GSE Bailout Elimination and Taxpayer Protection Act - Sets a deadline for the Director of the Federal Housing Finance Agency (FHFA) to terminate the conservatorship of either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) if the Director determines that it is financially viable. (Refers to both Fannie Mae and Freddie Mac as enterprises.)
Requires the Director to appoint the FHFA immediately as receiver of either enterprise if it is found not to be financially viable.
Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (FHEFSSA) to repeal: (1) its housing goals if the Director determines that an enterprise is financially viable; and (2) the new housing price index.
Amends the Housing and Community Development Act of 1992 to restrict the authority of an enterprise to acquire mortgage assets following its emergence from conservatorship.
Increases the minimum capital level required for each enterprise.
Instructs the Director to establish minimum levels of capital for the enterprises. Authorizes the Director to: (1) establish minimum capital levels in excess of levels specified in the FHEFSSA; and (2) deem failure of an enterprise to maintain revised minimum capital levels to constitute an unsafe and unsound condition.
Amends the Continuing Appropriations Resolution, 2010, the American Recovery and Reinvestment Act of 2009, and the Economic Stimulus Act of 2009 to repeal temporary increases to conforming loan limits.
Amends the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to repeal provisions governing enterprise authority to purchase and sell certain insured and conventional mortgages and to engage in certain lending activities (general limit and permanent high-cost area increases).
Amends the Housing and Economic Recovery Act of 2008 to repeal its conforming loan limits. Prescribes conforming loan limits for conventional mortgages that may be purchased by the enterprises.
Amends the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to: (1) prohibit the enterprises from purchasing mortgages that exceed the median area price for the affected property; (2) prohibit the enterprises from purchasing mortgages if the mortgagor has paid less than the specified minimum downpayment; and (3) require the enterprises to pay state and local taxes.
Instructs the Director of FHFA to assess each enterprise for the amount necessary to recoup to the federal government the full value of the benefit received from the federal guarantee of its obligations and financial viability.
Directs the Comptroller General to study and report to Congress on a risk-based pricing mechanism to determine accurately the value of the benefit the enterprises receive from the federal guarantee of their obligations and financial viability.
Prescribes a deadline and procedures for the wind down of operations and dissolution of an enterprise.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4889 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 4889
To establish a term certain for the conservatorships of Fannie Mae and
Freddie Mac, to provide conditions for continued operation of such
enterprises, and to provide for the wind down of such operations and
the dissolution of such enterprises.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 19, 2010
Mr. Hensarling (for himself, Mr. Pence, Mr. Price of Georgia, Mr.
Flake, Mr. Marchant, Mr. Akin, Mr. Bartlett, Mr. Latta, Mr. Pitts, Mrs.
Schmidt, Mr. Garrett of New Jersey, Mr. Olson, Mr. Duncan, Mr. Platts,
and Mr. Smith of Texas) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To establish a term certain for the conservatorships of Fannie Mae and
Freddie Mac, to provide conditions for continued operation of such
enterprises, and to provide for the wind down of such operations and
the dissolution of such enterprises.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``GSE Bailout Elimination and Taxpayer
Protection Act''.
SEC. 2. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Charter.--The term ``charter'' means--
(A) with respect to the Federal National Mortgage
Association, the Federal National Mortgage Association
Charter Act (12 U.S.C. 1716 et seq.); and
(B) with respect to the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1451 et seq.).
(2) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(3) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association; and
(B) the Federal Home Loan Mortgage Corporation.
(4) Guarantee.--The term ``guarantee'' means, with respect
to an enterprise, the credit support of the enterprise that is
provided by the Federal Government through its charter as a
government-sponsored enterprise.
SEC. 3. TERMINATION OF CURRENT CONSERVATORSHIP.
(a) In General.--Upon the expiration of the period referred to in
subsection (b), the Director of the Federal Housing Finance Agency
shall determine, with respect to each enterprise, if the enterprise is
financially viable at that time and--
(1) if the Director determines that the enterprise is
financially viable, immediately take all actions necessary to
terminate the conservatorship for the enterprise that is in
effect pursuant to section 1367 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4617); or
(2) if the Director determines that the enterprise is not
financially viable, immediately appoint the Federal Housing
Finance Agency as receiver under section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
and carry out such receivership under the authority of such
section.
(b) Timing.--The period referred to in this subsection is, with
respect to an enterprise--
(1) except as provided in paragraph (2), the 24-month
beginning upon the date of the enactment of this Act; or
(2) if the Director determines before the expiration of the
period referred to in paragraph (1) that the financial markets
would be adversely affected without the extension of such
period under this paragraph with respect to that enterprise,
and upon making such determination notifies the Congress in
writing of such determination, the 30-month period beginning
upon the date of the enactment of this Act.
(c) Financial Viability.--The Director may not determine that an
enterprise is financially viable for purposes of subsection (a) if the
Director determines that any of the conditions for receivership set
forth in paragraph (3) or (4) of section 1367(a) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4617(a)) exists at the time with respect to the enterprise.
SEC. 4. LIMITATION OF ENTERPRISE AUTHORITY UPON EMERGENCE FROM
CONSERVATORSHIP.
(a) Revised Authority.--Upon the expiration of the period referred
to in section 3(b), if the Director makes the determination under
section 3(a)(1), the following provisions shall take effect:
(1) Repeal of housing goals.--
(A) Repeal.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended
by striking sections 1331 through 1336 (12 U.S.C. 4561-
6).
(B) Conforming amendments.--Federal Housing
Enterprises Financial Safety and Soundness Act of 1992
is amended--
(i) in section 1303(28) (12 U.S.C.
4502(28)), by striking ``and, for the
purposes'' and all that follows through
``designated disaster areas'';
(ii) in section 1324(b)(1)(A) (12 U.S.C.
4544(b)(1)(A))--
(I) by striking clauses (i), (ii),
and (iv);
(II) in clause (iii), by inserting
``and'' after the semicolon at the end;
and
(III) by redesignating clauses
(iii) and (v) as clauses (i) and (ii),
respectively;
(iii) in section 1338(c)(10) (12 U.S.C.
4568(c)(10)), by striking subparagraph (E);
(iv) in section 1339(h) (12 U.S.C. 4569),
by striking paragraph (7);
(v) in section 1341 (12 U.S.C. 4581)--
(I) in subsection (a)--
(aa) in paragraph (1), by
inserting ``or'' after the
semicolon at the end;
(bb) in paragraph (2), by
striking the semicolon at the
end and inserting a period; and
(cc) by striking paragraphs
(3) and (4); and
(II) in subsection (b)(2)--
(aa) in subparagraph (A),
by inserting ``or'' after the
semicolon at the end;
(bb) by striking
subparagraphs (B) and (C); and
(cc) by redesignating
subparagraph (D) as
subparagraph (B);
(vi) in section 1345(a) (12 U.S.C.
4585(a))--
(I) in paragraph (1), by inserting
``or'' after the semicolon at the end;
(II) in paragraph (2), by striking
the semicolon at the end and inserting
a period; and
(III) by striking paragraphs (3)
and (4); and
(vii) in section 1371(a)(2) (12 U.S.C.
4631(a)(2))--
(I) by striking ``with any housing
goal established under subpart B of
part 2 of subtitle A of this title,'';
and
(II) by striking ``section 1336
or''.
(2) Portfolio limitations.--Subtitle B of title XIII of the
Housing and Community Development Act of 1992 (12 U.S.C. 4611
et seq.) is amended by adding at the end the following new
section:
``SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF ENTERPRISES.
``(a) Restriction.--No enterprise shall own, as of any applicable
date in this subsection or thereafter, mortgage assets in excess of--
``(1) upon the expiration of the period referred to in
section 3(b) of the GSE Bailout Elimination and Taxpayer
Protection Act or thereafter, $850,000,000,000;
``(2) upon the expiration of the 1-year period that begins
on the date described in paragraph (1) or thereafter,
$700,000,000,000;
``(3) upon the expiration of the 2-year period that begins
on the date described in paragraph (1) or thereafter,
$500,000,000,000; and
``(4) upon the expiration of the 3-year period that begins
on the date described in paragraph (1), $250,000,000,000.
``(b) Definition of Mortgage Assets.--For purposes of this section,
the term `mortgage assets' means, with respect to an enterprise, assets
of such enterprise consisting of mortgages, mortgage loans, mortgage-
related securities, participation certificates, mortgage-backed
commercial paper, obligations of real estate mortgage investment
conduits and similar assets, in each case to the extent such assets
would appear on the balance sheet of such enterprise in accordance with
generally accepted accounting principles in effect in the United States
as of September 7, 2008 (as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board from time to
time; and without giving any effect to any change that may be made
after September 7, 2008, in respect of Statement of Financial
Accounting Standards No. 140 or any similar accounting standard).''.
(3) Increase in minimum capital requirement.--Section 1362
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4612), as amended by section
1111 of the Housing and Economic Recovery Act of 2008 (Public
Law 110-289), is amended--
(A) in subsection (a), by striking ``For purposes
of this subtitle, the minimum capital level for each
enterprise shall be'' and inserting ``The minimum
capital level established under subsection (g) for each
enterprise may not be lower than'';
(B) in subsection (c)--
(i) by striking ``subsections (a) and'' and
inserting ``subsection'';
(ii) by striking ``regulated entities'' the
first place such term appears and inserting
``Federal Home Loan Banks'';
(iii) by striking ``for the enterprises,'';
(iv) by striking ``, or for both the
enterprises and the banks,'';
(v) by striking ``the level specified in
subsection (a) for the enterprises or''; and
(vi) by striking ``the regulated entities
operate'' and inserting ``such banks operate'';
(C) in subsection (d)(1)--
(i) by striking ``subsections (a) and'' and
inserting ``subsection''; and
(ii) by striking ``regulated entity'' each
place such term appears and inserting ``Federal
home loan bank'';
(D) in subsection (e), by striking ``regulated
entity'' each place such term appears and inserting
``Federal home loan bank'';
(E) in subsection (f)--
(i) by striking ``the amount of core
capital maintained by the enterprises,''; and
(ii) by striking ``regulated entities'' and
inserting ``banks''; and
(F) by adding at the end the following new
subsection:
``(g) Establishment of Revised Minimum Capital Levels.--
``(1) In general.--The Director shall cause the enterprises
to achieve and maintain adequate capital by establishing
minimum levels of capital for such the enterprises and by using
such other methods as the Director deems appropriate.
``(2) Authority.--The Director shall have the authority to
establish such minimum level of capital for an enterprise in
excess of the level specified under subsection (a) as the
Director, in the Director's discretion, deems to be necessary
or appropriate in light of the particular circumstances of the
enterprise.
``(h) Failure To Maintain Revised Minimum Capital Levels.--
``(1) Unsafe and unsound practice or condition.--Failure of
a enterprise to maintain capital at or above its minimum level
as established pursuant to subsection (g) of this section may
be deemed by the Director, in his discretion, to constitute an
unsafe and unsound practice or condition within the meaning of
this title.
``(2) Directive to achieve capital level.--
``(A) Authority.--In addition to, or in lieu of,
any other action authorized by law, including paragraph
(1), the Director may issue a directive to an
enterprise that fails to maintain capital at or above
its required level as established pursuant to
subsection (g) of this section.
``(B) Plan.--Such directive may require the
enterprise to submit and adhere to a plan acceptable to
the Director describing the means and timing by which
the enterprise shall achieve its required capital
level.
``(C) Enforcement.--Any such directive issued
pursuant to this paragraph, including plans submitted
pursuant thereto, shall be enforceable under the
provisions of subtitle C of this title to the same
extent as an effective and outstanding order issued
pursuant to subtitle C of this title which has become
final.
``(3) Adherence to plan.--
``(A) Consideration.--The Director may consider
such enterprise's progress in adhering to any plan
required under this subsection whenever such enterprise
seeks the requisite approval of the Director for any
proposal which would divert earnings, diminish capital,
or otherwise impede such enterprise's progress in
achieving its minimum capital level.
``(B) Denial.--The Director may deny such approval
where it determines that such proposal would adversely
affect the ability of the enterprise to comply with
such plan.''.
(4) Repeal of increases to conforming loan limits.--
(A) Repeal of temporary increases.--
(i) Continuing appropriations resolution,
2010.--Section 167 of the Continuing
Appropriations Resolution, 2010 (as added by
section 104 of division B of Public Law 111-88;
123 Stat. 2973) is hereby repealed.
(ii) American recovery and reinvestment act
of 2009.--Section 1203 of division A of the
American Recovery and Reinvestment Act of 2009
(Public Law 111-5; 123 Stat. 225) is hereby
repealed.
(iii) Economic stimulus act of 2008.--
Section 201 of the Economic Stimulus Act of
2008 (Public Law 110-185; 122 Stat. 619) is
hereby repealed.
(B) Repeal of general limit and permanent high-cost
area increase.--Paragraph (2) of section 302(b) of the
Federal National Mortgage Association Charter Act (12
U.S.C. 1717(b)(2)) and paragraph (2) of section 305(a)
of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) are each amended to read as such
sections were in effect immediately before the
enactment of the Housing and Economic Recovery Act of
2008 (Public Law 110-289).
(C) Repeal of new housing price index.--Section
1322 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992, as added by section
1124(d) of the Housing and Economic Recovery Act of
2008 (Public Law 110-289), is hereby repealed.
(D) Repeal.--Section 1124 of the Housing and
Economic Recovery Act of 2008 (Public Law 110-289) is
hereby repealed.
(E) Establishment of conforming loan limit.--For
the year in which the expiration of the period referred
to in section 3(b) of this section occurs, the
limitations governing the maximum original principal
obligation of conventional mortgages that may be
purchased by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation,
referred to in section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) and section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)),
respectively, shall be considered to be--
(i) $417,000 for a mortgage secured by a
single-family residence,
(ii) $533,850 for a mortgage secured by a
2-family residence,
(iii) $645,300 for a mortgage secured by a
3-family residence, and
(iv) $801,950 for a mortgage secured by a
4-family residence,
and such limits shall be adjusted effective each
January 1 thereafter in accordance with such sections
302(b)(2) and 305(a)(2).
(F) Prohibition of purchase of mortgages exceeding
median area home price.--
(i) Fannie mae.--Section 302(b)(2) of the
Federal National Mortgage Association Charter
Act (12 U.S.C. 1717(b)(2)) is amended by adding
at the end the following new sentence:
``Notwithstanding any other provision of this
title, the corporation may not purchase any
mortgage for a property having a principal
obligation that exceeds the median home price,
for properties of the same size, for the area
in which such property subject to the mortgage
is located.''.
(ii) Freddie mac.--Section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) is amended by adding at the
end the following new sentence:
``Notwithstanding any other provision of this
title, the Corporation may not purchase any
mortgage for a property having a principal
obligation that exceeds the median home price,
for properties of the same size, for the area
in which such property subject to the mortgage
is located.''.
(5) Requirement of minimum downpayment for mortgages
purchased.--
(A) Fannie mae.--Subsection (b) of section 302 of
the Federal National Mortgage Association Charter Act
(12 U.S.C. 1717(b)) is amended by adding at the end the
following new paragraph:
``(7) Notwithstanding any other provision of this Act, the
corporation may not newly purchase any mortgage unless the mortgagor
has paid, in cash or its equivalent on account of the property securing
repayment such mortgage, in accordance with regulations issued by the
Director of the Federal Housing Finance Agency, not less than--
``(A) for any mortgage purchased during the 12-month period
beginning upon the expiration of the period referred to in
section 3(b) of the GSE Bailout Elimination and Taxpayer
Protection Act, 5 percent of the appraised value of the
property;
``(B) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (A) of this paragraph, 7.5 percent of the
appraised value of the property; and
``(C) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (B) of this paragraph, 10 percent of the
appraised value of the property.''.
(B) Freddie mac.--Subsection (a) of section 305 of
the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)) is amended by adding at the end the
following new paragraph:
``(6) Notwithstanding any other provision of this Act, the
Corporation may not newly purchase any mortgage unless the mortgagor
has paid, in cash or its equivalent on account of the property securing
repayment such mortgage, in accordance with regulations issued by the
Director of the Federal Housing Finance Agency, not less than--
``(A) for any mortgage purchased during the 12-month period
beginning upon the expiration of the period referred to in
section 3(b) of the GSE Bailout Elimination and Taxpayer
Protection Act, 5 percent of the appraised value of the
property;
``(B) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (A) of this paragraph, 7.5 percent of the
appraised value of the property; and
``(C) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (B) of this paragraph, 10 percent of the
appraised value of the property.''.
(6) Requirement to pay state and local taxes.--
(A) Fannie mae.--Paragraph (2) of section 309(c) of
the Federal National Mortgage Association Charter Act
(12 U.S.C. 1723a(c)(2)) is amended--
(i) by striking ``shall be exempt from''
and inserting ``shall be subject to''; and
(ii) by striking ``except that any'' and
inserting ``and any''.
(B) Freddie mac.--Section 303(e) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1452(e))
is amended--
(i) by striking ``shall be exempt from''
and inserting ``shall be subject to''; and
(ii) by striking ``except that any'' and
inserting ``and any''.
(7) Repeals relating to registration of securities.--
(A) Fannie mae.--
(i) Mortgage-backed securities.--Section
304(d) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(d)) is
amended by striking the fourth sentence.
(ii) Subordinate obligations.--Section
304(e) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(e)) is
amended by striking the fourth sentence.
(B) Freddie mac.--Section 306 of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1455) is
amended by striking subsection (g).
(8) Recoupment of costs for federal guarantee.--
(A) Assessments.--The Director of the Federal
Housing Finance Agency shall establish and collect from
each enterprise assessments in the amount determined
under subparagraph (B). In determining the method and
timing for making such assessments, the Director shall
take into consideration the determinations and
conclusions of the study under subsection (b) of this
section.
(B) Determination of costs of guarantee.--
Assessments under subparagraph (A) with respect to an
enterprise shall be in such amount as the Director
determines necessary to recoup to the Federal
Government the full value of the benefit the enterprise
receives from the guarantee provided by the Federal
Government for the obligations and financial viability
of the enterprise, based upon the dollar value of such
benefit in the market to such enterprise when not
operating under conservatorship or receivership. To
determine such amount, the Director shall establish a
risk-based pricing mechanism as the Director considers
appropriate, taking into consideration the
determinations and conclusions of the study under
subsection (b) of this section.
(C) Treatment of recouped amounts.--The Director
shall cover into the general fund of the Treasury any
amounts received from assessments made under this
paragraph.
(b) GAO Study Regarding Recoupment of Costs for Federal Government
Guarantee.--The Comptroller General of the United States shall conduct
a study to determine a risk-based pricing mechanism to accurately
determine the value of the benefit the enterprises receive from the
guarantee provided by the Federal Government for the obligations and
financial viability of the enterprises. Such study shall establish a
dollar value of such benefit in the market to each enterprise when not
operating under conservatorship or receivership, shall analyze various
methods of the Federal Government assessing a charge for such value
received (including methods involving an annual fee or a fee for each
mortgage purchased or securitized), and shall make a recommendation of
the best such method for assessing such charge. Not later than 12
months after the date of the enactment of this Act, the Comptroller
General shall submit to the Congress a report setting forth the
determinations and conclusions of such study.
SEC. 5. REQUIRED WIND DOWN OF OPERATIONS AND DISSOLUTION OF ENTERPRISE.
(a) Applicability.--This section shall apply to an enterprise upon
the expiration of the 3-year period referred to in section 3(b).
(b) Repeal of Charter.--Upon the applicability of this section to
an enterprise, the charter for the enterprise is repealed and the
enterprise shall have no authority to conduct new business under such
charter, except that the provisions of such charter in effect
immediately before such repeal shall continue to apply with respect to
the rights and obligations of any holders of outstanding debt
obligations and mortgage-backed securities of the enterprise.
(c) Wind Down.--Upon the applicability of this section to an
enterprise, the Director and the Secretary of the Treasury shall
jointly take such action, and may prescribe such regulations and
procedures, as may be necessary to wind down the operations of an
enterprise as an entity chartered by the United States Government over
the duration of the 10-year period beginning upon the applicability of
this section to the enterprise (pursuant to subsection (a)) in an
orderly manner consistent with this Act and the ongoing obligations of
the enterprise.
(d) Division of Assets and Liabilities; Authority To Establish
Holding Corporation and Dissolution Trust Fund.--The action and
procedures required under subsection (c)--
(1) shall include the establishment and execution of plans
to provide for an equitable division and distribution of assets
and liabilities of the enterprise, including any liability of
the enterprise to the United States Government or a Federal
reserve bank that may continue after the end of the period
described in subsection (ca); and
(2) may provide for establishment of--
(A) a holding corporation organized under the laws
of any State of the United States or the District of
Columbia for the purposes of the reorganization and
restructuring of the enterprise; and
(B) one or more trusts to which to transfer--
(i) remaining debt obligations of the
enterprise, for the benefit of holders of such
remaining obligations; or
(ii) remaining mortgages held for the
purpose of backing mortgage-backed securities,
for the benefit of holders of such remaining
securities.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line