I 

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Secondary Mortgage Market Enterprises Regulatory Im6 provement Act’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows:
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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. 
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Sec. 203. Transfer and rights of employees of OFHEO. 

Sec. 204. Transfer of property and facilities.

1 TITLE I—REFORM OF REGULA2 TION OF FANNIE MAE AND 

3 FREDDIE MAC 

4 Subtitle A—Improvement of 

5 Supervision 

6 SEC. 101. CHANGE OF NAME OF OFFICE OF THRIFT SUPER7 VISION TO OFFICE OF HOUSING FINANCE SU8 PERVISION. 

9 (a) IN GENERAL.—Section 3 of the Home Owners’ 

10 Loan Act (12 U.S.C. 1462a) is amended—

11 (1) in the section heading, by striking 

12 ‘‘THRIFT’’ and inserting ‘‘HOUSING FINANCE’’; 

13 and 

14 (2) in subsection (a), by striking ‘‘Office of 

15 Thrift Supervision’’ and inserting ‘‘Office of Hous16 ing Finance Supervision’’. 

17 (b) CONFORMING AMENDMENTS TO HOME OWNERS’ 

18 LOAN ACT.—The Home Owners’ Loan Act is amended—

19 (1) by striking ‘‘Thrift Supervision’’ each place 

20 such term appears and inserting ‘‘Housing Finance 

21 Supervision’’; and
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1 (2) in the table of contents in section 1, by 

2 striking the item relating to section 3 and inserting 

3 the following new item:

‘‘Sec. 3. Director of the Office of Housing Finance Supervision.’’

4 (c) OTHER REFERENCES.—Any reference in any 

5 Federal law, executive order, rule, regulation, or delega6 tion of authority, or any document of or pertaining to the 

7 Office of Thrift Supervision—

8 (1) to the Director of the Office of Thrift Su9 pervision is deemed to refer to the Director of the 

10 Office of Housing Finance Supervision; and 

11 (2) to the Office of Thrift Supervision is 

12 deemed to refer to the Office of Housing Finance 

13 Supervision. 

14 SEC. 102. TRANSFER OF AUTHORITY TO REGULATE SAFETY 

15 AND SOUNDNESS OF ENTERPRISES TO OF16 FICE OF HOUSING FINANCE SUPERVISION. 

17 (a) IN GENERAL.—Part 1 of subtitle A of title XIII 

18 of the Housing and Community Development Act of 1992 

19 is amended by striking sections 1311 and 1312 (12 U.S.C. 

20 4511, 4512) and inserting the following new section: 

21 ‘‘SEC. 1311. SUPERVISION AND REGULATION BY OFFICE OF 

22 HOUSING FINANCE SUPERVISION. 

23 ‘‘(a) IN GENERAL.—The enterprises shall, to the ex24 tent provided in this title, be subject to the supervision 

25 and regulation of the Director of the Office of Housing 
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1 Finance Supervision. The Director shall succeed to the au2 thority of the Director of the Office of Federal Housing 

3 Enterprise Oversight of the Department of Housing and 

4 Urban Development and the general regulatory and any 

5 other authority of the Secretary of Housing and Urban 

6 Development with respect to the enterprises (except as 

7 specifically provided otherwise in this Act, the Federal Na8 tional Mortgage Association Charter Act, the Federal 

9 Home Loan Mortgage Corporation Act, and any other pro10 vision of Federal law). 

11 ‘‘(b) SAVINGS PROVISION.—The authority of the Di12 rector to take actions under subtitles B and C does not 

13 in any way limit the general supervisory and regulatory 

14 authority granted to the Director under subsection (a).’’. 

15 (b) PROHIBITION OF FINANCIAL INTERESTS OF DI16 RECTOR.—

17 (1) IN GENERAL.—Section 3(d) of the Home 

18 Owners’ Loan Act (12 U.S.C. 1462a(d)) is amended 

19 by inserting ‘‘, or in any enterprise, as defined in 

20 section 1303 of the Federal Housing Enterprises Fi21 nancial Safety and Soundness Act of 1992 (12 

22 U.S.C. 4502)’’ before the period at the end. 

23 (2) APPLICABILITY.—The amendment made by 

24 paragraph (1) shall apply beginning on the expira-
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1 tion of the 1-year period that begins on the date of 

2 the enactment of this Act. 

3 SEC. 103. DUTIES AND AUTHORITIES OF DIRECTOR. 

4 (a) IN GENERAL.—Section 1313 of the Housing and 

5 Community Development Act of 1992 (12 U.S.C. 4513) 

6 is amended to read as follows: 

7 ‘‘SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR. 

8 ‘‘(a) DUTIES.—

9 ‘‘(1) PRINCIPAL DUTIES.—The principal duties 

10 under this title of the Director shall be to ensure 

11 that the enterprises—

12 ‘‘(A) operate in a financially safe and 

13 sound manner; 

14 ‘‘(B) carry out their missions in a finan15 cially safe and sound manner and only through 

16 activities that have been authorized under, and 

17 are consistent with the purposes of, the provi18 sions of Federal law that charter the enter19 prises, including as determined by the Secretary 

20 of Housing and Urban Development under sec21 tion 1322; and 

22 ‘‘(C) remain adequately capitalized. 

23 ‘‘(2) OTHER DUTIES.—To the extent consistent 

24 with paragraph (1), the duty of the Director shall be 

25 to exercise general supervisory and regulatory au-
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1 thority over the enterprises, in accordance with this 

2 title, the Federal National Mortgage Association 

3 Charter Act, the Federal Home Loan Mortgage Cor4 poration Act, and any other provisions of law. 

5 ‘‘(b) AUTHORITY EXCLUSIVE OF SECRETARY.—Ex6 cept as specifically provided in this Act, the Federal Na7 tional Mortgage Association Charter Act, the Federal 

8 Home Loan Mortgage Corporation Act, or any other pro9 vision of Federal law, the authority of the Director with 

10 respect to the enterprises shall not be subject to the re11 view, approval, or intervention of the Secretary of the 

12 Treasury. 

13 ‘‘(c) DELEGATION OF AUTHORITY.—The Director 

14 may delegate to officers and employees of the Director any 

15 of the functions, powers, and duties of the Director, with 

16 respect to supervision and regulation of the enterprises, 

17 as the Director considers appropriate.’’. 

18 SEC. 104. EXAMINERS AND ACCOUNTANTS. 

19 (a) EXAMINATIONS.—Section 1317 of the Housing 

20 and Community Development Act of 1992 (12 U.S.C. 

21 4517) is amended—

22 (1) in the second sentence of subsection (c)—

23 (A) by striking ‘‘The’’ and inserting ‘‘Dur24 ing the 3-year period that begins upon the date 

25 of the enactment of the Secondary Mortgage 
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1 Market Enterprises Regulatory Improvement 

2 Act, the’’; and 

3 (B) by inserting ‘‘to conduct examinations 

4 under this section’’ before the period; and 

5 (2) in subsection (d)—

6 (A) by inserting ‘‘, with respect to the en7 terprises,’’ after ‘‘penalties’’; and 

8 (B) by striking ‘‘Federal Reserve banks’’ 

9 and inserting ‘‘Director, with respect to exami10 nations of savings associations’’. 

11 (b) ENHANCED AUTHORITY TO HIRE EXAMINERS

12 AND ACCOUNTANTS.—Section 1317 of the Housing and 

13 Community Development Act of 1992 (12 U.S.C. 4517) 

14 is amended by adding at the end the following new sub15 section: 

16 ‘‘(g) APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, 

17 AND EXAMINERS.—

18 ‘‘(1) APPLICABILITY.—This section applies with 

19 respect to any position of examiner, accountant, and 

20 economist at the Office, with respect to supervision 

21 and regulation of the enterprises, that is in the com22 petitive service. 

23 ‘‘(2) APPOINTMENT AUTHORITY.—
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1 ‘‘(A) IN GENERAL.—The Director may ap2 point candidates to any position described in 

3 paragraph (1)—

4 ‘‘(i) in accordance with the statutes, 

5 rules, and regulations governing appoint6 ments in the excepted service; and 

7 ‘‘(ii) notwithstanding any statutes, 

8 rules, and regulations governing appoint9 ments in the competitive service. 

10 ‘‘(B) RULE OF CONSTRUCTION.—The ap11 pointment of a candidate to a position under 

12 authority of this paragraph shall not be consid13 ered to cause such position to be converted 

14 from the competitive service to the excepted 

15 service. 

16 ‘‘(3) REPORTS.—No later than 90 days after 

17 the end of fiscal year 2003 (for fiscal year 2003) 

18 and 90 days after the end of fiscal year 2005 (for 

19 fiscal years 2004 and 2005), the Director shall sub20 mit a report with respect to its exercise of the au21 thority granted by paragraph (2) during such fiscal 

22 years to the Committee on Government Reform and 

23 the Committee on Financial Services of the House of 

24 Representatives and the Committee on Govern25 mental Affairs and the Committee on Banking, 
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1 Housing, and Urban Affairs of the Senate. Such re2 ports shall describe the changes in the hiring process 

3 authorized by such paragraph, including relevant in4 formation related to—

5 ‘‘(A) the quality of candidates; 

6 ‘‘(B) the procedures used by the Director 

7 to select candidates through the streamlined 

8 hiring process; 

9 ‘‘(C) the numbers, types, and grades of 

10 employees hired under the authority; 

11 ‘‘(D) any benefits or shortcomings associ12 ated with the use of the authority; 

13 ‘‘(E) the effect of the exercise of the au14 thority on the hiring of veterans and other de15 mographic groups; and 

16 ‘‘(F) the way in which managers were 

17 trained in the administration of the streamlined 

18 hiring system.’’. 

19 SEC. 105. REGULATIONS. 

20 Section 1319G of the Housing and Community De21 velopment Act of 1992 (12 U.S.C. 4526) is amended—

22 (1) by striking subsection (a) and inserting the 

23 following new subsection:

24 ‘‘(a) AUTHORITY.—The Director shall issue any reg25 ulations and orders necessary to carry out the duties of 
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1 the Director, with respect to supervision and regulation 

2 of the enterprises, under this title, the Federal National 

3 Mortgage Association Charter Act, and the Federal Home 

4 Loan Mortgage Corporation Act, and to ensure that the 

5 purposes of this title and such Acts are accomplished.’’; 

6 and 

7 (2) in subsection (c), by striking ‘‘Committee on 

8 Banking, Finance and Urban Affairs’’ and inserting 

9 ‘‘Committee on Financial Services’’. 

10 SEC. 106. ASSESSMENTS. 

11 Section 1316 of the Housing and Community Devel12 opment Act of 1992 (12 U.S.C. 4516) is amended—

13 (1) by striking subsection (a) and inserting the 

14 following new subsection: 

15 ‘‘(a) ANNUAL ASSESSMENTS.—

16 ‘‘(1) DIRECTOR.—The Director shall establish 

17 and collect from the enterprises annual assessments 

18 in an amount not exceeding the amount sufficient to 

19 provide for reasonable costs and expenses of the Di20 rector, with respect to regulation and supervision of 

21 the enterprises, including the expenses of any exami22 nations under section 1317 and the expenses of ob23 taining any reviews and credit assessments under 

24 subsection section 1319. 
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1 ‘‘(2) SECRETARY OF HUD.—The Secretary of 

2 Housing and Urban Development shall establish and 

3 collect from the enterprises annual assessments in 

4 an amount not exceeding the amount sufficient to 

5 provide for reasonable costs and expenses of the De6 partment of Housing and Urban Development in 

7 carrying out the responsibilities of the Secretary of 

8 Housing and Urban Development under this sub9 title, the Federal National Mortgage Association 

10 Charter Act, and the Federal Home Loan Mortgage 

11 Corporation Act.’’; 

12 (2) in subsection (b)—

13 (A) in paragraph (1)—

14 (i) by inserting ‘‘and to the Secretary 

15 of Housing and Urban Development’’ after 

16 ‘‘Director’’; 

17 (ii) by inserting ‘‘paragraph (1) and 

18 (2), respectively, of’’ before ‘‘subsection 

19 (a)’’; and 

20 (iii) by inserting ‘‘under such para21 graph’’ after ‘‘total annual assessment’’; 

22 and 

23 (B) in paragraph (2)—

24 (i) by striking ‘‘The annual assess25 ment’’ and inserting ‘‘Each of the annual 
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1 assessments pursuant to paragraphs (1) 

2 and (2) of subsection (a)’’; and 

3 (ii) by realigning paragraph (2) two 

4 ems from the left margin, so as to align 

5 the left margin of such paragraph with the 

6 left margins of paragraphs (1) and (3); 

7 (3) in subsection (c)—

8 (A) by inserting ‘‘for an assessment under 

9 subsection (a)(1) that are’’ after ‘‘The semi10 annual payments’’; and 

11 (B) by adding at the end the following new 

12 sentence: ‘‘The Director may adjust the 

13 amounts of any semiannual assessments for an 

14 assessment under subsection (a)(1) that are to 

15 be paid pursuant to subsection (b) by an enter16 prise, as necessary in the discretion of the Di17 rector, to ensure that the costs of enforcement 

18 activities under subtitles B and C for an enter19 prise are borne only by that enterprise.’’; 

20 (4) in subsection (d)—

21 (A) by inserting ‘‘by the Director or by the 

22 Secretary of Housing and Urban Development’’ 

23 before ‘‘from an enterprise’’; and
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1 (B) by inserting ‘‘by the Director or by the 

2 Secretary of Housing and Urban Development, 

3 as applicable,’’ before ‘‘for the following year’’; 

4 (5) in subsection (f), by striking the last sen5 tence and inserting the following new sentence: 

6 ‘‘Notwithstanding any other provision of law, any 

7 assessments collected by the Director pursuant to 

8 this section shall be deposited in the Fund in an ac9 count for the Director and any amounts collected by 

10 the Secretary of Housing and Urban Development 

11 shall be deposited in the Fund in an account for 

12 such Secretary. Any amounts in the Fund are here13 by made available, without fiscal year limitation, to 

14 the Director (to the extent of amounts in the Direc15 tor’s account) and to the Secretary of Housing and 

16 Urban Development (to the extent of amounts in the 

17 Secretary’s account) for carrying out the supervisory 

18 and regulatory responsibilities of the Director and 

19 the Secretary, respectively, with respect to the enter20 prises, including any necessary administrative and 

21 nonadministrative expenses of the Director and Sec22 retary, respectively, in carrying out the purposes of 

23 this title, the Federal National Mortgage Association 

24 Charter Act, and the Federal Home Loan Mortgage 

25 Corporation Act.’’; and 
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1 (6) in subsection (g)—

2 (A) by striking paragraphs (1) and (2) and 

3 inserting the following new paragraphs: 

4 ‘‘(1) FINANCIAL OPERATING PLANS AND FORE5 CASTS.—Before the beginning of each fiscal year—

6 ‘‘(A) the Director shall submit a copy of 

7 the financial operating plans and forecasts for 

8 the Director, with respect to regulation and su9 pervision of the enterprises, to the Director of 

10 the Office of Management and Budget; and 

11 ‘‘(B) the Secretary of Housing and Urban 

12 Development shall submit, to the Director, a 

13 copy of the financial operating plans and fore14 casts for the Department of Housing and 

15 Urban Development, with respect to responsibil16 ities and activities of the Secretary under this 

17 title. 

18 ‘‘(2) REPORTS OF OPERATIONS.—As soon as 

19 practicable after the end of each fiscal year and each 

20 quarter thereof—

21 ‘‘(A) the Director shall submit a copy of 

22 the report of the results of the operations of the 

23 Director, with respect to regulation and super24 vision of the enterprises, during such period to 
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1 the Director of the Office of Management and 

2 Budget; and 

3 ‘‘(B) the Secretary of Housing and Urban 

4 Development shall submit, to the Director, a re5 port of the results of the operations of the De6 partment of Housing and Urban Development, 

7 with respect to responsibilities and activities of 

8 the Secretary under this title.’’; and 

9 (B) in paragraph (3)—

10 (i) by striking ‘‘(A)’’; 

11 (ii) by striking ‘‘, and (B)’’ and in12 serting the following: ‘‘. The annual plans, 

13 forecasts, and reports required under para14 graphs (1)(B) and (2)(B) shall be in15 cluded’’; and 

16 (iii) by inserting ‘‘of Housing and 

17 Urban Development’’ before the period at 

18 the end. 

19 SEC. 107. AUTHORITY OF SECRETARY OF HUD FOR NEW AC20 TIVITIES, HOUSING INFORMATION, AND 

21 HOUSING GOALS. 

22 (a) IN GENERAL.—Part 2 of subtitle A of title XIII 

23 of the Housing and Community Development Act of 1992 

24 is amended—
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1 (1) by striking the heading for the part and the 

2 heading for subpart A and inserting the following: 

3 ‘‘PART 2—NEW ACTIVITIES, HOUSING 

4 INFORMATION, AND HOUSING GOALS 

5 ‘‘Subpart A—New Activities and Housing 

6 Information’’; 

7 and 

8 (2) by striking section 1321 (12 U.S.C. 4541). 

9 (b) RETENTION OF FAIR HOUSING RESPONSIBIL10 ITIES.—Section 1325 of the Housing and Community De11 velopment Act of 1992 (12 U.S.C. 4545) is amended, in 

12 the matter preceding paragraph (1), by inserting ‘‘of 

13 Housing and Urban Development’’ after ‘‘The Secretary’’. 

14 (c) RETENTION OF AUTHORITY TO ESTABLISH AND

15 ENFORCE HOUSING GOALS.—Part 2 of subtitle A of the

16 Housing and Community Development Act of 1992 is 

17 amended—

18 (1) by inserting ‘‘of Housing and Urban Devel19 opment (in this subpart referred to as the ‘Sec20 retary’)’’ after ‘‘The Secretary’’, each place such 

21 term appears in—

22 (A) the first sentence of section 1331(a) 

23 (12 U.S.C. 4561(a)); and 

24 (B) section 1341(a) (12 U.S.C. 4581(a)); 
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1 (2) in section 1332 (12 U.S.C. 4562), by strik2 ing subsection (d); 

3 (3) in section 1333 (12 U.S.C. 4563), by strik4 ing subsection (d); 

5 (4) in section 1334 (12 U.S.C. 4564), by strik6 ing subsection (d); 

7 (5) in section 1336 (12 U.S.C. 4566)—

8 (A) in subsection (b)(3)(C), by inserting 

9 ‘‘the Director,’’ after ‘‘notice to the enter10 prise,’’; and 

11 (B) in subsection (c)(5), by inserting ‘‘, 

12 and to the Director,’’ after ‘‘housing plan’’; 

13 (6) by striking sections 1337 and 1338 (12 

14 U.S.C. 4567, 4562 note); 

15 (7) in section 1341(b)(1) (12 U.S.C. 

16 4581(b)(1)), by inserting after the period at the end 

17 the following new sentence: ‘‘Immediately upon 

18 issuing and serving a notice of charges under this 

19 section, the Secretary shall submit a copy of such 

20 notice to the Director.’’; 

21 (8) in section 1345 (12 U.S.C. 4585)—

22 (A) in subsection (c)(1)(A), by inserting 

23 ‘‘and the Director’’ after ‘‘enterprise’’; and 

24 (B) in subsection (d), by inserting ‘‘, upon 

25 notification to the Director,’’ after ‘‘1343’’; and
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1 (9) in section 1346(a) (12 U.S.C. 4586(a)), in 

2 the matter preceding paragraph (1), by inserting 

3 ‘‘and to the Director’’ after ‘‘the public’’. 

4 (d) RETENTION OF ANNUAL HOUSING REPORT RE5 SPONSIBILITY.—Section 1324 of the Housing and Com6 munity Development Act of 1992 (12 U.S.C. 4544) is 

7 amended—

8 (1) by inserting ‘‘of Housing and Urban Devel9 opment’’ after ‘‘the Secretary’’ each place such term 

10 appears; and 

11 (2) in subsection (a), by striking ‘‘, as part of 

12 the annual report under section 1328(a) of this 

13 title,’’. 

14 (e) AUTHORITY OF SECRETARY TO ENFORCE NO15 TICES AND ORDERS.—Section 1344 of the Housing and 

16 Community Development Act of 1992 (12 U.S.C. 4584) 

17 is amended by striking subsection (a) and inserting the 

18 following new subsection: 

19 ‘‘(a) ENFORCEMENT.—The Secretary of Housing and 

20 Urban Development may, in the discretion of such Sec21 retary, apply to the United States District Court for the 

22 District of Columbia, or the United States district court 

23 within the jurisdiction of which the headquarters of the 

24 enterprise is located, for the enforcement of any effective 

25 and outstanding notice or order issued under section 1341 
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1 or 1345, or request that the Attorney General of the 

2 United States bring such an action. Such court shall have 

3 jurisdiction and power to order and require compliance 

4 with such notice or order.’’. 

5 (f) REGULATORY AUTHORITY.—Subpart A of part 2 

6 of subtitle A of title XIII of the Housing and Community 

7 Development Act of 1992 (12 U.S.C. 4541 et seq.) is 

8 amended by adding at the end the following new section: 

9 ‘‘SEC. 1329. AUTHORITY OF SECRETARY OF HUD TO ISSUE 

10 REGULATIONS. 

11 ‘‘The Secretary of Housing and Urban Development 

12 shall issue any regulations as are necessary to carry out 

13 the responsibilities of the Secretary under this subtitle.’’. 

14 SEC. 108. PRIOR APPROVAL OF SECRETARY OF HUD FOR 

15 NEW ACTIVITIES. 

16 (a) IN GENERAL.—Section 1322 of the Housing and 

17 Community Development Act of 1992 (12 U.S.C. 4542) 

18 is amended to read as follows: 

19 ‘‘SEC. 1322. PRIOR APPROVAL AUTHORITY FOR NEW ACTIVI20 TIES. 

21 ‘‘(a) AUTHORITY.—The Secretary of Housing and 

22 Urban Development shall have the authority to approve 

23 all new activities, and to review all ongoing activities, of 

24 an enterprise to ensure compliance with the Federal Na-
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1 tional Mortgage Association Charter Act or the Federal 

2 Home Loan Mortgage Corporation Act, as applicable. 

3 ‘‘(b) REQUIREMENT FOR PRIOR APPROVAL.—An en4 terprise may not commence any new activity before obtain5 ing the approval of the Secretary of Housing and Urban 

6 Development for the new activity, in accordance with this 

7 section. 

8 ‘‘(c) STANDARD FOR APPROVAL.—The Secretary of 

9 Housing and Urban Development may approve a new ac10 tivity of an enterprise only if—

11 ‘‘(1) the new activity is authorized—

12 ‘‘(A) with respect to the Federal National 

13 Mortgage Association, under the Federal Na14 tional Mortgage Association Charter Act or 

15 other Federal law; and 

16 ‘‘(B) with respect to the Federal Home 

17 Loan Mortgage Corporation, under the Federal 

18 Home Loan Mortgage Corporation Act or other 

19 Federal law; 

20 ‘‘(2) the Secretary of Housing and Urban De21 velopment determines, after consultation with the 

22 Director, that the enterprise can conduct the new 

23 activity in a safe and sound manner; and 
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1 ‘‘(3) the Secretary of Housing and Urban De2 velopment determines that the new activity is in the 

3 public interest. 

4 ‘‘(d) PROCEDURE FOR APPROVAL.—The Secretary of 

5 Housing and Urban Development shall, by regulation, es6 tablish procedures for the enterprises to obtain the ap7 proval of the Secretary of Housing and Urban Develop8 ment for purposes of subsection (b).’’. 

9 (b) DEFINITION OF NEW ACTIVITY.—Paragraph 

10 (13) of section 1303 of the Housing and Community De11 velopment Act of 1992 (12 U.S.C. 4502(13)) is amended 

12 to read as follows: 

13 ‘‘(13) NEW ACTIVITY.—The term ‘new activity’ 

14 means, with respect to the enterprises, any program, 

15 activity, business process, or investment that directly 

16 or indirectly provides financing or other services re17 lated to conventional mortgages (including pur18 chasing, servicing, selling, and lending on the secu19 rity of such mortgages) that—

20 ‘‘(A) is significantly different from pro21 grams, activities, business processes, or invest22 ments that (i) have been approved under this 

23 Act, or (ii) were approved or engaged in by an 

24 enterprise before the date of the enactment of 
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1 the Housing and Community Development Act 

2 of 1992; or 

3 ‘‘(B) represents an expansion, in terms of 

4 the dollar volume or number of mortgages or 

5 securities involved, of programs above limits ex6 pressly contained in any prior approval.’’. 

7 (c) CONFORMING AMENDMENTS.—

8 (1) FANNIE MAE.—Section 302(b)(6) of the 

9 Federal National Mortgage Association Charter Act 

10 (12 U.S.C. 1717(b)(6)) is amended by striking ‘‘pro11 gram’’ and inserting ‘‘activity’’. 

12 (2) FREDDIE MAC.—Section 305(c) of the Fed13 eral Home Loan Mortgage Corporation Act (12 

14 U.S.C. 1454(c)) is amended by striking ‘‘program’’ 

15 and inserting ‘‘activity’’. 

16 (3) 1992 ACT.—Section 1369C(a)(4) of the 

17 Housing and Community Development Act of 1992 

18 (12 U.S.C. 4622(a)(4)) is amended by striking ‘‘pro19 grams’’ and inserting ‘‘activities’’.

20 SEC. 109. LIMITATION ON NONMISSION-RELATED ASSETS. 

21 Subtitle B of title XIII of the Housing and Commu22 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

23 is amended—

24 (1) by striking the subtitle designation and 

25 heading and inserting the following:
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1 ‘‘Subtitle B—Required Capital Lev2 els for Enterprises, Special En3 forcement Powers, and Limita4 tion on Nonmission-Related As5 sets’’; 

6 and 

7 (2) by adding at the end the following new sec8 tion: 

9 ‘‘SEC. 1369E. LIMITATION ON NONMISSION-RELATED AS10 SETS. 

11 ‘‘(a) IN GENERAL.—The Secretary of Housing and 

12 Urban Development shall, by regulation, limit the nonmis13 sion-related assets that an enterprise may hold at any 

14 time. The Secretary of Housing and Urban Development 

15 shall define the term ‘nonmission-related asset’ for pur16 poses of this section. 

17 ‘‘(b) RULE OF CONSTRUCTION.—Subsection (a) may 

18 not be construed to authorize an enterprise to engage in 

19 any new activity (as such term is defined in section 1303) 

20 relating to any nonmission-related asset without obtaining 

21 the prior approval of the Secretary of Housing and Urban 

22 Development in accordance with section 1322.’’. 

23 SEC. 110. CONFORMING LOAN LIMITS. 

24 (a) FANNIE MAE.—Section 302(b)(2) of the Federal 

25 National Mortgage Association Charter Act (12 U.S.C. 
25

•HR 2575 IH 

1 1717(b)(2)) is amended by striking the 7th and 8th sen2 tences and inserting the following new sentences: ‘‘Such 

3 limitations shall not exceed $275,000 for a mortgage se4 cured by a single-family residence, $351,950 for a mort5 gage secured by a 2-family residence, $425,400 for a 

6 mortgage secured by a 3-family residence, and $528,700 

7 for a mortgage secured by a 4-family residence, except 

8 that such maximum limitations shall be adjusted effective 

9 January 1 of each year beginning with 2002, subject to 

10 the limitations in this paragraph. Each adjustment shall 

11 be made by adding to or subtracting from each such 

12 amount (as it may have been previously adjusted) a per13 centage thereof equal to the percentage increase or de14 crease during the 12-month period ending with the pre15 vious October in the housing price index maintained by 

16 the Director of the Office of Housing Finance Supervision 

17 (pursuant to section 1321 of the Housing and Community 

18 Development Act of 1992 (12 U.S.C. 4541)).’’. 

19 (b) FREDDIE MAC.—Section 305(a)(2) of the Fed20 eral National Mortgage Association Charter Act (12 

21 U.S.C. 1454(a)(2)) is amended by striking the 6th and 

22 7th sentences and inserting the following new sentences: 

23 ‘‘Such limitations shall not exceed $275,000 for a mort24 gage secured by a single-family residence, $351,950 for 

25 a mortgage secured by a 2-family residence, $425,400 for 
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•HR 2575 IH 

1 a mortgage secured by a 3-family residence, and $528,700 

2 for a mortgage secured by a 4-family residence, except 

3 that such maximum limitations shall be adjusted effective 

4 January 1 of each year beginning with 2002, subject to 

5 the limitations in this paragraph. Each adjustment shall 

6 be made by adding to or subtracting from each such 

7 amount (as it may have been previously adjusted) a per8 centage thereof equal to the percentage increase or de9 crease during the 12-month period ending with the pre10 vious October in the housing price index maintained by 

11 the Director of the Office of Housing Finance Supervision 

12 (pursuant to section 1321 of the Housing and Community 

13 Development Act of 1992 (12 U.S.C. 4541)).’’. 

14 (c) HOUSING PRICE INDEX.—Subpart A of part 2 of 

15 subtitle A of title XIII of the Housing and Community 

16 Development Act of 1992 (as amended by the preceding 

17 provisions of this Act) is amended by inserting before sec18 tion 1322 (12 U.S.C. 4542) the following new section: 

19 ‘‘SEC. 1321. HOUSING PRICE INDEX. 

20 ‘‘The Director shall establish and maintain a method 

21 of assessing the national average 1-family house price for 

22 use for adjusting the conforming loan limitations of the 

23 enterprises (as such term is defined in section 1303 of 

24 Federal Housing Enterprises Financial Safety and Sound25 ness Act of 1992). In establishing such method, the Direc-
27

•HR 2575 IH 

1 tor shall take into consideration the monthly survey of all 

2 major lenders conducted by the Federal Housing Finance 

3 Board to determine the national average 1-family house 

4 price, the House Price Index maintained by the Office of 

5 Federal Housing Enterprise Oversight of the Department 

6 of Housing and Urban Development before the effective 

7 date of the Secondary Mortgage Market Enterprises Reg8 ulatory Improvement Act, any appropriate house price in9 dexes of the Bureau of the Census of the Department of 

10 Commerce, and any other indexes or measures that the 

11 Director considers appropriate.’’.

12 SEC. 111. PUBLIC DISCLOSURE OF INFORMATION. 

13 Section 1314 of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4514) is amended—

15 (1) in the section heading by striking ‘‘BY EN16 TERPRISES’’ and inserting ‘‘AND INFORMATION’’; 

17 and 

18 (2) by adding at the end the following new sub19 section: 

20 ‘‘(c) PUBLIC DISCLOSURE OF INFORMATION.—The 

21 Director shall, by regulation, require each enterprise to 

22 disclose to the public, on not less than an annual basis, 

23 such financial, business, and other information that the 

24 Director determines would be in the public interest.’’. 
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1 SEC. 112. REVIEWS OF ENTERPRISES. 

2 Section 1319 of the Housing and Community Devel3 opment Act of 1992 (12 U.S.C. 4519) is amended—

4 (1) in the section heading—

5 (A) by striking ‘‘AUTHORITY TO PRO6 VIDE FOR’’; and 

7 (B) in the section heading, by striking ‘‘BY

8 RATING ORGANIZATION’’; 

9 (2) by inserting after ‘‘any entity’’ the fol10 lowing: ‘‘that the Director considers appropriate, in11 cluding an entity’’; 

12 (3) by inserting ‘‘(a) AUTHORITY TO PROVIDE

13 FOR REVIEWS.—’’ before ‘‘The’’; and 

14 (4) by adding at the end the following new sub15 section: 

16 ‘‘(b) BIENNIAL DETERMINATION OF CREDIT RAT17 ING.—

18 ‘‘(1) IN GENERAL.—On a biennial basis, the Di19 rector shall provide for 2 entities effectively recog20 nized by the Division of Market Regulation of the 

21 Securities and Exchange Commission as nationally 

22 recognized statistical rating organizations for the 

23 purposes of the capital rules for broker dealers, each 

24 to conduct an assessment of the financial condition 

25 of each enterprise for the purpose of determining the 

26 level of risk that the enterprise will be unable to
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•HR 2575 IH 

1 meet its obligations, taking into consideration the 

2 legal status evidenced by the statements required 

3 under—

4 ‘‘(A) the penultimate sentence of section 

5 304(b) of the Federal National Mortgage Asso6 ciation Charter Act (12 U.S.C. 1719(b)); 

7 ‘‘(B) the last sentence of section 304(d) of 

8 the Federal National Mortgage Association 

9 Charter Act (12 U.S.C. 1719(d)); 

10 ‘‘(C) the penultimate sentence of section 

11 304(e) of the Federal National Mortgage Asso12 ciation Charter Act (12 U.S.C. 1719(e)); and 

13 ‘‘(D) section 306(h)(2) of the Federal 

14 Home Loan Mortgage Corporation Act (12 

15 U.S.C. 1455(h)(2)). 

16 ‘‘(2) CREDIT RATING.—The assessment shall 

17 include assigning a credit rating for each enterprise 

18 using a scale similar to that used by such organiza19 tion with respect to obligations of other financial in20 stitutions, and shall include the report regarding 

21 such assessment and the rating in the report of the 

22 Director under section 1319B(a).’’.

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

24 Section 1361 of the Housing and Community Devel25 opment Act of 1992 (12 U.S.C. 4611) is amended—
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•HR 2575 IH 

1 (1) in subsection (a)(2)(A), by inserting ‘‘or 

2 change in such other manner as the Director con3 siders appropriate,’’ after ‘‘subparagraph (C),’’; 

4 (2) in subsection (b)(1), by inserting after the 

5 period at the end the following: ‘‘Notwithstanding 

6 subsection (a), the Director may, in the sole discre7 tion of the Director, make any assumptions that the 

8 Director considers appropriate regarding interest 

9 rates, home prices, and new business.’’; and 

10 (3) in subsection (c)(2), by inserting ‘‘or such 

11 other percentage as the Director considers appro12 priate’’ before the period at the end. 

13 SEC. 114. MINIMUM AND CRITICAL CAPITAL LEVELS. 

14 (a) MINIMUM CAPITAL LEVEL.—Section 1362 of the 

15 Housing and Community Development Act of 1992 (12 

16 U.S.C. 4612) is amended—

17 (1) by striking subsection (b); 

18 (2) by striking ‘‘(a) IN GENERAL.—’’; and 

19 (3) in the matter preceding paragraph (1), by 

20 inserting before ‘‘the sum of’’ the following: ‘‘the 

21 amount established by the Director, by regulation or 

22 order, as such amount may be adjusted from time23 to-time by the Director to achieve the purposes of 

24 this title, that is not less than’’. 
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•HR 2575 IH 

1 (b) CRITICAL CAPITAL LEVEL.—Section 1363 of the 

2 Housing and Community Development Act of 1992 (12 

3 U.S.C. 4613) is amended, in the matter preceding para4 graph (1), by inserting before ‘‘the sum of’’ the following: 

5 ‘‘the amount established by the Director, by regulation or 

6 order, as such amount may be adjusted from time-to-time 

7 by the Director to achieve the purposes of this title, that 

8 is not less than’’. 

9 SEC. 115. REQUIREMENTS TO ENHANCE CAPITAL 

10 STRENGTH, DISCLOSURE, AND MARKET DIS11 CIPLINE. 

12 Section 1361 of the Housing and Community Devel13 opment Act of 1992 (12 U.S.C. 4611) is amended by add14 ing at the end the following new subsection: 

15 ‘‘(g) REQUIRED IMPLEMENTATION OF AGREE16 MENT.—The Director shall, by regulation, require each 

17 enterprise—

18 ‘‘(1) to issue subordinated debt of such type 

19 and in such amount as the Director considers nec20 essary; 

21 ‘‘(2) to maintain appropriate levels of liquidity; 

22 ‘‘(3) to obtain and disclose an annual credit 

23 rating; 

24 ‘‘(4) to publicly disclose interest rate risk; and 

25 ‘‘(5) to publicly disclose credit risk. 
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1 SEC. 116. DEFINITIONS. 

2 Section 1303 of the Housing and Community Devel3 opment Act of 1992 (12 U.S.C. 4502) is amended—

4 (1) in paragraph (5), by striking ‘‘Federal 

5 Housing Enterprise Oversight of the Department of 

6 Housing and Urban Development’’ and inserting 

7 ‘‘Housing Finance Supervision’’; 

8 (2) in paragraphs (8), (9), (10), and (19), by 

9 inserting ‘‘of Housing and Urban Development’’ 

10 after ‘‘Secretary’’ each place such term appears; 

11 (3) in paragraph (14), by striking ‘‘Federal 

12 Housing Enterprise Oversight of the Department of 

13 Housing and Urban Development’’ and inserting 

14 ‘‘Housing Finance Supervision’’; 

15 (4) by striking paragraph (15); 

16 (5) by redesignating paragraphs (7) through 

17 (14) (as amended by the preceding provisions of this 

18 Act) as paragraphs (8) through (15), respectively; 

19 and 

20 (6) by inserting after paragraph (6) the fol21 lowing new paragraph: 

22 ‘‘(7) ENTERPRISE-AFFILIATED PARTY.—The 

23 term ‘enterprise-affiliated party’ means—

24 ‘‘(A) any director, officer, employee, or 

25 controlling stockholder of, or agent for, an en26 terprise; 
33

•HR 2575 IH 

1 ‘‘(B) any shareholder, consultant, joint 

2 venture partner, and any other person as deter3 mined by the Director (by regulation or case4 by-case) who participates in the conduct of the 

5 affairs of an enterprise; and 

6 ‘‘(C) any independent contractor (including 

7 any attorney, appraiser, or accountant) who 

8 knowingly or recklessly participates in—

9 ‘‘(i) any violation of any law or regu10 lation; 

11 ‘‘(ii) any breach of fiduciary duty; or 

12 ‘‘(iii) any unsafe or unsound practice, 

13 which caused or is likely to cause more than a 

14 minimal financial loss to, or a significant ad15 verse effect on, the enterprise.’’. 

16 Subtitle B—Prompt Corrective 

17 Action

18 SEC. 131. CAPITAL CLASSIFICATIONS. 

19 Section 1364 of the Housing and Community Devel20 opment Act of 1992 (12 U.S.C. 4614) is amended—

21 (1) by striking subsection (b) and inserting the 

22 following new subsection: 

23 ‘‘(b) DISCRETIONARY CLASSIFICATION.—
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•HR 2575 IH 

1 ‘‘(1) GROUNDS FOR RECLASSIFICATION.—The 

2 Director may reclassify an enterprise under para3 graph (2) if—

4 ‘‘(A) at any time, the Director determines 

5 in writing that an enterprise is engaging in con6 duct that could result in a rapid depletion of 

7 core capital or that the value of the property 

8 subject to mortgages held or securitized by the 

9 enterprise has decreased significantly; 

10 ‘‘(B) after notice and an opportunity for 

11 hearing, the Director determines that an enter12 prise is in an unsafe or unsound condition; or 

13 ‘‘(C) pursuant to section 1371(b), the Di14 rector deems an enterprise to be engaging in an 

15 unsafe or unsound practice. 

16 ‘‘(2) RECLASSIFICATION.—In addition to any 

17 other action authorized under this title, including 

18 the reclassification of an enterprise for any reason 

19 not specified in this subsection, if the Director takes 

20 any action described in paragraph (1) the Director 

21 may classify an enterprise—

22 ‘‘(A) as undercapitalized, if the enterprise 

23 is otherwise classified as adequately capitalized; 
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•HR 2575 IH 

1 ‘‘(B) as significantly undercapitalized, if 

2 the enterprise is otherwise classified as under3 capitalized; and 

4 ‘‘(C) as critically undercapitalized, if the 

5 enterprise is otherwise classified as significantly 

6 undercapitalized.’’; 

7 (2) by redesignating subsection (d) as sub8 section (e); and 

9 (3) by inserting after subsection (c) the fol10 lowing new subsection: 

11 ‘‘(d) RESTRICTION ON CAPITAL DISTRIBUTIONS.—

12 ‘‘(1) IN GENERAL.—An enterprise shall make 

13 no capital distribution if, after making the distribu14 tion, the enterprise would be undercapitalized. 

15 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

16 (1), the Director may permit an enterprise to repur17 chase, redeem, retire, or otherwise acquire shares or 

18 ownership interests if the repurchase, redemption, 

19 retirement, or other acquisition—

20 ‘‘(A) is made in connection with the 

21 issuance of additional shares or obligations of 

22 the enterprise in at least an equivalent amount; 

23 and 
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•HR 2575 IH 

1 ‘‘(B) will reduce the financial obligations of 

2 the enterprise or otherwise improve the finan3 cial condition of the enterprise.’’. 

4 SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDER5 CAPITALIZED ENTERPRISES. 

6 (a) EFFECTIVE DATE FOR SUPERVISORY ACTIONS.—

7 Section 1365(c) of the Housing and Community Develop8 ment Act of 1992 (12 U.S.C. 4615(c)) is amended by 

9 striking ‘‘1-year’’ and inserting ‘‘6-month’’.

10 (b) SUPERVISORY ACTIONS.—Section 1365 of the 

11 Housing and Community Development Act of 1992 (12 

12 U.S.C. 4615) is amended—

13 (1) in subsection (a)—

14 (A) by redesignating paragraphs (1) and 

15 (2) as paragraphs (2) and (3), respectively; 

16 (B) by inserting before paragraph (2) the 

17 following paragraph: 

18 ‘‘(1) REQUIRED MONITORING.—The Director 

19 shall—

20 ‘‘(A) closely monitor the condition of any 

21 undercapitalized enterprise; 

22 ‘‘(B) closely monitor compliance with the 

23 capital restoration plan, restrictions, and re24 quirements imposed under this section; and 
37

•HR 2575 IH 

1 ‘‘(C) periodically review the plan, restric2 tions, and requirements applicable to the under3 capitalized enterprise to determine whether the 

4 plan, restrictions, and requirements are achiev5 ing the purpose of this section.’’; and 

6 (C) by inserting at the end the following 

7 new paragraphs: 

8 ‘‘(4) RESTRICTION OF ASSET GROWTH.—An 

9 undercapitalized enterprise shall not permit its aver10 age total assets during any calendar quarter to ex11 ceed its average total assets during the preceding 

12 calendar quarter unless—

13 ‘‘(A) the Board has accepted the enter14 prise’s capital restoration plan; 

15 ‘‘(B) any increase in total assets is con16 sistent with the plan; and 

17 ‘‘(C) the enterprise’s ratio of tangible eq18 uity to assets increases during the calendar 

19 quarter at a rate sufficient to enable the enter20 prise to become adequately capitalized within a 

21 reasonable time. 

22 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND

23 ISSUANCE OF NEW PRODUCTS.—An undercapitalized 

24 enterprise shall not, directly or indirectly, acquire
38

•HR 2575 IH 

1 any interest in any entity or issue a new product 

2 unless—

3 ‘‘(A) the Director has accepted the enter4 prise’s capital restoration plan, the enterprise is 

5 implementing the plan, and the Director deter6 mines that the proposed action is consistent 

7 with and will further the achievement of the 

8 plan; or 

9 ‘‘(B) the Director determines that the pro10 posed action will further the purpose of this 

11 section.’’; and 

12 (2) in the subsection heading for subsection (b), 

13 by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI14 CANTLY UNDERCAPITALIZED’’; 

15 (3) by redesignating subsection (c) (as amended 

16 by subsection (a) of this section) as subsection (d); 

17 and 

18 (4) by inserting after subsection (b) the fol19 lowing new subsection: 

20 ‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The 

21 Director may take, with respect to an undercapitalized en22 terprise, any of the actions authorized to be taken under 

23 section 1366 with respect to a significantly undercapital24 ized enterprise, if the Director determines that such ac-
39

•HR 2575 IH 

1 tions are necessary to carry out the purpose of this sub2 title.’’. 

3 SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI4 CANTLY UNDERCAPITALIZED ENTERPRISES. 

5 Section 1366 of the Housing and Community Devel6 opment Act of 1992 (12 U.S.C. 4616) is amended—

7 (1) in subsection (b)—

8 (A) in the subsection heading, by striking 

9 ‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 

10 inserting ‘‘SPECIFIC ACTIONS’’; 

11 (B) in the matter preceding paragraph (1), 

12 by striking ‘‘may, at any time, take any’’ and 

13 inserting ‘‘shall carry out this section by taking, 

14 at any time, 1 or more’’; 

15 (C) by redesignating paragraphs (5) and 

16 (6) as paragraphs (6) and (7), respectively; 

17 (D) by inserting after paragraph (4) the 

18 following new paragraph: 

19 ‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take 

20 one or more of the following actions: 

21 ‘‘(A) NEW ELECTION OF BOARD.—Order a 

22 new election for the board of directors of the 

23 enterprise. 

24 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU25 TIVE OFFICERS.—Require the enterprise to dis-
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1 miss from office any director or executive offi2 cer who had held office for more than 180 days 

3 immediately before the enterprise became 

4 undercapitalized. Dismissal under this subpara5 graph shall not be construed to be a removal 

6 pursuant to the Director’s enforcement powers 

7 provided in section 1377. 

8 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF9 FICERS.—Require the enterprise to employ 

10 qualified executive officers (who, if the Director 

11 so specifies, shall be subject to approval by the 

12 Director).’’; and 

13 (E) by inserting at the end the following 

14 new paragraph: 

15 ‘‘(8) OTHER ACTION.—Require the enterprise 

16 to take any other action that the Director deter17 mines will better carry out the purpose of this sec18 tion than any of the actions specified in this para19 graph.’’; 

20 (2) by redesignating subsection (c) as sub21 section (d); and 

22 (3) by inserting after subsection (b) the fol23 lowing new subsection: 

24 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECU25 TIVE OFFICERS.—An enterprise that is classified as sig-
41

•HR 2575 IH 

1 nificantly undercapitalized may not, without prior written 

2 approval by the Director—

3 ‘‘(A) pay any bonus to any executive offi4 cer; or 

5 ‘‘(B) provide compensation to any execu6 tive officer at a rate exceeding that officer’s av7 erage rate of compensation (excluding bonuses, 

8 stock options, and profit sharing) during the 12 

9 calendar months preceding the calendar month 

10 in which the enterprise became undercapital11 ized.’’.

12 SEC. 134. AUTHORITY OVER CRITICALLY UNDERCAPITAL13 IZED ENTERPRISES. 

14 Section 1368 of the Housing and Community Devel15 opment Act of 1992 (12 U.S.C. 4618) is amended to read 

16 as follows: 

17 ‘‘SEC. 1368. APPOINTMENT OF RECEIVERS. 

18 ‘‘(a) APPOINTMENT.—

19 ‘‘(1) AUTHORITY.—Upon a determination that 

20 an enterprise is critically undercapitalized and a de21 termination that the enterprise meets such other 

22 conditions for taking action pursuant to this sub23 section as the Director shall by regulation establish, 

24 the Director may, notwithstanding section 

25 1367(a)(1), appoint a receiver for the enterprise in 
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•HR 2575 IH 

1 accordance with this section and in lieu of appoint2 ment of a conservator pursuant to section 1367. If 

3 the Director takes action pursuant to this sub4 section, the Director shall appoint the receiver not 

5 later than 30 days after providing notice under 

6 paragraph (2) of this subsection. 

7 ‘‘(2) NOTICE.—Upon making a determination 

8 under paragraph (1) to appoint a receiver for an en9 terprise, the Director shall provide written notice to 

10 the enterprise, the Committee on Financial Services 

11 of the House of Representatives, and the Committee 

12 on Banking, Housing, and Urban Affairs of the Sen13 ate—

14 ‘‘(A) that a receiver will be appointed for 

15 the enterprise; 

16 ‘‘(B) stating the reasons for the appoint17 ment of the receiver; and 

18 ‘‘(C) identifying the person or govern19 mental agency that the Director intends to ap20 point as a receiver. 

21 ‘‘(3) QUALIFICATIONS.—The receiver shall be—

22 ‘‘(A) the Director or any other govern23 mental agency; or 

24 ‘‘(B) any person that—
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•HR 2575 IH 

1 ‘‘(i) has no claim against, or financial 

2 interest in, the enterprise or other basis for 

3 a conflict of interest; and 

4 ‘‘(ii) has the financial and manage5 ment expertise necessary to carry out the 

6 duties under subsection (c). 

7 ‘‘(b) JUDICIAL REVIEW.—The provisions of section 

8 1369(b) shall apply to the appointment of a receiver pur9 suant to this section to the same extent that such provi10 sions apply to the appointment of a conservator pursuant 

11 to this subtitle. 

12 ‘‘(c) DUTIES.—A receiver appointed pursuant to this 

13 section shall be appointed for the purpose, and shall have 

14 the duty, of liquidating or winding up the affairs of the 

15 enterprise, in accordance with such regulations as the Di16 rector may issue, and notwithstanding the second sen17 tences of paragraphs (1) and (2)(B) of section 302(a) of 

18 the Federal National Mortgage Association Charter Act 

19 (12 U.S.C. 1717(a)) and section 303(c)(2) of the Federal 

20 Home Loan Mortgage Corporation Act (12 U.S.C. 

21 1452(c)(2)). 

22 ‘‘(d) REPLACEMENT, POWERS, LIABILITY PROTEC23 TION.—The provisions of subsections (c) and (d) of section 

24 1369, section 1369A, and section 1369B shall apply to 

25 a receiver appointed pursuant to this section to the same 
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•HR 2575 IH 

1 extent that such provisions apply to a conservator ap2 pointed pursuant to this subtitle. In addition to any pow3 ers under section 1369A, a receiver appointed pursuant 

4 to this section shall have such powers with respect to an 

5 enterprise, as the Director may by regulation provide, that 

6 the Federal Deposit Insurance Corporation has under sec7 tion 11 of the Federal Deposit Insurance Act (12 U.S.C. 

8 1821), as in effect at that time, with respect to a insured 

9 depository institution when acting as a receiver under such 

10 section.’’. 

11 Subtitle C—Enforcement Actions

12 SEC. 151. CEASE-AND-DESIST PROCEEDINGS. 

13 Section 1371 of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4631) is amended—

15 (1) by striking subsections (a) and (b) and in16 serting the following new subsections: 

17 ‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC18 TICES AND VIOLATIONS OF RULES OR LAWS.—If, in the 

19 opinion of the Director, an enterprise or any enterprise20 affiliated party is engaging or has engaged, or the Direc21 tor has reasonable cause to believe that the enterprise or 

22 any enterprise-affiliated party is about to engage, in an 

23 unsafe or unsound practice in conducting the business of 

24 the enterprise or is violating or has violated, or the Direc25 tor has reasonable cause to believe that the enterprise or 
45

•HR 2575 IH 

1 any enterprise-affiliated party is about to violate, a law, 

2 rule, or regulation, or any condition imposed in writing 

3 by the Director in connection with the granting of any 

4 application or other request by the enterprise or any writ5 ten agreement entered into with the Director, the Director 

6 may issue and serve upon the enterprise or such party a 

7 notice of charges in respect thereof. The Director may not 

8 enforce compliance with any housing goal established 

9 under subpart B of part 2 of subtitle A of this title, with 

10 section 1336 or 1337 of this title, with subsection (m) or 

11 (n) of section 309 of the Federal National Mortgage Asso12 ciation Charter Act (12 U.S.C. 1723a(m), (n)), or with 

13 subsection (e) or (f) of section 307 of the Federal Home 

14 Loan Mortgage Corporation Act (12 U.S.C. 1456(e), (f)). 

15 ‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If 

16 an enterprise receives, in its most recent report of exam17 ination, a less-than-satisfactory rating for asset quality, 

18 management, earnings, or liquidity, the Director may (if 

19 the deficiency is not corrected) deem the enterprise to be 

20 engaging in an unsafe or unsound practice for purposes 

21 of this subsection.’’; and 

22 (2) in subsection (c)(2), by striking ‘‘or direc23 tor’’ and inserting ‘‘director, or enterprise-affiliated 

24 party’’. 
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1 SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

2 Section 1372 of the Housing and Community Devel3 opment Act of 1992 (12 U.S.C. 4632) is amended—

4 (1) by striking subsection (a) and inserting the 

5 following new subsection: 

6 ‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Direc7 tor determines that the violation or threatened violation 

8 or the unsafe or unsound practice or practices specified 

9 in the notice of charges served upon the enterprise or any 

10 enterprise-affiliated party pursuant to section 1371(a), or 

11 the continuation thereof, is likely to cause insolvency or 

12 significant dissipation of assets or earnings of the enter13 prise, or is likely to weaken the condition of the enterprise 

14 prior to the completion of the proceedings conducted pur15 suant to sections 1371 and 1373, the Director may issue 

16 a temporary order requiring the enterprise or such party 

17 to cease and desist from any such violation or practice 

18 and to take affirmative action to prevent or remedy such 

19 insolvency, dissipation, condition, or prejudice pending 

20 completion of such proceedings. Such order may include 

21 any requirement authorized under subsection 1371(d).’’; 

22 (2) in subsection (b), by striking ‘‘or director’’ 

23 and inserting ‘‘director, or enterprise-affiliated 

24 party’’; 
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•HR 2575 IH 

1 (3) in subsection (d), striking ‘‘or director’’ and 

2 inserting ‘‘director, or enterprise-affiliated party’’; 

3 and 

4 (4) by striking subsection (e) and in inserting 

5 the following new subsection: 

6 ‘‘(e) ENFORCEMENT.—In the case of violation or 

7 threatened violation of, or failure to obey, a temporary 

8 cease-and-desist order issued pursuant to this section, the 

9 Director may apply to the United States District Court 

10 for the District of Columbia or the United States district 

11 court within the jurisdiction of which the headquarters of 

12 the enterprise is located, for an injunction to enforce such 

13 order, and, if the court determines that there has been 

14 such violation or threatened violation or failure to obey, 

15 it shall be the duty of the court to issue such injunction.’’. 

16 SEC. 153. REMOVAL AND PROHIBITION AUTHORITY. 

17 (a) IN GENERAL.—Subtitle C of title XIII of the 

18 Housing and Community Development Act of 1992 is 

19 amended—

20 (1) by redesignating sections 1377 through 

21 1379B (12 U.S.C. 4637–41) as sections 1379 

22 through 1379D, respectively; and 

23 (2) by inserting after section 1376 (12 U.S.C. 

24 4636) the following new section:
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1 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

2 ‘‘(a) AUTHORITY TO ISSUE ORDER.—Whenever the 

3 Director determines that—

4 ‘‘(1) any enterprise-affiliated party has, directly 

5 or indirectly—

6 ‘‘(A) violated—

7 ‘‘(i) any law or regulation; 

8 ‘‘(ii) any cease-and-desist order which 

9 has become final; 

10 ‘‘(iii) any condition imposed in writing 

11 by the Director in connection with the 

12 grant of any application or other request 

13 by such enterprise; or 

14 ‘‘(iv) any written agreement between 

15 such enterprise and the Director; 

16 ‘‘(B) engaged or participated in any unsafe 

17 or unsound practice in connection with any en18 terprise; or

19 ‘‘(C) committed or engaged in any act, 

20 omission, or practice which constitutes a breach 

21 of such party’s fiduciary duty; 

22 ‘‘(2) by reason of the violation, practice, or 

23 breach described in any subparagraph of paragraph 

24 (1)—
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1 ‘‘(A) such enterprise has suffered or will 

2 probably suffer financial loss or other damage; 

3 or 

4 ‘‘(B) such party has received financial gain 

5 or other benefit by reason of such violation, 

6 practice, or breach; and 

7 ‘‘(3) such violation, practice, or breach—

8 ‘‘(A) involves personal dishonesty on the 

9 part of such party; or 

10 ‘‘(B) demonstrates willful or continuing 

11 disregard by such party for the safety or sound12 ness of such enterprise, 

13 the Director may serve upon such party a written notice 

14 of the Director’s intention to remove such party from of15 fice or to prohibit any further participation by such party, 

16 in any manner, in the conduct of the affairs of any enter17 prise. 

18 ‘‘(b) SUSPENSION ORDER.—

19 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR20 ITY.—If the Director serves written notice under 

21 subsection (a) to any enterprise-affiliated party of 

22 the Director’s intention to issue an order under such 

23 subsection, the Director may suspend such party 

24 from office or prohibit such party from further par-
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1 ticipation in any manner in the conduct of the af2 fairs of the enterprise, if the Director—

3 ‘‘(A) determines that such action is nec4 essary for the protection of the enterprise; and 

5 ‘‘(B) serves such party with written notice 

6 of the suspension order. 

7 ‘‘(2) EFFECTIVE PERIOD.—Any suspension 

8 order issued under subsection (a)—

9 ‘‘(A) shall become effective upon service; 

10 and 

11 ‘‘(B) unless a court issues a stay of such 

12 order under subsection (g) of this section, shall 

13 remain in effect and enforceable until—

14 ‘‘(i) the date the Director dismisses 

15 the charges contained in the notice served 

16 under subsection (a) with respect to such 

17 party; or 

18 ‘‘(ii) the effective date of an order 

19 issued by the Director to such party under 

20 subsection (a). 

21 ‘‘(3) COPY OF ORDER.—If the Director issues a 

22 suspension order under subsection (a) to any enter23 prise-affiliated party, the Director shall serve a copy 

24 of such order on any enterprise with which such 

25 party is affiliated at the time such order is issued. 
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1 ‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of 

2 intention to remove an enterprise-affiliated party from of3 fice or to prohibit such party from participating in the 

4 conduct of the affairs of an enterprise shall contain a 

5 statement of the facts constituting grounds for such ac6 tion, and shall fix a time and place at which a hearing 

7 will be held on such action. Such hearing shall be fixed 

8 for a date not earlier than 30 days nor later than 60 days 

9 after the date of service of such notice, unless an earlier 

10 or a later date is set by the Director at the request of 

11 (1) such party, and for good cause shown, or (2) the At12 torney General of the United States. Unless such party 

13 shall appear at the hearing in person or by a duly author14 ized representative, such party shall be deemed to have 

15 consented to the issuance of an order of such removal or 

16 prohibition. In the event of such consent, or if upon the 

17 record made at any such hearing the Director shall find 

18 that any of the grounds specified in such notice have been 

19 established, the Director may issue such orders of suspen20 sion or removal from office, or prohibition from participa21 tion in the conduct of the affairs of the enterprise, as it 

22 may deem appropriate. Any such order shall become effec23 tive at the expiration of 30 days after service upon such 

24 enterprise and such party (except in the case of an order 

25 issued upon consent, which shall become effective at the 
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•HR 2575 IH 

1 time specified therein). Such order shall remain effective 

2 and enforceable except to such extent as it is stayed, modi3 fied, terminated, or set aside by action of the Director or 

4 a reviewing court. 

5 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI6 TIES.—Any person subject to an order issued under this 

7 section shall not—

8 ‘‘(1) participate in any manner in the conduct 

9 of the affairs of any enterprise; 

10 ‘‘(2) solicit, procure, transfer, attempt to trans11 fer, vote, or attempt to vote any proxy, consent, or 

12 authorization with respect to any voting rights in 

13 any enterprise; 

14 ‘‘(3) violate any voting agreement previously 

15 approved by the Director; or 

16 ‘‘(4) vote for a director, or serve or act as an 

17 enterprise-affiliated party. 

18 ‘‘(e) INDUSTRY-WIDE PROHIBITION.—

19 ‘‘(1) IN GENERAL.—Except as provided in sub20 paragraph (2), any person who, pursuant to an 

21 order issued under subsection (h), has been removed

22 or suspended from office in an enterprise or prohib23 ited from participating in the conduct of the affairs 

24 of an enterprise may not, while such order is in ef25 fect, continue or commence to hold any office in, or
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•HR 2575 IH 

1 participate in any manner in the conduct of the af2 fairs of any enterprise. 

3 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT4 TEN CONSENT.—If, on or after the date an order is 

5 issued under this section which removes or suspends 

6 from office any enterprise-affiliated party or pro7 hibits such party from participating in the conduct 

8 of the affairs of an enterprise, such party receives 

9 the written consent of the Director, the order shall, 

10 to the extent of such consent, cease to apply to such 

11 party with respect to the enterprise described in the 

12 written consent. If the Director grants such a writ13 ten consent, it shall publicly disclose such consent. 

14 ‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED

15 AS VIOLATION OF ORDER.—Any violation of para16 graph (1) by any person who is subject to an order 

17 described in such subsection shall be treated as a 

18 violation of the order. 

19 ‘‘(f) APPLICABILITY.—This section shall only apply 

20 to a person who is an individual, unless the Director spe21 cifically finds that it should apply to a corporation, firm, 

22 or other business enterprise. 

23 ‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF

24 ENTERPRISE-AFFILIATED PARTY.—Within 10 days after 

25 any enterprise-affiliated party has been suspended from 
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•HR 2575 IH 

1 office and/or prohibited from participation in the conduct 

2 of the affairs of an enterprise under this section, such 

3 party may apply to the United States District Court for 

4 the District of Columbia, or the United States district 

5 court for the judicial district in which the headquarters 

6 of the enterprise is located, for a stay of such suspension 

7 and/or prohibition pending the completion of the adminis8 trative proceedings pursuant to the notice served upon 

9 such party under this section, and such court shall have 

10 jurisdiction to stay such suspension and/or prohibition. 

11 ‘‘(h) SUSPENSION OR REMOVAL OF ENTERPRISE-AF12 FILIATED PARTY CHARGED WITH FELONY.—

13 ‘‘(1) SUSPENSION OR PROHIBITION.—

14 ‘‘(A) IN GENERAL.—Whenever any enter15 prise-affiliated party is charged in any informa16 tion, indictment, or complaint, with the commis17 sion of or participation in a crime involving dis18 honesty or breach of trust which is punishable 

19 by imprisonment for a term exceeding one year 

20 under State or Federal law, the Director may, 

21 if continued service or participation by such 

22 party may pose a threat to the enterprise or im23 pair public confidence in the enterprise, by writ24 ten notice served upon such party, suspend 

25 such party from office or prohibit such party 
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1 from further participation in any manner in the 

2 conduct of the affairs of any enterprise. 

3 ‘‘(B) PROVISIONS APPLICABLE TO NO4 TICE.—

5 ‘‘(i) COPY.—A copy of any notice 

6 under paragraph (1)(A) shall also be 

7 served upon the enterprise. 

8 ‘‘(ii) EFFECTIVE PERIOD.—A suspen9 sion or prohibition under subparagraph (A) 

10 shall remain in effect until the informa11 tion, indictment, or complaint referred to 

12 in such subparagraph is finally disposed of 

13 or until terminated by the Director. 

14 ‘‘(2) REMOVAL OR PROHIBITION.—

15 ‘‘(A) IN GENERAL.—If a judgment of con16 viction or an agreement to enter a pretrial di17 version or other similar program is entered 

18 against an enterprise-affiliated party in connec19 tion with a crime described in paragraph 

20 (1)(A), at such time as such judgment is not 

21 subject to further appellate review, the Director 

22 may, if continued service or participation by 

23 such party may pose a threat to the enterprise 

24 or impair public confidence in the enterprise, 

25 issue and serve upon such party an order re-
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•HR 2575 IH 

1 moving such party from office or prohibiting 

2 such party from further participation in any 

3 manner in the conduct of the affairs of the en4 terprise without the prior written consent of the 

5 Director. 

6 ‘‘(B) PROVISIONS APPLICABLE TO

7 ORDER.—

8 ‘‘(i) COPY.—A copy of any order 

9 under paragraph (2)(A) shall also be 

10 served upon the enterprise, whereupon the 

11 enterprise-affiliated party who is subject to 

12 the order (if a director or an officer) shall 

13 cease to be a director or officer of such en14 terprise. 

15 ‘‘(ii) EFFECT OF ACQUITTAL.—A find16 ing of not guilty or other disposition of the 

17 charge shall not preclude the Director from 

18 instituting proceedings after such finding 

19 or disposition to remove such party from 

20 office or to prohibit further participation in 

21 enterprise affairs pursuant to subsections 

22 (a), (d), or (e) of this section. 

23 ‘‘(iii) EFFECTIVE PERIOD.—Any no24 tice of suspension or order of removal 

25 issued under this subsection shall remain 
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•HR 2575 IH 

1 effective and outstanding until the comple2 tion of any hearing or appeal authorized 

3 under paragraph (4) unless terminated by 

4 the Director. 

5 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM6 BERS.—If at any time, because of the suspension of 

7 one or more directors pursuant to this section, there 

8 shall be on the board of directors of an enterprise 

9 less than a quorum of directors not so suspended, all 

10 powers and functions vested in or exercisable by 

11 such board shall vest in and be exercisable by the di12 rector or directors on the board not so suspended, 

13 until such time as there shall be a quorum of the 

14 board of directors. In the event all of the directors 

15 of an enterprise are suspended pursuant to this sec16 tion, the Director shall appoint persons to serve tem17 porarily as directors in their place and stead pending 

18 the termination of such suspensions, or until such 

19 time as those who have been suspended, cease to be 

20 directors of the enterprise and their respective suc21 cessors take office. 

22 ‘‘(4) HEARING REGARDING CONTINUED PAR23 TICIPATION.—Within 30 days from service of any 

24 notice of suspension or order of removal issued pur25 suant to paragraph (1) or (2) of this subsection, the
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1 enterprise-affiliated party concerned may request in 

2 writing an opportunity to appear before the Director 

3 to show that the continued service to or participation 

4 in the conduct of the affairs of the enterprise by 

5 such party does not, or is not likely to, pose a threat 

6 to the interests of the enterprise or threaten to im7 pair public confidence in the enterprise. Upon re8 ceipt of any such request, the Director shall fix a 

9 time (not more than 30 days after receipt of such 

10 request, unless extended at the request of such 

11 party) and place at which such party may appear, 

12 personally or through counsel, before one or more 

13 members of the Director or designated employees of 

14 the Director to submit written materials (or, at the 

15 discretion of the Director, oral testimony) and oral 

16 argument. Within 60 days of such hearing, the Di17 rector shall notify such party whether the suspension 

18 or prohibition from participation in any manner in 

19 the conduct of the affairs of the enterprise will be 

20 continued, terminated, or otherwise modified, or 

21 whether the order removing such party from office 

22 or prohibiting such party from further participation 

23 in any manner in the conduct of the affairs of the 

24 enterprise will be rescinded or otherwise modified. 

25 Such notification shall contain a statement of the 
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1 basis for the Director’s decision, if adverse to such 

2 party. The Director is authorized to prescribe such 

3 rules as may be necessary to effectuate the purposes 

4 of this subsection. 

5 ‘‘(i) HEARINGS AND JUDICIAL REVIEW.—

6 ‘‘(1) VENUE AND PROCEDURE.—Any hearing 

7 provided for in this section shall be held in the Dis8 trict of Columbia or in the Federal judicial district 

9 in which the headquarters of the enterprise is lo10 cated, unless the party afforded the hearing consents 

11 to another place, and shall be conducted in accord12 ance with the provisions of chapter 5 of title 5, 

13 United States Code. After such hearing, and within 

14 90 days after the Director has notified the parties 

15 that the case has been submitted to it for final deci16 sion, it shall render its decision (which shall include 

17 findings of fact upon which its decision is predi18 cated) and shall issue and serve upon each party to 

19 the proceeding an order or orders consistent with 

20 the provisions of this section. Judicial review of any 

21 such order shall be exclusively as provided in this 

22 subsection. Unless a petition for review is timely 

23 filed in a court of appeals of the United States, as 

24 provided in paragraph (2), and thereafter until the 

25 record in the proceeding has been filed as so pro-
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1 vided, the Director may at any time, upon such no2 tice and in such manner as it shall deem proper, 

3 modify, terminate, or set aside any such order. Upon 

4 such filing of the record, the Director may modify, 

5 terminate, or set aside any such order with permis6 sion of the court. 

7 ‘‘(2) REVIEW OF ORDER.—Any party to any 

8 proceeding under paragraph (1) may obtain a review 

9 of any order served pursuant to paragraph (1) 

10 (other than an order issued with the consent of the 

11 enterprise or the enterprise-affiliated party con12 cerned, or an order issued under subsection (h) of 

13 this section) by the filing in the United States Court 

14 of Appeals for the District of Columbia Circuit or 

15 court of appeals of the United States for the circuit 

16 in which the headquarters of the enterprise is lo17 cated, within 30 days after the date of service of 

18 such order, a written petition praying that the order 

19 of the Director be modified, terminated, or set aside. 

20 A copy of such petition shall be forthwith trans21 mitted by the clerk of the court to the Director, and 

22 thereupon the Director shall file in the court the 

23 record in the proceeding, as provided in section 2112 

24 of title 28, United States Code. Upon the filing of 

25 such petition, such court shall have jurisdiction, 
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1 which upon the filing of the record shall (except as 

2 provided in the last sentence of paragraph (1)) be 

3 exclusive, to affirm, modify, terminate, or set aside, 

4 in whole or in part, the order of the Director. Re5 view of such proceedings shall be had as provided in 

6 chapter 7 of title 5, United States Code. The judg7 ment and decree of the court shall be final, except 

8 that the same shall be subject to review by the Su9 preme Court upon certiorari, as provided in section 

10 1254 of title 28, United States Code. 

11 ‘‘(3) PROCEEDINGS NOT TREATED AS STAY.—

12 The commencement of proceedings for judicial re13 view under paragraph (2) shall not, unless specifi14 cally ordered by the court, operate as a stay of any 

15 order issued by the Director.’’. 

16 (b) CONFORMING AMENDMENTS.—

17 (1) 1992 ACT.—Section 1317(f) of the Housing 

18 and Community Development Act of 1992 (12 

19 U.S.C. 4517(f)) is amended by striking ‘‘section 

20 1379B’’ and inserting ‘‘section 1379D’’. 

21 (2) FANNIE MAE CHARTER ACT.—The second 

22 sentence of subsection (b) of section 308 of the Fed23 eral National Mortgage Association Charter Act (12 

24 U.S.C. 1723(b)) is amended by striking ‘‘The’’ and 

25 inserting ‘‘Except to the extent action under section 
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•HR 2575 IH 

1 1377 of the Housing and Community Development 

2 Act of 1992 temporarily results in a lesser number, 

3 the’’. 

4 (3) FREDDIE MAC ACT.—The second sentence 

5 of subparagraph (A) of section 303(a)(2) of the 

6 Federal Home Loan Mortgage Corporation Act (12 

7 U.S.C. 1452(a)(2)(A)) is amended by striking 

8 ‘‘The’’ and inserting ‘‘Except to the extent action 

9 under section 1377 of the Housing and Community 

10 Development Act of 1992 temporarily results in a 

11 lesser number, the’’. 

12 SEC. 154. ENFORCEMENT AND JURISDICTION. 

13 Section 1375 of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4635) is amended—

15 (1) by striking subsection (a) and inserting the 

16 following new subsection: 

17 ‘‘(a) ENFORCEMENT.—The Director may, in the dis18 cretion of the Director, apply to the United States District 

19 Court for the District of Columbia, or the United States 

20 district court within the jurisdiction of which the head21 quarters of the enterprise is located, for the enforcement 

22 of any effective and outstanding notice or order issued 

23 under this subtitle or subtitle B, or request that the Attor24 ney General of the United States bring such an action.
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1 Such court shall have jurisdiction and power to order and 

2 require compliance with such notice or order.’’; and 

3 (2) in subsection (b), by striking ‘‘or 1376’’ and 

4 inserting ‘‘1376, or 1377’’. 

5 SEC. 155. CIVIL MONEY PENALTIES. 

6 Section 1376 of the Housing and Community Devel7 opment Act of 1992 (12 U.S.C. 4636) is amended—

8 (1) in subsection (a), in the matter preceding 

9 paragraph (1), by striking ‘‘or any executive officer 

10 or’’ and inserting ‘‘any executive officer of an enter11 prise, any enterprise-affiliated party, or any’’; 

12 (2) by striking subsection (b) and inserting the 

13 following new subsection:

14 ‘‘(b) AMOUNT OF PENALTY.—

15 ‘‘(1) FIRST TIER.—Any enterprise which, or 

16 any enterprise-affiliated party who—

17 ‘‘(A) violates any provision of this title, the 

18 Federal National Mortgage Association Charter 

19 Act (12 U.S.C. 1716 et seq.), the Federal 

20 Home Loan Mortgage Corporation Act (12 

21 U.S.C. 1451 et seq.), or any order, condition, 

22 rule, or regulation under any such title or Act, 

23 except that the Director may not enforce com24 pliance with any housing goal established under 

25 subpart B of part 2 of subtitle A of this title, 
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1 with section 1336 or 1337 of this title, with 

2 subsection (m) or (n) of section 309 of the Fed3 eral National Mortgage Association Charter Act 

4 (12 U.S.C. 1723a(m), (n)), or with subsection 

5 (e) or (f) of section 307 of the Federal Home 

6 Loan Mortgage Corporation Act (12 U.S.C. 

7 1456(e), (f)); 

8 ‘‘(B) violates any final or temporary order 

9 or notice issued pursuant to this title; 

10 ‘‘(C) violates any condition imposed in 

11 writing by the Director in connection with the 

12 grant of any application or other request by 

13 such enterprise; 

14 ‘‘(D) violates any written agreement be15 tween the enterprise and the Director; or 

16 ‘‘(E) engages in any conduct the Director 

17 determines to be an unsafe or unsound practice, 

18 shall forfeit and pay a civil penalty of not more than 

19 $10,000 for each day during which such violation 

20 continues. 

21 ‘‘(2) SECOND TIER.—Notwithstanding para22 graph (1)—

23 ‘‘(A) if an enterprise, or an enterprise-af24 filiated party—
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•HR 2575 IH 

1 ‘‘(i) commits any violation described 

2 in any subparagraph of paragraph (1); 

3 ‘‘(ii) recklessly engages in an unsafe 

4 or unsound practice in conducting the af5 fairs of such enterprise; or 

6 ‘‘(iii) breaches any fiduciary duty 

7 which violation, practice, or breach; and 

8 ‘‘(B) the violation, practice, or breach—

9 ‘‘(i) is part of a pattern of mis10 conduct; 

11 ‘‘(ii) causes or is likely to cause more 

12 than a minimal loss to such enterprise; or 

13 ‘‘(iii) results in pecuniary gain or 

14 other benefit to such party, 

15 the enterprise or enterprise-affiliated party shall for16 feit and pay a civil penalty of not more than 

17 $50,000 for each day during which such violation, 

18 practice, or breach continues. 

19 ‘‘(3) THIRD TIER.—Notwithstanding para20 graphs (1) and (2), any enterprise which, or any en21 terprise-affiliated party who—

22 ‘‘(A) knowingly—

23 ‘‘(i) commits any violation described 

24 in any subparagraph of paragraph (1); 
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•HR 2575 IH 

1 ‘‘(ii) engages in any unsafe or un2 sound practice in conducting the affairs of 

3 such enterprise; or 

4 ‘‘(iii) breaches any fiduciary duty; and 

5 ‘‘(B) knowingly or recklessly causes a sub6 stantial loss to such enterprise or a substantial 

7 pecuniary gain or other benefit to such party by 

8 reason of such violation, practice, or breach, 

9 shall forfeit and pay a civil penalty in an amount not 

10 to exceed the applicable maximum amount deter11 mined under paragraph (4) for each day during 

12 which such violation, practice, or breach continues. 

13 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR

14 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).—

15 The maximum daily amount of any civil penalty 

16 which may be assessed pursuant to paragraph (3) 

17 for any violation, practice, or breach described in 

18 such paragraph is—

19 ‘‘(A) in the case of any person other than 

20 an enterprise, an amount not to exceed 

21 $2,000,000; and 

22 ‘‘(B) in the case of any enterprise, 

23 $2,000,000.’’; and 

24 (3) in subsection (d)—
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•HR 2575 IH 

1 (A) by striking ‘‘or director’’ each place 

2 such term appears and inserting ‘‘director, or 

3 enterprise-affiliated party’’; 

4 (B) by striking ‘‘request the Attorney Gen5 eral of the United States to’’; 

6 (C) by inserting ‘‘, or the United States 

7 district court within the jurisdiction of which 

8 the headquarters of the enterprise is located,’’ 

9 after ‘‘District of Columbia’’; and 

10 (D) by striking ‘‘, or may, under the direc11 tion and control of the Attorney General, bring 

12 such an action’’. 

13 SEC. 156. CRIMINAL PENALTY. 

14 Subtitle C of title XIII of the Housing and Commu15 nity Development Act of 1992 (12 U.S.C. 4631 et seq.) 

16 is amended by inserting after section 1377 (as added by 

17 the preceding provisions of this Act) the following new sec18 tion: 

19 ‘‘SEC. 1378. CRIMINAL PENALTY. 

20 ‘‘Whoever, being subject to an order in effect under 

21 section 1377, without the prior written approval of the Di22 rector, knowingly participates, directly or indirectly, in any 

23 manner (including by engaging in an activity specifically 

24 prohibited in such an order) in the conduct of the affairs 

25 of any enterprise shall, notwithstanding section 3571 of
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1 title 18, be fined not more than $1,000,000, imprisoned 

2 for not more than 5 years, or both.’’. 

3 Subtitle D—Reporting Regarding 

4 Enterprises 

5 SEC. 161. REPORTING REGARDING ENTERPRISES. 

6 Part 3 of subtitle A of the Housing and Community 

7 Development Act of 1992 is amended—

8 (1) by striking sections 1351, 1352, and 1353 

9 (Public Law 102–550; 106 Stat. 3969), except the 

10 provisions of law amended by such sections repealed 

11 shall not be affected by such repeal; and 

12 (2) by striking sections 1354, 1355, and 1356 

13 (12 U.S.C. 4601–3) and inserting the following new 

14 section:

15 ‘‘SEC. 1351. REPORTS REGARDING ENTERPRISE ISSUES 

16 AND ACTIVITIES. 

17 ‘‘(a) INSURED DEPOSITORY INSTITUTION HOLDINGS

18 OF ENTERPRISE DEBT AND MORTGAGE-BACKED SECURI19 TIES.—Not later than 180 days after the date of the en20 actment of the Secondary Mortgage Market Enterprises 

21 Regulatory Improvement Act, the Secretary of the Treas22 ury, the Board of Governors of the Federal Reserve Sys23 tem, the Board of Directors of the Federal Deposit Insur24 ance Corporation, and the National Credit Union Admin-
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1 istration Board shall jointly submit a report to the Con2 gress regarding—

3 ‘‘(1) the extent to which obligations issued or 

4 guaranteed by the enterprises (including mortgage5 backed securities) are held by federally insured de6 pository institutions, including such extent by type 

7 of institution and such extent relative to the institu8 tions’ capital; 

9 ‘‘(2) the extent to which the unlimited holdings 

10 by federally insured depository institutions of the ob11 ligations of the enterprises could produce systemic 

12 risk issues, particularly for the safety and soundness 

13 of the banking system in the United States, in the 

14 event of default or failure by an enterprise; and 

15 ‘‘(3) the effects on the enterprises, the banking 

16 industry, and mortgage markets, if prudent limits on 

17 the holdings of enterprise obligations were placed on 

18 federally insured depository institutions. 

19 ‘‘(b) PORTFOLIO OPERATIONS, RISK MANAGEMENT, 

20 AND MISSION.—Not later than one year after the date of 

21 the enactment of the Secondary Mortgage Market Enter22 prises Regulatory Improvement Act, the Director shall 

23 submit a report to the Congress—

24 ‘‘(1) describing the holdings of the enterprises 

25 in retained mortgages and repurchased mortgage-
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1 backed securities and the use of derivatives for hedg2 ing purposes; 

3 ‘‘(2) describing the extent of such holdings rel4 ative to other assets and the risk implications of 

5 such holdings; 

6 ‘‘(3) containing an analysis of such holdings for 

7 safety and soundness and/or mission compliance pur8 poses; and 

9 ‘‘(4) containing an assessment of whether such 

10 holdings and other assets of the enterprises fulfill 

11 the mission purposes of the enterprises under the 

12 Federal National Mortgage Association Charter Act 

13 and the Federal Home Loan Mortgage Corporation 

14 Act. 

15 The Director shall consult with the Comptroller General 

16 of the United States in preparing the report under this 

17 subsection and in conducting any research, analyses, and 

18 assessments for the report. 

19 ‘‘(c) DEBT ISSUANCES.—Not later than one year 

20 after the date of the enactment of the Secondary Mortgage 

21 Market Enterprises Regulatory Improvement Act, the Sec22 retary of the Treasury shall submit a report to the Con23 gress regarding—
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1 ‘‘(1) the extent of outstanding obligations of the 

2 enterprises and the rate of growth of such obliga3 tions; and 

4 ‘‘(2) an analysis of whether debt issuances 

5 should be limited or reduced if an enterprise is not 

6 operating in a safe and sound manner and/or not 

7 complying with its mission, or if an enterprise fails 

8 to maintain a certain credit rating and/or debt rat9 ing. 

10 ‘‘(d) TREASURY LINE OF CREDIT.—Not later than 

11 one year after the date of the enactment of the Secondary 

12 Mortgage Market Enterprises Regulatory Improvement 

13 Act, the Secretary of the Treasury shall submit a report 

14 to the Congress regarding the purposes of the authority 

15 of the Secretary of the Treasury to purchase the debt obli16 gations of the enterprises. The report shall assess the de17 sirability of limiting such authority in certain cir18 cumstances or eliminating such authority. 

19 ‘‘(e) RISK-BASED CAPITAL LEVELS.—The Director 

20 shall submit a report to the Congress annually, on fiscal 

21 year basis, regarding—

22 ‘‘(1) the risk-based capital levels for the enter23 prises under section 1361, including a description of 

24 the risk-based capital test under such section and 
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1 any assumptions of the Director and factors used by 

2 the Director in establishing the test; and 

3 (2) the minimum and critical capital levels for 

4 the enterprises pursuant to sections 1362 and 1363, 

5 respectively. 

6 Each report under this subsection for a fiscal year shall 

7 be submitted not later than the December 31 first occur8 ring after the conclusion of such fiscal year. 

9 ‘‘(f) RECOMMENDATIONS.—Each report submitted 

10 pursuant to this section shall include specific recommenda11 tions of appropriate policies, limitations, regulations, legis12 lation, or other actions to deal appropriately and effec13 tively with the issues addressed by such report.’’. 

14 Subtitle E—General Provisions 

15 SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS. 

16 (a) AMENDMENTS TO 1992 ACT.—Title XIII of the 

17 Housing and Community Development Act of 1992 (12 

18 U.S.C. 4501 et seq.), as amended by the preceding provi19 sions of this Act, is further amended—

20 (1) in section 1315 (12 U.S.C. 4515)—

21 (A) in subsection (a)—

22 (i) in the subsection heading, by strik23 ing ‘‘OFFICE PERSONNEL’’ and inserting 

24 ‘‘IN GENERAL’’;
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1 (ii) by striking ‘‘The’’ and inserting 

2 ‘‘Subject to title II of the Secondary Mort3 gage Market Enterprises Regulatory Im4 provement Act, the’’; and 

5 (iii) by striking ‘‘Director and the Of6 fice. Officers’’ and inserting ‘‘Director, 

7 with respect to regulation and supervision 

8 of the enterprises. Such officers’’; 

9 (B) in subsection (b)—

10 (i) by striking ‘‘, and maintain com11 parability with compensation of officers 

12 and employees of’’; 

13 (ii) by inserting ‘‘and’’ after ‘‘Sys14 tem,’’; and 

15 (iii) by striking ‘‘the Office of Thrift 

16 Supervision’’ and inserting the following: 

17 ‘‘and shall maintain comparability with 

18 compensation of officers and employees of 

19 such Office, Board, and Corporation, and 

20 of other officers and employees of the Of21 fice of Housing Finance Supervision’’; 

22 (C) in subsection (c), by inserting ‘‘, with 

23 respect to regulation and supervision of the en24 terprises’’ before the first comma; 

25 (D) in subsection (d)—
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1 (i) in the subsection heading, by strik2 ing ‘‘HUD’’ and inserting ‘‘DEPARTMENT

3 OF THE TREASURY’’; and 

4 (ii) by striking ‘‘Housing and Urban 

5 Development’’ and inserting ‘‘the Treas6 ury’’; 

7 (E) in subsection (e), by inserting ‘‘, with 

8 respect to regulation and supervision of the en9 terprises’’ before the period at the end; and 

10 (F) by striking subsection (f); 

11 (2) in section 1319A (12 U.S.C. 4520)—

12 (A) by striking ‘‘(a) IN GENERAL.—’’; and 

13 (B) by striking subsection (b); 

14 (3) in section 1319C (12 U.S.C. 4522)—

15 (A) in subsection (a)(1), by inserting 

16 ‘‘under this title’’ after ‘‘redressed’’; and 

17 (B) in subsection (b), by inserting ‘‘under 

18 this title’’ after ‘‘issued’’; 

19 (4) in section 1319D (12 U.S.C. 4523), by in20 serting ‘‘to conduct duties relating to the regulation 

21 and supervision of the enterprises’’ before the second 

22 comma; 

23 (5) in section 1319E (12 U.S.C. 4524)—
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1 (A) by inserting ‘‘relating to regulation 

2 and supervision of the enterprises’’ before ‘‘in 

3 accordance with’’; and 

4 (B) by inserting ‘‘in functions relating to 

5 the regulation and supervision of the enter6 prises’’ before ‘‘shall be made available’’; 

7 (6) in section 1319F (12 U.S.C. 4525), by 

8 striking ‘‘Code’’ and all that follows through ‘‘agen9 cies’’ and inserting ‘‘Code, the Office of Housing Fi10 nance Supervision, to the extent only of its func11 tions, activities, and employees involved in the regu12 lation and supervision of the enterprises, shall be 

13 considered an agency’’; 

14 (7) in the section heading for section 1328, by 

15 striking ‘‘SECRETARY’’ and inserting ‘‘DIREC16 TOR’’;

17 (8) in section 1361 (12 U.S.C. 4611)—

18 (A) in subsection (e)(1), by striking the 

19 first sentence and inserting the following new 

20 sentence: ‘‘The Director shall establish the risk21 based capital test under this section by regula22 tion.’’; and 

23 (B) in subsection (f), by striking ‘‘the Sec24 retary,’’; 
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1 (9) in section 1364(c) (12 U.S.C. 4614(c)), by 

2 striking the last sentence; 

3 (10) in section 1367(a)(2) (12 U.S.C. 

4 4617(a)(2)), by striking ‘‘with the written concur5 rence of the Secretary of the Treasury,’’; 

6 (11) in section 1369A(i) (12 U.S.C. 4620(i)), 

7 by inserting ‘‘having duties relating to regulation 

8 and supervision of the enterprises’’ before the period 

9 at the end; 

10 (12) by striking section 1383; 

11 (13) by striking ‘‘Committee on Banking, Fi12 nance and Urban Affairs’’ and inserting ‘‘Committee 

13 on Financial Services’’ each place such term appears 

14 in sections 1319B, 1319G(c), 1328(a), 

15 1336(b)(3)(C), 1337, and 1369(a)(3); and 

16 (14) by striking ‘‘Secretary’’ and inserting ‘‘Di17 rector’’ each place such term appears in —

18 (A) subpart A of part 2 of subtitle A (ex19 cept in sections 1322, 1324, and 1325); 

20 (B) subtitle B (except in section 

21 1361(d)(1) and 1369E); and 

22 (C) subtitle C. 

23 (b) AMENDMENTS TO FANNIE MAE CHARTER ACT.—

24 The Federal National Mortgage Association Charter Act 

25 (12 U.S.C. 1716 et seq.) is amended—
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1 (1) by striking ‘‘Director of the Office of Fed2 eral Housing Enterprise Oversight of the Depart3 ment of Housing and Urban Development’’ each 

4 place such term appears, and inserting ‘‘Director of 

5 the Office of Housing Finance Supervision’’, in—

6 (A) section 303(c)(2) (12 U.S.C. 

7 1718(c)(2));

8 (B) section 309(d)(3)(B) (12 U.S.C. 

9 1723a(d)(3)(B)); and 

10 (C) section 309(k)(1); and 

11 (2) in section 309(n)—

12 (A) in paragraph (1), by inserting ‘‘the Di13 rector of the Office of Housing Finance Super14 vision,’’ after ‘‘Senate,’’; and 

15 (B) in paragraph (3)(B), by striking ‘‘Sec16 retary’’ and inserting ‘‘Director of the Office of 

17 Housing Finance Supervision’’. 

18 (c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed19 eral Home Loan Mortgage Corporation Act is amended—

20 (1) by striking ‘‘Director of the Office of Fed21 eral Housing Enterprise Oversight of the Depart22 ment of Housing and Urban Development’’ each 

23 place such term appears, and inserting ‘‘Director of 

24 the Office of Housing Finance Supervision’’, in—
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1 (A) section 303(b)(2) (12 U.S.C. 

2 1452(b)(2)); 

3 (B) section 303(h)(2) (12 U.S.C. 

4 1452(h)(2)); and 

5 (C) section 307(c)(1) (12 U.S.C. 

6 1456(c)(1)); 

7 (2) in section 306(i) (12 U.S.C. 1455(i))—

8 (A) by striking ‘‘section 1316(c)’’ and in9 serting ‘‘section 306(c)’’; and 

10 (B) by striking ‘‘section 106’’ and insert11 ing ‘‘section 1316’’; and 

12 (3) in section 307 (12 U.S.C. 1456)—

13 (A) in subsection (f)—

14 (i) in paragraph (1), by inserting ‘‘the 

15 Director of the Office of Housing Finance 

16 Supervision,’’ after ‘‘Senate,’’; and 

17 (ii) in paragraph (3)(B), by striking 

18 ‘‘Secretary’’ and inserting ‘‘Director of the 

19 Office of Housing Finance Supervision’’.

20 (d) AMENDMENT TO TITLE 18, UNITED STATES

21 CODE.—Section 1905 of title 18, United States Code, is 

22 amended by striking ‘‘Office of Federal Housing Enter23 prise Oversight’’ and inserting ‘‘Office of Housing Finance 

24 Supervision in its capacity under title XIII of the Housing 

25 and Community Development Act of 1992’’. 
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1 (e) AMENDMENTS TO FLOOD DISASTER PROTECTION

2 ACT OF 1973.—Section 102(f)(3)(A) of the Flood Dis3 aster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) 

4 is amended by striking ‘‘Director of the Office of Federal 

5 Housing Enterprise Oversight of the Department of Hous6 ing and Urban Development’’ and inserting ‘‘Director of 

7 the Office of Housing Finance Supervision’’. 

8 (f) AMENDMENT TO DEPARTMENT OF HOUSING AND

9 URBAN DEVELOPMENT ACT.—Section 5 of the Depart10 ment of Housing and Urban Development Act (42 U.S.C. 

11 3534) is amended by striking subsection (d). 

12 (g) AMENDMENT TO TITLE 5, UNITED STATES

13 CODE.—Section 5315 of title 5, United States Code, is 

14 amended by striking the item relating to the Director of 

15 the Office of Federal Housing Enterprise Oversight, De16 partment of Housing and Urban Development. 

17 SEC. 172. EFFECTIVE DATE. 

18 Except as specifically provided otherwise in this title, 

19 the amendments made by this title shall take effect on, 

20 and shall apply beginning on, the expiration of the 1-year 

21 period beginning on the date of the enactment of this Act.
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1 TITLE II—TRANSFER OF FUNC2 TIONS, PERSONNEL, AND 

3 PROPERTY 

4 SEC. 201. ABOLISHMENT OF OFHEO. 

5 (a) IN GENERAL.—Effective at the end of the 1-year 

6 period beginning on the date of the enactment of this Act, 

7 the Office of Federal Housing Enterprise Oversight of the 

8 Department of Housing and Urban Development and the 

9 positions of the Director and Deputy Director of such Of10 fice are abolished.

11 (b) DISPOSITION OF AFFAIRS.—During the 1-year 

12 period beginning on the date of the enactment of this Act, 

13 the Director of the Office of Federal Housing Enterprise 

14 Oversight shall, solely for the purpose of winding up the 

15 affairs of the Office of Federal Housing Enterprise Over16 sight—

17 (1) manage the employees of such Office and 

18 provide for the payment of the compensation and 

19 benefits of any such employee which accrue before 

20 the effective date of any transfer of such employee 

21 pursuant to section 203; and 

22 (2) may take any other action necessary for the 

23 purpose of winding up the affairs of the Office. 

24 (c) STATUS OF EMPLOYEES AS FEDERAL AGENCY

25 EMPLOYEES.—The amendments made by title I and the 
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1 abolishment of the Office of Federal Housing Enterprise 

2 Oversight under subsection (a) of this section may not be 

3 construed to affect the status of any employee of such Of4 fice as employees of an agency of the United States for 

5 purposes of any other provision of law during any time 

6 such employee is so employed. 

7 (d) USE OF PROPERTY AND SERVICES.—

8 (1) PROPERTY.—The Director of the Office of 

9 Housing Finance Supervision may use the property 

10 of the Office of Federal Housing Enterprise Over11 sight to perform functions which have been trans12 ferred to the Director of the Office of Housing Fi13 nance Supervision for such time as is reasonable to 

14 facilitate the orderly transfer of functions trans15 ferred pursuant to any other provision of this Act or 

16 any amendment made by this Act to any other provi17 sion of law. 

18 (2) AGENCY SERVICES.—Any agency, depart19 ment, or other instrumentality of the United States, 

20 and any successor to any such agency, department, 

21 or instrumentality, which was providing supporting 

22 services to the Office of Federal Housing Enterprise 

23 Oversight before the expiration of the period under 

24 subsection (a) in connection with functions that are 
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1 transferred to the Director of the Office of Housing 

2 Finance Supervision shall—

3 (A) continue to provide such services, on a 

4 reimbursable basis, until the transfer of such 

5 functions is complete; and 

6 (B) consult with any such agency to co7 ordinate and facilitate a prompt and reasonable 

8 transition. 

9 (e) SAVINGS PROVISIONS.—

10 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA11 TIONS NOT AFFECTED.—Subsection (a) shall not af12 fect the validity of any right, duty, or obligation of 

13 the United States, the Director of the Office of Fed14 eral Housing Enterprise Oversight, or any other per15 son, which—

16 (A) arises under or pursuant to the title 

17 XIII of the Housing and Community Develop18 ment Act of 1992, the Federal National Mort19 gage Association Charter Act, the Federal 

20 Home Loan Mortgage Corporation Act, or any 

21 other provision of law applicable with respect to 

22 such Office; and 

23 (B) existed on the day before the abolish24 ment under subsection (a) of this section.
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1 (2) CONTINUATION OF SUITS.—No action or 

2 other proceeding commenced by or against the Di3 rector of the Office of Federal Housing Enterprise 

4 Oversight shall abate by reason of the enactment of 

5 this Act, except that the Director of the Office of 

6 Housing Finance Supervision shall be substituted 

7 for the Director of the Office of Federal Housing 

8 Enterprise Oversight as a party to any such action 

9 or proceeding. 

10 SEC. 202. CONTINUATION AND COORDINATION OF CERTAIN 

11 REGULATIONS. 

12 All regulations, orders, determinations, and resolu13 tions that—

14 (1) were issued, made, prescribed, or allowed to 

15 become effective by—

16 (A) the Office of Federal Housing Enter17 prise Oversight; 

18 (B) the Secretary of Housing and Urban 

19 Development and that relate to the Secretary’s 

20 authority under—

21 (i) title XIII of the Housing and Com22 munity Development Act of 1992; 

23 (ii) under the Federal National Mort24 gage Association Charter Act, with respect 
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1 to the Federal National Mortgage Associa2 tion; or 

3 (iii) the Federal Home Loan Mort4 gage Corporation Act; or 

5 (C) a court of competent jurisdiction and 

6 that relate to functions transferred by this Act; 

7 and 

8 (2) are in effect on the date of the abolishment 

9 under section 201(a) of this Act, 

10 shall remain in effect according to the terms of such regu11 lations, orders, determinations, and resolutions and shall 

12 be enforceable by or against the Director of the Office of 

13 Housing Finance Supervision until modified, terminated, 

14 set aside, or superseded in accordance with applicable law 

15 by such Board, any court of competent jurisdiction, or op16 eration of law. 

17 SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF 

18 OFHEO. 

19 (a) AUTHORITY TO TRANSFER.—The Director of the 

20 Office of Housing Finance Supervision may transfer em21 ployees of the Office of Federal Housing Enterprise Over22 sight to the Office of Housing Finance Supervision for em23 ployment no later than the date of the abolishment under 

24 section 201(a) of this Act, as the Director considers ap25 propriate. This Act and the amendments made by this Act 
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1 shall not be considered to result in the transfer of any 

2 function from one agency to another or the replacement 

3 of one agency by another, for purposes of section 3505 

4 of title 5, United States Code, except to the extent that 

5 the Director of the Office of Housing Finance Supervision 

6 specifically provides so. 

7 (b) APPOINTMENT AUTHORITY FOR EXCEPTED AND

8 SENIOR EXECUTIVE SERVICE EMPLOYEES.—

9 (1) IN GENERAL.—In the case of employees oc10 cupying positions in the excepted service or the Sen11 ior Executive Service, any appointment authority es12 tablished pursuant to law or regulations of the Of13 fice of Personnel Management for filling such posi14 tions shall be transferred, subject to paragraph (2). 

15 (2) DECLINE OF TRANSFER.—The Director of 

16 the Office of Housing Finance Supervision may de17 cline a transfer of authority under paragraph (1) 

18 (and the employees appointed pursuant thereto) to 

19 the extent that such authority relates to positions 

20 excepted from the competitive service because of 

21 their confidential, policy-making, policy-determining, 

22 or policy-advocating character, and noncareer posi23 tions in the Senior Executive Service (within the 

24 meaning of section 3132(a)(7) of title 5, United 

25 States Code). 
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1 (c) REORGANIZATION.—If the Director of the Office 

2 of Housing Finance Supervision determines, after the end 

3 of the 1-year period beginning on the date of the abolish4 ment under section 201(a), that a reorganization of the 

5 combined work force is required, that reorganization shall 

6 be deemed a major reorganization for purposes of afford7 ing affected employees retirement under section 

8 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

9 Code. 

10 (d) EMPLOYEE BENEFIT PROGRAMS.—Any employee 

11 of the Office of Federal Housing Enterprise Oversight ac12 cepting employment with the Director of the Office of 

13 Housing Finance Supervision as a result of a transfer 

14 under subsection (a) may retain for 18 months after the 

15 date such transfer occurs membership in any employee 

16 benefit program of the Director of the Office of Housing 

17 Finance Supervision or the Office of Federal Housing En18 terprise Oversight, as applicable, including insurance, to 

19 which such employee belongs on the date of the abolish20 ment under section 201(a) if—

21 (1) the employee does not elect to give up the 

22 benefit or membership in the program; and 

23 (2) the benefit or program is continued by the 

24 Director of the Office of Housing Finance Super25 vision.
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1 The difference in the costs between the benefits which 

2 would have been provided by such agency and those pro3 vided by this section shall be paid by the Director of the 

4 Office of Housing Finance Supervision. If any employee 

5 elects to give up membership in a health insurance pro6 gram or the health insurance program is not continued 

7 by such Director, the employee shall be permitted to select 

8 an alternate Federal health insurance program within 30 

9 days of such election or notice, without regard to any other 

10 regularly scheduled open season. 

11 SEC. 204. TRANSFER OF PROPERTY AND FACILITIES. 

12 Upon the abolishment under section 201(a), all prop13 erty of the Office of Federal Housing Enterprise Oversight 

14 shall transfer to the Director of the Office of Housing Fi15 nance Supervision.

Æ