I 

108TH CONGRESS 

1ST SESSION H. R. 3071

To prohibit the provision of Federal funds to the housing-related governmentsponsored enterprises and to remove certain competitive advantages 

granted under law to such enterprises. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 10, 2003

Mr. PAUL introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL

To prohibit the provision of Federal funds to the housingrelated government-sponsored enterprises and to remove 

certain competitive advantages granted under law to such 

enterprises.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Free Housing Market 

5 Enhancement Act’’. 
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1 SEC. 2. PROHIBITION OF FEDERAL FUNDS FOR HOUSING2 RELATED GOVERNMENT-SPONSORED ENTER3 PRISES. 

4 Notwithstanding any other provision of law, no Fed5 eral funds may be provided, directly or indirectly, to the 

6 Federal National Mortgage Association, the Federal 

7 Home Loan Mortgage Corporation, or any Federal Home 

8 Loan Bank. 

9 SEC. 3. AMENDMENTS TO FEDERAL NATIONAL MORTGAGE 

10 ASSOCIATION CHARTER ACT. 

11 (a) EXEMPTION FROM STATE TAXATION.—Section 

12 309(c) of the Federal National Mortgage Association 

13 Charter Act (12 U.S.C. 1723a(c)) is amended—

14 (1) by striking paragraph (2); and 

15 (2) by striking ‘‘(1)’’. 

16 (b) AUTHORITY OF TREASURY TO APPROVE DEBT

17 ISSUES.—Section 304(b) of the Federal National Mort18 gage Association Charter Act (12 U.S.C. 1719(b)) is 

19 amended—

20 (1) by striking ‘‘, upon the approval of the Sec21 retary of the Treasury,’’; and 

22 (2) by striking ‘‘with the approval of the Sec23 retary of the Treasury’’. 

24 (c) AUTHORITY TO BORROW FROM TREASURY.—Sec25 tion 304 of the Federal National Mortgage Association 
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1 Charter Act (12 U.S.C. 1719) is amended by striking sub2 section (c). 

3 (d) DEPOSITARY AUTHORITY.—Section 309(g) of the 

4 Federal National Mortgage Association Charter Act (12 

5 U.S.C. 1723a(g)) is amended—

6 (1) by striking ‘‘each of the bodies corporate 

7 named in section 302(a)(2)’’ and inserting ‘‘the As8 sociation’’; and 

9 (2) by striking ‘‘such bodies corporate’’ and in10 serting ‘‘the bodies corporate named in section 

11 302(a)(2)’’. 

12 (e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN13 VESTMENTS.—The first sentence of section 311 of the 

14 Federal National Mortgage Association Charter Act (12 

15 U.S.C. 1723c) is amended by striking ‘‘either of the bodies 

16 corporate named in section 302(a)(2)’’ and inserting ‘‘the 

17 Association’’. 

18 (f) APPOINTMENT OF MEMBERS OF BOARD OF DI19 RECTORS.—

20 (1) IN GENERAL.—Section 308(b) of the Fed21 eral National Mortgage Association Charter Act (12 

22 U.S.C. 1723(b)) is amended—

23 (A) in the first sentence, by striking ‘‘five 

24 of whom shall be appointed annually by the 
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1 President of the United States, and the remain2 der of whom’’ and inserting ‘‘who’’; 

3 (B) in the second sentence, by striking 

4 ‘‘appointed by the President’’; 

5 (C) in the third sentence—

6 (i) by striking ‘‘appointed or’’; and 

7 (ii) by striking ‘‘, except that any 

8 such appointed member may be removed 

9 from office by the President for good 

10 cause’’; 

11 (D) in the fourth sentence, by striking 

12 ‘‘elective’’; and 

13 (E) by striking the fifth sentence. 

14 (2) APPLICABILITY.—The amendments made 

15 by paragraph (1) shall apply only with respect to the 

16 first election of members of the board of directors of 

17 the Federal National Mortgage Association occur18 ring after the date of the enactment of this Act, and 

19 the board resulting from such election, and to elec20 tions and boards thereafter. 

21 SEC. 4. AMENDMENTS TO FEDERAL HOME LOAN MORT22 GAGE CORPORATION ACT. 

23 (a) EXEMPTION FROM STATE TAXATION.—Section 

24 303 of the Federal Home Loan Mortgage Corporation Act 

25 (12 U.S.C. 1452) is amended by striking subsection (e). 
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1 (b) AUTHORITY OF TREASURY TO APPROVE DEBT

2 ISSUES.—Section 306(j) of the Federal Home Loan Mort3 gage Corporation Act (12 U.S.C. 1455(j)) is amended—

4 (1) by striking ‘‘(1)’’; 

5 (2) by striking ‘‘be issued upon the approval of 

6 the Secretary of the Treasury and shall’’; 

7 (3) by striking ‘‘with the approval of the Sec8 retary of the Treasury’’; and 

9 (4) by striking paragraphs (2) and (3). 

10 (c) AUTHORITY TO BORROW FROM TREASURY.—Sec11 tion 306 of the Federal Home Loan Mortgage Corporation 

12 Act (12 U.S.C. 1455) is amended by striking subsection 

13 (c). 

14 (d) DEPOSITARY AUTHORITY.—Section 303(d) of the 

15 Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

16 1452(d)) is amended by striking the second and third sen17 tences. 

18 (e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN19 VESTMENTS.—Section 303 of the Federal Home Loan 

20 Mortgage Corporation Act (12 U.S.C. 1452) is amended 

21 by striking subsection (g). 

22 (f) APPOINTMENT OF MEMBERS OF BOARD OF DI23 RECTORS.—
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1 (1) IN GENERAL.—Section 303(a)(2) of the 

2 Federal Home Loan Mortgage Corporation Act (12 

3 U.S.C. 1452(a)(2)) is amended—

4 (A) in subparagraph (A)—

5 (i) in the first sentence, by striking ‘‘5 

6 of whom shall be appointed annually by 

7 the President of the United States and the 

8 remainder of whom’’ and inserting ‘‘who’’; 

9 and 

10 (ii) in the second sentence, by striking 

11 ‘‘appointed by the President of the United 

12 States’’; 

13 (B) in subparagraph (B)—

14 (i) by striking ‘‘such or’’; and 

15 (ii) by striking ‘‘, except that any ap16 pointed member may be removed from of17 fice by the President for good cause’’; and 

18 (C) in subparagraph (C)—

19 (i) by striking the first sentence; and 

20 (ii) by striking ‘‘elective’’. 

21 (2) APPLICABILITY.—The amendments made 

22 by paragraph (1) shall apply only with respect to the 

23 first election of members of the Board of Directors 

24 of the Federal Home Loan Mortgage Corporation 

25 occurring after the date of the enactment of this 
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1 Act, and the Board resulting from such election, and 

2 to elections and Boards thereafter. 

3 SEC. 5. AMENDMENTS TO FEDERAL HOME LOAN BANK ACT. 

4 (a) EXEMPTION FROM STATE TAXATION.—

5 (1) NOTES AND OBLIGATIONS.—The first sen6 tence of section 13 of the Federal Home Loan Bank 

7 Act (12 U.S.C. 1433) is amended by striking ‘‘, by 

8 any Territory,’’ and all that follows through ‘‘local 

9 taxing authority’’. 

10 (2) BANKS.—The second sentence of section 13 

11 of the Federal Home Loan Bank Act (12 U.S.C. 

12 1433) is amended by striking ‘‘, by any Territory,’’ 

13 and all that follows through ‘‘taxed’’. 

14 (b) AUTHORITY TO BORROW FROM TREASURY.—

15 Section 11 of the Federal Home Loan Bank Act (12 

16 U.S.C. 1431) is amended by striking subsection (i). 

17 (c) DEPOSITARY AUTHORITY.—The Federal Home 

18 Loan Bank Act is amended—

19 (1) by striking section 14 (12 U.S.C. 1434); 

20 and 

21 (2) in section 15 (12 U.S.C. 1435), by striking 

22 the second sentence. 

23 (d) DESIGNATION OF OBLIGATIONS AS LAWFUL IN24 VESTMENTS.—Section 15 of the Federal Home Loan 

25 Bank Act (12 U.S.C. 1435), as amended by subsection 
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1 (c)(2) of this section, is further amended by striking the 

2 first sentence. 

3 SEC. 6. PROHIBITION OF FEDERAL RESERVE PURCHASE OF 

4 GSE DEBT. 

5 Section 14(b)(2) of the Federal Reserve Act (12 

6 U.S.C. 355(2)) is amended—

7 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 

8 (2) by adding at the end the following new sub9 paragraph: 

10 ‘‘(B) For purposes of this subsection, the Federal 

11 National Mortgage Association, the Federal Home Loan 

12 Mortgage Corporation, and the Federal Home Loan 

13 Banks shall not be considered agencies of the United 

14 States.’’. 

15 SEC. 7. REPEAL OF ELIGIBILITY OF GSE OBLIGATIONS FOR 

16 UNLIMITED INVESTMENTS. 

17 (a) NATIONAL BANKS.—Section 5136 of the Revised 

18 Statutes of the United States (12 U.S.C. 24) is amended 

19 in the sixth sentence of the paragraph designated ‘‘Sev20 enth’’—

21 (1) by striking ‘‘or the Federal Home Loan 

22 Banks’’; 

23 (2) by striking ‘‘the Federal National Mortgage 

24 Association or’’; and 
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1 (3) by striking ‘‘or mortgages, obligations, or 

2 other securities which are or ever have been sold by 

3 the Federal Home Loan Mortgage Corporation pur4 suant to section 305 or 306 of the Federal Home 

5 Loan Mortgage Corporation Act’’. 

6 (b) FEDERALLY CHARTERED THRIFTS.—Section 

7 5(c)(1) of the Home Owners’ Loan Act (12 U.S.C. 

8 1464(c)(1)) is amended—

9 (1) by striking subparagraphs (D) and (E); 

10 (2) in subparagraph (F), by striking ‘‘the Fed11 eral National Mortgage Association,’’; 

12 (3) in subparagraph (M), by striking ‘‘or a Fed13 eral home loan bank’’; and 

14 (4) by redesignating subparagraphs (F) 

15 through (U) as subparagraphs (D) through (S), re16 spectively. 

17 (c) CREDIT UNIONS.—Section 107(7)(E) of the Fed18 eral Credit Union Act (12 U.S.C. 1757(7)(E)) is amend19 ed—

20 (1) by striking ‘‘Federal home loan banks, the 

21 Federal Home Loan Bank Board,’’; 

22 (2) by striking ‘‘the Federal National Mortgage 

23 Association or’’; and 

24 (3) by striking ‘‘or in mortgages, obligations, or 

25 other securities which are or ever have been sold by 
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1 the Federal Home Loan Mortgage Corporation pur2 suant to section 305 or section 306 of the Federal 

3 Home Loan Mortgage Corporation Act;’’.

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