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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3167 Introduced in House (IH)]

104th CONGRESS
  2d Session
                                H. R. 3167

  To reform the Federal Home Loan Bank System, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 27, 1996

 Mr. Baker of Louisiana (for himself, Mr. Kanjorski, Mr. McCollum, Mr. 
Bachus, Mr. King, Mr. Hayworth, Mr. Chrysler, Mr. Cremeans, Mr. Fox of 
Pennsylvania, Mr. Metcalf, Mr. Weller, Mr. LaFalce, Mr. Orton, and Mr. 
   Bentsen) introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL

 
  To reform the Federal Home Loan Bank System, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Enterprise 
Resource Bank Act of 1996''.
    (b) Table of Contents.--The table of sections for this Act is as 
follows:

Sec. 1. Short title; table of contents; findings.
Sec. 2. Redesignation of Federal home loan banks as enterprise resource 
                            banks.
Sec. 3. Provisions relating to banks and bank membership.
Sec. 4. Federal Housing Finance Board.
Sec. 5. The Office of Finance.
Sec. 6. Capital.
Sec. 7. Prompt corrective action.
Sec. 8. Management of banks.
Sec. 9. Sustainable economic development program.
Sec. 10. Enforcement authority to promote safety and soundness of 
                            enterprise resource banks.
Sec. 11. Resolution Funding Corporation obligation.
Sec. 12. Powers and duties of banks; technical and conforming 
                            amendments.
Sec. 13. Incorporation of banks; corporate powers.
Sec. 14. Succession of enterprise resource banks.
Sec. 15. Definitions.
    (c) Findings.--The Congress finds the following:
            (1) The Federal Home Loan Bank System was established in 
        1932 primarily to provide a source of intermediate- and long-
        term credit for State savings institutions to finance long-term 
        residential mortgages and to provide a source for liquidity 
        loans for such institutions, neither of which was readily 
        available for such institutions at that time.
            (2) Recently, the System's membership has been expanded to 
        include other depository institutions that are significant 
        housing lenders.
            (3) That portion of all savings associations and other 
        depository institutions which are specialized mortgage lending 
        has decreased, both with respect to the volume of loans and as 
        a percentage of market share and may continue to decrease.
            (4) The establishment of the Federal National Mortgage 
        Association, the Federal Home Loan Mortgage Corporation, and 
        the Government National Mortgage Association and the subsequent 
        development of an extensive private secondary market for 
        residential mortgages has challenged the Federal Home Loan Bank 
        System as a source of intermediate- and long-term credit to 
        support primary residential mortgage lenders.
            (5) For most depository institutions, residential mortgage 
        lending has been incorporated into a product mix of community 
        banking that typically provides a range of mortgage, consumer, 
        and commercial loans in their communities.
            (6) Community banks have a difficult time accessing capital 
        markets and adequately funding intermediate- and long-term 
        assets held by the bank for investment purposes, particularly 
        community banks located in rural areas where nonfarm businesses 
        tend to rely heavily on community banks as their primary 
        lender.
            (7) Since community banks in rural areas, like savings 
        associations in the 1930s, tend to draw most of their funds 
        from local deposits, credit for borrowers in rural areas may be 
        difficult to obtain and the economy of rural America could 
        benefit from increased competition if community banks in rural 
        areas were provided with enhanced access to capital markets.
            (8) Access to liquidity through Federal home loan banks 
        greatly benefits well-managed, adequately-capitalized community 
        banks because--
                    (A) term advances reduce interest rate risk; and
                    (B) the ability of a community bank to obtain 
                advances to offset deposit decreases or to temporarily 
                fund portfolios during an increase in loan demands 
                reduces the bank's overall cost of operation and allows 
                the community bank to better serve its market and 
                community.
            (9) Used prudently, the Federal Home Loan Bank System is an 
        integral tool to assist properly-regulated, well-capitalized 
        community banks, especially community banks in rural areas and 
        underserved neighborhoods, to obtain a more stable funding 
        source for intermediate- and long-term assets.

SEC. 2. REDESIGNATION OF FEDERAL HOME LOAN BANKS AS ENTERPRISE RESOURCE 
              BANKS.

    (a) In General.--Each Federal home loan bank is hereby redesignated 
as an enterprise resource bank.
    (b) Universal Conforming Amendments.--
            (1) Federal home loan bank.--The Federal Home Loan Bank Act 
        (12 U.S.C. 1421 et seq.) is amended by striking ``Federal Home 
        Loan Bank'' and ``Federal Home Loan Banks'' each place such 
        terms appear in such Act (other than in connection with a 
        reference to the Federal Home Loan Bank System) and inserting 
        ``enterprise resource bank'' and ``enterprise resource banks'', 
        respectively.
            (2) Federal home loan bank system.--The Federal Home Loan 
        Bank Act (12 U.S.C. 1421 et seq.) is amended by striking 
        ``Federal Home Loan Bank System'' and inserting ``enterprise 
        resource bank system''.
    (c) Redesignation of Act.--
            (1) In general.--The Federal Home Loan Bank Act (12 U.S.C. 
        1421 et seq.) is amended by striking the clause that appears 
        after the enacting clause and before section 2 and inserting 
        the following new section:

``SECTION 1. SHORT TITLE.

    ``This Act may be cited as the `Enterprise Resource Bank System 
Act'.''.
            (2) References to federal home loan bank act.--Any 
        reference in this Act and any other Federal law to the Federal 
        Home Loan Bank Act shall be deemed, as of the date of the 
        enactment of this Act, to be a reference to the Enterprise 
        Resource Bank System Act.
    (d) References to Federal Home Loan Banks.--Any reference in a 
Federal law to any Federal home loan bank shall be deemed, as of the 
date of the enactment of this Act, to be a reference to an enterprise 
resource bank.

SEC. 3. PROVISIONS RELATING TO BANKS AND BANK MEMBERSHIP.

    The Federal Home Loan Bank Act (12 U.S.C. 1421) is amended by 
inserting after section 4 the following new section:

``SEC. 5. MISSION STATEMENT; ENTERPRISE RESOURCE BANKS.

    ``(a) Mission.--The enterprise resource banks are established by 
the Congress as profitmaking financial institutions whose purposes are 
as follows:
            ``(1) To promote residential mortgage lending (including 
        mortgages on housing for low- and moderate-income families).
            ``(2) To facilitate community and economic development 
        lending, including rural economic development lending.
            ``(3) To assist such lending, safely and soundly, through a 
        program of collateralized advances and other financial services 
        that provide long-term funding, liquidity, operational, and 
        interest rate risk management to the bank's shareholders and 
        certain mortgagees who are not shareholders of the bank.
    ``(b) Districts.--
            ``(1) In general.--Subject to subsection (c), there are 12 
        districts which shall be known as enterprise resource bank 
        districts.
            ``(2) Name of district.--Each district shall bear a name 
        descriptive of the geographic location of the district.
            ``(3) Districts designated.--Subject to subsection (c), the 
        12 districts shall be comprised as follows:
                    ``(A) District 1 shall be composed of the States of 
                Connecticut, Maine, Massachusetts, New Hampshire, Rhode 
                Island, and Vermont.
                    ``(B) District 2 shall be composed of the States of 
                New Jersey and New York, the Commonwealth of Puerto 
                Rico, and the territory of the Virgin Islands.
                    ``(C) District 3 shall be composed of the States of 
                Delaware, Pennsylvania, and West Virginia.
                    ``(D) District 4 shall be composed of the States of 
                Alabama, Florida, Georgia, Maryland, North Carolina, 
                South Carolina, and Virginia, and the District of 
                Columbia.
                    ``(E) District 5 shall be composed of the States of 
                Kentucky, Ohio, and Tennessee.
                    ``(F) District 6 shall be composed of the States of 
                Indiana and Michigan.
                    ``(G) District 7 shall be composed of the States of 
                Illinois and Wisconsin.
                    ``(H) District 8 shall be composed of the States of 
                Iowa, Minnesota, Missouri, North Dakota, and South 
                Dakota.
                    ``(I) District 9 shall be composed of the States of 
                Arkansas, Louisiana, Mississippi, New Mexico, and 
                Texas.
                    ``(J) District 10 shall be composed of the States 
                of Colorado, Kansas, Nebraska, and Oklahoma.
                    ``(K) District 11 shall be composed of the States 
                of Arizona, California, and Nevada.
                    ``(L) District 12 shall be composed of the States 
                of Alaska, Hawaii, Idaho, Montana, Oregon, Utah, 
                Washington, and Wyoming, and the territories of Guam 
                and the Pacific Islands.
            ``(4) Single bank in each district.--There shall be 1 
        enterprise resource bank in each district.
            ``(5) No additional banks authorized.--No additional 
        enterprise resource banks may be chartered by the Finance Board 
        after the date of the enactment of the Enterprise Resource Bank 
        Act of 1996, except in connection with a transaction under 
        subsection (c).
    ``(c) Mergers, Consolidations and Combinations of Banks.--
            ``(1) Merger, consolidation, and combination authority.--In 
        addition to the authority of the Finance Board under section 6A 
        and notwithstanding subsection (b), 2 or more enterprise 
        resource banks may merge or otherwise combine or consolidate.
            ``(2) Prerequisites for transaction.--A merger, 
        combination, or consolidation of enterprise banks may be 
        consummated under this subsection only if the transaction is 
        approved by--
                    ``(A) a majority of the board of directors of each 
                bank participating in the transaction; and
                    ``(B) the holders of a majority of the voting 
                shares of capital stock of each such bank.
            ``(3) Effective date of transaction.--If the requirements 
        of paragraph (2) have been met, a merger, combination, or 
        consolidation of enterprise resource banks shall be effective 
        as of the date the following conditions are met:
                    ``(A) A certificate of merger, combination, or 
                consolidation (in such form as the Finance Board shall 
                prescribe) is--
                            ``(i) executed by the banks participating 
                        in such transaction; and
                            ``(ii) filed with the Finance Board in 
                        accordance with section 12(a)(3).
                    ``(B) The Finance Board has--
                            ``(i) approved the transaction in 
                        accordance with paragraph (12)(A); or
                            ``(ii) not disapproved the transaction in 
                        accordance with paragraph (12)(B) before the 
                        end of the 120-day period beginning on the date 
                        of the filing described in subparagraph 
                        (A)(ii).
            ``(4) Merger agreement.--
                    ``(A) In general.--Any merger, combination, or 
                consolidation of enterprise resource banks under this 
                subsection shall be carried out pursuant to an 
                agreement entered into by all the enterprise resource 
                banks participating in the transaction.
                    ``(B) Contents of agreement.--Any agreement 
                referred to in subparagraph (A) shall specify--
                            ``(i) the terms and conditions of the 
                        merger, combination, or consolidation;
                            ``(ii) the amendments to the charter 
                        documents of the resulting bank to be affected 
                        by the transaction, if any;
                            ``(iii) the location of the principal 
                        office of the resulting bank;
                            ``(iv) the manner of converting the shares 
                        of each of the banks participating in the 
                        transaction into shares of the resulting bank; 
                        and
                            ``(v) such other details or provisions as 
                        are appropriate.
            ``(5) Succession in interest.--Upon the effective date of 
        any merger, combination, or consolidation of enterprise 
        resource banks under this subsection--
                    ``(A) the separate existence of any bank 
                participating in the transaction other than the 
                resulting bank shall cease to exist;
                    ``(B) the resulting bank shall--
                            ``(i) succeed to all the rights and 
                        properties of each of the banks described in 
                        subparagraph (A) without other transfer; and
                            ``(ii) be subject to all the debts and 
                        liabilities of each such bank in the same 
                        manner as if the resulting bank had incurred 
                        such debts and liabilities.
            ``(6) Existing rights not affected.--This subsection shall 
        not affect any right of any creditor of any enterprise resource 
        bank which is participating in any merger, combination, or 
        consolidation under this subsection.
            ``(7) Preservation of liens.--All liens upon the property 
        of any enterprise resource bank which is participating in any 
        merger, combination, or consolidation under this subsection 
        shall continue to be effective after the consummation of the 
        transaction except that any lien upon property of any bank 
        other than the resulting bank shall be effective only with 
        respect to the property which was subject to the lien 
        immediately before consummation of the transaction.
            ``(8) Continuation of suits.--
                    ``(A) In general.--No action or other proceeding 
                commenced by or against any enterprise resource bank 
                which is participating in any merger, combination, or 
                consolidation under this subsection shall abate by 
                reason of the consummation of such transaction.
                    ``(B) Substitution of resulting bank.--In any 
                action or proceeding described in subparagraph (A), the 
                enterprise resource bank resulting from the transaction 
                referred to in such subparagraph shall be substituted 
                for the enterprise resource bank involved in such 
                action or proceeding before the consummation of the 
                transaction.
                    ``(C) Applicability to resulting bank.--Any final 
                judgment or other determination which becomes final in 
                any action or proceeding described in subparagraph (A) 
                shall be binding on the bank resulting from the 
                transaction referred to in such subparagraph.
            ``(9) Number of elected directors of resulting bank.--
        Subject to section 7(a), any Bank resulting from a merger, 
        combination, or consolidation pursuant to this section may have 
        a number of elected directors equal to or less than the total 
        number of elected directors of all the banks which participated 
        in such transaction (as determined immediately before such 
        transaction).
            ``(10) Number of appointed directors of resulting bank.--
        The number of appointed directors of any enterprise resource 
        bank resulting from a merger, combination, or consolidation 
        pursuant to this section shall be not less than \1/2\ and not 
        more than \3/4\ of the number of elected directors.
            ``(11) Adjustment of district boundaries.--After a merger, 
        combination, or consolidation of 2 or more enterprise resource 
        banks under this subsection is consummated, the Finance Board 
        shall adjust the districts established pursuant to subsection 
        (b) to reflect such merger, combination, or consolidation.
            ``(12) Finance board authority.--Upon receipt of a 
        certificate of merger, combination, or consolidation filed with 
        the Finance Board in accordance with section 12(a)(3), the 
        Finance Board may--
                    ``(A) approve the transaction on the basis of a 
                determination that the transaction provides for a 
                resulting enterprise resource bank which is safe and 
                sound; or
                    ``(B) disapprove the transaction on the basis of a 
                determination that the transaction does not provide for 
                a resulting enterprise resource bank which is safe and 
                sound.
    ``(d) Prohibition on Joint Offices.--Except with regard to the 
office of finance or to the extent specifically provided in this Act, 
there shall be no joint or collective offices of the enterprise 
resource banks.''.

SEC. 4. FEDERAL HOUSING FINANCE BOARD.

    (a) In General.--Section 3 of the Federal Home Loan Bank Act (12 
U.S.C. 1423) is amended to read as follows:

``SEC. 3. FEDERAL HOUSING FINANCE BOARD.

    ``(a) Establishment.--
            ``(1) In general.--There shall be a Federal Housing Finance 
        Board in the executive branch which shall be an independent 
        agency to regulate the safety and soundness of the enterprise 
        resource banks.
            ``(2) Duties.--The duties of the Finance Board shall be the 
        following:
                    ``(A) To ensure that the enterprise resource 
                banks--
                            ``(i) operate in accordance with this Act 
                        and in a safe and sound manner; and
                            ``(ii) remain adequately capitalized.
                    ``(B) To ensure that programs administered by any 
                enterprise resource bank are consistent with, and 
                contribute to the fulfillment of, the mission of the 
                bank.
                    ``(C) To provide periodic reports to the Congress 
                regarding the safety and soundness and the composition 
                of the shareholders in the enterprise resource banks 
                and the extent to which such banks are fulfilling their 
                mission.
            ``(3) Clarification of authority of finance board.--The 
        Finance Board shall have no authority--
                    ``(A) to manage the operations of any enterprise 
                resource bank;
                    ``(B) to manage the sustainable economic 
                development program of any enterprise resource bank, 
                including the community investment program or the 
                affordable housing program of any such bank; or
                    ``(C) to approve or disapprove funding by any such 
                bank for any program referred to in subparagraph (B).
    ``(b) Composition of Finance Board.--
            ``(1) In general.--Subject to paragraph (9), the Finance 
        Board shall be composed of 5 directors as follows:
                    ``(A) The Secretary of the Department of Housing 
                and Urban Development, who shall serve without 
                additional compensation.
                    ``(B) 3 directors appointed by the President, by 
                and with the advice and consent of the Senate, from 
                among individuals who--
                            ``(i) are citizens of the United States; 
                        and
                            ``(ii) have--
                                    ``(I) extensive experience or 
                                training in housing finance, community 
                                and economic development (including 
                                rural economic development), financial 
                                safety and soundness regulation, or 
                                extensive experience with an 
                                organization which represents consumer 
                                or community interest in banking 
                                services, credit needs, housing, 
                                financial consumer protection, or small 
                                businesses; and
                                    ``(II) a commitment to provide 
                                specialized housing, small business, or 
                                rural credit.
                    ``(C) 1 director appointed by the President, by and 
                with the advice and consent of the Senate, from among 
                individuals who--
                            ``(i) are citizens of the United States; 
                        and
                            ``(ii) have extensive experience or 
                        training in financial safety and soundness 
                        regulation.
            ``(2) Terms.--
                    ``(A) In general.--Each director of the Finance 
                Board appointed under subparagraph (B) or (C) of 
                paragraph (1) shall be appointed for a term of 7 years.
                    ``(B) Interim appointments.--Any director appointed 
                to fill a vacancy occurring before the expiration of 
                the term for which such director's predecessor was 
                appointed shall be appointed only for the remainder of 
                such term.
                    ``(C) Continuation of service.--Each director may 
                continue to serve after the expiration of the term to 
                which such director was appointed until a successor has 
                been appointed and qualified.
            ``(3) Chairperson and acting chairperson.--
                    ``(A) Chairperson.--The President shall designate 1 
                of the directors appointed pursuant to subparagraph (B) 
                or (C) of paragraph (1) to be the Chairperson of the 
                Finance Board.
                    ``(B) Service as chief executive officer.--The 
                Chairperson shall be the chief executive officer of the 
                Finance Board.
                    ``(C) Acting chairperson.--
                            ``(i) In general.--The Chairperson shall 
                        designate another director to serve as Acting 
                        Chairperson during the absence or disability of 
                        the Chairperson.
                            ``(ii) Selection by directors.--If a 
                        designation by the Chairperson has not been 
                        made pursuant to clause (i) and the position of 
                        Chairperson becomes vacant, the remaining 
                        directors shall elect a director to serve as 
                        the Acting Chairperson until a Chairperson has 
                        been appointed.
                    ``(D) Powers and responsibility of ceo.--
                            ``(i) In general.--As the chief executive 
                        officer, the Chairperson shall be responsible 
                        for--
                                    ``(I) the overall management, 
                                organization, and functioning of the 
                                Finance Board in accordance with the 
                                policies established and regulations 
                                prescribed by the Finance Board;
                                    ``(II) directing the implementation 
                                of regulations prescribed and policies 
                                established by the Finance Board; and
                                    ``(III) appoint, remove, promote, 
                                direct, and set rates of compensation 
                                for employees, attorneys, and agents of 
                                the Finance Board consistent with the 
                                policies established by the Finance 
                                Board pursuant to subsection (e)(1).
                            ``(ii) Meetings.--The Chairperson may call 
                        a meeting of the Finance Board.
                            ``(iii) Delegation.--The Chairperson may 
                        delegate any authority of the Chairperson as 
                        the chief executive officer of the Finance 
                        Board to any officer or employee of the Finance 
                        Board, including another director of the 
                        Finance Board.
                            ``(iv) Governing standards.--In carrying 
                        out the duties of the chief executive officer, 
                        the Chairperson shall be subject to and 
                        governed by the policies adopted by the Finance 
                        Board and any regulatory decision, finding, or 
                        determination made by the Finance Board.
            ``(4) Representational requirements.--
                    ``(A) Political affiliation.--Not more than 2 
                directors may be members of the same political party.
                    ``(B) District representation.--Not more than 1 
                director may be appointed from any single district of 
                the enterprise resource Bank System.
            ``(5) Vacancy.--Any vacancy on the Finance Board shall be 
        filled in the manner in which the original appointment was 
        made.
            ``(6) Limitations on conflicts of interest.--No director on 
        the Finance Board may, while serving as a director--
                    ``(A) serve as a director, officer, employee, 
                counsel, or agent of any enterprise resource bank; or
                    ``(B) hold shares of, serve as a director, officer, 
                employee, counsel, or agent of, or have any other 
                financial interest in any member of any such bank.
            ``(7) Full-time service.--No director other than the 
        Chairperson may serve on the Finance Board on a full-time 
        basis.
            ``(8) Quorum.--3 directors shall constitute a quorum.
            ``(9) Delegation by secretary.--The Secretary of Housing 
        and Urban Development may delegate such Secretary's position on 
        the Finance Board to an officer of such Secretary's agency who 
        has been appointed to such office by the President, by and with 
        the advice and consent of the Senate.
            ``(10) Transitional provision.--
                    ``(A) Continued service of federal housing finance 
                board directors.--Any director of the Federal Housing 
                Finance Board whose term has not expired before the 
                date of enactment of the Enterprise Resource Bank Act 
                of 1996 shall remain a director of the Finance Board 
                and shall be deemed to have been appointed under 
                subparagraph (B) or (C) of paragraph (1), as designated 
                by the President.
                    ``(B) Terms of appointment.--Subject to 
                subparagraph (C), the President shall determine the 
                length of the term of any director described in 
                subparagraph (A) and shall determine which director 
                described in subparagraph (A), if any, shall serve as 
                the Chairperson of the Finance Board.
                    ``(C) Staggered terms.--In establishing the terms 
                of any director under subparagraph (B), the President 
                shall provide that 1 such director shall serve a 1-year 
                term, 1 director shall serve a 3-year term, and 1 
                director shall serve a 5-year term.
    ``(c) General Powers.--Subject to subsection (a)(3), the Finance 
Board shall have the following powers:
            ``(1) To maintain such oversight of the enterprise resource 
        banks and the office of finance as may be necessary to ensure 
        that such banks and the office of finance operate in accordance 
        with this Act and in a financially safe and sound manner.
            ``(2) To prescribe or issue, and enforce, such regulations 
        and orders as the Finance Board determines to be necessary to 
        carry out the provisions of this Act.
            ``(3) To suspend or remove for cause a director, officer, 
        employee, or agent of any enterprise resource bank or the 
        office of finance.
            ``(4) To determine necessary expenditures of the Finance 
        Board under this Act and the manner in which such expenditures 
        shall be incurred, allowed, and paid.
            ``(5) To use the United States mails in the same manner and 
        under the same conditions as a department or agency of the 
        United States.
            ``(6) To sue and be sued and to complain and defend, by and 
        through the Finance Board's own attorneys, in any action 
        brought by or against the Finance Board in any court of 
        competent jurisdiction.
            ``(7) To make contracts.
            ``(8) To exercise incidental powers that are consistent 
        with this Act and are appropriate to carry out the provisions 
        of this Act.
    ``(d) Receipts of the Finance Board.--
            ``(1) Deposit in treasury.--Receipts of the Finance Board 
        derived from assessments imposed on the enterprise resource 
        banks and from other sources shall be deposited in an account 
of the Finance Board in the Treasury of the United States.
            ``(2) Payment of expenses.--Salaries of the directors and 
        other employees of the Finance Board and all other expenses of 
        the Finance Board may be paid from the receipts described in 
        paragraph (1).
            ``(3) Treatment of amounts received.--Notwithstanding any 
        other provision of law--
                    ``(A) no amount received by the Finance Board 
                pursuant to any assessment imposed on any enterprise 
                resource bank or any other income of the Finance Board 
                may be construed to be Government funds or appropriated 
                money;
                    ``(B) no authority of the Finance Board to spend or 
                otherwise obligate any such amount may be treated as 
                budget authority, spending authority, or credit 
                authority or as authority to obligate funds of the 
                United States, notwithstanding the fact that the 
                receipts described in paragraph (1) are deposited in 
                the account of the Finance Board in the Treasury; and
                    ``(C) no such amount shall be subject to 
                apportionment for purposes of chapter 15 of title 31, 
                United States Code, or under any other authority.
    ``(e) Staff.--
            ``(1) In general.--The Finance Board may provide for the 
        employment, direction, compensation, and number of employees, 
        attorneys, and agents of the Finance Board.
            ``(2) Prohibition on delegation to banks or the office of 
        finance.--The Finance Board may not delegate, or provide for 
        the delegation of, any function of the Finance Board to any 
        employee or administrative unit of any bank or the office of 
        finance.
            ``(3) Restatement of prior law.--The compensation of staff, 
        attorneys, and agents shall be paid without regard to the 
        provisions of other laws applicable to officers or employees of 
        the United States, except that the chairperson and the other 
        appointed directors shall be compensated pursuant to sections 
        5314 and 5315 of title 5, United States Code, respectively.
    ``(f) Annual Reports.--
            ``(1) Board reports.--The Finance Board shall make an 
        annual report to the Congress regarding--
                    ``(A) the safety and soundness of the enterprise 
                resource banks and the office of finance;
                    ``(B) the fulfillment of the mission of the banks 
                under this Act; and
                    ``(C) the composition of the shareholders in the 
                enterprise resource banks.
            ``(2) Bank reports.--The enterprise resource banks shall 
        submit a collective annual report to the Finance Board on the 
        fulfillment of the mission of the banks under this Act.
            ``(3) Affordable housing advisory councils.--The affordable 
        housing advisory councils of the enterprise resource banks 
        shall each submit an annual report to the Finance Board on the 
        fulfillment by such bank of its affordable housing mission 
        under section 10.
    ``(g) Suspension or Removal of Bank Employees for Cause.--
            ``(1) Written notice.--In exercising any authority under 
        subsection (c)(3) to suspend or remove for cause a director, 
        officer, employee, or agent of any enterprise resource bank or 
        the office of finance, the Finance Board shall provide written 
        notice of such suspension or removal and the cause of the 
        suspension or removal to such director, officer, employee, or 
        agent and to such bank or office.
            ``(2) Hearing.--The notice provided pursuant to paragraph 
        (1) shall establish the time and place for a hearing on the 
        suspension or removal in accordance with section 554 of title 
        5, United States Code.''.
    (b) Independence of Finance Board.--Section 111 of Public Law 93-
495 (12 U.S.C. 250) is amended by striking ``the Federal Home Loan Bank 
Board,'' and inserting ``the Director of the Office of Thrift 
Supervision, the Federal Housing Finance Board,''.

SEC. 5. THE OFFICE OF FINANCE.

    Section 4 of the Federal Home Loan Bank Act (12 U.S.C. 1424) is 
amended to read as follows:

``SEC. 4. THE OFFICE OF FINANCE.

    ``(a) Operation.--The enterprise resource banks shall operate 
jointly an office of finance (hereafter in this section referred to as 
the `office') to issue the notes, bonds, and debentures of the 
enterprise resource banks in accordance with this Act.
    ``(b) Powers.--Subject to the other provisions of this Act and such 
safety and soundness regulations as the Finance Board may prescribe, 
the office shall be authorized by the enterprise resource banks to act 
as the agent of such banks to issue enterprise resource bank notes, 
bonds and debentures pursuant to section 11 of this Act on behalf of 
the banks.
    ``(c) Central Board of Directors.--
            ``(1) Establishment.--The enterprise resource banks shall 
        establish a central board of directors of the office of finance 
        to administer the affairs of the office in accordance with the 
        provisions of this Act.
            ``(2) Composition of board.--Each enterprise resource bank 
        shall annually select 1 individual who, as of the time of the 
        election, is an officer or director of such bank to serve as a 
        member of the policy review board.
    ``(d) Status.--Except to the extent expressly provided in this Act, 
the office shall be treated as an enterprise resource bank for purposes 
of any law.
    ``(e) Monitoring Investment Exposure.--
            ``(1) Daily position reporting required.--
                    ``(A) In general.--Beginning 30 days after the date 
                of the enactment of the Enterprise Resource Bank Act of 
                1996, each enterprise resource bank shall regularly 
                report the bank's closing position on all of the 
bank's investments and qualified financial contracts (as defined in 
section 11(e)(8)(D) of the Federal Deposit Insurance Act) to the 
Finance Board.
                    ``(B) Finance board requirements.--The Finance 
                Board may specify the contents of the reports required 
                under subparagraph (A).
            ``(2) System procedures.--In addition to the reports 
        required under paragraph (1), the Finance Board, the enterprise 
        resource banks, and the office shall jointly establish 
        procedures for monitoring the investment exposure, including 
        credit and interest rate risk, of the banks' individual and 
        combined investment portfolios.''.

SEC. 6. CAPITAL.

    (a) In General.--Section 6 of the Federal Home Loan Bank Act (12 
U.S.C. 1426) is amended by striking all that precedes subsection (h) 
and inserting the following:

``SEC. 6. CAPITAL STRUCTURE OF ENTERPRISE RESOURCE BANKS.

    ``(a) Capital Structure Plan.--Before the end of the 6-month period 
beginning on the date of the enactment of the Enterprise Resource Bank 
Act of 1996, the board of directors of each enterprise resource bank 
shall complete a plan for establishing and implementing a capital 
structure for such bank which--
            ``(1) the board of directors determines is the best suited 
        for the condition and operation of the bank and the interests 
        of the stockholders of the bank;
            ``(2) meets the requirements of subsection (b); and
            ``(3) meets the minimum capital standards and requirements 
        established under subsection (c) and any regulations prescribed 
        by the Finance Board pursuant to such subsection.
    ``(b) Contents of Plan.--The capital structure of each enterprise 
resource bank shall meet the following requirements:
            ``(1) Reduction of equity investments.--The plan shall 
        include a timetable for reducing, by such amount as the board 
        of directors may determine to be appropriate, the amount of the 
        equity investment of the shareholders of the bank as of the 
        date of the enactment of the Enterprise Resource Bank Act of 
        1996.
            ``(2) Uniform standards for shareholders.--The plan shall 
        establish uniform standards, criteria, and requirements for the 
        issuance of shares of any class of stock of the bank.
            ``(3) Procedure for meeting core capital requirement.--The 
        plan shall establish the process by which the bank may meet the 
        core capital requirement in subsection (c)(5) as soon as 
        practicable after the date of the enactment of the Enterprise 
        Resource Bank Act of 1996.
            ``(4) Limited transferability of stock.--The plan shall 
        provide that any equity securities issued by the bank shall be 
        available only to, held only by, and tradable only among, 
        shareholders of the bank or institutions eligible to become 
        stockholders of the bank under subsection (d).
            ``(5) Description of stock and rights of stockholders.--The 
        plan shall provide for and describe the terms, rights (voting, 
        liquidation, and other rights), and preferences (such as 
        dividends) of not more than 2 classes of stock and any class or 
        series of any other type of equity security issued or to be 
        issued by the bank.
            ``(6) Acquisition, transfer, and redemption of stock.--The 
        plan shall identify the manner in which any equity securities 
        to be issued by the bank may be sold, transferred, or redeemed.
            ``(7) Final disposition of ownership interests of 
        stockholder.--The plan shall provide for the manner of 
        disposition of any outstanding equity securities held by, and 
        the liquidation of any claims of the bank against, a 
        stockholder who provides notice of intention to dispose of all 
        ownership interest in the enterprise resource bank.
    ``(c) Capital Standards.--
            ``(1) In general.--The Finance Board shall prescribe, by 
        regulation, uniform capital standards applicable to each 
        enterprise resource bank which shall include--
                    ``(A) a leverage limit;
                    ``(B) a risk-based capital requirement; and
                    ``(C) a core capital requirement.
            ``(2) Risk-based capital test.--The Finance Board shall 
        establish a risk-based capital test substantially similar to 
        the risk-based capital test established by the Director of the 
        Office of Federal Housing Enterprise Oversight of the 
        Department of Housing and Urban Development pursuant to section 
        1361 of the Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992, with such modifications as the Finance 
        Board determines appropriate to reflect differences in 
        operation between the enterprise resource bank system and the 
        enterprises (as defined in section 1303(6) of such Act).
            ``(3) Minimum leverage limit.--The leverage limit 
        established by the Finance Board shall require each enterprise 
        resource bank to maintain total capital in an amount not less 
        than the applicable amount in the following subparagraphs, as 
        determined in accordance with generally accepted accounting 
        principles:
                    ``(A) 5 percent of the total assets of the bank, 
                during any period in which--
                            ``(i) the bank does not meet the 
                        requirement of paragraph (5); and
                            ``(ii) the amount of the capital of the 
                        bank which is taken into account under 
                        paragraph (5) is less than 0.5 percent of such 
                        total assets.
                    ``(B) 4.5 percent of the total assets of the bank, 
                during any period in which--
                            ``(i) the bank does not meet the 
                        requirement of paragraph (5); and
                            ``(ii) the amount of the capital of the 
                        bank which is taken into account 
under paragraph (5) is 0.5 percent or more, and less than 1 percent, of 
such total assets.
                    ``(C) 4 percent of the bank's total assets during 
                any period in which--
                            ``(i) the amount of the capital of the bank 
                        which is taken into account under paragraph (5) 
                        is 1 percent or more of such total assets; and
                            ``(ii) the bank is obligated, under section 
                        21B(f)(2)(C), to provide funding to cover 
                        interests payments on obligations issued by the 
                        Resolution Funding Corporation.
                    ``(D) 3 percent of the bank's total assets during 
                any other period.
            ``(4) Risk-based capital standard.--The risk-based capital 
        standard established by the Finance Board shall require each 
        enterprise resource bank to maintain total capital in an amount 
        not less than the greater of the following:
                    ``(A) 10 percent of the risk-adjusted assets of the 
                bank, as determined using the risk weighting 
                established by the Bank for International Settlements 
                pursuant to the Basel Accord.
                    ``(B) The amount which enables the bank to maintain 
                a positive equity account under the application of the 
                risk-based capital test established by the Finance 
                Board pursuant to paragraph (2).
            ``(5) Core unredeemable capital requirement.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Finance Board shall require each enterprise resource 
                bank to maintain, as soon as practicable after the date 
                of the enactment of the Enterprise Resource Bank Act of 
                1996, such amount of total capital as the Finance Board 
                may prescribe in any of the following forms or 
                combination of forms:
                            ``(i) Retained earnings.
                            ``(ii) A risk-insurance pool.
                            ``(iii) Nonredeemable stock of the bank.
                            ``(iv) Stock of the bank as to which any 
                        right to redeem is explicitly suspended during 
                        any period in which the bank is 
                        undercapitalized.
                    ``(B) Minimum amount.--The amount prescribed by the 
                Finance Board under subparagraph (A) may not be less 
                than 1 percent of the total assets of the bank.
    ``(d) Criteria for Eligibility for Ownership Interest in a Bank.--
            ``(1) In general.--Any insured depository institution and 
        insured credit union, and, except as provided in paragraph (5), 
        only such institutions and credit unions, may acquire and 
        retain shares of stock of an enterprise resource bank.
            ``(2) Rules and requirements.--Subject to the requirements 
        of this section, the board of directors of each enterprise 
        resource bank shall promptly prescribe regulations, consistent 
        with this Act, governing the capital stock of such bank and 
        other provisions of this section.
            ``(3) Whole mortgage test for large depository 
        institutions.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                an institution which has total assets of $500,000,000 
                or more at any time after June 30, 1998, shall not be 
                eligible to obtain new long-term advances from an 
                enterprise resource bank if the institution does not 
                maintain an investment in whole mortgage loans in 
                accordance with the following table:

                                    Not less than the following per-
                                        cent of the total assets of
                                        the institution are invested
``Annually--                            in whole mortgage loans--
    During the 1-year period beginning on July 1,                   7% 
        1998.
    During the 1-year period beginning on July 1,                   8% 
        1999.
    During the 1-year period beginning on July 1,                   9% 
        2000.
    After June 30, 2001...........................                 10% 
                    ``(B) Whole mortgage loan defined.--For purposes of 
                this subsection, the term `whole mortgage loan' does 
                not include--
                            ``(i) a partial interest in a residential 
                        mortgage on improved residential real property; 
                        or
                            ``(ii) a security that represents an 
                        interest in a residential mortgage loan.
            ``(4) Designation of bank.--An institution which is 
        eligible to acquire and retain shares of an enterprise resource 
        bank under paragraph (1) may only acquire the shares of, or 
        secure advances from--
                    ``(A) the enterprise resource bank of the district 
                in which is located the institution's principal place 
                of business; or
                    ``(B) the bank of a district adjoining the district 
                described in subparagraph (A) if--
                            ``(i) demanded by convenience; and
                            ``(ii) an application by such institution 
                        to the bank and the Finance Board for the 
                        acquisition of shares of such bank is--
                                    ``(I) approved by the bank; and
                                    ``(II) not disapproved by the 
                                Finance Board before the end of the 30-
                                day period beginning on the date the 
                                Finance Board receives the application 
                                from such institution.
            ``(5) Exception for certain nondepository institutions.--
        Any company which, as of the day before the date of the 
        enactment of the Enterprise Resource Bank Act of 1996, was a 
        member of a Federal home loan bank may continue, subject to 
        this Act, to be a voting shareholder of the bank after such 
        date with all rights and privileges as a voting shareholder.
    ``(e) Capital Stock.--
            ``(1) Classes of stock.--
                    ``(A) Voting capital stock.--No enterprise resource 
                bank may issue more than 1 class of voting capital 
                stock.
                    ``(B) Preferred stock.--
                            ``(i) In general.--The board of directors 
                        of any enterprise resource bank may authorize 
                        the bank to issue a floating rate preferred 
                        stock with cumulative dividend which may be 
                        transferred at any time to another stockholder 
                        of the bank but may not be redeemed for at 
                        least 2 years after the date of issuance.
                            ``(ii) Eligibility for core capital pool.--
                        Preferred stock issued under this subparagraph 
                        may be taken into account for purposes of the 
                        core capital requirement in subsection (c)(5).
                            ``(iii) Issuance to voting shareholders.--
                        Only voting shareholders may acquire and retain 
                        preferred stock issued by an enterprise 
                        resource bank under this subparagraph.
            ``(2) Minimum and maximum investment requirements 
        authorized.--
                    ``(A) In general.--The board of directors of each 
                enterprise resource bank may establish any minimum 
                investment requirement and any maximum amount limit on 
                the total amount of voting capital stock which may be 
                held directly or indirectly by any stockholder as the 
                board of directors determines to be appropriate and 
                consistence with the mission of the bank.
                    ``(B) Basis for requirement.--A minimum investment 
                requirement or maximum investment limit may be based 
                on--
                            ``(i) a fixed dollar amount;
                            ``(ii) a percentage of the total assets of 
                        the shareholder;
                            ``(iii) a percentage of the total amount of 
                        voting shares of the bank which are controlled 
                        by the shareholder; or
                            ``(iv) such other criteria as the board of 
                        directors may, in the discretion of the board, 
                        determine to be reasonable.
                    ``(C) Advances-related requirement.--The minimum 
                investment of each shareholder of an enterprise 
                resource bank in the voting stock of such bank, as 
                determined on the basis of the amount of outstanding 
                advances from such bank to the member, shall be an 
                amount which is equal to not less than 3.0 percent of 
                such advances and not more than 6.0 percent of such 
                advances, as determined by the board of directors of 
                the bank from time to time.
            ``(3) Divestiture.--The board of directors of any 
        enterprise resource bank may order, after a hearing, the 
        divestiture by any stockholder of all ownership interests of 
        such stockholder in the bank, if--
                    ``(A) in the opinion of the board of directors, 
                such stockholder has failed to comply with a provision 
                of this Act, any regulation prescribed under this Act, 
                or any other applicable law; or
                    ``(B) the stockholder has been determined to be 
                insolvent, or otherwise subject to the appointment of a 
                conservator, receiver, or other legal custodian, by a 
                state or Federal authority with regulatory and 
                supervisory responsibility for such member.
            ``(4) Retirement of stock district-wide.--
                    ``(A) In general.--Upon a determination of the 
                board of directors of an enterprise resource bank, a 
                bank may retire all, or any portion, of the outstanding 
                stock of the bank in excess of the total of any 
                applicable minimum investment amounts of all 
                stockholders of the bank, if the board of directors 
                determines that the bank is adequately capitalized, and 
                would remain adequately capitalized if all of the 
following stocks were deducted from the bank's capital:
                            ``(i) Stock of the bank which the bank 
                        proposes to retire under this subparagraph.
                            ``(ii) Stock of the bank which is subject 
                        to pending applications for retirement, and 
                        pending notices of intention to dispose of all 
                        stock of the bank.
                    ``(B) Retirement required to be made on a pro rata 
                basis.--The determination of the amount of shares held 
                by each stockholder of a bank which are subject to 
                retirement pursuant to a determination by the board of 
                directors of the bank in accordance with subparagraph 
                (A) shall be made on a pro rata basis for like stock.
                    ``(C) Retirement subject to minimum investment 
                requirements.--No retirement of shares held by a 
                stockholder of a bank may be made under this paragraph 
                to the extent such retirement of shares would cause the 
                amount of such stockholder's remaining investment in 
                the capital stock of the bank after such retirement to 
                fall below any applicable minimum investment amount.
            ``(5) Impairment of capital.--If the Finance Board or the 
        board of directors of an enterprise resource bank determines 
        that the paid-in capital of the bank is likely to be impaired 
        as a result of losses in or depreciation of the assets of the 
        bank, the enterprise resource bank shall withhold that portion 
        of the amount due any stockholder with respect to any 
        redemption or retirement of stock which bears the same ratio to 
        the total of such amount as the amount of the impaired capital 
        bears to the total amount of capital.
            ``(6) Policies.--Subject to the requirements of this 
        section, the board of directors of each enterprise resource 
        bank shall promptly establish policies, consistent with this 
        Act, governing the capital stock of such bank and other 
        provisions of this section.''.
    (b) Reduction of Period Required Before Fully Divested Stockholder 
May Reacquire Shares of a Bank.--Subsection (h) of section 6 of the 
Federal Home Loan Bank Act (12 U.S.C. 1426) (as amended by subsection 
(a)) is amended--
            (1) by redesignating such subsection as subsection (f);
            (2) by striking ``10'' and inserting ``5''; and
            (3) by inserting before the period at the end ``, except 
        that any institution that withdrew from membership in any such 
        bank before December 31, 1995, may acquire an ownership 
        interest in a enterprise resource bank at any time after such 
        date subject to the requirements of this Act.''.
    (c) Eligibility of Non-QTL Savings Associations To Obtain New 
Advances and Maintain Advances.--Section 10(m)(3)(B) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(m)(3)(B)) is amended--
            (1) in clause (i), by striking subclause (III) and 
        redesignating subclause (IV) as subclause (III); and
            (2) in clause (ii), by striking subclause (II).
    (d) Voluntary Membership of Federal Savings Associations.--Section 
5(f) of the Home Owners' Loan Act (12 U.S.C. 1464(f)) is amended to 
read as follows:
    ``(f) Voluntary Membership in Enterprise Resource Bank.--Each 
Federal savings association may be eligible to acquire shares of stock 
in an enterprise resource bank in the manner provided in the Enterprise 
Resource Bank System Act.''.

SEC. 7. PROMPT CORRECTIVE ACTION.

    The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended 
by inserting after section 6 the following new section:

``SEC. 6A. PROMPT CORRECTIVE ACTION.

    ``(a) Purposes.--The purposes of this section are to ensure that 
the enterprise resource banks remain--
            ``(1) adequately capitalized;
            ``(2) able to raise funds in the capital markets; and
            ``(3) able meet the obligations of such banks under this 
        Act.
    ``(b) Capital Classifications.--The Finance Board shall classify 
the capital adequacy of enterprise resource banks in accordance with 
the following capital categories:
            ``(1) Adequately capitalized.--An enterprise resource bank 
        shall be classified as adequately capitalized if such bank 
        meets the required minimum level for each relevant capital 
        measure.
            ``(2) Undercapitalized.--An enterprise resource bank shall 
        be classified as undercapitalized if such bank fails to meet 
        the minimum level for any capital measure required by this Act, 
        or any additional capital requirement that may be established 
        for such bank by the Finance Board.
            ``(3) Critically undercapitalized.--An enterprise resource 
        bank shall be classified as critically undercapitalized if the 
        capital of such bank fails to meet any level specified under 
        section 6(c)(1).
            ``(4) Capital categories.--The Finance Board shall, by 
        regulation, specify for each relevant capital measure the 
        levels at which an enterprise resource bank is adequately 
        capitalized, undercapitalized, and critically undercapitalized.
            ``(5) Quarterly evaluation of capital adequacy.--
                    ``(A) In general.--The Finance Board shall--
                            ``(i) evaluate the capital adequacy of each 
                        enterprise resource bank at least once in each 
                        calendar quarter, and
                            ``(ii) classify the capital adequacy of the 
                        bank in accordance with the categories 
                        established pursuant to paragraph (1).
                    ``(B) Judicial review.--For the purpose of 
                obtaining judicial review of--
                            ``(i) any classification of the capital 
                        adequacy of an enterprise resource bank under 
                        subparagraph (A); or
                            ``(ii) any action taken by the Finance 
                        Board pursuant to such classification,
                the classification, or the action taken pursuant to a 
                classification, shall be treated as a final order of 
                the Finance Board.
    ``(c) Provision Applicable to All Enterprise Resource Banks.--
            ``(1) Capital distributions restricted.--An enterprise 
        resource bank shall make no capital distribution if, after 
        making the distribution, the bank would be undercapitalized.
            ``(2) Exceptions.--Notwithstanding paragraph (1)--
                    ``(A) an enterprise resource bank may redeem a 
                voting shareholder's stock in accordance with section 
                6(e)(3); and
                    ``(B) the Finance Board may permit an enterprise 
                resource bank to repurchase, redeem, retire, or 
                otherwise acquire the shares of the bank if the 
                repurchase, redemption, retirement, or other 
                acquisition--
                            ``(i) is made in connection with the 
                        issuance of additional shares of the bank in at 
                        least an equivalent amount; and
                            ``(ii) will reduce the bank's financial 
                        obligations or otherwise improve the bank's 
                        financial condition.
    ``(d) Supervisory Actions Applicable to Undercapitalized Enterprise 
Resource Banks.--
            ``(1) Mandatory actions.--
                    ``(A) Capital and income restoration plans.--Any 
                undercapitalized enterprise resource bank shall file an 
                acceptable capital and income restoration plan with the 
                Finance Board, in accordance with subsection (f).
                    ``(B) Reclassification from under- capitalized to 
                critically undercapitalized.--The Finance Board shall 
                reclassify as critically undercapitalized any 
                enterprise resource bank that is classified as 
                undercapitalized if--
                            ``(i) the bank does not submit an 
                        acceptable capital and income restoration plan 
                        within the time periods prescribed;
                            ``(ii) if the Finance Board does not 
                        approve the capital and income restoration plan 
                        submitted; or
                            ``(iii) the Finance Board determines that 
                        the bank has failed to make, in good faith, 
                        reasonable efforts to comply with an accepted 
                        capital and income restoration plan.
                    ``(C) Prior approval for new activities.--The 
                Finance Board shall require an undercapitalized 
                enterprise resource bank to obtain prior approval from 
                the Finance Board before engaging in any new 
                activities.
            ``(2) Discretionary actions.--The Finance Board may, with 
        respect to an undercapitalized enterprise resource bank, take 
        such other actions as the Finance Board determines are 
        necessary or appropriate to carry out the purpose of this 
        section including--
                    ``(A) imposition of restrictions on growth in 
                assets;
                    ``(B) limitations on increases in bank obligations;
                    ``(C) imposition of restrictions on activities that 
                the Finance Board determines create excessive risk to 
                the bank; and
                    ``(D) requiring changes in or any restriction on 
                the board of directors or management of the bank.
    ``(e) Supervisory Actions Applicable to Critically Undercapitalized 
Enterprise Resource Banks.--
            ``(1) Merger, liquidation, reorganization, or other action 
        required.--The Finance Board shall--
                    ``(A) combine, by merger or otherwise, any 
                critically undercapitalized enterprise resource bank 
                with another enterprise resource bank;
                    ``(B) liquidate or reorganize any such critically 
                under capitalized bank; or
                    ``(C) take such other action in connection with 
                such bank as the Finance Board determines would better 
                achieve the purpose of this section.
            ``(2) Periodic redetermination required.--Any determination 
        by the Finance Board under paragraph (1) to take any action 
        with respect to a critically undercapitalized enterprise 
        resource bank other than combining, reorganizing, or 
        liquidating the bank shall cease to be effective not later than 
        the end of the 90-day period after the determination was made 
        and the bank shall be combined, reorganized or liquidated 
        unless the Finance Board makes a new determination.
            ``(3) Activities restrictions.--The Finance Board shall 
        restrict and closely monitor the activities of a critically 
        undercapitalized enterprise resource bank, including taking any 
        of the discretionary actions applicable to an undercapitalized 
        bank.
    ``(f) Capital and Income Restoration Plans.--
            ``(1) In general.--The Finance Board shall prescribe 
        regulations which require any under- capitalized enterprise 
        resource bank to file within the prescribed periods and 
        implement an acceptable capital and income restoration plan 
        with the Finance Board.
            ``(2) Requirements relating to plan.--
                    ``(A) Contents of plan.--A capital and income 
                restoration plan shall--
                            ``(i) specify the steps that the bank will 
                        take to become adequately capitalized and to 
                        increase earnings;
                            ``(ii) specify the levels of capital to be 
                        attained during each year in which the plan 
                        will be in effect;
                            ``(iii) describe how the bank will comply 
                        with the restrictions or requirements in effect 
                        under this section; and
                            ``(iv) specify the types and levels of 
                        activities in which the bank will engage during 
                        the term of the plan.
                    ``(B) Deadlines for submission.--
                            ``(i) Initial period.--The Finance Board 
                        shall, by regulation, establish a deadline for 
                        submission of a capital and income restoration 
                        plan which may not be more than 45 days after 
                        the bank is notified that a plan is required.
                            ``(ii) Extension of deadline.--The 
                        regulations shall provide that the Finance 
                        Board may extend, in writing, the deadline to a 
                        date certain if the Finance Board determines 
                        such extension is appropriate.
                    ``(C) Approval.--
                            ``(i) Review period.--The Finance Board 
                        shall review each capital and income 
                        restoration plan submitted under this section 
                        and, not later than 30 days after submission of 
                        the plan, approve or disapprove the plan.
                            ``(ii) Extension of review period.--The 
                        Finance Board may extend, in writing, the 
                        period for approval or disapproval for any plan 
                        for a single additional 30-day period if the 
                        Finance Board determines such extension is 
                        appropriate.
                    ``(D) Notice of board action.--The Finance Board 
                shall provide written notice to any bank which submits 
                a plan under this subsection of the approval or 
                disapproval of the plan and shall include the reasons 
                for any disapproval of the plan.
                    ``(E) Resubmission.--If the Finance Board 
                disapproves the initial capital and income restoration 
                plan submitted by the bank, the bank shall submit an 
                amended plan acceptable to the Finance Board within 30 
                days or such longer period that the Finance Board 
                determines is in the public interest.
    ``(g) Appointment of Conservator for Critically Undercapitalized 
Enterprise Resource Bank.--
            ``(1) Grounds.--The Finance Board may appoint a conservator 
        for a critically undercapitalized enterprise resource bank 
        under subsection (e)(2) upon a written determination that 
        alternative remedies available to the Finance Board are not 
        satisfactory and that--
                    ``(A) the bank is not likely to pay obligations of 
                the bank in the normal course of business;
                    ``(B) the bank has incurred or is reasonably likely 
                to incur losses, or has pending applications for stock 
                redemptions, that would deplete substantially all of 
                the capital of the bank and it is unlikely that the 
                bank will replenish such capital within a reasonable 
                period;
                    ``(C) the bank has concealed or is concealing 
                books, papers, records, or assets of the bank that are 
                material to the discharge of the Finance Board's 
                responsibilities under this subtitle, or has refused or 
                is refusing to submit such books, papers, records, or 
                information regarding the affairs of the bank for 
                inspection to the Finance Board upon the demand of the 
                Finance Board;
                    ``(D) the bank has willfully violated, or is 
                willfully violating, a final cease-and-desist order; or
                    ``(E) the bank, by an affirmative vote of a 
                majority of the bank's board of directors or an 
                affirmative vote of the shareholders of the bank, 
                consents to such appointment.
            ``(2) Qualifications.--The Finance Board may appoint--
                    ``(A) itself as the conservator for any enterprise 
                resource bank;
                    ``(B) as conservator for any such bank, any other 
                Federal agency or department or other person that the 
                Finance Board determines has--
                            ``(i) no claim against, or financial 
                        interest in, the bank;
                            ``(ii) no other basis for a conflict of 
                        interest with respect to the bank; and
                            ``(iii) the financial and management 
                        expertise necessary to direct the operations 
                        and affairs of the bank.
            ``(3) Appointment ex parte and without notice.--If, in the 
        opinion of the Finance Board, a ground for the appointment of a 
        conservator for an enterprise resource bank exists, the Finance 
        Board may appoint a conservator for the bank ex parte and 
        without notice.
            ``(4) Judicial review.--
                    ``(A) Jurisdiction.--Except as provided in 
                subparagraph (D), a bank for which a conservator is 
                appointed may bring an action during the 30-day period 
                beginning upon the appointment of the conservator in 
                the United States District Court for the District of 
                Columbia for an order requiring the Finance Board to 
                terminate the appointment of the conservator.
                    ``(B) Standard of review.--A decision of the 
                Finance Board to appoint a conservator may be set aside 
                only if the court finds that the decision was 
                arbitrary, capricious, an abuse of discretion, or 
                otherwise not in accordance with applicable laws.
                    ``(C) Limitation on jurisdiction.--Except as 
                otherwise provided in this subsection, no court may 
                take any action regarding the removal of a conservator 
                or otherwise restrain or affect the exercise of powers 
                or functions of a conservator.
                    ``(D) Consensual appointments.--Appointment of a 
                conservator pursuant to consent of the bank shall not 
                be subject to judicial review under this subsection.
            ``(5) Replacement.--
                    ``(A) In general.--The Finance Board may, without 
                notice or hearing, replace a conservator for an 
                enterprise resource bank with another conservator.
                    ``(B) No effect on judicial review.--The 
                replacement of a conservator for an enterprise resource 
                bank shall not affect the right of the bank to obtain 
                judicial review under paragraph (4) of the Finance 
                Board's decision to make the initial appointment of a 
                conservator.
            ``(6) Examinations.--The Finance Board may examine and 
        supervise any enterprise resource bank for which a conservator 
        has been appointed during the period in which the bank 
        continues to operate as a going concern.
            ``(7) Termination.--
                    ``(A) In general.--If, at any time, the Finance 
                Board determines that termination of a conservatorship 
                for an enterprise resource bank is in the public 
                interest and may safely be accomplished, the Finance 
                Board may terminate the conservatorship and permit the 
                bank to resume the transaction of the business of the 
                bank subject to such terms, conditions, and limitations 
                as the Finance Board may prescribe.
                    ``(B) Enforcement of terms, conditions, and 
                limitations.--Any terms, conditions, and limitations 
                imposed by the Finance Board in accordance with 
                subparagraph (A) upon termination of a conservatorship 
                for an enterprise resource bank shall be enforceable 
                and renewable to the same extent as any cease-and-
                desist order issued by the Finance Board.
    ``(h) Powers of Conservator.--A conservator appointed for an 
enterprise resource bank shall have all the powers of the stockholders, 
the directors, and the officers of the bank and may operate the bank in 
the bank's own name or conserve the assets of the bank in the manner 
and to the extent authorized by the Finance Board.
    ``(i) Exception.--Notwithstanding any other provision of this 
section, the Finance Board may permit an enterprise resource bank to 
redeem the stock of a member of such bank, repurchase, retire, or 
otherwise acquire shares of the bank if the repurchase, redemption, 
retirement, or other acquisition--
            ``(1) is made in connection with the issuance of additional 
        shares of the bank in at least an equivalent amount; and
            ``(2) will reduce the bank's financial obligations or 
        otherwise improve the bank's financial condition.''.

SEC. 8. MANAGEMENT OF BANKS.

    Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is 
amended to read as follows:

``SEC. 7. MANAGEMENT OF BANKS.

    ``(a) Board of Directors.--
            ``(1) Composition of board.--Except as otherwise provided 
        in this section, the management of each enterprise resource 
        bank shall be vested in a board of directors consisting of 14 
        directors selected as follows:
                    ``(A) 8 shall be elected by the members of the bank 
                as provided in paragraph (6).
                    ``(B) 6 shall be appointed by the Finance Board.
            ``(2) Qualifications.--
                    ``(A) In general.--Each director of an enterprise 
                resource bank shall be a citizen of the United States 
                and a bona fide resident of the district in which such 
                bank is located.
                    ``(B) Disqualification.--An individual who is an 
                officer or director of a depository institution that 
                fails to meet any applicable capital requirement shall 
                not be qualified to be a director on the board of 
                directors of an enterprise resource bank.
            ``(3) Representational criteria.--
                    ``(A) Representation of states.--Subject to 
                subparagraph (B), the bylaws of each enterprise 
                resource bank shall provide for the manner in which the 
                representation of the shareholders of the bank from the 
                various States within such bank's district will be 
                distributed among the positions of the elected 
                directors of such bank.
                    ``(B) Transition provision.--Notwithstanding 
                subparagraph (A), the composition of the boards of 
                directors of the 12 enterprise resource banks 
                immediately after the effective date of the Enterprise 
                Resource Bank Act of 1996 shall be the same as the 
                composition of such boards of directors on January 1, 
                1996.
                    ``(C) Discretionary increase in overall number of 
                directors.--In order to ensure director representation 
                on the board of directors of an enterprise resource 
                bank consistent with this paragraph, the board of 
                directors of the bank may--
                            ``(i) increase the number of elected 
                        directors on the board of directors; and
                            ``(ii) increase the number of appointed 
                        directors to an amount not more than \3/4\ of 
                        the number of elected directors.
                    ``(D) Increase to achieve minimum state 
                representation.--If, at any time, the number of elected 
                directors of an enterprise resource bank is less than 
                the number of States in the district of such bank, the 
                board of directors of the bank may increase the number 
                of elected directors on such board of directors to a 
                number at least equal to the number of States in such 
                district.
                    ``(E) Representational composition of board of 
                directors.--In establishing bylaws for the election of 
                directors, and in appointing directors, to the board of 
                directors of an enterprise resource bank, the board of 
                directors and the Finance Board shall establish such 
                procedures as may be appropriate to achieve a board of 
                directors which reflects the geographical diversity of 
                the district, the representation of both large and 
                small institutional stockholder, and the representation 
                of the public interest.
            ``(4) Chairperson and vice chairperson.--
                    ``(A) In general.--The board of directors of each 
                enterprise resource bank shall elect--
                            ``(i) 1 of the directors of the bank to be 
                        the chairperson of the board of directors; and
                            ``(ii) 1 of the directors of the bank to be 
                        vice chairperson of the board of directors.
                    ``(B) Limitation.--The president of an enterprise 
                resource bank may not be designated under subparagraph 
                (A) as the chairperson or vice chairperson of the bank.
                    ``(C) Public interest representation.--At least 1 
                of the members of the board of directors of an 
                enterprise resource bank who were appointed pursuant to 
                paragraph (5)(A) shall be elected to be the chairperson 
                or the vice chairperson of the board of directors.
            ``(5) Provisions applicable to appointed directors.--
                    ``(A) Representational requirement.--At least 2 of 
                the directors of each enterprise resource bank who are 
                appointed by the Finance Board shall be appointed from 
                among representatives of organizations with more than a 
                2-year history of representing consumer or community 
                interests on banking services, credit needs, housing, 
                or financial consumer protections.
                    ``(B) Conflict of interest provision.--No director 
                on the board of directors of an enterprise resource 
                bank who is appointed pursuant to this subsection may, 
                during such director's term of office, serve as an 
                officer of any enterprise resource bank or as a 
                director or officer of any member of a bank.
            ``(6) Provisions applicable to elected directors.--
                    ``(A) Designation of state to be represented.--Each 
                position of elected director on the board of directors 
                of any enterprise resource bank shall be designated by 
                the board of directors as a position to be filled by a 
                director representing the voting shareholders of the 
                bank whose principal places of business are located in 
                a particular State.
                    ``(B) Shareholders located in u.s. territories.--In 
                the case of any voting shareholder (of an enterprise 
                resource bank) whose principal place of business is not 
                located in any State, the enterprise resource bank 
shall designate the State in such bank's district in which such member 
shall be deemed to be located for purposes of this subsection.
                    ``(C) Qualification.--Only presidents, chief 
                executive officers, and other senior executive officers 
                (as defined by the Finance Board) of voting 
                shareholders whose principal places of business are 
                located in a State shall be qualified to serve as a 
                director representing such State.
                    ``(D) Nomination of directors.--All voting 
                shareholders (of an enterprise resource bank) whose 
                principal places of business are located in any State 
                may nominate any qualified individual for election as a 
                director representing such State.
                    ``(E) Voting procedure.--In any election of a 
                director of an enterprise resource bank, each voting 
                shareholder of the bank whose principal place of 
                business is located in the State which such director 
                represents may cast for such office a number of votes 
                equal to the lesser of--
                            ``(i) the minimum number of voting shares 
                        of the capital stock of such bank in which such 
                        shareholder is required, under section 6(b), to 
                        be invested as of the end of the calendar year 
                        immediately preceding the election, as 
                        determined by the board of directors of the 
                        enterprise resource bank; and
                            ``(ii) the average of the minimum number of 
                        voting shares of such stock in which all voting 
                        shareholders whose principal places of business 
                        are located in such State are required, under 
                        section 6(b), to be invested as of the end of 
                        the calendar year immediately preceding the 
                        election, as so determined.
                    ``(F) Plurality decision.--Each position of elected 
                director of an enterprise resource bank shall be filled 
                by the nominee, for such position, who receives a 
                larger number of the votes cast in an election held for 
                the purpose of filling such position than any other 
                nominee.
            ``(7) Terms.--
                    ``(A) In general.--The term of each director who is 
                elected or appointed to the board of directors of an 
                enterprise resource bank after the date of the 
                enactment of the Enterprise Resource Bank Act of 1996 
                shall be 4 years.
                    ``(B) Term limits.--
                            ``(i) Appointed directors.--No individual 
                        may serve as an appointed director on the board 
                        of directors of an enterprise resource bank for 
                        more than 2 full consecutive 4-year terms.
                            ``(ii) Elected directors.--If, during any 
                        8-year period, the board of directors of any 
                        enterprise resource bank has included, as an 
                        elected director, any officer of a specific 
                        voting shareholder of the bank, no officer of 
                        such shareholder shall be eligible to serve as 
                        an elected member of such board of directors 
                        during the subsequent 4-year period.
                    ``(C) Interim appointments.--Any director appointed 
                or elected to fill a vacancy occurring before the 
                expiration of the term for which such director's 
                predecessor was appointed or elected shall be appointed 
                or elected only for the remainder of such term.
                    ``(D) Continuation of service.--Each director of an 
                enterprise resource bank may continue to serve after 
                the expiration of the term to which such director was 
                appointed or elected until a successor has been 
                qualified.
                    ``(E) Staggered terms.--
                            ``(i) In general.--The bylaws of each 
                        enterprise resource bank shall provide for 
                        staggering the terms of the elected and 
                        appointed directors so that the positions of 
                        approximately \1/4\ of the appointed directors 
                        and approximately \1/4\ of the appointed 
                        directors shall become vacant each year.
                            ``(ii) Designation of shorter terms to 
                        achieve staggering.--Whenever necessary to 
                        achieve staggered terms for the directors of an 
                        enterprise resource bank, the board of 
                        directors of such bank may, by resolution (and 
                        in accordance with the bylaws of the bank) and 
                        before the election or appointment of a 
                        director, designate a shorter term for such 
                        position for the next succeeding term.
            ``(8) Vacancies.--
                    ``(A) Appointed director.--Any vacancy occurring in 
                the position of appointed director of an enterprise 
                resource bank shall be filled in the manner in which 
                the original appointment was made.
                    ``(B) Elected director.--Any vacancy occurring in 
                the position of elected director of an enterprise 
                resource bank shall be filled by an affirmative vote of 
                a majority of the remaining directors of such bank, 
                without regard to whether such remaining directors 
                constitute a quorum of the board of directors.
                    ``(C) Vacancy as a result of disqualification of 
                director.--
                            ``(i) In general.--If any director of an 
                        enterprise resource bank ceases to meet any 
                        qualification for such position--
                                    ``(I) the position shall 
                                immediately become vacant by operation 
                                of law; and
                                    ``(II) service by such director in 
                                such position shall cease.
                            ``(ii) Continuation.--Notwithstanding 
                        clause (i), an appointed director of an 
                        enterprise resource bank whose position became 
                        vacant pursuant to such clause may continue to 
                        serve in such position until a successor has 
                        been qualified.
            ``(9) Ineligibility of certain officers for position of 
        director.--No officer or employee of, or any attorney or agent 
        for, any enterprise resource bank who receives compensation for 
        such service, other than the president of the bank, shall be 
        eligible to serve on the board of directors of such bank or any 
        other enterprise resource bank.
            ``(10) Regulations governing nominations and elections.--
        The bylaws of each enterprise resource bank shall provide 
        procedures for the nomination and election of directors on the 
        board of directors of the bank.
            ``(11) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Voting shareholder.--The term `voting 
                shareholder' means, with respect to any year, any 
                institution which holds voting shares of an enterprise 
                resource bank and held voting shares of such bank at 
                the end of the immediately preceding calendar year.
                    ``(B) State.--The term `State' means any State, the 
                District of Columbia, and the Commonwealth of Puerto 
                Rico.
            ``(12) Applicability.--This subsection shall apply to 
        elections and appointments of directors to terms that begin 
        after the date of enactment of the Enterprise Resource Bank Act 
        of 1996.
    ``(b) Powers of Boards of Directors.--The board of directors of 
each enterprise resource bank shall have all power necessary to 
exercise the responsibility of such board with respect to such bank, 
including the following powers:
            ``(1) Establish financial and other performance targets.
            ``(2) Conduct studies of trends of home or other property 
        values, methods of appraisals, state and Federal laws, 
        regulations, policies, and procedures relevant to the 
        operations of the bank and the members of the bank, and such 
        other subjects as the board of directors may consider to be 
        useful for the general guidance of the policies and operations 
        of the bank and institutions authorized to secure advances from 
        the bank.
            ``(3) Establish credit policy and policy for management of 
        the bank's investments.
            ``(4) Establish policy regarding the bank's interest rate 
        risk.
            ``(5) Determine dividends.
            ``(6) Establish policy regarding the documentation required 
        for advances.
            ``(7) Establish policy regarding item processing pricing.
            ``(8) Establish policy regarding the sale and purchase of, 
        and participations in, advances.
            ``(9) Establish policy regarding lending to members that 
        are insolvent or not in compliance with applicable capital 
        requirements.
            ``(10) Establish policy regarding--
                    ``(A) lending to and borrowing from the enterprise 
                resource banks; and
                    ``(B) making deposits in and accepting deposits 
                from such banks.
            ``(11) Establish policy regarding the community investment 
        program and the affordable housing program.
            ``(12) Establish policy regarding incentives for community 
        support by member institutions.
            ``(13) Establish policy regarding publication of community 
        support activities of member institutions.
            ``(14) Establish policy regarding the development and 
        implementation of the business plan of the bank.
            ``(15) Approve the budget of the bank and modifications to 
        such budget.
            ``(16) Approve the bylaws of the bank and modifications to 
        such bylaws.
            ``(17) Establish the travel policy of the bank.
            ``(18) Determine the location of meetings of boards of 
        directors.
            ``(19) Determine the eligibility of individuals to serve as 
        directors and conduct elections of directors.
            ``(20) Establish policy regarding charitable donations and 
        membership in organizations.
            ``(21) Establish policy regarding mandatory retirement of 
        directors, officers and employees.
            ``(22) Establish policy regarding indemnification of 
        directors, officers, employees, and agents.
            ``(23) Establish policy regarding the disaster recovery 
        plan of the bank.
            ``(24) Establish the records retention policy of the bank.
            ``(25) Provide, in accordance with resolutions of the board 
        of directors and any regulations prescribed by the Finance 
        Board, for the payment of reasonable rates of compensation to 
        members of the board of directors for such periods of time, 
        including travel time, during which the members are engaged in 
        the actual performance of duties vested in the board of 
        directors and travel expenses, including per diem in lieu of 
        subsistence.
            ``(26) Approve and disapprove membership applications.
            ``(27) Establish policies regarding the issuance of letters 
        of credit.
            ``(28) Establish policies regarding the safekeeping of 
        securities.
    ``(c) Duties of Boards of Directors.--The board of directors of 
each enterprise resource bank shall--
            ``(1) administer the affairs of the bank fairly and 
        impartially and without discrimination in favor of or against 
        any voting shareholder or borrower; and
            ``(2) subject to the provisions of this Act, extend to each 
        institution authorized to secure advances such advances as may 
        be made safely and soundly with due regard for--
                    ``(A) the claims and demands of other institutions; 
                and
                    ``(B) the maintenance of adequate credit standing 
                for the bank and the bank's obligations.''.

SEC. 9. SUSTAINABLE ECONOMIC DEVELOPMENT PROGRAM.

    (a) Findings and Purpose.--
            (1) Findings.--The Congress finds as follows:
                    (A) In exchange for Federal deposit insurance, the 
                Federal Government has placed regulations on financial 
                institutions to ensure safety and soundness and to 
                promote lending to underserved communities.
                    (B) These regulations place a significant cost on 
                financial institutions.
                    (C) While there is a compelling need for solutions 
                to the country's most difficult social problems, 
                including poverty and high unemployment, in 
                economically distressed communities, especially inner-
                cities and rural areas, the most effective model for 
                solutions to such problems is through the development 
                of a sustainable economic base for these communities.
                    (D) To develop a sustainable economic base the 
                Government should encourage mainstream private 
                institutions to improve the environment for growth and 
                new business opportunities in distressed neighborhoods 
                by providing incentives for such actions.
                    (E) The Congress recognizes the difficulties facing 
                community banks in attempting to increase the 
                availability of credit in economically distressed 
                neighborhoods, including--
                            (i) the lack of a mutual understanding 
                        between the lenders and the potential 
                        borrowers;
                            (ii) the perception that loans to borrowers 
                        in such neighborhoods are or would be high-
                        risk;
                            (iii) the frequent need for credit 
                        enhancement in connection with loans to 
                        borrowers in such neighborhoods; and
                            (iv) the higher costs involved in lending 
                        in such neighborhoods due to the additional 
                        time and effort which is frequently required in 
                        conducting adequate credit analysis.
                    (F) Lending in economically distressed 
                neighborhoods is most effective if community banks make 
                rational credit decisions with regard to--
                            (i) the profitability of lending in such 
                        neighborhoods; and
                            (ii) the potential profits from the 
                        establishment of a market presence by community 
                        banks in such neighborhoods.
                    (G) While it may be desirable for the Government to 
                encourage depository institutions to provide banking 
                services and extend credit in economically distressed 
                communities, such encouragement should come in the form 
                of incentives and not mandates.
            (2) Purpose.--It is the purpose of this section to enhance 
        the efficiency of providing debt and equity capital and other 
        financial services to underserved communities by encouraging, 
        and creating incentives for, communities to develop a 
        sustainable economic base in such communities.
    (b) Mission of Sustainable Economic Development.--The purpose of 
the community support requirements, the community investment program, 
and the affordable housing program is to serve depository institutions 
as an intermediary--
            (1) to aid in the development of a sustainable economic 
        base in the banks' communities;
            (2) to promote access to credit throughout the Nation 
        (including rural areas and underserved neighborhoods by 
        increasing the liquidity of economic development financing and 
        improving the distribution of investment capital available for 
        economic development financing; and
            (3) to assist with technical expertise for compliance with 
        the Community Reinvestment Act of 1977.
    (c) Community Support Requirements.--Subsection (g) of section 10 
of the Federal Home Loan Bank Act (12 U.S.C. 1430(g)) is amended by 
adding at the end the following new paragraph:
            ``(3) Safe harbor for members receiving cra ratings of 
        satisfactory or better.--Notwithstanding paragraphs (1) and 
        (2), any depository institution which is a shareholder in an 
        enterprise resource bank and receives a rating of satisfactory 
        or outstanding pursuant to section 807 of the Community 
        Reinvestment Act of 1977 in such member's most recent 
        examination, if any, shall be treated as having satisfied the 
        requirements of such paragraphs.''.
    (d) Prohibition on Delegation of Certain Funding Determinations to 
Management of Bank.--The board of directors of an enterprise resource 
may not delegate, or provide for the delegation of, any authority of 
the board of directors to approve or disapprove funding by such bank 
under the affordable housing program established pursuant to section 
10(j) of the Federal Home Loan Bank Act to any officer or employee of 
the bank.

SEC. 10. ENFORCEMENT AUTHORITY TO PROMOTE SAFETY AND SOUNDNESS OF 
              ENTERPRISE RESOURCE BANKS.

    Section 3 of the Federal Home Loan Bank Act (as amended by section 
4 of this Act) is amended--
            (1) by redesignating subsection (f) as subsection (g); and
            (2) by inserting after subsection (e) the following new 
        subsection:
    ``(f) Enforcement Powers.--The Finance Board shall have the same 
powers, rights, and duties to enforce this Act with regard to the 
enterprise resource banks as the appropriate Federal banking agencies 
(as defined in section 3(q) of the Federal Deposit Insurance Act) have 
under section 8 of the Federal Deposit Insurance Act with respect to 
insured depository institutions (as defined in section 3(c) of such 
Act).''.

SEC. 11. RESOLUTION FUNDING CORPORATION OBLIGATION.

    Effective on January 1, 1998, section 21B(f)(2)(C)(ii) of the 
Federal Home Loan Bank Act (12 U.S.C. 1441b(f)(2)(C)(ii)) is amended to 
read as follows:
                            ``(C) Payments by enterprise resource 
                        banks.--To the extent the amounts available 
                        pursuant to subparagraphs (A) and (B) are 
                        insufficient to cover the amount of interest 
                        payments, each enterprise resource bank shall 
                        pay to the Funding Corporation each calendar 
                        year an amount equal to 23.7 percent of the 
                        bank's net earnings for the year for which such 
                        amount is required to be paid.''.

SEC. 12. POWERS AND DUTIES OF BANKS; TECHNICAL AND CONFORMING 
              AMENDMENTS.

    (a) Section 9.--Section 9 of the Federal Home Loan Bank Act (12 
U.S.C. 1429) is amended--
            (1) in the 2d sentence, by striking ``with the approval of 
        the Board''; and
            (2) in the 3d sentence, by striking ``, subject to the 
        approval of the Board,''.
    (b) Section 10.--
            (1) Subsection (a) of section 10 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1430(a)) is amended--
                    (A) in that portion of the subsection which 
                precedes paragraph (1)--
                            (i) by inserting ``and subject to 
                        regulations prescribed by the Finance Board'' 
                        after ``in the judgment of the Bank''; and
                            (ii) by striking the 2d sentence;
                    (B) in paragraph (1), by inserting ``mortgages on 
                improved residential property which are insured or 
                guaranteed by the United States or any agency or 
                department of the United States,'' after ``90 days 
                delinquent),'';
                    (C) in paragraph (3), by striking ``Deposits'' and 
                inserting ``Cash or deposits'';
                    (D) in paragraph (4)--
                            (i) by striking ``Other real estate related 
                        collateral'' and inserting ``Other mission-
                        related collateral (as defined by the Finance 
                        Board''; and
                            (ii) by striking ``30 percent'' and 
                        inserting ``50 percent''; and
                    (E) by striking paragraph (5) and inserting the 
                following new paragraphs:
            ``(5) Assets consisting of small business loans the 
        principal amounts of which are less than $250,000.
            ``(6) Assets consisting of loans to municipalities and 
        other units for general local government for maintenance and 
        improvement of the infrastructure (as defined by the Finance 
        Board) the principal amounts of which are less than $2,500,000.
            ``(7) Municipal securities rated by investment grade by 1 
        or more nationwide statistical rating organizations.''.
            (2) Section 10(b) of the Federal Home Loan Bank Act (12 
        U.S.C. 1430(b)) is amended--
                    (A) by striking ``(b) For the purposes of this 
                section'' and inserting ``(b) Protection of interest in 
                collateral.--
            ``(1) Investigations.-- For the purposes of this section'';
                    (B) by striking ``Board'' where such term appears 
                in the last sentence and inserting ``bank''; and
                    (C) by adding at the end the following new 
                paragraphs:
            ``(2) Adequacy of controls.--In order to minimize the 
        various risks borne by an enterprise resource bank with regard 
        to advances to stockholders, each enterprise resource bank 
        shall ensure that--
                    ``(A) adequate controls exist to manage risk, 
                including a strict policy of overcollateralization;
                    ``(B) ensure that the collateral has a readily 
                ascertainable market value;
                    ``(C) a security interest in such collateral can be 
                perfected; and
                    ``(D) the security interest of the bank has 
                priority over any other claim against the collateral.
            ``(3) Other protective measures.--
                    ``(A) Additional collateral.--An enterprise 
                resource bank may take such steps as the bank 
                determines to be necessary to protect the security 
                position of the bank with respect to outstanding 
                advances, including requiring the deposit of additional 
                collateral security whether or not such collateral 
                would be eligible under subsection (a) to be eligible 
                to be used as collateral for an advance at the time of 
                origination.
                    ``(B) Reduction in outstanding advance.--If a 
                stockholder of an enterprise resource bank has 
                insufficient eligible collateral to support an 
                outstanding advance to such stockholder, the 
                stockholder shall promptly and prudently reduce the 
                level of outstanding advances in accordance with a 
                schedule determined by such bank.''.
            (3) Section 10(c) of the Federal Home Loan Bank Act (12 
        U.S.C. 1430(c)) is amended--
                    (A) in the 1st sentence, by striking ``Board'' and 
                inserting ``bank''; and
                    (B) by striking the 2d sentence.
            (4) Section 10(d) of the Federal Home Loan Bank Act (12 
        U.S.C. 1430(d)) is amended--
                    (A) in the first sentence, by striking ``and the 
                approval of the Board''; and
                    (B) in the last sentence, by striking ``Subject to 
                the approval of the Board, any'' and inserting ``Any''.
            (5) Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 
        1430) is amended by striking the first of the 2 subsections 
        designated as subsection (e) (relating to qualified thrift 
        lender status).
            (6) Section 10(j)(1) of the Federal Home Loan Bank Act (12 
        U.S.C. 1430(j)(1)) is amended--
                    (A) by striking ``In general.--Pursuant to'' and 
                inserting ``Establishment.--
                    ``(A) In general.--Pursuant to''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Bank approval authority.--The board of 
                directors of each enterprise resource bank may--
                            ``(i) approve or disapprove a request from 
                        a shareholder of the bank for a subsidy under 
                        the affordable housing program of the bank; and
                            ``(ii) delegate such approval or 
                        disapproval authority to the president or any 
                        other senior executive officer of the bank.''.
            (7) Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 
        1430) is amended by adding at the end the following new 
        subsection:
    ``(k) Limitations on Advances to Undercapitalized Institutions.--
            ``(1) Limitation on extended periods.--Except as provided 
        in paragraph (2), no new advances to any undercapitalized 
        depository institution by any enterprise resource bank under 
        this section may be outstanding for more than 60 days in any 
        120-day period.
            ``(2) Viability exception.--
                    ``(A) In general.--If the head of the appropriate 
                Federal banking agency certifies in advance in writing 
                to the enterprise resource bank that any depository 
                institution is viable, the limitation contained in 
                paragraph (1) shall not apply during the 60-day period 
                beginning on the date such certification is received.
                    ``(B) Extensions of period.--The 60-day period may 
                be extended for additional 60-day periods upon receipt 
                by the enterprise resource bank of additional written 
                certifications under subparagraph (A) with respect to 
                each such additional period.
                    ``(C) Authority to issue a certificate of viability 
                may not be delegated.--The authority of the head of any 
                agency to issue a written certification of viability 
                under this paragraph may not be delegated to any other 
                person.
            ``(3) Prohibition on advances to critically 
        undercapitalized depository institutions.--Notwithstanding any 
        other provision of this Act, no new advances may be made to a 
        critically undercapitalized depository institution.
            ``(4) No obligation to make advances.--An enterprise 
        resource bank shall have no obligation to make, increase, 
        renew, or extend any advance or discount under this Act to any 
        member.
            ``(5) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Appropriate federal banking agency.--The term 
                `appropriate Federal banking agency'--
                            ``(i) has the same meaning as in section 3 
                        of the Federal Deposit Insurance Act; and
                            ``(ii) includes the National Credit Union 
                        Administration.
                    ``(B) Critically undercapitalized.--The term 
                `critically undercapitalized' has the same meaning as 
                in section 6A(b)(3).
                    ``(C) New advance.--The term `new advance' includes 
                a renewal or extension of, or an increase in, an 
                outstanding advance.
                    ``(D) Undercapitalized depository institution.--The 
                term `undercapitalized depository institution' means 
                any depository institution which--
                            ``(i) is undercapitalized, as defined in 
                        section 38 of the Federal Deposit Insurance Act 
                        (or as defined by the National Credit Union 
                        Administration Board, in the case of an insured 
                        credit union); or
                            ``(ii) has a composite CAMEL rating of 5 
                        under the Uniform Financial Institutions Rating 
                        System (or an equivalent rating by any such 
                        agency under a comparable rating system) as of 
                        the most recent examination of such 
                        institution.
                    ``(E) Viable.--The term `viable' means, with 
                respect to a depository institution, a depository 
                institution which the appropriate Federal banking 
                agency determines, giving due regard to the economic 
                conditions and circumstances in the market in which the 
                institution operates--
                            ``(i) is not critically undercapitalized;
                            ``(ii) is not expected to become critically 
                        undercapitalized; and
                            ``(iii) is not expected to be placed in 
                        conservatorship or receivership.''.
    (c) Section 10b.--
            (1) Subsection (a) of section 10b of the Federal Home Loan 
        Bank Act (12 U.S.C. 1430b) is amended to read as follows:
    ``(a) In General.--
            ``(1) Authority.--Each enterprise resource bank may make 
        advances to a permissible nonmember mortgagee.
            ``(2) Permissible nonmember mortgagee.--For purposes of 
        paragraph (1), the term `permissible nonmember mortgagee' 
        means--
                    ``(A) any State housing finance agency or Indian 
                housing authority (including any subsidiary of such 
                agency or authority) approved under title II of the 
                National Housing Act--
                            ``(i) which is a chartered institution 
                        having succession and subject to the inspection 
                        and supervision of a governmental agency; and
                            ``(ii) whose principal activity in the 
                        mortgage field must consist of lending the 
                        institution's own funds; or
                    ``(B) any community development financial 
                institution--
                            ``(i) which is not an insured depository 
                        institution or a subsidiary of an insured 
                        depository institution;
                            ``(ii) which, at the time the advance is 
                        made, has been certified within the last year 
                        as a community development financial 
                        institution under the Community Development 
                        Banking and Financial Institutions Act of 1994;
                            ``(iii) which is a chartered institution 
                        having succession; and
                            ``(iv) whose principal activity in the 
                        mortgage field must consist of lending the 
                        institution's own funds.
            ``(3) Security.--Advances under paragraph (1) shall not be 
        subject to the other provisions and restrictions of this Act, 
        but shall be made upon the security of mortgages insured under 
        title II of the National Housing Act.
            ``(4) Terms and conditions.--Advances made under the terms 
        of this section shall be at such rates of interest and upon 
        such terms and conditions as shall be determined by the 
        enterprise resource bank, but no advance may be for an amount 
        in excess of 90 percent of the unpaid principal of the mortgage 
        loan given as security.
            ``(5) Definitions of community development financial 
        institution.--The term `community development financial 
        institution' has the same meaning as in section 103 of the 
        Community Development Banking and Financial Institutions Act of 
        1994.''.
            (2) Subsection (b) of section 10b of the Federal Home Loan 
        Bank Act (12 U.S.C. 1430b(b)) is amended by inserting ``or 
        Indian housing authority'' after ``State housing finance 
        agency''.
    (d) Section 11.--
            (1) Subsection (a) of section 11 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1431(a)) is amended--
                    (A) by striking ``(a) Each Federal Home Loan Bank'' 
                and inserting ``(a) Borrowing Authority.--
            ``(1) In general.--Each enterprise resource bank'';
                    (B) by striking ``, subject to rules and 
                regulations prescribed by the Board'';
                    (C) by striking ``Board'' and inserting ``board of 
                directors of the bank''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(2) Borrowing through the office of finance only.--
        Notwithstanding paragraph (1), all notes, bonds, and debentures 
        issued by any enterprise resource bank shall be issued through 
        the office of finance as agent for the banks.''.
            (2) Subsection (b) of section 11 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1431(b)) is amended to read as follows:
    ``(b) Issuance of Enterprise Resource Bank Bonds.--
            ``(1) In general.--The office of finance may issue 
        consolidated enterprise resource bank bonds and other 
        consolidated obligations on behalf of the banks.
            ``(2) Joint and several obligations.--Consolidated 
        obligations issued by the office of finance under paragraph (1) 
        shall be the joint and several obligations of all the 
        enterprise resource banks.''.
            (3) Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 
        1431) is amended by striking subsection (c).
            (4) Section 11(d) of the Federal Home Loan Bank Act (12 
        U.S.C. 1431(d)) is amended to read as follows:
    ``(d) Additional or Substituted Collateral.--The Finance Board, for 
safety and soundness reasons, may require any enterprise resource bank 
to deposit additional collateral or to make substitutions of 
collateral.''.
            (5) Section 11(e) of the Federal Home Loan Bank Act (12 
        U.S.C. 1431(e)) is amended to read as follows:
    ``(e) Acceptance of Deposits; Regulations.--
            ``(1) Acceptance of deposits.--Subject to regulations 
        prescribed by the Finance Board, each enterprise resource bank 
        may accept deposits made by members of such bank or by any 
        other enterprise resource bank or other instrumentality of the 
        United States, upon such terms and conditions as the bank may 
        determine.
            ``(2) Collection and settlement of checks.--
                    ``(A) In general.--Subject to regulations of the 
                Finance Board, an enterprise resource bank may be a 
                drawee of, and engage in, or be agents or 
                intermediaries for, or otherwise participate or assist 
                in, the collection and settlement of (including 
                presentment, clearing, and payment of, and remitting 
                for), checks, drafts, or any other negotiable or 
                nonnegotiable items or instruments of payment drawn on 
                or issued by members of any enterprise resource bank or 
                by institutions which are eligible to make application 
                to become members pursuant to section 4, and to have 
                such incidental powers as the Finance Board shall find 
                necessary for the exercise of any such authorization.
                    ``(B) Charges.--An enterprise resource bank shall 
                make charges, to be determined by the bank consistent 
                with the principles set forth in section 11A(c) of the 
                Federal Reserve Act, or utilize the services of, or act 
                as agent for, or be a member of, a Federal reserve 
                bank, clearinghouse, or any other public or private 
                financial institution or other agency, in the exercise 
                of any powers or functions pursuant to this paragraph.
                    ``(C) Regulations.--
                            ``(i) In general.--The Finance Board may, 
                        with respect to participation in the collection 
                        and settlement of any items by enterprise 
                        resource banks, and with respect to the 
                        collection and settlement (including payment by 
                        the payor institution) of items payable by 
                        members, to prescribe regulations regarding the 
                        rights, powers, responsibilities, duties, and 
                        liabilities, including standards relating to 
                        such rights, powers, responsibilities, duties, 
                        and liabilities, of such enterprise resource 
                        banks, members, and other parties to any such 
                        item or the collection and settlement of any 
                        such item.
                            ``(ii) Application of banking usage and 
                        practice.--In prescribing such regulations, the 
                        Finance Board may adopt or apply, in whole or 
                        in part, general banking usage and practices, 
                        and, in instances or respects in which they 
                        would otherwise not be applicable, regulations 
                        of the Board of Governors of the Federal 
                        Reserve System and operating letters, the 
                        Uniform Commercial Code, and clearinghouse 
                        rules.
            ``(3) Prohibition on other general banking activities.--An 
        enterprise resource bank may not engage in any banking or other 
        commercial activities other than the activities specifically 
        authorized under this Act and activities incidental to such 
        authorized activities.''.
            (6) Subsection (f) of section 11 of the Federal Home Loan 
        Bank Act is amended to read as follows:
    ``(f) Rediscount of Notes Held by Other Banks; Purchase of Bonds of 
Other Banks.--The enterprise resource banks may--
            ``(1) rediscount the discounted notes of shareholders of an 
        enterprise resource bank which are held by other enterprise 
        resource banks;
            ``(2) make loans to, or make deposits with, other 
        enterprise resource banks; or
            ``(3) purchase any bonds or debentures issued under this 
        section.''.
            (7) Subsection (h) of section 11 of the Federal Home Loan 
        Bank Act is amended by striking ``section 301(d) of the Small 
        Business Investment Act of 1958'' and inserting ``title III of 
        the Small Business Investment Act of 1958''.
            (8) Subsection (j) of section 11 of the Federal Home Loan 
        Bank Act is amended to read as follows:
    ``(j) Audits.--
            ``(1) Audits by inspector general and gao.--The financial 
        transactions of each enterprise resource bank and the office of 
        finance shall be audited in accordance with paragraph (1) of 
        section 9105(a) of title 31, United States Code, and may be 
        audited in accordance with paragraph (4) of such section.
            ``(2) Exception to exclusion from government corporation 
        control act.--Section 9107(c)(2) of title 31, United States 
        Code, shall not apply to any enterprise resource bank or the 
        office of finance.
            ``(3) Selection of external auditors.--
                    ``(A) In general.--The enterprise resource banks 
                and the office of finance shall contract jointly for an 
                annual external audit.
                    ``(B) Role of the board.--Notwithstanding any other 
                provision of law, the Finance Board shall not 
                participate in the audit contracting process under this 
                paragraph except that the Finance Board may establish 
                requirements for external audit contracts and 
                requirements to assure consistency in financial 
                report.''.
    (e) Section 16.--
            (1) Section 16(a) of the Federal Home Loan Bank Act (12 
        U.S.C. 1436(a)) is amended--
                    (A) in the 3d sentence, by striking ``and then only 
                with the approval of the Federal Housing Finance 
                Board'' and inserting ``subject to such regulations as 
                may be prescribed by the Finance Board''; and
                    (B) by striking the 4th sentence and inserting the 
                following new sentence: ``No enterprise resource bank 
                may make any dividend payment pursuant to the preceding 
                sentence without the approval of the Finance Board 
                unless the amount of retained earnings and reserves 
                (other than loan loss reserves) of the bank after the 
                payment of such dividend would equal or exceed the 
                amount of capital required in order for the bank to be 
                treated as adequately capitalized under all relevant 
                capital measures in effect pursuant to section 
                6A(c).''.
            (2) Section 16 of the Federal Home Loan Bank Act (12 U.S.C. 
        1436) is amended by adding at the end the following new 
        subsection:
    ``(d) Ownership Interest in Retained Earnings Recognized.--Subject 
to any other provision of this Act, each enterprise resource bank and, 
indirectly, the voting shareholders of each bank, shall have an 
ownership interest in, and a property right in, the retained earnings 
of the bank.''.
    (f) Repeal of Sections 2A, 2B, and 24.--The Federal Home Loan Bank 
Act (12 U.S.C. 1421 et seq.) is amended by striking sections 2A, 2B, 
and 24.

SEC. 13. INCORPORATION OF BANKS; CORPORATE POWERS.

    Section 12 of the Federal Home Loan Bank Act is amended to read as 
follows:

``SEC. 12. INCORPORATION OF BANKS; CORPORATE POWERS.

    ``(a) Organizational Certificates.--
            ``(1) Custodianship.--The Finance Board shall be the 
        custodian of the organizational certificates of the enterprise 
        resource banks previously filed with the Federal Home Loan Bank 
        Board (as in existence before the end of the 60-day period 
        beginning on the date of the enactment of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989) or 
        the Finance Board.
            ``(2) Replacement of lost or destroyed certificate.--If the 
        organizational certificate of an enterprise resource bank is 
        lost or destroyed, the board of directors of the bank shall 
        provide the Finance Board with a substitute certificate 
        containing such information as the Finance Board may require.
            ``(3) Amendment in case of merger, combination, or 
        consolidation.--If 2 or more enterprise resource banks merge, 
        combine, or otherwise consolidate, the resulting bank shall 
        provide the Finance Board with an amended organizational 
        certificate containing such information as the Finance Board 
        may require.
    ``(b) Corporate Status.--Each enterprise resource bank shall be a 
corporation.
    ``(c) Powers.--Each enterprise resource bank shall have the 
following powers:
            ``(1) To adopt, alter, and use a corporate seal.
            ``(2) To make contracts.
            ``(3) To purchase or lease and hold or dispose of such real 
        estate as may be necessary or convenient for the transaction of 
        the business of the bank.
            ``(4) To sue and be sued, to complain, and to defend, in 
        any court of competent jurisdiction.
            ``(5) To select, employ, and fix the compensation of such 
        officers, employees, attorneys, and agents as the board of 
        directors determines to be necessary for the transaction of the 
        business of the bank.
            ``(6) To define the duties of, and require bonds of, 
        officers, employees, attorneys, and agents of the bank and fix 
        the penalties of any such bonds.
            ``(7) To dismiss at pleasure officers, employees, 
        attorneys, and agents of the bank.
            ``(8) By the board of directors, to prescribe, amend, and 
        repeal bylaws and policies governing the manner in which the 
        affairs of the bank may be administered.
            ``(9) Such incidental powers as are not inconsistent with 
        the provisions of this Act and are customary and usual in 
        corporations generally.
    ``(d) Prohibition on Excessive Compensation.--
            ``(1) In general.--The Finance Board shall prohibit the 
        enterprise resource banks from providing compensation to any 
        employee of the bank that is not reasonable and comparable with 
        compensation for employment in other similar businesses 
        (including other financial institutions or major financial 
        services companies) involving similar duties and 
        responsibilities.
            ``(2) Limitation on finance board's authority to set 
        compensation.--In carrying out paragraph (1), the Financial 
        Board may not prescribe or set a specific level or range of 
        compensation.
    ``(e) Status of Bank Employees.--Notwithstanding any other 
provision of this Act, no officer, employee, or agent of an enterprise 
resource bank or the office of finance of such banks shall be 
considered to be an officer or employee of the United States for 
purposes of title 5, United States Code.
    ``(f) Guaranteed Housing Project Loans.--Subject to such 
regulations as may be prescribed by the Finance Board, an enterprise 
resource bank may acquire, hold, or dispose of, in whole or in part, or 
facilitate the acquisition, holding, or disposition by members of such 
bank of, any housing project loan which has the benefit of any guaranty 
under section 221, 222, or 224 of the Foreign Assistance Act of 1961, 
any interest in any such loan, or any commitment or agreement with 
respect to any such loan or interest.''.

SEC. 14. SUCCESSION OF ENTERPRISE RESOURCE BANKS.

    Section 25 of the Federal Home Loan Bank Act (12 U.S.C. 1445) is 
amended by inserting ``, operation of law,'' after ``the Board under 
this Act''.

SEC. 15. DEFINITIONS.

    (a) Finance Board Defined.--Paragraph (1) of section 2 of the 
Federal Home Loan Bank Act (12 U.S.C. 1422(1)) is amended to read as 
follows:
            ``(1) Finance board.--The term `Finance Board' means the 
        Federal Housing Finance Board established under section 3.''.
    (b) Home Mortgage Loan Defined.--Section 2 of the Federal Home Loan 
Bank Act (12 U.S.C. 1422) is amended by striking paragraphs (5) and (6) 
and inserting the following new paragraph:
            ``(5) Home mortgage loan.--
                    ``(A) In general.--The term `home mortgage loan' 
                means a loan made by a voting shareholder or 
                nonshareholder borrower upon the security of--
                            ``(i) a mortgage, deed of trust, or other 
                        security arrangement upon qualified real 
                        estate, in fee simple; or
                            ``(ii) on a qualified leasehold--
                                    ``(I) under a lease which has a 
                                period to maturity of not less than 99 
                                years and is renewable; or
                                    ``(II) under a lease having a 
                                period of not less than 50 years to run 
                                from the date the mortgage, deed of 
                                trust, or other security arrangement 
                                was executed.
                    ``(B) Certain loans included.--The term `home 
                mortgage loan' includes--
                            ``(i) such classes of first liens as are 
                        commonly given to secure advances on real 
                        estate, under the laws of the State in which 
                        the real estate is located, by institutions 
                        authorized under this Act to become members of 
                        an enterprise resource bank; and
                            ``(ii) the credit instruments, if any, 
                        secured by such liens.
                    ``(C) Qualified real estate; qualified leasehold.--
                The term `qualified real estate' and `qualified 
                leasehold' mean real estate upon which is located, or 
                which comprises or includes, 1 or more homes or other 
                dwelling units.
                    ``(D) Definition of further terms.--The Finance 
                Board may define any term used in this paragraph.''.
    (c) Residential Mortgage Assets Defined.--Section 2 of the Federal 
Home Loan Bank Act (12 U.S.C. 1422) is amended--
            (1) by redesignating paragraphs (7), (8), (9), (10), (11), 
        and (12) as paragraphs (6), (7), (8), (9), (10), and (11), 
        respectively; and
            (2) by adding at the end the following new paragraph:
            ``(12) Residential mortgage assets.--The term `residential 
        mortgage asset'--
                    ``(A) means a home mortgage, deed of trust, or 
                other security arrangement upon real estate that is 
                solely residential; and
                    ``(B) includes any mortgage pass-through security 
                or mortgage debt security representing an interest in, 
                or which is collateralized by, home mortgage loans.''.
    (d) Regulated Financial Institution Defined.--Section 2 of the 
Federal Home Loan Bank Act (12 U.S.C. 1422) is amended by adding after 
paragraph (12) (as added by subsection (c) of this section) the 
following new paragraph:
            ``(13) Regulated financial institution.--The term 
        `regulated financial institution' means--
                    ``(A) any depository institution (as defined in 
                section 3(c) of the Federal Deposit Insurance Act; and
                    ``(B) any insured or noninsured credit union (as 
                such terms are defined in section 101(7) of the Federal 
                Credit Union Act).''.
    (e) Capital Distribution Defined.--Section 2 of the Federal Home 
Loan Bank Act (12 U.S.C. 1422) is amended by adding after paragraph 
(13) (as added by subsection (d) of this section) the following new 
paragraph:
            ``(14) Capital distribution.--The term `capital 
        distribution' means--
                    ``(A) any dividend or other distribution in cash or 
                other property made with respect to any shares of, or 
                other ownership interest in, an enterprise resource 
                bank, other than a dividend consisting only of shares 
                of any such bank;
                    ``(B) any payment in cash or other property made by 
                an enterprise resource bank to repurchase, redeem, 
                retire, or otherwise acquire any of the shares of the 
                bank, including any extension of credit made to finance 
                an acquisition by a bank of such shares; and
                    ``(C) any transaction that the Finance Board 
                determines by regulation to be, in substance, a 
                distribution of capital of an enterprise resource 
                bank.''.
    (f) Bank-Affiliated Party.--Section 2 of the Federal Home Loan Bank 
Act (12 U.S.C. 1422) is amended by adding after paragraph (14) (as 
added by subsection (e) of this section) the following new paragraph:
            ``(15) Bank-affiliated party.--The term `bank-affiliated 
        party' means--
                    ``(A) any director, officer, or employee of, or 
                agent for, an enterprise resource bank;
                    ``(B) any voting shareholder, consultant, joint 
                venture partner, and any other person as determined by 
                the Finance Board who participates in the conduct of 
                the affairs of an enterprise resource bank; and
                    ``(C) any independent contractor (including any 
                attorney, appraiser, or accountant) who knowingly or 
                recklessly participates in--
                            ``(i) any violation of any law or 
                        regulation;
                            ``(ii) any breach of fiduciary duty; or
                            ``(iii) any unsafe or unsound practice,
                which caused or is likely to cause more than a minimal 
                financial loss to, or a significant adverse effect on, 
                the enterprise resource bank.''.
    (g) Voting Shareholder.--Section 2 of the Federal Home Loan Bank 
Act (12 U.S.C. 1422) is amended by adding after paragraph (15) (as 
added by subsection (f) of this section) the following new paragraph:
            ``(16) Voting shareholder.--The term `voting shareholder' 
        means any regulated financial institution or insurance company 
        which holds any voting stock of an enterprise resource bank.''.
                                 <all>
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