II 

109TH CONGRESS 

1ST SESSION S. 190

IN THE SENATE OF THE UNITED STATES 

JANUARY 26, 2005

Mr. HAGEL (for himself, Mr. SUNUNU, and Mrs. DOLE) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Afairs 

A BILL

To address the regulation of secondary mortgage market 

enterprises, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Federal Housing Enterprise Regulatory Reform Act of 

6 2005’’. 

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

8 this Act is as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

TITLE I—REFORM OF REGULATION OF ENTERPRISES 
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Subtitle A—Improvement of Safety and Soundness Supervision 

Sec. 101. Establishment of the Federal Housing Enterprise Regulatory Agency. 

Sec. 102. Duties and authorities of Director. 

Sec. 103. Federal Housing Enterprise Board. 

Sec. 104. Authority to require reports by regulated entities. 

Sec. 105. Examiners and accountants; authority to contract for reviews of enterprises. 

Sec. 106. Assessments. 

Sec. 107. Regulations and orders. 

Sec. 108. Prudential management and operations standards. 

Sec. 109. Limitation on nonmission-related assets. 

Sec. 110. Risk-based capital test for enterprises. 

Sec. 111. Limit on golden parachutes. 

Sec. 112. Reporting of fraudulent loans. 

Subtitle B—Improvement of Mission Supervision 

Sec. 121. Transfer of program approval and housing goal oversight. 

Sec. 122. Review of enterprise programs, and activities. 

Sec. 123. Authority to require reports by enterprises. 

Sec. 124. Monitoring and enforcing compliance with housing goals. 

Sec. 125. Assumption by director of other HUD responsibilities. 

Sec. 126. Administrative and judicial enforcement proceedings. 

Subtitle C—Prompt Corrective Action 

Sec. 141. Capital classifications. 

Sec. 142. Supervisory actions applicable to undercapitalized regulated entities. 

Sec. 143. Supervisory actions applicable to significantly undercapitalized regulated entities. 

Sec. 144. Authority over critically undercapitalized enterprises. 

Subtitle D—Enforcement Actions 

Sec. 151. Cease-and-desist proceedings. 

Sec. 152. Temporary cease-and-desist proceedings. 

Sec. 153. Removal and prohibition authority. 

Sec. 154. Enforcement and jurisdiction. 

Sec. 155. Civil money penalties. 

Sec. 156. Criminal penalty. 

Sec. 157. Notice after separation from service. 

Subtitle E—Other Reporting Regarding Regulated Entities 

Sec. 161. Reporting regarding regulated entities. 

Subtitle F—General Provisions 

Sec. 171. Conforming and technical amendments. 

Sec. 172. Presidentially appointed directors of enterprises. 

Sec. 173. Effective date. 

TITLE II—FEDERAL HOME LOAN BANKS 

Sec. 201. Directors. 

Sec. 202. Definitions. 

Sec. 203. Agency oversight of Federal Home Loan Banks. 
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Sec. 204. Debt issuing facility. 

Sec. 205. Exclusion from certain securities reporting requirements. 

Sec. 206. Limitation on golden parachutes. 

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND THE FEDERAL HOUSING FINANCE 

BOARD 

Subtitle A—OFHEO 

Sec. 301. Abolishment of OFHEO. 

Sec. 302. Continuation and coordination of certain regulations. 

Sec. 303. Transfer and rights of employees of OFHEO. 

Sec. 304. Transfer of property and facilities. 

Subtitle B—Federal Housing Finance Board 

Sec. 311. Abolishment of the Federal Housing Finance Board. 

Sec. 312. Continuation and coordination of certain regulations.Board. 

Sec. 314. Transfer of property and facilities. 

TITLE IV—MISCELLANEOUS PROVISIONS 

Sec. 401. Study and report on Basel II and enterprise debt. 

Sec. 402. Affordable housing reporting.

1 SEC. 2. DEFINITIONS. 

2 Section 1303 of the Federal Housing Enterprises Fi3 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

4 4502) is amended—

5 (1) in paragraph (5), by striking ‘‘Office of 

6 Federal Housing Enterprise Oversight of the De7 partment of Housing and Urban Development’’ and 

8 inserting ‘‘Federal Housing Enterprise Regulatory 

9 Agency’’; 

10 (2) in each of paragraphs (8), (9), (10), and 

11 (19), by striking ‘‘Secretary’’ each place that term 

12 appears and inserting ‘‘Director’’; 

13 (3) in paragraph (14), by striking ‘‘Office of 

14 Federal Housing Enterprise Oversight of the De-
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•S 190 IS 

1 partment of Housing and Urban Development’’ and 

2 inserting ‘‘Federal Housing Enterprise Regulatory 

3 Agency’’; 

4 (4) by redesignating paragraphs (16) through 

5 (19) as paragraphs (21) through (24), respectively; 

6 (5) by striking paragraph (15) and inserting 

7 the following: 

8 ‘‘(20) REGULATED ENTITY.—The term ‘regu9 lated entity’ means—

10 ‘‘(A) the Federal National Mortgage Asso11 ciation and any affiliate thereof; 

12 ‘‘(B) the Federal Home Loan Mortgage 

13 Corporation and any affiliate thereof; and 

14 ‘‘(C) any Federal Home Loan Bank.’’; 

15 (6) by striking paragraph (13) and by redesig16 nating paragraphs (7), (8), (9), (10), (11), (12), and 

17 (14) as paragraphs (13) through (19), respectively; 

18 (7) by redesignating paragraphs (2) through 

19 (4) as paragraphs (5) through (7), respectively; 

20 (8) by inserting after paragraph (7), as redesig21 nated, the following: 

22 ‘‘(8) DEFAULT; DANGER OF DEFAULT.—

23 ‘‘(A) DEFAULT.—The term ‘default’ 

24 means, with respect to an enterprise, any adju25 dication or other official determination by any 
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1 court of competent jurisdiction, or the Agency, 

2 pursuant to which a conservator, receiver, lim3 ited-life enterprise, or legal custodian is ap4 pointed for an enterprise. 

5 ‘‘(B) IN DANGER OF DEFAULT.—The term 

6 ‘in danger of default’ means an enterprise with 

7 respect to which—

8 ‘‘(i) in the opinion of the Agency—

9 ‘‘(I) the enterprise is not likely to 

10 be able to pay the obligations of the 

11 enterprise in the normal course of 

12 business; or 

13 ‘‘(II) the enterprise has incurred 

14 or is likely to incur losses that will de15 plete all or substantially all of its cap16 ital; and 

17 ‘‘(ii) there is no reasonable prospect 

18 that the capital of the enterprise will be re19 plenished.’’. 

20 (9) by redesignating paragraph (1) as para21 graph (2); 

22 (10) by inserting after paragraph (2), as redes23 ignated the following: 

24 ‘‘(3) AUTHORIZING STATUTES.—The term ‘au25 thorizing statutes’ means—
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1 ‘‘(A) the Federal National Mortgage Asso2 ciation Charter Act; 

3 ‘‘(B) the Federal Home Loan Mortgage 

4 Corporation Act; and 

5 ‘‘(C) the Federal Home Loan Bank Act. 

6 ‘‘(4) BOARD.—The term ‘Board’ means the 

7 Federal Housing Enterprise Board established under 

8 section 1313A.’’; 

9 (11) by redesignated paragraph (6) as para10 graph (10), and by inserting after paragraph (10), 

11 as redesignated, the following: 

12 ‘‘(11) ENTERPRISE-AFFILIATED PARTY.—The 

13 term ‘enterprise-affiliated party’ means—

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

15 controlling stockholder of, or agent for, a regu16 lated entity; 

17 ‘‘(B) any shareholder, affiliate, consultant, 

18 or joint venture partner of a regulated entity, 

19 and any other person, as determined by the Di20 rector (by regulation or on a case-by-case basis) 

21 that participates in the conduct of the affairs of 

22 a regulated entity; and 

23 ‘‘(C) any independent contractor for a reg24 ulated entity (including any attorney, appraiser, 

25 or accountant), if—
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1 ‘‘(i) the independent contractor know2 ingly or recklessly participates in—

3 ‘‘(I) any violation of any law or 

4 regulation; 

5 ‘‘(II) any breach of fiduciary 

6 duty; or 

7 ‘‘(III) any unsafe or unsound 

8 practice; and 

9 ‘‘(ii) such violation, breach, or prac10 tice caused, or is likely to cause, more than 

11 a minimal financial loss to, or a significant 

12 adverse effect on, the regulated entity; and 

13 ‘‘(D) any not-for-profit corporation that re14 ceives its principal funding, on an ongoing 

15 basis, from any regulated entity.’’; 

16 (12) by inserting before paragraph (2), as re17 designated, the following: 

18 ‘‘(1) AGENCY; DIRECTOR.—The term—

19 ‘‘(A) ‘Agency’ means the Federal Housing 

20 Enterprise Regulatory Agency established under 

21 section 1311; and 

22 ‘‘(B) ‘Director’ means the Director of the 

23 Agency, appointed under section 1312.’’; and 

24 (13) by adding at the end the following: 
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1 ‘‘(25) VIOLATION.—The term ‘violation’ in2 cludes any action (alone or in combination with an3 other or others) for or toward causing, bringing 

4 about, participating in, counseling, or aiding or abet5 ting a violation.’’.

6 TITLE I—REFORM OF 

7 REGULATION OF ENTERPRISES 

8 Subtitle A—Improvement of Safety 

9 and Soundness Supervision 

10 SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING EN11 TERPRISE REGULATORY AGENCY. 

12 The Federal Housing Enterprises Financial Safety 

13 and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 

14 amended by striking sections 1311 and 1312 and inserting 

15 the following: 

16 ‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING 

17 ENTERPRISE REGULATORY AGENCY. 

18 ‘‘(a) ESTABLISHMENT.—There is established the 

19 Federal Housing Enterprise Regulatory Agency, which 

20 shall be an independent agency of the Federal Govern21 ment. 

22 ‘‘(b) GENERAL SUPERVISORY AND REGULATORY AU23 THORITY.—
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1 ‘‘(1) IN GENERAL.—Each regulated entity shall, 

2 to the extent provided in this title, be subject to the 

3 supervision and regulation of the Agency. 

4 ‘‘(2) AUTHORITY OVER FANNIE MAE AND

5 FREDDIE MAC, THE FEDERAL HOME LOAN BANKS, 

6 AND THE FEDERAL HOME LOAN BANK FINANCE

7 CORPORATION.—The Director shall have general 

8 regulatory authority over each regulated entity and 

9 the Federal Home Loan Bank Finance Corporation, 

10 and shall exercise such general regulatory authority, 

11 including such duties and authorities set forth under 

12 section 1313 of this Act, to ensure that the purposes 

13 of this Act, the authorizing statutes, and any other 

14 applicable law are carried out. 

15 ‘‘(c) SAVINGS PROVISION.—The authority of the Di16 rector to take actions under subtitles B and C shall not 

17 in any way limit the general supervisory and regulatory 

18 authority granted to the Director under subsection (b). 

19 ‘‘SEC. 1312. DIRECTOR. 

20 ‘‘(a) ESTABLISHMENT OF POSITION.—There is estab21 lished the position of the Director of the Agency, who shall 

22 be the head of the Agency. 

23 ‘‘(b) APPOINTMENT; TERM.—

24 ‘‘(1) APPOINTMENT.—The Director shall be ap25 pointed by the President, by and with the advice and 
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•S 190 IS 

1 consent of the Senate, from among individuals who 

2 are citizens of the United States, have a dem3 onstrated understanding of financial management or 

4 oversight, and have a demonstrated understanding 

5 of capital markets, including the mortgage securities 

6 markets and housing finance. 

7 ‘‘(2) TERM.—The Director shall be appointed 

8 for a term of 6 years, unless removed before the end 

9 of such term for cause by the President. 

10 ‘‘(3) VACANCY.—A vacancy in the position of 

11 Director that occurs before the expiration of the 

12 term for which a Director was appointed shall be 

13 filled in the manner established under paragraph 

14 (1), and the Director appointed to fill such vacancy 

15 shall be appointed only for the remainder of such 

16 term. 

17 ‘‘(4) SERVICE AFTER END OF TERM.—An indi18 vidual may serve as the Director after the expiration 

19 of the term for which appointed until a successor 

20 has been appointed. 

21 ‘‘(5) TRANSITIONAL PROVISION.—Notwith22 standing paragraphs (1) and (2), the person serving 

23 as the Director of the Office of Federal Housing En24 terprise Oversight of the Department of Housing 

25 and Urban Development on the date of enactment of 
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1 the Federal Housing Enterprise Regulatory Reform 

2 Act of 2005, shall serve as the Director until a suc3 cessor has been appointed under paragraph (1). 

4 ‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF EN5 TERPRISE REGULATION.—

6 ‘‘(1) IN GENERAL.—The Agency shall have a 

7 Deputy Director of the Division of Enterprise Regu8 lation, who shall be designated by the Director from 

9 among individuals who are citizens of the United 

10 States, have a demonstrated understanding of finan11 cial management or oversight, and have a dem12 onstrated understanding of mortgage securities mar13 kets and housing finance. 

14 ‘‘(2) FUNCTIONS.—The Deputy Director of the 

15 Division of Enterprise Regulation shall have such 

16 functions, powers, and duties with respect to the 

17 oversight of the enterprises as the Director shall pre18 scribe. 

19 ‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED20 ERAL HOME LOAN BANK REGULATION.—

21 ‘‘(1) IN GENERAL.—The Agency shall have a 

22 Deputy Director of the Division of Federal Home 

23 Loan Bank Regulation, who shall be designated by 

24 the Director from among individuals who are citi25 zens of the United States, have a demonstrated un-
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1 derstanding of financial management or oversight, 

2 and have a demonstrated understanding of the Fed3 eral Home Loan Bank System and housing finance. 

4 ‘‘(2) FUNCTIONS.—The Deputy Director of the 

5 Division of Federal Home Loan Bank Regulation 

6 shall have such functions, powers, and duties with 

7 respect to the oversight of the Federal Home Loan 

8 Banks as the Director shall prescribe. 

9 ‘‘(e) DEPUTY DIRECTOR FOR HOUSING MISSION AND

10 GOALS.— 

11 ‘‘(1) IN GENERAL.—The Agency shall have a 

12 Deputy Director for Housing Mission and Goals, 

13 who shall be designated by the Director from among 

14 individuals who are citizens of the United States, 

15 and have a demonstrated understanding of the hous16 ing markets and housing finance. 

17 ‘‘(2) FUNCTIONS.—The Deputy Director for 

18 Housing Mission and Goals shall have such func19 tions, powers, and duties with respect to the over20 sight of the housing mission and goals of the enter21 prises as the Director shall prescribe. 

22 ‘‘(f) ACTING DIRECTOR.—In the event of the death, 

23 resignation, sickness, or absence of the Director, the 

24 Board shall, by a majority vote, designate either the Dep25 uty Director of the Division of Enterprise Regulation, the 
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1 Deputy Director of the Division of Federal Home Loan 

2 Bank Regulation, or the Deputy Director for Housing 

3 Mission and Goals, to serve as acting Director until the 

4 return of the Director, or the appointment of a successor 

5 pursuant to subsection (b). 

6 ‘‘(g) LIMITATIONS.—The Director and each of the 

7 Deputy Directors may not—

8 ‘‘(1) have any direct or indirect financial inter9 est in any regulated entity or enterprise-affiliated 

10 party; 

11 ‘‘(2) hold any office, position, or employment in 

12 any regulated entity or enterprise-affiliated party; or 

13 ‘‘(3) have served as an executive officer or di14 rector of any regulated entity, or enterprise-affiliated 

15 party, at any time during the 3-year period ending 

16 on the date of appointment of such individual as Di17 rector or Deputy Director.’’. 

18 SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR. 

19 (a) IN GENERAL.—Section 1313 of the Federal 

20 Housing Enterprises Financial Safety and Soundness Act 

21 of 1992 (12 U.S.C. 4513) is amended to read as follows: 

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

23 ‘‘(a) DUTIES.—

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

25 of the Director shall be—
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1 ‘‘(A) to oversee the prudential operations 

2 of each regulated entity, on a consolidated 

3 basis; and 

4 ‘‘(B) to ensure that—

5 ‘‘(i) each regulated entity operates in 

6 a safe and sound manner, including main7 tenance of adequate capital and internal 

8 controls; 

9 ‘‘(ii) the operations and activities of 

10 each regulated entity foster liquid, effi11 cient, competitive, and resilient national 

12 housing finance markets (including activi13 ties relating to mortgages on housing for 

14 low- and moderate- income families involv15 ing a reasonable economic return that may 

16 be less than the return earned on other ac17 tivities); 

18 ‘‘(iii) each regulated entity complies 

19 with this title and the rules, regulations, 

20 guidelines, and orders issued under this 

21 title and the authorizing statutes; 

22 ‘‘(iv) each regulated entity carries out 

23 its statutory mission only through activi24 ties that are authorized under and con-
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1 sistent with this title and the authorizing 

2 statutes; 

3 ‘‘(v) the activities of each regulated 

4 entity and the manner in which such regu5 lated entity is operated are consistent with 

6 the public interest; and 

7 ‘‘(vi) each regulated entity remains 

8 adequately capitalized, after due consider9 ation of the risk to such regulated entity. 

10 ‘‘(2) SCOPE OF AUTHORITY.—The authority of 

11 the Director shall include the authority—

12 ‘‘(A) to review and, if warranted based on 

13 the principal duties described in paragraph (1), 

14 reject any acquisition or transfer of a control15 ling interest in an enterprise; and 

16 ‘‘(B) to exercise such incidental powers as 

17 may be necessary or appropriate to fulfill the 

18 duties and responsibilities of the Director in the 

19 supervision and regulation of each regulated en20 tity. 

21 ‘‘(b) DELEGATION OF AUTHORITY.—The Director 

22 may delegate to officers and employees of the Agency any 

23 of the functions, powers, or duties of the Director, as the 

24 Director considers appropriate. 

25 ‘‘(c) LITIGATION AUTHORITY.—
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1 ‘‘(1) IN GENERAL.—In enforcing any provision 

2 of this title, any regulation or order prescribed under 

3 this title, or any other provision of law, rule, regula4 tion, or order, or in any other action, suit, or pro5 ceeding to which the Director is a party or in which 

6 the Director is interested, and in the administration 

7 of conservatorships and receiverships, the Director 

8 may act in the Director’s own name and through the 

9 Director’s own attorneys. 

10 ‘‘(2) SUBJECT TO SUIT.—Except as otherwise 

11 provided by law, the Director shall be subject to suit 

12 (other than suits on claims for money damages) by 

13 a regulated entity with respect to any matter under 

14 this title or any other applicable provision of law, 

15 rule, order, or regulation under this title, in the 

16 United States district court for the judicial district 

17 in which the regulated entity has its principal place 

18 of business, or in the United States District Court 

19 for the District of Columbia, and the Director may 

20 be served with process in the manner prescribed by 

21 the Federal Rules of Civil Procedure.’’. 

22 (b) INDEPENDENCE IN CONGRESSIONAL TESTIMONY

23 AND RECOMMENDATIONS.—Section 111 of Public Law 

24 93–495 (12 U.S.C. 250) is amended by striking ‘‘the Fed-
17

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1 eral Housing Finance Board’’ and inserting ‘‘the Director 

2 of the Federal Housing Enterprise Regulatory Agency’’. 

3 SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD. 

4 (a) IN GENERAL.—The Federal Housing Enterprises 

5 Financial Safety and Soundness Act of 1992 (12 U.S.C. 

6 4501 et seq.) is amended by inserting after section 1313 

7 the following: 

8 ‘‘SEC. 1313A. FEDERAL HOUSING ENTERPRISE BOARD. 

9 ‘‘(a) IN GENERAL.—There is established the Federal 

10 Housing Enterprise Board. 

11 ‘‘(b) DUTIES.—The Board shall advise the Director 

12 with respect to overall strategies and policies in carrying 

13 out the duties of the Director under this title. Except as 

14 otherwise provided under this Act, the Board shall not ex15 ercise any executive authority. 

16 ‘‘(c) COMPOSITION.—The Board shall be comprised 

17 of 4 members, of whom—

18 ‘‘(1) 1 member shall be the Secretary of the 

19 Treasury; 

20 ‘‘(2) 1 member shall be the Secretary of Hous21 ing and Urban Development; 

22 ‘‘(3) 1 member shall be the Chairman of the 

23 Securities and Exchange Commission; and 

24 ‘‘(4) 1 member shall be the Director, who shall 

25 serve as the Chairperson of the Board. 
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1 ‘‘(d) MEETINGS.—

2 ‘‘(1) IN GENERAL.—The Board shall meet upon 

3 notice by the Director, but in no event shall the 

4 Board meet less frequently than once every 3 

5 months. 

6 ‘‘(2) SPECIAL MEETINGS.—Either the Secretary 

7 of the Treasury, the Secretary of Housing and 

8 Urban Development, or the Chairman of the Securi9 ties and Exchange Commission may, upon giving 

10 written notice to the Director, require a special 

11 meeting of the Board. 

12 ‘‘(e) TESTIMONY.—On an annual basis, the Board 

13 shall testify before Congress regarding—

14 ‘‘(1) the safety and soundness of the regulated 

15 entities; 

16 ‘‘(2) any material deficiencies in the conduct of 

17 the operations of the regulated entities; 

18 ‘‘(3) the overall operational status of the regu19 lated entities; 

20 ‘‘(4) an evaluation of the performance of the 

21 regulated entities in carrying out their respective 

22 missions; 

23 ‘‘(5) operations, resources, and performance of 

24 the Agency; and 
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1 ‘‘(6) such other matters relating to the Agency 

2 and its fulfillment of its mission, as the Board deter3 mines appropriate.’’. 

4 (b) ANNUAL REPORT OF THE DIRECTOR.—Section 

5 1319B(a) of the Federal Housing Enterprises Financial 

6 Safety and Soundness Act of 1992 (12 U.S.C. 4521 (a)) 

7 is amended—

8 (1) in paragraph (3), by striking ‘‘; and’’ and 

9 inserting a semicolon; 

10 (2) in paragraph (4), by striking the period at 

11 the end and inserting ‘‘; and’’; and 

12 (3) by inserting after paragraph (4) the fol13 lowing: 

14 ‘‘(5) the assessment of the Board or any of its 

15 members with respect to—

16 ‘‘(A) the safety and soundness of the regu17 lated entities; 

18 ‘‘(B) any material deficiencies in the con19 duct of the operations of the regulated entities; 

20 ‘‘(C) the overall operational status of the 

21 regulated entities; and 

22 ‘‘(D) an evaluation of the performance of 

23 the regulated entities in carrying out their re24 spective missions; 
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1 ‘‘(6) operations, resources, and performance of 

2 the Agency; and 

3 ‘‘(7) such other matters relating to the Agency 

4 and its fulfillment of its mission.’’. 

5 SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGU6 LATED ENTITIES. 

7 Section 1314 of the Federal Housing Enterprises Fi8 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

9 4514) is amended—

10 (1) in the section heading, by striking ‘‘ENTER11 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

12 (2) by striking ‘‘an enterprise’’ each place that 

13 term appears and inserting ‘‘a regulated entity’’; 

14 (3) by striking ‘‘the enterprise’’ and inserting 

15 ‘‘the regulated entity’’; and 

16 (4) in subsection (a)—

17 (A) in the subsection heading, by striking 

18 ‘‘SPECIAL REPORTS AND REPORTS OF FINAN19 CIAL CONDITION’’ and inserting ‘‘REGULAR

20 AND SPECIAL REPORTS’’; 

21 (B) in paragraph (1)—

22 (i) by striking the paragraph heading 

23 and inserting the following: 

24 ‘‘(1) REGULAR REPORTS.—’’; and 
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1 (ii) by striking ‘‘reports of financial 

2 condition and operations’’ and inserting 

3 ‘‘regular reports, including financial state4 ments determined on a fair value basis, on 

5 the condition (including financial condi6 tion), management, activities, or operations 

7 of the regulated entity, as the Director 

8 considers appropriate’’; and 

9 (C) in paragraph (2), by striking ‘‘when10 ever’’ and inserting ‘‘on any of the topics speci11 fied in paragraph (1) or any other relevant top12 ics, if’’. 

13 SEC. 105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO 

14 CONTRACT FOR REVIEWS OF REGULATED EN15 TITIES. 

16 (a) IN GENERAL.—Section 1317 of the Federal 

17 Housing Enterprises Financial Safety and Soundness Act 

18 of 1992 (12 U.S.C. 4517) is amended—

19 (1) in subsection (a), by striking ‘‘enterprise’’ 

20 each place that term appears and inserting ‘‘regu21 lated entity’’; 

22 (2) in subsection (b), by striking ‘‘an enter23 prise’’ and inserting ‘‘a regulated entity’’; 
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1 (3) in subsection (c), in the second sentence, by 

2 inserting before the period ‘‘to conduct examinations 

3 under this section’’; 

4 (4) by redesignating subsections (d) through (f) 

5 as (e) through (g); and 

6 (5) by inserting after subsection (c) the fol7 lowing: 

8 ‘‘(d) INSPECTOR GENERAL.—There shall be within 

9 the Agency an Inspector General, who shall be appointed 

10 in accordance with section 3(a) of the Inspector General 

11 Act of 1978.’’. 

12 (b) DIRECT HIRE AUTHORITY TO HIRE ACCOUNT13 ANTS, ECONOMISTS, AND EXAMINERS.—Section 1317 of 

14 the Housing and Community Development Act of 1992 

15 (12 U.S.C. 4517) is amended by adding at the end the 

16 following: 

17 ‘‘(h) APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, 

18 AND EXAMINERS.—

19 ‘‘(1) APPLICABILITY.—This section shall apply 

20 with respect to any position of examiner, accountant, 

21 economist, and specialist in financial markets and in 

22 technology at the Agency, with respect to supervision 

23 and regulation of the enterprises, that is in the com24 petitive service. 
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1 ‘‘(2) APPOINTMENT AUTHORITY.—The Director 

2 may appoint candidates to any position described in 

3 paragraph (1)—

4 ‘‘(A) in accordance with the statutes, rules, 

5 and regulations governing appointments in the 

6 excepted service; and 

7 ‘‘(B) notwithstanding any statutes, rules, 

8 and regulations governing appointments in the 

9 competitive service.’’. 

10 (c) AMENDMENTS TO INSPECTOR GENERAL ACT.—

11 Section 11 of the Inspector General Act of 1978 (5 U.S.C. 

12 11 App.) is amended—

13 (1) in paragraph (1), by inserting ‘‘, the Direc14 tor of the Federal Housing Enterprises Regulatory 

15 Agency’’ after ‘‘Social Security Administration’’; and 

16 (2) in paragraph (2), by inserting ‘‘, the Fed17 eral Housing Enterprises Regulatory Agency’’ after 

18 ‘‘Social Security Administration’’. 

19 (d) AUTHORITY TO CONTRACT FOR REVIEWS OF

20 REGULATED ENTITIES.—Section 1319 of the Federal 

21 Housing Enterprises Financial Safety and Soundness Act 

22 of 1992 (12 U.S.C. 4519) is amended in the section head23 ing, by striking ‘‘BY RATING ORGANIZATION’’. 
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1 SEC. 106. ASSESSMENTS. 

2 Section 1316 of the Federal Housing Enterprises Fi3 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

4 4516) is amended—

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

6 following: 

7 ‘‘(a) ANNUAL ASSESSMENTS.—The Director shall es8 tablish and collect from the regulated entities annual as9 sessments in an amount not exceeding the amount suffi10 cient to provide for reasonable costs and expenses of the 

11 Agency, including—

12 ‘‘(1) the expenses of any examinations under 

13 section 1317; 

14 ‘‘(2) the expenses of obtaining any reviews and 

15 credit assessments under section 1319; and 

16 ‘‘(3) such amounts in excess of actual expenses 

17 for any given fiscal year, as deemed necessary by the 

18 Director to maintain working capital.’’; 

19 (2) by striking ‘‘an enterprise’’ each place that 

20 term appears and inserting ‘‘a regulated entity’’; 

21 (3) by striking ‘‘enterprise’’ each place that 

22 term appears (other than as described in paragraph 

23 (1)), except in subparagraphs (A) and (B) of sub24 section (b)(3), and inserting ‘‘regulated entity’’; 

25 (4) in subsection (b)—
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1 (A) in paragraph (2), by moving the mar2 gin 2 ems to the left; and 

3 (B) in paragraph (3)(B), by striking ‘‘by 

4 the enterprise’’ and inserting ‘‘by an enter5 prise’’; 

6 (5) in subsection (c), by adding at the end the 

7 following: ‘‘The Director may adjust the amounts of 

8 any semiannual assessments for an assessment 

9 under subsection (a) that are to be paid pursuant to 

10 subsection (b) by a regulated entity, as the Director 

11 determines necessary to ensure that the costs of en12 forcement activities under subtitles B and C for an 

13 enterprise are borne only by that regulated entity.’’; 

14 (6) in subsection (d), by striking ‘‘If’’ and in15 serting ‘‘Except with respect to amounts collected 

16 pursuant to subsection (a)(3), if’’; 

17 (7) by striking subsection (e) and inserting the 

18 following: 

19 ‘‘(e) REMISSION OF ASSESSMENT.—At the end of 

20 each year for which an assessment under this section is 

21 made, the Director shall remit to each regulated entity any 

22 amount of an assessment collected from the regulated en23 tity that is attributable to subsection (a)(3), and is in ex24 cess of the amount that the Director deems necessary to 

25 maintain working capital.’’; 
26

•S 190 IS 

1 (8) by striking subsection (f) and inserting the 

2 following: 

3 ‘‘(f) NO APPROPRIATED FUNDS.—Salaries of the Di4 rector and other employees of the Agency, and all other 

5 expenses thereof, may be paid from assessments collected 

6 under this subsection or other sources, and shall not be 

7 construed to be Government funds or appropriated mon8 ies, or subject to apportionment for the purposes of chap9 ter 15 of title 31, United States Code, or any other au10 thority.’’; 

11 (9) in subsection (g)—

12 (A) by striking ‘‘the Secretary and’’ each 

13 place that term appears; and 

14 (B) in paragraph (3)—

15 (i) by striking ‘‘(A)’’; and 

16 (ii) by striking ‘‘, and (B)’’ and all 

17 that follows through the end of the para18 graph and inserting a period; and 

19 (10) by adding at the end the following: 

20 ‘‘(h) PAYMENT OF EXPENSES.—

21 ‘‘(1) HOME LOAN BANKS.—The expenses for 

22 performing examination, regulation, supervision, and 

23 enforcement functions of the Federal Home Loan 

24 Banks by the Director, or any other agency, shall 
27

•S 190 IS 

1 not be paid from any assessments collected by the 

2 Director from the enterprises. 

3 ‘‘(2) ENTERPRISES.—The expenses for per4 forming examination, regulation, supervision, and 

5 enforcement function of the enterprises by the Di6 rector, or any other agency, shall not be paid from 

7 any assessments collected by the Director from the 

8 Federal Home Loan Banks.’’. 

9 SEC. 107. REGULATIONS AND ORDERS. 

10 (a) AUTHORITY.—Section 1319G of the Federal 

11 Housing Enterprises Financial Safety and Soundness Act 

12 of 1992 (12 U.S.C. 4526) is amended—

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

14 following:

15 ‘‘(a) AUTHORITY.—The Director shall issue any reg16 ulations, guidelines, directives, or orders necessary to 

17 carry out the duties of the Director under this title or the 

18 authorizing statutes, and to ensure that the purposes of 

19 this title and the authorizing statutes are accomplished.’’; 

20 and 

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

22 Banking, Finance and Urban Affairs’’ and inserting 

23 ‘‘Committee on Financial Services’’. 

24 (b) CLARIFICATION OF MISSION.—Part 1 of subtitle 

25 A of the Federal Housing Enterprises Financial Safety 
28

•S 190 IS 

1 and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 

2 amended by adding after section 1319H, as added by this 

3 Act, the following: 

4 ‘‘SEC. 1319I. CLARIFICATION OF MISSION. 

5 ‘‘(a) LOAN ORIGINATION.—The Director shall pre6 scribe a regulation defining what activities constitute loan 

7 origination and are, therefore, impermissible for the enter8 prises. The regulation shall clarify that loan origination 

9 is impermissible to the enterprises whether done directly 

10 or indirectly. 

11 ‘‘(b) DEFINING THE BOUNDARY.—The Director shall 

12 prescribe regulations defining the boundary between the 

13 primary mortgage market, in which the enterprises are not 

14 permitted to participate directly or indirectly, and the sec15 ondary mortgage market, in which the enterprises are per16 mitted to operate. Such regulations shall make clear 

17 that— 

18 ‘‘(1) the secondary market operations can only 

19 involve a mortgage loan after it has been closed and 

20 funded; 

21 ‘‘(2) primary market activities include any ac22 tivities that involve direct contact with a mortgage 

23 borrower, before or after the loan closes, except that 

24 an enterprise may make direct contact with a bor25 rower whose loan that enterprise currently owns or 
29

•S 190 IS 

1 guarantees when that loan has defaulted or is in im2 minent danger of defaulting; 

3 ‘‘(3) underwriting a loan for origination, di4 rectly or indirectly, is a primary market activity; and 

5 ‘‘(4) document and custodial functions are pri6 mary market activities, and therefore impermissible 

7 to the enterprises, until the purchase of the related 

8 loan in the secondary market. 

9 ‘‘(c) DEADLINE.—The Director shall prescribe regu10 lations required by this section in accordance with applica11 ble requirements of title 5, United States Code, and shall 

12 issue them in final form not later than 18 months after 

13 the date of enactment of this section. 

14 ‘‘(d) NO GRANDFATHERING.—No activity or invest15 ment of an enterprise shall be presumed permissible be16 cause it occurred or was occurring on the date of enact17 ment of this section. The Director shall use reasonable 

18 procedures to address any such activity or investment.’’. 

19 SEC. 108. PRUDENTIAL MANAGEMENT AND OPERATIONS 

20 STANDARDS. 

21 Part 1 of subtitle A of the Federal Housing Enter22 prises Financial Safety and Soundness Act of 1992 (12 

23 U.S.C. 4501 et seq.) is amended by inserting after section 

24 1313 the following new section: 
30

•S 190 IS 

1 ‘‘SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS 

2 STANDARDS. 

3 ‘‘The Director may establish standards, by regula4 tion, order, or guideline, for each enterprise relating to—

5 ‘‘(1) adequacy of internal controls and informa6 tion systems taking into account the nature and 

7 scale of business operations; 

8 ‘‘(2) independence and adequacy of internal 

9 audit systems; 

10 ‘‘(3) management of interest rate risk exposure; 

11 ‘‘(4) management of market risk, including 

12 standards that provide for systems that accurately 

13 measure, monitor, and control market risks and, as 

14 warranted, that establish limitations on market risk; 

15 ‘‘(5) adequacy and maintenance of liquidity and 

16 reserves; 

17 ‘‘(6) management of asset and investment port18 folio growth; 

19 ‘‘(7) investments and acquisitions of assets by 

20 an enterprise, to ensure that they are consistent 

21 with the purposes of this title and the authorizing 

22 statutes; 

23 ‘‘(8) overall risk management processes, includ24 ing adequacy of oversight by senior management and 

25 the board of directors and of processes and policies 

26 to identify, measure, monitor, and control material 
31

•S 190 IS 

1 risks, including reputational risks, and for adequate, 

2 well-tested business resumption plans for all major 

3 systems with remote site facilities to protect against 

4 disruptive events; and 

5 ‘‘(9) such other operational and management 

6 standards as the Director determines to be appro7 priate.’’.

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

9 Subtitle B of title XIII of the Housing and Commu10 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

11 is amended—

12 (1) by striking the subtitle designation and 

13 heading and inserting the following:

14 ‘‘Subtitle B—Required Capital Lev15 els for Enterprises, Special En16 forcement Powers, and Limita17 tion on Nonmission-Related As18 sets’’; 

19 and 

20 (2) by adding at the end the following: 

21 ‘‘SEC. 1369E. LIMITATION ON NONMISSION-RELATED AS22 SETS. 

23 ‘‘(a) IN GENERAL.—The Director may, by regulation, 

24 determine the type and amount of nonmission-related as25 sets that an enterprise may hold at any time. The Director 
32

•S 190 IS 

1 shall, in any such regulation, define the term ‘nonmission2 related asset’ for purposes of this section. 

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

4 not be construed to authorize an enterprise to engage in 

5 any new program relating to any nonmission-related asset 

6 without obtaining the prior approval of the Director in ac7 cordance with section 1319H.’’.

8 SEC. 110. RISK-BASED CAPITAL TEST FOR ENTERPRISES. 

9 (a) RISK CAPITAL LEVELS.—Section 1361 of the 

10 Federal Housing Enterprises Financial Safety and Sound11 ness Act of 1992 (12 U.S.C. 4611) is amended to read 

12 as follows: 

13 ‘‘SEC. 1361. RISK-BASED CAPITAL LEVELS. 

14 ‘‘(a) IN GENERAL.—The Director shall, by regula15 tion, establish risk-based capital requirements for each of 

16 the regulated entities to ensure that the regulated entities 

17 operate in a safe and sound manner, with sufficient capital 

18 and reserves to support the risks that arise in the oper19 ations and management of each regulated entity. 

20 ‘‘(b) REQUIRED REGISTRATION UNDER THE SECURI21 TIES EXCHANGE ACT OF 1934.—

22 ‘‘(1) IN GENERAL.—Each regulated entity shall 

23 register at least one class of the capital stock of 

24 such regulated entity, and maintain such registra-
33

•S 190 IS 

1 tion with the Securities and Exchange Commission, 

2 under the Securities Exchange Act of 1934. 

3 ‘‘(2) ENTERPRISES.—Each enterprise shall 

4 comply with sections 14 and 16 of the Securities Ex5 change Act of 1934. 

6 ‘‘(c) NO LIMITATION.—Nothing in this section shall 

7 limit the authority of the Director to require other reports 

8 or undertakings in furtherance of the responsibilities of 

9 the Director under this Act.’’. 

10 (b) MINIMUM CAPITAL LEVELS FOR ENTER11 PRISES.—Section 1362 of the Federal Housing Enter12 prises Financial Safety and Soundness Act of 1992 (12 

13 U.S.C. 4612) is amended—

14 (1) in the section heading, by inserting ‘‘FOR

15 ENTERPRISES’’ after ‘‘LEVELS’’; and 

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

17 following: 

18 ‘‘(b) REGULATORY DISCRETION.—The Director may, 

19 by regulation, establish a minimum capital level that is 

20 higher than the level specified in subsection (a).’’. 

21 SEC. 111. LIMIT ON GOLDEN PARACHUTES. 

22 Section 1318 of the Federal Housing Enterprises Fi23 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

24 4518) is amended by adding at the end the following: 
34

•S 190 IS 

1 ‘‘(c) AUTHORITY TO REGULATE OR PROHIBIT CER2 TAIN FORMS OF BENEFITS TO AFFILIATED PARTIES.—

3 ‘‘(1) GOLDEN PARACHUTES AND INDEMNIFICA4 TION PAYMENTS.—The Agency may prohibit or 

5 limit, by regulation or order, any golden parachute 

6 payment or indemnification payment. 

7 (2) FACTORS TO BE TAKEN INTO ACCOUNT.—

8 The Agency shall prescribe, by regulation, the fac9 tors to be considered by the Agency in taking any 

10 action pursuant to paragraph (1), which may include 

11 such factors as—

12 ‘‘(A) whether there is a reasonable basis to 

13 believe that the affiliated party has committed 

14 any fraudulent act or omission, breach of trust 

15 or fiduciary duty, or insider abuse with regard 

16 to the enterprise that has had a material affect 

17 on the financial condition of the enterprise; 

18 ‘‘(B) whether there is a reasonable basis to 

19 believe that the affiliated party is substantially 

20 responsible for the insolvency of the enterprise, 

21 the appointment of a conservator or receiver for 

22 the enterprise, or the enterprise’s troubled con23 dition (as defined in the regulations prescribed 

24 pursuant to section 32(f)); 
35

•S 190 IS 

1 ‘‘(C) whether there is a reasonable basis to 

2 believe that the affiliated party has materially 

3 violated any applicable Federal or State law or 

4 regulation that has had a material affect on the 

5 financial condition of the enterprise; 

6 ‘‘(D) whether the affiliated party was in a 

7 position of managerial or fiduciary responsi8 bility; and 

9 ‘‘(E) the length of time the party was af10 filiated with the enterprise, and the degree to 

11 which—

12 ‘‘(i) the payment reasonably reflects 

13 compensation earned over the period of 

14 employment; and 

15 ‘‘(ii) the compensation involved rep16 resents a reasonable payment for services 

17 rendered. 

18 ‘‘(3) CERTAIN PAYMENTS PROHIBITED.—No 

19 enterprise may prepay the salary or any liability or 

20 legal expense of any affiliated party if such payment 

21 is made—

22 ‘‘(A) in contemplation of the insolvency of 

23 such enterprise, or after the commission of an 

24 act of insolvency; and 

25 ‘‘(B) with a view to, or has the result of—
36

•S 190 IS 

1 ‘‘(i) preventing the proper application 

2 of the assets of the enterprise to creditors; 

3 or 

4 ‘‘(ii) preferring one creditor over an5 other. 

6 ‘‘(4) GOLDEN PARACHUTE PAYMENT DE7 FINED.—For purposes of this subsection—

8 ‘‘(A) IN GENERAL.—The term ‘golden 

9 parachute payment’ means any payment (or 

10 any agreement to make any payment) in the 

11 nature of compensation by any enterprise for 

12 the benefit of any affiliated party pursuant to 

13 an obligation of such enterprise that—

14 ‘‘(i) is contingent on the termination 

15 of such party’s affiliation with the enter16 prise; and 

17 ‘‘(ii) is received on or after the date 

18 on which—

19 ‘‘(I) the enterprise became insol20 vent; 

21 ‘‘(II) any conservator or receiver 

22 is appointed for such enterprise; or 

23 ‘‘(III) the Agency determines 

24 that the enterprise is in a troubled 
37

•S 190 IS 

1 condition (as defined in the regula2 tions of the Agency). 

3 ‘‘(B) CERTAIN PAYMENTS IN CONTEMPLA4 TION OF AN EVENT.—Any payment which 

5 would be a golden parachute payment but for 

6 the fact that such payment was made before the 

7 date referred to in subparagraph (A)(ii) shall be 

8 treated as a golden parachute payment if the 

9 payment was made in contemplation of the oc10 currence of an event described in any subclause 

11 of such subparagraph. 

12 ‘‘(C) CERTAIN PAYMENTS NOT IN13 CLUDED.—The term ‘golden parachute pay14 ment’ shall not include—

15 ‘‘(i) any payment made pursuant to a 

16 retirement plan which is qualified (or is in17 tended to be qualified) under section 401 

18 of the Internal Revenue Code of 1986 or 

19 other nondiscriminatory benefit plan; 

20 ‘‘(ii) any payment made pursuant to a 

21 bona fide deferred compensation plan or 

22 arrangement which the Board determines, 

23 by regulation or order, to be permissible; 

24 or 
38

•S 190 IS 

1 ‘‘(iii) any payment made by reason of 

2 the death or disability of an affiliated 

3 party. 

4 ‘‘(5) OTHER DEFINITIONS.—For purposes of 

5 this subsection—

6 ‘‘(A) INDEMNIFICATION PAYMENT.—Sub7 ject to paragraph (6), the term ‘indemnification 

8 payment’ means any payment (or any agree9 ment to make any payment) by any enterprise 

10 for the benefit of any person who is or was an 

11 affiliated party, to pay or reimburse such per12 son for any liability or legal expense with re13 gard to any administrative proceeding or civil 

14 action instituted by the Agency which results in 

15 a final order under which such person—

16 ‘‘(i) is assessed a civil money penalty; 

17 ‘‘(ii) is removed or prohibited from 

18 participating in conduct of the affairs of 

19 the enterprise; or 

20 ‘‘(iii) is required to take any affirma21 tive action to correct certain conditions re22 sulting from violations or practices, by 

23 order of the Agency. 

24 ‘‘(B) LIABILITY OR LEGAL EXPENSE.—The 

25 term ‘liability or legal expense’ means—
39

•S 190 IS 

1 ‘‘(i) any legal or other professional ex2 pense incurred in connection with any 

3 claim, proceeding, or action; 

4 ‘‘(ii) the amount of, and any cost in5 curred in connection with, any settlement 

6 of any claim, proceeding, or action; and 

7 ‘‘(iii) the amount of, and any cost in8 curred in connection with, any judgment or 

9 penalty imposed with respect to any claim, 

10 proceeding, or action. 

11 ‘‘(C) PAYMENT.—The term ‘‘payment’’ in12 cludes—

13 ‘‘(i) any direct or indirect transfer of 

14 any funds or any asset; and 

15 ‘‘(ii) any segregation of any funds or 

16 assets for the purpose of making, or pursu17 ant to an agreement to make, any payment 

18 after the date on which such funds or as19 sets are segregated, without regard to 

20 whether the obligation to make such pay21 ment is contingent on—

22 ‘‘(I) the determination, after such 

23 date, of the liability for the payment 

24 of such amount; or 
40

•S 190 IS 

1 ‘‘(II) the liquidation, after such 

2 date, of the amount of such payment. 

3 ‘‘(6) CERTAIN COMMERCIAL INSURANCE COV4 ERAGE NOT TREATED AS COVERED BENEFIT PAY5 MENT.—No provision of this subsection shall be con6 strued as prohibiting any enterprise from purchasing 

7 any commercial insurance policy or fidelity bond, ex8 cept that, subject to any requirement described in 

9 paragraph (5)(A)(iii), such insurance policy or bond 

10 shall not cover any legal or liability expense of the 

11 enterprise which is described in paragraph (5)(A).’’. 

12 SEC. 112. REPORTING OF FRAUDULENT LOANS. 

13 Subtitle C of part 1 of the Federal Housing Enter14 prises Financial Safety and Soundness Act of 1992 (12 

15 U.S.C. 4631 et seq.), as amended by this Act, is amended 

16 by adding at the end the following: 

17 ‘‘SEC. 1379E. REPORTING OF FRAUDULENT LOANS. 

18 ‘‘The Director shall, by regulation, require the regu19 lated entities to timely report to the Director when the 

20 regulated entity discovers it has purchased or sold a fraud21 ulent loan.’’. 
41

•S 190 IS 

1 Subtitle B—Improvement of 

2 Mission Supervision 

3 SEC. 121. TRANSFER OF PROGRAM APPROVAL AND HOUS4 ING GOAL OVERSIGHT. 

5 Part 2 of subtitle A of the Federal Housing Enter6 prises Financial Safety and Soundness Act of 1992 (12 

7 U.S.C. 4541 et seq.) is amended—

8 (1) by striking the heading for the part and in9 serting the following: 

10 ‘‘PART 2—PROGRAM APPROVAL BY THE DIREC11 TOR AND ESTABLISHMENT OF HOUSING 

12 GOALS’’; 

13 and 

14 (2) by striking sections 1321 and 1322. 

15 SEC. 122. REVIEW OF ENTERPRISE PROGRAMS. 

16 Part 1 of subtitle A of the Federal Housing Enter17 prises Financial Safety and Soundness Act of 1992 (12 

18 U.S.C. 4501 et seq.), as amended by this Act, is amended 

19 by adding at the end the following: 

20 ‘‘SEC. 1319J. PRIOR APPROVAL AUTHORITY FOR NEW PRO21 GRAMS. 

22 ‘‘(a) IN GENERAL.—The Director shall have author23 ity to review the appropriateness and permissibility of any 

24 enterprise activities to assure their conformance with the 

25 purposes of this title and with the purposes of the Federal 
42

•S 190 IS 

1 Home Loan Mortgage Corporation Act and the Federal 

2 National Mortgage Association Charter Act, and to pro3 tect the safety and soundness of the enterprises. The Di4 rector may require written applications before an activity 

5 is, or before certain types of activities are, commenced. 

6 It may review any activity after an enterprise has com7 menced it. The Director may prohibit or limit any activity 

8 that it determines to be inappropriate or impermissible 

9 under this section. 

10 ‘‘(b) NOTICE OF NEW ACTIVITY.—An enterprise that 

11 commences any business product or activity under this 

12 section shall provide written notice to the Director of the 

13 business product or activity not later than 30 days prior 

14 to the commencement of such business product or activity. 

15 ‘‘(c) NO LIMITATION.—Nothing in this section shall 

16 be deemed to restrict the safety and soundness authority 

17 of the Director over all new and existing programs, prod18 ucts, or activities.’’. 

19 SEC. 123. AUTHORITY TO REQUIRE REPORTS BY ENTER20 PRISES. 

21 The Federal Housing Enterprises Financial Safety 

22 and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 

23 amended by striking sections 1327 and 1328. 
43

•S 190 IS 

1 SEC. 124. MONITORING AND ENFORCING COMPLIANCE 

2 WITH HOUSING GOALS. 

3 Section 1336 of the Federal Housing Enterprises Fi4 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

5 4566) is amended—

6 (1) by striking ‘‘Secretary’’ each place that 

7 term appears and inserting ‘‘Director’’; and 

8 (2) in subsection (a)(1), by striking ‘‘estab9 lished’’ and all that follows through ‘‘1334’’ and in10 serting ‘‘under this subpart’’. 

11 SEC. 125. ASSUMPTION BY DIRECTOR OF OTHER HUD RE12 SPONSIBILITIES. 

13 (a) IN GENERAL.—Part 2 of subtitle A of the Federal 

14 Housing Enterprises Financial Safety and Soundness Act 

15 of 1992 (12 U.S.C. 4541 et seq.) is amended—

16 (1) by striking ‘‘Secretary’’ each place that 

17 term appears and inserting ‘‘Director’’ in each of—

18 (A) sections 1323, 1324, and 1326; 

19 (B) subsections (a), (b), and (c) of section 

20 1331 (12 U.S.C. 4561); 

21 (C) subsections (a), (b), and (c) of section 

22 1332 (12 U.S.C. 4562); 

23 (D) subsections (a), (b), and (c) of section 

24 1333 (12 U.S.C. 4563); 

25 (E) subsections (a), (b), and (c) of section 

26 1334 (12 U.S.C. 4564); and 
44

•S 190 IS 

1 (F) subsections (a), (b), and (c) of section 

2 1336 (12 U.S.C. 4566); 

3 (2) in section 1332 (12 U.S.C. 4562), by strik4 ing subsection (d); 

5 (3) in section 1333 (12 U.S.C. 4563), by strik6 ing subsection (d); 

7 (4) in section 1334 (12 U.S.C. 4564), by strik8 ing subsection (d); 

9 (5) by striking sections 1337 and 1338 (12 

10 U.S.C. 4567, 4562 note); and 

11 (6) by striking section 1349 (12 U.S.C. 4589). 

12 (b) RETENTION OF FAIR HOUSING RESPONSIBIL13 ITIES.—Section 1325 of the Federal Housing Enterprises 

14 Financial Safety and Soundness Act of 1992 (12 U.S.C. 

15 4545) is amended, in the matter preceding paragraph (1), 

16 by inserting ‘‘of Housing and Urban Development’’ after 

17 ‘‘The Secretary’’. 

18 SEC. 126. ADMINISTRATIVE AND JUDICIAL ENFORCEMENT 

19 PROCEEDINGS. 

20 Subpart C of part 2 of subtitle A of the Federal 

21 Housing Enterprises Financial Safety and Soundness Act 

22 of 1992 (12 U.S.C. 4581 et seq.) is amended by striking 

23 ‘‘Secretary’’ each place that term appears and inserting 

24 ‘‘Director,’’ in each of—

25 (1) section 1341 (12 U.S.C. 4581); 
45

•S 190 IS 

1 (2) section 1342 (12 U.S.C. 4582); 

2 (3) section 1343 (12 U.S.C. 4583); 

3 (4) section 1344 (12 U.S.C. 4584); 

4 (5) section 1345 (12 U.S.C. 4585); 

5 (6) section 1346 (12 U.S.C. 4586); 

6 (7) section 1347 (12 U.S.C. 4587); and 

7 (8) section 1348 (12 U.S.C. 4588). 

8 Subtitle C—Prompt Corrective 

9 Action

10 SEC. 141. CAPITAL CLASSIFICATIONS. 

11 Section 1364 of the Federal Housing Enterprises Fi12 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

13 4614) is amended—

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

15 following: 

16 ‘‘(b) DISCRETIONARY CLASSIFICATION.—

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

18 Director may reclassify a regulated entity under 

19 paragraph (2) if—

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

21 in writing that a regulated entity is engaging in 

22 conduct that could result in a rapid depletion of 

23 core capital, or that the value of the property 

24 subject to mortgages held or securitized by the 
46

•S 190 IS 

1 regulated entity, or the value of collateral 

2 pledged as security, has decreased significantly; 

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

4 hearing, the Director determines that a regu5 lated entity is in an unsafe or unsound condi6 tion; or 

7 ‘‘(C) pursuant to section 1371(b), the Di8 rector determines that a regulated entity is en9 gaging in an unsafe or unsound practice. 

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

11 other action authorized under this title, including 

12 the reclassification of a regulated entity for any rea13 son not specified in this subsection, if the Director 

14 takes any action described in paragraph (1), the Di15 rector may reclassify a regulated entity—

16 ‘‘(A) as ‘undercapitalized’, if the regulated 

17 entity is otherwise classified as adequately cap18 italized; 

19 ‘‘(B) as ‘significantly undercapitalized’, if 

20 the regulated entity is otherwise classified as 

21 undercapitalized; and 

22 ‘‘(C) as ‘critically undercapitalized’, if the 

23 regulated entity is otherwise classified as sig24 nificantly undercapitalized.’’; 
47

•S 190 IS 

1 (2) by redesignating subsection (d) as sub2 section (e); and 

3 (3) by inserting after subsection (c) the fol4 lowing: 

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

6 ‘‘(1) IN GENERAL.—A regulated entity shall 

7 make no capital distribution if, after making the dis8 tribution, the regulated entity would be under9 capitalized. 

10 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

11 (1), the Director may permit a regulated entity to 

12 repurchase, redeem, retire, or otherwise acquire 

13 shares or ownership interests if the repurchase, re14 demption, retirement, or other acquisition—

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

16 issuance of additional shares or obligations of 

17 the regulated entity in at least an equivalent 

18 amount; and 

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

20 the regulated entity or otherwise improve the fi21 nancial condition of the regulated entity.’’. 
48

•S 190 IS 

1 SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDER2 CAPITALIZED REGULATED ENTITIES. 

3 Section 1365 of the Federal Housing Enterprises Fi4 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

5 4615) is amended—

6 (1) by striking ‘‘the enterprise’’ each place that 

7 term appears and inserting ‘‘the regulated entity’’; 

8 (2) by striking ‘‘An enterprise’’ each place that 

9 term appears and inserting ‘‘A regulated entity’’; 

10 (3) by striking ‘‘an enterprise’’ each place that 

11 term appears and inserting ‘‘a regulated entity’’; 

12 (4) in subsection (a)—

13 (A) by redesignating paragraphs (1) and 

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

15 (B) by inserting before paragraph (2), as 

16 redesignated, the following: 

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

18 shall—

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

20 undercapitalized regulated entity; 

21 ‘‘(B) closely monitor compliance with the 

22 capital restoration plan, restrictions, and re23 quirements imposed on an undercapitalized reg24 ulated entity under this section; and 

25 ‘‘(C) periodically review the plan, restric26 tions, and requirements applicable to an under-
49

•S 190 IS 

1 capitalized regulated entity to determine wheth2 er the plan, restrictions, and requirements are 

3 achieving the purpose of this section.’’; and 

4 (C) by adding at the end the following: 

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

6 undercapitalized regulated entity shall not permit its 

7 average total assets during any calendar quarter to 

8 exceed its average total assets during the preceding 

9 calendar quarter, unless—

10 ‘‘(A) the Director has accepted the capital 

11 restoration plan of the regulated entity; 

12 ‘‘(B) any increase in total assets is con13 sistent with the capital restoration plan; and 

14 ‘‘(C) the ratio of tangible equity to assets 

15 of the regulated entity increases during the cal16 endar quarter at a rate sufficient to enable the 

17 enterprise to become adequately capitalized 

18 within a reasonable time. 

19 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND

20 NEW ACTIVITIES.—An undercapitalized regulated en21 tity shall not, directly or indirectly, acquire any in22 terest in any entity or engage in any new activity, 

23 unless—

24 ‘‘(A) the Director has accepted the capital 

25 restoration plan of the regulated entity, the reg-
50

•S 190 IS 

1 ulated entity is implementing the plan, and the 

2 Director determines that the proposed action is 

3 consistent with and will further the achievement 

4 of the plan; or 

5 ‘‘(B) the Director determines that the pro6 posed action will further the purpose of this 

7 subtitle.’’; 

8 (5) in subsection (b)—

9 (A) in the subsection heading, by striking 

10 ‘‘DISCRETIONARY’’; 

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

12 by striking ‘‘may’’ and inserting ‘‘shall’’; and 

13 (C) in paragraph (2)—

14 (i) by striking ‘‘make, in good faith, 

15 reasonable efforts necessary to’’; and 

16 (ii) by striking the period at the end 

17 and inserting ‘‘in any material respect.’’; 

18 and 

19 (6) by striking subsection (c) and inserting the 

20 following: 

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

22 Director may take, with respect to an undercapitalized 

23 regulated entity, any of the actions authorized to be taken 

24 under section 1366 with respect to a significantly under25 capitalized regulated entity, if the Director determines 
51

•S 190 IS 

1 that such actions are necessary to carry out the purpose 

2 of this subtitle.’’. 

3 SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI4 CANTLY UNDERCAPITALIZED REGULATED 

5 ENTITIES. 

6 Section 1366 of the Federal Housing Enterprises Fi7 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

8 4616) is amended—

9 (1) by striking ‘‘the enterprise’’ each place that 

10 term appears and inserting ‘‘the regulated entity’’; 

11 (2) by striking ‘‘An enterprise’’ each place that 

12 term appears and inserting ‘‘A regulated entity’’; 

13 (3) by striking ‘‘an enterprise’’ each place that 

14 term appears and inserting ‘‘a regulated entity’’; 

15 (4) in subsection (b)—

16 (A) in the subsection heading, by striking 

17 ‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 

18 inserting ‘‘SPECIFIC ACTIONS’’; 

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

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

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

22 at any time, 1 or more’’; 

23 (C) by striking paragraph (6); 

24 (D) by redesignating paragraph (5) as 

25 paragraph (6); 
52

•S 190 IS 

1 (E) by inserting after paragraph (4) the 

2 following: 

3 ‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take 1 

4 or more of the following actions: 

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

6 new election for the board of directors of the 

7 regulated entity. 

8 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU9 TIVE OFFICERS.—Require the regulated entity 

10 to dismiss from office any director or executive 

11 officer who had held office for more than 180 

12 days immediately before the date on which the 

13 regulated entity became undercapitalized. Dis14 missal under this subparagraph shall not be 

15 construed to be a removal pursuant to the en16 forcement powers of the Director under section 

17 1377. 

18 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF19 FICERS.—Require the regulated entity to em20 ploy qualified executive officers (who, if the Di21 rector so specifies, shall be subject to approval 

22 by the Director).’’; and 

23 (F) by adding at the end the following: 

24 ‘‘(8) OTHER ACTION.—Require the regulated 

25 entity to take any other action that the Director de-
53

•S 190 IS 

1 termines will better carry out the purpose of this 

2 section than any of the actions specified in this 

3 paragraph.’’; 

4 (5) by redesignating subsection (c) as sub5 section (d); and 

6 (6) by inserting after subsection (b) the fol7 lowing: 

8 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECU9 TIVE OFFICERS.—A regulated entity that is classified as 

10 significantly undercapitalized in accordance with section 

11 1364 may not, without prior written approval by the Di12 rector—

13 ‘‘(1) pay any bonus to any executive officer; or 

14 ‘‘(2) provide compensation to any executive offi15 cer at a rate exceeding the average rate of com16 pensation of that officer (excluding bonuses, stock 

17 options, and profit sharing) during the 12 calendar 

18 months preceding the calendar month in which the 

19 regulated entity became significantly undercapital20 ized.’’.

21 SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITAL22 IZED ENTERPRISES. 

23 (a) IN GENERAL.—Section 1367 of the Federal 

24 Housing Enterprises Financial Safety and Soundness Act 

25 of 1992 (12 U.S.C. 4617) is amended to read as follows: 
54

•S 190 IS 

1 ‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL2 IZED ENTERPRISES. 

3 ‘‘(a) APPOINTMENT OF THE AGENCY AS CONSER4 VATOR OR RECEIVER.— 

5 ‘‘(1) IN GENERAL.—Notwithstanding any other 

6 provision of Federal law, the Director may establish 

7 a conservatorship or receivership in the manner pro8 vided under paragraph (2). 

9 ‘‘(2) APPOINTMENT.—The Agency may, at the 

10 discretion of the Director, be appointed conservator 

11 or receiver for the purpose of reorganizing, rehabili12 tating, or winding up the affairs of an enterprise. 

13 ‘‘(3) GROUNDS FOR APPOINTING CONSERVATOR

14 OR RECEIVER.—The grounds for appointing a con15 servator or receiver for any enterprise are as follows: 

16 ‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA17 TIONS.—The assets of the enterprise are less 

18 than the obligations of the enterprise to its 

19 creditors and others. 

20 ‘‘(B) SUBSTANTIAL DISSIPATION.—Sub21 stantial dissipation of assets or earnings due 

22 to— 

23 ‘‘(i) any violation of any provision of 

24 Federal or State law; or 

25 ‘‘(ii) any unsafe or unsound practice. 
55

•S 190 IS 

1 ‘‘(C) UNSAFE OR UNSOUND CONDITION.—

2 An unsafe or unsound condition to transact 

3 business. 

4 ‘‘(D) CEASE-AND-DESIST ORDERS.—Any 

5 willful violation of a cease-and-desist order that 

6 has become final. 

7 ‘‘(E) CONCEALMENT.—Any concealment of 

8 the books, papers, records, or assets of the en9 terprise, or any refusal to submit the books, pa10 pers, records, or affairs of the enterprise, for 

11 inspection to any examiner or to any lawful 

12 agent of the Director. 

13 ‘‘(F) INABILITY TO MEET OBLIGATIONS.—

14 The enterprise is likely to be unable to pay its 

15 obligations or meet the demands of its creditors 

16 in the normal course of business. 

17 ‘‘(G) LOSSES.—The enterprise has in18 curred or is likely to incur losses that will de19 plete all or substantially all of its capital, and 

20 there is no reasonable prospect for the enter21 prise to become adequately capitalized (as de22 fined in section 1364(a)(1)). 

23 ‘‘(H) VIOLATIONS OF LAW.—Any violation 

24 of any law or regulation, or any unsafe or un25 sound practice or condition that is likely to— 
56

•S 190 IS 

1 ‘‘(i) cause insolvency or substantial 

2 dissipation of assets or earnings; or 

3 ‘‘(ii) weaken the condition of the en4 terprise. 

5 ‘‘(I) CONSENT.—The enterprise, by resolu6 tion of its board of directors or its shareholders 

7 or members, consents to the appointment. 

8 ‘‘(J) UNDERCAPITALIZATION.—The enter9 prise is undercapitalized or significantly under10 capitalized (as defined in section 1364(a)(3)), 

11 and— 

12 ‘‘(i) has no reasonable prospect of be13 coming adequately capitalized; 

14 ‘‘(ii) fails to become adequately cap15 italized, as required by—

16 ‘‘(I) section 1365(a)(1) with re17 spect to an undercapitalized enter18 prise; or 

19 ‘‘(II) section 1366(a)(1) with re20 spect to a significantly undercapital21 ized enterprise; 

22 ‘‘(iii) fails to submit a capital restora23 tion plan acceptable to the Agency within 

24 the time prescribed under section 1369C; 

25 or 
57

•S 190 IS 

1 ‘‘(iv) materially fails to implement a 

2 capital restoration plan submitted and ac3 cepted under section 1369C. 

4 ‘‘(K) CRITICAL UNDERCAPITALIZATION.—

5 The enterprise is critically undercapitalized, as 

6 defined in section 1364(a)(4). 

7 ‘‘(L) MONEY LAUNDERING.—The Attorney 

8 General notifies the Director in writing that the 

9 enterprise has been found guilty of a criminal 

10 offense under section 1956 or 1957 of title 18, 

11 United States Code, or section 5322 or 5324 of 

12 title 31, United States Code. 

13 ‘‘(4) JUDICIAL REVIEW.—

14 ‘‘(A) IN GENERAL.—If the Agency is ap15 pointed conservator or receiver under this sec16 tion, the enterprise may, within 30 days of such 

17 appointment, bring an action in the United 

18 States District Court for the judicial district in 

19 which the home office of such enterprise is lo20 cated, or in the United States District Court 

21 for the District of Columbia, for an order re22 quiring the Agency to remove itself as conser23 vator or receiver. 

24 ‘‘(B) REVIEW.—Upon the filing of an ac25 tion under subparagraph (A), the court shall, 
58

•S 190 IS 

1 upon the merits, dismiss such action or direct 

2 the Agency to remove itself as such conservator 

3 or receiver. 

4 ‘‘(5) DIRECTORS NOT LIABLE FOR ACQUI5 ESCING IN APPOINTMENT OF CONSERVATOR OR RE6 CEIVER.—The members of the board of directors of 

7 an enterprise shall not be liable to the shareholders 

8 or creditors of the enterprise for acquiescing in or 

9 consenting in good faith to the appointment of the 

10 Agency as conservator or receiver for that enter11 prise. 

12 ‘‘(6) AGENCY NOT SUBJECT TO ANY OTHER

13 FEDERAL AGENCY.—When acting as conservator or 

14 receiver, the Agency shall not be subject to the di15 rection or supervision of any other agency of the 

16 United States or any State in the exercise of the 

17 rights, powers, and privileges of the Agency. 

18 ‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON19 SERVATOR OR RECEIVER.— 

20 ‘‘(1) RULEMAKING AUTHORITY OF THE AGEN21 CY.—The Agency may prescribe such regulations as 

22 the Agency determines to be appropriate regarding 

23 the conduct of conservatorships or receiverships. 

24 ‘‘(2) GENERAL POWERS.— 
59

•S 190 IS 

1 ‘‘(A) SUCCESSOR TO ENTERPRISE.—The 

2 Agency shall, as conservator or receiver, and by 

3 operation of law, immediately succeed to— 

4 ‘‘(i) all rights, titles, powers, and 

5 privileges of the enterprise, and of any 

6 stockholder, officer, or director of such en7 terprise with respect to the enterprise and 

8 the assets of the enterprise; and 

9 ‘‘(ii) title to the books, records, and 

10 assets of any other legal custodian of such 

11 enterprise. 

12 ‘‘(B) OPERATE THE ENTERPRISE.—The 

13 Agency may, as conservator or receiver— 

14 ‘‘(i) take over the assets of and oper15 ate the enterprise with all the powers of 

16 the shareholders, the directors, and the of17 ficers of the enterprise and conduct all 

18 business of the enterprise; 

19 ‘‘(ii) collect all obligations and money 

20 due the enterprise; 

21 ‘‘(iii) perform all functions of the en22 terprise in the name of the enterprise 

23 which are consistent with the appointment 

24 as conservator or receiver; and 
60

•S 190 IS 

1 ‘‘(iv) preserve and conserve the assets 

2 and property of such enterprise. 

3 ‘‘(C) FUNCTIONS OF OFFICERS, DIREC4 TORS, AND SHAREHOLDERS OF AN ENTER5 PRISE.—The Agency may, by regulation or 

6 order, provide for the exercise of any function 

7 by any stockholder, director, or officer of any 

8 enterprise for which the Agency has been 

9 named conservator or receiver. 

10 ‘‘(D) POWERS AS CONSERVATOR.—The 

11 Agency may, as conservator, take such action 

12 as may be— 

13 ‘‘(i) necessary to put the enterprise in 

14 a sound and solvent condition; and 

15 ‘‘(ii) appropriate to carry on the busi16 ness of the enterprise and preserve and 

17 conserve the assets and property of the en18 terprise. 

19 ‘‘(E) ADDITIONAL POWERS AS RE20 CEIVER.—The Agency may, as receiver, place 

21 the enterprise in liquidation and proceed to re22 alize upon the assets of the enterprise, having 

23 due regard to the conditions of the housing fi24 nance market. 
61

•S 190 IS 

1 ‘‘(F) ORGANIZATION OF NEW ENTER2 PRISES.—The Agency may, as receiver, orga3 nize a successor enterprise that will operate 

4 pursuant to subsection (i). 

5 ‘‘(G) TRANSFER OF ASSETS AND LIABIL6 ITIES.—The Agency may, as conservator or re7 ceiver, transfer any asset or liability of the en8 terprise in default without any approval, assign9 ment, or consent with respect to such transfer. 

10 ‘‘(H) PAYMENT OF VALID OBLIGATIONS.—

11 The Agency, as conservator or receiver, shall, to 

12 the extent of proceeds realized from the per13 formance of contracts or sale of the assets of an 

14 enterprise, pay all valid obligations of the enter15 prise in accordance with the prescriptions and 

16 limitations of this section. 

17 ‘‘(I) SUBPOENA AUTHORITY.— 

18 ‘‘(i) IN GENERAL.—

19 ‘‘(I) IN GENERAL.—The Agency 

20 may, as conservator or receiver, and 

21 for purposes of carrying out any 

22 power, authority, or duty with respect 

23 to an enterprise (including deter24 mining any claim against the enter25 prise and determining and realizing 
62

•S 190 IS 

1 upon any asset of any person in the 

2 course of collecting money due the en3 terprise), exercise any power estab4 lished under section 1348. 

5 ‘‘(II) APPLICABILITY OF LAW.—

6 The provisions of section 1348 shall 

7 apply with respect to the exercise of 

8 any power exercised under this sub9 paragraph in the same manner as 

10 such provisions apply under that sec11 tion. 

12 ‘‘(ii) AUTHORITY OF DIRECTOR.—A 

13 subpoena or subpoena duces tecum may be 

14 issued under clause (i) only by, or with the 

15 written approval of, the Director, or the 

16 designee of the Director. 

17 ‘‘(iii) RULE OF CONSTRUCTION.—This 

18 subsection shall not be construed to limit 

19 any rights that the Agency, in any capac20 ity, might otherwise have under section 

21 1317 or 1379B. 

22 ‘‘(J) INCIDENTAL POWERS.—The Agency 

23 may, as conservator or receiver— 

24 ‘‘(i) exercise all powers and authori25 ties specifically granted to conservators or 
63

•S 190 IS 

1 receivers, respectively, under this section, 

2 and such incidental powers as shall be nec3 essary to carry out such powers; and 

4 ‘‘(ii) take any action authorized by 

5 this section, which the Agency determines 

6 is in the best interests of the enterprise or 

7 the Agency. 

8 ‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE

9 CLAIMS.— 

10 ‘‘(A) IN GENERAL.—The Agency may, as 

11 receiver, determine claims in accordance with 

12 the requirements of this subsection and any 

13 regulations prescribed under paragraph (4). 

14 ‘‘(B) NOTICE REQUIREMENTS.—The re15 ceiver, in any case involving the liquidation or 

16 winding up of the affairs of a closed enterprise, 

17 shall— 

18 ‘‘(i) promptly publish a notice to the 

19 creditors of the enterprise to present their 

20 claims, together with proof, to the receiver 

21 by a date specified in the notice which 

22 shall be not less than 90 days after the 

23 publication of such notice; and 

24 ‘‘(ii) republish such notice approxi25 mately 1 month and 2 months, respec-
64

•S 190 IS 

1 tively, after the publication under clause 

2 (i). 

3 ‘‘(C) MAILING REQUIRED.—The receiver 

4 shall mail a notice similar to the notice pub5 lished under subparagraph (B)(i) at the time of 

6 such publication to any creditor shown on the 

7 books of the enterprise— 

8 ‘‘(i) at the last address of the creditor 

9 appearing in such books; or 

10 ‘‘(ii) upon discovery of the name and 

11 address of a claimant not appearing on the 

12 books of the enterprise within 30 days 

13 after the discovery of such name and ad14 dress. 

15 ‘‘(4) RULEMAKING AUTHORITY RELATING TO

16 DETERMINATION OF CLAIMS.—Subject to subsection 

17 (c), the Director may prescribe regulations regarding 

18 the allowance or disallowance of claims by the re19 ceiver and providing for administrative determina20 tion of claims and review of such determination. 

21 ‘‘(5) PROCEDURES FOR DETERMINATION OF

22 CLAIMS.— 

23 ‘‘(A) DETERMINATION PERIOD.— 

24 ‘‘(i) IN GENERAL.—Before the end of 

25 the 180-day period beginning on the date 
65

•S 190 IS 

1 on which any claim against an enterprise is 

2 filed with the Agency as receiver, the 

3 Agency shall determine whether to allow or 

4 disallow the claim and shall notify the 

5 claimant of any determination with respect 

6 to such claim. 

7 ‘‘(ii) EXTENSION OF TIME.—The pe8 riod described in clause (i) may be ex9 tended by a written agreement between the 

10 claimant and the Agency. 

11 ‘‘(iii) MAILING OF NOTICE SUFFI12 CIENT.—The requirements of clause (i) 

13 shall be deemed to be satisfied if the notice 

14 of any determination with respect to any 

15 claim is mailed to the last address of the 

16 claimant which appears— 

17 ‘‘(I) on the books of the enter18 prise; 

19 ‘‘(II) in the claim filed by the 

20 claimant; or 

21 ‘‘(III) in documents submitted in 

22 proof of the claim. 

23 ‘‘(iv) CONTENTS OF NOTICE OF DIS24 ALLOWANCE.—If any claim filed under 
66

•S 190 IS 

1 clause (i) is disallowed, the notice to the 

2 claimant shall contain— 

3 ‘‘(I) a statement of each reason 

4 for the disallowance; and 

5 ‘‘(II) the procedures available for 

6 obtaining agency review of the deter7 mination to disallow the claim or judi8 cial determination of the claim. 

9 ‘‘(B) ALLOWANCE OF PROVEN CLAIM.—

10 The receiver shall allow any claim received on 

11 or before the date specified in the notice pub12 lished under paragraph (3)(B)(i) by the receiver 

13 from any claimant which is proved to the satis14 faction of the receiver. 

15 ‘‘(C) DISALLOWANCE OF CLAIMS FILED

16 AFTER END OF FILING PERIOD.—Claims filed 

17 after the date specified in the notice published 

18 under paragraph (3)(B)(i), or the date specified 

19 under paragraph (3)(C), shall be disallowed and 

20 such disallowance shall be final. 

21 ‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— 

22 ‘‘(i) IN GENERAL.—The receiver may 

23 disallow any portion of any claim by a 

24 creditor or claim of security, preference, or 
67

•S 190 IS 

1 priority which is not proved to the satisfac2 tion of the receiver. 

3 ‘‘(ii) PAYMENTS TO LESS THAN

4 FULLY SECURED CREDITORS.—In the case 

5 of a claim of a creditor against an enter6 prise which is secured by any property or 

7 other asset of such enterprise, the receiver 

8 may treat the portion of such claim which 

9 exceeds an amount equal to the fair mar10 ket value of such property or other asset 

11 as an unsecured claim against the enter12 prise. 

13 ‘‘(iii) EXCEPTIONS.—No provision of 

14 this paragraph shall apply with respect 

15 to— 

16 ‘‘(I) any extension of credit from 

17 any Federal Reserve Bank or the 

18 United States Treasury; or 

19 ‘‘(II) any security interest in the 

20 assets of the enterprise securing any 

21 such extension of credit. 

22 ‘‘(E) NO JUDICIAL REVIEW OF DETER23 MINATION PURSUANT TO SUBPARAGRAPH (D).—

24 No court may review the determination of the 
68

•S 190 IS 

1 Agency under subparagraph (D) to disallow a 

2 claim. 

3 ‘‘(F) LEGAL EFFECT OF FILING.— 

4 ‘‘(i) STATUTE OF LIMITATION

5 TOLLED.—For purposes of any applicable 

6 statute of limitations, the filing of a claim 

7 with the receiver shall constitute a com8 mencement of an action. 

9 ‘‘(ii) NO PREJUDICE TO OTHER AC10 TIONS.—Subject to paragraph (10), the fil11 ing of a claim with the receiver shall not 

12 prejudice any right of the claimant to con13 tinue any action which was filed before the 

14 date of the appointment of the receiver, 

15 subject to the determination of claims by 

16 the receiver. 

17 ‘‘(6) PROVISION FOR JUDICIAL DETERMINATION

18 OF CLAIMS.— 

19 ‘‘(A) IN GENERAL.—The claimant may file 

20 suit on a claim (or continue an action com21 menced before the appointment of the receiver) 

22 in the district or territorial court of the United 

23 States for the district within which the prin24 cipal place of business of the enterprise is lo25 cated or the United States District Court for 
69

•S 190 IS 

1 the District of Columbia (and such court shall 

2 have jurisdiction to hear such claim), before the 

3 end of the 60-day period beginning on the ear4 lier of— 

5 ‘‘(i) the end of the period described in 

6 paragraph (5)(A)(i) with respect to any 

7 claim against an enterprise for which the 

8 Agency is receiver; or 

9 ‘‘(ii) the date of any notice of dis10 allowance of such claim pursuant to para11 graph (5)(A)(i). 

12 ‘‘(B) STATUTE OF LIMITATIONS.—A claim 

13 shall be deemed to be disallowed (other than 

14 any portion of such claim which was allowed by 

15 the receiver), and such disallowance shall be 

16 final, and the claimant shall have no further 

17 rights or remedies with respect to such claim, 

18 if the claimant fails, before the end of the 60-

19 day period described under subparagraph (A), 

20 to file suit on such claim (or continue an action 

21 commenced before the appointment of the re22 ceiver). 

23 ‘‘(7) REVIEW OF CLAIMS.— 

24 ‘‘(A) OTHER REVIEW PROCEDURES.— 
70

•S 190 IS 

1 ‘‘(i) IN GENERAL.—The Agency shall 

2 establish such alternative dispute resolu3 tion processes as may be appropriate for 

4 the resolution of claims filed under para5 graph (5)(A)(i). 

6 ‘‘(ii) CRITERIA.—In establishing alter7 native dispute resolution processes, the 

8 Agency shall strive for procedures which 

9 are expeditious, fair, independent, and low 

10 cost. 

11 ‘‘(iii) VOLUNTARY BINDING OR NON12 BINDING PROCEDURES.—The Agency may 

13 establish both binding and nonbinding 

14 processes, which may be conducted by any 

15 government or private party. All parties, 

16 including the claimant and the Agency, 

17 must agree to the use of the process in a 

18 particular case. 

19 ‘‘(B) CONSIDERATION OF INCENTIVES.—

20 The Agency shall seek to develop incentives for 

21 claimants to participate in the alternative dis22 pute resolution process. 

23 ‘‘(8) EXPEDITED DETERMINATION OF

24 CLAIMS.— 
71

•S 190 IS 

1 ‘‘(A) ESTABLISHMENT REQUIRED.—The 

2 Agency shall establish a procedure for expedited 

3 relief outside of the routine claims process es4 tablished under paragraph (5) for claimants 

5 who— 

6 ‘‘(i) allege the existence of legally 

7 valid and enforceable or perfected security 

8 interests in assets of any enterprise for 

9 which the Agency has been appointed re10 ceiver; and 

11 ‘‘(ii) allege that irreparable injury will 

12 occur if the routine claims procedure is fol13 lowed. 

14 ‘‘(B) DETERMINATION PERIOD.—Before 

15 the end of the 90-day period beginning on the 

16 date any claim is filed in accordance with the 

17 procedures established under subparagraph (A), 

18 the Director shall— 

19 ‘‘(i) determine— 

20 ‘‘(I) whether to allow or disallow 

21 such claim; or 

22 ‘‘(II) whether such claim should 

23 be determined pursuant to the proce24 dures established under paragraph 

25 (5); and 
72

•S 190 IS 

1 ‘‘(ii) notify the claimant of the deter2 mination, and if the claim is disallowed, 

3 provide a statement of each reason for the 

4 disallowance and the procedure for obtain5 ing agency review or judicial determina6 tion. 

7 ‘‘(C) PERIOD FOR FILING OR RENEWING

8 SUIT.—Any claimant who files a request for ex9 pedited relief shall be permitted to file a suit, 

10 or to continue a suit filed before the appoint11 ment of the receiver, seeking a determination of 

12 the rights of the claimant with respect to such 

13 security interest after the earlier of— 

14 ‘‘(i) the end of the 90-day period be15 ginning on the date of the filing of a re16 quest for expedited relief; or 

17 ‘‘(ii) the date the Agency denies the 

18 claim. 

19 ‘‘(D) STATUTE OF LIMITATIONS.—If an 

20 action described under subparagraph (C) is not 

21 filed, or the motion to renew a previously filed 

22 suit is not made, before the end of the 30-day 

23 period beginning on the date on which such ac24 tion or motion may be filed under subparagraph 

25 (B), the claim shall be deemed to be disallowed 
73

•S 190 IS 

1 as of the end of such period (other than any 

2 portion of such claim which was allowed by the 

3 receiver), such disallowance shall be final, and 

4 the claimant shall have no further rights or 

5 remedies with respect to such claim. 

6 ‘‘(E) LEGAL EFFECT OF FILING.— 

7 ‘‘(i) STATUTE OF LIMITATION

8 TOLLED.—For purposes of any applicable 

9 statute of limitations, the filing of a claim 

10 with the receiver shall constitute a com11 mencement of an action. 

12 ‘‘(ii) NO PREJUDICE TO OTHER AC13 TIONS.—Subject to paragraph (10), the fil14 ing of a claim with the receiver shall not 

15 prejudice any right of the claimant to con16 tinue any action that was filed before the 

17 appointment of the receiver, subject to the 

18 determination of claims by the receiver. 

19 ‘‘(9) PAYMENT OF CLAIMS.— 

20 ‘‘(A) IN GENERAL.—The receiver may, in 

21 the discretion of the receiver, and to the extent 

22 funds are available, pay creditor claims, in such 

23 manner and amounts as are authorized under 

24 this section, which are—

25 ‘‘(i) allowed by the receiver; 
74

•S 190 IS 

1 ‘‘(ii) approved by the Agency pursuant 

2 to a final determination pursuant to para3 graph (7) or (8); or 

4 ‘‘(iii) determined by the final judg5 ment of any court of competent jurisdic6 tion. 

7 ‘‘(B) AGREEMENTS AGAINST THE INTER8 EST OF THE AGENCY.—No agreement that 

9 tends to diminish or defeat the interest of the 

10 Agency in any asset acquired by the Agency as 

11 receiver under this section shall be valid against 

12 the Agency unless such agreement is in writing. 

13 ‘‘(C) PAYMENT OF DIVIDENDS ON

14 CLAIMS.—The receiver may, in the sole discre15 tion of the receiver, pay dividends on proved 

16 claims at any time, and no liability shall attach 

17 to the Agency, by reason of any such payment, 

18 for failure to pay dividends to a claimant whose 

19 claim is not proved at the time of any such pay20 ment. 

21 ‘‘(C) RULEMAKING AUTHORITY OF THE DI22 RECTOR.—The Director may prescribe such 

23 rules, including definitions of terms, as the Di24 rector deems appropriate to establish a single 

25 uniform interest rate for, or to make payments 
75

•S 190 IS 

1 of post-insolvency interest to creditors holding 

2 proven claims against the receivership estates of 

3 enterprises following satisfaction by the receiver 

4 of the principal amount of all creditor claims. 

5 ‘‘(10) SUSPENSION OF LEGAL ACTIONS.— 

6 ‘‘(A) IN GENERAL.—After the appointment 

7 of a conservator or receiver for an enterprise, 

8 the conservator or receiver may, in any judicial 

9 action or proceeding to which such enterprise is 

10 or becomes a party, request a stay for a period 

11 not to exceed— 

12 ‘‘(i) 45 days, in the case of any con13 servator; and 

14 ‘‘(ii) 90 days, in the case of any re15 ceiver. 

16 ‘‘(B) GRANT OF STAY BY ALL COURTS RE17 QUIRED.—Upon receipt of a request by any 

18 conservator or receiver under subparagraph (A) 

19 for a stay of any judicial action or proceeding 

20 in any court with jurisdiction of such action or 

21 proceeding, the court shall grant such stay as 

22 to all parties. 

23 ‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— 

24 ‘‘(A) PRIOR FINAL ADJUDICATION.—The 

25 Agency shall abide by any final unappealable 
76

•S 190 IS 

1 judgment of any court of competent jurisdiction 

2 which was rendered before the appointment of 

3 the Agency as conservator or receiver. 

4 ‘‘(B) RIGHTS AND REMEDIES OF CONSER5 VATOR OR RECEIVER.—In the event of any ap6 pealable judgment, the Agency as conservator 

7 or receiver shall— 

8 ‘‘(i) have all the rights and remedies 

9 available to the enterprise (before the ap10 pointment of such conservator or receiver) 

11 and the Agency, including removal to Fed12 eral court and all appellate rights; and 

13 ‘‘(ii) not be required to post any bond 

14 in order to pursue such remedies. 

15 ‘‘(C) NO ATTACHMENT OR EXECUTION.—

16 No attachment or execution may issue by any 

17 court upon assets in the possession of the re18 ceiver. 

19 ‘‘(D) LIMITATION ON JUDICIAL REVIEW.—

20 Except as otherwise provided in this subsection, 

21 no court shall have jurisdiction over— 

22 ‘‘(i) any claim or action for payment 

23 from, or any action seeking a determina24 tion of rights with respect to, the assets of 
77

•S 190 IS 

1 any enterprise for which the Agency has 

2 been appointed receiver; or 

3 ‘‘(ii) any claim relating to any act or 

4 omission of such enterprise or the Agency 

5 as receiver. 

6 ‘‘(E) DISPOSITION OF ASSETS.—In exer7 cising any right, power, privilege, or authority 

8 as conservator or receiver in connection with 

9 any sale or disposition of assets of an enterprise 

10 for which the Agency has been appointed con11 servator or receiver, the Agency shall conduct 

12 its operations in a manner which— 

13 ‘‘(i) maximizes the net present value 

14 return from the sale or disposition of such 

15 assets; 

16 ‘‘(ii) minimizes the amount of any loss 

17 realized in the resolution of cases; and 

18 ‘‘(iii) ensures adequate competition 

19 and fair and consistent treatment of 

20 offerors. 

21 ‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS

22 BROUGHT BY CONSERVATOR OR RECEIVER.— 

23 ‘‘(A) IN GENERAL.—Notwithstanding any 

24 provision of any contract, the applicable statute 

25 of limitations with regard to any action brought 
78

•S 190 IS 

1 by the Agency as conservator or receiver shall 

2 be— 

3 ‘‘(i) in the case of any contract claim, 

4 the longer of— 

5 ‘‘(I) the 6-year period beginning 

6 on the date the claim accrues; or 

7 ‘‘(II) the period applicable under 

8 State law; and 

9 ‘‘(ii) in the case of any tort claim, the 

10 longer of— 

11 ‘‘(I) the 3-year period beginning 

12 on the date the claim accrues; or 

13 ‘‘(II) the period applicable under 

14 State law. 

15 ‘‘(B) DETERMINATION OF THE DATE ON

16 WHICH A CLAIM ACCRUES.—For purposes of 

17 subparagraph (A), the date on which the stat18 ute of limitations begins to run on any claim 

19 described in such subparagraph shall be the 

20 later of— 

21 ‘‘(i) the date of the appointment of 

22 the Agency as conservator or receiver; or 

23 ‘‘(ii) the date on which the cause of 

24 action accrues. 
79

•S 190 IS 

1 ‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF

2 ACTION.—

3 ‘‘(i) IN GENERAL.—In the case of any 

4 tort claim described under clause (ii) for 

5 which the statute of limitations applicable 

6 under State law with respect to such claim 

7 has expired not more than 5 years before 

8 the appointment of the Agency as conser9 vator or receiver, the Agency may bring an 

10 action as conservator or receiver on such 

11 claim without regard to the expiration of 

12 the statute of limitation applicable under 

13 State law. 

14 ‘‘(ii) CLAIMS DESCRIBED.—A tort 

15 claim referred to under clause (i) is a 

16 claim arising from fraud, intentional mis17 conduct resulting in unjust enrichment, or 

18 intentional misconduct resulting in sub19 stantial loss to the enterprise. 

20 ‘‘(14) ACCOUNTING AND RECORDKEEPING RE21 QUIREMENTS.— 

22 ‘‘(A) IN GENERAL.—The Agency as conser23 vator or receiver shall, consistent with the ac24 counting and reporting practices and proce25 dures established by the Agency, maintain a full 
80

•S 190 IS 

1 accounting of each conservatorship and receiv2 ership or other disposition of an enterprise in 

3 default. 

4 ‘‘(B) ANNUAL ACCOUNTING OR REPORT.—

5 With respect to each conservatorship or receiv6 ership, the Agency shall make an annual ac7 counting or report available to the Board, the 

8 Comptroller General of the United States, the 

9 Committee on Banking, Housing, and Urban 

10 Affairs of the Senate, and the Committee on 

11 Financial Services of the House of Representa12 tives. 

13 ‘‘(C) AVAILABILITY OF REPORTS.—Any re14 port prepared under subparagraph (B) shall be 

15 made available by the Agency upon request to 

16 any shareholder of an enterprise or any member 

17 of the public. 

18 ‘‘(D) RECORDKEEPING REQUIREMENT.—

19 After the end of the 6-year period beginning on 

20 the date that the conservatorship or receiver21 ship is terminated by the Director, the Agency 

22 may destroy any records of such enterprise 

23 which the Agency, in the discretion of the Agen24 cy, determines to be unnecessary unless di25 rected not to do so by a court of competent ju-
81

•S 190 IS 

1 risdiction or governmental agency, or prohibited 

2 by law. 

3 ‘‘(15) FRAUDULENT TRANSFERS.— 

4 ‘‘(A) IN GENERAL.—The Agency, as con5 servator or receiver, may avoid a transfer of 

6 any interest of an enterprise-affiliated party, or 

7 any person who the conservator or receiver de8 termines is a debtor of the enterprise, in prop9 erty, or any obligation incurred by such party 

10 or person, that was made within 5 years of the 

11 date on which the Agency was appointed con12 servator or receiver, if such party or person vol13 untarily or involuntarily made such transfer or 

14 incurred such liability with the intent to hinder, 

15 delay, or defraud the enterprise, the Agency, 

16 the conservator, or receiver. 

17 ‘‘(B) RIGHT OF RECOVERY.—To the extent 

18 a transfer is avoided under subparagraph (A), 

19 the conservator or receiver may recover, for the 

20 benefit of the enterprise, the property trans21 ferred, or, if a court so orders, the value of 

22 such property (at the time of such transfer) 

23 from— 

24 ‘‘(i) the initial transferee of such 

25 transfer or the enterprise-affiliated party 
82

•S 190 IS 

1 or person for whose benefit such transfer 

2 was made; or 

3 ‘‘(ii) any immediate or mediate trans4 feree of any such initial transferee. 

5 ‘‘(C) RIGHTS OF TRANSFEREE OR OBLI6 GEE.—The conservator or receiver may not re7 cover under subparagraph (B) from— 

8 ‘‘(i) any transferee that takes for 

9 value, including satisfaction or securing of 

10 a present or antecedent debt, in good faith; 

11 or 

12 ‘‘(ii) any immediate or mediate good 

13 faith transferee of such transferee. 

14 ‘‘(D) RIGHTS UNDER THIS PARAGRAPH.—

15 The rights under this paragraph of the conser16 vator or receiver described under subparagraph 

17 (A) shall be superior to any rights of a trustee 

18 or any other party (other than any party which 

19 is a Federal agency) under title 11, United 

20 States Code. 

21 ‘‘(16) ATTACHMENT OF ASSETS AND OTHER IN22 JUNCTIVE RELIEF.—Subject to paragraph (17), any 

23 court of competent jurisdiction may, at the request 

24 of the conservator or receiver, issue an order in ac25 cordance with Rule 65 of the Federal Rules of Civil 
83

•S 190 IS 

1 Procedure, including an order placing the assets of 

2 any person designated by the Agency or such conser3 vator under the control of the court, and appointing 

4 a trustee to hold such assets. 

5 ‘‘(17) STANDARDS OF PROOF.—Rule 65 of the 

6 Federal Rules of Civil Procedure shall apply with re7 spect to any proceeding under paragraph (16) with8 out regard to the requirement of such rule that the 

9 applicant show that the injury, loss, or damage is ir10 reparable and immediate. 

11 ‘‘(18) TREATMENT OF CLAIMS ARISING FROM

12 BREACH OF CONTRACTS EXECUTED BY THE RE13 CEIVER OR CONSERVATOR.—

14 ‘‘(A) IN GENERAL.—Notwithstanding any 

15 other provision of this subsection, any final and 

16 unappealable judgment for monetary damages 

17 entered against a receiver or conservator for the 

18 breach of an agreement executed or approved in 

19 writing by such receiver or conservator after the 

20 date of its appointment, shall be paid as an ad21 ministrative expense of the receiver or conser22 vator. 

23 ‘‘(B) NO LIMITATION OF POWER.—Nothing 

24 in this paragraph shall be construed to limit the 

25 power of a receiver or conservator to exercise 
84

•S 190 IS 

1 any rights under contract or law, including to 

2 terminate, breach, cancel, or otherwise dis3 continue such agreement. 

4 ‘‘(19) GENERAL EXCEPTIONS.—

5 ‘‘(A) LIMITATIONS.—The rights of a con6 servator or receiver appointed under this section 

7 shall be subject to the limitations on the powers 

8 of a receiver under sections 402 through 407 of 

9 the Federal Deposit Insurance Corporation Im10 provement Act of 1991 (12 U.S.C. 4402 

11 through 4407). 

12 ‘‘(B) MORTGAGES HELD IN TRUST.—

13 ‘‘(i) IN GENERAL.—Any mortgage, or 

14 pool of mortgages, held in trust, custodial, 

15 or agency capacity by an enterprise shall 

16 not be available to satisfy the claims of 

17 creditors generally. 

18 ‘‘(ii) HOLDING OF MORTGAGES.—Any 

19 mortgage or pool of mortgages described 

20 under clause (i) shall be held by the con21 servator or receiver appointed under this 

22 subsection for the beneficial owners of such 

23 mortgages, under the terms of the agree24 ment creating such trust, custodial, or 

25 other agency arrangement. 
85

•S 190 IS 

1 ‘‘(iii) LIABILITY OF RECEIVER.—The 

2 liability of a receiver appointed under this 

3 section for damages shall, in the case of 

4 any contingent or unliquidated claim relat5 ing to the mortgages held in trust, be esti6 mated in accordance set forth in the regu7 lations of the Director. 

8 ‘‘(c) PRIORITY OF EXPENSES AND UNSECURED

9 CLAIMS.—

10 ‘‘(1) IN GENERAL.—Unsecured claims against 

11 an enterprise, or a receiver, that are proven to the 

12 satisfaction of the receiver shall have priority in the 

13 following order: 

14 ‘‘(A) Administrative expenses of the re15 ceiver. 

16 ‘‘(B) Any general or senior liability of the 

17 enterprise (which is not a liability described 

18 under subparagraph (C) or (D). 

19 ‘‘(C) Any obligation subordinated to gen20 eral creditors (which is not an obligation de21 scribed under subparagraph (D)). 

22 ‘‘(D) Any obligation to shareholders or 

23 members arising as a result of their status as 

24 shareholder or members. 
86

•S 190 IS 

1 ‘‘(2) CREDITORS SIMILARLY SITUATED.—All 

2 creditors that are similarly situated under paragraph 

3 (1) shall be treated in a similar manner. 

4 ‘‘(3) DEFINITION.—The term ‘administrative 

5 expenses of the receiver’ shall include those nec6 essary expenses incurred by the receiver in liqui7 dating or otherwise resolving the affairs of a failed 

8 enterprise. Such expenses shall include pre-failure 

9 and post-failure obligations that the receiver deter10 mines are necessary and appropriate to facilitate the 

11 smooth and orderly liquidation or other resolution of 

12 the enterprise. 

13 ‘‘(d) PROVISIONS RELATING TO CONTRACTS EN14 TERED INTO BEFORE APPOINTMENT OF CONSERVATOR

15 OR RECEIVER.— 

16 ‘‘(1) AUTHORITY TO REPUDIATE CONTRACTS.—

17 In addition to any other rights a conservator or re18 ceiver may have, the conservator or receiver for any 

19 enterprise may disaffirm or repudiate any contract 

20 or lease— 

21 ‘‘(A) to which such enterprise is a party; 

22 ‘‘(B) the performance of which the conser23 vator or receiver, in its sole discretion, deter24 mines to be burdensome; and 
87

•S 190 IS 

1 ‘‘(C) the disaffirmance or repudiation of 

2 which the conservator or receiver determines, in 

3 its sole discretion, will promote the orderly ad4 ministration of the affairs of the enterprise. 

5 ‘‘(2) TIMING OF REPUDIATION.—The conser6 vator or receiver shall determine whether or not to 

7 exercise the rights of repudiation under this sub8 section within a reasonable period following such ap9 pointment. 

10 ‘‘(3) CLAIMS FOR DAMAGES FOR REPUDI11 ATION.— 

12 ‘‘(A) IN GENERAL.—Except as otherwise 

13 provided under subparagraph (C) and para14 graphs (4), (5), and (6), the liability of the con15 servator or receiver for the disaffirmance or re16 pudiation of any contract pursuant to para17 graph (1) shall be— 

18 ‘‘(i) limited to actual direct compen19 satory damages; and 

20 ‘‘(ii) determined as of— 

21 ‘‘(I) the date of the appointment 

22 of the conservator or receiver; or 

23 ‘‘(II) in the case of any contract 

24 or agreement referred to in paragraph 

25 (8), the date of the disaffirmance or 
88

•S 190 IS 

1 repudiation of such contract or agree2 ment. 

3 ‘‘(B) NO LIABILITY FOR OTHER DAM4 AGES.—For purposes of subparagraph (A), the 

5 term ‘actual direct compensatory damages’ shall 

6 not include— 

7 ‘‘(i) punitive or exemplary damages; 

8 ‘‘(ii) damages for lost profits or op9 portunity; or 

10 ‘‘(iii) damages for pain and suffering. 

11 ‘‘(C) MEASURE OF DAMAGES FOR REPUDI12 ATION OF FINANCIAL CONTRACTS.—In the case 

13 of any qualified financial contract or agreement 

14 to which paragraph (8) applies, compensatory 

15 damages shall be— 

16 ‘‘(i) deemed to include normal and 

17 reasonable costs of cover or other reason18 able measures of damages utilized in the 

19 industries for such contract and agreement 

20 claims; and 

21 ‘‘(ii) paid in accordance with this sub22 section and subsection (f), except as other23 wise specifically provided in this section. 

24 ‘‘(4) LEASES UNDER WHICH THE ENTERPRISE

25 IS THE LESSEE.— 
89

•S 190 IS 

1 ‘‘(A) IN GENERAL.—If the conservator or 

2 receiver disaffirms or repudiates a lease under 

3 which the enterprise was the lessee, the conser4 vator or receiver shall not be liable for any 

5 damages (other than damages determined 

6 under subparagraph (B)) for the disaffirmance 

7 or repudiation of such lease. 

8 ‘‘(B) PAYMENTS OF RENT.—Notwith9 standing subparagraph (A), the lessor under a 

10 lease to which that subparagraph applies 

11 shall— 

12 ‘‘(i) be entitled to the contractual rent 

13 accruing before the later of the date— 

14 ‘‘(I) the notice of disaffirmance 

15 or repudiation is mailed; or 

16 ‘‘(II) the disaffirmance or repudi17 ation becomes effective, unless the les18 sor is in default or breach of the 

19 terms of the lease; 

20 ‘‘(ii) have no claim for damages under 

21 any acceleration clause or other penalty 

22 provision in the lease; and 

23 ‘‘(iii) have a claim for any unpaid 

24 rent, subject to all appropriate offsets and 

25 defenses, due as of the date of the appoint-
90

•S 190 IS 

1 ment, which shall be paid in accordance 

2 with this subsection and subsection (f). 

3 ‘‘(5) LEASES UNDER WHICH THE ENTERPRISE

4 IS THE LESSOR.— 

5 ‘‘(A) IN GENERAL.—If the conservator or 

6 receiver repudiates an unexpired written lease 

7 of real property of the enterprise under which 

8 the enterprise is the lessor and the lessee is not, 

9 as of the date of such repudiation, in default, 

10 the lessee under such lease may either— 

11 ‘‘(i) treat the lease as terminated by 

12 such repudiation; or 

13 ‘‘(ii) remain in possession of the lease14 hold interest for the balance of the term of 

15 the lease, unless the lessee defaults under 

16 the terms of the lease after the date of 

17 such repudiation. 

18 ‘‘(B) PROVISIONS APPLICABLE TO LESSEE

19 REMAINING IN POSSESSION.—If any lessee 

20 under a lease described under subparagraph (A) 

21 remains in possession of a leasehold interest 

22 under clause (ii) of such subparagraph— 

23 ‘‘(i) the lessee— 

24 ‘‘(I) shall continue to pay the 

25 contractual rent pursuant to the 
91

•S 190 IS 

1 terms of the lease after the date of 

2 the repudiation of such lease; and 

3 ‘‘(II) may offset against any rent 

4 payment which accrues after the date 

5 of the repudiation of the lease, and 

6 any damages which accrue after such 

7 date due to the nonperformance of 

8 any obligation of the enterprise under 

9 the lease after such date; and 

10 ‘‘(ii) the conservator or receiver shall 

11 not be liable to the lessee for any damages 

12 arising after such date as a result of the 

13 repudiation other than the amount of any 

14 offset allowed under clause (i)(II). 

15 ‘‘(6) CONTRACTS FOR THE SALE OF REAL

16 PROPERTY.— 

17 ‘‘(A) IN GENERAL.—If the conservator or 

18 receiver repudiates any contract for the sale of 

19 real property and the purchaser of such real 

20 property under such contract is in possession, 

21 and is not, as of the date of such repudiation, 

22 in default, such purchaser may either— 

23 ‘‘(i) treat the contract as terminated 

24 by such repudiation; or 
92

•S 190 IS 

1 ‘‘(ii) remain in possession of such real 

2 property. 

3 ‘‘(B) PROVISIONS APPLICABLE TO PUR4 CHASER REMAINING IN POSSESSION.—If any 

5 purchaser of real property under any contract 

6 described under subparagraph (A) remains in 

7 possession of such property under clause (ii) of 

8 such subparagraph— 

9 ‘‘(i) the purchaser— 

10 ‘‘(I) shall continue to make all 

11 payments due under the contract after 

12 the date of the repudiation of the con13 tract; and 

14 ‘‘(II) may offset against any such 

15 payments any damages which accrue 

16 after such date due to the non17 performance (after such date) of any 

18 obligation of the enterprise under the 

19 contract; and 

20 ‘‘(ii) the conservator or receiver 

21 shall— 

22 ‘‘(I) not be liable to the pur23 chaser for any damages arising after 

24 such date as a result of the repudi-
93

•S 190 IS 

1 ation other than the amount of any 

2 offset allowed under clause (i)(II); 

3 ‘‘(II) deliver title to the pur4 chaser in accordance with the provi5 sions of the contract; and 

6 ‘‘(III) have no obligation under 

7 the contract other than the perform8 ance required under subclause (II). 

9 ‘‘(C) ASSIGNMENT AND SALE ALLOWED.— 

10 ‘‘(i) IN GENERAL.—No provision of 

11 this paragraph shall be construed as lim12 iting the right of the conservator or re13 ceiver to assign the contract described 

14 under subparagraph (A), and sell the prop15 erty subject to the contract and the provi16 sions of this paragraph. 

17 ‘‘(ii) NO LIABILITY AFTER ASSIGN18 MENT AND SALE.—If an assignment and 

19 sale described under clause (i) is con20 summated, the conservator or receiver 

21 shall have no further liability under the 

22 contract described under subparagraph 

23 (A), or with respect to the real property 

24 which was the subject of such contract. 
94

•S 190 IS 

1 ‘‘(7) PROVISIONS APPLICABLE TO SERVICE CON2 TRACTS.— 

3 ‘‘(A) SERVICES PERFORMED BEFORE AP4 POINTMENT.—In the case of any contract for 

5 services between any person and any enterprise 

6 for which the Agency has been appointed con7 servator or receiver, any claim of such person 

8 for services performed before the appointment 

9 of the conservator or the receiver shall be— 

10 ‘‘(i) a claim to be paid in accordance 

11 with subsections (b) and (f); and 

12 ‘‘(ii) deemed to have arisen as of the 

13 date the conservator or receiver was ap14 pointed. 

15 ‘‘(B) SERVICES PERFORMED AFTER AP16 POINTMENT AND PRIOR TO REPUDIATION.—If, 

17 in the case of any contract for services de18 scribed under subparagraph (A), the conser19 vator or receiver accepts performance by the 

20 other person before the conservator or receiver 

21 makes any determination to exercise the right 

22 of repudiation of such contract under this sec23 tion— 
95

•S 190 IS 

1 ‘‘(i) the other party shall be paid 

2 under the terms of the contract for the 

3 services performed; and 

4 ‘‘(ii) the amount of such payment 

5 shall be treated as an administrative ex6 pense of the conservatorship or receiver7 ship. 

8 ‘‘(C) ACCEPTANCE OF PERFORMANCE NO

9 BAR TO SUBSEQUENT REPUDIATION.—The ac10 ceptance by any conservator or receiver of serv11 ices referred to under subparagraph (B) in con12 nection with a contract described in such sub13 paragraph shall not affect the right of the con14 servator or receiver to repudiate such contract 

15 under this section at any time after such per16 formance. 

17 ‘‘(8) CERTAIN QUALIFIED FINANCIAL CON18 TRACTS.— 

19 ‘‘(A) RIGHTS OF PARTIES TO CON20 TRACTS.—Subject to paragraph (10) and not21 withstanding any other provision of this Act, 

22 any other Federal law, or the law of any State, 

23 no person shall be stayed or prohibited from ex24 ercising— 
96

•S 190 IS 

1 ‘‘(i) any right to cause the termi2 nation or liquidation of any qualified finan3 cial contract with an enterprise that arises 

4 upon the appointment of the Agency as re5 ceiver for such enterprise at any time after 

6 such appointment; 

7 ‘‘(ii) any right under any security ar8 rangement relating to any contract or 

9 agreement described in clause (i); or 

10 ‘‘(iii) any right to offset or net out 

11 any termination value, payment amount, or 

12 other transfer obligation arising under or 

13 in connection with 1 or more contracts and 

14 agreements described in clause (i), includ15 ing any master agreement for such con16 tracts or agreements. 

17 ‘‘(B) APPLICABILITY OF OTHER PROVI18 SIONS.—Subsection (b)(12) shall apply in the 

19 case of any judicial action or proceeding 

20 brought against any receiver referred to under 

21 subparagraph (A), or the enterprise for which 

22 such receiver was appointed, by any party to a 

23 contract or agreement described under subpara24 graph (A)(i) with such enterprise. 
97

•S 190 IS 

1 ‘‘(C) CERTAIN TRANSFERS NOT AVOID2 ABLE.— 

3 ‘‘(i) IN GENERAL.—Notwithstanding 

4 paragraph (11), the Agency, whether act5 ing as such or as conservator or receiver of 

6 an enterprise, may not avoid any transfer 

7 of money or other property in connection 

8 with any qualified financial contract with 

9 an enterprise. 

10 ‘‘(ii) EXCEPTION FOR CERTAIN

11 TRANSFERS.—Clause (i) shall not apply to 

12 any transfer of money or other property in 

13 connection with any qualified financial con14 tract with an enterprise if the Agency de15 termines that the transferee had actual in16 tent to hinder, delay, or defraud such en17 terprise, the creditors of such enterprise, 

18 or any conservator or receiver appointed 

19 for such enterprise. 

20 ‘‘(D) CERTAIN CONTRACTS AND AGREE21 MENTS DEFINED.—In this subsection: 

22 ‘‘(i) QUALIFIED FINANCIAL CON23 TRACT.—The term ‘qualified financial con24 tract’ means any securities contract, com25 modity contract, forward contract, repur-
98

•S 190 IS 

1 chase agreement, swap agreement, and any 

2 similar agreement that the Agency deter3 mines by regulation to be a qualified finan4 cial contract for purposes of this para5 graph. 

6 ‘‘(ii) SECURITIES CONTRACT.—The 

7 term ‘securities contract’ has the meaning 

8 given to such term under section 741 of 

9 title 11, United States Code, except that 

10 the term ‘security’ (as used in such sec11 tion) shall be deemed to include any mort12 gage loan, any mortgage-related security 

13 (as defined in section 3(a)(41) of the Secu14 rities Exchange Act of 1934), and any in15 terest in any mortgage loan or mortgage16 related security, and does not include any 

17 participation in a commercial mortgage 

18 loan. 

19 ‘‘(iii) COMMODITY CONTRACT.—The 

20 term ‘commodity contract’ has the mean21 ing given to such term in section 761 of 

22 title 11, United States Code. 

23 ‘‘(iv) FORWARD CONTRACT.—The 

24 term ‘forward contract’ has the meaning 
99

•S 190 IS 

1 given to such term in section 101 of title 

2 11, United States Code. 

3 ‘‘(v) REPURCHASE AGREEMENT.—The 

4 term ‘repurchase agreement’ has the mean5 ing given to such term in section 101 of 

6 title 11, the United States Code, except 

7 that the items (as described in such sec8 tion) which may be subject to any such 

9 agreement shall be deemed to include 

10 mortgage-related securities (as such term 

11 is defined in section 3(a)(41) of the Securi12 ties Exchange Act of 1934), any mortgage 

13 loan, and any interest in any mortgage 

14 loan and does not include any participation 

15 in a commercial mortgage loan unless the 

16 Agency determines by regulation, resolu17 tion, or order to include any such partici18 pation within the meaning of such term. 

19 ‘‘(vi) SWAP AGREEMENT.—The term 

20 ‘swap agreement’— 

21 ‘‘(I) means any agreement, in22 cluding the terms and conditions in23 corporated by reference in any such 

24 agreement, which is a rate swap 

25 agreement, basis swap, commodity 
100

•S 190 IS 

1 swap, forward rate agreement, inter2 est rate future, interest rate option 

3 purchased, forward foreign exchange 

4 agreement, rate cap agreement, rate 

5 floor agreement, rate collar agree6 ment, currency swap agreement, 

7 cross-currency rate swap agreement, 

8 currency future, or currency option 

9 purchased or any other similar agree10 ment; and 

11 ‘‘(II) includes any combination of 

12 such agreements and any option to 

13 enter into any such agreement. 

14 ‘‘(vii) TREATMENT OF MASTER

15 AGREEMENT AS 1 QUALIFIED FINANCIAL

16 CONTRACT.—Any master agreement for 

17 any agreements described under this sub18 paragraph, together with all supplements 

19 to such master agreement, shall be treated 

20 as 1 qualified financial contract. 

21 ‘‘(viii) TRANSFER.—The term ‘trans22 fer’ has the meaning given to such term in 

23 section 101 of title 11, United States 

24 Code. 
101

•S 190 IS 

1 ‘‘(E) CERTAIN PROTECTIONS IN EVENT OF

2 APPOINTMENT OF CONSERVATOR.—Notwith3 standing any other provision of this Act (other 

4 than paragraph (12) of this subsection), any 

5 other Federal law, or the law of any State, no 

6 person shall be stayed or prohibited from exer7 cising— 

8 ‘‘(i) any right such person has to 

9 cause the termination, liquidation, or accel10 eration of any qualified financial contract 

11 with an enterprise in a conservatorship 

12 based upon a default under such financial 

13 contract which is enforceable under appli14 cable noninsolvency law; 

15 ‘‘(ii) any right under any security ar16 rangement relating to such qualified finan17 cial contracts; or 

18 ‘‘(iii) any right to offset or net out 

19 any termination values, payment amounts, 

20 or other transfer obligations arising under 

21 or in connection with such qualified finan22 cial contracts. 

23 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON24 TRACTS.—In making any transfer of assets or liabil25 ities of an enterprise in default which includes any 
102

•S 190 IS 

1 qualified financial contract, the conservator or re2 ceiver for such enterprise shall either— 

3 ‘‘(A) transfer to 1 person— 

4 ‘‘(i) all qualified financial contracts 

5 between— 

6 ‘‘(I) any person (or any affiliate 

7 of such person); and 

8 ‘‘(II) the enterprise in default; 

9 ‘‘(ii) all claims of such person (or any 

10 affiliate of such person) against such en11 terprise under any such contract (other 

12 than any claim which, under the terms of 

13 any such contract, is subordinated to the 

14 claims of general unsecured creditors of 

15 such enterprise); 

16 ‘‘(iii) all claims of such enterprise 

17 against such person (or any affiliate of 

18 such person) under any such contract; and 

19 ‘‘(iv) all property securing any claim 

20 described in clause (ii) or (iii) under any 

21 such contract; or 

22 ‘‘(B) transfer none of the financial con23 tracts, claims, or property referred to under 

24 subparagraph (A) (with respect to such person 

25 and any affiliate of such person). 
103

•S 190 IS 

1 ‘‘(10) NOTIFICATION OF TRANSFER.— 

2 ‘‘(A) IN GENERAL.—If— 

3 ‘‘(i) the conservator or receiver for an 

4 enterprise in default makes any transfer of 

5 the assets and liabilities of such enterprise; 

6 ‘‘(ii) the transfer includes any quali7 fied financial contract; and 

8 ‘‘(iii) the conservator or receiver shall 

9 use best efforts to notify any person who 

10 is a party to any such contract of such 

11 transfer by 12 p.m. (noon) (Eastern 

12 Standard Time) on the business day fol13 lowing such transfer. 

14 ‘‘(B) BUSINESS DAY DEFINED.—For pur15 poses of this paragraph, the term ‘business day’ 

16 means any day other than any Saturday, Sun17 day, or any day on which either the New York 

18 Stock Exchange or the Federal Reserve Bank 

19 of New York is closed. 

20 ‘‘(11) CERTAIN SECURITY INTERESTS NOT

21 AVOIDABLE.—No provision of this subsection shall 

22 be construed as permitting the avoidance of any le23 gally enforceable or perfected security interest in any 

24 of the assets of any enterprise, except where such an 

25 interest is taken in contemplation of the insolvency 
104

•S 190 IS 

1 of the enterprise, or with the intent to hinder, delay, 

2 or defraud the enterprise or the creditors of such en3 terprise. 

4 ‘‘(12) AUTHORITY TO ENFORCE CONTRACTS.— 

5 ‘‘(A) IN GENERAL.—Notwithstanding any 

6 provision of a contract providing for termi7 nation, default, acceleration, or exercise of 

8 rights upon, or solely by reason of, insolvency 

9 or the appointment of a conservator or receiver, 

10 the conservator or receiver may enforce any 

11 contract, other than a liability insurance of a 

12 director or officer, or a contract or an enter13 prise bond, entered into by the enterprise. 

14 ‘‘(B) CERTAIN RIGHTS NOT AFFECTED.—

15 No provision of this paragraph may be con16 strued as impairing or affecting any right of the 

17 conservator or receiver to enforce or recover 

18 under a liability insurance contract of an officer 

19 or director, or enterprise bond under other ap20 plicable law. 

21 ‘‘(C) CONSENT REQUIREMENT.—

22 ‘‘(i) IN GENERAL.—Except as other23 wise provided under this section, no person 

24 may exercise any right or power to termi25 nate, accelerate, or declare a default under 
105

•S 190 IS 

1 any contract to which an enterprise is a 

2 party, or to obtain possession of or exercise 

3 control over any property of the enterprise, 

4 or affect any contractual rights of the en5 terprise, without the consent of the conser6 vator or receiver, as appropriate, for a pe7 riod of—

8 ‘‘(I) 45 days after the date of ap9 pointment of a conservator; or 

10 ‘‘(II) 90 days after the date of 

11 appointment of a receiver. 

12 ‘‘(ii) EXCEPTIONS.—This subpara13 graph shall—

14 ‘‘(I) not apply to the liability in15 surance contract of an officer or di16 rector; 

17 ‘‘(II) not apply to the rights of 

18 parties to certain qualified financial 

19 contracts under subsection (d)(8); and 

20 ‘‘(III) not be construed as per21 mitting the conservator or receiver to 

22 fail to comply with otherwise enforce23 able provisions of such contracts. 

24 ‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 
106

•S 190 IS 

1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of Federal law or the law of any State, and 

3 regardless of the method which the Agency deter4 mines to utilize with respect to an enterprise in de5 fault or in danger of default, including transactions 

6 authorized under subsection (i), this subsection shall 

7 govern the rights of the creditors of such enterprise. 

8 ‘‘(2) MAXIMUM LIABILITY.—The maximum li9 ability of the Agency, acting as receiver or in any 

10 other capacity, to any person having a claim against 

11 the receiver or the enterprise for which such receiver 

12 is appointed shall equal the lesser of—

13 ‘‘(A) the amount such claimant would have 

14 received if the Agency had liquidated the assets 

15 and liabilities of such enterprise without exer16 cising the authority of the Agency under sub17 section (i) of this section; or 

18 ‘‘(B) the amount of proceeds realized from 

19 the performance of contracts or sale of the as20 sets of the enterprise. 

21 ‘‘(f) LIMITATION ON COURT ACTION.—Except as 

22 provided in this section, no court may take any action, 

23 except at the request of the Director, by regulation or 

24 order, to restrain or affect the exercise of powers or func25 tions of the Agency as a conservator or a receiver. 
107

•S 190 IS 

1 ‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.—

2 ‘‘(1) IN GENERAL.—A director or officer of an 

3 enterprise may be held personally liable for mone4 tary damages in any civil action by, on behalf of, or 

5 at the request or direction of the Agency, which ac6 tion is prosecuted wholly or partially for the benefit 

7 of the Agency— 

8 ‘‘(A) acting as conservator or receiver of 

9 such enterprise; 

10 ‘‘(B) acting based upon a suit, claim, or 

11 cause of action purchased from, assigned by, or 

12 otherwise conveyed by such receiver or conser13 vator; or 

14 ‘‘(C) for gross negligence, including any 

15 similar conduct or conduct that demonstrates a 

16 greater disregard of a duty of care (than gross 

17 negligence) including intentional tortious con18 duct, as such terms are defined and determined 

19 under applicable State law. 

20 ‘‘(2) NO LIMITATION.—Nothing in this para21 graph shall impair or affect any right of the Agency 

22 under other applicable law. 

23 ‘‘(h) DAMAGES.—In any proceeding related to any 

24 claim against a director, officer, employee, agent, attorney, 

25 accountant, appraiser, or any other party employed by or 
108

•S 190 IS 

1 providing services to an enterprise, recoverable damages 

2 determined to result from the improvident or otherwise 

3 improper use or investment of any assets of the enterprise 

4 shall include principal losses and appropriate interest. 

5 ‘‘(i) LIMITED-LIFE ENTERPRISE.— 

6 ‘‘(1) ORGANIZATION.— 

7 ‘‘(A) PURPOSE.—If an enterprise is in de8 fault, or if the Agency anticipates that an en9 terprise will default, the Agency may organize a 

10 limited-life enterprise with those powers and at11 tributes of the enterprise in default or in dan12 ger of default that the Director determines nec13 essary, subject to the provisions of this sub14 section. The Director shall grant a temporary 

15 charter to the limited-life enterprise, and the 

16 limited-life enterprise shall operate subject to 

17 that charter. 

18 ‘‘(B) AUTHORITIES.—Upon the creation of 

19 a limited-life enterprise under subparagraph 

20 (A), the limited-life enterprise may— 

21 ‘‘(i) assume such liabilities of the en22 terprise that is in default or in danger of 

23 default as the Agency may, in its discre24 tion, determine to be appropriate, provided 

25 that the liabilities assumed shall not exceed 
109

•S 190 IS 

1 the amount of assets of the limited-life en2 terprise; 

3 ‘‘(ii) purchase such assets of the en4 terprise that is in default, or in danger of 

5 default, as the Agency may, in its discre6 tion, determine to be appropriate; and 

7 ‘‘(iii) perform any other temporary 

8 function which the Agency may, in its dis9 cretion, prescribe in accordance with this 

10 section. 

11 ‘‘(2) CHARTER.— 

12 ‘‘(A) CONDITIONS.—The Agency may 

13 grant a temporary charter if the Agency deter14 mines that the continued operation of the enter15 prise in default or in danger of default is in the 

16 best interest of the national economy and the 

17 housing markets. 

18 ‘‘(B) LIMITED-LIFE ENTERPRISE TREATED

19 AS BEING IN DEFAULT FOR CERTAIN PUR20 POSES.—A limited-life enterprise shall be treat21 ed as an enterprise in default at such times and 

22 for such purposes as the Agency may, in its dis23 cretion, determine. 

24 ‘‘(C) MANAGEMENT.—A limited-life enter25 prise, upon the granting of its charter, shall be 
110

•S 190 IS 

1 under the management of a board of directors 

2 consisting of not fewer than 5 nor more than 

3 10 members appointed by the Agency. 

4 ‘‘(D) BYLAWS.—The board of directors of 

5 a limited-life enterprise shall adopt such bylaws 

6 as may be approved by the Agency. 

7 ‘‘(3) CAPITAL STOCK.—No capital stock need 

8 be paid into a limited-life enterprise by the Agency. 

9 ‘‘(4) INVESTMENTS.—Funds of a limited-life 

10 enterprise shall be kept on hand in cash, invested in 

11 obligations of the United States or obligations guar12 anteed as to principal and interest by the United 

13 States, or deposited with the Agency, or any Federal 

14 Reserve bank. 

15 ‘‘(5) EXEMPT STATUS.—Notwithstanding any 

16 other provision of Federal or State law, the limited17 life enterprise, its franchise, property, and income 

18 shall be exempt from all taxation now or hereafter 

19 imposed by the United States, by any territory, de20 pendency, or possession thereof, or by any State, 

21 county, municipality, or local taxing authority. 

22 ‘‘(6) OTHER EXEMPTIONS.—When acting as a 

23 receiver, the following provisions shall apply with re24 spect to the Agency: 
111

•S 190 IS 

1 ‘‘(A) The Agency, including its franchise, 

2 its capital, reserves, and surplus, and its in3 come, shall be exempt from all taxation imposed 

4 by any State, country, municipality, or local 

5 taxing authority, except that any real property 

6 of the Agency shall be subject to State, terri7 torial, county, municipal, or local taxation to 

8 the same extent according to its value as other 

9 real property is taxed, except that, notwith10 standing the failure of any person to challenge 

11 an assessment under State law of the value of 

12 such property, and the tax thereon, shall be de13 termined as of the period for which such tax is 

14 imposed. 

15 ‘‘(B) No property of the Agency shall be 

16 subject to levy, attachment, garnishment, fore17 closure, or sale without the consent of the 

18 Agency, nor shall any involuntary lien attach to 

19 the property of the Agency. 

20 ‘‘(C) The Agency shall not be liable for any 

21 amounts in the nature of penalties or fines, in22 cluding those arising from the failure of any 

23 person to pay any real property, personal prop24 erty, probate, or recording tax or any recording 

25 or filing fees when due. 
112

•S 190 IS 

1 ‘‘(7) WINDING UP.—

2 ‘‘(A) IN GENERAL.—Subject to subpara3 graph (B), unless Congress authorizes the sale 

4 of the capital stock of the limited-life enter5 prise, not later than 2 years after the date of 

6 its organization, the Agency shall wind up the 

7 affairs of the limited-life enterprise. 

8 ‘‘(B) EXTENSION.—The Director may, in 

9 the discretion of the Director, extend the status 

10 of the limited-life enterprise for 3 additional 1-

11 year periods. 

12 ‘‘(8) TRANSFER OF ASSETS AND LIABILITIES.— 

13 ‘‘(A) IN GENERAL.— 

14 ‘‘(i) TRANSFER OF ASSETS AND LI15 ABILITIES.—The Agency, as receiver, may 

16 transfer any assets and liabilities of an en17 terprise in default, or in danger of default, 

18 to the limited-life enterprise in accordance 

19 with paragraph (1). 

20 ‘‘(ii) SUBSEQUENT TRANSFERS.—At 

21 any time after a charter is transferred to 

22 a limited-life enterprise, the Agency, as re23 ceiver, may transfer any assets and liabil24 ities of such enterprise in default, or in 

25 danger in default, as the Agency may, in 
113

•S 190 IS 

1 its discretion, determine to be appropriate 

2 in accordance with paragraph (1). 

3 ‘‘(iii) EFFECTIVE WITHOUT AP4 PROVAL.—The transfer of any assets or li5 abilities of an enterprise in default, or in 

6 danger of default, transferred to a limited7 life enterprise shall be effective without 

8 any further approval under Federal or 

9 State law, assignment, or consent with re10 spect thereto. 

11 ‘‘(9) PROCEEDS.—To the extent that available 

12 proceeds from the limited-life enterprise exceed 

13 amounts required to pay obligations, such proceeds 

14 may be paid to the enterprise in default, or in dan15 ger of default. 

16 ‘‘(10) POWERS OF LIMITED-LIFE ENTER17 PRISES.—

18 ‘‘(A) IN GENERAL.—Each limited-life en19 terprise created under this subsection shall have 

20 all corporate powers of, and be subject to the 

21 same provisions of law as, the enterprise in de22 fault or in danger of default to which it relates, 

23 except that— 

24 ‘‘(i) the Agency may— 
114

•S 190 IS 

1 ‘‘(I) remove the directors of a 

2 limited-life enterprise; and 

3 ‘‘(II) fix the compensation of 

4 members of the board of directors and 

5 senior management, as determined by 

6 the Agency in its discretion, of a lim7 ited-life enterprise; 

8 ‘‘(ii) the Agency may indemnify the 

9 representatives for purposes of paragraph 

10 (1)(B), and the directors, officers, employ11 ees, and agents of a limited-life enterprise 

12 on such terms as the Agency determines to 

13 be appropriate; and 

14 ‘‘(iii) the board of directors of a lim15 ited-life enterprise—

16 ‘‘(I) shall elect a chairperson who 

17 may also serve in the position of chief 

18 executive officer, except that such per19 son shall not serve either as chair20 person or as chief executive officer 

21 without the prior approval of the 

22 Agency; and 

23 ‘‘(II) may appoint a chief execu24 tive officer who is not also the chair25 person, except that such person shall 
115

•S 190 IS 

1 not serve as chief executive officer 

2 without the prior approval of the 

3 Agency. 

4 ‘‘(B) STAY OF JUDICIAL ACTION.—Any ju5 dicial action to which a limited-life enterprise 

6 becomes a party by virtue of its acquisition of 

7 any assets or assumption of any liabilities of an 

8 enterprise in default shall be stayed from fur9 ther proceedings for a period of up to 45 days 

10 at the request of the limited-life enterprise. 

11 Such period may be modified upon the consent 

12 of all parties. 

13 ‘‘(11) NO FEDERAL STATUS.— 

14 ‘‘(A) AGENCY STATUS.—A limited-life en15 terprise is not an agency, establishment, or in16 strumentality of the United States. 

17 ‘‘(B) EMPLOYEE STATUS.—Representa18 tives for purposes of paragraph (1)(B), interim 

19 directors, directors, officers, employees, or 

20 agents of a limited-life enterprise are not, solely 

21 by virtue of service in any such capacity, offi22 cers or employees of the United States. Any 

23 employee of the Agency or of any Federal in24 strumentality who serves at the request of the 

25 Agency as a representative for purposes of 
116

•S 190 IS 

1 paragraph (1)(B), interim director, director, of2 ficer, employee, or agent of a limited-life enter3 prise shall not— 

4 ‘‘(i) solely by virtue of service in any 

5 such capacity lose any existing status as 

6 an officer or employee of the United States 

7 for purposes of title 5, United States Code, 

8 or any other provision of law; or 

9 ‘‘(ii) receive any salary or benefits for 

10 service in any such capacity with respect to 

11 a limited-life enterprise in addition to such 

12 salary or benefits as are obtained through 

13 employment with the Agency or such Fed14 eral instrumentality. 

15 ‘‘(j) PROHIBITION OF CHARTER REVOCATION.—In 

16 no case may a receiver appointed pursuant to this section 

17 revoke, annul, or terminate the charter of an enterprise. 

18 ‘‘(k) OBTAINING CREDIT BY A LIMITED-LIFE EN19 TERPRISE.—

20 ‘‘(1) IN GENERAL.—The limited-life enterprise 

21 may obtain unsecured credit and incur unsecured 

22 debt in the ordinary course of business. 

23 ‘‘(2) INABILITY TO OBTAIN CREDIT.—If the 

24 limited-life enterprise is unable to obtain unsecured 
117

•S 190 IS 

1 credit the Director may authorize the obtaining of 

2 credit or the incurring of debt—

3 ‘‘(A) with priority over any or all adminis4 trative expenses; 

5 ‘‘(B) secured by a lien on property that is 

6 not otherwise subject to a lien; or 

7 ‘‘(C) secured by a junior lien on property 

8 that is subject to a lien. 

9 ‘‘(3) LIMITATIONS.—

10 ‘‘(A) IN GENERAL.—The Director, after 

11 notice and a hearing, may authorize the obtain12 ing of credit or the incurring of debt secured by 

13 a senior or equal lien on property that is sub14 ject to a lien (other than mortgages that 

15 collateralize the mortgage-backed securities 

16 issued or guaranteed by the enterprise) only 

17 if—

18 ‘‘(i) the limited-life enterprise is un19 able to obtain such credit otherwise; and 

20 ‘‘(ii) there is adequate protection of 

21 the interest of the holder of the lien on the 

22 property which such senior or equal lien is 

23 proposed to be granted. 

24 ‘‘(B) BURDEN OF PROOF.—In any hearing 

25 under this subsection, the Director has the bur-
118

•S 190 IS 

1 den of proof on the issue of adequate protec2 tion. 

3 ‘‘(4) AFFECT ON DEBTS AND LIENS.—The re4 versal or modification on appeal of an authorization 

5 under this subsection to obtain credit or incur debt, 

6 or of a grant under this section of a priority or a 

7 lien, does not affect the validity of any debt so in8 curred, or any priority or lien so granted, to an enti9 ty that extended such credit in good faith, whether 

10 or not such entity knew of the pendency of the ap11 peal, unless such authorization and the incurring of 

12 such debt, or the granting of such priority or lien, 

13 were stayed pending appeal. 

14 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

15 The Federal Housing Enterprises Financial Safety and 

16 Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amend17 ed—

18 (1) in section 1368 (12 U.S.C. 4618)—

19 (A) by striking ‘‘an enterprise’’ each place 

20 that term appears and inserting ‘‘a regulated 

21 entity’’; and 

22 (B) by striking ‘‘the enterprise’’ each place 

23 that term appears and inserting ‘‘the regulated 

24 entity’’; 
119

•S 190 IS 

1 (2) in section 1369C (12 U.S.C. 4622), by 

2 striking ‘‘enterprise’’ each place that term appears 

3 and inserting ‘‘regulated entity’’; 

4 (3) in section 1369D (12 U.S.C. 4623)—

5 (A) by striking ‘‘an enterprise’’ each place 

6 that term appears and inserting ‘‘a regulated 

7 entity’’; and 

8 (B) in subsection (a)(1), by striking ‘‘An 

9 enterprise’’ and inserting ‘‘A regulated entity’’; 

10 and 

11 (4) by striking sections 1369, 1369A, and 

12 1369B (12 U.S.C. 4619, 4620, and 4621). 

13 Subtitle D—Enforcement Actions

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

15 Section 1371 of the Federal Housing Enterprises Fi16 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

17 4631) is amended—

18 (1) by striking subsections (a) and (b) and in19 serting the following: 

20 ‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC21 TICES AND VIOLATIONS.—If, in the opinion of the Direc22 tor, a regulated entity, any enterprise-affiliated party, or 

23 the Federal Home Loan Bank Finance Corporation, is en24 gaging or has engaged, or the Director has reasonable 

25 cause to believe that the regulated entity, any enterprise-
120

•S 190 IS 

1 affiliated party, or the Federal Home Loan Bank Finance 

2 Corporation is about to engage, in an unsafe or unsound 

3 practice in conducting the business of the regulated entity, 

4 or is violating or has violated, or the Director has reason5 able cause to believe that the regulated entity, any enter6 prise-affiliated party, or the Federal Home Loan Bank Fi7 nance Corporation is about to violate, a law, rule, regula8 tion, or order, or any condition imposed in writing by the 

9 Director in connection with the granting of any applica10 tion or other request by the regulated entity or any written 

11 agreement entered into with the Director, the Director 

12 may issue and serve upon the regulated entity, enterprise13 affiliated party, or the Federal Home Loan Bank Finance 

14 Corporation a notice of charges in respect thereof. 

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

16 regulated entity receives, in its most recent report of ex17 amination, a less-than-satisfactory rating for credit risk, 

18 market risk, operations, or corporate governance, the Di19 rector may (if the deficiency is not corrected) deem the 

20 regulated entity to be engaging in an unsafe or unsound 

21 practice for purposes of subsection (a).’’; 

22 (2) in subsection (c)(2)—

23 (A) by striking ‘‘or director’’ and inserting 

24 ‘‘director, or enterprise-affiliated party’’; and 
121

•S 190 IS 

1 (B) by inserting ‘‘or enterprise-affiliated 

2 party’’ before ‘‘consents’’; 

3 (3) in subsections (c), (d), and (e)—

4 (A) by striking ‘‘the enterprise’’ each place 

5 that term appears and inserting ‘‘the regulated 

6 entity’’; and 

7 (B) by striking ‘‘an enterprise’’ each place 

8 that term appears and inserting ‘‘a regulated 

9 entity’’; 

10 (4) in subsection (d)—

11 (A) by striking ‘‘or director’’ and inserting 

12 ‘‘director, or enterprise-affiliated party’’; and 

13 (B) in paragraph (1), by striking ‘‘or a di14 rector’’ and inserting ‘‘, director, or enterprise15 affiliated party’’; 

16 (5) in each of subsections (d)(7) and (e), by in17 serting ‘‘or enterprise-affiliated party’’ after ‘‘enter18 prise’’ each place that term appears; and 

19 (6) in subsection (f), by striking ‘‘or director’’ 

20 and inserting ‘‘director, or enterprise-affiliated 

21 party’’. 

22 SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

23 Section 1372 of the Federal Housing Enterprises Fi24 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

25 4632) is amended—
122

•S 190 IS 

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

2 following: 

3 ‘‘(a) GROUNDS FOR ISSUANCE.—

4 ‘‘(1) IN GENERAL.—If the Director determines 

5 that the actions specified in the notice of charges 

6 served upon a regulated entity, any enterprise-affili7 ated party, or the Federal Home Loan Bank Fi8 nance Corporation, pursuant to section 1371(a), or 

9 the continuation thereof, is likely to cause insolvency 

10 or significant dissipation of assets or earnings of 

11 that entity, or is likely to weaken the condition of 

12 that entity prior to the completion of the pro13 ceedings conducted pursuant to sections 1371 and 

14 1373, the Director may—

15 ‘‘(A) issue a temporary order requiring 

16 that entity to cease and desist from any such 

17 violation or practice; and 

18 ‘‘(B) require that entity to take affirmative 

19 action to prevent or remedy such insolvency, 

20 dissipation, condition, or prejudice pending 

21 completion of such proceedings. 

22 ‘‘(2) ADDITIONAL REQUIREMENTS.—An order 

23 issued under paragraph (1) may include any require24 ment authorized under subsection 1371(d).’’; 

25 (2) in subsection (b)—
123

•S 190 IS 

1 (A) by striking ‘‘or director’’ and inserting 

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

3 (B) by striking ‘‘enterprise’’ and inserting 

4 ‘‘regulated entity’’; 

5 (3) in subsection (c), by striking ‘‘enterprise’’ 

6 and inserting ‘‘regulated entity’’; 

7 (4) in subsection (d)—

8 (A) by striking ‘‘or director’’ and inserting 

9 ‘‘director, or enterprise-affiliated party’’; and 

10 (B) by striking ‘‘An enterprise’’ and insert11 ing ‘‘A regulated entity’’; and 

12 (5) by striking subsection (e) and inserting the 

13 following: 

14 ‘‘(e) ENFORCEMENT.—If a temporary cease-and-de15 sist order is issued under subsection (a), the Director may 

16 apply to the United States District Court for the District 

17 of Columbia, or the United States district court within the 

18 jurisdiction of which the headquarters of the regulated en19 tity is located, for an injunction to enforce such order, 

20 and, if the court determines that the notice of charges 

21 issued under section 1371(a) are accurate, it shall be the 

22 duty of the court to issue such injunction.’’. 
124

•S 190 IS 

1 SEC. 153. REMOVAL AND PROHIBITION AUTHORITY. 

2 (a) IN GENERAL.—Subtitle C of part 1 of the Fed3 eral Housing Enterprises Financial Safety and Soundness 

4 Act of 1992 (12 U.S.C. 4631 et seq.) is amended—

5 (1) by redesignating sections 1377 through 

6 1379B (12 U.S.C. 4637–4641) as sections 1379 

7 through 1379D, respectively; and 

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

9 4636) the following:

10 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

11 ‘‘(a) AUTHORITY TO ISSUE ORDER.—

12 ‘‘(1) IN GENERAL.—The Director may serve 

13 upon a party described in paragraph (2), or any offi14 cer or director of the Federal Home Loan Bank Fi15 nance Corporation a written notice of the intention 

16 of the Director to suspend or remove such party 

17 from office, or prohibit any further participation by 

18 such party, in any manner, in the conduct of the af19 fairs of the regulated entity. 

20 ‘‘(2) APPLICABILITY.—A party described in this 

21 paragraph is an enterprise-affiliated party or any of22 ficer or director of the Federal Home Loan Bank 

23 Finance Corporation, if the Director determines 

24 that—

25 ‘‘(A) that party, officer, or director has, di26 rectly or indirectly—
125

•S 190 IS 

1 ‘‘(i) violated—

2 ‘‘(I) any law or regulation; 

3 ‘‘(II) any cease-and-desist order 

4 which has become final; 

5 ‘‘(III) any condition imposed in 

6 writing by the Director in connection 

7 with the grant of any application or 

8 other request by such regulated enti9 ty; or 

10 ‘‘(IV) any written agreement be11 tween such regulated entity and the 

12 Director; 

13 ‘‘(ii) engaged or participated in any 

14 unsafe or unsound practice in connection 

15 with any regulated entity; or

16 ‘‘(iii) committed or engaged in any 

17 act, omission, or practice which constitutes 

18 a breach of such party’s fiduciary duty; 

19 ‘‘(B) by reason of the violation, practice, or 

20 breach described in subparagraph (A)—

21 ‘‘(i) such regulated entity has suffered 

22 or will probably suffer financial loss or 

23 other damage; or 

24 ‘‘(ii) such party has received financial 

25 gain or other benefit; and 
126

•S 190 IS 

1 ‘‘(C) the violation, practice, or breach de2 scribed in subparagraph (A)—

3 ‘‘(i) involves personal dishonesty on 

4 the part of such party; or 

5 ‘‘(ii) demonstrates willful or con6 tinuing disregard by such party for the 

7 safety or soundness of such regulated enti8 ty. 

9 ‘‘(b) SUSPENSION ORDER.—

10 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR11 ITY.—If the Director serves written notice under 

12 subsection (a) upon a party subject to that sub13 section (a), the Director may, by order, suspend or 

14 remove such party from office, or prohibit such 

15 party from further participation in any manner in 

16 the conduct of the affairs of the regulated entity, if 

17 the Director—

18 ‘‘(A) determines that such action is nec19 essary for the protection of the regulated entity; 

20 and 

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

22 of the order. 

23 ‘‘(2) EFFECTIVE PERIOD.—Any order issued 

24 under this subsection—
127

•S 190 IS 

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

2 and 

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

4 order under subsection (g), shall remain in ef5 fect and enforceable until—

6 ‘‘(i) the date on which the Director 

7 dismisses the charges contained in the no8 tice served under subsection (a) with re9 spect to such party; or 

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

11 issued under subsection (b). 

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

13 an order under subsection (b) to any party, the Di14 rector shall serve a copy of such order on any regu15 lated entity with which such party is affiliated at the 

16 time such order is issued. 

17 ‘‘(c) NOTICE, HEARING, AND ORDER.—

18 ‘‘(1) NOTICE.—A notice under subsection (a) of 

19 the intention of the Director to issue an order under 

20 this section shall contain a statement of the facts 

21 constituting grounds for such action, and shall fix a 

22 time and place at which a hearing will be held on 

23 such action. 

24 ‘‘(2) TIMING OF HEARING.—A hearing shall be 

25 fixed for a date not earlier than 30 days, nor later 
128

•S 190 IS 

1 than 60 days, after the date of service of notice 

2 under subsection (a), unless an earlier or a later 

3 date is set by the Director at the request of—

4 ‘‘(A) the party receiving such notice, and 

5 good cause is shown; or 

6 ‘‘(B) the Attorney General of the United 

7 States. 

8 ‘‘(3) CONSENT.—Unless the party that is the 

9 subject of a notice delivered under subsection (a) ap10 pears at the hearing in person or by a duly author11 ized representative, such party shall be deemed to 

12 have consented to the issuance of an order under 

13 this section. 

14 ‘‘(4) ISSUANCE OF ORDER OF SUSPENSION.—

15 The Director may issue an order under this section, 

16 as the Director may deem appropriate, if—

17 ‘‘(A) a party is deemed to have consented 

18 to the issuance of an order under paragraph 

19 (3); or 

20 ‘‘(B) upon the record made at the hearing, 

21 the Director finds that any of the grounds spec22 ified in the notice have been established. 

23 ‘‘(5) EFFECTIVENESS OF ORDER.—Any order 

24 issued under paragraph (4) shall become effective at 

25 the expiration of 30 days after the date of service 
129

•S 190 IS 

1 upon the relevant regulated entity and party (except 

2 in the case of an order issued upon consent under 

3 paragraph (3), which shall become effective at the 

4 time specified therein). Such order shall remain ef5 fective and enforceable except to such extent as it is 

6 stayed, modified, terminated, or set aside by action 

7 of the Director or a reviewing court. 

8 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI9 TIES.—Any person subject to an order issued under this 

10 section shall not—

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

12 of the affairs of any regulated entity or the Federal 

13 Home Loan Bank Finance Corporation; 

14 ‘‘(2) solicit, procure, transfer, attempt to trans15 fer, vote, or attempt to vote any proxy, consent, or 

16 authorization with respect to any voting rights in 

17 any regulated entity; 

18 ‘‘(3) violate any voting agreement previously 

19 approved by the Director; or 

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

21 enterprise-affiliated party of a regulated entity or as 

22 an officer or director of the Federal Home Loan 

23 Bank Finance Corporation. 

24 ‘‘(e) INDUSTRY-WIDE PROHIBITION.—
130

•S 190 IS 

1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), any person who, pursuant to an order 

3 issued under this section, has been removed or sus4 pended from office in a regulated entity or the Fed5 eral Home Loan Bank Finance Corporation, or pro6 hibited from participating in the conduct of the af7 fairs of a regulated entity or such Corporation, may 

8 not, while such order is in effect, continue or com9 mence to hold any office in, or participate in any 

10 manner in the conduct of the affairs of, any regu11 lated entity or such Corporation. 

12 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT13 TEN CONSENT.—If, on or after the date on which an 

14 order is issued under this section which removes or 

15 suspends from office any party, or prohibits such 

16 party from participating in the conduct of the affairs 

17 of a regulated entity or the Federal Home Loan 

18 Bank Finance Corporation, such party receives the 

19 written consent of the Director, the order shall, to 

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

21 party with respect to the regulated entity or such 

22 Corporation described in the written consent. Any 

23 such consent shall be publicly disclosed. 

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

25 AS VIOLATION OF ORDER.—Any violation of para-
131

•S 190 IS 

1 graph (1) by any person who is subject to an order 

2 issued under subsection (h) shall be treated as a vio3 lation of the order. 

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

5 to a person who is an individual, unless the Director spe6 cifically finds that it should apply to a corporation, firm, 

7 or other business entity. 

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

9 ENTERPRISE-AFFILIATED PARTY.—Not later than 10 

10 days after the date on which any enterprise-affiliated 

11 party has been suspended from office or prohibited from 

12 participation in the conduct of the affairs of a regulated 

13 entity under this section, such party may apply to the 

14 United States District Court for the District of Columbia, 

15 or the United States district court for the judicial district 

16 in which the headquarters of the regulated entity is lo17 cated, for a stay of such suspension or prohibition pending 

18 the completion of the administrative proceedings pursuant 

19 to subsection (c). The court shall have jurisdiction to stay 

20 such suspension or prohibition. 

21 ‘‘(h) SUSPENSION OR REMOVAL OF ENTERPRISE-AF22 FILIATED PARTY CHARGED WITH FELONY.—

23 ‘‘(1) SUSPENSION OR PROHIBITION.—

24 ‘‘(A) IN GENERAL.—Whenever any enter25 prise-affiliated party is charged in any informa-
132

•S 190 IS 

1 tion, indictment, or complaint, with the commis2 sion of or participation in a crime involving dis3 honesty or breach of trust which is punishable 

4 by imprisonment for a term exceeding 1 year 

5 under Federal or State law, the Director may, 

6 if continued service or participation by such 

7 party may pose a threat to the regulated entity 

8 or impair public confidence in the regulated en9 tity, by written notice served upon such party, 

10 suspend such party from office or prohibit such 

11 party from further participation in any manner 

12 in the conduct of the affairs of any regulated 

13 entity. 

14 ‘‘(B) PROVISIONS APPLICABLE TO NO15 TICE.—

16 ‘‘(i) COPY.—A copy of any notice 

17 under subparagraph (A) shall be served 

18 upon the relevant regulated entity. 

19 ‘‘(ii) EFFECTIVE PERIOD.—A suspen20 sion or prohibition under subparagraph (A) 

21 shall remain in effect until the informa22 tion, indictment, or complaint referred to 

23 in subparagraph (A) is finally disposed of, 

24 or until terminated by the Director. 

25 ‘‘(2) REMOVAL OR PROHIBITION.—
133

•S 190 IS 

1 ‘‘(A) IN GENERAL.—If a judgment of con2 viction or an agreement to enter a pretrial di3 version or other similar program is entered 

4 against an enterprise-affiliated party in connec5 tion with a crime described in paragraph 

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

7 subject to further appellate review, the Director 

8 may, if continued service or participation by 

9 such party may pose a threat to the regulated 

10 entity or impair public confidence in the regu11 lated entity, issue and serve upon such party an 

12 order removing such party from office or pro13 hibiting such party from further participation 

14 in any manner in the conduct of the affairs of 

15 the regulated entity without the prior written 

16 consent of the Director. 

17 ‘‘(B) PROVISIONS APPLICABLE TO

18 ORDER.—

19 ‘‘(i) COPY.—A copy of any order 

20 under subparagraph (A) shall be served 

21 upon the relevant regulated entity, at 

22 which time the enterprise-affiliated party 

23 who is subject to the order (if a director or 

24 an officer) shall cease to be a director or 

25 officer of such regulated entity. 
134

•S 190 IS 

1 ‘‘(ii) EFFECT OF ACQUITTAL.—A find2 ing of not guilty or other disposition of the 

3 charge shall not preclude the Director from 

4 instituting proceedings after such finding 

5 or disposition to remove a party from of6 fice or to prohibit further participation in 

7 the affairs of a regulated entity pursuant 

8 to subsection (a), (d), or (e). 

9 ‘‘(iii) EFFECTIVE PERIOD.—Unless 

10 terminated by the Director, any notice of 

11 suspension or order of removal issued 

12 under this subsection shall remain effective 

13 and outstanding until the completion of 

14 any hearing or appeal authorized under 

15 paragraph (4). 

16 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM17 BERS.—

18 ‘‘(A) IN GENERAL.—If at any time, be19 cause of the suspension of 1 or more directors 

20 pursuant to this section, there shall be on the 

21 board of directors of a regulated entity less 

22 than a quorum of directors not so suspended, 

23 all powers and functions vested in or exercisable 

24 by such board shall vest in and be exercisable 

25 by the director or directors on the board not so 
135

•S 190 IS 

1 suspended, until such time as there shall be a 

2 quorum of the board of directors. 

3 ‘‘(B) APPOINTMENT OF TEMPORARY DI4 RECTORS.—If all of the directors of a regulated 

5 entity are suspended pursuant to this section, 

6 the Director shall appoint persons to serve tem7 porarily as directors pending the termination of 

8 such suspensions, or until such time as those 

9 who have been suspended cease to be directors 

10 of the regulated entity and their respective suc11 cessors take office. 

12 ‘‘(4) HEARING REGARDING CONTINUED PAR13 TICIPATION.—

14 ‘‘(A) IN GENERAL.—Not later than 30 

15 days after the date of service of any notice of 

16 suspension or order of removal issued pursuant 

17 to paragraph (1) or (2), the enterprise-affiliated 

18 party may request in writing an opportunity to 

19 appear before the Director to show that the 

20 continued service or participation in the con21 duct of the affairs of the regulated entity by 

22 such party does not, or is not likely to, pose a 

23 threat to the interests of the regulated entity, 

24 or threaten to impair public confidence in the 

25 regulated entity. 
136

•S 190 IS 

1 ‘‘(B) TIMING AND FORM OF HEARING.—

2 Upon receipt of a request for a hearing under 

3 subparagraph (A), the Director shall fix a time 

4 (not later than 30 days after the date of receipt 

5 of such request, unless extended at the request 

6 of such party) and place at which the enter7 prise-affiliated party may appear, personally or 

8 through counsel, before the Director or 1 or 

9 more designated employees of the Director to 

10 submit written materials (or, at the discretion 

11 of the Director, oral testimony) and oral argu12 ment. 

13 ‘‘(C) DETERMINATION.—Not later than 60 

14 days after the date of a hearing under subpara15 graph (B), the Director shall notify the enter16 prise-affiliated party whether the suspension or 

17 prohibition from participation in any manner in 

18 the conduct of the affairs of the regulated enti19 ty will be continued, terminated, or otherwise 

20 modified, or whether the order removing such 

21 party from office or prohibiting such party from 

22 further participation in any manner in the con23 duct of the affairs of the regulated entity will 

24 be rescinded or otherwise modified. Such notifi-
137

•S 190 IS 

1 cation shall contain a statement of the basis for 

2 any adverse decision of the Director. 

3 ‘‘(5) RULES.—The Director is authorized to 

4 prescribe such rules as may be necessary to carry 

5 out this subsection. 

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

7 ‘‘(1) VENUE AND PROCEDURE.—

8 ‘‘(A) IN GENERAL.—Any hearing under 

9 this section shall be held in the District of Co10 lumbia or in the Federal judicial district in 

11 which the headquarters of the regulated entity 

12 is located, unless the party afforded the hearing 

13 consents to another place, and shall be con14 ducted in accordance with the provisions of 

15 chapter 5 of title 5, United States Code. 

16 ‘‘(B) DECISION.—After any hearing under 

17 this section, and not later than 90 days after 

18 the Director has notified the parties that the 

19 case has been submitted to it for final decision, 

20 the Director shall render its decision (which 

21 shall include findings of fact upon which the de22 cision of the Director is predicated) and issue 

23 and serve upon each party to the proceeding an 

24 order or orders consistent with the provisions of 

25 this section. 
138

•S 190 IS 

1 ‘‘(C) JUDICIAL REVIEW.—Judicial review 

2 of any order issued under subparagraph (B) 

3 shall be exclusively as provided in this sub4 section. 

5 ‘‘(D) MODIFICATION OF ORDER.—

6 ‘‘(i) IN GENERAL.—Unless a petition 

7 for review is timely filed in a court of ap8 peals of the United States, as provided in 

9 paragraph (2), and thereafter until the 

10 record in the proceeding has been filed 

11 with the court, the Director may at any 

12 time, upon such notice and in such manner 

13 as it shall deem proper, modify, terminate, 

14 or set aside any such order. 

15 ‘‘(ii) LIMITATION.—Upon the filing of 

16 the record, the Director may modify, ter17 minate, or set aside any order under this 

18 subsection only with permission of the 

19 court. 

20 ‘‘(2) REVIEW OF ORDER.—

21 ‘‘(A) IN GENERAL.—Any party to any pro22 ceeding under paragraph (1) may obtain a re23 view of any order served pursuant to paragraph 

24 (1) (other than an order issued with the con25 sent of the regulated entity or the enterprise-af-
139

•S 190 IS 

1 filiated party, or an order issued under sub2 section (h)) by the filing in the United States 

3 Court of Appeals for the District of Columbia 

4 Circuit, or the Court of Appeals of the United 

5 States for the circuit in which the headquarters 

6 of the relevant regulated entity is located, with7 in 30 days after the date of service of such 

8 order, a written petition praying that the order 

9 of the Director be modified, terminated, or set 

10 aside. 

11 ‘‘(B) FORWARDING OF PETITION; FILING

12 OF RECORD.—A copy of any petition filed under 

13 subparagraph (A) shall be transmitted by the 

14 clerk of the court to the Director, and the Di15 rector shall file in the court the record in the 

16 proceeding, as provided in section 2112 of title 

17 28, United States Code. 

18 ‘‘(C) JURISDICTION.—Upon the filing of a 

19 petition under subparagraph (B), the court 

20 shall have jurisdiction, which upon the filing of 

21 the record shall (except as provided under para22 graph (1)(D)(ii)) be exclusive, to affirm, mod23 ify, terminate, or set aside, in whole or in part, 

24 the order of the Director. 
140

•S 190 IS 

1 ‘‘(D) FINALITY OF DECREE.—The judg2 ment and decree of the court under this para3 graph shall be final, except that it shall be sub4 ject to review by the Supreme Court of the 

5 United States, upon certiorari, as provided in 

6 section 1254 of title 28, United States Code. 

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

8 The commencement of proceedings for judicial re9 view under paragraph (2) shall not, unless specifi10 cally ordered by the court, operate as a stay of any 

11 order issued by the Director.’’. 

12 (b) CONFORMING AMENDMENTS.—

13 (1) 1992 ACT.—Section 1317(f) of the Federal 

14 Housing Enterprises Financial Safety and Sound15 ness Act of 1992 (12 U.S.C. 4517(f)) is amended by 

16 striking ‘‘section 1379B’’ and inserting ‘‘section 

17 1379D’’. 

18 (2) FANNIE MAE CHARTER ACT.—Section 

19 308(b) of the Federal National Mortgage Associa20 tion Charter Act (12 U.S.C. 1723(b)) is amended in 

21 the second sentence, by striking ‘‘The’’ and inserting 

22 ‘‘Except to the extent that action under section 

23 1377 of the Federal Housing Enterprises Financial 

24 Safety and Soundness Act of 1992 temporarily re25 sults in a lesser number, the’’. 
141

•S 190 IS 

1 (3) FREDDIE MAC CHARTER ACT.—Section 

2 303(a)(2)(A) of the Federal Home Loan Mortgage 

3 Corporation Act (12 U.S.C. 1452(a)(2)(A)) is 

4 amended, in the second sentence, by striking ‘‘The’’ 

5 and inserting ‘‘Except to the extent action under 

6 section 1377 of the Federal Housing Enterprises Fi7 nancial Safety and Soundness Act of 1992 tempo8 rarily results in a lesser number, the’’. 

9 SEC. 154. ENFORCEMENT AND JURISDICTION. 

10 (a) IN GENERAL.—Section 1375 of the Federal 

11 Housing Enterprises Financial Safety and Soundness Act 

12 of 1992 (12 U.S.C. 4635) is amended—

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

14 following: 

15 ‘‘(a) ENFORCEMENT.—The Director may, in the dis16 cretion of the Director, apply to the United States District 

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

18 district court within the jurisdiction of which the head19 quarters of the regulated entity is located, for the enforce20 ment of any effective and outstanding notice, order, or 

21 subpoena issued under this title, or request that the Attor22 ney General of the United States bring such an action. 

23 Such court shall have jurisdiction and power to order and 

24 require compliance with such notice, order, or subpoena.’’; 

25 and 
142

•S 190 IS 

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

2 inserting ‘‘1376, or 1377’’. 

3 (b) CONFORMING AMENDMENT.—Section 1379B of 

4 the Federal Housing Enterprises Financial Safety and 

5 Soundness Act of 1992 (12 U.S.C. 4641) is amended by 

6 striking subsection (c) and redesignating subsection (d) as 

7 subsection (c). 

8 SEC. 155. CIVIL MONEY PENALTIES. 

9 Section 1376 of the Federal Housing Enterprises Fi10 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

11 4636) is amended—

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

13 paragraph (1), by striking ‘‘Any enterprise, or any 

14 executive officer or director of any enterprise’’ and 

15 inserting ‘‘Any regulated entity, or any executive of16 ficer of a regulated entity or any enterprise-affiliated 

17 party,’’; and 

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

19 following:

20 ‘‘(b) AMOUNT OF PENALTY.—

21 ‘‘(1) FIRST TIER.—A regulated entity or enter22 prise-affiliated party shall forfeit and pay a civil pen23 alty of not more than $10,000 for each day during 

24 which a violation continues, if such regulated entity 

25 or party—
143

•S 190 IS 

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

2 authorizing statutes, or any order, condition, 

3 rule, or regulation under this title or any au4 thorizing statute; 

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

6 or notice issued pursuant to this title; 

7 ‘‘(C) violates any condition imposed in 

8 writing by the Director in connection with the 

9 grant of any application or other request by 

10 such regulated entity; 

11 ‘‘(D) violates any written agreement be12 tween the regulated entity and the Director; or 

13 ‘‘(E) engages in any conduct that the Di14 rector determines to be an unsafe or unsound 

15 practice. 

16 ‘‘(2) SECOND TIER.—Notwithstanding para17 graph (1), a regulated entity or enterprise-affiliated 

18 party shall forfeit and pay a civil penalty of not 

19 more than $50,000 for each day during which a vio20 lation, practice, or breach continues, if—

21 ‘‘(A) the regulated entity or enterprise-af22 filiated party, respectively—

23 ‘‘(i) commits any violation described 

24 in any subparagraph of paragraph (1); 
144

•S 190 IS 

1 ‘‘(ii) recklessly engages in an unsafe 

2 or unsound practice in conducting the af3 fairs of the regulated entity; or 

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

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

6 ‘‘(i) is part of a pattern of mis7 conduct; 

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

9 than a minimal loss to the regulated entity; 

10 or 

11 ‘‘(iii) results in pecuniary gain or 

12 other benefit to such party. 

13 ‘‘(3) THIRD TIER.—Notwithstanding para14 graphs (1) and (2), any regulated entity or enter15 prise-affiliated party shall forfeit and pay a civil pen16 alty in an amount not to exceed the applicable max17 imum amount determined under paragraph (4) for 

18 each day during which such violation, practice, or 

19 breach continues, if such regulated entity or enter20 prise-affiliated party—

21 ‘‘(A) knowingly—

22 ‘‘(i) commits any violation described 

23 in any subparagraph of paragraph (1); 
145

•S 190 IS 

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

3 the regulated entity; or 

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

5 ‘‘(B) knowingly or recklessly causes a sub6 stantial loss to the regulated entity or a sub7 stantial pecuniary gain or other benefit to such 

8 party by reason of such violation, practice, or 

9 breach. 

10 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR

11 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).—

12 The maximum daily amount of any civil penalty 

13 which may be assessed pursuant to paragraph (3) 

14 for any violation, practice, or breach described in 

15 paragraph (3) is—

16 ‘‘(A) in the case of any enterprise-affiliated 

17 party, an amount not to exceed $2,000,000; 

18 and 

19 ‘‘(B) in the case of any regulated entity, 

20 $2,000,000.’’; 

21 (3) in subsection (c), by striking ‘‘enterprise’’ 

22 each place that term appears and inserting ‘‘regu23 lated entity’’; 

24 (4) in subsection (d)—
146

•S 190 IS 

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

2 such term appears and inserting ‘‘director, or 

3 enterprise-affiliated party’’; 

4 (B) by striking ‘‘an enterprise’’ and insert5 ing ‘‘a regulated entity’’; 

6 (C) by striking ‘‘the enterprise’’ and in7 serting ‘‘the regulated entity’’; 

8 (D) by striking ‘‘request the Attorney Gen9 eral of the United States to’’; 

10 (E) by inserting ‘‘, or the United States 

11 district court within the jurisdiction of which 

12 the headquarters of the regulated entity is lo13 cated,’’ after ‘‘District of Columbia’’; 

14 (F) by striking ‘‘, or may, under the direc15 tion and control of the Attorney General of the 

16 United States, bring such an action’’; and 

17 (G) by striking ‘‘and section 1374’’; and 

18 (5) in subsection (g), by striking ‘‘An enter19 prise’’ and inserting ‘‘A regulated entity’’. 

20 SEC. 156. CRIMINAL PENALTY. 

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

22 Federal Housing Enterprises Financial Safety and Sound23 ness Act of 1992 (12 U.S.C. 4631 et seq.), as amended 

24 by this Act, is amended by adding at the end the following: 
147

•S 190 IS 

1 ‘‘SEC. 1378. CRIMINAL PENALTY. 

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

3 section 1377, without the prior written approval of the Di4 rector, knowingly participates, directly or indirectly, in any 

5 manner (including by engaging in an activity specifically 

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

7 of any regulated entity shall, notwithstanding section 

8 3571 of title 18, be fined not more than $1,000,000, im9 prisoned for not more than 5 years, or both.’’. 

10 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

11 The Federal Housing Enterprises Financial Safety and 

12 Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amend13 ed—

14 (1) in section 1379 (as so designated by this 

15 Act)—

16 (A) by striking ‘‘an enterprise’’ and insert17 ing ‘‘a regulated entity’’; and 

18 (B) by striking ‘‘the enterprise’’ and in19 serting ‘‘the regulated entity’’; 

20 (2) in section 1379A (as so designated by this 

21 Act), by striking ‘‘an enterprise’’ and inserting ‘‘a 

22 regulated entity’’; 

23 (3) in section 1379B(c) (as so designated by 

24 this Act), by striking ‘‘enterprise’’ and inserting 

25 ‘‘regulated entity’’; and 
148

•S 190 IS 

1 (4) in section 1379D (as so designated by this 

2 Act), by striking ‘‘enterprise’’ and inserting ‘‘regu3 lated entity’’. 

4 SEC. 157. NOTICE AFTER SEPARATION FROM SERVICE. 

5 Section 1379 of the Federal Housing Enterprises Fi6 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

7 4637), as so designated by this Act, is amended—

8 (1) by striking ‘‘2-year’’ and inserting ‘‘6-year’’; 

9 and 

10 (2) by inserting ‘‘or an enterprise-affiliated 

11 party’’ after ‘‘enterprise’’ each place that term ap12 pears. 

13 Subtitle E—Other Reporting 

14 Regarding Regulated Entities 

15 SEC. 161. REPORTING REGARDING REGULATED ENTITIES. 

16 Part 3 of subtitle A of the Federal Housing Enter17 prises Financial Safety and Soundness Act of 1992 is 

18 amended—

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

20 (Public Law 102–550; 106 Stat. 3969), except that 

21 no provisions of law amended by any such section 

22 repealed shall be affected by such repeal; and 

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

24 (12 U.S.C. 4601–3) and inserting the following:
149

•S 190 IS 

1 ‘‘SEC. 1351. REPORTS REGARDING ISSUES AND ACTIVITIES 

2 OF REGULATED ENTITIES. 

3 ‘‘(a) INSURED DEPOSITORY INSTITUTION HOLDINGS

4 OF ENTERPRISE DEBT AND MORTGAGE-BACKED SECURI5 TIES.—Not later than 2 years after the date of enactment 

6 of the Federal Housing Enterprise Regulatory Reform Act 

7 of 2005, the Director, the Secretary of the Treasury, the 

8 Board of Governors of the Federal Reserve System, the 

9 Board of Directors of the Federal Deposit Insurance Cor10 poration, and the National Credit Union Administration 

11 Board shall jointly submit a report to the Congress re12 garding—

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

14 guaranteed by the regulated entities (including mort15 gage-backed securities) are held by federally insured 

16 depository institutions, including such extent by type 

17 of institution and such extent relative to the capital 

18 of the institution; 

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

20 by federally insured depository institutions of the ob21 ligations of the enterprises could produce systemic 

22 risk issues, particularly for the safety and soundness 

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

24 event of default or failure by a regulated entity; and 

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

26 industry, and mortgage markets, if prudent limits on 
150

•S 190 IS 

1 the holdings of the obligations of a regulated entity 

2 were placed on federally insured depository institu3 tions. 

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

5 AND MISSION.—

6 ‘‘(1) IN GENERAL.—Not later than 2 years 

7 after the date of enactment of the Federal Housing 

8 Enterprise Regulatory Reform Act of 2005, the Di9 rector shall submit a report to the Congress—

10 ‘‘(A) describing the holdings of the regu11 lated entities in retained mortgages and repur12 chased mortgage-backed securities and the use 

13 of derivatives for hedging purposes; 

14 ‘‘(B) describing the extent of such holdings 

15 relative to other assets and the risk implications 

16 of such holdings; 

17 ‘‘(C) containing an analysis of such hold18 ings for safety and soundness or mission com19 pliance purposes; and 

20 ‘‘(D) containing an assessment of whether 

21 such holdings and other assets of the regulated 

22 entities fulfill the mission purposes of the regu23 lated entities under the Federal National Mort24 gage Association Charter Act, the Federal 
151

•S 190 IS 

1 Home Loan Mortgage Corporation Act, and the 

2 Federal Home Loan Bank Act. 

3 ‘‘(2) CONSULTATION.—The Director shall con4 sult with the Comptroller General of the United 

5 States in preparing the report under this subsection 

6 and in conducting any research, analyses, and as7 sessments for the report. 

8 ‘‘(c) DEBT ISSUANCES.—Not later than 2 years after 

9 the date of enactment of the Federal Housing Enterprise 

10 Regulatory Reform Act of 2005, the Director shall submit 

11 a report to Congress regarding—

12 ‘‘(1) the extent of outstanding obligations of the 

13 regulated entities and the rate of growth of such ob14 ligations; and 

15 ‘‘(2) an analysis as to the appropriate level of 

16 debt issuances of a regulated entity to operate in a 

17 safe and sound manner, comply with its mission, 

18 and maintain a certain credit rating or debt rating. 

19 ‘‘(d) RISK-BASED CAPITAL LEVELS.—

20 ‘‘(1) IN GENERAL.—The Director shall submit 

21 a report to the Congress, at the end of each fiscal 

22 quarter, regarding—

23 ‘‘(A) the risk-based capital levels for the 

24 enterprises under section 1361, including a de25 scription of the risk-based capital test under 
152

•S 190 IS 

1 that section and any assumptions of the Direc2 tor and factors used by the Director in estab3 lishing the test; and 

4 ‘‘(B) the minimum and critical capital lev5 els for the enterprises pursuant to sections 

6 1362 and 1363, respectively. 

7 ‘‘(2) TIMING.—Each report under this sub8 section shall be submitted not later than 60 days 

9 after the end of each fiscal quarter. 

10 ‘‘(e) RESOURCES AND ALLOCATIONS.—The Comp11 troller General of the United States shall submit a report 

12 to Congress annually, on a fiscal year basis, regarding—

13 ‘‘(1) the allocation of resources of the Agency 

14 by the Director; and 

15 ‘‘(2) the level of assessments collected by the 

16 Director for the operation of the Agency. 

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

18 pursuant to this section shall include specific recommenda19 tions of appropriate policies, limitations, regulations, legis20 lation, or other actions to deal appropriately and effec21 tively with the issues addressed by such report.’’. 

22 Subtitle F—General Provisions 

23 SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS. 

24 (a) AMENDMENTS TO 1992 ACT.—The Federal 

25 Housing Enterprises Financial Safety and Soundness Act 
153

•S 190 IS 

1 of 1992 (12 U.S.C. 4501 et seq.), as amended by this Act, 

2 is amended—

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

4 (A) in subsection (a)—

5 (i) by striking ‘‘(a) OFFICE PER6 SONNEL.—The’’ and inserting ‘‘(a) IN

7 GENERAL.—Subject to title III of the Fed8 eral Enterprise Regulatory Reform Act of 

9 2005, the’’; and 

10 (ii) by striking ‘‘the Office’’ each place 

11 that term appears and inserting ‘‘the 

12 Agency’’; 

13 (B) in subsection (c), by striking ‘‘the Of14 fice’’ and inserting ‘‘the Agency’’; 

15 (C) in subsection (e), by striking ‘‘the Of16 fice’’ and inserting ‘‘the Agency’’; 

17 (D) by striking subsection (d) and redesig18 nating subsection (e) as subsection (d); and 

19 (E) by striking subsection (f); 

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

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

22 (B) by striking subsection (b); 

23 (3) in section 1364(c) (12 U.S.C. 4614(c)), by 

24 striking the last sentence; 
154

•S 190 IS 

1 (4) by striking section 1383 (12 U.S.C. 1451 

2 note); 

3 (5) in each of sections 1319D, 1319E, and 

4 1319F (12 U.S.C. 4523, 4524, 4525) by striking 

5 ‘‘the Office’’ each place that term appears and in6 serting ‘‘the Agency’’; and 

7 (6) in each of sections 1319B and 1369(a)(3) 

8 (12 U.S.C. 4521, 4619(a)(3)), by striking ‘‘Com9 mittee on Banking, Finance and Urban Affairs’’ 

10 each place such term appears and inserting ‘‘Com11 mittee on Financial Services’’. 

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

13 The Federal National Mortgage Association Charter Act 

14 (12 U.S.C. 1716 et seq.) is amended—

15 (1) in each of sections 303(c)(2) (12 U.S.C. 

16 1718(c)(2)), 309(d)(3)(B) (12 U.S.C. 

17 1723a(d)(3)(B)), and 309(k)(1) (12 U.S.C. 

18 1723a(k)(1)), by striking ‘‘Director of the Office of 

19 Federal Housing Enterprise Oversight of the De20 partment of Housing and Urban Development’’ each 

21 place that term appears, and inserting ‘‘Director of 

22 the Federal Housing Enterprise Regulatory Agen23 cy’’; 

24 (2) in section 309—
155

•S 190 IS 

1 (A) in subsection (m) (12 U.S.C. 

2 1723a(m))— 

3 (i) in paragraph (1), by striking ‘‘to 

4 the Secretary, in a form determined by the 

5 Secretary’’ and inserting ‘‘to the Director 

6 of the Federal Housing Enterprise Regu7 latory Agency, in a form determined by the 

8 Director’’; and 

9 (ii) in paragraph (2), by striking ‘‘to 

10 the Secretary, in a form determined by the 

11 Secretary’’ and inserting ‘‘to the Director 

12 of the Federal Housing Enterprise Regu13 latory Agency, in a form determined by the 

14 Director’’; 

15 (B) in subsection (n) (12 U.S.C. 

16 1723a(n))—

17 (i) in paragraph (1), by striking ‘‘and 

18 the Secretary’’ and inserting ‘‘and the Di19 rector of the Federal Housing Enterprise 

20 Regulatory Agency’’; and 

21 (ii) in paragraph (2), by striking 

22 ‘‘Secretary’’ each place that term appears 

23 and inserting ‘‘Director of the Federal 

24 Housing Enterprise Regulatory Agency’’; 

25 and 
156

•S 190 IS 

1 (C) in paragraph (3)(B), by striking ‘‘Sec2 retary’’ and inserting ‘‘Director of the Federal 

3 Housing Enterprise Regulatory Agency’’. 

4 (c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed5 eral Home Loan Mortgage Corporation Act (12 U.S.C. 

6 1451 et seq.) is amended—

7 (1) in each of sections 303(b)(2) (12 U.S.C. 

8 1452(b)(2)), 303(h)(2) (12 U.S.C. 1452(h)(2)), and 

9 section 307(c)(1) (12 U.S.C. 1456(c)(1)), by strik10 ing ‘‘Director of the Office of Federal Housing En11 terprise Oversight of the Department of Housing 

12 and Urban Development’’ each place that term ap13 pears, and inserting ‘‘Director of the Federal Hous14 ing Enterprise Regulatory Agency’’; 

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

16 (A) in subsection (c)(2), by inserting ‘‘the’’ 

17 after ‘‘Secretary of’’; 

18 (B) in subsection (i)—

19 (i) by striking ‘‘section 1316(c)’’ and 

20 inserting ‘‘section 306(c)’’; and 

21 (ii) by striking ‘‘section 106’’ and in22 serting ‘‘section 1316’’; and 

23 (C) in subsection (j), by striking ‘‘of sub24 stantially’’ and inserting ‘‘or substantially’’; and 

25 (3) in section 307 (12 U.S.C. 1456)—
157

•S 190 IS 

1 (A) in subsection (e)—

2 (i) in paragraph (1), by striking ‘‘to 

3 the Secretary, in a form determined by the 

4 Secretary’’ and inserting ‘‘to the Director 

5 of the Federal Housing Enterprise Regu6 latory Agency, in a form determined by the 

7 Director’’; and 

8 (ii) in paragraph (2), by striking ‘‘to 

9 the Secretary, in a form determined by the 

10 Secretary’’ and inserting ‘‘to the Director 

11 of the Federal Housing Enterprise Regu12 latory Agency, in a form determined by the 

13 Director’’; and 

14 (B) in subsection (f)—

15 (i) in paragraph (1), by striking ‘‘and 

16 the Secretary’’ and inserting ‘‘and the Di17 rector of the Federal Housing Enterprise 

18 Regulatory Agency’’; 

19 (ii) in paragraph (2), by striking ‘‘the 

20 Secretary’’ each place that term appears 

21 and inserting ‘‘the Director of the Federal 

22 Housing Enterprise Regulatory Agency’’; 

23 and 

24 (iii) in paragraph (3)(B), by striking 

25 ‘‘Secretary’’ and inserting ‘‘Director of the 
158

•S 190 IS 

1 Federal Housing Enterprise Regulatory 

2 Agency’’.

3 (d) AMENDMENT TO TITLE 18, UNITED STATES

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

5 amended by striking ‘‘Office of Federal Housing Enter6 prise Oversight’’ and inserting ‘‘Federal Housing Enter7 prise Regulatory Agency’’. 

8 (e) AMENDMENTS TO FLOOD DISASTER PROTECTION

9 ACT OF 1973.—Section 102(f)(3)(A) of the Flood Dis10 aster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) 

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

12 Housing Enterprise Oversight of the Department of Hous13 ing and Urban Development’’ and inserting ‘‘Director of 

14 the Federal Housing Enterprise Regulatory Agency’’. 

15 (f) AMENDMENT TO DEPARTMENT OF HOUSING AND

16 URBAN DEVELOPMENT ACT.—Section 5 of the Depart17 ment of Housing and Urban Development Act (42 U.S.C. 

18 3534) is amended by striking subsection (d). 

19 (g) AMENDMENT TO TITLE 5, UNITED STATES

20 CODE.—Section 5313 of title 5, United States Code, is 

21 amended by striking the item relating to the Director of 

22 the Office of Federal Housing Enterprise Oversight, De23 partment of Housing and Urban Development and insert24 ing the following new item: 
159

•S 190 IS 

1 ‘‘Director of the Federal Housing Enterprise 

2 Regulatory Agency.’’. 

3 SEC. 172. PRESIDENTIALLY APPOINTED DIRECTORS OF EN4 TERPRISES. 

5 (a) FANNIE MAE.—

6 (1) IN GENERAL.—Section 308(b) of the Fed7 eral National Mortgage Association Charter Act (12 

8 U.S.C. 1723(b)) is amended—

9 (A) in the first sentence, by striking 

10 ‘‘eighteen persons, five of whom shall be ap11 pointed annually by the President of the United 

12 States, and the remainder of whom’’ and insert13 ing ‘‘13 persons, or such other number that the 

14 Director determines appropriate, who’’; 

15 (B) in the second sentence, by striking 

16 ‘‘appointed by the President’’; 

17 (C) in the third sentence—

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

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

20 such appointed member may be removed 

21 from office by the President for good 

22 cause’’; 

23 (D) in the fourth sentence, by striking 

24 ‘‘elective’’; and 

25 (E) by striking the fifth sentence. 
160

•S 190 IS 

1 (2) TRANSITIONAL PROVISION.—The amend2 ments made by paragraph (1) shall not apply to any 

3 appointed position of the board of directors of the 

4 Federal National Mortgage Association until the ex5 piration of the annual term for such position during 

6 which the effective date under section 173 occurs. 

7 (b) FREDDIE MAC.—

8 (1) IN GENERAL.—Section 303(a)(2) of the 

9 Federal Home Loan Mortgage Corporation Act (12 

10 U.S.C. 1452(a)(2)) is amended—

11 (A) in subparagraph (A)—

12 (i) in the first sentence, by striking 

13 ‘‘13 persons, 5 of whom shall be appointed 

14 annually by the President of the United 

15 States and the remainder of whom’’ and 

16 inserting ‘‘13 persons, or such other num17 ber as the Director determines appropriate, 

18 who’’; and 

19 (ii) in the second sentence, by striking 

20 ‘‘appointed by the President of the United 

21 States’’; 

22 (B) in subparagraph (B)—

23 (i) by striking ‘‘such or’’; and 
161

•S 190 IS 

1 (ii) by striking ‘‘, except that any ap2 pointed member may be removed from of3 fice by the President for good cause’’; and 

4 (C) in subparagraph (C)—

5 (i) by striking the first sentence; and 

6 (ii) by striking ‘‘elective’’. 

7 (2) TRANSITIONAL PROVISION.—The amend8 ments made by paragraph (1) shall not apply to any 

9 appointed position of the board of directors of the 

10 Federal Home Loan Mortgage Corporation until the 

11 expiration of the annual term for such position dur12 ing which the effective date under section 173 oc13 curs. 

14 SEC. 173. EFFECTIVE DATE. 

15 Except as specifically provided otherwise in this title, 

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

17 and shall apply beginning on, the date of enactment of 

18 this Act. 

19 TITLE II—FEDERAL HOME LOAN 

20 BANKS 

21 SEC. 201. DIRECTORS. 

22 Section 7 of the Federal Home Loan Bank Act (12 

23 U.S.C. 1427) is amended—

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

25 following: 
162

•S 190 IS 

1 ‘‘(a) NUMBER; APPOINTMENT AND ELECTION; 

2 QUALIFICATIONS; CONFLICTS OF INTEREST.—

3 ‘‘(1) IN GENERAL.—Subject to paragraphs (2) 

4 through (4), and except to the extent that action 

5 under section 1377 of the Federal Housing Enter6 prises Financial Safety and Soundness Act of 1992 

7 results in a lesser number, the management of each 

8 Federal Home Loan Bank shall be vested in a board 

9 of 13 directors, or such other number as the Direc10 tor determines appropriate. 

11 ‘‘(2) BOARD MAKEUP.—The board of directors 

12 of each Bank shall be comprised of—

13 ‘‘(A) member directors, who shall comprise 

14 at least the majority of the members of the 

15 board of directors; and 

16 ‘‘(B) nonmember directors, who shall comprise not fewer than 1 17 ⁄3 of the members of the 

18 board of directors. 

19 ‘‘(3) SELECTION CRITERIA.—

20 ‘‘(A) IN GENERAL.—Each member of the 

21 board of directors shall be—

22 ‘‘(i) elected by majority vote of the 

23 members, in accordance with procedures 

24 established under this section; and 

25 ‘‘(ii) a citizen of the United States. 
163

•S 190 IS 

1 ‘‘(B) NONMEMBER DIRECTOR CRITERIA.—

2 ‘‘(i) PUBLIC INTEREST.—Not fewer 

3 than 2 of the nonmember directors shall be 

4 selected from among representatives of or5 ganizations having more than a 2-year his6 tory of representing consumer or commu7 nity interests on banking services, credit 

8 needs, housing, or financial consumer pro9 tections. 

10 ‘‘(ii) CONFLICTS OF INTEREST.—No 

11 nonmember director may, during the term 

12 of service on the board of directors, serve 

13 as an officer of any Federal Home Loan 

14 Bank or as a director or officer of any 

15 member of a Bank. 

16 ‘‘(4) DEFINITIONS.—For purposes of this sec17 tion, the following definitions shall apply: 

18 ‘‘(A) MEMBER DIRECTOR.—The terms 

19 ‘member director’ and ‘member directorship’ 

20 mean a member of the board of directors of a 

21 Federal Home Loan Bank who is an officer or 

22 director of a member bank that is located in the 

23 district in which the Federal Home Loan Bank 

24 is located. 
164

•S 190 IS 

1 ‘‘(B) NONMEMBER DIRECTOR.—The terms 

2 ‘nonmember director’ and ‘nonmember director3 ship’ mean a member of the board of directors 

4 of a Federal Home Loan Bank who is a bona 

5 fide resident of the district in which the Federal 

6 Home Loan Bank is located.’’; 

7 (2) by striking ‘‘elective’’ each place that term 

8 appears and inserting ‘‘member’’, other than in sub9 sections (d) and (f); 

10 (3) in subsection (b)—

11 (A) in the first sentence, by striking ‘‘Each 

12 elective directorship’’ and inserting the fol13 lowing: 

14 ‘‘(b) DIRECTORSHIPS.—

15 ‘‘(1) MEMBER DIRECTORS.—Each member di16 rector’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(2) NONMEMBER DIRECTORS.—Each non19 member director shall be elected by the members en20 titled to vote, from among eligible persons nomi21 nated by the Board. Nominees shall meet all applica22 ble requirements prescribed in this section. Proce23 dures for nomination and election of nonmember di24 rectors shall be prescribed by the bylaws of each 

25 Federal Home Loan Bank, in a manner consistent 
165

•S 190 IS 

1 with the rules and regulations of the Federal Hous2 ing Enterprise Agency.’’; 

3 (4) in subsection (d)—

4 (A) in the first sentence— 

5 (i) by striking ‘‘, whether elected or 

6 appointed,’’; and 

7 (ii) by striking ‘‘3 years’’ and insert8 ing 4 years’’; and 

9 (B) in the second sentence—

10 (i) by striking ‘‘Federal Home Loan 

11 Bank System Modernization Act of 1999’’ 

12 and inserting ‘‘Federal Housing Enterprise 

13 Regulatory Reform Act of 2005’’; 

(ii) by striking ‘‘1 14 ⁄3’’ and inserting 

‘‘1 15 ⁄4’’; and 

16 (iii) by striking ‘‘or appointed’’; 

17 (5) in subsection (f)—

18 (A) by striking paragraph (2); 

19 (B) by striking ‘‘appointed or’’ each place 

20 that term appears; and 

21 (C) in paragraph (3)—

22 (i) by striking ‘‘(3) ELECTED BANK

23 DIRECTORS.—’’ and inserting ‘‘ELECTION

24 PROCESS.—’’; and 
166

•S 190 IS 

1 (ii) by striking ‘‘and such person shall 

2 not continue to act as a Bank director’’ 

3 and inserting ‘‘but such person may con4 tinue to act as a Bank director until his or 

5 her successor assumes the vacated office’’; 

6 (6) in subsection (i)—

7 (A) in paragraph (1), by striking ‘‘Subject 

8 to paragraph (2), each’’ and inserting ‘‘Each’’; 

9 and 

10 (B) by striking paragraph (2); and 

11 (7) by adding at the end the following: 

12 ‘‘(l) TRANSITION RULE.—Any member of the board 

13 of directors of a Bank elected in accordance with this sec14 tion prior to the date of enactment of this subsection may 

15 continue to serve as a member of that board of directors 

16 for the remainder of the term of service, and until his or 

17 her successor assumes the vacated office.’’. 

18 SEC. 202. DEFINITIONS. 

19 Section 2 of the Federal Home Loan Bank Act (12 

20 U.S.C. 1422) is amended—

21 (1) by striking paragraph (1); 

22 (2) by redesignating paragraphs (2) through 

23 (13) as paragraphs (1) through (12), respectively; 

24 and 

25 (3) by adding at the end the following: 
167

•S 190 IS 

1 ‘‘(13) DIRECTOR.—The term ‘Director’ means 

2 the Director of the Federal Housing Enterprise 

3 Agency. 

4 ‘‘(14) AGENCY.—The term ‘Agency’ means the 

5 Federal Housing Enterprises Supervisory Agency.’’. 

6 SEC. 203. AGENCY OVERSIGHT OF FEDERAL HOME LOAN 

7 BANKS. 

8 The Federal Home Loan Bank Act (12 U.S.C. 1421 

9 et seq.), other than in provisions of that Act added or 

10 amended otherwise by this Act, is amended—

11 (1) by striking sections 2A, 2B, and 20 (12 

12 U.S.C. 1422a, 1422b, 1440); 

13 (2) in section 18 (12 U.S.C. 1438), by striking 

14 subsection (b); 

15 (3) by striking ‘‘the Board’’ each place that 

16 term appears, except in sections 15 and 25, and sub17 sections (a), (b), and (c) of section 11, and inserting 

18 ‘‘the Director’’; 

19 (4) by striking ‘‘The Board’’ each place that 

20 term appears and inserting ‘‘The Director’’; 

21 (5) by striking ‘‘the Finance Board’’ each place 

22 that term appears and inserting ‘‘the Director’’; 

23 (6) by striking ‘‘The Finance Board’’ each 

24 place that term appears and inserting ‘‘The Direc25 tor’’; 
168

•S 190 IS 

1 (7) in section 6 (12 U.S.C. 1426(b)(1))—

2 (A) in subsection (b)(1), in the matter pre3 ceding subparagraph (A), by striking ‘‘Finance 

4 Board approval’’ and inserting ‘‘approval by the 

5 Director’’; and 

6 (B) in each of subsections (c)(4)(B) and 

7 (d)(2), by striking ‘‘Finance Board regulations’’ 

8 each place that term appears and inserting 

9 ‘‘regulations of the Director’’; 

10 (8) by striking ‘‘Federal Housing Finance 

11 Board’’ each place that term appears and inserting 

12 ‘‘Director’’; 

13 (9) by striking ‘‘Federal Home Loan Bank 

14 Board’’ each place that term appears and inserting 

15 ‘‘Director’’; 

16 (10) in section 10 (12 U.S.C. 1430)—

17 (A) in the heading for subsection (b), by 

18 striking ‘‘FORMAL BOARD RESOLUTION’’ and 

19 inserting ‘‘APPROVAL OF DIRECTOR’’; and 

20 (B) in subsection (b), by striking ‘‘by for21 mal resolution’’; and 

22 (11) in section 21(b)(5) (12 U.S.C. 1441(b)(5), 

23 by striking ‘‘Chairperson of the Federal Housing Fi24 nance Board’’ and inserting ‘‘Director’’. 
169

•S 190 IS 

1 SEC. 204. DEBT ISSUING FACILITY. 

2 The Federal Home Loan Bank Act (12 U.S.C. 1421 

3 et seq.) is amended by inserting after section 11 the fol4 lowing: 

5 ‘‘SEC. 11A. FEDERAL HOME LOAN BANK FINANCE COR6 PORATION. 

7 ‘‘(a) ESTABLISHMENT.—

8 ‘‘(1) IN GENERAL.—There is established the 

9 Federal Home Loan Bank Finance Corporation (in 

10 this section referred to as the ‘Corporation’), which 

11 shall be a jointly owned subsidiary of the Federal 

12 Home Loan Banks. 

13 ‘‘(2) PURPOSES.—The purposes of the Corpora14 tion are— 

15 ‘‘(A) to issue and service the consolidated 

16 obligations of the Federal Home Loan Banks in 

17 accordance with this Act; and 

18 ‘‘(B) to perform all other necessary and 

19 proper functions in relation to the issuance and 

20 service of such obligations, as fiscal agent on 

21 behalf of the Federal Home Loan Banks, and 

22 any other functions performed by the Office of 

23 Finance on behalf of the Financing Corporation 

24 (established under section 21) and the Resolu25 tion Funding Corporation (established under 

26 section 21B). 
170

•S 190 IS 

1 ‘‘(3) TRANSFER OF FUNCTIONS.—

2 ‘‘(A) IN GENERAL.—The functions of the 

3 Office of Finance of the Federal Home Loan 

4 Banks, shall be transferred to the Corporation 

5 immediately upon the conclusion of the organi6 zational meeting of the board of directors (re7 ferred to in this subsection as the ‘effective 

8 time’) established under subsection (c). 

9 ‘‘(B) ORGANIZATIONAL MEETING.—The 

10 organizational meeting of the board of directors 

11 of the Corporation shall occur as soon as prac12 ticable after the date of enactment of the Fed13 eral Enterprise Regulatory Reform Act of 2005. 

14 ‘‘(C) INTERIM PROCEDURES.—Until the ef15 fective time under subparagraph (A), the Office 

16 of Finance established as a joint office of the 

17 Federal Home Loan Banks (referred to in this 

18 subsection as the ‘predecessor office’) shall con19 tinue to operate as if this section had not been 

20 enacted. 

21 ‘‘(D) REFERENCES.—After the effective 

22 time under subparagraph (A), any reference 

23 under any Federal law to the Office of Finance 

24 and the Managing Director of the Office of Fi25 nance shall be deemed to be references to the 
171

•S 190 IS 

1 Corporation and the chief executive officer of 

2 the Corporation, respectively. 

3 ‘‘(4) SUCCESSION.—

4 ‘‘(i) ASSETS AND LIABILITIES.—At 

5 the effective time, the Corporation shall, by 

6 operation of law and without any further 

7 action by the Federal Housing Finance 

8 Board, the predecessor office, or any court, 

9 succeed to the assets of, and assume all 

10 debts, obligations, contracts, and other li11 abilities of the predecessor office, matured 

12 or unmatured, accrued or absolute, contin13 gent or otherwise, and whether or not re14 flected or reserved against on balance 

15 sheets, books of account, or records of the 

16 predecessor office. 

17 ‘‘(ii) CONTRACTS.—At the effective 

18 time, the existing contractual obligations of 

19 the Federal Housing Finance Board, solely 

20 in its capacity as issuer of consolidated ob21 ligations of the Federal Home Loan Banks 

22 and the predecessor office shall, by oper23 ation of law and without any further action 

24 by the Federal Housing Finance Board, 

25 the predecessor office, or any court, be-
172

•S 190 IS 

1 come obligations, entitlements, and instru2 ments of the Corporation. 

3 ‘‘(iii) TAXATION.—The succession to 

4 assets, assumption of liabilities, conversion 

5 of obligations and instruments, and effec6 tuation of any other transaction by the 

7 Corporation to carry out this subsection 

8 shall not be treated as a taxable event 

9 under the laws of any State, or any polit10 ical subdivision thereof. 

11 ‘‘(b) POWERS.—Subject to the provisions of this Act, 

12 and such regulations as the Director may prescribe, the 

13 Corporation shall have the power—

14 ‘‘(1) to issue voting capital stock to the Federal 

15 Home Loan Banks; 

16 ‘‘(2) to issue and service Federal Home Loan 

17 Bank consolidated notes, consolidated bonds, con18 solidated debentures and other consolidated obliga19 tions under section 11, on behalf of the Federal 

20 Home Loan Banks; 

21 ‘‘(3) to determine the amount, maturities, rate 

22 of interest, terms, and other conditions of Federal 

23 Home Loan Bank consolidated obligations; 

24 ‘‘(4) to adopt, alter, and use a corporate seal; 

25 ‘‘(5) to make contracts; 
173

•S 190 IS 

1 ‘‘(6) to sue and be sued in the corporate capac2 ity of the Corporation, and to complain and defend 

3 in any action brought by or against the Corporation 

4 in any court of competent jurisdiction; 

5 ‘‘(7) to determine the terms and conditions 

6 under which the Corporation may indemnify its di7 rectors, officers, employees, and agents; 

8 ‘‘(8) to determine and implement the method9 ology for assessments of the Federal Home Loan 

10 Banks to fund all of the expenses of the Corpora11 tion; and 

12 ‘‘(9) to exercise such incidental powers not in13 consistent with the provisions of this Act as are nec14 essary or advisable to carry out the purposes of the 

15 Corporation. 

16 ‘‘(c) BOARD OF DIRECTORS.—

17 ‘‘(1) ESTABLISHMENT.—The management of 

18 the Corporation shall be vested in a board of direc19 tors composed of the president of each of the Fed20 eral Home Loan Banks, ex officio. 

21 ‘‘(2) DUTIES.—The board of directors of the 

22 Corporation shall administer the affairs of the Cor23 poration in accordance with the provisions of this 

24 section. 
174

•S 190 IS 

1 ‘‘(3) INTERIM APPOINTMENTS.—If the office of 

2 the president of any Federal Home Loan Bank is 

3 vacant, the person serving in such capacity on an 

4 acting basis shall serve on the board of directors of 

5 the Corporation until replaced by the next person to 

6 fill the office of the president of that Federal Home 

7 Loan Bank. 

8 ‘‘(4) POWERS.—The board of directors of the 

9 Corporation shall exercise such powers as may be 

10 necessary or advisable to carry out this section, in11 cluding the power to—

12 ‘‘(A) set policies for the management and 

13 operation of the Corporation; 

14 ‘‘(B) approve a strategic business plan for 

15 the Corporation; 

16 ‘‘(C) review, adopt and monitor annual op17 eration and capital budgets of the Corporation; 

18 ‘‘(D) constitute and perform the duties of 

19 an audit committee, which to the extent pos20 sible shall operate consistent with—

21 ‘‘(i) the requirements established for 

22 the Federal Home Loan Banks; and 

23 ‘‘(ii) the requirements pertaining to 

24 audit committee reports set forth in the 
175

•S 190 IS 

1 rules of Securities and Exchange Commis2 sion; 

3 ‘‘(E) select, employ, determine the com4 pensation for, and assign the duties and func5 tions of the president of the Corporation, who 

6 shall—

7 ‘‘(i) be the chief executive officer for 

8 the Corporation and shall direct the imple9 mentation of the policies adopted by the 

10 board of directors of the Corporation; 

11 ‘‘(ii) serve as a member of the Direc12 torate of the Financing Corporation, under 

13 section 21(b)(1)(A) of this Act (12 U.S.C. 

14 1441(b)(1)(A)); and 

15 ‘‘(iii) serve as a member of the Direc16 torate of the Resolution Funding Corpora17 tion, under section 21B(c)(1)(A) of this 

18 Act (12 U.S.C. 1441b(c)(1)(A)); 

19 ‘‘(F) provide for the review and approval 

20 of all contracts of the Corporation; 

21 ‘‘(G) have the exclusive authority to em22 ploy and contract for the services of an inde23 pendent, external auditor for the annual and 

24 quarterly combined financial statements of the 

25 Federal Home Loan Banks; and 
176

•S 190 IS 

1 ‘‘(H) select, evaluate, determine the com2 pensation of, and, as appropriate, replace the 

3 internal auditor of the Corporation, who may be 

4 removed only by vote of the board of directors 

5 of the Corporation. 

6 ‘‘(5) PAY.—The members of the board of direc7 tors of the Corporation shall not receive compensa8 tion for their services as members of the board of di9 rectors. 

10 ‘‘(6) QUORUM REQUIREMENT.—

11 ‘‘(A) IN GENERAL.—No business of the 

12 Corporation may be conducted by the board of 

13 directors unless a quorum of the members of 

14 the board of directors is present in person or by 

15 telephone, or through action taken by written 

16 consent executed by all of the members of the 

17 board of directors. 

18 ‘‘(B) NUMBER.—Directors representing a 

19 majority of the members of the board of direc20 tors shall constitute a quorum. 

21 ‘‘(C) VOTE REQUIRED.—Action taken by 

22 the board of directors shall be approved by a 

23 majority of the directors in attendance at any 

24 meeting at which a quorum is present, unless 
177

•S 190 IS 

1 the board of directors adopts procedures requir2 ing a greater voting requirement. 

3 ‘‘(7) APPOINTMENT OF OFFICERS AND ADOP4 TION OF RULES OF PROCEDURE.—The board of di5 rectors of the Corporation shall—

6 ‘‘(A) select, from among the members of 

7 such board, a Chairperson and a Vice Chair8 person; and 

9 ‘‘(B) adopt bylaws and other rules of pro10 cedure for actions before the board of directors, 

11 including the establishment of 1 or more com12 mittees to take action on behalf of the board of 

13 directors, and the delegation of powers of the 

14 board of directors to any committee or officer 

15 of the Corporation. 

16 ‘‘(d) STOCK.—

17 ‘‘(1) ISSUANCE OF EQUAL AMOUNT TO EACH

18 BANK.—The Corporation shall issue to each Federal 

19 Home Loan Bank 1 share of voting capital stock, 

20 with a par value of $100 per share. 

21 ‘‘(2) RESTRICTED TRANSFERABILITY.—Stock 

22 issued under paragraph (1) may be owned and held 

23 only by the Federal Home Loan Banks. 

24 ‘‘(3) PAYMENT UPON ISSUANCE.—Upon 

25 issuance of any share of stock under this subsection 
178

•S 190 IS 

1 to any Federal Home Loan Bank, the bank shall 

2 pay to the Corporation the total amount due for 

3 such stock. 

4 ‘‘(4) DISTRIBUTION REQUIREMENT.—

5 ‘‘(A) IN GENERAL.—The total amount of 

6 outstanding stock of the Corporation shall, at 

7 all times, be distributed equally among all of 

8 the Federal Home Loan Banks. 

9 ‘‘(B) PROCEDURES.—The board of direc10 tors of the Corporation shall adopt procedures 

11 to implement subparagraph (A). 

12 ‘‘(e) STATUS.—Except to the extent expressly pro13 vided in this title, or in rules or regulations promulgated 

14 by the Director, or unless the context clearly indicates oth15 erwise, the Corporation shall be accorded the same status 

16 as a Federal Home Loan Bank for purposes of any other 

17 provision of law, including sections 2B and 13 of this 

18 Act.’’. 

19 SEC. 205. EXCLUSION FROM CERTAIN SECURITIES REPORT20 ING REQUIREMENTS. 

21 (a) IN GENERAL.—The Federal Home Loan Banks 

22 shall be exempt from compliance with— 

23 (1) sections 13(e), 14(a), 14(c), and 17A of the 

24 Securities Exchange Act of 1934, and related Com25 mission regulations; and 
179

•S 190 IS 

1 (2) section 15 of the Securities Exchange Act 

2 of 1934, and related Commission regulations, with 

3 respect to transactions in the capital stock of a Fed4 eral Home Loan Bank. 

5 (b) MEMBER EXEMPTION.—The members of the 

6 Federal Home Loan Bank System shall be exempt from 

7 compliance with sections 13(d), 13(f), 13(g), 14(d), and 

8 16 of the Securities Exchange Act of 1934, and related 

9 Commission regulations, with respect to ownership of or 

10 transactions in the capital stock of the Federal Home 

11 Loan Banks by such members. 

12 (c) EXEMPTED AND GOVERNMENT SECURITIES.—

13 (1) CAPITAL STOCK.—The capital stock issued 

14 by each of the Federal Home Loan Banks under 

15 section 6 of the Federal Home Loan Bank Act are—

16 (A) ‘‘exempted securities’’, within the 

17 meaning of section 3(a)(2) of the Securities Act 

18 of 1933; and 

19 (B) ‘‘exempted securities’’, within the 

20 meaning of section 3(a)(12)(A) of the Securities 

21 Exchange Act of 1934. 

22 (2) OTHER OBLIGATIONS.—The debentures, 

23 bonds, and other obligations issued under section 11 

24 of the Federal Home Loan Bank Act are—
180

•S 190 IS 

1 (A) ‘‘exempted securities’’, within the 

2 meaning of section 3(a)(2) of the Securities Act 

3 of 1933; 

4 (B) ‘‘government securities’’, within the 

5 meaning of section 3(a)(42) of the Securities 

6 Exchange Act of 1934; and 

7 (E) ‘‘government securities’’ within the 

8 meaning of section 2(a)(16) of the Investment 

9 Company Act of 1940. 

10 (3) BROKERS AND DEALERS.—A person that 

11 effects transactions in the capital stock or other obli12 gations of a Federal Home Loan Bank, for the ac13 count of others or for his own account, as applica14 ble—

15 (A) is excluded from the definition of the 

16 term ‘‘government securities broker’’ under sec17 tion 3(a)(43) of the Securities Exchange Act of 

18 1934; and 

19 (B) is excluded from the definition of ‘‘gov20 ernment securities dealer’’ under section 

21 3(a)(44) of the Securities Exchange Act of 

22 1934. 

23 (d) EXEMPTION FROM REPORTING REQUIRE24 MENTS.—The Federal Home Loan Banks shall be exempt 
181

•S 190 IS 

1 from periodic reporting requirements under the securities 

2 laws pertaining to—

3 (1) the disclosure of related party transactions 

4 that occur in the ordinary course of the business of 

5 the Banks with members; and 

6 (2) the disclosure of the unregistered sales of 

7 equity securities. 

8 (e) TENDER OFFERS.—Commission rules relating to 

9 tender offers shall not apply in connection with trans10 actions in the capital stock of the Federal Home Loan 

11 Banks. 

12 (f) REGULATIONS.—

13 (1) FINAL RULES.—Not later than 1 year after 

14 the date of enactment of this Act, the Commission 

15 shall issue final rules to implement this section and 

16 the exemptions provided in this section. 

17 (2) CONSIDERATIONS.—In issuing final regula18 tions under this section, the Commission shall con19 sider the distinctive characteristics of the Federal 

20 Home Loan Banks when evaluating the accounting 

21 treatment with respect to the payment to the Reso22 lution Funding Corporation, the role of the com23 bined financial statements of the Federal Home 

24 Loan Banks, the accounting classification of redeem25 able capital stock, and the accounting treatment re-
182

•S 190 IS 

1 lated to the joint and several nature of the obliga2 tions of the Banks. 

3 (g) APPLICABILITY.—The exemptions and exclusions 

4 provided for in this section shall apply in accordance with 

5 this section, notwithstanding any other provision of law, 

6 including any provision of the securities laws. 

7 (h) DEFINITIONS.—As used in this section—

8 (1) the terms ‘‘Bank’’, ‘‘Federal Home Loan 

9 Bank’’, ‘‘member’’, and ‘‘Federal Home Loan Bank 

10 System’’ have the same meanings as in section 2 of 

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

12 1422); 

13 (2) the term ‘‘Commission’’ means the Securi14 ties and Exchange Commission’’; and 

15 (3) the term ‘‘securities laws’’ has the same 

16 meaning as in section 3(a)(47) of the Securities Ex17 change Act of 1934. 

18 SEC. 206. LIMITATION ON GOLDEN PARACHUTES. 

19 Section 7(i) of the Federal Home Loan Bank Act (12 

20 U.S.C. 1427) is amended by adding at the end the fol21 lowing: 

22 ‘‘(2) AUTHORITY TO REGULATE OR PROHIBIT

23 CERTAIN FORMS OF BENEFITS TO AFFILIATED PAR24 TIES.—
183

•S 190 IS 

1 ‘‘(A) GOLDEN PARACHUTES AND INDEM2 NIFICATION PAYMENTS.—The Agency may pro3 hibit or limit, by regulation or order, any golden 

4 parachute payment or indemnification payment. 

5 ‘‘(B) FACTORS TO BE TAKEN INTO AC6 COUNT.—The Agency shall prescribe, by regula7 tion, the factors to be considered by the Agency 

8 in taking any action pursuant to subparagraph 

9 (A), which may include such factors as—

10 ‘‘(i) whether there is a reasonable 

11 basis to believe that the affiliated party 

12 has committed any fraudulent act or omis13 sion, breach of trust or fiduciary duty, or 

14 insider abuse with regard to the Bank that 

15 has had a material affect on the financial 

16 condition of the Bank; 

17 ‘‘(ii) whether there is a reasonable 

18 basis to believe that the affiliated party is 

19 substantially responsible for the insolvency 

20 of the Bank, the appointment of a conser21 vator or receiver for the Bank, or the trou22 bled condition of the Bank (as defined in 

23 regulations prescribed by the Agency); 

24 ‘‘(iii) whether there is a reasonable 

25 basis to believe that the affiliated party 
184

•S 190 IS 

1 has materially violated any applicable Fed2 eral or State law or regulation that has 

3 had a material affect on the financial con4 dition of the Bank; 

5 ‘‘(iv) whether the affiliated party was 

6 in a position of managerial or fiduciary re7 sponsibility; and 

8 ‘‘(v) the length of time the party was 

9 affiliated with the Bank, and the degree to 

10 which—

11 ‘‘(I) the payment reasonably re12 flects compensation earned over the 

13 period of employment; and 

14 ‘‘(II) the compensation involved 

15 represents a reasonable payment for 

16 services rendered. 

17 ‘‘(C) CERTAIN PAYMENTS PROHIBITED.—

18 No Bank may prepay the salary or any liability 

19 or legal expense of any affiliated party, if such 

20 payment is made—

21 ‘‘(i) in contemplation of the insolvency 

22 of such Bank, or after the commission of 

23 an act of insolvency; and 

24 ‘‘(ii) with a view to, or has the result 

25 of—
185

•S 190 IS 

1 ‘‘(I) preventing the proper appli2 cation of the assets of the Bank to 

3 creditors; or 

4 ‘‘(II) preferring one creditor over 

5 another. 

6 ‘‘(D) GOLDEN PARACHUTE PAYMENT DE7 FINED.—

8 ‘‘(i) IN GENERAL.—For purposes of 

9 this paragraph, the term ‘golden parachute 

10 payment’ means any payment (or any 

11 agreement to make any payment) in the 

12 nature of compensation by any Bank for 

13 the benefit of any affiliated party, pursu14 ant to an obligation of such Bank that—

15 ‘‘(I) is contingent on the termi16 nation of such party’s affiliation with 

17 the Bank; and 

18 ‘‘(II) is received on or after the 

19 date on which—

20 ‘‘(aa) the Bank becomes in21 solvent; 

22 ‘‘(bb) any conservator or re23 ceiver is appointed for such insti24 tution; or 
186

•S 190 IS 

1 ‘‘(cc) the Agency determines 

2 that the Bank is in a troubled 

3 condition (as defined in the regu4 lations prescribed by the Agen5 cy). 

6 ‘‘(ii) CERTAIN PAYMENTS IN CON7 TEMPLATION OF AN EVENT.—Any pay8 ment which would be a golden parachute 

9 payment but for the fact that such pay10 ment was made before the date referred to 

11 in subclause (II) of clause (i) shall be 

12 treated as a golden parachute payment for 

13 purposes of this paragraph, if the payment 

14 was made in contemplation of the occur15 rence of an event described in any provi16 sion of such subclause. 

17 ‘‘(iii) CERTAIN PAYMENTS NOT IN18 CLUDED.—For purposes of this paragraph, 

19 the term ‘golden parachute payment’ does 

20 not include—

21 ‘‘(I) any payment made pursuant 

22 to a retirement plan which is qualified 

23 (or is intended to be qualified) under 

24 section 401 of the Internal Revenue 
187

•S 190 IS 

1 Code of 1986, or other nondiscrim2 inatory benefit plan; 

3 ‘‘(II) any payment made pursu4 ant to a bona fide deferred compensa5 tion plan or arrangement which the 

6 Agency determines, by regulation or 

7 order, to be permissible; or 

8 ‘‘(III) any payment made by rea9 son of the death or disability of an af10 filiated party. 

11 ‘‘(E) OTHER DEFINITIONS.—For purposes 

12 of this paragraph—

13 ‘‘(i) INDEMNIFICATION PAYMENT.—

14 Subject to subparagraph (F), the term ‘in15 demnification payment’ means any pay16 ment (or any agreement to make any pay17 ment) by any Bank for the benefit of any 

18 person who is or was an affiliated party, to 

19 pay or reimburse such person for any li20 ability or legal expense with regard to any 

21 administrative proceeding or civil action in22 stituted by the Agency which results in a 

23 final order under which such person—

24 ‘‘(I) is assessed a civil money 

25 penalty; 
188

•S 190 IS 

1 ‘‘(II) is removed or prohibited 

2 from participating in conduct of the 

3 affairs of the Bank; or 

4 ‘‘(III) is required to take any af5 firmative action described in section 

6 2B(a)(5) with respect to such Bank. 

7 ‘‘(ii) LIABILITY OR LEGAL EX8 PENSE.—The term ‘liability or legal ex9 pense’ means—

10 ‘‘(I) any legal or other profes11 sional expense incurred in connection 

12 with any claim, proceeding, or action; 

13 ‘‘(II) the amount of, and any cost 

14 incurred in connection with, any set15 tlement of any claim, proceeding, or 

16 action; and 

17 ‘‘(III) the amount of, and any 

18 cost incurred in connection with, any 

19 judgment or penalty imposed with re20 spect to any claim, proceeding, or ac21 tion. 

22 ‘‘(iii) PAYMENT.—The term ‘payment’ 

23 includes—

24 ‘‘(I) any direct or indirect trans25 fer of any funds or any asset; and 
189

•S 190 IS 

1 ‘‘(II) any segregation of any 

2 funds or assets for the purpose of 

3 making, or pursuant to an agreement 

4 to make, any payment after the date 

5 on which such funds or assets are seg6 regated, without regard to whether 

7 the obligation to make such payment 

8 is contingent on—

9 ‘‘(aa) the determination, 

10 after such date, of the liability 

11 for the payment of such amount; 

12 or 

13 ‘‘(bb) the liquidation, after 

14 such date, of the amount of such 

15 payment. 

16 ‘‘(F) CERTAIN COMMERCIAL INSURANCE

17 COVERAGE NOT TREATED AS COVERED BEN18 EFIT PAYMENT.—No provision of this para19 graph shall be construed as prohibiting any 

20 Bank from purchasing any commercial insur21 ance policy or fidelity bond, except that, subject 

22 to any affirmative action required under section 

23 2B(a)(5), such insurance policy or bond shall 

24 not cover any legal or liability expense of the 
190

•S 190 IS 

1 Bank which is described in subparagraph 

2 (E)(i).’’.

3 TITLE III—TRANSFER OF FUNC4 TIONS, PERSONNEL, AND 

5 PROPERTY OF OFHEO AND 

6 THE FEDERAL HOUSING FI7 NANCE BOARD 

8 Subtitle A—OFHEO 

9 SEC. 301. ABOLISHMENT OF OFHEO. 

10 (a) IN GENERAL.—Effective at the end of the 180-

11 day period beginning on the date of enactment of this Act, 

12 the Office of Federal Housing Enterprise Oversight of the 

13 Department of Housing and Urban Development and the 

14 positions of the Director and Deputy Director of such Of15 fice are abolished.

16 (b) DISPOSITION OF AFFAIRS.—During the 180-day 

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

18 Director of the Office of Federal Housing Enterprise 

19 Oversight, solely for the purpose of winding up the affairs 

20 of the Office of Federal Housing Enterprise Oversight—

21 (1) shall manage the employees of such Office 

22 and provide for the payment of the compensation 

23 and benefits of any such employee which accrue be24 fore the effective date of the transfer of such em25 ployee under section 303; and 
191

•S 190 IS 

1 (2) may take any other action necessary for the 

2 purpose of winding up the affairs of the Office. 

3 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.—

4 The amendments made by title I and the abolishment of 

5 the Office of Federal Housing Enterprise Oversight under 

6 subsection (a) of this section may not be construed to af7 fect the status of any employee of such Office as employ8 ees of an agency of the United States for purposes of any 

9 other provision of law before the effective date of the 

10 transfer of any such employee under section 303. 

11 (d) USE OF PROPERTY AND SERVICES.—

12 (1) PROPERTY.—The Director of the Federal 

13 Housing Enterprise Regulatory Agency may use the 

14 property of the Office of Federal Housing Enter15 prise Oversight to perform functions which have 

16 been transferred to the Director of the Federal 

17 Housing Enterprise Regulatory Agency for such 

18 time as is reasonable to facilitate the orderly trans19 fer of functions transferred under any other provi20 sion of this Act or any amendment made by this Act 

21 to any provision of law. 

22 (2) AGENCY SERVICES.—Any agency, depart23 ment, or other instrumentality of the United States, 

24 and any successor to any such agency, department, 

25 or instrumentality, which was providing supporting 
192

•S 190 IS 

1 services to the Office of Federal Housing Enterprise 

2 Oversight before the expiration of the period under 

3 subsection (a) in connection with functions that are 

4 transferred to the Director of the Federal Housing 

5 Enterprise Regulatory Agency shall—

6 (A) continue to provide such services, on a 

7 reimbursable basis, until the transfer of such 

8 functions is complete; and 

9 (B) consult with any such agency to co10 ordinate and facilitate a prompt and reasonable 

11 transition. 

12 (e) SAVINGS PROVISIONS.—

13 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA14 TIONS NOT AFFECTED.—Subsection (a) shall not af15 fect the validity of any right, duty, or obligation of 

16 the United States, the Director of the Office of Fed17 eral Housing Enterprise Oversight, or any other per18 son, which—

19 (A) arises under title XIII of the Housing 

20 and Community Development Act of 1992, the 

21 Federal National Mortgage Association Charter 

22 Act, the Federal Home Loan Mortgage Cor23 poration Act, or any other provision of law ap24 plicable with respect to such Office; and 
193

•S 190 IS 

1 (B) existed on the day before the date of 

2 abolishment under subsection (a).

3 (2) CONTINUATION OF SUITS.—No action or 

4 other proceeding commenced by or against the Di5 rector of the Office of Federal Housing Enterprise 

6 Oversight in connection with functions that are 

7 transferred to the Director of the Federal Housing 

8 Enterprise Regulatory Agency shall abate by reason 

9 of the enactment of this Act, except that the Direc10 tor of the Federal Housing Enterprise Regulatory 

11 Agency shall be substituted for the Director of the 

12 Office of Federal Housing Enterprise Oversight as a 

13 party to any such action or proceeding. 

14 SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN 

15 REGULATIONS. 

16 (a) IN GENERAL.—All regulations, orders, and deter17 minations described under subsection (b) shall remain in 

18 effect according to the terms of such regulations, orders, 

19 determinations, and resolutions, and shall be enforceable 

20 by or against the Director of the Federal Housing Enter21 prise Regulatory Agency or the Secretary of Housing and 

22 Urban Development, as the case may be, until modified, 

23 terminated, set aside, or superseded in accordance with 

24 applicable law by such Director or Secretary, as the case 
194

•S 190 IS 

1 may be, any court of competent jurisdiction, or operation 

2 of law. 

3 (b) APPLICABILITY.—A regulation, order, or deter4 mination is described under this subsection if they—

5 (1) were issued, made, prescribed, or allowed to 

6 become effective by—

7 (A) the Office of Federal Housing Enter8 prise Oversight; 

9 (B) the Secretary of Housing and Urban 

10 Development and that relate to the Secretary’s 

11 authority under—

12 (i) title XIII of the Housing and Com13 munity Development Act of 1992; 

14 (ii) the Federal National Mortgage 

15 Association Charter Act, with respect to 

16 the Federal National Mortgage Associa17 tion; or 

18 (iii) the Federal Home Loan Mort19 gage Corporation Act, with respect to the 

20 Federal Home Loan Mortgage Corpora21 tion; or 

22 (C) a court of competent jurisdiction and 

23 that relate to functions transferred by this Act; 

24 and 
195

•S 190 IS 

1 (2) are in effect on the effective date of the 

2 abolishment under section 301(a). 

3 SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF 

4 OFHEO. 

5 (a) TRANSFER.—Each employee of the Office of Fed6 eral Housing Enterprise Oversight shall be transferred to 

7 the Federal Housing Enterprise Regulatory Agency for 

8 employment not later than the effective date of the abol9 ishment under section 301(a) and such transfer shall be 

10 deemed a transfer of function for purposes of section 3503 

11 of title 5, United States Code. 

12 (b) GUARANTEED POSITIONS.—Each employee trans13 ferred under subsection (a) shall be guaranteed a position 

14 with the same status, tenure, grade, and pay as that held 

15 on the day immediately preceding the transfer. Each such 

16 employee holding a permanent position shall not be invol17 untarily separated or reduced in grade or compensation 

18 for 12 months after the date of transfer, except for cause 

19 or, if the employee is a temporary employee, separated in 

20 accordance with the terms of the appointment. 

21 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

22 SENIOR EXECUTIVE SERVICE EMPLOYEES.—

23 (1) IN GENERAL.—In the case of employees oc24 cupying positions in the excepted service or the Sen25 ior Executive Service, any appointment authority es-
196

•S 190 IS 

1 tablished under law or by regulations of the Office 

2 of Personnel Management for filling such positions 

3 shall be transferred, subject to paragraph (2). 

4 (2) DECLINE OF TRANSFER.—The Director of 

5 the Federal Housing Enterprise Regulatory Agency 

6 may decline a transfer of authority under paragraph 

7 (1) to the extent that such authority relates to posi8 tions excepted from the competitive service because 

9 of their confidential, policymaking, policy-deter10 mining, or policy-advocating character, and non11 career positions in the Senior Executive Service 

12 (within the meaning of section 3132(a)(7) of title 5, 

13 United States Code). 

14 (d) REORGANIZATION.—If the Director of the Fed15 eral Housing Enterprise Regulatory Agency determines, 

16 after the end of the 1-year period beginning on the effec17 tive date of the abolishment under section 301(a), that 

18 a reorganization of the combined workforce is required, 

19 that reorganization shall be deemed a major reorganiza20 tion for purposes of affording affected employees retire21 ment under section 8336(d)(2) or 8414(b)(1)(B) of title 

22 5, United States Code. 

23 (e) EMPLOYEE BENEFIT PROGRAMS.—

24 (1) IN GENERAL.—Any employee of the Office 

25 of Federal Housing Enterprise Oversight accepting 
197

•S 190 IS 

1 employment with the Federal Housing Enterprise 

2 Regulatory Agency as a result of a transfer under 

3 subsection (a) may retain for 12 months after the 

4 date on which such transfer occurs membership in 

5 any employee benefit program of the Director of the 

6 Federal Housing Enterprise Regulatory Agency or 

7 the Office of Federal Housing Enterprise Oversight 

8 of the Department of Housing and Urban Develop9 ment, as applicable, including insurance, to which 

10 such employee belongs on the date of the abolish11 ment under section 301(a) if—

12 (A) the employee does not elect to give up 

13 the benefit or membership in the program; and 

14 (B) the benefit or program is continued by 

15 the Director of the Federal Housing Enterprise 

16 Regulatory Agency.

17 (2) COST DIFFERENTIAL.—The difference in 

18 the costs between the benefits which would have 

19 been provided by the Office of Federal Housing En20 terprise Oversight and those provided by this section 

21 shall be paid by the Director of the Federal Housing 

22 Enterprise Regulatory Agency. If any employee 

23 elects to give up membership in a health insurance 

24 program or the health insurance program is not con25 tinued by such Director, the employee shall be per-
198

•S 190 IS 

1 mitted to select an alternate Federal health insur2 ance program within 30 days after such election or 

3 notice, without regard to any other regularly sched4 uled open season. 

5 SEC. 304. TRANSFER OF PROPERTY AND FACILITIES. 

6 Upon the effective date of its abolishment under sec7 tion 301(a), all property of the Office of Federal Housing 

8 Enterprise Oversight of the Department of Housing and 

9 Urban Development shall transfer to the Director of the 

10 Federal Housing Enterprise Regulatory Agency.

11 Subtitle B—Federal Housing 

12 Finance Board 

13 SEC. 311. ABOLISHMENT OF THE FEDERAL HOUSING FI14 NANCE BOARD. 

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

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

17 Federal Housing Finance Board (in this title referred to 

18 as the ‘‘Board’’) is abolished.

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

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

21 Board, solely for the purpose of winding up the affairs 

22 of the Board—

23 (1) shall manage the employees of such Board 

24 and provide for the payment of the compensation 

25 and benefits of any such employee which accrue be-
199

•S 190 IS 

1 fore the effective date of the transfer of such em2 ployee under section 403; and 

3 (2) may take any other action necessary for the 

4 purpose of winding up the affairs of the Board. 

5 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.—

6 The amendments made by titles I and II and the abolish7 ment of the Board under subsection (a) may not be con8 strued to affect the status of any employee of such Board 

9 as employees of an agency of the United States for pur10 poses of any other provision of law before the effective 

11 date of the transfer of any such employee under section 

12 403. 

13 (d) USE OF PROPERTY AND SERVICES.—

14 (1) PROPERTY.—The Director of the Federal 

15 Housing Enterprise Regulatory Agency may use the 

16 property of the Board to perform functions which 

17 have been transferred to the Director of the Federal 

18 Housing Enterprise Regulatory Agency for such 

19 time as is reasonable to facilitate the orderly trans20 fer of functions transferred under any other provi21 sion of this Act or any amendment made by this Act 

22 to any other provision of law. 

23 (2) AGENCY SERVICES.—Any agency, depart24 ment, or other instrumentality of the United States, 

25 and any successor to any such agency, department, 
200

•S 190 IS 

1 or instrumentality, which was providing supporting 

2 services to the Board before the expiration of the 1-

3 year period under subsection (a) in connection with 

4 functions that are transferred to the Director of the 

5 Federal Housing Enterprise Regulatory Agency 

6 shall—

7 (A) continue to provide such services, on a 

8 reimbursable basis, until the transfer of such 

9 functions is complete; and 

10 (B) consult with any such agency to co11 ordinate and facilitate a prompt and reasonable 

12 transition. 

13 (e) SAVINGS PROVISIONS.—

14 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA15 TIONS NOT AFFECTED.—Subsection (a) shall not af16 fect the validity of any right, duty, or obligation of 

17 the United States, a member of the Board, or any 

18 other person, which—

19 (A) arises under title XIII of the Housing 

20 and Community Development Act of 1992, the 

21 Federal National Mortgage Association Charter 

22 Act, the Federal Home Loan Mortgage Cor23 poration Act, the Federal Home Loan Bank 

24 Act, or any other provision of law applicable 

25 with respect to such Board; and 
201

•S 190 IS 

1 (B) existed on the day before the effective 

2 date of the abolishment under subsection (a).

3 (2) CONTINUATION OF SUITS.—No action or 

4 other proceeding commenced by or against the 

5 Board in connection with functions that are trans6 ferred to the Director of the Federal Housing Enter7 prise Regulatory Agency shall abate by reason of the 

8 enactment of this Act, except that the Director of 

9 the Federal Housing Enterprise Regulatory Agency 

10 shall be substituted for the Board or any member 

11 thereof as a party to any such action or proceeding. 

12 SEC. 312. CONTINUATION AND COORDINATION OF CERTAIN 

13 REGULATIONS. 

14 (a) IN GENERAL.—All regulations, orders, and deter15 minations described under subsection (b) shall remain in 

16 effect according to the terms of such regulations, orders, 

17 determinations, and resolutions, and shall be enforceable 

18 by or against the Director of the Federal Housing Enter19 prise Regulatory Agency until modified, terminated, set 

20 aside, or superseded in accordance with applicable law by 

21 such Director, any court of competent jurisdiction, or op22 eration of law. 

23 (b) APPLICABILITY.—A regulation, order, or deter24 mination is described under this subsection if they—
202

•S 190 IS 

1 (1) were issued, made, prescribed, or allowed to 

2 become effective by—

3 (A) the Board; or 

4 (B) a court of competent jurisdiction and 

5 that relate to functions transferred by this Act; 

6 and 

7 (2) are in effect on the effective date of the 

8 abolishment under section 401(a). 

9 SEC. 313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE 

10 FEDERAL HOUSING FINANCE BOARD. 

11 (a) TRANSFER.—Each employee of the Board shall 

12 be transferred to the Federal Housing Enterprise Regu13 latory Agency for employment not later than the effective 

14 date of the abolishment under section 401(a), and such 

15 transfer shall be deemed a transfer of function for pur16 poses of section 3503 of title 5, United States Code. 

17 (b) GUARANTEED POSITIONS.—Each employee trans18 ferred under subsection (a) shall be guaranteed a position 

19 with the same status, tenure, grade, and pay as that held 

20 on the day immediately preceding the transfer. Each such 

21 employee holding a permanent position shall not be invol22 untarily separated or reduced in grade or compensation 

23 for 12 months after the date of transfer, except for cause 

24 or, if the employee is a temporary employee, separated in 

25 accordance with the terms of the appointment. 
203

•S 190 IS 

1 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

2 SENIOR EXECUTIVE SERVICE EMPLOYEES.—

3 (1) IN GENERAL.—In the case of employees oc4 cupying positions in the excepted service or the Sen5 ior Executive Service, any appointment authority es6 tablished under law or by regulations of the Office 

7 of Personnel Management for filling such positions 

8 shall be transferred, subject to paragraph (2). 

9 (2) DECLINE OF TRANSFER.—The Director of 

10 the Federal Housing Enterprise Regulatory Agency 

11 may decline a transfer of authority under paragraph 

12 (1) to the extent that such authority relates to posi13 tions excepted from the competitive service because 

14 of their confidential, policymaking, policy-deter15 mining, or policy-advocating character, and non16 career positions in the Senior Executive Service 

17 (within the meaning of section 3132(a)(7) of title 5, 

18 United States Code). 

19 (d) REORGANIZATION.—If the Director of the Fed20 eral Housing Enterprise Regulatory Agency determines, 

21 after the end of the 1-year period beginning on the effec22 tive date of the abolishment under section 401(a), that 

23 a reorganization of the combined workforce is required, 

24 that reorganization shall be deemed a major reorganiza25 tion for purposes of affording affected employees retire-
204

•S 190 IS 

1 ment under section 8336(d)(2) or 8414(b)(1)(B) of title 

2 5, United States Code. 

3 (e) EMPLOYEE BENEFIT PROGRAMS.—

4 (1) IN GENERAL.—Any employee of the Board 

5 accepting employment with the Federal Housing En6 terprise Regulatory Agency as a result of a transfer 

7 under subsection (a) may retain for 12 months after 

8 the date on which such transfer occurs membership 

9 in any employee benefit program of the Federal 

10 Housing Enterprise Regulatory Agency or the 

11 Board, as applicable, including insurance, to which 

12 such employee belongs on the effective date of the 

13 abolishment under section 201(a) if—

14 (A) the employee does not elect to give up 

15 the benefit or membership in the program; and 

16 (B) the benefit or program is continued by 

17 the Director of the Federal Housing Enterprise 

18 Regulatory Agency.

19 (2) COST DIFFERENTIAL.—The difference in 

20 the costs between the benefits which would have 

21 been provided by the Board and those provided by 

22 this section shall be paid by the Director of the Fed23 eral Housing Enterprise Regulatory Agency. If any 

24 employee elects to give up membership in a health 

25 insurance program or the health insurance program 
205

•S 190 IS 

1 is not continued by such Director, the employee shall 

2 be permitted to select an alternate Federal health in3 surance program within 30 days after the date of 

4 such election or notice, without regard to any other 

5 regularly scheduled open season. 

6 SEC. 314. TRANSFER OF PROPERTY AND FACILITIES. 

7 Upon the effective date of the abolishment under sec8 tion 401(a), all property of the Board shall transfer to 

9 the Director of the Federal Housing Enterprise Regu10 latory Agency.

11 TITLE IV—MISCELLANEOUS 

12 PROVISIONS 

13 SEC. 401. STUDY AND REPORT ON BASEL II AND ENTER14 PRISE DEBT. 

15 (a) STUDY.—The Board of Governors of the Federal 

16 Reserve System shall conduct a study the effects of the 

17 new Basel Capital Accord (Basel II), as endorsed by the 

18 Group of Ten countries in ’’International Convergence of 

19 Capital Measurement and Capital Standards: a Revised 

20 Framework’’ on the regulated entities, as defined under 

21 this Act. The study shall examine the debt of the regulated 

22 entities and the capital classification on financial institu23 tions that hold such debt. 

24 (b) REPORT.—The Chairman of the Board of Gov25 ernors of the Federal Reserve System shall submit a re-
206

•S 190 IS 

1 port to Congress on the results of the study required by 

2 this section 2 years after the date of enactment of this 

3 Act. 

4 SEC. 402. AFFORDABLE HOUSING REPORTING. 

5 The Inspector General of the Federal Housing Enter6 prise Regulatory Agency shall conduct an annual audit of 

7 the affordable housing activities of the Federal National 

8 Mortgage Association and the Federal Home Loan Mort9 gage Corporation, programs, and partnerships to ensure 

10 that such activities, programs, and partnerships support 

11 the affordable housing mission of those enterprises.

Æ