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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2575 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 2575

    To reform the regulation of certain housing-related Government-
             sponsored enterprises, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 24, 2003

Mr. Baker (for himself, Mr. Ose, Mr. Bachus, Mr. King of New York, Mr. 
  Leach, Mr. Shays, Mr. Linder, Ms. Ginny Brown-Waite of Florida, Mr. 
   Cox, Mr. Ryan of Wisconsin, Mr. Gary G. Miller of California, Mr. 
    Renzi, Mr. Manzullo, Ms. Hart, Mr. Hoekstra, Mr. Jones of North 
    Carolina, Mr. Toomey, Mr. Hensarling, Mr. Gillmor, Mr. Lucas of 
  Oklahoma, and Ms. Harris) 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 ``Secondary Mortgage 
Market Enterprises Regulatory Improvement Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
      TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC

                 Subtitle A--Improvement of Supervision

Sec. 101. Change of name of Office of Thrift Supervision to Office of 
                            Housing Finance Supervision.
Sec. 102. Transfer of authority to regulate safety and soundness of 
                            enterprises to Office of Housing Finance 
                            Supervision.
Sec. 103. Duties and authorities of Director.
Sec. 104. Examiners and accountants.
Sec. 105. Regulations.
Sec. 106. Assessments.
Sec. 107. Authority of Secretary of HUD for new activities, housing 
                            information, and housing goals.
Sec. 108. Prior approval of Secretary of HUD for new activities.
Sec. 109. Limitation on nonmission-related assets.
Sec. 110. Conforming loan limits.
Sec. 111. Public disclosure of information.
Sec. 112. Reviews of enterprises.
Sec. 113. Risk-based capital test for enterprises.
Sec. 114. Minimum and critical capital levels.
Sec. 115. Required implementation of agreement.
Sec. 116. Definitions.
                  Subtitle B--Prompt Corrective Action

Sec. 131. Capital classifications.
Sec. 132. Supervisory actions applicable to undercapitalized 
                            enterprises.
Sec. 133. Supervisory actions applicable to significantly 
                            undercapitalized enterprises.
Sec. 134. Authority over critically undercapitalized enterprises.
                    Subtitle C--Enforcement Actions

Sec. 151. Cease-and-desist proceedings.
Sec. 152. Temporary cease-and-desist proceedings.
Sec. 153. Removal and prohibition authority.
Sec. 154. Enforcement and jurisdiction.
Sec. 155. Civil money penalties.
Sec. 156. Criminal penalty.
              Subtitle D--Reporting Regarding Enterprises

Sec. 161. Reporting regarding enterprises.
                     Subtitle E--General Provisions

Sec. 171. Conforming and technical amendments.
Sec. 172. Effective date.
        TITLE II--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

Sec. 201. Abolishment of OFHEO.
Sec. 202. Continuation and coordination of certain regulations.
Sec. 203. Transfer and rights of employees of OFHEO.
Sec. 204. Transfer of property and facilities.

      TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC

                 Subtitle A--Improvement of Supervision

SEC. 101. CHANGE OF NAME OF OFFICE OF THRIFT SUPERVISION TO OFFICE OF 
              HOUSING FINANCE SUPERVISION.

    (a) In General.--Section 3 of the Home Owners' Loan Act (12 U.S.C. 
1462a) is amended--
            (1) in the section heading, by striking ``thrift'' and 
        inserting ``housing finance''; and
            (2) in subsection (a), by striking ``Office of Thrift 
        Supervision'' and inserting ``Office of Housing Finance 
        Supervision''.
    (b) Conforming Amendments to Home Owners' Loan Act.--The Home 
Owners' Loan Act is amended--
            (1) by striking ``Thrift Supervision'' each place such term 
        appears and inserting ``Housing Finance Supervision''; and
            (2) in the table of contents in section 1, by striking the 
        item relating to section 3 and inserting the following new 
        item:

``Sec. 3. Director of the Office of Housing Finance Supervision.''
    (c) Other References.--Any reference in any Federal law, executive 
order, rule, regulation, or delegation of authority, or any document of 
or pertaining to the Office of Thrift Supervision--
            (1) to the Director of the Office of Thrift Supervision is 
        deemed to refer to the Director of the Office of Housing 
        Finance Supervision; and
            (2) to the Office of Thrift Supervision is deemed to refer 
        to the Office of Housing Finance Supervision.

SEC. 102. TRANSFER OF AUTHORITY TO REGULATE SAFETY AND SOUNDNESS OF 
              ENTERPRISES TO OFFICE OF HOUSING FINANCE SUPERVISION.

    (a) In General.--Part 1 of subtitle A of title XIII of the Housing 
and Community Development Act of 1992 is amended by striking sections 
1311 and 1312 (12 U.S.C. 4511, 4512) and inserting the following new 
section:

``SEC. 1311. SUPERVISION AND REGULATION BY OFFICE OF HOUSING FINANCE 
              SUPERVISION.

    ``(a) In General.--The enterprises shall, to the extent provided in 
this title, be subject to the supervision and regulation of the 
Director of the Office of Housing Finance Supervision. The Director 
shall succeed to the authority of the Director of the Office of Federal 
Housing Enterprise Oversight of the Department of Housing and Urban 
Development and the general regulatory and any other authority of the 
Secretary of Housing and Urban Development with respect to the 
enterprises (except as specifically provided otherwise in this Act, the 
Federal National Mortgage Association Charter Act, the Federal Home 
Loan Mortgage Corporation Act, and any other provision of Federal law).
    ``(b) Savings Provision.--The authority of the Director to take 
actions under subtitles B and C does not in any way limit the general 
supervisory and regulatory authority granted to the Director under 
subsection (a).''.
    (b) Prohibition of Financial Interests of Director.--
            (1) In general.--Section 3(d) of the Home Owners' Loan Act 
        (12 U.S.C. 1462a(d)) is amended by inserting ``, or in any 
        enterprise, as defined in section 1303 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992 (12 
        U.S.C. 4502)'' before the period at the end.
            (2) Applicability.--The amendment made by paragraph (1) 
        shall apply beginning on the expiration of the 1-year period 
        that begins on the date of the enactment of this Act.

SEC. 103. DUTIES AND AUTHORITIES OF DIRECTOR.

    (a) In General.--Section 1313 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4513) is amended to read as follows:

``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

    ``(a) Duties.--
            ``(1) Principal duties.--The principal duties under this 
        title of the Director shall be to ensure that the enterprises--
                    ``(A) operate in a financially safe and sound 
                manner;
                    ``(B) carry out their missions in a financially 
                safe and sound manner and only through activities that 
                have been authorized under, and are consistent with the 
                purposes of, the provisions of Federal law that charter 
                the enterprises, including as determined by the 
                Secretary of Housing and Urban Development under 
                section 1322; and
                    ``(C) remain adequately capitalized.
            ``(2) Other duties.--To the extent consistent with 
        paragraph (1), the duty of the Director shall be to exercise 
        general supervisory and regulatory authority over the 
        enterprises, in accordance with this title, the Federal 
        National Mortgage Association Charter Act, the Federal Home 
        Loan Mortgage Corporation Act, and any other provisions of law.
    ``(b) Authority Exclusive of Secretary.--Except as specifically 
provided in this Act, the Federal National Mortgage Association Charter 
Act, the Federal Home Loan Mortgage Corporation Act, or any other 
provision of Federal law, the authority of the Director with respect to 
the enterprises shall not be subject to the review, approval, or 
intervention of the Secretary of the Treasury.
    ``(c) Delegation of Authority.--The Director may delegate to 
officers and employees of the Director any of the functions, powers, 
and duties of the Director, with respect to supervision and regulation 
of the enterprises, as the Director considers appropriate.''.

SEC. 104. 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 the second sentence of subsection (c)--
                    (A) by striking ``The'' and inserting ``During the 
                3-year period that begins upon the date of the 
                enactment of the Secondary Mortgage Market Enterprises 
                Regulatory Improvement Act, the''; and
                    (B) by inserting ``to conduct examinations under 
                this section'' before the period; and
            (2) in subsection (d)--
                    (A) by inserting ``, with respect to the 
                enterprises,'' after ``penalties''; and
                    (B) by striking ``Federal Reserve banks'' and 
                inserting ``Director, with respect to examinations of 
                savings associations''.
    (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 
        Office, with respect to supervision and regulation of the 
        enterprises, that is in the competitive service.
            ``(2) Appointment authority.--
                    ``(A) In general.--The Director may appoint 
                candidates to any position described in paragraph (1)--
                            ``(i) in accordance with the statutes, 
                        rules, and regulations governing appointments 
                        in the excepted service; and
                            ``(ii) notwithstanding any statutes, rules, 
                        and regulations governing appointments in the 
                        competitive service.
                    ``(B) Rule of construction.--The appointment of a 
                candidate to a position under authority of this 
                paragraph shall not be considered to cause such 
                position to be converted from the competitive service 
                to the excepted service.
            ``(3) Reports.--No later than 90 days after the end of 
        fiscal year 2003 (for fiscal year 2003) and 90 days after the 
        end of fiscal year 2005 (for fiscal years 2004 and 2005), the 
        Director shall submit a report with respect to its exercise of 
        the authority granted by paragraph (2) during such fiscal years 
        to the Committee on Government Reform and the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Governmental Affairs and the Committee on Banking, 
        Housing, and Urban Affairs of the Senate. Such reports shall 
        describe the changes in the hiring process authorized by such 
        paragraph, including relevant information related to--
                    ``(A) the quality of candidates;
                    ``(B) the procedures used by the Director to select 
                candidates through the streamlined hiring process;
                    ``(C) the numbers, types, and grades of employees 
                hired under the authority;
                    ``(D) any benefits or shortcomings associated with 
                the use of the authority;
                    ``(E) the effect of the exercise of the authority 
                on the hiring of veterans and other demographic groups; 
                and
                    ``(F) the way in which managers were trained in the 
                administration of the streamlined hiring system.''.

SEC. 105. REGULATIONS.

    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 and 
orders necessary to carry out the duties of the Director, with respect 
to supervision and regulation of the enterprises, under this title, the 
Federal National Mortgage Association Charter Act, and the Federal Home 
Loan Mortgage Corporation Act, and to ensure that the purposes of this 
title and such Acts are accomplished.''; and
            (2) in subsection (c), by striking ``Committee on Banking, 
        Finance and Urban Affairs'' and inserting ``Committee on 
        Financial Services''.

SEC. 106. 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.--
            ``(1) Director.--The Director shall establish and collect 
        from the enterprises annual assessments in an amount not 
        exceeding the amount sufficient to provide for reasonable costs 
        and expenses of the Director, with respect to regulation and 
        supervision of the enterprises, including the expenses of any 
        examinations under section 1317 and the expenses of obtaining 
        any reviews and credit assessments under subsection section 
        1319.
            ``(2) Secretary of HUD.--The Secretary of Housing and Urban 
        Development shall establish and collect from the enterprises 
        annual assessments in an amount not exceeding the amount 
        sufficient to provide for reasonable costs and expenses of the 
        Department of Housing and Urban Development in carrying out the 
        responsibilities of the Secretary of Housing and Urban 
        Development under this subtitle, the Federal National Mortgage 
        Association Charter Act, and the Federal Home Loan Mortgage 
        Corporation Act.'';
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by inserting ``and to the Secretary of 
                        Housing and Urban Development'' after 
                        ``Director'';
                            (ii) by inserting ``paragraph (1) and (2), 
                        respectively, of'' before ``subsection (a)''; 
                        and
                            (iii) by inserting ``under such paragraph'' 
                        after ``total annual assessment''; and
                    (B) in paragraph (2)--
                            (i) by striking ``The annual assessment'' 
                        and inserting ``Each of the annual assessments 
                        pursuant to paragraphs (1) and (2) of 
                        subsection (a)''; and
                            (ii) 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 paragraphs (1) and (3);
            (3) in subsection (c)--
                    (A) by inserting ``for an assessment under 
                subsection (a)(1) that are'' after ``The semiannual 
                payments''; and
                    (B) by adding at the end the following new 
                sentence: ``The Director may adjust the amounts of any 
                semiannual assessments for an assessment under 
                subsection (a)(1) that are to be paid pursuant to 
                subsection (b) by an enterprise, as necessary in the 
                discretion of the Director, to ensure that the costs of 
                enforcement activities under subtitles B and C for an 
                enterprise are borne only by that enterprise.'';
            (4) in subsection (d)--
                    (A) by inserting ``by the Director or by the 
                Secretary of Housing and Urban Development'' before 
                ``from an enterprise''; and
                    (B) by inserting ``by the Director or by the 
                Secretary of Housing and Urban Development, as 
                applicable,'' before ``for the following year'';
            (5) in subsection (f), by striking the last sentence and 
        inserting the following new sentence: ``Notwithstanding any 
        other provision of law, any assessments collected by the 
        Director pursuant to this section shall be deposited in the 
        Fund in an account for the Director and any amounts collected 
        by the Secretary of Housing and Urban Development shall be 
        deposited in the Fund in an account for such Secretary. Any 
        amounts in the Fund are hereby made available, without fiscal 
        year limitation, to the Director (to the extent of amounts in 
        the Director's account) and to the Secretary of Housing and 
        Urban Development (to the extent of amounts in the Secretary's 
        account) for carrying out the supervisory and regulatory 
        responsibilities of the Director and the Secretary, 
        respectively, with respect to the enterprises, including any 
        necessary administrative and nonadministrative expenses of the 
        Director and Secretary, respectively, in carrying out the 
        purposes of this title, the Federal National Mortgage 
        Association Charter Act, and the Federal Home Loan Mortgage 
        Corporation Act.''; and
            (6) in subsection (g)--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following new paragraphs:
            ``(1) Financial operating plans and forecasts.--Before the 
        beginning of each fiscal year--
                    ``(A) the Director shall submit a copy of the 
                financial operating plans and forecasts for the 
                Director, with respect to regulation and supervision of 
                the enterprises, to the Director of the Office of 
                Management and Budget; and
                    ``(B) the Secretary of Housing and Urban 
                Development shall submit, to the Director, a copy of 
                the financial operating plans and forecasts for the 
                Department of Housing and Urban Development, with 
                respect to responsibilities and activities of the 
                Secretary under this title.
            ``(2) Reports of operations.--As soon as practicable after 
        the end of each fiscal year and each quarter thereof--
                    ``(A) the Director shall submit a copy of the 
                report of the results of the operations of the 
                Director, with respect to regulation and supervision of 
                the enterprises, during such period to the Director of 
                the Office of Management and Budget; and
                    ``(B) the Secretary of Housing and Urban 
                Development shall submit, to the Director, a report of 
                the results of the operations of the Department of 
                Housing and Urban Development, with respect to 
                responsibilities and activities of the Secretary under 
                this title.''; and
                    (B) in paragraph (3)--
                            (i) by striking ``(A)'';
                            (ii) by striking ``, and (B)'' and 
                        inserting the following: ``. The annual plans, 
                        forecasts, and reports required under 
                        paragraphs (1)(B) and (2)(B) shall be 
                        included''; and
                            (iii) by inserting ``of Housing and Urban 
                        Development'' before the period at the end.

SEC. 107. AUTHORITY OF SECRETARY OF HUD FOR NEW ACTIVITIES, HOUSING 
              INFORMATION, AND HOUSING GOALS.

    (a) In General.--Part 2 of subtitle A of title XIII of the Housing 
and Community Development Act of 1992 is amended--
            (1) by striking the heading for the part and the heading 
        for subpart A and inserting the following:

    ``PART 2--NEW ACTIVITIES, HOUSING INFORMATION, AND HOUSING GOALS

         ``Subpart A--New Activities and Housing Information'';

        and
            (2) by striking section 1321 (12 U.S.C. 4541).
    (b) Retention of Fair Housing Responsibilities.--Section 1325 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4545) is 
amended, in the matter preceding paragraph (1), by inserting ``of 
Housing and Urban Development'' after ``The Secretary''.
    (c) Retention of Authority To Establish and Enforce Housing 
Goals.--Part 2 of subtitle A of the Housing and Community Development 
Act of 1992 is amended--
            (1) by inserting ``of Housing and Urban Development (in 
        this subpart referred to as the `Secretary')'' after ``The 
        Secretary'', each place such term appears in--
                    (A) the first sentence of section 1331(a) (12 
                U.S.C. 4561(a)); and
                    (B) section 1341(a) (12 U.S.C. 4581(a));
            (2) in section 1332 (12 U.S.C. 4562), by striking 
        subsection (d);
            (3) in section 1333 (12 U.S.C. 4563), by striking 
        subsection (d);
            (4) in section 1334 (12 U.S.C. 4564), by striking 
        subsection (d);
            (5) in section 1336 (12 U.S.C. 4566)--
                    (A) in subsection (b)(3)(C), by inserting ``the 
                Director,'' after ``notice to the enterprise,''; and
                    (B) in subsection (c)(5), by inserting ``, and to 
                the Director,'' after ``housing plan'';
            (6) by striking sections 1337 and 1338 (12 U.S.C. 4567, 
        4562 note);
            (7) in section 1341(b)(1) (12 U.S.C. 4581(b)(1)), by 
        inserting after the period at the end the following new 
        sentence: ``Immediately upon issuing and serving a notice of 
        charges under this section, the Secretary shall submit a copy 
        of such notice to the Director.'';
            (8) in section 1345 (12 U.S.C. 4585)--
                    (A) in subsection (c)(1)(A), by inserting ``and the 
                Director'' after ``enterprise''; and
                    (B) in subsection (d), by inserting ``, upon 
                notification to the Director,'' after ``1343''; and
            (9) in section 1346(a) (12 U.S.C. 4586(a)), in the matter 
        preceding paragraph (1), by inserting ``and to the Director'' 
        after ``the public''.
    (d) Retention of Annual Housing Report Responsibility.--Section 
1324 of the Housing and Community Development Act of 1992 (12 U.S.C. 
4544) is amended--
            (1) by inserting ``of Housing and Urban Development'' after 
        ``the Secretary'' each place such term appears; and
            (2) in subsection (a), by striking ``, as part of the 
        annual report under section 1328(a) of this title,''.
    (e) Authority of Secretary 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 Secretary of Housing and Urban Development 
may, in the discretion of such Secretary, 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.''.
    (f) Regulatory Authority.--Subpart A of 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 by adding at the end the following new 
section:

``SEC. 1329. AUTHORITY OF SECRETARY OF HUD TO ISSUE REGULATIONS.

    ``The Secretary of Housing and Urban Development shall issue any 
regulations as are necessary to carry out the responsibilities of the 
Secretary under this subtitle.''.

SEC. 108. PRIOR APPROVAL OF SECRETARY OF HUD FOR NEW ACTIVITIES.

    (a) In General.--Section 1322 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4542) is amended to read as follows:

``SEC. 1322. PRIOR APPROVAL AUTHORITY FOR NEW ACTIVITIES.

    ``(a) Authority.--The Secretary of Housing and Urban Development 
shall have the authority to approve all new activities, and to review 
all ongoing activities, of an enterprise to ensure compliance with the 
Federal National Mortgage Association Charter Act or the Federal Home 
Loan Mortgage Corporation Act, as applicable.
    ``(b) Requirement for Prior Approval.--An enterprise may not 
commence any new activity before obtaining the approval of the 
Secretary of Housing and Urban Development for the new activity, in 
accordance with this section.
    ``(c) Standard for Approval.--The Secretary of Housing and Urban 
Development may approve a new activity of an enterprise only if--
            ``(1) the new activity is authorized--
                    ``(A) with respect to the Federal National Mortgage 
                Association, under the Federal National Mortgage 
                Association Charter Act or other Federal law; and
                    ``(B) with respect to the Federal Home Loan 
                Mortgage Corporation, under the Federal Home Loan 
                Mortgage Corporation Act or other Federal law;
            ``(2) the Secretary of Housing and Urban Development 
        determines, after consultation with the Director, that the 
        enterprise can conduct the new activity in a safe and sound 
        manner; and
            ``(3) the Secretary of Housing and Urban Development 
        determines that the new activity is in the public interest.
    ``(d) Procedure for Approval.--The Secretary of Housing and Urban 
Development shall, by regulation, establish procedures for the 
enterprises to obtain the approval of the Secretary of Housing and 
Urban Development for purposes of subsection (b).''.
    (b) Definition of New Activity.--Paragraph (13) of section 1303 of 
the Housing and Community Development Act of 1992 (12 U.S.C. 4502(13)) 
is amended to read as follows:
            ``(13) New activity.--The term `new activity' means, with 
        respect to the enterprises, any program, activity, business 
        process, or investment that directly or indirectly provides 
        financing or other services related to conventional mortgages 
        (including purchasing, servicing, selling, and lending on the 
        security of such mortgages) that--
                    ``(A) is significantly different from programs, 
                activities, business processes, or investments that (i) 
                have been approved under this Act, or (ii) were 
                approved or engaged in by an enterprise before the date 
                of the enactment of the Housing and Community 
                Development Act of 1992; or
                    ``(B) represents an expansion, in terms of the 
                dollar volume or number of mortgages or securities 
                involved, of programs above limits expressly contained 
                in any prior approval.''.
    (c) Conforming Amendments.--
            (1) Fannie mae.--Section 302(b)(6) of the Federal National 
        Mortgage Association Charter Act (12 U.S.C. 1717(b)(6)) is 
        amended by striking ``program'' and inserting ``activity''.
            (2) Freddie mac.--Section 305(c) of the Federal Home Loan 
        Mortgage Corporation Act (12 U.S.C. 1454(c)) is amended by 
        striking ``program'' and inserting ``activity''.
            (3) 1992 act.--Section 1369C(a)(4) of the Housing and 
        Community Development Act of 1992 (12 U.S.C. 4622(a)(4)) is 
        amended by striking ``programs'' and inserting ``activities''.

SEC. 109. LIMITATION ON NONMISSION-RELATED ASSETS.

    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 Enterprises, Special 
   Enforcement Powers, and Limitation on Nonmission-Related Assets'';

        and
            (2) by adding at the end the following new section:

``SEC. 1369E. LIMITATION ON NONMISSION-RELATED ASSETS.

    ``(a) In General.--The Secretary of Housing and Urban Development 
shall, by regulation, limit the nonmission-related assets that an 
enterprise may hold at any time. The Secretary of Housing and Urban 
Development shall define the term `nonmission-related asset' for 
purposes of this section.
    ``(b) Rule of Construction.--Subsection (a) may not be construed to 
authorize an enterprise to engage in any new activity (as such term is 
defined in section 1303) relating to any nonmission-related asset 
without obtaining the prior approval of the Secretary of Housing and 
Urban Development in accordance with section 1322.''.

SEC. 110. 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 $275,000 for a mortgage secured by 
a single-family residence, $351,950 for a mortgage secured by a 2-
family residence, $425,400 for a mortgage secured by a 3-family 
residence, and $528,700 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 2002, 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 Office of 
Housing Finance Supervision (pursuant to section 1321 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 $275,000 for a mortgage 
secured by a single-family residence, $351,950 for a mortgage secured 
by a 2-family residence, $425,400 for a mortgage secured by a 3-family 
residence, and $528,700 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 2002, 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 Office of 
Housing Finance Supervision (pursuant to section 1321 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 before section 1322 (12 U.S.C. 4542) the following new 
section:

``SEC. 1321. HOUSING PRICE INDEX.

    ``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 (as such term is defined 
in section 1303 of Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992). In establishing such method, the Director shall 
take into consideration the monthly survey of all major lenders 
conducted by the Federal Housing Finance Board 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 
Secondary Mortgage Market Enterprises Regulatory Improvement Act, 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.''.

SEC. 111. PUBLIC DISCLOSURE OF INFORMATION.

    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 ``by enterprises'' 
        and inserting ``and information''; and
            (2) by adding at the end the following new subsection:
    ``(c) Public Disclosure of Information.--The Director shall, by 
regulation, require each enterprise to disclose to the public, on not 
less than an annual basis, such financial, business, and other 
information that the Director determines would be in the public 
interest.''.

SEC. 112. REVIEWS OF ENTERPRISES.

    Section 1319 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4519) is amended--
            (1) in the section heading--
                    (A) by striking ``authority to provide for''; and
                    (B) in the section heading, by striking ``by rating 
                organization'';
            (2) by inserting after ``any entity'' the following: ``that 
        the Director considers appropriate, including an entity'';
            (3) by inserting ``(a) Authority To Provide for Reviews.--
        '' before ``The''; and
            (4) by adding at the end the following new subsection:
    ``(b) Biennial Determination of Credit Rating.--
            ``(1) In general.--On a biennial basis, the Director shall 
        provide for 2 entities effectively recognized by the Division 
        of Market Regulation of the Securities and Exchange Commission 
        as nationally recognized statistical rating organizations for 
        the purposes of the capital rules for broker dealers, each to 
        conduct an assessment of the financial condition of each 
        enterprise for the purpose of determining the level of risk 
        that the enterprise will be unable to meet its obligations, 
taking into consideration the legal status evidenced by the statements 
required under--
                    ``(A) the penultimate sentence of section 304(b) of 
                the Federal National Mortgage Association Charter Act 
                (12 U.S.C. 1719(b));
                    ``(B) the last sentence of section 304(d) of the 
                Federal National Mortgage Association Charter Act (12 
                U.S.C. 1719(d));
                    ``(C) the penultimate sentence of section 304(e) of 
                the Federal National Mortgage Association Charter Act 
                (12 U.S.C. 1719(e)); and
                    ``(D) section 306(h)(2) of the Federal Home Loan 
                Mortgage Corporation Act (12 U.S.C. 1455(h)(2)).
            ``(2) Credit rating.--The assessment shall include 
        assigning a credit rating for each enterprise using a scale 
        similar to that used by such organization with respect to 
        obligations of other financial institutions, and shall include 
        the report regarding such assessment and the rating in the 
        report of the Director under section 1319B(a).''.

SEC. 113. RISK-BASED CAPITAL TEST FOR ENTERPRISES.

    Section 1361 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4611) is amended--
            (1) in subsection (a)(2)(A), by inserting ``or change in 
        such other manner as the Director considers appropriate,'' 
        after ``subparagraph (C),'';
            (2) in subsection (b)(1), by inserting after the period at 
        the end the following: ``Notwithstanding subsection (a), the 
        Director may, in the sole discretion of the Director, make any 
        assumptions that the Director considers appropriate regarding 
        interest rates, home prices, and new business.''; and
            (3) in subsection (c)(2), by inserting ``or such other 
        percentage as the Director considers appropriate'' before the 
        period at the end.

SEC. 114. 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) by striking subsection (b);
            (2) by striking ``(a) In General.--''; and
            (3) in the matter preceding paragraph (1), by inserting 
        before ``the sum of'' the following: ``the amount established 
        by the Director, by regulation or order, as such amount may be 
        adjusted from time-to-time by the Director to achieve the 
        purposes of this title, that is not less than''.
    (b) Critical Capital Level.--Section 1363 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4613) is amended, in the 
matter preceding paragraph (1), by inserting before ``the sum of'' the 
following: ``the amount established by the Director, by regulation or 
order, as such amount may be adjusted from time-to-time by the Director 
to achieve the purposes of this title, that is not less than''.

SEC. 115. REQUIREMENTS TO ENHANCE CAPITAL STRENGTH, DISCLOSURE, AND 
              MARKET DISCIPLINE.

    Section 1361 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4611) is amended by adding at the end the following new 
subsection:
    ``(g) Required Implementation of Agreement.--The Director shall, by 
regulation, require each enterprise--
            ``(1) to issue subordinated debt of such type and in such 
        amount as the Director considers necessary;
            ``(2) to maintain appropriate levels of liquidity;
            ``(3) to obtain and disclose an annual credit rating;
            ``(4) to publicly disclose interest rate risk; and
            ``(5) to publicly disclose credit risk.

SEC. 116. DEFINITIONS.

    Section 1303 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4502) is amended--
            (1) in paragraph (5), by striking ``Federal Housing 
        Enterprise Oversight of the Department of Housing and Urban 
        Development'' and inserting ``Housing Finance Supervision'';
            (2) in paragraphs (8), (9), (10), and (19), by inserting 
        ``of Housing and Urban Development'' after ``Secretary'' each 
        place such term appears;
            (3) in paragraph (14), by striking ``Federal Housing 
        Enterprise Oversight of the Department of Housing and Urban 
        Development'' and inserting ``Housing Finance Supervision'';
            (4) by striking paragraph (15);
            (5) by redesignating paragraphs (7) through (14) (as 
        amended by the preceding provisions of this Act) as paragraphs 
        (8) through (15), respectively; and
            (6) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Enterprise-affiliated party.--The term `enterprise-
        affiliated party' means--
                    ``(A) any director, officer, employee, or 
                controlling stockholder of, or agent for, an 
                enterprise;
                    ``(B) any shareholder, consultant, joint venture 
                partner, and any other person as determined by the 
                Director (by regulation or case-by-case) who 
                participates in the conduct of the affairs of an 
                enterprise; and
                    ``(C) any independent contractor (including any 
                attorney, appraiser, or accountant) who 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,
                which caused or is likely to cause more than a minimal 
                financial loss to, or a significant adverse effect on, 
                the enterprise.''.

                  Subtitle B--Prompt Corrective Action

SEC. 131. CAPITAL CLASSIFICATIONS.

    Section 1364 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4614) is amended--
            (1) by striking subsection (b) and inserting the following 
        new subsection:
    ``(b) Discretionary Classification.--
            ``(1) Grounds for reclassification.--The Director may 
        reclassify an enterprise under paragraph (2) if--
                    ``(A) at any time, the Director determines in 
                writing that an enterprise is engaging in conduct that 
                could result in a rapid depletion of core capital or 
                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 an enterprise is in an 
                unsafe or unsound condition; or
                    ``(C) pursuant to section 1371(b), the Director 
                deems an enterprise 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 
        an enterprise for any reason not specified in this subsection, 
        if the Director takes any action described in paragraph (1) the 
        Director may classify an enterprise--
                    ``(A) as undercapitalized, if the enterprise is 
                otherwise classified as adequately capitalized;
                    ``(B) as significantly undercapitalized, if the 
                enterprise is otherwise classified as undercapitalized; 
                and
                    ``(C) as critically undercapitalized, if the 
                enterprise is otherwise classified as significantly 
                undercapitalized.'';
            (2) by redesignating subsection (d) as subsection (e); and
            (3) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Restriction on Capital Distributions.--
            ``(1) In general.--An enterprise shall make no capital 
        distribution if, after making the distribution, the enterprise 
        would be undercapitalized.
            ``(2) Exception.--Notwithstanding paragraph (1), the 
        Director may permit an enterprise 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 enterprise in 
                at least an equivalent amount; and
                    ``(B) will reduce the financial obligations of the 
                enterprise or otherwise improve the financial condition 
                of the enterprise.''.

SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED 
              ENTERPRISES.

    (a) Effective Date for Supervisory Actions.--Section 1365(c) of the 
Housing and Community Development Act of 1992 (12 U.S.C. 4615(c)) is 
amended by striking ``1-year'' and inserting ``6-month''.
    (b) Supervisory Actions.--Section 1365 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4615) is amended--
            (1) 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 
                undercapitalized enterprise;
                    ``(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 
                enterprise 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.--An undercapitalized 
        enterprise shall not permit its average total assets during any 
        calendar quarter to exceed its average total assets during the 
        preceding calendar quarter unless--
                    ``(A) the Board has accepted the enterprise's 
                capital restoration plan;
                    ``(B) any increase in total assets is consistent 
                with the plan; and
                    ``(C) the enterprise's ratio of tangible equity to 
                assets increases during the calendar quarter at a rate 
                sufficient to enable the enterprise to become 
                adequately capitalized within a reasonable time.
            ``(5) Prior approval of acquisitions and issuance of new 
        products.--An undercapitalized enterprise shall not, directly 
        or indirectly, acquire any interest in any entity or issue a 
new product unless--
                    ``(A) the Director has accepted the enterprise's 
                capital restoration plan, the enterprise 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.''; and
            (2) in the subsection heading for subsection (b), by 
        striking ``From Undercapitalized to Significantly 
        Undercapitalized'';
            (3) by redesignating subsection (c) (as amended by 
        subsection (a) of this section) as subsection (d); and
            (4) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Other Discretionary Safeguards.--The Director may take, with 
respect to an undercapitalized enterprise, any of the actions 
authorized to be taken under section 1366 with respect to a 
significantly undercapitalized enterprise, if the Director determines 
that such actions are necessary to carry out the purpose of this 
subtitle.''.

SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY 
              UNDERCAPITALIZED ENTERPRISES.

    Section 1366 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4616) is amended--
            (1) 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, 
                1 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 enterprise.
                    ``(B) Dismissal of directors or executive 
                officers.--Require the enterprise to dismiss from 
                office any director or executive officer who had held 
                office for more than 180 days immediately before the 
                enterprise 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 enterprise 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 enterprise 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.'';
            (2) by redesignating subsection (c) as subsection (d); and
            (3) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Restriction on Compensation of Executive Officers.--An 
enterprise that is classified as significantly undercapitalized may 
not, without prior written approval by the Director--
                    ``(A) pay any bonus to any executive officer; or
                    ``(B) 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 enterprise became 
                undercapitalized.''.

SEC. 134. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED ENTERPRISES.

    Section 1368 of the Housing and Community Development Act of 1992 
(12 U.S.C. 4618) is amended to read as follows:

``SEC. 1368. APPOINTMENT OF RECEIVERS.

    ``(a) Appointment.--
            ``(1) Authority.--Upon a determination that an enterprise 
        is critically undercapitalized and a determination that the 
        enterprise meets such other conditions for taking action 
        pursuant to this subsection as the Director shall by regulation 
        establish, the Director may, notwithstanding section 
        1367(a)(1), appoint a receiver for the enterprise in accordance 
        with this section and in lieu of appointment of a conservator 
        pursuant to section 1367. If the Director takes action pursuant 
        to this subsection, the Director shall appoint the receiver not 
        later than 30 days after providing notice under paragraph (2) 
        of this subsection.
            ``(2) Notice.--Upon making a determination under paragraph 
        (1) to appoint a receiver for an enterprise, the Director shall 
        provide written notice to the enterprise, the Committee on 
        Financial Services of the House of Representatives, and the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate--
                    ``(A) that a receiver will be appointed for the 
                enterprise;
                    ``(B) stating the reasons for the appointment of 
                the receiver; and
                    ``(C) identifying the person or governmental agency 
                that the Director intends to appoint as a receiver.
            ``(3) Qualifications.--The receiver shall be--
                    ``(A) the Director or any other governmental 
                agency; or
                    ``(B) any person that--
                            ``(i) has no claim against, or financial 
                        interest in, the enterprise or other basis for 
                        a conflict of interest; and
                            ``(ii) has the financial and management 
                        expertise necessary to carry out the duties 
                        under subsection (c).
    ``(b) Judicial Review.--The provisions of section 1369(b) shall 
apply to the appointment of a receiver pursuant to this section to the 
same extent that such provisions apply to the appointment of a 
conservator pursuant to this subtitle.
    ``(c) Duties.--A receiver appointed pursuant to this section shall 
be appointed for the purpose, and shall have the duty, of liquidating 
or winding up the affairs of the enterprise, in accordance with such 
regulations as the Director may issue, and notwithstanding the second 
sentences of paragraphs (1) and (2)(B) of section 302(a) of the Federal 
National Mortgage Association Charter Act (12 U.S.C. 1717(a)) and 
section 303(c)(2) of the Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1452(c)(2)).
    ``(d) Replacement, Powers, Liability Protection.--The provisions of 
subsections (c) and (d) of section 1369, section 1369A, and section 
1369B shall apply to a receiver appointed pursuant to this section to 
the same extent that such provisions apply to a conservator appointed 
pursuant to this subtitle. In addition to any powers under section 
1369A, a receiver appointed pursuant to this section shall have such 
powers with respect to an enterprise, as the Director may by regulation 
provide, that the Federal Deposit Insurance Corporation has under 
section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821), as in 
effect at that time, with respect to a insured depository institution 
when acting as a receiver under such section.''.

                    Subtitle C--Enforcement Actions

SEC. 151. 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, an enterprise or 
any enterprise-affiliated party is engaging or has engaged, or the 
Director has reasonable cause to believe that the enterprise or any 
enterprise-affiliated party is about to engage, in an unsafe or unsound 
practice in conducting the business of the enterprise or is violating 
or has violated, or the Director has reasonable cause to believe that 
the enterprise or any enterprise-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 enterprise or any written agreement entered into with 
the Director, the Director may issue and serve upon the enterprise 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)), or 
with subsection (e) or (f) of section 307 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1456(e), (f)).
    ``(b) Issuance for Unsatisfactory Rating.--If an enterprise 
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 enterprise to be engaging in an unsafe or unsound practice for 
purposes of this subsection.''; and
            (2) in subsection (c)(2), by striking ``or director'' and 
        inserting ``director, or enterprise-affiliated party''.

SEC. 152. 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 
enterprise or any enterprise-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 enterprise, or is 
likely to weaken the condition of the enterprise prior to the 
completion of the proceedings conducted pursuant to sections 1371 and 
1373, the Director may issue a temporary order requiring the enterprise 
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 enterprise-affiliated party'';
            (3) in subsection (d), striking ``or director'' and 
        inserting ``director, or enterprise-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 
enterprise 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.''.

SEC. 153. 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 through 1379B (12 U.S.C. 
        4637-41) as sections 1379 through 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 enterprise-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 
                        enterprise; or
                            ``(iv) any written agreement between such 
                        enterprise and the Director;
                    ``(B) engaged or participated in any unsafe or 
                unsound practice in connection with any enterprise; 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 enterprise 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 
                enterprise,
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 enterprise.
    ``(b) Suspension Order.--
            ``(1) Suspension or prohibition authority.--If the Director 
        serves written notice under subsection (a) to any enterprise-
        affiliated party of the Director's intention to issue an order 
        under such subsection, the Director may suspend such party from 
        office or prohibit such party from further participation in any 
        manner in the conduct of the affairs of the enterprise, if the 
        Director--
                    ``(A) determines that such action is necessary for 
                the protection of the enterprise; and
                    ``(B) serves such party with written notice of the 
                suspension order.
            ``(2) Effective period.--Any suspension order issued under 
        subsection (a)--
                    ``(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 subsection (a) to any enterprise-affiliated party, 
        the Director shall serve a copy of such order on any enterprise 
        with which such party is affiliated at the time such order is 
        issued.
    ``(c) Notice, Hearing, and Order.--A notice of intention to remove 
an enterprise-affiliated party from office or to prohibit such party 
from participating in the conduct of the affairs of an enterprise 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 enterprise, as it 
may deem appropriate. Any such order shall become effective at the 
expiration of 30 days after service upon such enterprise 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 enterprise;
            ``(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 enterprise;
            ``(3) violate any voting agreement previously approved by 
        the Director; or
            ``(4) vote for a director, or serve or act as an 
        enterprise-affiliated party.
    ``(e) Industry-Wide Prohibition.--
            ``(1) In general.--Except as provided in subparagraph (2), 
        any person who, pursuant to an order issued under subsection 
        (h), has been removed or suspended from office in an enterprise 
or prohibited from participating in the conduct of the affairs of an 
enterprise 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 enterprise.
            ``(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 enterprise-affiliated 
        party or prohibits such party from participating in the conduct 
        of the affairs of an enterprise, 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 enterprise 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 Enterprise-Affiliated 
Party.--Within 10 days after any enterprise-affiliated party has been 
suspended from office and/or prohibited from participation in the 
conduct of the affairs of an enterprise 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 enterprise is located, for a stay of 
such suspension and/or prohibition 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 Enterprise-Affiliated Party Charged 
With Felony.--
            ``(1) Suspension or prohibition.--
                    ``(A) In general.--Whenever any enterprise-
                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 enterprise or 
                impair public confidence in the enterprise, by written 
                notice served upon such party, suspend such party from 
                office or prohibit such party from further 
                participation in any manner in the conduct of the 
                affairs of any enterprise.
                    ``(B) Provisions applicable to notice.--
                            ``(i) Copy.--A copy of any notice under 
                        paragraph (1)(A) shall also be served upon the 
                        enterprise.
                            ``(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 an enterprise-
                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 enterprise or impair 
                public confidence in the enterprise, issue and serve 
                upon such party an order removing such party from 
                office or prohibiting such party from further 
                participation in any manner in the conduct of the 
                affairs of the enterprise without the prior written 
                consent of the Director.
                    ``(B) Provisions applicable to order.--
                            ``(i) Copy.--A copy of any order under 
                        paragraph (2)(A) shall also be served upon the 
                        enterprise, whereupon the enterprise-affiliated 
                        party who is subject to the order (if a 
                        director or an officer) shall cease to be a 
                        director or officer of such enterprise.
                            ``(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 enterprise 
                        affairs 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 an enterprise 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 an enterprise 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 
        enterprise 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 enterprise-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 enterprise by such party does not, or is not likely to, 
pose a threat to the interests of the enterprise or threaten to impair 
public confidence in the enterprise. 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 enterprise 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 enterprise 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 
        enterprise 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 enterprise or the enterprise-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 enterprise 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 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 action 
        under section 1377 of the Housing and Community Development Act 
        of 1992 temporarily results in a lesser number, the''.

SEC. 154. 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 enterprise 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. 155. 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), in the matter preceding paragraph 
        (1), by striking ``or any executive officer or'' and inserting 
        ``any executive officer of an enterprise, any enterprise-
        affiliated party, or any'';
            (2) by striking subsection (b) and inserting the following 
        new subsection:
    ``(b) Amount of Penalty.--
            ``(1) First tier.--Any enterprise which, or any enterprise-
        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.), 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)), or 
                with subsection (e) or (f) of section 307 of the 
                Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
                1456(e), (f));
                    ``(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 enterprise;
                    ``(D) violates any written agreement between the 
                enterprise 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 an enterprise, or an enterprise-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 enterprise; or
                            ``(iii) breaches any fiduciary duty which 
                        violation, practice, or breach; 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 enterprise; or
                            ``(iii) results in pecuniary gain or other 
                        benefit to such party,
        the enterprise or enterprise-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 enterprise which, or any enterprise-affiliated party who--
                    ``(A) knowingly--
                            ``(i) commits any violation described in 
                        any subparagraph of paragraph (1);
                            ``(ii) engages in any unsafe or unsound 
                        practice in conducting the affairs of such 
                        enterprise; or
                            ``(iii) breaches any fiduciary duty; and
                    ``(B) knowingly or recklessly causes a substantial 
                loss to such enterprise 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 an 
                enterprise, an amount not to exceed $2,000,000; and
                    ``(B) in the case of any enterprise, $2,000,000.''; 
                and
            (3) in subsection (d)--
                    (A) by striking ``or director'' each place such 
                term appears and inserting ``director, or enterprise-
                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 enterprise 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. 156. 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 enterprise shall, notwithstanding 
section 3571 of title 18, be fined not more than $1,000,000, imprisoned 
for not more than 5 years, or both.''.

              Subtitle D--Reporting Regarding Enterprises

SEC. 161. REPORTING REGARDING ENTERPRISES.

    Part 3 of subtitle A of the Housing and Community Development Act 
of 1992 is amended--
            (1) by striking sections 1351, 1352, and 1353 (Public Law 
        102-550; 106 Stat. 3969), except the provisions of law amended 
        by such sections repealed shall not be affected by such repeal; 
        and
            (2) by striking sections 1354, 1355, and 1356 (12 U.S.C. 
        4601-3) and inserting the following new section:

``SEC. 1351. REPORTS REGARDING ENTERPRISE ISSUES AND ACTIVITIES.

    ``(a) Insured Depository Institution Holdings of Enterprise Debt 
and Mortgage-Backed Securities.--Not later than 180 days after the date 
of the enactment of the Secondary Mortgage Market Enterprises 
Regulatory Improvement Act, the Secretary of the Treasury, the Board of 
Governors of the Federal Reserve System, the Board of Directors of the 
Federal Deposit Insurance Corporation, and the National Credit Union 
Administration Board shall jointly submit a report to the Congress 
regarding--
            ``(1) the extent to which obligations issued or guaranteed 
        by the enterprises (including mortgage-backed securities) are 
        held by federally insured depository institutions, including 
        such extent by type of institution and such extent relative to 
        the institutions' capital;
            ``(2) the extent to which the unlimited holdings by 
        federally insured depository institutions of the obligations of 
        the enterprises could produce systemic risk issues, 
        particularly for the safety and soundness of the banking system 
        in the United States, in the event of default or failure by an 
        enterprise; and
            ``(3) the effects on the enterprises, the banking industry, 
        and mortgage markets, if prudent limits on the holdings of 
        enterprise obligations were placed on federally insured 
        depository institutions.
    ``(b) Portfolio Operations, Risk Management, and Mission.--Not 
later than one year after the date of the enactment of the Secondary 
Mortgage Market Enterprises Regulatory Improvement Act, the Director 
shall submit a report to the Congress--
            ``(1) describing the holdings of the enterprises in 
        retained mortgages and repurchased mortgage-backed securities 
        and the use of derivatives for hedging purposes;
            ``(2) describing the extent of such holdings relative to 
        other assets and the risk implications of such holdings;
            ``(3) containing an analysis of such holdings for safety 
        and soundness and/or mission compliance purposes; and
            ``(4) containing an assessment of whether such holdings and 
        other assets of the enterprises fulfill the mission purposes of 
        the enterprises under the Federal National Mortgage Association 
        Charter Act and the Federal Home Loan Mortgage Corporation Act.
The Director shall consult with the Comptroller General of the United 
States in preparing the report under this subsection and in conducting 
any research, analyses, and assessments for the report.
    ``(c) Debt Issuances.--Not later than one year after the date of 
the enactment of the Secondary Mortgage Market Enterprises Regulatory 
Improvement Act, the Secretary of the Treasury shall submit a report to 
the Congress regarding--
            ``(1) the extent of outstanding obligations of the 
        enterprises and the rate of growth of such obligations; and
            ``(2) an analysis of whether debt issuances should be 
        limited or reduced if an enterprise is not operating in a safe 
        and sound manner and/or not complying with its mission, or if 
        an enterprise fails to maintain a certain credit rating and/or 
        debt rating.
    ``(d) Treasury Line of Credit.--Not later than one year after the 
date of the enactment of the Secondary Mortgage Market Enterprises 
Regulatory Improvement Act, the Secretary of the Treasury shall submit 
a report to the Congress regarding the purposes of the authority of the 
Secretary of the Treasury to purchase the debt obligations of the 
enterprises. The report shall assess the desirability of limiting such 
authority in certain circumstances or eliminating such authority.
    ``(e) Risk-Based Capital Levels.--The Director shall submit a 
report to the Congress annually, on fiscal year basis, regarding--
            ``(1) the risk-based capital levels for the enterprises 
        under section 1361, including a description of the risk-based 
        capital test under such section and any assumptions of the 
        Director and factors used by the Director in establishing the 
        test; and
            (2) the minimum and critical capital levels for the 
        enterprises pursuant to sections 1362 and 1363, respectively.
Each report under this subsection for a fiscal year shall be submitted 
not later than the December 31 first occurring after the conclusion of 
such fiscal year.
    ``(f) Recommendations.--Each report submitted pursuant to this 
section shall include specific recommendations of appropriate policies, 
limitations, regulations, legislation, or other actions to deal 
appropriately and effectively with the issues addressed by such 
report.''.

                     Subtitle E--General Provisions

SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS.

    (a) Amendments to 1992 Act.--Title XIII of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4501 et seq.), as amended 
by the preceding provisions of this Act, is further amended--
            (1) 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'';
                            (ii) by striking ``The'' and inserting 
                        ``Subject to title II of the Secondary Mortgage 
                        Market Enterprises Regulatory Improvement Act, 
                        the''; and
                            (iii) by striking ``Director and the 
                        Office. Officers'' and inserting ``Director, 
                        with respect to regulation and supervision of 
                        the enterprises. Such officers'';
                    (B) in subsection (b)--
                            (i) by striking ``, and maintain 
                        comparability with compensation of officers and 
                        employees of'';
                            (ii) by inserting ``and'' after 
                        ``System,''; and
                            (iii) by striking ``the Office of Thrift 
                        Supervision'' and inserting the following: 
                        ``and shall maintain comparability with 
                        compensation of officers and employees of such 
                        Office, Board, and Corporation, and of other 
                        officers and employees of the Office of Housing 
                        Finance Supervision'';
                    (C) in subsection (c), by inserting ``, with 
                respect to regulation and supervision of the 
                enterprises'' before the first comma;
                    (D) in subsection (d)--
                            (i) in the subsection heading, by striking 
                        ``HUD'' and inserting ``Department of the 
                        Treasury''; and
                            (ii) by striking ``Housing and Urban 
                        Development'' and inserting ``the Treasury'';
                    (E) in subsection (e), by inserting ``, with 
                respect to regulation and supervision of the 
                enterprises'' before the period at the end; and
                    (F) by striking subsection (f);
            (2) in section 1319A (12 U.S.C. 4520)--
                    (A) by striking ``(a) In General.--''; and
                    (B) by striking subsection (b);
            (3) in section 1319C (12 U.S.C. 4522)--
                    (A) in subsection (a)(1), by inserting ``under this 
                title'' after ``redressed''; and
                    (B) in subsection (b), by inserting ``under this 
                title'' after ``issued'';
            (4) in section 1319D (12 U.S.C. 4523), by inserting ``to 
        conduct duties relating to the regulation and supervision of 
        the enterprises'' before the second comma;
            (5) in section 1319E (12 U.S.C. 4524)--
                    (A) by inserting ``relating to regulation and 
                supervision of the enterprises'' before ``in accordance 
                with''; and
                    (B) by inserting ``in functions relating to the 
                regulation and supervision of the enterprises'' before 
                ``shall be made available'';
            (6) in section 1319F (12 U.S.C. 4525), by striking ``Code'' 
        and all that follows through ``agencies'' and inserting ``Code, 
        the Office of Housing Finance Supervision, to the extent only 
        of its functions, activities, and employees involved in the 
        regulation and supervision of the enterprises, shall be 
        considered an agency'';
            (7) in the section heading for section 1328, by striking 
        ``secretary'' and inserting ``director'';
            (8) in section 1361 (12 U.S.C. 4611)--
                    (A) in subsection (e)(1), by striking the first 
                sentence and inserting the following new sentence: 
                ``The Director shall establish the risk-based capital 
                test under this section by regulation.''; and
                    (B) in subsection (f), by striking ``the 
                Secretary,'';
            (9) in section 1364(c) (12 U.S.C. 4614(c)), by striking the 
        last sentence;
            (10) in section 1367(a)(2) (12 U.S.C. 4617(a)(2)), by 
        striking ``with the written concurrence of the Secretary of the 
        Treasury,'';
            (11) in section 1369A(i) (12 U.S.C. 4620(i)), by inserting 
        ``having duties relating to regulation and supervision of the 
        enterprises'' before the period at the end;
            (12) by striking section 1383;
            (13) by striking ``Committee on Banking, Finance and Urban 
        Affairs'' and inserting ``Committee on Financial Services'' 
        each place such term appears in sections 1319B, 1319G(c), 
        1328(a), 1336(b)(3)(C), 1337, and 1369(a)(3); and
            (14) by striking ``Secretary'' and inserting ``Director'' 
        each place such term appears in --
                    (A) subpart A of part 2 of subtitle A (except in 
                sections 1322, 1324, and 1325);
                    (B) subtitle B (except in section 1361(d)(1) and 
                1369E); and
                    (C) subtitle C.
    (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 Office of Housing Finance Supervision'', 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(n)--
                    (A) in paragraph (1), by inserting ``the Director 
                of the Office of Housing Finance Supervision,'' after 
                ``Senate,''; and
                    (B) in paragraph (3)(B), by striking ``Secretary'' 
                and inserting ``Director of the Office of Housing 
                Finance Supervision''.
    (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 Office of Housing Finance Supervision'', 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 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
            (3) in section 307 (12 U.S.C. 1456)--
                    (A) in subsection (f)--
                            (i) in paragraph (1), by inserting ``the 
                        Director of the Office of Housing Finance 
                        Supervision,'' after ``Senate,''; and
                            (ii) in paragraph (3)(B), by striking 
                        ``Secretary'' and inserting ``Director of the 
                        Office of Housing Finance Supervision''.
    (d) 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 ``Office of 
Housing Finance Supervision in its capacity under title XIII of the 
Housing and Community Development Act of 1992''.
    (e) 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 Office of Housing 
Finance Supervision''.
    (f) 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).
    (g) Amendment to Title 5, United States Code.--Section 5315 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.

SEC. 172. 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--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

SEC. 201. 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 any transfer of such 
        employee pursuant to section 203; and
            (2) may take any other action necessary for the purpose of 
        winding up the affairs of the Office.
    (c) Status of Employees as Federal Agency Employees.--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 during any time such employee is so employed.
    (d) Use of Property and Services.--
            (1) Property.--The Director of the Office of Housing 
        Finance Supervision may use the property of the Office of 
        Federal Housing Enterprise Oversight to perform functions which 
        have been transferred to the Director of the Office of Housing 
        Finance Supervision 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 Office of Housing Finance 
        Supervision 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 shall abate by reason of the 
        enactment of this Act, except that the Director of the Office 
        of Housing Finance Supervision shall be substituted for the 
        Director of the Office of Federal Housing Enterprise Oversight 
        as a party to any such action or proceeding.

SEC. 202. 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 201(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 Office of Housing Finance Supervision until 
modified, terminated, set aside, or superseded in accordance with 
applicable law by such Board, any court of competent jurisdiction, or 
operation of law.

SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

    (a) Authority to Transfer.--The Director of the Office of Housing 
Finance Supervision may transfer employees of the Office of Federal 
Housing Enterprise Oversight to the Office of Housing Finance 
Supervision for employment no later than the date of the abolishment 
under section 201(a) of this Act, as the Director considers 
appropriate. This Act and the amendments made by this Act shall not be 
considered to result in the transfer of any function from one agency to 
another or the replacement of one agency by another, for purposes of 
section 3505 of title 5, United States Code, except to the extent that 
the Director of the Office of Housing Finance Supervision specifically 
provides so.
    (b) 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 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 Office of 
        Housing Finance Supervision 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, and noncareer positions in the Senior 
        Executive Service (within the meaning of section 3132(a)(7) of 
        title 5, United States Code).
    (c) Reorganization.--If the Director of the Office of Housing 
Finance Supervision 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.
    (d) Employee Benefit Programs.--Any employee of the Office of 
Federal Housing Enterprise Oversight accepting employment with the 
Director of the Office of Housing Finance Supervision as a result of a 
transfer under subsection (a) may retain for 18 months after the date 
such transfer occurs membership in any employee benefit program of the 
Director of the Office of Housing Finance Supervision 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 Office of Housing Finance Supervision.
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 Office of Housing Finance Supervision. 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. 204. TRANSFER OF PROPERTY AND FACILITIES.

    Upon the abolishment under section 201(a), all property of the 
Office of Federal Housing Enterprise Oversight shall transfer to the 
Director of the Office of Housing Finance Supervision.
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