract to which an enterprise is a party, or
to obtain possession of or exercise control
over any property of the enterprise, or affect
any contractual rights of the enterprise,
without the consent of the conservator or
receiver, as appropriate, for a period of--
``(I) 45 days after the date of
appointment of a conservator; or
``(II) 90 days after the date of
appointment of a receiver.
``(ii) Exceptions.--This subparagraph
shall--
``(I) not apply to a director's or
officer's liability insurance contract;
``(II) not apply to the rights of
parties to certain qualified financial
contracts under subsection (d)(8); and
``(III) not be construed as
permitting the conservator or receiver
to fail to comply with otherwise
enforceable provisions of such
contracts.
``(e) Valuation of Claims in Default.--
``(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method which the Agency determines to utilize with respect to
an enterprise in default or in danger of default, including
transactions authorized under subsection (i), this subsection
shall govern the rights of the creditors of such enterprise.
``(2) Maximum liability.--The maximum liability of the
Agency, acting as receiver or in any other capacity, to any
person having a claim against the receiver or the enterprise
for which such receiver is appointed shall equal the lesser
of--
``(A) the amount such claimant would have received
if the Agency had liquidated the assets and liabilities
of such enterprise without exercising the authority of
the Agency under subsection (i) of this section; or
``(B) the amount of proceeds realized from the
performance of contracts or sale of the assets of the
enterprise.
``(f) Limitation on Court Action.--Except as provided in this
section or at the request of the Director, no court may take any action
to restrain or affect the exercise of powers or functions of the Agency
as a conservator or a receiver.
``(g) Liability of Directors and Officers.--
``(1) In general.--A director or officer of an enterprise
may be held personally liable for monetary damages in any civil
action by, on behalf of, or at the request or direction of the
Agency, which action is prosecuted wholly or partially for the
benefit of the Agency--
``(A) acting as conservator or receiver of such
enterprise, or
``(B) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by such receiver or conservator,
for gross negligence, including any similar conduct or conduct
that demonstrates a greater disregard of a duty of care (than
gross negligence) including intentional tortious conduct, as
such terms are defined and determined under applicable State
law.
``(2) No limitation.--Nothing in this paragraph shall
impair or affect any right of the Agency under other applicable
law.
``(h) Damages.--In any proceeding related to any claim against a
director, officer, employee, agent, attorney, accountant, appraiser, or
any other party employed by or providing services to an enterprise,
recoverable damages determined to result from the improvident or
otherwise improper use or investment of any assets of the enterprise
shall include principal losses and appropriate interest.
``(i) Limited-Life Enterprise.--
``(1) Organization.--
``(A) Purpose.--If an enterprise is in default, or
if the Agency anticipates that an enterprise will
default, the Agency may organize a limited-life
enterprise with those powers and attributes of the
enterprise in default or in danger of default that the
Director determines necessary, subject to the
provisions of this subsection. The Director shall grant
a temporary charter to the limited-life enterprise, and
the limited-life enterprise shall operate subject to
that charter.
``(B) Authorities.--Upon the creation of a limited-
life enterprise under subparagraph (A), the limited-
life enterprise may--
``(i) assume such liabilities of the
enterprise that is in default or in danger of
default as the Agency may, in its discretion,
determine to be appropriate, provided that the
liabilities assumed shall not exceed the amount
of assets of the limited-life enterprise;
``(ii) purchase such assets of the
enterprise that is in default, or in danger of
default, as the Agency may, in its discretion,
determine to be appropriate; and
``(iii) perform any other temporary
function which the Agency may, in its
discretion, prescribe in accordance with this
section.
``(2) Charter.--
``(A) Conditions.--The Agency may grant a temporary
charter if the Agency determines that the continued
operation of the enterprise in default or in danger of
default is in the best interest of the national economy
and the housing markets.
``(B) Limited-life enterprise treated as being in
default for certain purposes.--A limited-life
enterprise shall be treated as an enterprise in default
at such times and for such purposes as the Agency may,
in its discretion, determine.
``(C) Management.--A limited-life enterprise, upon
the granting of its charter, shall be under the
management of a board of directors consisting of not
fewer than 5 nor more than 10 members appointed by the
Agency.
``(D) Bylaws.--The board of directors of a limited-
life enterprise shall adopt such bylaws as may be
approved by the Agency.
``(3) Capital stock.--No capital stock need be paid into a
limited-life enterprise by the Agency.
``(4) Investments.--Funds of a limited-life enterprise
shall be kept on hand in cash, invested in obligations of the
United States or obligations guaranteed as to principal and
interest by the United States, or deposited with the Agency, or
any Federal Reserve bank.
``(5) Exempt status.--Notwithstanding any other provision
of Federal or State law, the limited-life enterprise, its
franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by any
territory, dependency, or possession thereof, or by any State,
county, municipality, or local taxing authority.
``(6) Other exemptions.--When acting as a receiver, the
following provisions shall apply with respect to the Agency:
``(A) The Agency, including its franchise, its
capital, reserves, and surplus, and its income, shall
be exempt from all taxation imposed by any State,
country, municipality, or local taxing authority,
except that any real property of the Agency shall be
subject to State, territorial, county, municipal, or
local taxation to the same extent according to its
value as other real property is taxed, except that,
notwithstanding the failure of any person to challenge
an assessment under State law of the value of such
property, and the tax thereon, shall be determined as
of the period for which such tax is imposed.
``(B) No property of the Agency shall be subject to
levy, attachment, garnishment, foreclosure, or sale
without the consent of the Agency, nor shall any
involuntary lien attach to the property of the Agency.
``(C) The Agency shall not be liable for any
amounts in the nature of penalties or fines, including
those arising from the failure of any person to pay any
real property, personal property, probate, or recording
tax or any recording or filing fees when due.
``(7) Winding up.--
``(A) In general.--Subject to subparagraph (B),
unless Congress authorizes the sale of the capital
stock of the limited-life enterprise, not later than 2
years after the date of its organization, the Agency
shall wind up the affairs of the limited-life
enterprise.
``(B) Extension.--The Director may, in the
discretion of the Director, extend the status of the
limited-life enterprise for 3 additional 1-year
periods.
``(8) Transfer of assets and liabilities.--
``(A) In general.--
``(i) Transfer of assets and liabilities.--
The Agency, as receiver, may transfer any
assets and liabilities of an enterprise in
default, or in danger of default, to the
limited-life enterprise in accordance with
paragraph (1).
``(ii) Subsequent transfers.--At any time
after a charter is transferred to a limited-
life enterprise, the Agency, as receiver, may
transfer any assets and liabilities of such
enterprise in default, or in danger in default,
as the Agency may, in its discretion, determine
to be appropriate in accordance with paragraph
(1).
``(iii) Effective without approval.--The
transfer of any assets or liabilities of an
enterprise in default, or in danger of default,
transferred to a limited-life enterprise shall
be effective without any further approval under
Federal or State law, assignment, or consent
with respect thereto.
``(9) Proceeds.--To the extent that available proceeds from
the limited-life enterprise exceed amounts required to pay
obligations, such proceeds may be paid to the enterprise in
default, or in danger of default.
``(10) Powers of limited-life enterprises.--
``(A) In general.--Each limited-life enterprise
created under this subsection shall have all corporate
powers of, and be subject to the same provisions of law
as, the enterprise in default or in danger of default
to which it relates, except that--
``(i) the Agency may--
``(I) remove the directors of a
limited-life enterprise; and
``(II) fix the compensation of
members of the board of directors and
senior management, as determined by the
Agency in its discretion, of a limited-
life enterprise;
``(ii) the Agency may indemnify the
representatives for purposes of paragraph
(1)(B), and the directors, officers, employees,
and agents of a limited-life enterprise on such
terms as the Agency determines to be
appropriate; and
``(iii) the board of directors of a
limited-life enterprise--
``(I) shall elect a chairperson who
may also serve in the position of chief
executive officer, except that such
person shall not serve either as
chairperson or as chief executive
officer without the prior approval of
the Agency; and
``(II) may appoint a chief
executive officer who is not also the
chairperson, except that such person
shall not serve as chief executive
officer without the prior approval of
the Agency.
``(B) Stay of judicial action.--Any judicial action
to which a limited-life enterprise becomes a party by
virtue of its acquisition of any assets or assumption
of any liabilities of an enterprise in default shall be
stayed from further proceedings for a period of up to
45 days at the request of the limited-life enterprise.
Such period may be modified upon the consent of all
parties.
``(11) No federal status.--
``(A) Agency status.--A limited-life enterprise is
not an agency, establishment, or instrumentality of the
United States.
``(B) Employee status.--Representatives for
purposes of paragraph (1)(B), interim directors,
directors, officers, employees, or agents of a limited-
life enterprise are not, solely by virtue of service in
any such capacity, officers or employees of the United
States. Any employee of the Agency or of any Federal
instrumentality who serves at the request of the Agency
as a representative for purposes of paragraph (1)(B),
interim director, director, officer, employee, or agent
of a limited-life enterprise shall not--
``(i) solely by virtue of service in any
such capacity lose any existing status as an
officer or employee of the United States for
purposes of title 5, United States Code, or any
other provision of law; or
``(ii) receive any salary or benefits for
service in any such capacity with respect to a
limited-life enterprise in addition to such
salary or benefits as are obtained through
employment with the Agency or such Federal
instrumentality.
``(j) Prohibition of Charter Revocation.--In no case may a receiver
appointed pursuant to this section revoke, annul, or terminate the
charter of an enterprise.
``(k) Obtaining Credit by a Limited-Life Enterprise.--
``(1) In general.--The limited-life enterprise may obtain
unsecured credit and incur unsecured debt in the ordinary
course of business.
``(2) Inability to obtain credit.--If the limited-life
enterprise is unable to obtain unsecured credit the Director
may authorize the obtaining of credit or the incurring of
debt--
``(A) with priority over any or all administrative
expenses;
``(B) secured by a lien on property that is not
otherwise subject to a lien; or
``(C) secured by a junior lien on property that is
subject to a lien.
``(3) Limitations.--
``(A) In general.--The Director, after notice and a
hearing, may authorize the obtaining of credit or the
incurring of debt secured by a senior or equal lien on
property that is subject to a lien (other than
mortgages that collateralize the mortgage-backed
securities issued or guaranteed by the enterprise) only
if--
``(i) the limited-life enterprise is unable
to obtain such credit otherwise; and
``(ii) there is adequate protection of the
interest of the holder of the lien on the
property which such senior or equal lien is
proposed to be granted.
``(B) Burden of proof.--In any hearing under this
subsection, the Director has the burden of proof on the
issue of adequate protection.
``(4) Affect on debts and liens.--The reversal or
modification on appeal of an authorization under this
subsection to obtain credit or incur debt, or of a grant under
this section of a priority or a lien, does not affect the
validity of any debt so incurred, or any priority or lien so
granted, to an entity that extended such credit in good faith,
whether or not such entity knew of the pendency of the appeal,
unless such authorization and the incurring of such debt, or
the granting of such priority or lien, were stayed pending
appeal.''.
(b) Federal Home Loan Banks.--Section 26 of the Federal Home Loan
Bank Act (12 U.S.C. 1446) is amended--
(1) by inserting ``(a)'' before ``Whenever'';
(2) in the first sentence, by inserting ``or pursuant to a
determination and notice under section 1368(d) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
that a Federal home loan bank is critically undercapitalized,''
after ``such action,''; and
(3) by adding at the end the following new subsection:
``(b) The Director shall, by regulation, provide for the authority,
procedures, and conditions in liquidating and reorganizing critically
undercapitalized Federal home loan banks pursuant to subsection (a),
taking due consideration of the authorities, procedures, and conditions
established under section 1367 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, with respect to the
enterprises, with such modifications as the Director determines to be
appropriate to reflect the difference in operations between the banks
and the enterprises.''.
(c) Conforming Amendments.--Subtitle B of title XIII of the Housing
and Community Development Act of 1992 is amended by striking sections
1369 (12 U.S.C. 4619), 1369A (12 U.S.C. 4620), and 1369B (12 U.S.C.
4621)
SEC. 145. CONFORMING AMENDMENTS.
Subtitle B of title XIII of the Housing and Community Development
Act of 1992 (42 U.S.C. 4611 et seq.), as amended by the preceding
provisions of this Act, is further amended--
(1) in sections 1365 (12 U.S.C. 4615) through 1369D (12
U.S.C. 4623), but not including section 1367 (12 U.S.C. 4617)
as added by section 144 of this Act--
(A) by striking ``An enterprise'' each place such
term appears and inserting ``A regulated entity'';
(B) by striking ``an enterprise'' each place such
term appears and inserting ``a regulated entity''; and
(C) by striking ``the enterprise'' each place such
term appears and inserting ``the regulated entity'';
(2) in section 1366(d) (12 U.S.C. 4616(d)), by striking
``the enterprises'' and inserting ``the regulated entities'';
(3) in section 1368(d) (12 U.S.C. 4618(d)), by striking
``Committee on Banking, Finance and Urban Affairs'' and
inserting ``Committee on Financial Services''; and
(4) in section 1369C(c) (12 U.S.C. 4622(c)), by striking
``any enterprise'' and inserting ``any regulated entity''.
Subtitle D--Enforcement Actions
SEC. 161. CEASE-AND-DESIST PROCEEDINGS.
Section 1371 of the Housing and Community Development Act of 1992
(12 U.S.C. 4631) is amended--
(1) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Issuance for Unsafe or Unsound Practices and Violations of
Rules or Laws.--If, in the opinion of the Director, a regulated entity
or any regulated entity-affiliated party is engaging or has engaged, or
the Director has reasonable cause to believe that the regulated entity
or any regulated entity-affiliated party is about to engage, in an
unsafe or unsound practice in conducting the business of the regulated
entity or is violating or has violated, or the Director has reasonable
cause to believe that the regulated entity or any regulated entity-
affiliated party is about to violate, a law, rule, or regulation, or
any condition imposed in writing by the Director in connection with the
granting of any application or other request by the regulated entity or
any written agreement entered into with the Director, the Director may
issue and serve upon the regulated entity or such party a notice of
charges in respect thereof. The Director may not enforce compliance
with any housing goal established under subpart B of part 2 of subtitle
A of this title, with section 1336 or 1337 of this title, with
subsection (m) or (n) of section 309 of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1723a(m), (n)), with subsection (e)
or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1456(e), (f)), or with paragraph (5) or (12) of section
10(j) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)).
``(b) Issuance for Unsatisfactory Rating.--If a regulated entity
receives, in its most recent report of examination, a less-than-
satisfactory rating for asset quality, management, earnings, or
liquidity, the Director may (if the deficiency is not corrected) deem
the regulated entity to be engaging in an unsafe or unsound practice
for purposes of this subsection.'';
(2) in subsection (c)(2), by striking ``or director'' and
inserting ``director, or regulated entity-affiliated party'';
and
(3) in subsection (d)--
(A) in paragraph (1), by inserting ``(including
reimbursement of compensation under section 1318)''
after ``reimbursement'';
(B) in paragraph (6), by striking ``and'' at the
end;
(C) by redesignating paragraph (7) as paragraph
(8); and
(D) by inserting after paragraph (6) the following
new paragraph:
``(7) to effect an attachment on a regulated entity or
regulated entity-affiliated party subject to an order under
this section or section 1372; and''.
SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS.
Section 1372 of the Housing and Community Development Act of 1992
(12 U.S.C. 4632) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Grounds for Issuance.--Whenever the Director determines that
the violation or threatened violation or the unsafe or unsound practice
or practices specified in the notice of charges served upon the
regulated entity or any regulated entity-affiliated party pursuant to
section 1371(a), or the continuation thereof, is likely to cause
insolvency or significant dissipation of assets or earnings of the
regulated entity, or is likely to weaken the condition of the regulated
entity prior to the completion of the proceedings conducted pursuant to
sections 1371 and 1373, the Director may issue a temporary order
requiring the regulated entity or such party to cease and desist from
any such violation or practice and to take affirmative action to
prevent or remedy such insolvency, dissipation, condition, or prejudice
pending completion of such proceedings. Such order may include any
requirement authorized under subsection 1371(d).'';
(2) in subsection (b), by striking ``or director'' and
inserting ``director, or regulated entity-affiliated party'';
(3) in subsection (d), striking ``or director'' and
inserting ``director, or regulated entity-affiliated party'';
and
(4) by striking subsection (e) and in inserting the
following new subsection:
``(e) Enforcement.--In the case of violation or threatened
violation of, or failure to obey, a temporary cease-and-desist order
issued pursuant to this section, the Director may apply to the United
States District Court for the District of Columbia or the United States
district court within the jurisdiction of which the headquarters of the
regulated entity is located, for an injunction to enforce such order,
and, if the court determines that there has been such violation or
threatened violation or failure to obey, it shall be the duty of the
court to issue such injunction. Such an injunction may include an
injunction to effect an attachment on a regulated entity or regulated-
entity affiliated party.''.
SEC. 163. ENFORCEMENT AND JURISDICTION.
Section 1375 of the Housing and Community Development Act of 1992
(12 U.S.C. 4635) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Enforcement.--The Director may, in the discretion of the
Director, apply to the United States District Court for the District of
Columbia, or the United States district court within the jurisdiction
of which the headquarters of the regulated entity is located, for the
enforcement of any effective and outstanding notice or order issued
under this subtitle or subtitle B, or request that the Attorney General
of the United States bring such an action. Such court shall have
jurisdiction and power to order and require compliance with such notice
or order.''; and
(2) in subsection (b), by striking ``or 1376'' and
inserting ``1376, or 1377''.
SEC. 164. CIVIL MONEY PENALTIES.
Section 1376 of the Housing and Community Development Act of 1992
(12 U.S.C. 4636) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1), by
striking ``or any executive officer or'' and inserting
``any executive officer of a regulated entity, any
regulated entity-affiliated party, or any''; and
(B) in paragraph (1)--
(i) by inserting ``Federal Home Loan Bank
Act,'' after ``Corporation Act,'';
(ii) by striking ``or subsection'' and
inserting ``, subsection''; and
(iii) by inserting ``, or paragraph (5) or
(12) of section 10(j) of the Federal Home Loan
Bank Act'' before the semicolon at the end;
(2) by striking subsection (b) and inserting the following
new subsection:
``(b) Amount of Penalty.--
``(1) First tier.--Any regulated entity which, or any
regulated entity-affiliated party who--
``(A) violates any provision of this title, the
Federal National Mortgage Association Charter Act (12
U.S.C. 1716 et seq.), the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.), the Federal
Home Loan Bank Act (12 U.S.C. 1421 et seq., or any
order, condition, rule, or regulation under any such
title or Act, except that the Director may not enforce
compliance with any housing goal established under
subpart B of part 2 of subtitle A of this title, with
section 1336 or 1337 of this title, with subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1723a(m), (n)), with
subsection (e) or (f) of section 307 of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1456(e),
(f)), or with paragraph (5) or (12) of section 10(j) of
the Federal Home Loan Bank Act;
``(B) violates any final or temporary order or
notice issued pursuant to this title;
``(C) violates any condition imposed in writing by
the Director in connection with the grant of any
application or other request by such regulated entity;
``(D) violates any written agreement between the
regulated entity and the Director; or
``(E) engages in any conduct the Director
determines to be an unsafe or unsound practice,
shall forfeit and pay a civil penalty of not more than $10,000
for each day during which such violation continues.
``(2) Second tier.--Notwithstanding paragraph (1)--
``(A) if a regulated entity, or a regulated entity-
affiliated party--
``(i) commits any violation described in
any subparagraph of paragraph (1);
``(ii) recklessly engages in an unsafe or
unsound practice in conducting the affairs of
such regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) the violation, practice, or breach--
``(i) is part of a pattern of misconduct;
``(ii) causes or is likely to cause more
than a minimal loss to such regulated entity;
or
``(iii) results in pecuniary gain or other
benefit to such party,
the regulated entity or regulated entity-affiliated party shall
forfeit and pay a civil penalty of not more than $50,000 for
each day during which such violation, practice, or breach
continues.
``(3) Third tier.--Notwithstanding paragraphs (1) and (2),
any regulated entity which, or any regulated entity-affiliated
party who--
``(A) knowingly--
``(i) commits any violation or engages in
any conduct described in any subparagraph of
paragraph (1);
``(ii) engages in any unsafe or unsound
practice in conducting the affairs of such
regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) knowingly or recklessly causes a substantial
loss to such regulated entity or a substantial
pecuniary gain or other benefit to such party by reason
of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to
exceed the applicable maximum amount determined under paragraph
(4) for each day during which such violation, practice, or
breach continues.
``(4) Maximum amounts of penalties for any violation
described in paragraph (3).--The maximum daily amount of any
civil penalty which may be assessed pursuant to paragraph (3)
for any violation, practice, or breach described in such
paragraph is--
``(A) in the case of any person other than a
regulated entity, an amount not to exceed $2,000,000;
and
``(B) in the case of any regulated entity,
$2,000,000.'';
(3) in subsection (c)(1)(B), by inserting ``regulated
entity-affiliated party,'' after ``executive officer,''; and
(4) in subsection (d)--
(A) by striking ``or director'' each place such
term appears and inserting ``director, or regulated
entity-affiliated party'';
(B) by striking ``request the Attorney General of
the United States to'';
(C) by inserting ``, or the United States district
court within the jurisdiction of which the headquarters
of the regulated entity is located,'' after ``District
of Columbia''; and
(D) by striking ``, or may, under the direction and
control of the Attorney General, bring such an
action''.
SEC. 165. REMOVAL AND PROHIBITION AUTHORITY.
(a) In General.--Subtitle C of title XIII of the Housing and
Community Development Act of 1992 is amended--
(1) by redesignating sections 1377, 1378, 1379, 1379A, and
1379B (12 U.S.C. 4637-41) as sections 1379, 1379A, 1379B,
1379C, and 1379D, respectively; and
(2) by inserting after section 1376 (12 U.S.C. 4636) the
following new section:
``SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.
``(a) Authority to Issue Order.--Whenever the Director determines
that--
``(1) any regulated entity-affiliated party has, directly
or indirectly--
``(A) violated--
``(i) any law or regulation;
``(ii) any cease-and-desist order which has
become final;
``(iii) any condition imposed in writing by
the Director in connection with the grant of
any application or other request by such
regulated entity; or
``(iv) any written agreement between such
regulated entity and the Director;
``(B) engaged or participated in any unsafe or
unsound practice in connection with any regulated
entity; or
``(C) committed or engaged in any act, omission, or
practice which constitutes a breach of such party's
fiduciary duty;
``(2) by reason of the violation, practice, or breach
described in any subparagraph of paragraph (1)--
``(A) such regulated entity has suffered or will
probably suffer financial loss or other damage; or
``(B) such party has received financial gain or
other benefit by reason of such violation, practice, or
breach; and
``(3) such violation, practice, or breach--
``(A) involves personal dishonesty on the part of
such party; or
``(B) demonstrates willful or continuing disregard
by such party for the safety or soundness of such
regulated entity,
the Director may serve upon such party a written notice of the
Director's intention to remove such party from office or to prohibit
any further participation by such party, in any manner, in the conduct
of the affairs of any regulated entity.
``(b) Suspension Order.--
``(1) Suspension or prohibition authority.--If the Director
serves written notice under subsection (a) to any regulated
entity-affiliated party of the Director's intention to issue an
order under such subsection, the Director may--
``(A) suspend such party from office or prohibit
such party from further participation in any manner in
the conduct of the affairs of the regulated entity, if
the Director--
``(i) determines that such action is
necessary for the protection of the regulated
entity; and
``(ii) serves such party with written
notice of the suspension order; and
``(B) prohibit the regulated entity from releasing
to or on behalf of the regulated entity-affiliated
party any compensation or other payment of money or
other thing of current or potential value in connection
with any resignation, removal, retirement, or other
termination of employment or office of the party.
``(2) Effective period.--Any suspension order issued under
this subsection--
``(A) shall become effective upon service; and
``(B) unless a court issues a stay of such order
under subsection (g) of this section, shall remain in
effect and enforceable until--
``(i) the date the Director dismisses the
charges contained in the notice served under
subsection (a) with respect to such party; or
``(ii) the effective date of an order
issued by the Director to such party under
subsection (a).
``(3) Copy of order.--If the Director issues a suspension
order under this subsection to any regulated entity-affiliated
party, the Director shall serve a copy of such order on any
regulated entity with which such party is affiliated at the
time such order is issued.
``(c) Notice, Hearing, and Order.--A notice of intention to remove
a regulated entity-affiliated party from office or to prohibit such
party from participating in the conduct of the affairs of a regulated
entity shall contain a statement of the facts constituting grounds for
such action, and shall fix a time and place at which a hearing will be
held on such action. Such hearing shall be fixed for a date not earlier
than 30 days nor later than 60 days after the date of service of such
notice, unless an earlier or a later date is set by the Director at the
request of (1) such party, and for good cause shown, or (2) the
Attorney General of the United States. Unless such party shall appear
at the hearing in person or by a duly authorized representative, such
party shall be deemed to have consented to the issuance of an order of
such removal or prohibition. In the event of such consent, or if upon
the record made at any such hearing the Director shall find that any of
the grounds specified in such notice have been established, the
Director may issue such orders of suspension or removal from office, or
prohibition from participation in the conduct of the affairs of the
regulated entity, as it may deem appropriate, together with an order
prohibiting compensation described in subsection (b)(1)(B). Any such
order shall become effective at the expiration of 30 days after service
upon such regulated entity and such party (except in the case of an
order issued upon consent, which shall become effective at the time
specified therein). Such order shall remain effective and enforceable
except to such extent as it is stayed, modified, terminated, or set
aside by action of the Director or a reviewing court.
``(d) Prohibition of Certain Specific Activities.--Any person
subject to an order issued under this section shall not--
``(1) participate in any manner in the conduct of the
affairs of any regulated entity;
``(2) solicit, procure, transfer, attempt to transfer,
vote, or attempt to vote any proxy, consent, or authorization
with respect to any voting rights in any regulated entity;
``(3) violate any voting agreement previously approved by
the Director; or
``(4) vote for a director, or serve or act as a regulated
entity-affiliated party.
``(e) Industry-Wide Prohibition.--
``(1) In general.--Except as provided in paragraph (2), any
person who, pursuant to an order issued under this section, has
been removed or suspended from office in a regulated entity or
prohibited from participating in the conduct of the affairs of
a regulated entity may not, while such order is in effect,
continue or commence to hold any office in, or participate in
any manner in the conduct of the affairs of, any regulated
entity.
``(2) Exception if director provides written consent.--If,
on or after the date an order is issued under this section
which removes or suspends from office any regulated entity-
affiliated party or prohibits such party from participating in
the conduct of the affairs of a regulated entity, such party
receives the written consent of the Director, the order shall,
to the extent of such consent, cease to apply to such party
with respect to the regulated entity described in the written
consent. If the Director grants such a written consent, it
shall publicly disclose such consent.
``(3) Violation of paragraph (1) treated as violation of
order.--Any violation of paragraph (1) by any person who is
subject to an order described in such subsection shall be
treated as a violation of the order.
``(f) Applicability.--This section shall only apply to a person who
is an individual, unless the Director specifically finds that it should
apply to a corporation, firm, or other business enterprise.
``(g) Stay of Suspension and Prohibition of Regulated Entity-
Affiliated Party.--Within 10 days after any regulated entity-affiliated
party has been suspended from office and/or prohibited from
participation in the conduct of the affairs of a regulated entity under
this section, such party may apply to the United States District Court
for the District of Columbia, or the United States district court for
the judicial district in which the headquarters of the regulated entity
is located, for a stay of such suspension and/or prohibition and any
prohibition under subsection (b)(1)(B) pending the completion of the
administrative proceedings pursuant to the notice served upon such
party under this section, and such court shall have jurisdiction to
stay such suspension and/or prohibition.
``(h) Suspension or Removal of Regulated Entity-Affiliated Party
Charged With Felony.--
``(1) Suspension or prohibition.--
``(A) In general.--Whenever any regulated entity-
affiliated party is charged in any information,
indictment, or complaint, with the commission of or
participation in a crime involving dishonesty or breach
of trust which is punishable by imprisonment for a term
exceeding one year under State or Federal law, the
Director may, if continued service or participation by
such party may pose a threat to the regulated entity or
impair public confidence in the regulated entity, by
written notice served upon such party--
``(i) suspend such party from office or
prohibit such party from further participation
in any manner in the conduct of the affairs of
any regulated entity; and
``(ii) prohibit the regulated entity from
releasing to or on behalf of the regulated
entity-affiliated party any compensation or
other payment of money or other thing of
current or potential value in connection with
the period of any such suspension or with any
resignation, removal, retirement, or other
termination of employment or office of the
party.
``(B) Provisions applicable to notice.--
``(i) Copy.--A copy of any notice under
paragraph (1)(A) shall also be served upon the
regulated entity.
``(ii) Effective period.--A suspension or
prohibition under subparagraph (A) shall remain
in effect until the information, indictment, or
complaint referred to in such subparagraph is
finally disposed of or until terminated by the
Director.
``(2) Removal or prohibition.--
``(A) In general.--If a judgment of conviction or
an agreement to enter a pretrial diversion or other
similar program is entered against a regulated entity-
affiliated party in connection with a crime described
in paragraph (1)(A), at such time as such judgment is
not subject to further appellate review, the Director
may, if continued service or participation by such
party may pose a threat to the regulated entity or
impair public confidence in the regulated entity, issue
and serve upon such party an order that--
``(i) removes such party from office or
prohibits such party from further participation
in any manner in the conduct of the affairs of
the regulated entity without the prior written
consent of the Director; and
``(ii) prohibits the regulated entity from
releasing to or on behalf of the regulated
entity-affiliated party any compensation or
other payment of money or other thing of
current or potential value in connection with
the termination of employment or office of the
party.
``(B) Provisions applicable to order.--
``(i) Copy.--A copy of any order under
paragraph (2)(A) shall also be served upon the
regulated entity, whereupon the regulated
entity-affiliated party who is subject to the
order (if a director or an officer) shall cease
to be a director or officer of such regulated
entity.
``(ii) Effect of acquittal.--A finding of
not guilty or other disposition of the charge
shall not preclude the Director from
instituting proceedings after such finding or
disposition to remove such party from office or
to prohibit further participation in regulated
entity affairs, and to prohibit compensation or
other payment of money or other thing of
current or potential value in connection with
any resignation, removal, retirement, or other
termination of employment or office of the
party, pursuant to subsections (a), (d), or (e)
of this section.
``(iii) Effective period.--Any notice of
suspension or order of removal issued under
this subsection shall remain effective and
outstanding until the completion of any hearing
or appeal authorized under paragraph (4) unless
terminated by the Director.
``(3) Authority of remaining board members.--If at any
time, because of the suspension of one or more directors
pursuant to this section, there shall be on the board of
directors of a regulated entity less than a quorum of directors
not so suspended, all powers and functions vested in or
exercisable by such board shall vest in and be exercisable by
the director or directors on the board not so suspended, until
such time as there shall be a quorum of the board of directors.
In the event all of the directors of a regulated entity are
suspended pursuant to this section, the Director shall appoint
persons to serve temporarily as directors in their place and
stead pending the termination of such suspensions, or until
such time as those who have been suspended cease to be
directors of the regulated entity and their respective
successors take office.
``(4) Hearing regarding continued participation.--Within 30
days from service of any notice of suspension or order of
removal issued pursuant to paragraph (1) or (2) of this
subsection, the regulated entity-affiliated party concerned may
request in writing an opportunity to appear before the Director
to show that the continued service to or participation in the
conduct of the affairs of the regulated entity by such party
does not, or is not likely to, pose a threat to the interests
of the regulated entity or threaten to impair public confidence
in the regulated entity. Upon receipt of any such request, the
Director shall fix a time (not more than 30 days after receipt
of such request, unless extended at the request of such party)
and place at which such party may appear, personally or through
counsel, before one or more members of the Director or
designated employees of the Director to submit written
materials (or, at the discretion of the Director, oral
testimony) and oral argument. Within 60 days of such hearing,
the Director shall notify such party whether the suspension or
prohibition from participation in any manner in the conduct of
the affairs of the regulated entity will be continued,
terminated, or otherwise modified, or whether the order
removing such party from office or prohibiting such party from
further participation in any manner in the conduct of the
affairs of the regulated entity, and prohibiting compensation
in connection with termination will be rescinded or otherwise
modified. Such notification shall contain a statement of the
basis for the Director's decision, if adverse to such party.
The Director is authorized to prescribe such rules as may be
necessary to effectuate the purposes of this subsection.
``(i) Hearings and Judicial Review.--
``(1) Venue and procedure.--Any hearing provided for in
this section shall be held in the District of Columbia or in
the Federal judicial district in which the headquarters of the
regulated entity is located, unless the party afforded the
hearing consents to another place, and shall be conducted in
accordance with the provisions of chapter 5 of title 5, United
States Code. After such hearing, and within 90 days after the
Director has notified the parties that the case has been
submitted to it for final decision, it shall render its
decision (which shall include findings of fact upon which its
decision is predicated) and shall issue and serve upon each
party to the proceeding an order or orders consistent with the
provisions of this section. Judicial review of any such order
shall be exclusively as provided in this subsection. Unless a
petition for review is timely filed in a court of appeals of
the United States, as provided in paragraph (2), and thereafter
until the record in the proceeding has been filed as so
provided, the Director may at any time, upon such notice and in
such manner as it shall deem proper, modify, terminate, or set
aside any such order. Upon such filing of the record, the
Director may modify, terminate, or set aside any such order
with permission of the court.
``(2) Review of order.--Any party to any proceeding under
paragraph (1) may obtain a review of any order served pursuant
to paragraph (1) (other than an order issued with the consent
of the regulated entity or the regulated entity-affiliated
party concerned, or an order issued under subsection (h) of
this section) by the filing in the United States Court of
Appeals for the District of Columbia Circuit or court of
appeals of the United States for the circuit in which the
headquarters of the regulated entity is located, within 30 days
after the date of service of such order, a written petition
praying that the order of the Director be modified, terminated,
or set aside. A copy of such petition shall be forthwith
transmitted by the clerk of the court to the Director, and
thereupon the Director shall file in the court the record in
the proceeding, as provided in section 2112 of title 28, United
States Code. Upon the filing of such petition, such court shall
have jurisdiction, which upon the filing of the record shall
(except as provided in the last sentence of paragraph (1)) be
exclusive, to affirm, modify, terminate, or set aside, in whole
or in part, the order of the Director. Review of such
proceedings shall be had as provided in chapter 7 of title 5,
United States Code. The judgment and decree of the court shall
be final, except that the same shall be subject to review by
the Supreme Court upon certiorari, as provided in section 1254
of title 28, United States Code.
``(3) Proceedings not treated as stay.--The commencement of
proceedings for judicial review under paragraph (2) shall not,
unless specifically ordered by the court, operate as a stay of
any order issued by the Director.''.
(b) Conforming Amendments.--
(1) 1992 act.--Section 1317(f) of the Housing and Community
Development Act of 1992 (12 U.S.C. 4517(f)) is amended by
striking ``section 1379B'' and inserting ``section 1379D''.
(2) Fannie mae charter act.--The second sentence of
subsection (b) of section 308 of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1723(b)) is amended by
striking ``The'' and inserting ``Except to the extent that
action under section 1377 of the Housing and Community
Development Act of 1992 temporarily results in a lesser number,
the''.
(3) Freddie mac act.--The second sentence of subparagraph
(A) of section 303(a)(2) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1452(a)(2)(A)) is amended by
striking ``The'' and inserting ``Except to the extent that
action under section 1377 of the Housing and Community
Development Act of 1992 temporarily results in a lesser number,
the''.
SEC. 166. CRIMINAL PENALTY.
Subtitle C of title XIII of the Housing and Community Development
Act of 1992 (12 U.S.C. 4631 et seq.) is amended by inserting after
section 1377 (as added by the preceding provisions of this Act) the
following new section:
``SEC. 1378. CRIMINAL PENALTY.
``Whoever, being subject to an order in effect under section 1377,
without the prior written approval of the Director, knowingly
participates, directly or indirectly, in any manner (including by
engaging in an activity specifically prohibited in such an order) in
the conduct of the affairs of any regulated entity shall,
notwithstanding section 3571 of title 18, be fined not more than
$1,000,000, imprisoned for not more than 5 years, or both.''.
SEC. 167. CONFORMING AMENDMENTS.
Subtitle C of title XIII of the Housing and Community Development
Act of 1992 is amended--
(1) in section 1372(c)(1) (12 U.S.C. 4632(c)), by striking
``that enterprise'' and inserting ``that regulated entity'';
(2) in section 1379 (12 U.S.C. 4637), as so redesignated by
section 165(a)(1) of this Act--
(A) by inserting ``, or of a regulated entity-
affiliated party,'' before ``shall not affect''; and
(B) by striking ``such director or executive
officer'' each place such term appears and inserting
``such director, executive officer, or regulated
entity-affiliated party'';
(3) in section 1379A (12 U.S.C. 4638), as so redesignated
by section 165(a)(1) of this Act, by inserting ``or against a
regulated entity-affiliated party,'' before ``or impair'';
(4) by striking ``An enterprise'' each place such term
appears in such subtitle and inserting ``A regulated entity'';
(5) by striking ``an enterprise'' each place such term
appears in such subtitle and inserting ``a regulated entity'';
(6) by striking ``the enterprise'' each place such term
appears in such subtitle and inserting ``the regulated
entity''; and
(7) by striking ``any enterprise'' each place such term
appears in such subtitle and inserting ``any regulated
entity''.
Subtitle E--General Provisions
SEC. 181. PRESIDENTIALLY APPOINTED DIRECTORS OF ENTERPRISES.
(a) Fannie Mae.--
(1) In general.--Subsection (b) of section 308 of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1723(b)) is amended--
(A) in the first sentence, by striking ``five of
whom shall be appointed annually by the President of
the United States, and the remainder of whom'' and
inserting ``who'';
(B) in the second sentence, by striking ``appointed
by the President'';
(C) in the third sentence--
(i) by striking ``appointed or''; and
(ii) by striking ``, except that any such
appointed member may be removed from office by
the President for good cause'';
(D) in the fourth sentence, by striking
``elective''; and
(E) by striking the fifth sentence.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of the
board of directors of the Federal National Mortgage Association
until the expiration of the annual term for such position
during which the effective date under section 184 occurs.
(b) Freddie Mac.--
(1) In general.--Paragraph (2) of section 303(a) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1452(a)(2)) is amended--
(A) in subparagraph (A)--
(i) in the first sentence, by striking ``5
of whom shall be appointed annually by the
President of the United States and the
remainder of whom'' and inserting ``who''; and
(ii) in the second sentence, by striking
``appointed by the President of the United
States'';
(B) in subparagraph (B)--
(i) by striking ``such or''; and
(ii) by striking ``, except that any
appointed member may be removed from office by
the President for good cause''; and
(C) in subparagraph (C)--
(i) by striking the first sentence; and
(ii) by striking ``elective''.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of the
Board of Directors of the Federal Home Loan Mortgage
Corporation until the expiration of the annual term for such
position during which the effective date under section 184
occurs.
SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY AND SOUNDNESS, AND
MISSION OF ENTERPRISES.
Not later than the expiration of the 12-month period beginning on
the effective date under section 184, the Director of the Federal
Housing Finance Agency shall submit a report to the Congress which
shall include--
(1) a description of the portfolio holdings of the
enterprises (as such term is defined in section 1303 of the
Housing and Community Development Act of 1992 (12 U.S.C. 4502)
in mortgages (including whole loans and mortgage-backed
securities), non-mortgages, and other assets;
(2) a description of the risk implications for the
enterprises of such holdings and the consequent risk management
undertaken by the enterprises (including the use of derivatives
for hedging purposes), compared with off-balance sheet
obligations of the enterprises (including mortgage-backed
securities guaranteed by the enterprises);
(3) an analysis of portfolio holdings for safety and
soundness purposes;
(4) an assessment of whether portfolio holdings fulfill the
mission purposes of the enterprises under the Federal National
Mortgage Association Charter Act and the Federal Home Loan
Mortgage Corporation Act; and
(5) an analysis of the potential systemic risk implications
for the enterprises, the housing and capital markets, and the
financial system of portfolio holdings, and whether such
holdings should be limited or reduced over time.
SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS.
(a) Amendment to 1992 Act.--Title XIII of the Housing and Community
Development Act of 1992 is amended by striking section 1383 (12 U.S.C.
1451 note).
(b) Amendment to Title 18, United States Code.--Section 1905 of
title 18, United States Code, is amended by striking ``Office of
Federal Housing Enterprise Oversight'' and inserting ``Federal Housing
Finance Agency'' .
(c) Amendments to Flood Disaster Protection Act of 1973.--Section
102(f)(3)(A) of the Flood Disaster Protection Act of 1973 (42 U.S.C.
4012a(f)(3)(A)) is amended by striking ``Director of the Office of
Federal Housing Enterprise Oversight of the Department of Housing and
Urban Development'' and inserting ``Director of the Federal Housing
Finance Agency''.
(d) Amendment to Department of Housing and Urban Development Act.--
Section 5 of the Department of Housing and Urban Development Act (42
U.S.C. 3534) is amended by striking subsection (d).
(e) Amendment to Title 5, United States Code.--Section 5313 of
title 5, United States Code, is amended by striking the item relating
to the Director of the Office of Federal Housing Enterprise Oversight,
Department of Housing and Urban Development and inserting the following
new item:
``Director of the Federal Housing Finance Agency.''.
SEC. 184. EFFECTIVE DATE.
Except as specifically provided otherwise in this title, the
amendments made by this title shall take effect on, and shall apply
beginning on, the expiration of the 1-year period beginning on the date
of the enactment of this Act.
TITLE II--FEDERAL HOME LOAN BANKS
SEC. 201. DEFINITIONS.
Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is
amended--
(1) by striking paragraphs (1) and (10);
(2) by redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;
(3) by redesignating paragraphs (11) through (13) as
paragraphs (9) through (11), respectively; and
(4) by adding at the end the following:
``(12) Director.--The term `Director' means the Director of
the Federal Housing Finance Agency.
``(13) Agency.--The term `Agency' means the Federal Housing
Finance Agency.''.
SEC. 202. DIRECTORS.
(a) Election.--Section 7 of the Federal Home Loan Bank Act (12
U.S.C. 1427) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Number; Election; Qualifications; Conflicts of Interest.--
``(1) In general.--Subject to paragraph (2), and except to
the extent that action under section 1377 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
results in a lesser number, the management of each Federal Home
Loan Bank shall be vested in a board of 13 directors, or such
other number as the Director determines appropriate, each of
whom--
``(A) shall be elected by the members; and
``(B) shall be either a bona fide resident of the
district in which such bank is located or an officer or
director of a member of such bank located in that
district.
``(2) Public interest.--At least 2 directors elected under
paragraph (1) shall be representatives chosen from
organizations with more than a 2-year history of representing
consumer or community interests on banking services, credit
needs, housing, or financial consumer protections.'';
(2) in subsection (d)--
(A) in the first sentence, by striking ``, whether
elected or appointed,'';
(B) in the second sentence, by striking ``or
appointed''; and
(C) in the third sentence, by striking ``an
elective'' each place such term appears and inserting
``a'';
(3) by striking ``elective'' each place such term appears
(except in subsection (e)); and
(4) in subsection (f), by striking ``appointed or'' each
place that term appears.
(b) Terms.--
(1) In general.--Section 7(d) of the Federal Home Loan Bank
Act (12 U.S.C. 1427(i)) is amended--
(A) in the first sentence, by striking ``3 years''
and inserting ``4 years''; and
(B) in the second sentence--
(i) by striking ``Federal Home Loan Bank
System Modernization Act of 1999'' and
inserting ``Federal Housing Finance Reform Act
of 2005''; and
(ii) by striking ``1/3'' and inserting ``1/
4''.
(2) Savings provision.--The amendments made by paragraph
(1) shall not apply to the term of office of any director of a
Federal home loan bank who is serving as of the effective date
of this Act under section 184, including any director elected
to fill a vacancy in any such office.
(c) Compensation.--Subsection (i) of section 7 of the Federal Home
Loan Bank Act (12 U.S.C. 1427(i)) is amended to read as follows:
``(i) Directors' Compensation.--
``(1) In general.--Each Federal home loan bank may pay the
directors on the board of directors for the bank reasonable
compensation for the time required of such directors, and
reasonable expenses incurred by such directors, in connection
with service on the board of directors, in accordance with
resolutions adopted by the board of directors and subject to
the approval of the board.
``(2) Annual report by the board.--The Director shall
include, in the annual report submitted to the Congress
pursuant to section 1319B of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, information
regarding the compensation and expenses paid by the Federal
home loan banks to the directors on the boards of directors of
the banks.''.
SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVERSIGHT OF FEDERAL HOME LOAN
BANKS.
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), other than
in provisions of that Act added or amended otherwise by this Act, is
amended--
(1) by striking sections 2A and 2B (12 U.S.C. 1422a,
1422b);
(2) in section 6 (12 U.S.C. 1426(b)(1))--
(A) in subsection (b)(1), in the matter preceding
subparagraph (A), by striking ``Finance Board
approval'' and inserting ``approval by the Director'';
and
(B) in each of subsections (c)(4)(B) and (d)(2), by
striking ``Finance Board regulations'' each place that
term appears and inserting ``regulations of the
Director'';
(3) in section 8 (12 U.S.C. 1428), in the section heading,
by striking ``by the board'';
(4) in section 10(b) (12 U.S.C. 1430), by striking ``by
formal resolution'';
(5) in section 18 (12 U.S.C. 1438), by striking subsection
(b);
(6) in section 21 (12 U.S.C. 1441)--
(A) in subsection (b)--
(i) in paragraph (5), by striking
``Chairperson of the Federal Housing Finance
Board'' and inserting ``Director''; and
(ii) in the heading for paragraph (8), by
striking ``federal housing finance board'' and
inserting ``director''; and
(B) in subsection (i), in the heading for paragraph
(2), by striking ``federal housing finance board'' and
inserting ``director'';
(7) in section 23 (12 U.S.C. 1443), by striking ``Board of
Directors of the Federal Housing Finance Board'' and inserting
``Director'';
(8) by striking ``the Board'' each place such term appears
in such Act (except in subsections (a), (b), and (c) of section
11 (12 U.S.C. 1431), section 15 (12 U.S.C. 1435), section
21(f)(2) (12 U.S.C. 1441(f)(2)), subsections (a), (k)(2)(B)(i),
and (n)(6)(C)(ii) of section 21A (12 U.S.C. 1441a), subsections
(e)(7), (f)(2)(C), and (k)(7)(B)(ii) of section 21B (12 U.S.C.
1441b), the first two places such term appears in section 22
(12 U.S.C. 1442), and section 25 (12 U.S.C. 1445)) and
inserting ``the Director'';
(9) by striking ``The Board'' each place such term appears
in such Act (except in sections 7(e) (12 U.S.C. 1427(e)), and
11(b) (12 U.S.C. 1431(b)) and inserting ``The Director'';
(10) by striking ``the Board's'' each place such term
appears in such Act and inserting ``the Director's'';
(11) by striking ``The Board's'' each place such term
appears in such Act and inserting ``The Director's'';
(12) by striking ``The Finance Board'' each place such term
appears in such Act and inserting ``The Director'';
(13) by striking ``the Finance Board'' each place such term
appears in such Act and inserting ``the Director'';
(14) by striking ``Federal Housing Finance Board'' each
place such term appears and inserting ``Director'';
(15) by striking ``Federal Home Loan Bank Board'' each
place such term appears in such Act (except in section
21A(n)(9)(B) (12 U.S.C.1441a(n)(9)(B)) and inserting
``Director'';
(16) in section 11(i) (12 U.S.C. 1431(i), by striking ``the
Chairperson of''; and
(17) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), by
striking ``Chairperson of the''.
SEC. 204. DEBT ISSUING FACILITY.
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended
by inserting after section 11 the following:
``SEC. 11A. FEDERAL HOME LOAN BANK FINANCE CORPORATION.
``(a) Establishment.--
``(1) In general.--There is hereby established the Federal
Home Loan Bank Finance Corporation, which shall be a jointly
owned subsidiary of the Federal Home Loan Banks (in this
section referred to as the `Corporation').
``(2) Purposes.--The purpose of the Corporation shall be--
``(A) to issue and service the consolidated
obligations of the Federal Home Loan Banks in
accordance with this Act; and
``(B) to perform all other necessary and proper
functions in relation to the issuance and service of
such obligations, as fiscal agent on behalf of the
Federal Home Loan Banks, and any other functions
performed by the Office of Finance on behalf of the
Financing Corporation (established under section 21)
and the Resolution Funding Corporation (established
under section 21B).
``(3) Transfer of functions.--
``(A) In general.--The functions of the Office of
Finance of the Federal Home Loan Banks, shall be
transferred to the Corporation immediately upon the
conclusion of the organizational meeting of the board
of directors (referred to in this subsection as the
`effective time') established under subsection (c).
``(B) Organizational meeting.--The organizational
meeting of the board of directors of the Corporation
shall occur as soon as practicable after the date of
enactment of the Federal Housing Finance Reform Act of
2005.
``(C) Interim procedures.--Until the transfer under
subparagraph (A), the Office of Finance established as
a joint office of the Federal Home Loan Banks (referred
to in this subsection as the `predecessor office')
shall continue to operate as if this section had not
been enacted.
``(D) References.--After the transfer under
subparagraph (A), any reference under any Federal law
to the Office of Finance and the Managing Director of
the Office of Finance shall be deemed to be references
to the Corporation and the chief executive officer of
the Corporation, respectively.
``(4) Succession.--
``(A) Assets and liabilities.--At the transfer
under paragraph (3)(A), the Corporation shall, by
operation of law and without any further action by the
Federal Housing Finance Board, the predecessor office,
or any court, succeed to the assets of, and assume all
debts, obligations, contracts, and other liabilities of
the predecessor office, matured or unmatured, accrued
or absolute, contingent or otherwise, and whether or
not reflected or reserved against on balance sheets,
books of account, or records of the predecessor office.
``(B) Contracts.--At the time of the transfer under
paragraph (3)(A), the existing contractual obligations
of the Federal Housing Finance Board, solely in its
capacity as issuer of consolidated obligations of the
Federal Home Loan Banks and the predecessor office
shall, by operation of law and without any further
action by the Federal Housing Finance Board, the
predecessor office, or any court, become obligations,
entitlements, and instruments of the Corporation.
``(C) Taxation.--The succession to assets,
assumption of liabilities, conversion of obligations
and instruments, and effectuation of any other
transaction by the Corporation to carry out this
subsection shall not be treated as a taxable event
under the laws of any State, or any political
subdivision thereof.
``(b) Powers.--Subject to the provisions of this Act, and such
regulations as the Director may prescribe, the Corporation shall have
the power to--
``(1) issue voting capital stock to the Federal Home Loan
Banks;
``(2) issue and service Federal Home Loan Bank consolidated
notes, consolidated bonds, consolidated debentures and other
consolidated obligations under section 11 of this Act on behalf
of the Federal Home Loan Banks;
``(3) determine the amount, maturities, rate of interest,
terms, and other conditions of Federal Home Loan Bank
consolidated obligations;
``(4) adopt, alter, and use a corporate seal;
``(5) make contracts;
``(6) sue and be sued in the corporate capacity of the
Corporation, and to complain and defend in any action brought
by or against the Corporation in any court of competent
jurisdiction;
``(7) determine the terms and conditions under which the
Corporation may indemnify its directors, officers, employees,
and agents;
``(8) determine and implement the methodology for
assessments of the Federal Home Loan Banks to fund all of the
expenses of the Corporation; and
``(9) exercise such incidental powers not inconsistent with
the provisions of this Act as are necessary or advisable to
carry out the purposes of the Corporation.
``(c) Board of Directors.--
``(1) Establishment.--The management of the Corporation
shall be vested in a board of directors composed of the
president of each of the Federal Home Loan Banks, ex officio.
``(2) Duties.--The board of directors shall administer the
affairs of the Corporation in accordance with the provisions of
this Act.
``(3) Interim appointments.--If the president of any
Federal Home Loan Bank is vacant, the person serving in such
capacity on an acting basis shall serve on the board of
directors of the Corporation until replaced by the next person
to fill the office of president of the Federal Home Loan Bank.
``(4) Powers.--The board of directors shall exercise such
powers as may be necessary or advisable to carry out the
purposes of this section, including the power to--
``(A) set policies for the management and operation
of the Corporation;
``(B) approve a strategic business plan for the
Corporation;
``(C) review, adopt and monitor annual operation
and capital budgets of the Corporation;
``(D) constitute and perform the duties of an audit
committee, which to the extent possible shall operate
consistent with--
``(i) the requirements established for the
Federal Home Loan Banks; and
``(ii) the requirements pertaining to audit
committee reports set forth in the rules of
Securities and Exchange Commission;
``(E) select, employ, determine the compensation
for, and assign the duties and functions of the
president of the Corporation, who shall--
``(i) be the chief executive officer for
the Corporation and shall direct the
implementation of the policies adopted by the
board of directors of the Corporation;
``(ii) serve as a member of the Directorate
of the Financing Corporation, under section
21(b)(1)(A); and
``(iii) serve as a member of the
Directorate of the Resolution Funding
Corporation, under section 21B(c)(1)(A);
``(F) provide for the review and approval of all
contracts of the Corporation;
``(G) have the exclusive authority to employ and
contract for the services of an independent, external
auditor for the annual and quarterly combined financial
statements of the Federal Home Loan Banks; and
``(H) select, evaluate, determine the compensation
of, and, as appropriate, replace the internal auditor
of the Corporation, who may be removed only by vote of
the board of directors of the Corporation.
``(5) Pay.--The members of the board of directors of the
Corporation shall not receive compensation for their services
as members of the board of directors.
``(6) Quorum requirement.--
``(A) In general.--No business of the Corporation
may be conducted by the board of directors unless a
quorum of the members of the board of directors is
present in person or by telephone, or through action
taken by written consent executed by all of the
directors.
``(B) Number.--Directors representing a majority of
the members of the board of directors shall constitute
a quorum.
``(C) Vote required.--Action taken by the board of
directors shall be approved by a majority of the
directors in attendance at any meeting at which a
quorum is present, unless the board of directors adopts
procedures requiring a greater voting requirement.
``(7) Appointment of officers and adoption of rules of
procedure.--The board of directors of the Corporation shall--
``(A) select, from among the members of such board,
a Chairperson and a Vice Chairperson; and
``(B) adopt by-laws and other rules of procedure
for actions before the board of directors, including
the establishment of 1 or more committees to take
action on behalf of the board of directors, and the
delegation of powers of the board of directors to any
committee or officer of the Corporation.
``(d) Stock.--
``(1) Issuance of equal amount to each bank.--The
Corporation shall issue to each Federal home loan bank one
share of voting capital stock, with a par value of $100 per
share.
``(2) Restricted transferability.--Stock issued under
paragraph (1) may be owned and held only by the Federal Home
Loan Banks.
``(3) Payment upon issuance.--Upon issuance of any share of
stock under this subsection to any Federal Home Loan Bank, the
bank shall pay to the Corporation the total amount due for such
stock.
``(4) Distribution requirement.--
``(A) In general.--The total amount of outstanding
stock of the Corporation shall, at all times, be
distributed equally among all the Federal Home Loan
Banks.
``(B) Procedures.--The board of directors of the
Corporation shall adopt procedures to implement
subparagraph (A).
``(e) Status.--Except to the extent expressly provided in this Act,
or in rules and regulations promulgated by the Director, or unless the
context clearly indicates otherwise, the Corporation shall be accorded
the same status as a Federal Home Loan Bank for purposes of any law,
including sections 2B and 13 of this Act.''.
SEC. 205. SECURITIES AND EXCHANGE COMMISSION DISCLOSURE.
(a) In General.--The Federal Home Loan Banks shall be exempt from
compliance with--
(1) sections 13(e), 14(a), 14(c), and 17A of the Securities
Exchange Act of 1934 and related Commission regulations; and
(2) section 15 of that Act and related Securities and
Exchange Commission regulations with respect to transactions in
capital stock of the Banks.
(b) Member Exemption.--The members of the Federal Home Loan Banks
shall be exempt from compliance with sections 13(d), 13(f), 13(g),
14(d), and 16 of the Securities Exchange Act of 1934 and related
Securities and Exchange Commission regulations with respect to their
ownership of, or transactions in, capital stock of the Federal Home
Loan Banks.
(c) Exempted and Government Securities.--
(1) Capital stock.--The capital stock issued by each of the
Federal Home Loan Banks under section 6 of the Federal Home
Loan Bank Act are--
(A) exempted securities within the meaning of
section 3(a)(2) of the Securities Act of 1933; and
(B) ``exempted securities'' within the meaning of
section 3(a)(12)(A) of the Securities Exchange Act of
1934.
(2) Other obligations.--The debentures, bonds, and other
obligations issued under section 11 of the Federal Home Loan
Bank Act are--
(A) exempted securities within the meaning of
section 3(a)(2) of the Securities Act of 1933;
(B) ``government securities'' within the meaning of
section 3(a)(42) of the Securities Exchange Act of
1934;
(C) excluded from the definition of ``government
securities broker'' within section 3(a)(43) of the
Securities Exchange Act of 1934;
(D) excluded from the definition of ``government
securities dealer'' within section 3(a)(44) of the
Securities Exchange Act of 1934; and
(E) ``government securities'' within the meaning of
section 2(a)(16) of the Investment Company Act of 1940.
(d) Exemption From Reporting Requirements.--The Federal Home Loan
Banks shall be exempt from periodic reporting requirements pertaining
to--
(1) the disclosure of related party transactions that occur
in the ordinary course of business of the Banks with their
members; and
(2) the disclosure of unregistered sales of equity
securities.
(e) Tender Offers.--The Securities and Exchange Commission's rules
relating to tender offers shall not apply in connection with
transactions in capital stock of the Federal Home Loan Banks.
(f) Regulations.--In issuing final regulations to implement
provisions of this section, the Securities and Exchange Commission
shall consider the distinctive characteristics of the Federal Home Loan
Banks when evaluating the accounting treatment with respect to the
payment to REFCORP, the role of the combined financial statements of
the twelve Banks, the accounting classification of redeemable capital
stock, and the accounting treatment related to the joint and several
nature of the obligations of the Banks.
SEC. 206. COMMUNITY FINANCIAL INSTITUTION MEMBERS.
(a) Total Asset Requirement.--Paragraph (12) of section 2 of the
Federal Home Loan Bank Act (12 U.S.C. 1422(12)), as so redesignated by
section 202(2)of this Act, is amended by striking ``$500,000,000'' each
place such term appears and inserting ``$1,000,000,000''.
(b) Use of Advances for Community Development Activities.--Section
10(a) of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is
amended--
(1) in paragraph (2)(B)--
(A) by striking ``and''; and
(B) by inserting ``, and community development
activities'' before the period at the end; and
(2) in paragraph (6)--
(A) by striking ``and''; and
(B) by inserting ``and `community development
activities''' before ``shall''.
TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF
FEDERAL HOUSING ENTERPRISE OVERSIGHT AND FEDERAL HOUSING FINANCE BOARD
Subtitle A--Office of Federal Housing Enterprise Oversight
SEC. 301. ABOLISHMENT OF OFHEO.
(a) In General.--Effective at the end of the 1-year period
beginning on the date of the enactment of this Act, the Office of
Federal Housing Enterprise Oversight of the Department of Housing and
Urban Development and the positions of the Director and Deputy Director
of such Office are abolished.
(b) Disposition of Affairs.--During the 1-year period beginning on
the date of the enactment of this Act, the Director of the Office of
Federal Housing Enterprise Oversight shall, solely for the purpose of
winding up the affairs of the Office of Federal Housing Enterprise
Oversight--
(1) manage the employees of such Office and provide for the
payment of the compensation and benefits of any such employee
which accrue before the effective date of the transfer of such
employee pursuant to section 303; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Office.
(c) Status of Employees Before Transfer.--The amendments made by
title I and the abolishment of the Office of Federal Housing Enterprise
Oversight under subsection (a) of this section may not be construed to
affect the status of any employee of such Office as employees of an
agency of the United States for purposes of any other provision of law
before the effective date of the transfer of any such employee pursuant
to section 303.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing Finance
Agency may use the property of the Office of Federal Housing
Enterprise Oversight to perform functions which have been
transferred to the Director of the Federal Housing Finance
Agency for such time as is reasonable to facilitate the orderly
transfer of functions transferred pursuant to any other
provision of this Act or any amendment made by this Act to any
other provision of law.
(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to any
such agency, department, or instrumentality, which was
providing supporting services to the Office of Federal Housing
Enterprise Oversight before the expiration of the period under
subsection (a) in connection with functions that are
transferred to the Director of the Federal Housing Finance
Agency shall--
(A) continue to provide such services, on a
reimbursable basis, until the transfer of such
functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of any
right, duty, or obligation of the United States, the Director
of the Office of Federal Housing Enterprise Oversight, or any
other person, which--
(A) arises under or pursuant to the title XIII of
the Housing and Community Development Act of 1992, the
Federal National Mortgage Association Charter Act, the
Federal Home Loan Mortgage Corporation Act, or any
other provision of law applicable with respect to such
Office; and
(B) existed on the day before the abolishment under
subsection (a) of this section.
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Director of the Office of Federal
Housing Enterprise Oversight in connection with functions that
are transferred to the Director of the Federal Housing Finance
Agency shall abate by reason of the enactment of this Act,
except that the Director of the Federal Housing Finance Agency
shall be substituted for the Director of the Office of Federal
Housing Enterprise Oversight as a party to any such action or
proceeding.
SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN REGULATIONS.
All regulations, orders, determinations, and resolutions that--
(1) were issued, made, prescribed, or allowed to become
effective by--
(A) the Office of Federal Housing Enterprise
Oversight;
(B) the Secretary of Housing and Urban Development
and that relate to the Secretary's authority under--
(i) title XIII of the Housing and Community
Development Act of 1992;
(ii) under the Federal National Mortgage
Association Charter Act, with respect to the
Federal National Mortgage Association; or
(iii) the Federal Home Loan Mortgage
Corporation Act; or
(C) a court of competent jurisdiction and that
relate to functions transferred by this Act; and
(2) are in effect on the date of the abolishment under
section 301(a) of this Act,
shall remain in effect according to the terms of such regulations,
orders, determinations, and resolutions, and shall be enforceable by or
against the Director of the Federal Housing Finance Agency until
modified, terminated, set aside, or superseded in accordance with
applicable law by such Director, as the case may be, any court of
competent jurisdiction, or operation of law.
SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.
(a) Transfer.--Each employee of the Office of Federal Housing
Enterprise Oversight shall be transferred to the Federal Housing
Finance Agency for employment no later than the date of the abolishment
under section 301(a) of this Act and such transfer shall be deemed a
transfer of function for purposes of section 3503 of title 5, United
States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same status,
tenure, grade, and pay as that held on the day immediately preceding
the transfer. Each such employee holding a permanent position shall not
be involuntarily separated or reduced in grade or compensation for 12
months after the date of transfer, except for cause or, if the employee
is a temporary employee, separated in accordance with the terms of the
appointment.
(c) Appointment Authority for Excepted Service Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service, any appointment authority
established pursuant to law or regulations of the Office of
Personnel Management for filling such positions shall be
transferred, subject to paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Finance Agency may decline a transfer of authority
under paragraph (1) (and the employees appointed pursuant
thereto) to the extent that such authority relates to positions
excepted from the competitive service because of their
confidential, policy-making, policy-determining, or policy-
advocating character.
(d) Reorganization.--If the Director of the Federal Housing Finance
Agency determines, after the end of the 1-year period beginning on the
date of the abolishment under section 201(a), that a reorganization of
the combined work force is required, that reorganization shall be
deemed a major reorganization for purposes of affording affected
employees retirement under section 8336(d)(2) or 8414(b)(1)(B) of title
5, United States Code.
(e) Employee Benefit Programs.--Any employee of the Office of
Federal Housing Enterprise Oversight accepting employment with the
Director of the Federal Housing Finance Agency as a result of a
transfer under subsection (a) may retain for 12 months after the date
such transfer occurs membership in any employee benefit program of the
Federal Housing Finance Agency or the Office of Federal Housing
Enterprise Oversight, as applicable, including insurance, to which such
employee belongs on the date of the abolishment under section 201(a)
if--
(1) the employee does not elect to give up the benefit or
membership in the program; and
(2) the benefit or program is continued by the Director of
the Federal Housing Finance Agency;
The difference in the costs between the benefits which would have been
provided by such agency and those provided by this section shall be
paid by the Director of the Federal Housing Finance Agency. If any
employee elects to give up membership in a health insurance program or
the health insurance program is not continued by such Director, the
employee shall be permitted to select an alternate Federal health
insurance program within 30 days of such election or notice, without
regard to any other regularly scheduled open season.
SEC. 304. TRANSFER OF PROPERTY AND FACILITIES.
Upon the abolishment under section 301(a), all property of the
Office of Federal Housing Enterprise Oversight shall transfer to the
Director of the Federal Housing Finance Agency.
Subtitle B--Federal Housing Finance Board
SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.
(a) In General.--Effective at the end of the 1-year period
beginning on the date of enactment of this Act, the Federal Housing
Finance Board (in this title referred to as the ``Board'') is
abolished.
(b) Disposition of Affairs.--During the 1-year period beginning on
the date of enactment of this Act, the Board, solely for the purpose of
winding up the affairs of the Board--
(1) shall manage the employees of such Board and provide
for the payment of the compensation and benefits of any such
employee which accrue before the effective date of the transfer
of such employee under section 323; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Board.
(c) Status of Employees Before Transfer.--The amendments made by
titles I and II and the abolishment of the Board under subsection (a)
may not be construed to affect the status of any employee of such Board
as employees of an agency of the United States for purposes of any
other provision of law before the effective date of the transfer of any
such employee under section 403.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing Finance
Agency may use the property of the Board to perform functions
which have been transferred to the Director of the Federal
Housing Finance Agency for such time as is reasonable to
facilitate the orderly transfer of functions transferred under
any other provision of this Act or any amendment made by this
Act to any other provision of law.
(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to any
such agency, department, or instrumentality, which was
providing supporting services to the Board before the
expiration of the 1-year period under subsection (a) in
connection with functions that are transferred to the Director
of the Federal Housing Finance Agency shall--
(A) continue to provide such services, on a
reimbursable basis, until the transfer of such
functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of any
right, duty, or obligation of the United States, a member of
the Board, or any other person, which--
(A) arises under title XIII of the Housing and
Community Development Act of 1992, the Federal National
Mortgage Association Charter Act, the Federal Home Loan
Mortgage Corporation Act, the Federal Home Loan Bank
Act, or any other provision of law applicable with
respect to such Board; and
(B) existed on the day before the effective date of
the abolishment under subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Board in connection with functions
that are transferred to the Director of the Federal Housing
Finance Agency shall abate by reason of the enactment of this
Act, except that the Director of the Federal Housing Finance
Agency shall be substituted for the Board or any member thereof
as a party to any such action or proceeding.
SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN REGULATIONS.
(a) In General.--All regulations, orders, and determinations
described under subsection (b) shall remain in effect according to the
terms of such regulations, orders, determinations, and resolutions, and
shall be enforceable by or against the Director of the Federal Housing
Finance Agency until modified, terminated, set aside, or superseded in
accordance with applicable law by such Director, any court of competent
jurisdiction, or operation of law.
(b) Applicability.--A regulation, order, or determination is
described under this subsection if it--
(1) was issued, made, prescribed, or allowed to become
effective by--
(A) the Board; or
(B) a court of competent jurisdiction and that
relate to functions transferred by this Act; and
(2) is in effect on the effective date of the abolishment
under section 321(a).
SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL HOUSING
FINANCE BOARD.
(a) Transfer.--Each employee of the Board shall be transferred to
the Federal Housing Finance Agency for employment not later than the
effective date of the abolishment under section 321(a), and such
transfer shall be deemed a transfer of function for purposes of section
3503 of title 5, United States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same status,
tenure, grade, and pay as that held on the day immediately preceding
the transfer. Each such employee holding a permanent position shall not
be involuntarily separated or reduced in grade or compensation for 12
months after the date of transfer, except for cause or, if the employee
is a temporary employee, separated in accordance with the terms of the
appointment.
(c) Appointment Authority for Excepted and Senior Executive Service
Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service or the Senior Executive
Service, any appointment authority established under law or by
regulations of the Office of Personnel Management for filling
such positions shall be transferred, subject to paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Finance Agency may decline a transfer of authority
under paragraph (1) to the extent that such authority relates
to positions excepted from the competitive service because of
their confidential, policymaking, policy-determining, or
policy-advocating character, and noncareer positions in the
Senior Executive Service (within the meaning of section
3132(a)(7) of title 5, United States Code).
(d) Reorganization.--If the Director of the Federal Housing Finance
Agency determines, after the end of the 1-year period beginning on the
effective date of the abolishment under section 321(a), that a
reorganization of the combined workforce is required, that
reorganization shall be deemed a major reorganization for purposes of
affording affected employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Board accepting
employment with the Federal Housing Finance Agency as a result
of a transfer under subsection (a) may retain for 12 months
after the date on which such transfer occurs membership in any
employee benefit program of the Federal Housing Finance Agency
or the Board, as applicable, including insurance, to which such
employee belongs on the effective date of the abolishment under
section 321(a) if--
(A) the employee does not elect to give up the
benefit or membership in the program; and
(B) the benefit or program is continued by the
Director of the Federal Housing Finance Agency.
(2) Cost differential.--The difference in the costs between
the benefits which would have been provided by the Board and
those provided by this section shall be paid by the Director of
the Federal Housing Finance Agency. If any employee elects to
give up membership in a health insurance program or the health
insurance program is not continued by such Director, the
employee shall be permitted to select an alternate Federal
health insurance program within 30 days after such election or
notice, without regard to any other regularly scheduled open
season.
SEC. 324. TRANSFER OF PROPERTY AND FACILITIES.
Upon the effective date of the abolishment under section 321(a),
all property of the Board shall transfer to the Director of the Federal
Housing Finance Agency.
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POSTPONED PROCEEDINGS - At the conclusion of debate on the Paul amendment the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mr. Paul demanded a recorded vote and the Chair postponed further proceedings on the question of adoption of the amendment until later in the legislative day.
DEBATE - Pursuant to H. Res. 509, the Committee of the Whole proceeded with 10 minutes of debate on the Garrett (NJ) amendment.
POSTPONED PROCEEDINGS - At the conclusion of debate on the Garrett (NJ) amendment the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mr. Garrett (NJ) demanded a recorded vote and the Chair postponed further proceedings on the question of adoption of the amendment until later in the legislative day.
DEBATE - Pursuant to H. Res. 509, the Committee of the Whole proceeded with 10 minutes of debate on the Loretta Sanchez amendment.
Committee of the Whole House on the state of the Union rises leaving H.R. 1461 as unfinished business.
Considered as unfinished business. (consideration: CR H9189-9196)
The House resolved into Committee of the Whole House on the state of the Union for further consideration.
DEBATE - Pursuant to H. Res. 509, the Committee of the Whole proceeded with 10 minutes of debate on the Kanjorski amendment.
UNFINISHED BUSINESS - The Chair announced that the unfinished business was the question of adoption of amendments which had been debated earlier and on which further proceedings had been postponed.
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The House rose from the Committee of the Whole House on the state of the Union to report H.R. 1461.
The previous question was ordered pursuant to the rule.
The House adopted the amendment in the nature of a substitute as agreed to by the Committee of the Whole House on the state of the Union. (text: CR H9141-9172)
Mr. Frank (MA) moved to recommit with instructions to Financial Services.
Floor summary: DEBATE - The House proceeded with 10 minutes of debate on the Frank (MA) motion to recommit with instructions.
The previous question on the motion to recommit with instructions was ordered without objection.
On motion to recommit with instructions Failed by recorded vote: 200 - 220 (Roll no. 546). (consideration: CR H9192-9195; text: CR H9192)
Roll Call #546 (House)Passed/agreed to in House: On passage Passed by recorded vote: 331 - 90 (Roll no. 547).
Roll Call #547 (House)On passage Passed by recorded vote: 331 - 90 (Roll no. 547).
Roll Call #547 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.