I 

109TH CONGRESS 

1ST SESSION H. R. 1461 

To reform the regulation of certain housing-related Government-sponsored 

enterprises, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 5, 2005 

Mr. BAKER (for himself, Mr. OXLEY, Mr. RYUN of Kansas, Mr. HENSARLING, 

Mr. JONES of North Carolina, Mr. DAVIS of Kentucky, Mr. FITZPATRICK

of Pennsylvania, and Mr. SHAYS) introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To reform the regulation of certain housing-related 

Government-sponsored enterprises, and for other purposes. 

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 ‘‘Federal Housing Finance Reform Act of 2005’’. 

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

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Definitions. 

TITLE I—REFORM OF REGULATION OF ENTERPRISES AND 

FEDERAL HOME LOAN BANKS 
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Subtitle A —Improvement of Safety and Soundness 

Sec. 101. Establishment of the Federal Housing Finance Agency. 

Sec. 102. Duties and authorities of Director. 

Sec. 103. Housing Finance Oversight Board. 

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

Sec. 105. Assessments. 

Sec. 106. Examiners and accountants. 

Sec. 107. Prohibition and withholding of executive compensation. 

Sec. 108. Reviews of regulated entities. 

Sec. 109. Regulations and orders. 

Sec. 110. Risk-based capital requirements. 

Sec. 111. Minimum and critical capital levels. 

Sec. 112. Review of and authority over enterprise assets and obligations. 

Sec. 113. Corporate governance of enterprises. 

Sec. 114. Conforming amendments. 

Subtitle B—Improvement of Mission Supervision 

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

Sec. 122. Review by director of new programs and activities of enterprises. 

Sec. 123. Conforming loan limits. 

Sec. 124. Annual housing report regarding regulated entities. 

Sec. 125. Establishment of housing goals. 

Sec. 126. Home purchase goal and additions, modifications, and rescissions to 

goals. 

Sec. 127. Other requirements. 

Sec. 128. Monitoring and enforcing compliance with housing goals. 

Sec. 129. Enforcement. 

Sec. 130. Conforming amendments. 

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 regulated entities. 

Sec. 145. Conforming amendments. 

Subtitle D—Enforcement Actions 

Sec. 161. Cease-and-desist proceedings. 

Sec. 162. Temporary cease-and-desist proceedings. 

Sec. 163. Enforcement and jurisdiction. 

Sec. 164. Civil money penalties. 

Sec. 165. Removal and prohibition authority. 

Sec. 166. Criminal penalty. 

Sec. 167. Conforming amendments. 

Subtitle E—General Provisions 

Sec. 181. Presidentially appointed Directors of enterprises. 

Sec. 182. Report on portfolio operations, safety and soundness, and mission of 

enterprises. 

Sec. 183. Conforming and technical amendments. 
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Sec. 184. Effective date. 

TITLE II—FEDERAL HOME LOAN BANKS 

Sec. 201. Definitions. 

Sec. 202. Directors. 

Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan 

Banks. 

Sec. 204. Debt issuing facility. 

Sec. 205. Securities and Exchange Commission disclosure. 

Sec. 206. Community financial institution members. 

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT AND FEDERAL HOUSING FINANCE BOARD 

Subtitle A—Office of Federal Housing Enterprise Oversight 

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. 321. Abolishment of the Federal Housing Finance Board. 

Sec. 322. Continuation and coordination of certain regulations. 

Sec. 323. Transfer and rights of employees of the Federal Housing Finance 

Board. 

Sec. 324. Transfer of property and facilities. 

1 SEC. 2. DEFINITIONS. 

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

4 (1) by striking ‘‘an enterprise’’ each place such 

5 term appears (except in paragraphs (4), (13)(A), 

6 and (18)) and inserting ‘‘a regulated entity’’; 

7 (2) by striking ‘‘the enterprise’’ each place such 

8 term appears (except in paragraphs (4) and (18)) 

9 and inserting ‘‘the regulated entity’’; 

10 (3) in paragraph (5), by striking ‘‘Office of 

11 Federal Housing Enterprise Oversight of the De-
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1 partment of Housing and Urban Development’’ and 

2 inserting ‘‘Federal Housing Finance Agency’’; 

3 (4) in each of paragraphs (8), (9), (10), and 

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

5 appears and inserting ‘‘Director’’; 

6 (5) in paragraph (13), by inserting ‘‘, with re7 spect to an enterprise,’’ after ‘‘means’’; 

8 (6) by redesignating paragraphs (16) through 

9 (19) as paragraphs (19) through (22), respectively; 

10 (7) by striking paragraphs (14) and (15) and 

11 inserting the following new paragraphs: 

12 ‘‘(17) REGULATED ENTITY.—The term ‘regu13 lated entity’ means— 

14 ‘‘(A) the Federal National Mortgage Asso15 ciation and any affiliate thereof; 

16 ‘‘(B) the Federal Home Loan Mortgage 

17 Corporation and any affiliate thereof; and 

18 ‘‘(C) each Federal home loan bank. 

19 ‘‘(18) REGULATED ENTITY-AFFILIATED

20 PARTY.—The term ‘regulated entity-affiliated party’ 

21 means— 

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

23 controlling stockholder of, or agent for, a regu24 lated entity; 
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1 ‘‘(B) any shareholder, affiliate, consultant, 

2 or joint venture partner of a regulated entity, 

3 and any other person, as determined by the Di4 rector (by regulation or on a case-by-case basis) 

5 that participates in the conduct of the affairs of 

6 a regulated entity; and 

7 ‘‘(C) any independent contractor for a reg8 ulated entity (including any attorney, appraiser, 

9 or accountant), if— 

10 ‘‘(i) the independent contractor know11 ingly or recklessly participates in— 

12 ‘‘(I) any violation of any law or 

13 regulation; 

14 ‘‘(II) any breach of fiduciary 

15 duty; or 

16 ‘‘(III) any unsafe or unsound 

17 practice; and 

18 ‘‘(ii) such violation, breach, or prac19 tice caused, or is likely to cause, more than 

20 a minimal financial loss to, or a significant 

21 adverse effect on, the regulated entity; and 

22 ‘‘(D) any not-for-profit corporation that re23 ceives its principal funding, on an ongoing 

24 basis, from any regulated entity.’’; 
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1 (8) by redesignating paragraphs (2) through 

2 (13) as paragraphs (5) through (16), respectively; 

3 and 

4 (9) by inserting after paragraph (1) the fol5 lowing new paragraphs: 

6 ‘‘(2) AGENCY.—The term ‘Agency’ means the 

7 Federal Housing Finance Agency. 

8 ‘‘(3) AUTHORIZING STATUTES.—The term ‘au9 thorizing statutes’ means— 

10 ‘‘(A) the Federal National Mortgage Asso11 ciation Charter Act; 

12 ‘‘(B) the Federal Home Loan Mortgage 

13 Corporation Act; and 

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

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

16 Housing Finance Oversight Board established under 

17 section 1313.’’. 
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1 TITLE I—REFORM OF REGULA2 TION OF ENTERPRISES AND 

3 FEDERAL HOME LOAN BANKS 

4 Subtitle A —Improvement of Safety 

5 and Soundness 

6 SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FI7 NANCE AGENCY. 

8 The Housing and Community Development Act of 

9 1992 (12 U.S.C. 4501 et seq.) is amended by striking sec10 tions 1311 and 1312 and inserting the following: 

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

12 FINANCE AGENCY. 

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

14 Federal Housing Finance Agency, which shall be an inde15 pendent agency of the Federal Government. 

16 ‘‘(b) GENERAL SUPERVISORY AND REGULATORY AU17 THORITY.— 

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

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

20 supervision and regulation of the Agency. 

21 ‘‘(2) AUTHORITY OVER FANNIE MAE AND

22 FREDDIE MAC, FEDERAL HOME LOAN BANKS, AND

23 FEDERAL HOME LOAN BANK FINANCE CORPORA24 TION.—The Director of the Federal Housing Fi25 nance Agency shall have general supervisory and 
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1 regulatory authority over each regulated entity and 

2 the Federal Home Loan Bank Finance Corporation, 

3 and shall exercise such general regulatory authority, 

4 including such duties and authorities set forth under 

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

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

7 applicable law are carried out. 

8 ‘‘(c) SAVINGS PROVISION.—The authority of the Di9 rector to take actions under subtitles B and C shall not 

10 in any way limit the general supervisory and regulatory 

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

12 ‘‘SEC. 1312. DIRECTOR. 

13 ‘‘(a) ESTABLISHMENT OF POSITION.—There is estab14 lished the position of the Director of the Federal Housing 

15 Finance Agency, who shall be the head of the Agency. 

16 ‘‘(b) APPOINTMENT; TERM.— 

17 ‘‘(1) APPOINTMENT.—The Director shall be ap18 pointed by the President, by and with the advice and 

19 consent of the Senate, from among individuals who 

20 are citizens of the United States, have a dem21 onstrated understanding of financial management or 

22 oversight, and have a demonstrated understanding 

23 of capital markets, including the mortgage securities 

24 markets and housing finance. 
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1 ‘‘(2) TERM.—The Director shall be appointed 

2 for a term of 5 years. 

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

4 Director that occurs before the expiration of the 

5 term for which a Director was appointed shall be 

6 filled in the manner established under paragraph 

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

8 shall be appointed only for the remainder of such 

9 term. 

10 ‘‘(4) SERVICE AFTER END OF TERM.—An indi11 vidual may serve as the Director after the expiration 

12 of the term for which appointed until a successor 

13 has been appointed. 

14 ‘‘(5) TRANSITIONAL PROVISION.—Notwith15 standing paragraphs (1) and (2), the person serving 

16 as the Director of the Office of Federal Housing En17 terprise Oversight of the Department of Housing 

18 and Urban Development on the effective date under 

19 section 184 of the Federal Housing Finance Reform 

20 Act of 2005, shall serve as the Director until a suc21 cessor has been appointed under paragraph (1). 

22 ‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF EN23 TERPRISE REGULATION.— 

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

25 Deputy Director of the Division of Enterprise Regu-
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1 lation, who shall be designated by the Director from 

2 among individuals who are citizens of the United 

3 States, have a demonstrated understanding of finan4 cial management or oversight, and have a dem5 onstrated understanding of mortgage securities mar6 kets and housing finance. 

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

8 Division of Enterprise Regulation shall have such 

9 functions, powers, and duties with respect to the 

10 oversight of the enterprises as the Director shall pre11 scribe. 

12 ‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED13 ERAL HOME LOAN BANK REGULATION.— 

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

15 Deputy Director of the Division of Federal Home 

16 Loan Bank Regulation, who shall be designated by 

17 the Director from among individuals who are citi18 zens of the United States, have a demonstrated un19 derstanding of financial management or oversight, 

20 and have a demonstrated understanding of the Fed21 eral Home Loan Bank System and housing finance. 

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

23 Division of Federal Home Loan Bank Regulation 

24 shall have such functions, powers, and duties with 
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1 respect to the oversight of the Federal home loan 

2 banks as the Director shall prescribe. 

3 ‘‘(e) DEPUTY DIRECTOR FOR HOUSING.— 

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

5 Deputy Director for Housing, who shall be des6 ignated by the Director from among individuals who 

7 are citizens of the United States, and have a dem8 onstrated understanding of the housing markets and 

9 housing finance. 

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

11 Housing shall have such functions, powers, and du12 ties with respect to the oversight of the housing mis13 sion and goals of the enterprises as the Director 

14 shall prescribe. 

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

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

17 Board shall, by a majority vote, designate either the Dep18 uty Director of the Division of Enterprise Regulation, the 

19 Deputy Director of the Division of Federal Home Loan 

20 Bank Regulation, or the Deputy Director for Housing, to 

21 serve as acting Director until the return of the Director, 

22 or the appointment of a successor pursuant to subsection 

23 (b). 

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

25 Deputy Directors may not— 
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1 ‘‘(1) have any direct or indirect financial inter2 est in any regulated entity or regulated entity-affili3 ated party; 

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

5 any regulated entity or regulated entity-affiliated 

6 party; or 

7 ‘‘(3) have served as an executive officer or di8 rector of any regulated entity, or regulated entity-af9 filiated party, at any time during the 3-year period 

10 ending on the date of appointment of such individual 

11 as Director or Deputy Director.’’. 

12 SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR. 

13 (a) IN GENERAL.—The Housing and Community De14 velopment Act of 1992 (12 U.S.C. 4513) is amended by 

15 striking section 1313 and inserting the following new sec16 tions: 

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

18 ‘‘(a) DUTIES.— 

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

20 of the Director shall be— 

21 ‘‘(A) to oversee the prudential operations 

22 of each regulated entity, on a consolidated 

23 basis; and 

24 ‘‘(B) to ensure that— 
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1 ‘‘(i) each regulated entity operates in 

2 a safe and sound manner, including main3 tenance of adequate capital and internal 

4 controls; 

5 ‘‘(ii) the operations and activities of 

6 each regulated entity foster liquid, effi7 cient, competitive, and resilient national 

8 housing finance markets (including activi9 ties relating to mortgages on housing for 

10 low- and moderate- income families involv11 ing a reasonable economic return that may 

12 be less than the return earned on other ac13 tivities); 

14 ‘‘(iii) each regulated entity complies 

15 with this title and the rules, regulations, 

16 guidelines, and orders issued under this 

17 title and the authorizing statutes; and 

18 ‘‘(iv) each regulated entity carries out 

19 its statutory mission only through activi20 ties that are consistent with this title and 

21 the authorizing statutes. 

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

23 the Director shall include the authority— 

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

25 the principal duties described in paragraph (1), 
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1 reject any acquisition or transfer of a control2 ling interest in an enterprise; and 

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

4 may be necessary or appropriate to fulfill the 

5 duties and responsibilities of the Director in the 

6 supervision and regulation of each regulated en7 tity. 

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

9 may delegate to officers and employees of the Agency any 

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

11 Director considers appropriate. 

12 ‘‘(c) LITIGATION AUTHORITY.— 

13 ‘‘(1) IN GENERAL.—In enforcing any provision 

14 of this title, any regulation or order prescribed under 

15 this title, or any other provision of law, rule, regula16 tion, or order, or in any other action, suit, or pro17 ceeding to which the Director is a party or in which 

18 the Director is interested, and in the administration 

19 of conservatorships and receiverships, the Director 

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

21 Director’s own attorneys. 

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

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

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

25 a regulated entity or director or officer thereof with 
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1 respect to any matter under this title or any other 

2 applicable provision of law, rule, order, or regulation 

3 under this title, in the United States district court 

4 for the judicial district in which the regulated entity 

5 has its principal place of business, or in the United 

6 States District Court for the District of Columbia, 

7 and the Director may be served with process in the 

8 manner prescribed by the Federal Rules of Civil 

9 Procedure. 

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

11 STANDARDS. 

12 ‘‘(a) STANDARDS.—The Director shall establish 

13 standards, by regulation, guideline, or order, for each reg14 ulated entity relating to— 

15 ‘‘(1) adequacy of internal controls and informa16 tion systems taking into account the nature and 

17 scale of business operations; 

18 ‘‘(2) independence and adequacy of internal 

19 audit systems; 

20 ‘‘(3) management of credit and counterparty 

21 risk, including systems to identify concentrations of 

22 credit risk and prudential limits to restrict exposure 

23 of the regulated entity to a single counterparty or 

24 groups of related counterparties; 

25 ‘‘(4) management of interest rate risk exposure; 
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1 ‘‘(5) management of market risk, including 

2 standards that provide for systems that accurately 

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

4 warranted, that establish limitations on market risk; 

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

6 reserves; 

7 ‘‘(7) management of any asset and investment 

8 portfolio; 

9 ‘‘(8) investments and acquisitions by a regu10 lated entity, to ensure that they are consistent with 

11 the purposes of this Act and the Federal National 

12 Mortgage Association Charter Act, the Federal 

13 Home Loan Mortgage Corporation Act, or the Fed14 eral Home Loan Bank Act, as appropriate; 

15 ‘‘(9) maintenance of adequate records, in ac16 cordance with consistent accounting policies and 

17 practices that enable the Director to evaluate the fi18 nancial condition of the regulated entity; 

19 ‘‘(10) issuance of subordinated debt by that 

20 particular regulated entity, as the Director considers 

21 necessary; 

22 ‘‘(11) overall risk management processes, in23 cluding adequacy of oversight by senior management 

24 and the board of directors and of processes and poli25 cies to identify, measure, monitor, and control mate-
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1 rial risks, including reputational risks, and for ade2 quate, well-tested business resumption plans for all 

3 major systems with remote site facilities to protect 

4 against disruptive events; and 

5 ‘‘(12) such other operational and management 

6 standards as the Director determines to be appro7 priate. 

8 ‘‘(b) FAILURE TO MEET STANDARDS.— 

9 ‘‘(1) PLAN REQUIREMENT.— 

10 ‘‘(A) IN GENERAL.—If the Director deter11 mines that a regulated entity fails to meet any 

12 standard established under subsection (a)— 

13 ‘‘(i) if such standard is established by 

14 regulation, the Director shall require the 

15 regulated entity to submit an acceptable 

16 plan to the Director within the time al17 lowed under subparagraph (C); and 

18 ‘‘(ii) if such standard is established by 

19 guideline, the Director may require the 

20 regulated entity to submit a plan described 

21 in clause (i). 

22 ‘‘(B) CONTENTS.—Any plan required 

23 under subparagraph (A) shall specify the ac24 tions that the regulated entity will take to cor25 rect the deficiency. If the regulated entity is 
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1 undercapitalized, the plan may be a part of the 

2 capital restoration plan for the regulated entity 

3 under section 1369C. 

4 ‘‘(C) DEADLINES FOR SUBMISSION AND

5 REVIEW.—The Director shall by regulation es6 tablish deadlines that— 

7 ‘‘(i) provide the regulated entities with 

8 reasonable time to submit plans required 

9 under subparagraph (A), and generally re10 quire a regulated entity to submit a plan 

11 not later than 30 days after the Director 

12 determines that the entity fails to meet 

13 any standard established under subsection 

14 (a); and 

15 ‘‘(ii) require the Director to act on 

16 plans expeditiously, and generally not later 

17 than 30 days after the plan is submitted. 

18 ‘‘(2) REQUIRED ORDER UPON FAILURE TO SUB19 MIT OR IMPLEMENT PLAN.—If a regulated entity 

20 fails to submit an acceptable plan within the time al21 lowed under paragraph (1)(C), or fails in any mate22 rial respect to implement a plan accepted by the Di23 rector, the following shall apply: 
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1 ‘‘(A) REQUIRED CORRECTION OF DEFI2 CIENCY.—The Director shall, by order, require 

3 the regulated entity to correct the deficiency. 

4 ‘‘(B) OTHER AUTHORITY.—The Director 

5 may, by order, take one or more of the fol6 lowing actions until the deficiency is corrected: 

7 ‘‘(i) Prohibit the regulated entity from 

8 permitting its average total assets (as such 

9 term is defined in section 1316(b)) during 

10 any calendar quarter to exceed its average 

11 total assets during the preceding calendar 

12 quarter, or restrict the rate at which the 

13 average total assets of the entity may in14 crease from one calendar quarter to an15 other. 

16 ‘‘(ii) Require the regulated entity— 

17 ‘‘(I) in the case of an enterprise, 

18 to increase its ratio of core capital to 

19 assets. 

20 ‘‘(II) in the case of a Federal 

21 home loan bank, to increase its ratio 

22 of total capital (as such term is de23 fined in section 6(a)(5) of the Federal 

24 Home Loan Bank Act (12 U.S.C. 

25 1426(a)(5)) to assets. 
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1 ‘‘(iii) Require the regulated entity to 

2 take any other action that the Director de3 termines will better carry out the purposes 

4 of subtitle C than any of the actions de5 scribed in this subparagraph 

6 ‘‘(3) MANDATORY RESTRICTIONS.—In com7 plying with paragraph (2), the Director shall take 

8 one or more of the actions described in clauses (i) 

9 through (iii) of paragraph (2)(B) if— 

10 ‘‘(A) the Director determines that the reg11 ulated entity fails to meet any standard pre12 scribed under subsection (a); 

13 ‘‘(B) the regulated entity has not corrected 

14 the deficiency; and 

15 ‘‘(C) during the 18-month period before 

16 the date on which the regulated entity first 

17 failed to meet the standard, the entity under18 went extraordinary growth, as defined by the 

19 Director. 

20 ‘‘(c) OTHER ENFORCEMENT AUTHORITY NOT AF21 FECTED.—The authority of the Director under this sec22 tion is in addition to any other authority of the Director.’’. 

23 (b) INDEPENDENCE IN CONGRESSIONAL TESTIMONY

24 AND RECOMMENDATIONS.—Section 111 of Public Law 

25 93–495 (12 U.S.C. 250) is amended by striking ‘‘the Fed-
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1 eral Housing Finance Board’’ and inserting ‘‘the Director 

2 of the Federal Housing Finance Agency’’. 

3 SEC. 103. HOUSING FINANCE OVERSIGHT BOARD. 

4 (a) IN GENERAL.—Title XIII of the Housing and 

5 Community Development Act of 1992 (12 U.S.C. 4501 et 

6 seq.) is amended by inserting after section 1313A, as 

7 added by section 102 of this Act, the following new sec8 tion: 

9 ‘‘SEC. 1313B. HOUSING FINANCE OVERSIGHT BOARD. 

10 ‘‘(a) IN GENERAL.—There is established the Housing 

11 Finance Oversight Board. 

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

13 with respect to overall strategies and policies in carrying 

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

15 otherwise provided under this Act, the Board shall not ex16 ercise any executive authority. 

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

18 of 5 members, as follows: 

19 ‘‘(1) One member shall be the Director, who 

20 shall serve as the Chairperson of the Board. 

21 ‘‘(2) One member shall be the Secretary of the 

22 Treasury or the designee of the Secretary. 

23 ‘‘(3) One member shall be the Secretary of 

24 Housing and Urban Development or the designee of 

25 the Secretary. 
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1 ‘‘(4) Two members shall be appointed by the 

2 President, by and with the advice and consent of the 

3 Senate, who shall include— 

4 ‘‘(A) one individual who has extensive ex5 perience and expertise in the capital markets 

6 (including debt markets), the secondary mort7 gage market, and mortgage-backed securities; 

8 and 

9 ‘‘(B) one individual who has extensive ex10 perience and expertise in mortgage finance (in11 cluding single family and multifamily housing 

12 mortgage finance), development of affordable 

13 housing, and economic development and revital14 ization. 

15 ‘‘(d) FULL-TIME MEMBERS AND STAFF.— 

16 ‘‘(1) FULL-TIME MEMBERS.—The members of 

17 the Board pursuant to subsection (c)(4) shall serve 

18 on a full-time basis. 

19 ‘‘(2) STAFF.—The Board may appoint and fix 

20 the compensation of such staff as the Board con21 siders necessary to carry out the functions of the 

22 Board. 

23 ‘‘(e) MEETINGS.— 

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

25 notice by the Director, but in no event shall the 
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1 Board meet less frequently than once every 3 

2 months. 

3 ‘‘(2) SPECIAL MEETINGS.—Any member of the 

4 Board may, upon giving written notice to the Direc5 tor, require a special meeting of the Board, which 

6 shall be convened by the Director within 30 days 

7 after such notice. 

8 ‘‘(f) TESTIMONY.—On an annual basis, the Board 

9 shall testify before Congress regarding— 

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

11 entities; 

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

13 the operations of the regulated entities; 

14 ‘‘(3) the overall operational status of the regu15 lated entities; 

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

17 regulated entities in carrying out their respective 

18 missions; 

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

20 the Agency and the Board; and 

21 ‘‘(6) such other matters relating to the Agency, 

22 the Board, and the regulated entities, and their ful23 fillment of their missions, as the Board determines 

24 appropriate. 
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1 ‘‘(g) COSTS.—Costs of the Board, including staff, 

2 shall be paid by the Agency as a cost and expense of the 

3 Agency.’’. 

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

5 1319B(a) of the Housing and Community Development 

6 Act of 1992 (12 U.S.C. 4521 (a)) is amended— 

7 (1) in paragraph (3), by striking ‘‘and’’ at the 

8 end; and 

9 (2) by striking paragraph (4) and inserting the 

10 following new paragraphs: 

11 ‘‘(4) an assessment of the Board with respect 

12 to— 

13 ‘‘(A) the safety and soundness of the regu14 lated entities; 

15 ‘‘(B) any material deficiencies in the con16 duct of the operations of the regulated entities; 

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

18 regulated entities; 

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

20 the regulated entities in carrying out their mis21 sions, including compliance of the enterprises 

22 with the housing goals under subpart B of part 

23 2 of this subtitle and compliance of the Federal 

24 home loan banks with the community invest25 ment and affordable housing programs under 
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1 subsections (i) and (j) of section 10 of the Fed2 eral Home Loan Bank Act; 

3 ‘‘(E) an evaluation of the performance of 

4 the Agency in fulfilling its duties and respon5 sibilities under law; and 

6 ‘‘(F) such other matters relating to the 

7 Board and the fulfillment of its duties as the 

8 Board considers appropriate; 

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

10 the Agency; and 

11 ‘‘(6) such other matters relating to the Agency 

12 and its fulfillment of its mission.’’. 

13 SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGU14 LATED ENTITIES. 

15 Section 1314 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4514) is amended— 

17 (1) in the section heading, by striking ‘‘ENTER18 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

19 and 

20 (2) in subsection (a)— 

21 (A) in the subsection heading, by striking 

22 ‘‘SPECIAL REPORTS AND REPORTS OF FINAN23 CIAL CONDITION’’ and inserting ‘‘REGULAR

24 AND SPECIAL REPORTS’’; 

25 (B) in paragraph (1)— 
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1 (i) in the paragraph heading, by strik2 ing ‘‘FINANCIAL CONDITION’’ and inserting 

3 ‘‘REGULAR REPORTS’’; and 

4 (ii) by striking ‘‘reports of financial 

5 condition and operations’’ and inserting 

6 ‘‘regular reports on the condition (includ7 ing financial condition), management, ac8 tivities, or operations of the regulated enti9 ty, as the Director considers appropriate’’; 

10 and 

11 (C) in paragraph (2), after ‘‘submit special 

12 reports’’ insert ‘‘on any of the topics specified 

13 in paragraph (1) or such other topics’’. 

14 SEC. 105. ASSESSMENTS. 

15 Section 1316 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4516) is amended— 

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

18 following new subsection: 

19 ‘‘(a) ANNUAL ASSESSMENTS.—The Director shall es20 tablish and collect from the regulated entities annual as21 sessments in an amount not exceeding the amount suffi22 cient to provide for reasonable costs and expenses of the 

23 Agency, including— 
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1 ‘‘(1) the expenses of any examinations under 

2 section 1317 of this Act and under section 20 of the 

3 Federal Home Loan Bank Act; 

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

5 credit assessments under section 1319; and 

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

7 for any given year as deemed necessary by the Di8 rector to maintain a working capital fund in accord9 ance with subsection (e).’’; 

10 (2) in subsection (b)— 

11 (A) in the subsection heading, by striking 

12 ‘‘ENTERPRISES’’ and inserting ‘‘REGULATED

13 ENTITIES’’; 

14 (B) by realigning paragraph (2) two ems 

15 from the left margin, so as to align the left 

16 margin of such paragraph with the left margins 

17 of paragraph (1); 

18 (C) in paragraph (1)— 

19 (i) by striking ‘‘Each enterprise’’ and 

20 inserting ‘‘Each regulated entity’’; 

21 (ii) by striking ‘‘each enterprise’’ and 

22 inserting ‘‘each regulated entity’’; and 

23 (iii) by striking ‘‘both enterprises’’ 

24 and inserting ‘‘all of the regulated enti25 ties’’; and 
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1 (D) in paragraph (3)—— 

2 (i) in subparagraph (B), by striking 

3 ‘‘subparagraph (A)’’ and inserting ‘‘clause 

4 (i)’’; 

5 (ii) by redesignating subparagraphs 

6 (A), (B), and (C) as clauses (i), (ii) and 

7 (ii), respectively, and realigning such 

8 clauses, as so redesignated, so as to be in9 dented 6 ems from the left margin; 

10 (iii) by striking the matter that pre11 cedes clause (i), as so redesignated, and in12 serting the following: 

13 ‘‘(3) DEFINITION OF TOTAL ASSETS.—For pur14 poses of this section, the term ‘total assets’ means 

15 as follows: 

16 ‘‘(A) ENTERPRISES.—With respect to an 

17 enterprise, the sum of—’’; and 

18 (iv) by adding at the end the following 

19 new subparagraph: 

20 ‘‘(B) FEDERAL HOME LOAN BANKS.—With 

21 respect to a Federal home loan bank, the total 

22 assets of the Bank, as determined by the Direc23 tor in accordance with generally accepted ac24 counting principles.’’. 
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1 (3) in subsection (c), by inserting after the pe2 riod at the end the following: ‘‘The Director may ad3 just the amounts of any semiannual assessments for 

4 an assessment under subsection (a) that are to be 

5 paid pursuant to subsection (b) by a regulated enti6 ty, as necessary in the discretion of the Director, to 

7 ensure that the costs of enforcement activities under 

8 subtitles B and C for a regulated entity are borne 

9 only by that entity.’’; 

10 (4) in subsection (d), by striking ‘‘If’’ and in11 serting ‘‘Except with respect to amounts collected 

12 pursuant to subsection (a)(3), if’’; and 

13 (5) by striking subsections (e) through (g) and 

14 inserting the following new subsections: 

15 ‘‘(e) WORKING CAPITAL FUND.—At the end of each 

16 year for which an assessment under this section is made, 

17 the Director shall remit to each regulated entity any 

18 amount of assessment collected from such regulated entity 

19 that is attributable to subsection (a)(3) and is in excess 

20 of the amount the Director deems necessary to maintain 

21 a working capital fund. 

22 ‘‘(f) TREATMENT OF ASSESSMENTS.— 

23 ‘‘(1) DEPOSIT.—Amounts received by the Di24 rector from assessments under this section may be 

25 deposited in the manner provided in section 5234 of 
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1 the Revised Statutes (12 U.S.C. 192) with respect 

2 to assessments by the Comptroller of the Currency. 

3 ‘‘(2) NOT GOVERNMENT FUNDS.—The amounts 

4 received by the Director from any assessment under 

5 this section shall not be construed to be Government 

6 or public funds or appropriated money. 

7 ‘‘(3) NO APPORTIONMENT OF FUNDS.—Not8 withstanding any other provision of law, the 

9 amounts received by the Director from any assess10 ment under this section shall not be subject to ap11 portionment for the purpose of chapter 15 of title 

12 31, United States Code, or under any other author13 ity. 

14 ‘‘(4) USE OF FUNDS.—The Director may use 

15 any amounts received by the Director from assess16 ments under this section for compensation of the Di17 rector and other employees of the Agency and for all 

18 other expenses of the Director and the Agency. 

19 ‘‘(5) AVAILABILITY OF OVERSIGHT FUND

20 AMOUNTS.—Notwithstanding any other provision of 

21 law, any amounts remaining in the Federal Housing 

22 Enterprises Oversight Fund established under this 

23 section (as in effect before the effective date under 

24 section 184 of the Federal Housing Finance Reform 

25 Act of 2005), and any amounts remaining from as-
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1 sessments on the Federal Home Loan banks pursu2 ant to section 18(b) of the Federal Home Loan 

3 Bank Act (12 U.S.C. 1438(b)), shall, upon such ef4 fective date, be treated for purposes of this sub5 section as amounts received from assessments under 

6 this section. 

7 ‘‘(g) BUDGET AND FINANCIAL REPORTS.— 

8 ‘‘(1) FINANCIAL OPERATING PLANS AND FORE9 CASTS.—The Director shall provide to the Director 

10 of the Office of Management and Budget copies of 

11 the Director’s financial operating plans and fore12 casts as prepared by the Director in the ordinary 

13 course of the Agency’s operations, and copies of the 

14 quarterly reports of the Agency’s financial condition 

15 and results of operations as prepared by the Direc16 tor in the ordinary course of the Agency’s oper17 ations. 

18 ‘‘(2) RULE OF CONSTRUCTION.—This sub19 section may not be construed as implying any obliga20 tion on the part of the Director to consult with or 

21 obtain the consent or approval of the Director of the 

22 Office of Management and Budget with respect to 

23 any reports, plans, forecasts, or other information 

24 referred to in paragraph (1) or any jurisdiction or 
32 

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1 oversight over the affairs or operations of the Agen2 cy. 

3 ‘‘(h) AUDIT OF AGENCY.— 

4 ‘‘(1) IN GENERAL.—The financial transactions 

5 of the Agency shall be audited by the Government 

6 Accountability Office in accordance with the prin7 ciples and procedures applicable to commercial cor8 porate transactions and under such rules and regu9 lations as may be prescribed by the Comptroller 

10 General of the United States. The audit shall be 

11 conducted at the place or places where accounts of 

12 the Agency are normally kept. The representatives of 

13 the Government Accountability Office shall have ac14 cess to all books, accounts, records, reports, files, 

15 and all other papers, things, or property belonging 

16 to or in use by the Agency pertaining to its financial 

17 transactions and necessary to facilitate the audit, 

18 and they shall be afforded full facilities for verifying 

19 transactions with the balances or securities held by 

20 depositaries, fiscal agents, and custodians. All such 

21 books, accounts, records, reports, files, papers, and 

22 property of the Agency shall remain in possession 

23 and custody of the Agency. The Agency shall be au24 dited at least once in every three years. 
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1 ‘‘(2) REPORT.—A report of each audit con2 ducted under this subsection shall be made by the 

3 Comptroller General to the Congress not later than 

4 six and one-half months following the close of the 

5 last year covered by such audit. The report to the 

6 Congress shall set forth the scope of the audit and 

7 shall include a statement of assets and liabilities and 

8 surplus or deficit; a statement of surplus or deficit 

9 analysis; a statement of income and expenses; a 

10 statement of sources and application of funds and 

11 such comments and information as may be deemed 

12 necessary to inform Congress of the financial oper13 ations and condition of the Agency, together with 

14 such recommendations with respect thereto as the 

15 Comptroller General may deem advisable. The report 

16 shall also show specifically any program, expendi17 ture, or other financial transaction or undertaking 

18 observed in the course of the audit, which, in the 

19 opinion of the Comptroller General, has been carried 

20 on or made without authority of law. A copy of each 

21 report shall be furnished to the President and to the 

22 Agency at the time submitted to the Congress. 

23 ‘‘(3) ASSISTANCE AND COSTS.—For the purpose 

24 of conducting an audit under this subsection, the 

25 Comptroller General may, in the discretion of the 
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1 Comptroller General, employ by contract, without re2 gard to section 5 of title 41, professional services of 

3 firms and organizations of certified public account4 ants, with the concurrence of the Agency, for tem5 porary periods or for special purposes. The Agency 

6 shall reimburse the Government Accountability Of7 fice for the cost of any such audit as billed therefor 

8 by the Comptroller General, and the Government 

9 Accountability Office shall deposit the sums so reim10 bursed into the Treasury as miscellaneous receipts.’’. 

11 SEC. 106. EXAMINERS AND ACCOUNTANTS. 

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

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

14 4517) is amended—

15 (1) in subsection (b)—

16 (A) by inserting ‘‘of a regulated entity’’ 

17 after ‘‘under this section’’; and 

18 (B) by striking ‘‘to determine the condition 

19 of an enterprise for the purpose of ensuring its 

20 financial safety and soundness’’ and inserting 

21 ‘‘or appropriate’’ ; and 

22 (2) in subsection (c)—

23 (A) in the second sentence—

24 (i) by striking ‘‘The’’ and inserting 

25 ‘‘During the 3-year period that begins 
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1 upon the date of the enactment of the Fed2 eral Housing Finance Reform Act of 2005, 

3 the’’; and 

4 (ii) by inserting ‘‘to conduct examina5 tions under this section’’ before the period; 

6 and 

7 (B) in the third sentence, by striking 

8 ‘‘from amounts available in the Federal Hous9 ing Enterprises Oversight Fund’’. 

10 (b) ENHANCED AUTHORITY TO HIRE EXAMINERS

11 AND ACCOUNTANTS.—Section 1317 of the Housing and 

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

13 is amended by adding at the end the following new sub14 section: 

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

16 AND EXAMINERS.— 

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

18 respect to any position of examiner, accountant, and 

19 economist at the Agency, with respect to supervision 

20 and regulation of the regulated entities, that is in 

21 the competitive service. 

22 ‘‘(2) APPOINTMENT AUTHORITY.—The Director 

23 may appoint candidates to any position described in 

24 paragraph (1)— 
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1 ‘‘(A) in accordance with the statutes, rules, 

2 and regulations governing appointments in the 

3 excepted service; and 

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

5 and regulations governing appointments in the 

6 competitive service.’’. 

7 (c) REPEAL.—Section 20 of the Federal Home Loan 

8 Bank Act (12 U.S.C. 1440) is amended—

9 (1) in the section heading, by striking ‘‘RE10 PORTS’’ and inserting ‘‘GAO AUDITS’’; 

11 (2) in the third sentence, by striking ‘‘the 

12 Board and’’ each place such term appears; and 

13 (3) by striking the first two sentences and in14 serting the following: ‘‘The Federal home loan banks 

15 shall be subject to examinations by the Director to 

16 the extent provided in section 1317 of the Federal 

17 Housing Enterprises Financial Safety and Sound18 ness Act of 1992 (12 U.S.C. 4517).’’. 

19 (d) EFFECTIVE DATE.—This section and the amend20 ments made by this section shall take effect on the date 

21 of the enactment of this Act. 
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1 SEC. 107. PROHIBITION AND WITHHOLDING OF EXECUTIVE 

2 COMPENSATION. 

3 (a) IN GENERAL.—Section 1318 of the Housing and 

4 Community Development Act of 1992 (12 U.S.C. 4518) 

5 is amended— 

6 (1) in the section heading, by striking ‘‘OF EX7 CESSIVE’’ and inserting ‘‘AND WITHHOLDING OF

8 EXECUTIVE’’; 

9 (2) by redesignating subsection (b) as sub10 section (d); and 

11 (3) by inserting after subsection (a) the fol12 lowing new subsections: 

13 ‘‘(b) FACTORS.—In making any determination under 

14 subsection (a), the Director may take into consideration 

15 any factors the Director considers relevant, including any 

16 wrongdoing on the part of the executive officer, and such 

17 wrongdoing shall include any fraudulent act or omission, 

18 breach of trust or fiduciary duty, violation of law, rule, 

19 regulation, order, or written agreement, and insider abuse 

20 with respect to the regulated entity. 

21 ‘‘(c) WITHHOLDING OF COMPENSATION.—In car22 rying out subsection (a), the Director may require a regu23 lated entity to withhold any payment, transfer, or dis24 bursement of compensation to an executive officer, or to 

25 place such compensation in an escrow account, during the 
38 

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1 review of the reasonableness and comparability of com2 pensation.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) FANNIE MAE.—Section 309(d) of the Fed5 eral National Mortgage Association Charter Act (12 

6 U.S.C. 1723a(d)) is amended by adding at the end 

7 the following new paragraph: 

8 ‘‘(4) The corporation shall not transfer, disburse, or 

9 pay compensation to any executive officer, or enter into 

10 an agreement with such executive officer, without the ap11 proval of the Director, for matters being reviewed under 

12 section 1318 of the Federal Housing Enterprises Finan13 cial Safety and Soundness Act of 1992 (12 U.S.C. 

14 4518).’’. 

15 (2) FREDDIE MAC.—Section 303(h) of the Fed16 eral Home Loan Mortgage Corporation Act (12 

17 U.S.C. 1452(h)) is amended by adding at the end 

18 the following new paragraph: 

19 ‘‘(4) The Corporation shall not transfer, disburse, or 

20 pay compensation to any executive officer, or enter into 

21 an agreement with such executive officer, without the ap22 proval of the Director, for matters being reviewed under 

23 section 1318 of the Federal Housing Enterprises Finan24 cial Safety and Soundness Act of 1992 (12 U.S.C. 

25 4518).’’. 
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1 (3) FEDERAL HOME LOAN BANKS.—Section 7 

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

3 1427) is amended by adding at the end the following 

4 new subsection: 

5 ‘‘(l) DIRECTOR’S APPROVAL OF COMPENSATION.— 

6 Notwithstanding any other provision of this section, a 

7 Federal home loan bank shall not transfer, disburse, or 

8 pay compensation to any executive officer, or enter into 

9 an agreement with such executive officer, without the ap10 proval of the Director, for matters being reviewed under 

11 section 1318 of the Federal Housing Enterprises Finan12 cial Safety and Soundness Act of 1992 (12 U.S.C. 

13 4518).’’. 

14 SEC. 108. REVIEWS OF REGULATED ENTITIES. 

15 Section 1319 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4519) is amended— 

17 (1) by striking the section designation and 

18 heading and inserting the following: 

19 ‘‘SEC. 1319. REVIEWS OF REGULATED ENTITIES.’’; and 

20 (2) by inserting after ‘‘any entity’’ the fol21 lowing: ‘‘that the Director considers appropriate, in22 cluding an entity’’. 

23 SEC. 109. REGULATIONS AND ORDERS. 

24 Section 1319G of the Housing and Community De25 velopment Act of 1992 (12 U.S.C. 4526) is amended— 
40 

•HR 1461 IH 

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

2 following new subsection: 

3 ‘‘(a) AUTHORITY.—The Director shall issue any reg4 ulations, guidelines, and orders necessary to carry out the 

5 duties of the Director under this title, the Federal Na6 tional Mortgage Association Charter Act, the Federal 

7 Home Loan Mortgage Corporation Act, and the Federal 

8 Home Loan Bank Act to ensure that the purposes of this 

9 title and such Acts are accomplished.’’; and 

10 (2) by striking subsection (c). 

11 SEC. 110. RISK-BASED CAPITAL REQUIREMENTS. 

12 (a) IN GENERAL.—Section 1361 of the Housing and 

13 Community Development Act of 1992 (12 U.S.C. 4611) 

14 is amended to read as follows: 

15 ‘‘SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED 

16 ENTITIES. 

17 ‘‘(a) IN GENERAL.— 

18 ‘‘(1) ENTERPRISES.—The Director shall, by 

19 regulation, establish risk-based capital requirements 

20 for the enterprises to ensure that the enterprises op21 erate in a safe and sound manner, maintaining suffi22 cient capital and reserves to support the risks that 

23 arise in the operations and management of the en24 terprises. 
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1 ‘‘(2) FEDERAL HOME LOAN BANKS.—The Di2 rector shall establish risk-based capital standards 

3 under section 6 of the Federal Home Loan Bank 

4 Act for the Federal home loan banks. 

5 ‘‘(b) REQUIRED REGISTRATION UNDER THE SECURI6 TIES EXCHANGE ACT OF 1934.—

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

8 register at least one class of the capital stock of 

9 such regulated entity, and maintain such registra10 tion with the Securities and Exchange Commission, 

11 under the Securities Exchange Act of 1934. 

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

13 comply with sections 14 and 16 of the Securities Ex14 change Act of 1934. 

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

16 limit the authority of the Director to require other reports 

17 or undertakings, or take other action, in furtherance of 

18 the responsibilities of the Director under this Act.’’. 

19 (b) FEDERAL HOME LOAN BANKS RISK-BASED CAP20 ITAL.—Section 6(a)(3) of the Federal Home Loan Bank 

21 Act (12 U.S.C. 1426(a)(3)) is amended—

22 (1) by striking subparagraph (A) and inserting 

23 the following new subparagraph: 

24 ‘‘(A) RISK-BASED CAPITAL STANDARDS.—

25 The Director shall, by regulation, establish risk-
42 

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1 based capital standards for the Federal home 

2 loan banks to ensure that the Federal home 

3 loan banks operate in a safe and sound manner, 

4 with sufficient permanent capital and reserves 

5 to support the risks that arise in the operations 

6 and management of the Federal home loans 

7 banks.’’; and 

8 (2) in subparagraph (B), by striking ‘‘(A)(ii)’’ 

9 and inserting ‘‘(A)’’. 

10 SEC. 111. MINIMUM AND CRITICAL CAPITAL LEVELS. 

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

12 Housing and Community Development Act of 1992 (12 

13 U.S.C. 4612) is amended— 

14 (1) in subsection (a), by striking the subsection 

15 heading and inserting ‘‘ENTERPRISES’’ ; and 

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

17 following new subsections: 

18 ‘‘(b) FEDERAL HOME LOAN BANKS.—For purposes 

19 of this subtitle, the minimum capital level for each Federal 

20 home loan bank shall be the minimum capital required to 

21 be maintained to comply with the leverage requirement for 

22 the bank established under section 6(a)(2) of the Federal 

23 Home Loan Bank Act (12 U.S.C. 1426(a)(2)). 

24 ‘‘(c) REGULATORY DISCRETION TO INCREASE

25 LEVEL.—Notwithstanding subsections (a) and (b), the Di-
43 

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1 rector may, by regulations issued under section 1319G(b), 

2 establish a minimum capital level that is higher than the 

3 level specified in subsection (a) for an enterprise or the 

4 level specified in subsection (b) for a Federal home loan 

5 bank. 

6 ‘‘(d) AUTHORITY TO REQUIRE TEMPORARY IN7 CREASE.—Notwithstanding subsections (a) and (b) and 

8 any minimum capital level established pursuant to sub9 section (c), the Director may, by order, increase the min10 imum capital level for a regulated entity for such period 

11 as the Director may provide if the Director— 

12 ‘‘(1) makes any of the determinations specified 

13 in subparagraphs (A) through (C) of section 

14 1364(c)(1); or 

15 ‘‘(2) determines that the regulated entity has 

16 violated any of the prudential management and op17 erations standards established pursuant to section 

18 1313A and, as a result of such violation, is oper19 ating in an unsafe and unsound manner. 

20 ‘‘(e) AUTHORITY TO ESTABLISH ADDITIONAL CAP21 ITAL AND RESERVE REQUIREMENTS FOR PARTICULAR

22 PROGRAMS.—The Director may, at any time by order or 

23 regulation, establish such capital or reserve requirements 

24 with respect to any program or activity of a regulated enti25 ty as the Director considers appropriate to ensure that 
44 

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1 the regulated entity operates in a safe and sound manner, 

2 with sufficient capital and reserves to support the risks 

3 that arise in the operations and management of the regu4 lated entity.’’. 

5 (b) CRITICAL CAPITAL LEVELS.— 

6 (1) IN GENERAL.—Section 1363 of the Housing 

7 and Community Development Act of 1992 (12 

8 U.S.C. 4613) is amended— 

9 (A) by striking ‘‘For’’ and inserting ‘‘(a) 

10 ENTERPRISES.—For’’; and 

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

12 subsection: 

13 ‘‘(b) FEDERAL HOME LOAN BANKS.— 

14 ‘‘(1) IN GENERAL.—For purposes of this sub15 title, the critical capital level for each Federal home 

16 loan bank shall be such amount of capital as the Di17 rector shall, by regulation require. 

18 ‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP19 ITAL LEVELS.—In establishing the critical capital 

20 level under paragraph (1) for the Federal home loan 

21 banks, the Director shall take due consideration of 

22 the critical capital level established under subsection 

23 (a) for the enterprises, with such modifications as 

24 the Director determines to be appropriate to reflect 
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1 the difference in operations between the banks and 

2 the enterprises.’’. 

3 (2) REGULATIONS.—Not later than the expira4 tion of the 120-day period beginning on the effective 

5 date under section 184, the Director of the Federal 

6 Housing Finance Agency shall issue regulations pur7 suant to section 1363(b) of the Housing and Com8 munity Development Act of 1992 (as added by para9 graph (1) of this subsection) establishing the critical 

10 capital level under such section. 

11 SEC. 112. REVIEW OF AND AUTHORITY OVER ENTERPRISE 

12 ASSETS AND OBLIGATIONS. 

13 Subtitle B of title XIII of the Housing and Commu14 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

15 is amended—

16 (1) by striking the subtitle designation and 

17 heading and inserting the following: 

18 ‘‘Subtitle B—Required Capital Lev19 els for Regulated Entities, Spe20 cial Enforcement Powers, and 

21 Reviews of Assets and Obliga22 tions’’; and 

23 (2) by adding at the end the following new sec24 tion: 
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1 ‘‘SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND OBLI2 GATIONS. 

3 ‘‘(a) IN GENERAL.—The Director shall conduct, on 

4 a periodic basis, a review of the on-balance sheet assets 

5 and off-balance sheet obligations of each enterprise. 

6 ‘‘(b) AUTHORITY TO REQUIRE DISPOSITION OR AC7 QUISITION.—Pursuant to such a review, the Director may 

8 by order require an enterprise, under such terms and con9 ditions as the Director determines to be appropriate, to 

10 dispose of or acquire any asset or obligation, if the Direc11 tor determines that such action is consistent with the safe 

12 and sound operation of the enterprise or with the purposes 

13 of this Act, the Federal National Mortgage Association 

14 Charter Act, or the Federal Home Loan Mortgage Cor15 poration Act.’’. 

16 SEC. 113. CORPORATE GOVERNANCE OF ENTERPRISES. 

17 The Housing and Community Development Act of 

18 1992 is amended by inserting before section 1323 (12 

19 U.S.C. 4543) the following new section: 

20 ‘‘SEC. 1322A CORPORATE GOVERNANCE OF ENTERPRISES. 

21 ‘‘(a) BOARD OF DIRECTORS.— 

22 ‘‘(1) MEMBERSHIP.— 

23 ‘‘(A) IN GENERAL.—No person may serve 

24 on the board of directors of an enterprise for 

25 more than 10 years or past the age of 72, 

26 whichever comes first; except that a member of 
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1 a board of directors may serve his or her full 

2 term if he or she has served less than 10 years 

3 or is 72 years on the date of his or her election 

4 or appointment to the board. 

5 ‘‘(B) WAIVER.—Upon the written request 

6 of an enterprise, the Director may waive, in the 

7 Director’s sole discretion and for good cause, 

8 the limits on the service of a board member 

9 under subparagraph (A). 

10 ‘‘(2) INDEPENDENCE.—A majority of seated 

11 members of the board of directors of each enterprise 

12 shall be independent board members, as defined 

13 under rules set forth by the New York Stock Ex14 change, as such rules may be amended from time to 

15 time. 

16 ‘‘(3) FREQUENCY OF MEETINGS.—To carry out 

17 its obligations and duties under applicable laws, 

18 rules, regulations, and guidelines, the board of direc19 tors of an enterprise shall meet at least eight times 

20 a year and not less than once a calendar quarter. 

21 ‘‘(4) NON-MANAGEMENT BOARD MEMBER

22 MEETINGS.—The non-management directors of an 

23 enterprise shall meet at regularly scheduled execu24 tive sessions without management participation. 
48 

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1 ‘‘(5) QUORUMS; PROHIBITION ON PROXIES.— 

2 For the transaction of business, a quorum of the 

3 board of directors of an enterprise shall be at least 

4 a majority of the seated board of directors and a 

5 board member may not vote by proxy. 

6 ‘‘(6) INFORMATION.—The management of an 

7 enterprise shall provide a board member of the en8 terprise with such adequate and appropriate infor9 mation that a reasonable board member would find 

10 important to the fulfillment of his or her fiduciary 

11 duties and obligations. 

12 ‘‘(7) ANNUAL REVIEW.—At least annually, the 

13 board of directors of each enterprise shall review, 

14 with appropriate professional assistance, the require15 ments of laws, rules, regulations, and guidelines that 

16 are applicable to its activities and duties. 

17 ‘‘(b) COMMITTEES OF BOARDS OF DIRECTORS.— 

18 ‘‘(1) FREQUENCY OF MEETINGS.—Any com19 mittee of the board of directors of an enterprise 

20 shall meet with sufficient frequency to carry out its 

21 obligations and duties under applicable laws, rules, 

22 regulations, and guidelines. 

23 ‘‘(2) REQUIRED COMMITTEES.—Each enterprise 

24 shall provide for the establishment, however styled, 

25 of the following committees of the board of directors: 
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1 ‘‘(A) Audit committee. 

2 ‘‘(B) Compensation committee. 

3 ‘‘(C) Nominating/corporate governance 

4 committee. 

5 Such committees shall be in compliance with the 

6 charter, independence, composition, expertise, duties, 

7 responsibilities, and other requirements set forth 

8 under section 10A(m) of the Securities Exchange 

9 Act of 1934 (15 U.S.C. 78j-1(m)), with respect to 

10 the audit committee, and under rules issued by the 

11 New York Stock Exchange, as such rules may be 

12 amended from time to time. 

13 ‘‘(c) COMPENSATION.— 

14 ‘‘(1) IN GENERAL.—The compensation of board 

15 members, executive officers, and employees of an en16 terprise— 

17 ‘‘(A) shall not be in excess of that which 

18 is reasonable and appropriate; 

19 ‘‘(B) shall be commensurate with the du20 ties and responsibilities of such persons, 

21 ‘‘(C) shall be consistent with the long-term 

22 goals of the enterprise; 

23 ‘‘(D) shall not focus solely on earnings per24 formance, but shall take into account risk man-
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1 agement, operational stability and legal and 

2 regulatory compliance as well; and 

3 ‘‘(E) shall be undertaken in a manner that 

4 complies with applicable laws, rules, and regula5 tions. 

6 ‘‘(2) REIMBURSEMENT.—If an enterprise is re7 quired to prepare an accounting restatement due to 

8 the material noncompliance of the enterprise, as a 

9 result of misconduct, with any financial reporting re10 quirement under the securities laws, the chief execu11 tive officer and chief financial officer of the enter12 prise shall reimburse the enterprise as provided 

13 under section 304 of the Sarbanes-Oxley Act of 

14 2002 (15 U.S.C. 7243). This provision does not oth15 erwise limit the authority of the Agency to employ 

16 remedies available to it under its enforcement au17 thorities. 

18 ‘‘(d) CODE OF CONDUCT AND ETHICS.— 

19 ‘‘(1) IN GENERAL.—An enterprise shall estab20 lish and administer a written code of conduct and 

21 ethics that is reasonably designed to assure the abil22 ity of board members, executive officers, and em23 ployees of the enterprise to discharge their duties 

24 and responsibilities, on behalf of the enterprise, in 

25 an objective and impartial manner, and that includes 
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1 standards required under section 406 of the Sar2 banes-Oxley Act of 2002 (15 U.S.C. 7264) and 

3 other applicable laws, rules, and regulations. 

4 ‘‘(2) REVIEW.—Not less than once every three 

5 years, an enterprise shall review the adequacy of its 

6 code of conduct and ethics for consistency with prac7 tices appropriate to the enterprise and make any ap8 propriate revisions to such code. 

9 ‘‘(e) CONDUCT AND RESPONSIBILITIES OF BOARD OF

10 DIRECTORS.—The board of directors of an enterprise shall 

11 be responsible for directing the conduct and affairs of the 

12 enterprise in furtherance of the safe and sound operation 

13 of the enterprise and shall remain reasonably informed of 

14 the condition, activities, and operations of the enterprise. 

15 The responsibilities of the board of directors shall include 

16 having in place adequate policies and procedures to assure 

17 its oversight of, among other matters, the following: 

18 ‘‘(1) Corporate strategy, major plans of action, 

19 risk policy, programs for legal and regulatory com20 pliance and corporate performance, including pru21 dent plans for growth and allocation of adequate re22 sources to manage operations risk. 

23 ‘‘(2) Hiring and retention of qualified senior ex24 ecutive officers and succession planning for such 

25 senior executive officers. 
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1 ‘‘(3) Compensation programs of the enterprise. 

2 ‘‘(4) Integrity of accounting and financial re3 porting systems of the enterprise, including inde4 pendent audits and systems of internal control. 

5 ‘‘(5) Process and adequacy of reporting, disclo6 sures, and communications to shareholders, inves7 tors, and potential investors. 

8 ‘‘(6) Extensions of credit to board members and 

9 executive officers. 

10 ‘‘(7) Responsiveness of executive officers in pro11 viding accurate and timely reports to Federal regu12 lators and in addressing the supervisory concerns of 

13 Federal regulators in a timely and appropriate man14 ner. 

15 ‘‘(f) PROHIBITION OF EXTENSIONS OF CREDIT.—An 

16 enterprise may not directly or indirectly, including 

17 through any subsidiary, extend or maintain credit, arrange 

18 for the extension of credit, or renew an extension of credit, 

19 in the form of a personal loan to or for any board member 

20 or executive officer of the enterprise, as provided by sec21 tion 13(k) of the Securities Exchange Act of 1934 (15 

22 U.S.C. 78m(k)). 

23 ‘‘(g) CERTIFICATION OF DISCLOSURES.—The chief 

24 executive officer and the chief financial officer of an enter25 prise shall review each quarterly report and annual report 
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1 issued by the enterprise and such reports shall include cer2 tifications by such officers as required by section 302 of 

3 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241). 

4 ‘‘(h) CHANGE OF AUDIT PARTNER.—An enterprise 

5 may not accept audit services from an external auditing 

6 firm if the lead or coordinating audit partner who has pri7 mary responsibility for the external audit of the enterprise, 

8 or the external audit partner who has responsibility for 

9 reviewing the external audit has performed audit services 

10 for the enterprise in each of the five previous fiscal years. 

11 ‘‘(i) COMPLIANCE PROGRAM.— 

12 ‘‘(1) REQUIREMENT.—Each enterprise shall es13 tablish and maintain a compliance program that is 

14 reasonably designed to assure that the enterprise 

15 complies with applicable laws, rules, regulations, and 

16 internal controls. 

17 ‘‘(2) COMPLIANCE OFFICER.—The compliance 

18 program of an enterprise shall be headed by a com19 pliance officer, however styled, who reports directly 

20 to the chief executive officer of the enterprise. The 

21 compliance officer shall report regularly to the board 

22 of directors or an appropriate committee of the 

23 board of directors on compliance with and the ade24 quacy of current compliance policies and procedures 

25 of the enterprise, and shall recommend any adjust-
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1 ments to such policies and procedures that the com2 pliance officer considers necessary and appropriate. 

3 ‘‘(j) RISK MANAGEMENT PROGRAM.— 

4 ‘‘(1) REQUIREMENT.—Each enterprise shall es5 tablish and maintain a risk management program 

6 that is reasonably designed to manage the risks of 

7 the operations of the enterprise. 

8 ‘‘(2) RISK MANAGEMENT OFFICER.—The risk 

9 management program of an enterprise shall be head10 ed by a risk management officer, however styled, 

11 who reports directly to the chief executive officer of 

12 the enterprise. The risk management officer shall re13 port regularly to the board of directors or an appro14 priate committee of the board of directors on compli15 ance with and the adequacy of current risk manage16 ment policies and procedures of the enterprise, and 

17 shall recommend any adjustments to such policies 

18 and procedures that the risk management officer 

19 considers necessary and appropriate. 

20 ‘‘(k) COMPLIANCE WITH OTHER LAWS.— 

21 ‘‘(1) DEREGISTERED OR UNREGISTERED COM22 MON STOCK.—If an enterprise deregisters or has not 

23 registered its common stock with the Securities and 

24 Exchange Commission under the Securities Ex25 change Act of 1934, the enterprise shall comply or 
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1 continue to comply with sections 10A(m) and 13(k) 

2 of the Securities Exchange Act of 1934 (15 U.S.C. 

3 78j-1(m), 78m(k)) and sections 302, 304, and 406 

4 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 

5 7243, 7264), subject to such requirements as pro6 vided by subsection (l) of this section. 

7 ‘‘(2) REGISTERED COMMON STOCK.—An enter8 prise that has its common stock registered with the 

9 Securities and Exchange Commission shall maintain 

10 such registered status, unless it provides 60 days 

11 prior written notice to the Director stating its intent 

12 to deregister and its understanding that it will re13 main subject to the requirements of the sections of 

14 the Securities Exchange Act of 1934 and the Sar15 banes-Oxley Act of 2002, subject to such require16 ments as provided by subsection (l) of this section. 

17 ‘‘(l) MODIFICATION OF CERTAIN PROVISIONS.—In 

18 connection with standards of Federal or State law (includ19 ing the Revised Model Corporation Act) or New York 

20 Stock Exchange rules that are made applicable to an en21 terprise by section 1710.10 of the Director’s rules (12 

22 C.F.R. 1710.10) and by subsections (a), (b), (g), (i), (j), 

23 and (k) of this section, the Director, in the Director’s sole 

24 discretion, may modify the standards contained in this sec25 tion or in part 1710 of the Director’s rules (12 U.S.C. 
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1 Part 1710) in accordance with section 553 of title 5, 

2 United States Code, and upon written notice to the enter3 prise.’’. 

4 SEC. 114. CONFORMING AMENDMENTS. 

5 (a) 1992 Act.—Part 1 of subtitle A of title XIII of 

6 the Housing and Community Development Act of 1992 

7 (12 U.S.C. 4511 et seq.), as amended by the preceding 

8 provisions of this Act, is further amended— 

9 (1) by striking ‘‘an enterprise’’ each place such 

10 term appears in such part (except in sections 

11 1313(a)(2)(A), 1313A(b)(2)(B)(ii)(I), and 

12 1316(b)(3)) and inserting ‘‘a regulated entity’’; 

13 (2) by striking ‘‘the enterprise’’ each place such 

14 term appears in such part (except in section 

15 1316(b)(3)) and inserting ‘‘the regulated entity’’; 

16 (3) by striking ‘‘the enterprises’’ each place 

17 such term appears in such part (except in sections 

18 1312(c)(2), 1312(e)(2), 1317(g)(1), and 

19 1319B(a)(4)(D)) and inserting ‘‘the regulated enti20 ties’’; 

21 (4) by striking ‘‘each enterprise’’ each place 

22 such term appears in such part and inserting ‘‘each 

23 regulated entity’’; 

24 (5) by striking ‘‘Office’’ each place such term 

25 appears in such part (except in sections 1312(b)(5), 
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1 1315(b), and 1316(g), and subsections (c) and (d) 

2 of section 1317) and inserting ‘‘Agency’’; 

3 (6) in section 1315 (12 U.S.C. 4515)— 

4 (A) in subsection (a)— 

5 (i) in the subsection heading, by strik6 ing ‘‘OFFICE PERSONNEL’’ and inserting 

7 ‘‘IN GENERAL’’; and 

8 (ii) by striking ‘‘The’’ and inserting 

9 ‘‘Subject to titles III and IV of the Federal 

10 Housing Finance Reform Act of 2005, 

11 the’’; 

12 (B) by striking subsection (d); and 

13 (C) by redesignating subsections (e) and 

14 (f) as subsections (d) and (e), respectively; 

15 (7) in section 1316(c) (12 U.S.C. 4516(c)), by 

16 striking ‘‘any enterprise’’ and inserting ‘‘any regu17 lated entity’’; 

18 (8) in section 1319A (12 U.S.C. 4520)— 

19 (A) by striking ‘‘(a) IN GENERAL.—Each 

20 enterprise’’ and inserting ‘‘Each regulated enti21 ty’’; and 

22 (B) by striking subsection (b); 

23 (9) in section 1319B (12 U.S.C. 4521), by 

24 striking ‘‘Committee on Banking, Finance and 
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1 Urban Affairs’’ each place such term appears and 

2 inserting ‘‘Committee on Financial Services’’; and 

3 (10) in section 1319F (12 U.S.C. 4525), strik4 ing all that follows ‘‘United States Code’’ and insert5 ing ‘‘, the Agency shall be considered an agency re6 sponsible for the regulation or supervision of finan7 cial institutions.’’. 

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

9 The Federal National Mortgage Association Charter Act 

10 (12 U.S.C. 1716 et seq.) is amended— 

11 (1) by striking ‘‘Director of the Office of Fed12 eral Housing Enterprise Oversight of the Depart13 ment of Housing and Urban Development’’ each 

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

15 the Federal Housing Finance Agency’’, in— 

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

17 1718(c)(2)); 

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

19 1723a(d)(3)(B)); and 

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

21 (2) in section 309— 

22 (A) in subsections (d)(3)(A) and (n)(1), by 

23 striking ‘‘Banking, Finance and Urban Affairs’’ 

24 each place such term appears and inserting 

25 ‘‘Financial Services’’; and 
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1 (B) in subsection (n)(1), by inserting ‘‘the 

2 Director of the Federal Housing Finance Agen3 cy,’’ after ‘‘Senate,’’. 

4 (c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed5 eral Home Loan Mortgage Corporation Act is amended— 

6 (1) by striking ‘‘Director of the Office of Fed7 eral Housing Enterprise Oversight of the Depart8 ment of Housing and Urban Development’’ each 

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

10 the Federal Housing Finance Agency’’, in— 

11 (A) section 303(b)(2) (12 U.S.C. 

12 1452(b)(2)); 

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

14 1452(h)(2)); and 

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

16 1456(c)(1)); 

17 (2) in sections 303(h)(1) and 307(f)(1) (12 

18 U.S.C. 1452(h)(1), 1456(f)(1)), by striking ‘‘Bank19 ing, Finance and Urban Affairs’’ each place such 

20 term appears and inserting ‘‘Financial Services’’; 

21 (3) in section 306(i) (12 U.S.C. 1455(i))— 

22 (A) by striking ‘‘section 1316(c)’’ and in23 serting ‘‘section 306(c)’’; and 

24 (B) by striking ‘‘section 106’’ and insert25 ing ‘‘section 1316’’; and 
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1 (4) in section 307(f)(1) (12 U.S.C. 1456(f)(1)), 

2 by inserting ‘‘the Director of the Federal Housing 

3 Finance Agency,’’ after ‘‘Senate,’’. 

4 Subtitle B—Improvement of 

5 Mission Supervision 

6 SEC. 121. TRANSFER OF PROGRAM AND ACTIVITIES AP7 PROVAL AND HOUSING GOAL OVERSIGHT. 

8 Part 2 of subtitle A of title XIII of the Housing and 

9 Community Development Act of 1992 (12 U.S.C. 4541 et 

10 seq.) is amended— 

11 (1) by striking the designation and heading for 

12 the part and inserting the following: 

13 ‘‘PART 2—PROGRAM AND ACTIVITIES APPROVAL 

14 BY DIRECTOR, CORPORATE GOVERNANCE, 

15 AND ESTABLISHMENT OF HOUSING GOALS’’; 

16 and 

17 (2) by striking sections 1321 and 1322. 

18 SEC. 122. REVIEW BY DIRECTOR OF NEW PROGRAMS AND 

19 ACTIVITIES OF ENTERPRISES. 

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

21 of the Housing and Community Development Act of 1992 

22 is amended by inserting before section 1323 (12 U.S.C. 

23 4543) the following new section: 
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1 ‘‘SEC. 1321. REVIEW AND APPROVAL BY DIRECTOR OF NEW 

2 PROGRAMS AND BUSINESS ACTIVITIES OF 

3 ENTERPRISES. 

4 ‘‘(a) LIMITATION ON AUTHORITY TO UNDERTAKE

5 PROGRAMS AND ACTIVITIES.—An enterprise may not un6 dertake any new program, including a pilot program, or 

7 any new business activity except in accordance with the 

8 procedures set forth in this section and orders and regula9 tions issued under this section. 

10 ‘‘(b) NEW PROGRAMS.— 

11 ‘‘(1) PRIOR APPROVAL REQUIREMENT.—An en12 terprise may not commence any new program before 

13 it has obtained the approval of the Director, pursu14 ant to this subsection, for the new program. 

15 ‘‘(2) APPLICATION.—The Director shall, by 

16 order or regulation, require that an enterprise shall, 

17 to obtain a determination by the Director regarding 

18 approval of a new program by the enterprise, submit 

19 to the Director a written application for the new 

20 program in a format as prescribed by the Director. 

21 ‘‘(3) NOTICE.—Immediately upon receipt of a 

22 complete application for a new program, the Direc23 tor shall cause to be published in the Federal Reg24 ister notice of the receipt of such application and of 

25 the period for public comment pursuant to para26 graph (4) regarding such new program, and a de-
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1 scription of the new program proposed by the appli2 cation. 

3 ‘‘(4) PUBLIC COMMENT PERIOD.—During the 

4 30-day period beginning upon publication pursuant 

5 to paragraph (3) of a notice regarding such an ap6 plication, the Director shall receive public comments 

7 regarding the new program. 

8 ‘‘(5) DETERMINATION.—Not less than 15 days 

9 after the conclusion of the public comment period 

10 pursuant to paragraph (4) regarding an application 

11 but not more than 30 days after the conclusion of 

12 such comment period, the Director shall approve, 

13 conditionally approve, or reject such program, in 

14 writing. 

15 ‘‘(6) STANDARD FOR APPROVAL.—The Director 

16 may approve, or conditionally approve, a new pro17 gram of an enterprise only if the Director deter18 mines, taking into consideration any relevant infor19 mation and comments received during the public 

20 comment period, that such new program— 

21 ‘‘(A) does not contravene and is not incon22 sistent with the purposes of this title, the Fed23 eral National Mortgage Association Charter 

24 Act, or the Federal Home Loan Mortgage Cor25 poration Act, as such purposes are determined 
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1 taking into consideration the definitions of the 

2 terms ‘primary mortgage market’ and ‘sec3 ondary mortgage market’ pursuant to section 

4 1303; 

5 ‘‘(B) is not otherwise inconsistent with the 

6 safety and soundness of the enterprise; and 

7 ‘‘(C) is in the public interest. 

8 ‘‘(c) BUSINESS ACTIVITIES.— 

9 ‘‘(1) AUTHORITY OF DIRECTOR TO PROHIBIT

10 ACTIVITIES.—The Director shall have authority to 

11 prohibit any business activity by an enterprise if the 

12 Director determines, in writing, that such activity— 

13 ‘‘(A) contravenes or is inconsistent with 

14 the purposes of this title, the Federal National 

15 Mortgage Association Charter Act, or the Fed16 eral Home Loan Mortgage Corporation Act; 

17 ‘‘(B) is otherwise inconsistent with the 

18 safety and soundness of the enterprise; or 

19 ‘‘(C) is not in the public interest. 

20 ‘‘(2) NOTIFICATION OF NEW BUSINESS ACTIVI21 TIES.— An enterprise that undertakes any new busi22 ness activity shall provide written notice of the activ23 ity to the Director and may commence the new busi24 ness activity only in accordance with paragraph (4). 
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1 ‘‘(3) DIRECTOR DETERMINATION OF APPLICA2 BLE PROCEDURE.— 

3 ‘‘(A) TIMING.—Immediately upon receipt 

4 of any notice under paragraph (2) regarding a 

5 new business activity, the Director shall under6 take a determination under subparagraph (B) 

7 of this paragraph regarding the business activ8 ity. 

9 ‘‘(B) DETERMINATION AND TREATMENT

10 AS NEW PROGRAM.—If the Director determines 

11 that any new business activity consists of, re12 lates to, or involves any new program— 

13 ‘‘(i) the Director shall notify the en14 terprise of the determination; 

15 ‘‘(ii) the new business activity de16 scribed in the notice shall be considered a 

17 new program for purposes of this section; 

18 and 

19 ‘‘(iii) the Director shall prohibit the 

20 enterprise from carrying out the activity 

21 except to the extent that approval for the 

22 activity is obtained pursuant to subsection 

23 (b). 

24 ‘‘(4) COMMENCEMENT.—An enterprise may 

25 commence a new business activity— 
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1 ‘‘(A) if the Director issues a written ap2 proval regarding such business activity, imme3 diately upon such issuance or at such other 

4 time as provided by the Director in such letter; 

5 or 

6 ‘‘(B) if, during the 30-day period begin7 ning upon receipt by the Director of notice pur8 suant to paragraph (2) regarding a new busi9 ness activity, the Director has not issued to the 

10 enterprise a written approval or denial of the 

11 new business activity, upon the expiration of 

12 such 30-day period. 

13 ‘‘(d) APPROVAL AND CONDITIONAL APPROVAL.—The 

14 Director may at any time conditionally approve the under15 taking of a particular new program or business activity 

16 by an enterprise and set forth the terms and conditions 

17 that apply to the program or activity with which the enter18 prise shall comply if it undertakes the new program or 

19 activity. Such approval may, in the discretion of the Direc20 tor, be in the form of a written agreement between the 

21 enterprise and the Director and shall be subject to such 

22 terms and conditions therein. Such a written agreement 

23 or conditional approval shall be enforceable under subtitle 

24 C. 

25 ‘‘(e) EFFECT ON OTHER AUTHORITIES.— 
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1 ‘‘(1) EXAMINATIONS.—Nothing in this section 

2 may be construed to limit, in any manner, any other 

3 authority or right the Director may have under 

4 other provisions of law to conduct an examination of 

5 an enterprise. 

6 ‘‘(2) REQUESTS FOR INFORMATION.—Nothing 

7 in this section may be construed to limit the right 

8 of the Director at any time to request additional in9 formation from an enterprise concerning any busi10 ness activity. 

11 ‘‘(3) NO IMPLIED RIGHT OF ACTION.—This sec12 tion shall not create any private right of action 

13 against an enterprise or any director or executive of14 ficer of an enterprise, or impair any private right of 

15 action under other applicable law. 

16 ‘‘(4) NO LIMITATION.—Nothing in this section 

17 may be construed to restrict the general supervisory 

18 and regulatory authority of the Director over all pro19 grams, products, activities, or business operations of 

20 any kind. 

21 ‘‘(f) REPORT ON PROGRAMS AND BUSINESS ACTIVI22 TIES.—Not later than the expiration of the 180-day period 

23 beginning on the effective date under section 184 of the 

24 Federal Housing Finance Reform Act of 2005, each enter25 prise shall submit to the Director a report identifying and 
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1 describing each program and business activity of the en2 terprise engaged in or existing as of the submission of the 

3 report. 

4 ‘‘(g) REGULATIONS.—The Director shall by order or 

5 regulation issue rules and procedures to implement this 

6 section, including in the discretion of the Director, such 

7 definitions, interpretations, forms, and other guidances as 

8 the Director considers appropriate.’’. 

9 (b) DEFINITIONS.—Section 1303 of the Housing and 

10 Community Development Act of 1992 (12 U.S.C. 4502), 

11 as amended by section 2 of this Act, is further amended—

12 (1) by redesignating paragraphs (16) through 

13 (22) as paragraphs (19) through (25), respectively; 

14 (2) by inserting after paragraph (15) the fol15 lowing new paragraph: 

16 ‘‘(18) NEW BUSINESS ACTIVITY.—The term 

17 ‘new business activity’ means, with respect to an en18 terprise, any business activity of the enterprise 

19 that—

20 ‘‘(A) the enterprise was not engaging in on 

21 the effective date under section 184 of the Fed22 eral Housing Finance Reform Act of 2005; and 

23 ‘‘(B) that the enterprise is not authorized, 

24 pursuant to the provisions of section 1321(c), 
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1 to offer, undertake, transact, conduct, or en2 gage in.’’; 

3 (3) by redesignating paragraphs (14) and (15) 

4 as paragraphs (16) and (17), respectively; 

5 (4) by inserting after paragraph (13) the fol6 lowing new paragraph: 

7 ‘‘(15) MORTGAGE MARKETS.—The terms ‘pri8 mary mortgage market’ and ‘secondary mortgage 

9 market’ shall have such meanings as the Director 

10 shall, by regulation, prescribe consistent with the 

11 Federal National Mortgage Association Charter Act 

12 and the Federal Home Loan Mortgage Corporation 

13 Act. The Director shall issue such regulations not 

14 later than the expiration of the 6-month period be15 ginning on the effective date under section 184 of 

16 the Federal Housing Finance Reform Act of 2005.’’; 

17 (5) by redesignating paragraphs (5) through 

18 (13) as paragraphs (6) through (14), respectively; 

19 and 

20 (6) by inserting after paragraph (4) the fol21 lowing new paragraph: 

22 ‘‘(5) BUSINESS ACTIVITY.—The term ‘business 

23 activity’ means, with respect to an enterprise any of24 fering, undertaking, transacting, conducting, or en-
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1 gaging in any conduct or activity by an enterprise, 

2 as the Director shall provide.’’. 

3 SEC. 123. CONFORMING LOAN LIMITS. 

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

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

6 1717(b)(2)) is amended by striking the 7th and 8th sen7 tences and inserting the following new sentences: ‘‘Such 

8 limitations shall not exceed $359,650 for a mortgage se9 cured by a single-family residence, $460,400 for a mort10 gage secured by a 2-family residence, $556,500 for a 

11 mortgage secured by a 3-family residence, and $694,600 

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

13 that such maximum limitations shall be adjusted effective 

14 January 1 of each year beginning with 2006, subject to 

15 the limitations in this paragraph. Each adjustment shall 

16 be made by adding to or subtracting from each such 

17 amount (as it may have been previously adjusted) a per18 centage thereof equal to the percentage increase or de19 crease during the 12-month period ending with the pre20 vious October in the housing price index maintained by 

21 the Director of the Federal Housing Finance Agency (pur22 suant to section 1322 of the Housing and Community De23 velopment Act of 1992 (12 U.S.C. 4541)).’’. 

24 (b) FREDDIE MAC.—Section 305(a)(2) of the Fed25 eral National Mortgage Association Charter Act (12 
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1 U.S.C. 1454(a)(2)) is amended by striking the 6th and 

2 7th sentences and inserting the following new sentences: 

3 ‘‘Such limitations shall not exceed $359,650 for a mort4 gage secured by a single-family residence, $460,400 for 

5 a mortgage secured by a 2-family residence, $556,500 for 

6 a mortgage secured by a 3-family residence, and $694,600 

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

8 that such maximum limitations shall be adjusted effective 

9 January 1 of each year beginning with 2006, subject to 

10 the limitations in this paragraph. Each adjustment shall 

11 be made by adding to or subtracting from each such 

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

16 the Director of the Federal Housing Finance Agency (pur17 suant to section 1322 of the Housing and Community De18 velopment Act of 1992 (12 U.S.C. 4541)).’’. 

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

20 subtitle A of title XIII of the Housing and Community 

21 Development Act of 1992 (as amended by the preceding 

22 provisions of this Act) is amended by inserting after sec23 tion 1321 (as added by section 122 of this Act) the fol24 lowing new section: 
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1 ‘‘SEC. 1322. HOUSING PRICE INDEX. 

2 ‘‘(a) IN GENERAL.—The Director shall establish and 

3 maintain a method of assessing the national average 1- 

4 family house price for use for adjusting the conforming 

5 loan limitations of the enterprises. In establishing such 

6 method, the Director shall take into consideration the 

7 monthly survey of all major lenders conducted by the Fed8 eral Housing Finance Agency to determine the national 

9 average 1-family house price, the House Price Index main10 tained by the Office of Federal Housing Enterprise Over11 sight of the Department of Housing and Urban Develop12 ment before the effective date of the Federal Housing Fi13 nance Reform Act of 2005, any appropriate house price 

14 indexes of the Bureau of the Census of the Department 

15 of Commerce, and any other indexes or measures that the 

16 Director considers appropriate. 

17 ‘‘(b) GAO AUDIT.— 

18 ‘‘(1) IN GENERAL.—At such times as are re19 quired under paragraph (2), the Comptroller Gen20 eral of the United States shall conduct an audit of 

21 the methodology established by the Director under 

22 subsection (a) to determine whether the methodology 

23 established is an accurate and appropriate means of 

24 measuring changes to the national average 1-family 

25 house price. 
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1 ‘‘(2) TIMING.—An audit referred to in para2 graph (1) shall be conducted and completed not later 

3 than the expiration of the 180-day period that be4 gins upon each of the following dates: 

5 ‘‘(A) ESTABLISHMENT.—The date upon 

6 which such methodology is initially established 

7 under subsection (a) in final form by the Direc8 tor. 

9 ‘‘(B) MODIFICATION OR AMENDMENT.— 

10 Each date upon which any modification or 

11 amendment to such methodology is adopted in 

12 final form by the Director. 

13 ‘‘(3) REPORT.—Within 30 days of the comple14 tion of any audit conducted under this subsection, 

15 the Comptroller General shall submit a report detail16 ing the results and conclusions of the audit to the 

17 Director, the Committee on Financial Services of the 

18 House of Representatives, and the Committee on 

19 Banking, Housing, and Urban Affairs of the Sen20 ate.’’. 

21 SEC. 124. ANNUAL HOUSING REPORT REGARDING REGU22 LATED ENTITIES. 

23 The Housing and Community Development Act of 

24 1992 is amended by striking section 1324 (12 U.S.C. 

25 4544) and inserting the following new section: 
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1 ‘‘SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGU2 LATED ENTITIES. 

3 ‘‘(a) IN GENERAL.—After reviewing and analyzing 

4 the reports submitted under section 309(n) of the Federal 

5 National Mortgage Association Charter Act, section 

6 307(f) of the Federal Home Loan Mortgage Corporation 

7 Act, and section 10(j)(12) of the Federal Home Loan 

8 Bank Act (12 U.S.C. 1430(j)(12)), the Director shall sub9 mit a report, as part of the annual report under section 

10 1328, not later than October 30 of each year, to the Com11 mittee on Financial Services of the House of Representa12 tives and the Committee on Banking, Housing, and Urban 

13 Affairs of the Senate, on the activities of each regulated 

14 entity. 

15 ‘‘(b) CONTENTS.—The report shall— 

16 ‘‘(1) discuss the extent to which— 

17 ‘‘(A) each enterprise is achieving the an18 nual housing goals established under subpart B 

19 of this part; 

20 ‘‘(B) each Federal home loan bank is 

21 meeting the contribution requirements under 

22 section 10(j)(5) of the Federal Home Loan 

23 Bank Act; and 

24 ‘‘(C) each regulated entity is achieving the 

25 purposes of the regulated entity established by 

26 law; 
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1 ‘‘(2) aggregate and analyze census tract and 

2 other relevant data to assess the compliance of each 

3 enterprise with the central cities, rural areas, and 

4 other underserved areas housing goal and to deter5 mine levels of business in central cities, rural areas, 

6 underserved areas, low- and moderate-income census 

7 tracts, minority census tracts, and other geo8 graphical areas deemed appropriate by the Director; 

9 ‘‘(3) aggregate and analyze relevant data on in10 come to assess the compliance of each enterprise 

11 with the housing goals under subpart B; 

12 ‘‘(4) aggregate and analyze data on income, 

13 race, and gender by census tract and other relevant 

14 classifications, and compare such data with larger 

15 demographic, housing, and economic trends; 

16 ‘‘(5) examine actions that— 

17 ‘‘(A) each enterprise has undertaken or 

18 could undertake to promote and expand the an19 nual goals established under subpart B and the 

20 purposes of the enterprise established by law; 

21 and 

22 ‘‘(B) each Federal home loan bank has 

23 taken or could undertake to promote and ex24 pand the community investment program and 

25 affordable housing program of the bank estab-
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1 lished under section subsections (i) and (j) of 

2 section 10 of the Federal Home Loan Bank 

3 Act; 

4 ‘‘(6) examine the primary and secondary multi5 family housing mortgage markets and describe— 

6 ‘‘(A) the availability and liquidity of mort7 gage credit; 

8 ‘‘(B) the status of efforts to provide stand9 ard credit terms and underwriting guidelines 

10 for multifamily housing and to securitize such 

11 mortgage products; and 

12 ‘‘(C) any factors inhibiting such standard13 ization and securitization; 

14 ‘‘(7) examine actions each regulated entity has 

15 undertaken and could undertake to promote and ex16 pand opportunities for first-time homebuyers; 

17 ‘‘(8) describe any actions taken under section 

18 1325(5) with respect to originators found to violate 

19 fair lending procedures; and 

20 ‘‘(9) discuss and analyze existing conditions and 

21 trends, including conditions and trends relating to 

22 pricing, in the housing markets and mortgage mar23 kets. 

24 ‘‘(c) DATA COLLECTION AND REPORTING.— 
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1 ‘‘(1) IN GENERAL.—To assist the Director in 

2 analyzing the matters described in subsection (b) 

3 and establishing the methodology described in sec4 tion 1322, the Director shall conduct, on a monthly 

5 basis, a survey of mortgage markets in accordance 

6 with this subsection. 

7 ‘‘(2) DATA POINTS.—Each monthly survey con8 ducted by the Director under paragraph (1) shall 

9 collect data on— 

10 ‘‘(A) the characteristics of individual mort11 gages that are eligible for purchase by the en12 terprises and the characteristics of individual 

13 mortgages that are not eligible for purchase by 

14 the enterprises including, in both cases, infor15 mation concerning— 

16 ‘‘(i) the price of the house that se17 cures the mortgage; 

18 ‘‘(ii) the loan-to-value ratio of the 

19 mortgage, which shall reflect any sec20 ondary liens on the relevant property; 

21 ‘‘(iii) the terms of the mortgage; 

22 ‘‘(iv) the creditworthiness of the bor23 rower or borrowers; and 
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1 ‘‘(v) whether the mortgage, in the 

2 case of a conforming mortgage, was pur3 chased by an enterprise; and 

4 ‘‘(B) such other matters as the Director 

5 determines to be appropriate. 

6 ‘‘(3) PUBLIC AVAILABILITY.—The Director 

7 shall make any data collected by the Director in con8 nection with the conduct of a monthly survey avail9 able to the public in a timely manner, provided that 

10 the Director may modify the data released to the 

11 public to ensure that the data is not released in an 

12 identifiable form. 

13 ‘‘(4) DEFINITION.—For purposes of this sub14 section, the term ‘identifiable form’ means any rep15 resentation of information that permits the identity 

16 of a borrower to which the information relates to be 

17 reasonably inferred by either direct or indirect 

18 means.’’. 

19 SEC. 125. ESTABLISHMENT OF HOUSING GOALS. 

20 Section 1331 of the Housing and Community Devel21 opment Act of 1992 (12 U.S.C. 4561) is amended by 

22 striking subsection (a) and inserting the following new 

23 subsection: 

24 ‘‘(a) IN GENERAL.—The Director shall establish, by 

25 regulation, housing goals under this subpart for each en-
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1 terprise. The housing goals shall include a low- and mod2 erate-income housing goal pursuant to section 1332, a 

3 special affordable housing goal pursuant to section 1333, 

4 a central cities, rural areas, and other underserved areas 

5 housing goal pursuant to section 1334, a home purchase 

6 goal under section 1334A, and such other goals as the 

7 Director may establish under section 1334B. The Director 

8 shall implement this subpart in a manner consistent with 

9 section 301(3) of the Federal National Mortgage Associa10 tion Charter Act and section 301(b)(3) of the Federal 

11 Home Loan Mortgage Corporation Act.’’. 

12 SEC. 126. HOME PURCHASE GOAL AND ADDITIONS, MODI13 FICATIONS, AND RESCISSIONS TO GOALS. 

14 The Housing and Community Development Act of 

15 1992 is amended by inserting after section 1334 (12 

16 U.S.C. 4564) the following new sections: 

17 ‘‘SEC. 1334A. HOME PURCHASE GOAL. 

18 ‘‘(a) IN GENERAL.—The Director shall establish an 

19 annual home purchase goal for the purchase by each en20 terprise of mortgages financing the purchase of owner-oc21 cupied single family dwelling units. The Director may, by 

22 regulation, establish components for such goal to include 

23 any or all of the following: first-time homebuyers; low- and 

24 moderate-income homebuyers; homebuyers in central cit25 ies, rural areas, and other underserved areas; and home-
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1 buyers of special affordable housing. The Director may, 

2 by regulation, establish the goal with components as per3 centages of enterprise business or by such other means 

4 as necessary to increase the enterprises’ secondary market 

5 financing of mortgages for home purchases consistent with 

6 the enterprises’ charter missions. The components of the 

7 goal established by the Director shall be enforceable as 

8 goals. The goal under this section with its components 

9 must be established for metropolitan and rural areas for 

10 which data is available. 

11 ‘‘(b) FACTORS TO BE APPLIED.—In establishing the 

12 home purchase goal under this section for an enterprise, 

13 the Director shall consider— 

14 ‘‘(1) national housing needs; 

15 ‘‘(2) economic, housing, and demographic condi16 tions; 

17 ‘‘(3) the performance and effort of the enter18 prises toward achieving the home purchase goal in 

19 previous years; 

20 ‘‘(4) the size of the conventional mortgage mar21 ket serving home purchasers relative to the size of 

22 the overall conventional mortgage market; 

23 ‘‘(5) the ability of the enterprises to lead the in24 dustry in making mortgage credit available for home 

25 purchasers; and 
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1 ‘‘(6) the need to maintain the sound financial 

2 condition of the enterprises. 

3 ‘‘(c) TRANSITION.—In order to permit a transition 

4 to the goal established under this section, the Director 

5 shall phase in the goal over a period of one year. Such 

6 goal shall not be enforceable during the one-year transi7 tion period. 

8 ‘‘(d) IMPLEMENTATION DURING TRANSITION.—The 

9 Director shall establish any requirements necessary to im10 plement the transition provisions under this section by no11 tice, after providing the enterprises with an opportunity 

12 to review and comment not less than 30 days before the 

13 issuance of such notice. 

14 ‘‘SEC. 1334B. HOUSING GOALS: ADDITIONS, MODIFICATIONS, 

15 AND RESCISSIONS. 

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

17 establish additional annual housing goals, or modify or re18 scind existing housing goals, to address national housing 

19 needs consistent with the enterprises’ charters for the pur20 chase of mortgages where the Director determines by reg21 ulation that the housing need is greatest. The Director 

22 may issue a regulation which establishes or modifies any 

23 goal under this subsection— 

24 ‘‘(1) as a percentage of the mortgage purchases 

25 of each enterprise; 
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1 ‘‘(2) as a dollar amount of each enterprise’s 

2 mortgage purchases; or 

3 ‘‘(3) by such other means as necessary to in4 crease the enterprises’ secondary market financing 

5 of mortgages addressed by the goal. 

6 ‘‘(b) FACTORS TO BE APPLIED.—In establishing, 

7 modifying, or rescinding a goal, the Director shall con8 sider— 

9 ‘‘(1) national housing needs; 

10 ‘‘(2) economic, housing, and demographic condi11 tions; 

12 ‘‘(3) the performance and effort of the enter13 prises toward achieving the need addressed by such 

14 goal in previous years; 

15 ‘‘(4) the size of the conventional mortgage mar16 ket serving the need addressed by the goal relative 

17 to the size of the overall conventional mortgage mar18 ket; 

19 ‘‘(5) the ability of the enterprises to lead the in20 dustry in making mortgage credit available to meet 

21 the need addressed by the goal; and 

22 ‘‘(6) the need to maintain the sound financial 

23 condition of the enterprises. 

24 ‘‘(c) TIMING.—The Director may exercise the author25 ity under this section to issue regulations to establish, 
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1 modify, or rescind housing goals not more than once per 

2 calendar year. Such regulations for a calendar year may 

3 establish, or make modifications or rescissions with re4 spect to, more than one annual housing goal, but all such 

5 regulations for a calendar year shall be issued concur6 rently. 

7 ‘‘(d) TRANSITION.—In order to permit a transition 

8 to any goal established under this section, the Director 

9 shall phase in such goal over a period of one year. Such 

10 goal shall not be enforceable during the one-year transi11 tion period. 

12 ‘‘(e) IMPLEMENTATION DURING TRANSITION.—The 

13 Director shall establish any requirements necessary to im14 plement the transition provisions under this section by no15 tice, after providing the enterprises with an opportunity 

16 to review and comment not less than 30 days before the 

17 issuance of such notice.’’. 

18 SEC. 127. OTHER REQUIREMENTS. 

19 The first sentence of section 1335(a) of the Housing 

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

21 4565(a)) is amended by striking ‘‘low-’’ and all that fol22 lows through ‘‘1334’’ and inserting ‘‘goals under this sub23 part’’. 
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1 SEC. 128. MONITORING AND ENFORCING COMPLIANCE 

2 WITH HOUSING GOALS. 

3 Section 1336 of the Housing and Community Devel4 opment Act of 1992 (12 U.S.C. 4566) is amended— 

5 (1) in subsection (a)(1), by striking ‘‘estab6 lished’’ and all that follows through ‘‘1334’’ and in7 serting ‘‘under this subpart’’; 

8 (2) in subsection (b)— 

9 (A) in the subsection heading, by inserting 

10 ‘‘PRELIMINARY’’ before ‘‘DETERMINATION’’; 

11 (B) by striking paragraph (1) and insert12 ing the following new paragraph: 

13 ‘‘(1) NOTICE.—If the Director preliminarily de14 termines that an enterprise has failed, or that there 

15 is a substantial probability that an enterprise will 

16 fail, to meet any housing goal under this subpart, 

17 the Director shall provide written notice to the en18 terprise of such a preliminary determination, the 

19 reasons for such determination, and the information 

20 on which the Director based the determination.’’; 

21 (C) in paragraph (2)— 

22 (i) in subparagraph (A), by inserting 

23 ‘‘finally’’ before ‘‘determining’’; 

24 (ii) by striking subparagraphs (B) and 

25 (C) and inserting the following new sub26 paragraph: 
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1 ‘‘(B) EXTENSION OR SHORTENING OF PE2 RIOD.—The Director may— 

3 ‘‘(i) extend the period under subpara4 graph (A) for good cause for not more 

5 than 30 additional days; and 

6 ‘‘(ii) shorten the period under sub7 paragraph (A) for good cause.’’; and 

8 (iii) by redesignating subparagraph 

9 (D) as subparagraph (C); and 

10 (D) in paragraph (3)— 

11 (i) in subparagraph (A), by striking 

12 ‘‘determine’’ and inserting ‘‘issue a final 

13 determination of’’; 

14 (ii) in subparagraph (B), by inserting 

15 ‘‘final’’ before ‘‘determinations’’; and 

16 (iii) in subparagraph (C)— 

17 (I) by striking ‘‘Committee on 

18 Banking, Finance and Urban Affairs’’ 

19 and inserting ‘‘Committee on Finan20 cial Services’’; and 

21 (II) by inserting ‘‘final’’ before 

22 ‘‘determination’’ each place such term 

23 appears; and 

24 (3) in subsection (c)— 
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1 (A) by striking the subsection designation 

2 and heading and all that follows through the 

3 end of paragraph (1) and inserting the fol4 lowing: 

5 ‘‘(c) CEASE AND DESIST ORDERS, CIVIL MONEY

6 PENALTIES, AND REMEDIES INCLUDING HOUSING

7 PLANS.— 

8 ‘‘(1) REQUIREMENT.—If the Director finds, 

9 pursuant to subsection (b), that there is a substan10 tial probability that an enterprise will fail, or has ac11 tually failed, to meet any housing goal under this 

12 subpart and that the achievement of the housing 

13 goal was or is feasible, the Director may require that 

14 the enterprise submit a housing plan under this sub15 section. If the Director makes such a finding and 

16 the enterprise refuses to submit such a plan, sub17 mits an unacceptable plan, fails to comply with the 

18 plan or the Director finds that the enterprise has 

19 failed to meet any housing goal under this subpart, 

20 in addition to requiring an enterprise to submit a 

21 housing plan, the Director may issue a cease and de22 sist order in accordance with section 1341, impose 

23 civil money penalties in accordance with section 

24 1345, or order other remedies as set forth in para25 graph (7) of this subsection.’’; 
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1 (B) in paragraph (2)— 

2 (i) by striking ‘‘CONTENTS.—Each 

3 housing plan’’ and inserting ‘‘HOUSING

4 PLAN.—If the Director requires a housing 

5 plan under this section, such a plan’’; and 

6 (ii) in subparagraph (B), by inserting 

7 ‘‘and changes in its operations’’ after ‘‘im8 provements’’; 

9 (C) in paragraph (3)— 

10 (i) by inserting ‘‘comply with any re11 medial action or’’ before ‘‘submit a housing 

12 plan’’; and 

13 (ii) by striking ‘‘under subsection 

14 (b)(3) that a housing plan is required’’; 

15 (D) in paragraph (4), by striking the first 

16 two sentences and inserting the following: ‘‘The 

17 Director shall review each submission by an en18 terprise, including a housing plan submitted 

19 under this subsection, and not later than 30 

20 days after submission, approve or disapprove 

21 the plan or other action. The Director may ex22 tend the period for approval or disapproval for 

23 a single additional 30-day period if the Director 

24 determines such extension necessary.’’; and 
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1 (E) by adding at the end the following new 

2 paragraph: 

3 ‘‘(7) ADDITIONAL REMEDIES FOR FAILURE TO

4 MEET GOALS.—In addition to ordering a housing 

5 plan under this section, issuing cease and desist or6 ders under section 1341, and ordering civil money 

7 penalties under section 1345, the Director may seek 

8 other actions when an enterprise fails to meet a 

9 goal, and exercise appropriate enforcement authority 

10 available to the Director under this Act to prohibit 

11 the enterprise from entering into new programs and 

12 new business activities and to order the enterprise to 

13 suspend programs and business activities pending its 

14 achievement of the goal.’’. 

15 SEC. 129. ENFORCEMENT. 

16 (a) CEASE-AND-DESIST PROCEEDINGS.—Section 

17 1341 of the Housing and Community Development Act 

18 of 1992 (12 U.S.C. 4581) is amended— 

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

20 following new subsection: 

21 ‘‘(a) GROUNDS FOR ISSUANCE.—The Director may 

22 issue and serve a notice of charges under this section upon 

23 an enterprise if the Director determines— 

24 ‘‘(1) the enterprise has failed to meet any hous25 ing goal established under subpart B, following a 
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1 written notice and determination of such failure in 

2 accordance with section 1336; 

3 ‘‘(2) the enterprise has failed to submit a report 

4 under section 1314, following a notice of such fail5 ure, an opportunity for comment by the enterprise, 

6 and a final determination by the Director; 

7 ‘‘(3) the enterprise has failed to submit the in8 formation required under subsection (m) or (n) of 

9 section 309 of the Federal National Mortgage Asso10 ciation Charter Act, or subsection (e) or (f) of sec11 tion 307 of the Federal Home Loan Mortgage Cor12 poration Act; 

13 ‘‘(4) the enterprise has violated any provision of 

14 this part or any order, rule or regulation under this 

15 part; 

16 ‘‘(5) the enterprise has failed to submit a hous17 ing plan that complies with section 1336(c) within 

18 the applicable period; or 

19 ‘‘(6) the enterprise has failed to comply with a 

20 housing plan under section 1336(c).’’; 

21 (2) in subsection (b)(2), by striking ‘‘requiring 

22 the enterprise to’’ and all that follows through the 

23 end of the paragraph and inserting the following: 

24 ‘‘requiring the enterprise to— 

25 ‘‘(A) comply with the goal or goals; 
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1 ‘‘(B) submit a report under section 1314; 

2 ‘‘(C) comply with any provision this part 

3 or any order, rule or regulation under such 

4 part; 

5 ‘‘(D) submit a housing plan in compliance 

6 with section 1336(c); 

7 ‘‘(E) comply with a housing plan submitted 

8 under section 1336(c); or 

9 ‘‘(F) provide the information required 

10 under subsection (m) or (n) of section 309 of 

11 the Federal National Mortgage Association 

12 Charter Act or subsection (e) or (f) of section 

13 307 of the Federal Home Loan Mortgage Cor14 poration Act, as applicable.’’; 

15 (3) in subsection (c), by inserting ‘‘date of the’’ 

16 before ‘‘service of the order’’; and 

17 (4) by striking subsection (d). 

18 (b) AUTHORITY OF DIRECTOR TO ENFORCE NOTICES

19 AND ORDERS.—Section 1344 of the Housing and Commu20 nity Development Act of 1992 (12 U.S.C. 4584) is amend21 ed by striking subsection (a) and inserting the following 

22 new subsection: 

23 ‘‘(a) ENFORCEMENT.—The Director may, in the dis24 cretion of the Director, apply to the United States District 

25 Court for the District of Columbia, or the United States 
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1 district court within the jurisdiction of which the head2 quarters of the enterprise is located, for the enforcement 

3 of any effective and outstanding notice or order issued 

4 under section 1341 or 1345, or request that the Attorney 

5 General of the United States bring such an action. Such 

6 court shall have jurisdiction and power to order and re7 quire compliance with such notice or order.’’. 

8 (c) CIVIL MONEY PENALTIES.—Section 1345 of the 

9 Housing and Community Development Act of 1992 (12 

10 U.S.C. 4585) is amended— 

11 (1) by striking subsections (a) and (b) and in12 serting the following new subsections: 

13 ‘‘(a) AUTHORITY.—The Director may impose a civil 

14 money penalty, in accordance with the provisions of this 

15 section, on any enterprise that has failed to— 

16 ‘‘(1) meet any housing goal established under 

17 subpart B, following a written notice and determina18 tion of such failure in accordance with section 

19 1336(b); 

20 ‘‘(2) submit a report under section 1314, fol21 lowing a notice of such failure, an opportunity for 

22 comment by the enterprise, and a final determina23 tion by the Director; 

24 ‘‘(3) submit the information required under 

25 subsection (m) or (n) of section 309 of the Federal 
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1 National Mortgage Association Charter Act, or sub2 section (e) or (f) of section 307 of the Federal Home 

3 Loan Mortgage Corporation Act; 

4 ‘‘(4) comply with any provision of this part or 

5 any order, rule or regulation under this part; 

6 ‘‘(5) submit a housing plan pursuant to section 

7 1336(c) within the required period; or 

8 ‘‘(6) comply with a housing plan for the enter9 prise under section 1336(c). 

10 ‘‘(b) AMOUNT OF PENALTY.—The amount of the 

11 penalty, as determined by the Director, may not exceed— 

12 ‘‘(1) for any failure described in paragraph (1), 

13 (5), or (6) of subsection (a), $50,000 for each day 

14 that the failure occurs; and 

15 ‘‘(2) for any failure described in paragraph (2), 

16 (3), or (4) of subsection (a), $20,000 for each day 

17 that the failure occurs.’’; 

18 (2) in subsection (c)— 

19 (A) in paragraph (1)— 

20 (i) in subparagraph (A), by inserting 

21 ‘‘and’’ after the semicolon at the end; 

22 (ii) in subparagraph (B), by striking 

23 ‘‘; and’’ and inserting a period; and 

24 (iii) by striking subparagraph (C); 

25 and 
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1 (B) in paragraph (2), by inserting after 

2 the period at the end the following: ‘‘In deter3 mining the penalty under subsection (a)(1), the 

4 Director shall give consideration to the length 

5 of time the enterprise should reasonably take to 

6 achieve the goal.’’; 

7 (3) in the first sentence of subsection (d)— 

8 (A) by striking ‘‘request the Attorney Gen9 eral of the United States to’’ and inserting ‘‘, 

10 in the discretion of the Director,’’; and 

11 (B) by inserting ‘‘, or request that the At12 torney General of the United States bring such 

13 an action’’ before the period at the end; 

14 (4) by striking subsection (f); and 

15 (5) by redesignating subsection (g) as sub16 section (f). 

17 (d) CONFORMING AMENDMENT.—The heading for 

18 subpart C of part 2 of subtitle A of the Housing and Com19 munity Development Act of 1992 is amended to read as 

20 follows: 

21 ‘‘Subpart C—Enforcement’’. 

22 SEC. 130. CONFORMING AMENDMENTS. 

23 Part 2 of subtitle A of title XIII of the Housing and 

24 Community Development Act of 1992 (12 U.S.C. 4541 et 

25 seq.) is amended— 
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1 (1) by striking ‘‘Secretary’’ each place such 

2 term appears in such part and inserting ‘‘Director’’; 

3 (2) in the section heading for section 1323 (12 

4 U.S.C. 4543), by inserting ‘‘OF ENTERPRISES’’ be5 fore the period at the end; 

6 (3) in section 1326 (12 U.S.C. 4546)— 

7 (A) in subsection (a)— 

8 (i) by striking ‘‘or’’ the last place it 

9 appears; and 

10 (ii) by inserting ‘‘, or section 

11 10(j)(12) of the Federal Home Loan Bank 

12 Act (12 U.S.C. 1441a)’’ before the period 

13 at the end; and 

14 (B) in subsection (b)— 

15 (i) by striking ‘‘or’’ the last place it 

16 appears and inserting a comma; and 

17 (ii) by inserting ‘‘, or section 

18 10(j)(12) of the Federal Home Loan Bank 

19 Act (12 U.S.C. 1441a’’ before the period 

20 at the end; 

21 (4) by striking section 1327 (12 U.S.C. 4547); 

22 (5) by striking section 1328 (12 U.S.C. 4548); 

23 (6) in section 1332 (12 U.S.C. 4562), by strik24 ing subsection (d); 
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1 (7) in section 1333 (12 U.S.C. 4563), by strik2 ing subsection (d); 

3 (8) in section 1334 (12 U.S.C. 4564), by strik4 ing subsection (d); 

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

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

7 (10) in sections 1345(c)(1)(A) and 1346(b) (12 

8 U.S.C. 4585(c)(1)(A), 4586(b)), by striking ‘‘Sec9 retary’s’’ each place such term appears and inserting 

10 ‘‘Director’s’’; and 

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

12 Subtitle C—Prompt Corrective 

13 Action 

14 SEC. 141. CAPITAL CLASSIFICATIONS. 

15 (a) IN GENERAL.—Section 1364 of the Housing and 

16 Community Development Act of 1992 (12 U.S.C. 4614) 

17 is amended— 

18 (1) in the heading for subsection (a) by striking 

19 ‘‘IN GENERAL’’ and inserting ‘‘ENTERPRISES’’; 

20 (2) in subsection (c)— 

21 (A) by striking ‘‘subsection (b)’’ and in22 serting ‘‘subsection (c)’’; 

23 (B) by striking ‘‘enterprises’’ and inserting 

24 ‘‘regulated entities’’; and 

25 (C) by striking the last sentence; 
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1 (3) by redesignating subsections (c) (as so 

2 amended by paragraph (2) of this subsection) and 

3 (d) as subsections (d) and (f), respectively; 

4 (4) by striking subsection (b) and inserting the 

5 following new subsections: 

6 ‘‘(b) FEDERAL HOME LOAN BANKS.— 

7 ‘‘(1) ESTABLISHMENT AND CRITERIA.—For 

8 purposes of this subtitle, the Director shall, by regu9 lation— 

10 ‘‘(A) establish the capital classifications 

11 specified under paragraph (2) for the Federal 

12 home loan banks; 

13 ‘‘(B) establish criteria for each such cap14 ital classification based on the amount and 

15 types of capital held by a bank and the risk16 based, minimum, and critical capital levels for 

17 the banks and taking due consideration of the 

18 capital classifications established under sub19 section (a) for the enterprises, with such modi20 fications as the Director determines to be ap21 propriate to reflect the difference in operations 

22 between the banks and the enterprises; and 

23 ‘‘(C) shall classify the Federal home loan 

24 banks according to such capital classifications. 
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1 ‘‘(2) CLASSIFICATIONS.—The capital classifica2 tions specified under this paragraph are— 

3 ‘‘(A) adequately capitalized; 

4 ‘‘(B) undercapitalized; 

5 ‘‘(C) significantly undercapitalized; and 

6 ‘‘(D) critically undercapitalized. 

7 ‘‘(c) DISCRETIONARY CLASSIFICATION.— 

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

9 Director may reclassify a regulated entity under 

10 paragraph (2) if— 

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

12 in writing that the regulated entity is engaging 

13 in conduct that could result in a rapid depletion 

14 of core or total capital or, in the case of an en15 terprise, that the value of the property subject 

16 to mortgages held or securitized by the enter17 prise has decreased significantly; 

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

19 hearing, the Director determines that the regu20 lated entity is in an unsafe or unsound condi21 tion; or 

22 ‘‘(C) pursuant to section 1371(b), the Di23 rector deems the regulated entity to be engag24 ing in an unsafe or unsound practice. 
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1 ‘‘(2) RECLASSIFICATION.—In addition to any 

2 other action authorized under this title, including 

3 the reclassification of a regulated entity for any rea4 son not specified in this subsection, if the Director 

5 takes any action described in paragraph (1) the Di6 rector may classify a regulated entity— 

7 ‘‘(A) as undercapitalized, if the regulated 

8 entity is otherwise classified as adequately cap9 italized; 

10 ‘‘(B) as significantly undercapitalized, if 

11 the regulated entity is otherwise classified as 

12 undercapitalized; and 

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

14 regulated entity is otherwise classified as sig15 nificantly undercapitalized.’’; and 

16 (5) by inserting after subsection (d) (as so re17 designated by paragraph (3) of this subsection), the 

18 following new subsection: 

19 ‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 

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

21 make no capital distribution if, after making the dis22 tribution, the regulated entity would be under23 capitalized. 

24 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

25 (1), the Director may permit a regulated entity, to 
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1 the extent appropriate or applicable, to repurchase, 

2 redeem, retire, or otherwise acquire shares or owner3 ship interests if the repurchase, redemption, retire4 ment, or other acquisition— 

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

6 issuance of additional shares or obligations of 

7 the regulated entity in at least an equivalent 

8 amount; and 

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

10 the regulated entity or otherwise improve the fi11 nancial condition of the entity.’’. 

12 (b) REGULATIONS.—Not later than the expiration of 

13 the 120-day period beginning on the effective date under 

14 section 184, the Director of the Federal Housing Finance 

15 Agency shall issue regulations to carry out section 1364(b) 

16 of the Housing and Community Development Act of 1992 

17 (as added by paragraph (4) of this subsection), relating 

18 to capital classifications for the Federal home loan banks. 

19 SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDER20 CAPITALIZED REGULATED ENTITIES. 

21 Section 1365 of the Housing and Community Devel22 opment Act of 1992 (12 U.S.C. 4615) is amended— 

23 (1) in the section heading, by striking ‘‘ENTER24 PRISES’’ and inserting ‘‘ENTITIES’’; 

25 (2) in subsection (a)— 
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1 (A) by redesignating paragraphs (1) and 

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

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

4 following paragraph: 

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

6 shall— 

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

8 regulated entity that is classified as under9 capitalized; 

10 ‘‘(B) closely monitor compliance with the 

11 capital restoration plan, restrictions, and re12 quirements imposed under this section; and 

13 ‘‘(C) periodically review the plan, restric14 tions, and requirements applicable to the under15 capitalized regulated entity to determine wheth16 er the plan, restrictions, and requirements are 

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

18 (C) by inserting at the end the following 

19 new paragraphs: 

20 ‘‘(4) RESTRICTION OF ASSET GROWTH.—A reg21 ulated entity that is classified as undercapitalized 

22 shall not permit its average total assets (as such 

23 term is defined in section 1316(b) during any cal24 endar quarter to exceed its average total assets dur25 ing the preceding calendar quarter unless— 
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1 ‘‘(A) the Director has accepted the capital 

2 restoration plan of the regulated entity; 

3 ‘‘(B) any increase in total assets is con4 sistent with the plan; and 

5 ‘‘(C) the ratio of core or total capital to as6 sets for the regulated entity increases during 

7 the calendar quarter at a rate sufficient to en8 able the entity to become adequately capitalized 

9 within a reasonable time. 

10 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS, NEW

11 PROGRAMS, AND NEW BUSINESS ACTIVITIES.—A reg12 ulated entity that is classified as undercapitalized 

13 shall not, directly or indirectly, acquire any interest 

14 in any entity or engage in any new program or new 

15 business activity unless— 

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

17 restoration plan of the regulated entity, the en18 tity is implementing the plan, and the Director 

19 determines that the proposed action is con20 sistent with and will further the achievement of 

21 the plan; or 

22 ‘‘(B) the Director determines that the pro23 posed action will further the purpose of this 

24 section.’’; 
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1 (3) in the subsection heading for subsection (b), 

2 by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI3 CANTLY UNDERCAPITALIZED’’; and 

4 (4) by striking subsection (c) and inserting the 

5 following new subsection: 

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

7 Director may take, with respect to a regulated entity that 

8 is classified as undercapitalized, any of the actions author9 ized to be taken under section 1366 with respect to a regu10 lated entity that is classified as significantly undercapital11 ized, if the Director determines that such actions are nec12 essary to carry out the purpose of this subtitle.’’. 

13 SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI14 CANTLY UNDERCAPITALIZED REGULATED 

15 ENTITIES. 

16 Section 1366 of the Housing and Community Devel17 opment Act of 1992 (12 U.S.C. 4616) is amended— 

18 (1) in the section heading, by striking ‘‘ENTER19 PRISES’’ and inserting ‘‘ENTITIES’’; 

20 (2) in subsection (a)(2)(A), by striking ‘‘enter21 prise’’ the last place such term appears; 

22 (3) in subsection (b)— 

23 (A) in the subsection heading, by striking 

24 ‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 

25 inserting ‘‘SPECIFIC ACTIONS’’; 
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1 (B) in the matter preceding paragraph (1), 

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

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

4 at any time, one or more’’; 

5 (C) by redesignating paragraphs (5) and 

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

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

8 following new paragraph: 

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

10 one or more of the following actions: 

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

12 new election for the board of directors of the 

13 regulated entity. 

14 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU15 TIVE OFFICERS.—Require the regulated entity 

16 to dismiss from office any director or executive 

17 officer who had held office for more than 180 

18 days immediately before the entity became 

19 undercapitalized. Dismissal under this subpara20 graph shall not be construed to be a removal 

21 pursuant to the Director’s enforcement powers 

22 provided in section 1377. 

23 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF24 FICERS.—Require the regulated entity to em25 ploy qualified executive officers (who, if the Di-
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1 rector so specifies, shall be subject to approval 

2 by the Director).’’; and 

3 (E) by inserting at the end the following 

4 new paragraph: 

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

6 entity to take any other action that the Director de7 termines will better carry out the purpose of this 

8 section than any of the actions specified in this 

9 paragraph.’’; 

10 (4) by redesignating subsection (c) as sub11 section (d); and 

12 (5) by inserting after subsection (b) the fol13 lowing new subsection: 

14 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECU15 TIVE OFFICERS.—A regulated entity that is classified as 

16 significantly undercapitalized may not, without prior writ17 ten approval by the Director— 

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

19 ‘‘(2) provide compensation to any executive offi20 cer at a rate exceeding that officer’s average rate of 

21 compensation (excluding bonuses, stock options, and 

22 profit sharing) during the 12 calendar months pre23 ceding the calendar month in which the regulated 

24 entity became undercapitalized.’’. 
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1 SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITAL2 IZED REGULATED ENTITIES. 

3 (a) ENTERPRISES.—Section 1367 of the Housing and 

4 Community Development Act of 1992 (12 U.S.C. 4617) 

5 is amended to read as follows: 

6 ‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL7 IZED ENTERPRISES. 

8 ‘‘(a) APPOINTMENT OF AGENCY AS CONSERVATOR

9 OR RECEIVER.— 

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

11 provision of Federal law, the Director may establish 

12 a conservatorship or receivership in the manner pro13 vided under paragraph (2). 

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

15 discretion of the Director, be appointed conservator 

16 or receiver for the purpose of reorganizing, rehabili17 tating, or winding up the affairs of an enterprise 

18 ‘‘(3) GROUNDS FOR APPOINTMENT.—The 

19 grounds for appointing a conservator or receiver for 

20 any enterprise are as follows: 

21 ‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA22 TIONS.—The assets of the enterprise are less 

23 than the obligations of the enterprise to its 

24 creditors and others. 
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1 ‘‘(B) SUBSTANTIAL DISSIPATION.—Sub2 stantial dissipation of assets or earnings due 

3 to— 

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

5 Federal or State law; or 

6 ‘‘(ii) any unsafe or unsound practice. 

7 ‘‘(C) UNSAFE OR UNSOUND CONDITION.— 

8 An unsafe or unsound condition to transact 

9 business. 

10 ‘‘(D) CEASE-AND-DESIST ORDERS.—Any 

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

12 has become final. 

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

14 the books, papers, records, or assets of the en15 terprise, or any refusal to submit the books, pa16 pers, records, or affairs of the enterprise, for 

17 inspection to any examiner or to any lawful 

18 agent of the Director. 

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

20 The enterprise is likely to be unable to pay its 

21 obligations or meet the demands of its creditors 

22 in the normal course of business. 

23 ‘‘(G) LOSSES.—The enterprise has in24 curred or is likely to incur losses that will de25 plete all or substantially all of its capital, and 
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1 there is no reasonable prospect for the enter2 prise to become adequately capitalized (as de3 fined in section 1364(a)(1)). 

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

5 of any law or regulation, or any unsafe or un6 sound practice or condition that is likely to— 

7 ‘‘(i) cause insolvency or substantial 

8 dissipation of assets or earnings; or 

9 ‘‘(ii) weaken the condition of the en10 terprise. 

11 ‘‘(I) CONSENT.—The enterprise, by resolu12 tion of its board of directors or its shareholders 

13 or members, consents to the appointment. 

14 ‘‘(J) UNDERCAPITALIZATION.—The enter15 prise is undercapitalized or significantly under16 capitalized (as defined in section 1364(a)(3)), 

17 and— 

18 ‘‘(i) has no reasonable prospect of be19 coming adequately capitalized; 

20 ‘‘(ii) fails to become adequately cap21 italized, as required by— 

22 ‘‘(I) section 1365(a)(1) with re23 spect to an undercapitalized enter24 prise; or 
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1 ‘‘(II) section 1366(a)(1) with re2 spect to a significantly undercapital3 ized enterprise; 

4 ‘‘(iii) fails to submit a capital restora5 tion plan acceptable to the Agency within 

6 the time prescribed under section 1369C; 

7 or 

8 ‘‘(iv) materially fails to implement a 

9 capital restoration plan submitted and ac10 cepted under section 1369C. 

11 ‘‘(K) CRITICAL UNDERCAPITALIZATION.— 

12 The enterprise is critically undercapitalized, as 

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

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

15 General notifies the Director in writing that the 

16 enterprise has been found guilty of a criminal 

17 offense under section 1956 or 1957 of title 18, 

18 United States Code, or section 5322 or 5324 of 

19 title 31, United States Code. 

20 ‘‘(4) JUDICIAL REVIEW.— 

21 ‘‘(A) IN GENERAL.—If the Agency is ap22 pointed conservator or receiver under this sec23 tion, the enterprise may, within 30 days of such 

24 appointment, bring an action in the United 

25 States District Court for the judicial district in 
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1 which the home office of such enterprise is lo2 cated, or in the United States District Court 

3 for the District of Columbia, for an order re4 quiring the Agency to remove itself as conser5 vator or receiver. 

6 ‘‘(B) REVIEW.—Upon the filing of an ac7 tion under subparagraph (A), the court shall, 

8 upon the merits, dismiss such action or direct 

9 the Agency to remove itself as such conservator 

10 or receiver. 

11 ‘‘(5) DIRECTORS NOT LIABLE FOR ACQUI12 ESCING IN APPOINTMENT OF CONSERVATOR OR RE13 CEIVER.—The members of the board of directors of 

14 an enterprise shall not be liable to the shareholders 

15 or creditors of the enterprise for acquiescing in or 

16 consenting in good faith to the appointment of the 

17 Agency as conservator or receiver for that enter18 prise. 

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

20 FEDERAL AGENCY.—When acting as conservator or 

21 receiver, the Agency shall not be subject to the di22 rection or supervision of any other agency of the 

23 United States or any State in the exercise of the 

24 rights, powers, and privileges of the Agency. 
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1 ‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON2 SERVATOR OR RECEIVER.— 

3 ‘‘(1) RULEMAKING AUTHORITY OF THE AGEN4 CY.—The Agency may prescribe such regulations as 

5 the Agency determines to be appropriate regarding 

6 the conduct of conservatorships or receiverships. 

7 ‘‘(2) GENERAL POWERS.— 

8 ‘‘(A) SUCCESSOR TO ENTERPRISE.—The 

9 Agency shall, as conservator or receiver, and by 

10 operation of law, immediately succeed to— 

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

12 privileges of the enterprise, and of any 

13 stockholder, officer, or director of such en14 terprise with respect to the enterprise and 

15 the assets of the enterprise; and 

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

17 assets of any other legal custodian of such 

18 enterprise. 

19 ‘‘(B) OPERATE THE ENTERPRISE.—The 

20 Agency may, as conservator or receiver— 

21 ‘‘(i) take over the assets of and oper22 ate the enterprise with all the powers of 

23 the shareholders, the directors, and the of24 ficers of the enterprise and conduct all 

25 business of the enterprise; 
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1 ‘‘(ii) collect all obligations and money 

2 due the enterprise; 

3 ‘‘(iii) perform all functions of the en4 terprise in the name of the enterprise 

5 which are consistent with the appointment 

6 as conservator or receiver; and 

7 ‘‘(iv) preserve and conserve the assets 

8 and property of such enterprise. 

9 ‘‘(C) FUNCTIONS OF OFFICERS, DIREC10 TORS, AND SHAREHOLDERS OF AN ENTER11 PRISE.—The Agency may, by regulation or 

12 order, provide for the exercise of any function 

13 by any stockholder, director, or officer of any 

14 enterprise for which the Agency has been 

15 named conservator or receiver. 

16 ‘‘(D) POWERS AS CONSERVATOR.—The 

17 Agency may, as conservator, take such action 

18 as may be— 

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

20 a sound and solvent condition; and 

21 ‘‘(ii) appropriate to carry on the busi22 ness of the enterprise and preserve and 

23 conserve the assets and property of the en24 terprise. 
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1 ‘‘(E) ADDITIONAL POWERS AS RE2 CEIVER.—The Agency may, as receiver, place 

3 the enterprise in liquidation and proceed to re4 alize upon the assets of the enterprise, having 

5 due regard to the conditions of the housing fi6 nance market. 

7 ‘‘(F) ORGANIZATION OF NEW ENTER8 PRISES.—The Agency may, as receiver, orga9 nize a successor enterprise that will operate 

10 pursuant to subsection (i). 

11 ‘‘(G) TRANSFER OF ASSETS AND LIABIL12 ITIES.—The Agency may, as conservator or re13 ceiver, transfer any asset or liability of the en14 terprise in default without any approval, assign15 ment, or consent with respect to such transfer. 

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

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

18 the extent of proceeds realized from the per19 formance of contracts or sale of the assets of an 

20 enterprise, pay all valid obligations of the enter21 prise in accordance with the prescriptions and 

22 limitations of this section. 

23 ‘‘(I) SUBPOENA AUTHORITY.— 

24 ‘‘(i) IN GENERAL.— 
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1 ‘‘(I) IN GENERAL.—The Agency 

2 may, as conservator or receiver, and 

3 for purposes of carrying out any 

4 power, authority, or duty with respect 

5 to an enterprise (including deter6 mining any claim against the enter7 prise and determining and realizing 

8 upon any asset of any person in the 

9 course of collecting money due the en10 terprise), exercise any power estab11 lished under section 1348. 

12 ‘‘(II) APPLICABILITY OF LAW.— 

13 The provisions of section 1348 shall 

14 apply with respect to the exercise of 

15 any power exercised under this sub16 paragraph in the same manner as 

17 such provisions apply under that sec18 tion. 

19 ‘‘(ii) AUTHORITY OF DIRECTOR.—A 

20 subpoena or subpoena duces tecum may be 

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

22 written approval of, the Director, or the 

23 designee of the Director. 

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

25 subsection shall not be construed to limit 
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1 any rights that the Agency, in any capac2 ity, might otherwise have under section 

3 1317 or 1379B. 

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

5 may, as conservator or receiver— 

6 ‘‘(i) exercise all powers and authori7 ties specifically granted to conservators or 

8 receivers, respectively, under this section, 

9 and such incidental powers as shall be nec10 essary to carry out such powers; and 

11 ‘‘(ii) take any action authorized by 

12 this section, which the Agency determines 

13 is in the best interests of the enterprise or 

14 the Agency. 

15 ‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE

16 CLAIMS.— 

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

18 receiver, determine claims in accordance with 

19 the requirements of this subsection and any 

20 regulations prescribed under paragraph (4). 

21 ‘‘(B) NOTICE REQUIREMENTS.—The re22 ceiver, in any case involving the liquidation or 

23 winding up of the affairs of a closed enterprise, 

24 shall— 
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1 ‘‘(i) promptly publish a notice to the 

2 creditors of the enterprise to present their 

3 claims, together with proof, to the receiver 

4 by a date specified in the notice which 

5 shall be not less than 90 days after the 

6 publication of such notice; and 

7 ‘‘(ii) republish such notice approxi8 mately 1 month and 2 months, respec9 tively, after the publication under clause 

10 (i). 

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

12 shall mail a notice similar to the notice pub13 lished under subparagraph (B)(i) at the time of 

14 such publication to any creditor shown on the 

15 books of the enterprise— 

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

17 appearing in such books; or 

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

19 address of a claimant not appearing on the 

20 books of the enterprise within 30 days 

21 after the discovery of such name and ad22 dress. 

23 ‘‘(4) RULEMAKING AUTHORITY RELATING TO

24 DETERMINATION OF CLAIMS.—Subject to subsection 

25 (c), the Director may prescribe regulations regarding 
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1 the allowance or disallowance of claims by the re2 ceiver and providing for administrative determina3 tion of claims and review of such determination. 

4 ‘‘(5) PROCEDURES FOR DETERMINATION OF

5 CLAIMS.— 

6 ‘‘(A) DETERMINATION PERIOD.— 

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

8 the 180-day period beginning on the date 

9 on which any claim against an enterprise is 

10 filed with the Agency as receiver, the 

11 Agency shall determine whether to allow or 

12 disallow the claim and shall notify the 

13 claimant of any determination with respect 

14 to such claim. 

15 ‘‘(ii) EXTENSION OF TIME.—The pe16 riod described in clause (i) may be ex17 tended by a written agreement between the 

18 claimant and the Agency. 

19 ‘‘(iii) MAILING OF NOTICE SUFFI20 CIENT.—The requirements of clause (i) 

21 shall be deemed to be satisfied if the notice 

22 of any determination with respect to any 

23 claim is mailed to the last address of the 

24 claimant which appears— 
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1 ‘‘(I) on the books of the enter2 prise; 

3 ‘‘(II) in the claim filed by the 

4 claimant; or 

5 ‘‘(III) in documents submitted in 

6 proof of the claim. 

7 ‘‘(iv) CONTENTS OF NOTICE OF DIS8 ALLOWANCE.—If any claim filed under 

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

10 claimant shall contain— 

11 ‘‘(I) a statement of each reason 

12 for the disallowance; and 

13 ‘‘(II) the procedures available for 

14 obtaining agency review of the deter15 mination to disallow the claim or judi16 cial determination of the claim. 

17 ‘‘(B) ALLOWANCE OF PROVEN CLAIM.— 

18 The receiver shall allow any claim received on 

19 or before the date specified in the notice pub20 lished under paragraph (3)(B)(i) by the receiver 

21 from any claimant which is proved to the satis22 faction of the receiver. 

23 ‘‘(C) DISALLOWANCE OF CLAIMS FILED

24 AFTER END OF FILING PERIOD.—Claims filed 

25 after the date specified in the notice published 
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1 under paragraph (3)(B)(i), or the date specified 

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

3 such disallowance shall be final. 

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

5 ‘‘(i) IN GENERAL.—The receiver may 

6 disallow any portion of any claim by a 

7 creditor or claim of security, preference, or 

8 priority which is not proved to the satisfac9 tion of the receiver. 

10 ‘‘(ii) PAYMENTS TO LESS THAN

11 FULLY SECURED CREDITORS.—In the case 

12 of a claim of a creditor against an enter13 prise which is secured by any property or 

14 other asset of such enterprise, the re15 ceiver— 

16 ‘‘(I) may treat the portion of 

17 such claim which exceeds an amount 

18 equal to the fair market value of such 

19 property or other asset as an unse20 cured claim against the enterprise; 

21 and 

22 ‘‘(II) may not make any payment 

23 with respect to such unsecured por24 tion of the claim other than in connec25 tion with the disposition of all claims 
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1 of unsecured creditors of the enter2 prise. 

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

4 this paragraph shall apply with respect 

5 to— 

6 ‘‘(I) any extension of credit from 

7 any Federal Reserve Bank or the 

8 United States Treasury; or 

9 ‘‘(II) any security interest in the 

10 assets of the enterprise securing any 

11 such extension of credit. 

12 ‘‘(E) NO JUDICIAL REVIEW OF DETER13 MINATION PURSUANT TO SUBPARAGRAPH (D).— 

14 No court may review the determination of the 

15 Agency under subparagraph (D) to disallow a 

16 claim. 

17 ‘‘(F) LEGAL EFFECT OF FILING.— 

18 ‘‘(i) STATUTE OF LIMITATION

19 TOLLED.—For purposes of any applicable 

20 statute of limitations, the filing of a claim 

21 with the receiver shall constitute a com22 mencement of an action. 

23 ‘‘(ii) NO PREJUDICE TO OTHER AC24 TIONS.—Subject to paragraph (10), the fil25 ing of a claim with the receiver shall not 
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1 prejudice any right of the claimant to con2 tinue any action which was filed before the 

3 date of the appointment of the receiver, 

4 subject to the determination of claims by 

5 the receiver. 

6 ‘‘(6) PROVISION FOR JUDICIAL DETERMINATION

7 OF CLAIMS.— 

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

9 suit on a claim (or continue an action com10 menced before the appointment of the receiver) 

11 in the district or territorial court of the United 

12 States for the district within which the prin13 cipal place of business of the enterprise is lo14 cated or the United States District Court for 

15 the District of Columbia (and such court shall 

16 have jurisdiction to hear such claim), before the 

17 end of the 60-day period beginning on the ear18 lier of— 

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

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

21 claim against an enterprise for which the 

22 Agency is receiver; or 

23 ‘‘(ii) the date of any notice of dis24 allowance of such claim pursuant to para25 graph (5)(A)(i). 
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1 ‘‘(B) STATUTE OF LIMITATIONS.—A claim 

2 shall be deemed to be disallowed (other than 

3 any portion of such claim which was allowed by 

4 the receiver), and such disallowance shall be 

5 final, and the claimant shall have no further 

6 rights or remedies with respect to such claim, 

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

8 day period described under subparagraph (A), 

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

10 commenced before the appointment of the re11 ceiver). 

12 ‘‘(7) REVIEW OF CLAIMS.— 

13 ‘‘(A) OTHER REVIEW PROCEDURES.— 

14 ‘‘(i) IN GENERAL.—The Agency shall 

15 establish such alternative dispute resolu16 tion processes as may be appropriate for 

17 the resolution of claims filed under para18 graph (5)(A)(i). 

19 ‘‘(ii) CRITERIA.—In establishing alter20 native dispute resolution processes, the 

21 Agency shall strive for procedures which 

22 are expeditious, fair, independent, and low 

23 cost. 

24 ‘‘(iii) VOLUNTARY BINDING OR NON25 BINDING PROCEDURES.—The Agency may 
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1 establish both binding and nonbinding 

2 processes, which may be conducted by any 

3 government or private party. All parties, 

4 including the claimant and the Agency, 

5 must agree to the use of the process in a 

6 particular case. 

7 ‘‘(B) CONSIDERATION OF INCENTIVES.— 

8 The Agency shall seek to develop incentives for 

9 claimants to participate in the alternative dis10 pute resolution process. 

11 ‘‘(8) EXPEDITED DETERMINATION OF

12 CLAIMS.— 

13 ‘‘(A) ESTABLISHMENT REQUIRED.—The 

14 Agency shall establish a procedure for expedited 

15 relief outside of the routine claims process es16 tablished under paragraph (5) for claimants 

17 who— 

18 ‘‘(i) allege the existence of legally 

19 valid and enforceable or perfected security 

20 interests in assets of any enterprise for 

21 which the Agency has been appointed re22 ceiver; and 

23 ‘‘(ii) allege that irreparable injury will 

24 occur if the routine claims procedure is fol25 lowed. 
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1 ‘‘(B) DETERMINATION PERIOD.—Before 

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

3 date any claim is filed in accordance with the 

4 procedures established under subparagraph (A), 

5 the Director shall— 

6 ‘‘(i) determine— 

7 ‘‘(I) whether to allow or disallow 

8 such claim; or 

9 ‘‘(II) whether such claim should 

10 be determined pursuant to the proce11 dures established under paragraph 

12 (5); and 

13 ‘‘(ii) notify the claimant of the deter14 mination, and if the claim is disallowed, 

15 provide a statement of each reason for the 

16 disallowance and the procedure for obtain17 ing agency review or judicial determina18 tion. 

19 ‘‘(C) PERIOD FOR FILING OR RENEWING

20 SUIT.—Any claimant who files a request for ex21 pedited relief shall be permitted to file a suit, 

22 or to continue a suit filed before the appoint23 ment of the receiver, seeking a determination of 

24 the rights of the claimant with respect to such 

25 security interest after the earlier of— 
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1 ‘‘(i) the end of the 90-day period be2 ginning on the date of the filing of a re3 quest for expedited relief; or 

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

5 claim. 

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

7 action described under subparagraph (C) is not 

8 filed, or the motion to renew a previously filed 

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

10 period beginning on the date on which such ac11 tion or motion may be filed under subparagraph 

12 (B), the claim shall be deemed to be disallowed 

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

14 portion of such claim which was allowed by the 

15 receiver), such disallowance shall be final, and 

16 the claimant shall have no further rights or 

17 remedies with respect to such claim. 

18 ‘‘(E) LEGAL EFFECT OF FILING.— 

19 ‘‘(i) STATUTE OF LIMITATION

20 TOLLED.—For purposes of any applicable 

21 statute of limitations, the filing of a claim 

22 with the receiver shall constitute a com23 mencement of an action. 

24 ‘‘(ii) NO PREJUDICE TO OTHER AC25 TIONS.—Subject to paragraph (10), the fil-
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1 ing of a claim with the receiver shall not 

2 prejudice any right of the claimant to con3 tinue any action that was filed before the 

4 appointment of the receiver, subject to the 

5 determination of claims by the receiver. 

6 ‘‘(9) PAYMENT OF CLAIMS.— 

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

8 the discretion of the receiver, and to the extent 

9 funds are available from the assets of the enter10 prise, pay creditor claims, in such manner and 

11 amounts as are authorized under this section, 

12 which are— 

13 ‘‘(i) allowed by the receiver; 

14 ‘‘(ii) approved by the Agency pursuant 

15 to a final determination pursuant to para16 graph (7) or (8); or 

17 ‘‘(iii) determined by the final judg18 ment of any court of competent jurisdic19 tion. 

20 ‘‘(B) AGREEMENTS AGAINST THE INTER21 EST OF THE AGENCY.—No agreement that 

22 tends to diminish or defeat the interest of the 

23 Agency in any asset acquired by the Agency as 

24 receiver under this section shall be valid against 

25 the Agency unless such agreement is in writing. 
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1 ‘‘(C) PAYMENT OF DIVIDENDS ON

2 CLAIMS.—The receiver may, in the sole discre3 tion of the receiver, pay from the assets of the 

4 enterprise dividends on proved claims at any 

5 time, and no liability shall attach to the Agen6 cy, by reason of any such payment, for failure 

7 to pay dividends to a claimant whose claim is 

8 not proved at the time of any such payment. 

9 ‘‘(D) RULEMAKING AUTHORITY OF THE

10 DIRECTOR.—The Director may prescribe such 

11 rules, including definitions of terms, as the Di12 rector deems appropriate to establish a single 

13 uniform interest rate for, or to make payments 

14 of post-insolvency interest to creditors holding 

15 proven claims against the receivership estates of 

16 enterprises following satisfaction by the receiver 

17 of the principal amount of all creditor claims. 

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

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

20 of a conservator or receiver for an enterprise, 

21 the conservator or receiver may, in any judicial 

22 action or proceeding to which such enterprise is 

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

24 not to exceed— 
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1 ‘‘(i) 45 days, in the case of any con2 servator; and 

3 ‘‘(ii) 90 days, in the case of any re4 ceiver. 

5 ‘‘(B) GRANT OF STAY BY ALL COURTS RE6 QUIRED.—Upon receipt of a request by any 

7 conservator or receiver under subparagraph (A) 

8 for a stay of any judicial action or proceeding 

9 in any court with jurisdiction of such action or 

10 proceeding, the court shall grant such stay as 

11 to all parties. 

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

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

14 Agency shall abide by any final unappealable 

15 judgment of any court of competent jurisdiction 

16 which was rendered before the appointment of 

17 the Agency as conservator or receiver. 

18 ‘‘(B) RIGHTS AND REMEDIES OF CONSER19 VATOR OR RECEIVER.—In the event of any ap20 pealable judgment, the Agency as conservator 

21 or receiver shall— 

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

23 available to the enterprise (before the ap24 pointment of such conservator or receiver) 
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1 and the Agency, including removal to Fed2 eral court and all appellate rights; and 

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

4 in order to pursue such remedies. 

5 ‘‘(C) NO ATTACHMENT OR EXECUTION.— 

6 No attachment or execution may issue by any 

7 court upon assets in the possession of the re8 ceiver. 

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

10 Except as otherwise provided in this subsection, 

11 no court shall have jurisdiction over— 

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

13 from, or any action seeking a determina14 tion of rights with respect to, the assets of 

15 any enterprise for which the Agency has 

16 been appointed receiver; or 

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

18 omission of such enterprise or the Agency 

19 as receiver. 

20 ‘‘(E) DISPOSITION OF ASSETS.—In exer21 cising any right, power, privilege, or authority 

22 as conservator or receiver in connection with 

23 any sale or disposition of assets of an enterprise 

24 for which the Agency has been appointed con-
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1 servator or receiver, the Agency shall conduct 

2 its operations in a manner which— 

3 ‘‘(i) maximizes the net present value 

4 return from the sale or disposition of such 

5 assets; 

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

7 realized in the resolution of cases; and 

8 ‘‘(iii) ensures adequate competition 

9 and fair and consistent treatment of 

10 offerors. 

11 ‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS

12 BROUGHT BY CONSERVATOR OR RECEIVER.— 

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

14 provision of any contract, the applicable statute 

15 of limitations with regard to any action brought 

16 by the Agency as conservator or receiver shall 

17 be— 

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

19 the longer of— 

20 ‘‘(I) the 6-year period beginning 

21 on the date the claim accrues; or 

22 ‘‘(II) the period applicable under 

23 State law; and 

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

25 longer of— 
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1 ‘‘(I) the 3-year period beginning 

2 on the date the claim accrues; or 

3 ‘‘(II) the period applicable under 

4 State law. 

5 ‘‘(B) DETERMINATION OF THE DATE ON

6 WHICH A CLAIM ACCRUES.—For purposes of 

7 subparagraph (A), the date on which the stat8 ute of limitations begins to run on any claim 

9 described in such subparagraph shall be the 

10 later of— 

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

12 the Agency as conservator or receiver; or 

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

14 action accrues. 

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

16 ACTION.— 

17 ‘‘(A) IN GENERAL.—In the case of any tort 

18 claim described under subparagraph (B) for 

19 which the statute of limitations applicable 

20 under State law with respect to such claim has 

21 expired not more than 5 years before the ap22 pointment of the Agency as conservator or re23 ceiver, the Agency may bring an action as con24 servator or receiver on such claim without re-
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1 gard to the expiration of the statute of limita2 tion applicable under State law. 

3 ‘‘(B) CLAIMS DESCRIBED.—A tort claim 

4 referred to under subparagraph (A) is a claim 

5 arising from fraud, intentional misconduct re6 sulting in unjust enrichment, or intentional mis7 conduct resulting in substantial loss to the en8 terprise. 

9 ‘‘(14) ACCOUNTING AND RECORDKEEPING RE10 QUIREMENTS.— 

11 ‘‘(A) IN GENERAL.—The Agency as conser12 vator or receiver shall, consistent with the ac13 counting and reporting practices and proce14 dures established by the Agency, maintain a full 

15 accounting of each conservatorship and receiv16 ership or other disposition of an enterprise in 

17 default. 

18 ‘‘(B) ANNUAL ACCOUNTING OR REPORT.— 

19 With respect to each conservatorship or receiv20 ership, the Agency shall make an annual ac21 counting or report available to the Board, the 

22 Comptroller General of the United States, the 

23 Committee on Banking, Housing, and Urban 

24 Affairs of the Senate, and the Committee on 
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1 Financial Services of the House of Representa2 tives. 

3 ‘‘(C) AVAILABILITY OF REPORTS.—Any re4 port prepared under subparagraph (B) shall be 

5 made available by the Agency upon request to 

6 any shareholder of an enterprise or any member 

7 of the public. 

8 ‘‘(D) RECORDKEEPING REQUIREMENT.— 

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

10 the date that the conservatorship or receiver11 ship is terminated by the Director, the Agency 

12 may destroy any records of such enterprise 

13 which the Agency, in the discretion of the Agen14 cy, determines to be unnecessary unless di15 rected not to do so by a court of competent ju16 risdiction or governmental agency, or prohibited 

17 by law. 

18 ‘‘(15) FRAUDULENT TRANSFERS.— 

19 ‘‘(A) IN GENERAL.—The Agency, as con20 servator or receiver, may avoid a transfer of 

21 any interest of an enterprise-affiliated party, or 

22 any person who the conservator or receiver de23 termines is a debtor of the enterprise, in prop24 erty, or any obligation incurred by such party 

25 or person, that was made within 5 years of the 
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1 date on which the Agency was appointed con2 servator or receiver, if such party or person vol3 untarily or involuntarily made such transfer or 

4 incurred such liability with the intent to hinder, 

5 delay, or defraud the enterprise, the Agency, 

6 the conservator, or receiver. 

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

8 a transfer is avoided under subparagraph (A), 

9 the conservator or receiver may recover, for the 

10 benefit of the enterprise, the property trans11 ferred, or, if a court so orders, the value of 

12 such property (at the time of such transfer) 

13 from— 

14 ‘‘(i) the initial transferee of such 

15 transfer or the enterprise-affiliated party 

16 or person for whose benefit such transfer 

17 was made; or 

18 ‘‘(ii) any immediate or mediate trans19 feree of any such initial transferee. 

20 ‘‘(C) RIGHTS OF TRANSFEREE OR OBLI21 GEE.—The conservator or receiver may not re22 cover under subparagraph (B) from— 

23 ‘‘(i) any transferee that takes for 

24 value, including satisfaction or securing of 
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1 a present or antecedent debt, in good faith; 

2 or 

3 ‘‘(ii) any immediate or mediate good 

4 faith transferee of such transferee. 

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

6 The rights under this paragraph of the conser7 vator or receiver described under subparagraph 

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

9 or any other party (other than any party which 

10 is a Federal agency) under title 11, United 

11 States Code. 

12 ‘‘(16) ATTACHMENT OF ASSETS AND OTHER IN13 JUNCTIVE RELIEF.—Subject to paragraph (17), any 

14 court of competent jurisdiction may, at the request 

15 of the conservator or receiver, issue an order in ac16 cordance with Rule 65 of the Federal Rules of Civil 

17 Procedure, including an order placing the assets of 

18 any person designated by the Agency or such conser19 vator under the control of the court, and appointing 

20 a trustee to hold such assets. 

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

22 Federal Rules of Civil Procedure shall apply with re23 spect to any proceeding under paragraph (16) with24 out regard to the requirement of such rule that the 
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1 applicant show that the injury, loss, or damage is ir2 reparable and immediate. 

3 ‘‘(18) TREATMENT OF CLAIMS ARISING FROM

4 BREACH OF CONTRACTS EXECUTED BY THE RE5 CEIVER OR CONSERVATOR.— 

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

7 other provision of this subsection, any final and 

8 unappealable judgment for monetary damages 

9 entered against a receiver or conservator for the 

10 breach of an agreement executed or approved in 

11 writing by such receiver or conservator after the 

12 date of its appointment, shall be paid as an ad13 ministrative expense of the receiver or conser14 vator. 

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

16 in this paragraph shall be construed to limit the 

17 power of a receiver or conservator to exercise 

18 any rights under contract or law, including to 

19 terminate, breach, cancel, or otherwise dis20 continue such agreement. 

21 ‘‘(19) GENERAL EXCEPTIONS.— 

22 ‘‘(A) LIMITATIONS.—The rights of a con23 servator or receiver appointed under this section 

24 shall be subject to the limitations on the powers 

25 of a receiver under sections 402 through 407 of 
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1 the Federal Deposit Insurance Corporation Im2 provement Act of 1991 (12 U.S.C. 4402 

3 through 4407). 

4 ‘‘(B) MORTGAGES HELD IN TRUST.— 

5 ‘‘(i) IN GENERAL.—Any mortgage, 

6 pool of mortgages, or interest in a pool of 

7 mortgages, held in trust, custodial, or 

8 agency capacity by an enterprise for the 

9 benefit of persons other than the enterprise 

10 shall not be available to satisfy the claims 

11 of creditors generally. 

12 ‘‘(ii) HOLDING OF MORTGAGES.—Any 

13 mortgage, pool of mortgages, or interest in 

14 a pool of mortgages, described under 

15 clause (i) shall be held by the conservator 

16 or receiver appointed under this section for 

17 the beneficial owners of such mortgage, 

18 pool of mortgages, or interest in a pool of 

19 mortgages in accordance with the terms of 

20 the agreement creating such trust, custo21 dial, or other agency arrangement. 

22 ‘‘(iii) LIABILITY OF RECEIVER.—The 

23 liability of a receiver appointed under this 

24 section for damages shall, in the case of 

25 any contingent or unliquidated claim relat-
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1 ing to the mortgages held in trust, be esti2 mated in accordance set forth in the regu3 lations of the Director. 

4 ‘‘(c) PRIORITY OF EXPENSES AND UNSECURED

5 CLAIMS.— 

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

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

8 satisfaction of the receiver shall have priority in the 

9 following order: 

10 ‘‘(A) Administrative expenses of the re11 ceiver. 

12 ‘‘(B) Any other general or senior liability 

13 of the enterprise (which is not a liability de14 scribed under subparagraph (C) or (D). 

15 ‘‘(C) Any obligation subordinated to gen16 eral creditors (which is not an obligation de17 scribed under subparagraph (D)). 

18 ‘‘(D) Any obligation to shareholders or 

19 members arising as a result of their status as 

20 shareholder or members. 

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

22 creditors that are similarly situated under paragraph 

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

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

25 expenses of the receiver’ shall include the actual, 
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1 necessary costs and expenses incurred by the re2 ceiver in preserving the assets of a failed enterprise 

3 or liquidating or otherwise resolving the affairs of 

4 the failed enterprise. Such expenses shall include ob5 ligations that are incurred by the receiver after ap6 pointment as receiver that the Director determines 

7 are necessary and appropriate to facilitate the 

8 smooth and orderly liquidation or other resolution of 

9 the enterprise. 

10 ‘‘(d) PROVISIONS RELATING TO CONTRACTS EN11 TERED INTO BEFORE APPOINTMENT OF CONSERVATOR

12 OR RECEIVER.— 

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

14 In addition to any other rights a conservator or re15 ceiver may have, the conservator or receiver for any 

16 enterprise may disaffirm or repudiate any contract 

17 or lease— 

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

19 ‘‘(B) the performance of which the conser20 vator or receiver, in its sole discretion, deter21 mines to be burdensome; and 

22 ‘‘(C) the disaffirmance or repudiation of 

23 which the conservator or receiver determines, in 

24 its sole discretion, will promote the orderly ad25 ministration of the affairs of the enterprise. 
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1 ‘‘(2) TIMING OF REPUDIATION.—The conser2 vator or receiver shall determine whether or not to 

3 exercise the rights of repudiation under this sub4 section within a reasonable period following such ap5 pointment. 

6 ‘‘(3) CLAIMS FOR DAMAGES FOR REPUDI7 ATION.— 

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

9 provided under subparagraph (C) and para10 graphs (4), (5), and (6), the liability of the con11 servator or receiver for the disaffirmance or re12 pudiation of any contract pursuant to para13 graph (1) shall be— 

14 ‘‘(i) limited to actual direct compen15 satory damages; and 

16 ‘‘(ii) determined as of— 

17 ‘‘(I) the date of the appointment 

18 of the conservator or receiver; or 

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

20 or agreement referred to in paragraph 

21 (8), the date of the disaffirmance or 

22 repudiation of such contract or agree23 ment. 

24 ‘‘(B) NO LIABILITY FOR OTHER DAM25 AGES.—For purposes of subparagraph (A), the 
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1 term ‘actual direct compensatory damages’ shall 

2 not include— 

3 ‘‘(i) punitive or exemplary damages; 

4 ‘‘(ii) damages for lost profits or op5 portunity; or 

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

7 ‘‘(C) MEASURE OF DAMAGES FOR REPUDI8 ATION OF FINANCIAL CONTRACTS.—In the case 

9 of any qualified financial contract or agreement 

10 to which paragraph (8) applies, compensatory 

11 damages shall be— 

12 ‘‘(i) deemed to include normal and 

13 reasonable costs of cover or other reason14 able measures of damages utilized in the 

15 industries for such contract and agreement 

16 claims; and 

17 ‘‘(ii) paid in accordance with this sub18 section and subsection (e), except as other19 wise specifically provided in this section. 

20 ‘‘(4) LEASES UNDER WHICH THE ENTERPRISE

21 IS THE LESSEE.— 

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

23 receiver disaffirms or repudiates a lease under 

24 which the enterprise was the lessee, the conser25 vator or receiver shall not be liable for any 
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1 damages (other than damages determined 

2 under subparagraph (B)) for the disaffirmance 

3 or repudiation of such lease. 

4 ‘‘(B) PAYMENTS OF RENT.—Notwith5 standing subparagraph (A), the lessor under a 

6 lease to which that subparagraph applies 

7 shall— 

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

9 accruing before the later of the date— 

10 ‘‘(I) the notice of disaffirmance 

11 or repudiation is mailed; or 

12 ‘‘(II) the disaffirmance or repudi13 ation becomes effective, unless the les14 sor is in default or breach of the 

15 terms of the lease; 

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

17 any acceleration clause or other penalty 

18 provision in the lease; and 

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

20 rent, subject to all appropriate offsets and 

21 defenses, due as of the date of the appoint22 ment, which shall be paid in accordance 

23 with this subsection and subsection (e). 

24 ‘‘(5) LEASES UNDER WHICH THE ENTERPRISE

25 IS THE LESSOR.— 
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1 ‘‘(A) IN GENERAL.—If the conservator or 

2 receiver repudiates an unexpired written lease 

3 of real property of the enterprise under which 

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

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

6 the lessee under such lease may either— 

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

8 such repudiation; or 

9 ‘‘(ii) remain in possession of the lease10 hold interest for the balance of the term of 

11 the lease, unless the lessee defaults under 

12 the terms of the lease after the date of 

13 such repudiation. 

14 ‘‘(B) PROVISIONS APPLICABLE TO LESSEE

15 REMAINING IN POSSESSION.—If any lessee 

16 under a lease described under subparagraph (A) 

17 remains in possession of a leasehold interest 

18 under clause (ii) of such subparagraph— 

19 ‘‘(i) the lessee— 

20 ‘‘(I) shall continue to pay the 

21 contractual rent pursuant to the 

22 terms of the lease after the date of 

23 the repudiation of such lease; and 

24 ‘‘(II) may offset against any rent 

25 payment which accrues after the date 
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1 of the repudiation of the lease, and 

2 any damages which accrue after such 

3 date due to the nonperformance of 

4 any obligation of the enterprise under 

5 the lease after such date; and 

6 ‘‘(ii) the conservator or receiver shall 

7 not be liable to the lessee for any damages 

8 arising after such date as a result of the 

9 repudiation other than the amount of any 

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

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

12 PROPERTY.— 

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

14 receiver repudiates any contract for the sale of 

15 real property and the purchaser of such real 

16 property under such contract is in possession, 

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

18 in default, such purchaser may either— 

19 ‘‘(i) treat the contract as terminated 

20 by such repudiation; or 

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

22 property. 

23 ‘‘(B) PROVISIONS APPLICABLE TO PUR24 CHASER REMAINING IN POSSESSION.—If any 

25 purchaser of real property under any contract 
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1 described under subparagraph (A) remains in 

2 possession of such property under clause (ii) of 

3 such subparagraph— 

4 ‘‘(i) the purchaser— 

5 ‘‘(I) shall continue to make all 

6 payments due under the contract after 

7 the date of the repudiation of the con8 tract; and 

9 ‘‘(II) may offset against any such 

10 payments any damages which accrue 

11 after such date due to the non12 performance (after such date) of any 

13 obligation of the enterprise under the 

14 contract; and 

15 ‘‘(ii) the conservator or receiver 

16 shall— 

17 ‘‘(I) not be liable to the pur18 chaser for any damages arising after 

19 such date as a result of the repudi20 ation other than the amount of any 

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

22 ‘‘(II) deliver title to the pur23 chaser in accordance with the provi24 sions of the contract; and 
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1 ‘‘(III) have no obligation under 

2 the contract other than the perform3 ance required under subclause (II). 

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

5 ‘‘(i) IN GENERAL.—No provision of 

6 this paragraph shall be construed as lim7 iting the right of the conservator or re8 ceiver to assign the contract described 

9 under subparagraph (A), and sell the prop10 erty subject to the contract and the provi11 sions of this paragraph. 

12 ‘‘(ii) NO LIABILITY AFTER ASSIGN13 MENT AND SALE.—If an assignment and 

14 sale described under clause (i) is con15 summated, the conservator or receiver 

16 shall have no further liability under the 

17 contract described under subparagraph 

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

19 which was the subject of such contract. 

20 ‘‘(7) PROVISIONS APPLICABLE TO SERVICE CON21 TRACTS.— 

22 ‘‘(A) SERVICES PERFORMED BEFORE AP23 POINTMENT.—In the case of any contract for 

24 services between any person and any enterprise 

25 for which the Agency has been appointed con-
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1 servator or receiver, any claim of such person 

2 for services performed before the appointment 

3 of the conservator or the receiver shall be—

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

5 with subsections (b) and (e); and 

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

7 date the conservator or receiver was ap8 pointed. 

9 ‘‘(B) SERVICES PERFORMED AFTER AP10 POINTMENT AND PRIOR TO REPUDIATION.—If, 

11 in the case of any contract for services de12 scribed under subparagraph (A), the conser13 vator or receiver accepts performance by the 

14 other person before the conservator or receiver 

15 makes any determination to exercise the right 

16 of repudiation of such contract under this sec17 tion—

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

19 under the terms of the contract for the 

20 services performed; and 

21 ‘‘(ii) the amount of such payment 

22 shall be treated as an administrative ex23 pense of the conservatorship or receiver24 ship. 
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1 ‘‘(C) ACCEPTANCE OF PERFORMANCE NO

2 BAR TO SUBSEQUENT REPUDIATION.—The ac3 ceptance by any conservator or receiver of serv4 ices referred to under subparagraph (B) in con5 nection with a contract described in such sub6 paragraph shall not affect the right of the con7 servator or receiver to repudiate such contract 

8 under this section at any time after such per9 formance. 

10 ‘‘(8) CERTAIN QUALIFIED FINANCIAL CON11 TRACTS.— 

12 ‘‘(A) RIGHTS OF PARTIES TO CON13 TRACTS.—Subject to paragraph (10) and not14 withstanding any other provision of this Act, 

15 any other Federal law, or the law of any State, 

16 no person shall be stayed or prohibited from ex17 ercising— 

18 ‘‘(i) any right to cause the termi19 nation or liquidation of any qualified finan20 cial contract with an enterprise that arises 

21 upon the appointment of the Agency as re22 ceiver for such enterprise at any time after 

23 such appointment; 
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1 ‘‘(ii) any right under any security ar2 rangement relating to any contract or 

3 agreement described in clause (i); or 

4 ‘‘(iii) any right to offset or net out 

5 any termination value, payment amount, or 

6 other transfer obligation arising under or 

7 in connection with 1 or more contracts and 

8 agreements described in clause (i), includ9 ing any master agreement for such con10 tracts or agreements. 

11 ‘‘(B) APPLICABILITY OF OTHER PROVI12 SIONS.—Paragraphs (10) and (12) of sub13 section (b) shall apply in the case of any judi14 cial action or proceeding brought against any 

15 receiver referred to under subparagraph (A), or 

16 the enterprise for which such receiver was ap17 pointed, by any party to a contract or agree18 ment described under subparagraph (A)(i) with 

19 such enterprise. 

20 ‘‘(C) CERTAIN TRANSFERS NOT AVOID21 ABLE.— 

22 ‘‘(i) IN GENERAL.—Notwithstanding 

23 paragraph (11), the Agency, whether act24 ing as such or as conservator or receiver of 

25 an enterprise, may not avoid any transfer 
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1 of money or other property in connection 

2 with any qualified financial contract with 

3 an enterprise. 

4 ‘‘(ii) EXCEPTION FOR CERTAIN

5 TRANSFERS.—Clause (i) shall not apply to 

6 any transfer of money or other property in 

7 connection with any qualified financial con8 tract with an enterprise if the Agency de9 termines that the transferee had actual in10 tent to hinder, delay, or defraud such en11 terprise, the creditors of such enterprise, 

12 or any conservator or receiver appointed 

13 for such enterprise. 

14 ‘‘(D) CERTAIN CONTRACTS AND AGREE15 MENTS DEFINED.—In this subsection: 

16 ‘‘(i) QUALIFIED FINANCIAL CON17 TRACT.—The term ‘qualified financial con18 tract’ means any securities contract, com19 modity contract, forward contract, repur20 chase agreement, swap agreement, and any 

21 similar agreement that the Agency deter22 mines by regulation to be a qualified finan23 cial contract for purposes of this para24 graph. 
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1 ‘‘(ii) SECURITIES CONTRACT.—The 

2 term ‘securities contract’ has the meaning 

3 given to such term under section 741 of 

4 title 11, United States Code, except that 

5 the term ‘security’ (as used in such sec6 tion) shall be deemed to include any mort7 gage loan, any mortgage-related security 

8 (as defined in section 3(a)(41) of the Secu9 rities Exchange Act of 1934), and any in10 terest in any mortgage loan or mortgage11 related security, and does not include any 

12 participation in a commercial mortgage 

13 loan. 

14 ‘‘(iii) COMMODITY CONTRACT.—The 

15 term ‘commodity contract’ has the mean16 ing given to such term in section 761 of 

17 title 11, United States Code. 

18 ‘‘(iv) FORWARD CONTRACT.—The 

19 term ‘forward contract’ has the meaning 

20 given to such term in section 101 of title 

21 11, United States Code. 

22 ‘‘(v) REPURCHASE AGREEMENT.—The 

23 term ‘repurchase agreement’ has the mean24 ing given to such term in section 101 of 

25 title 11, the United States Code, except 
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1 that the items (as described in such sec2 tion) which may be subject to any such 

3 agreement shall be deemed to include 

4 mortgage-related securities (as such term 

5 is defined in section 3(a)(41) of the Securi6 ties Exchange Act of 1934), any mortgage 

7 loan, and any interest in any mortgage 

8 loan and does not include any participation 

9 in a commercial mortgage loan unless the 

10 Agency determines by regulation, resolu11 tion, or order to include any such partici12 pation within the meaning of such term. 

13 ‘‘(vi) SWAP AGREEMENT.—The term 

14 ‘swap agreement’— 

15 ‘‘(I) means any agreement, in16 cluding the terms and conditions in17 corporated by reference in any such 

18 agreement, which is a rate swap 

19 agreement, basis swap, commodity 

20 swap, forward rate agreement, inter21 est rate future, interest rate option 

22 purchased, forward foreign exchange 

23 agreement, rate cap agreement, rate 

24 floor agreement, rate collar agree25 ment, currency swap agreement, 
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1 cross-currency rate swap agreement, 

2 currency future, or currency option 

3 purchased or any other similar agree4 ment; and 

5 ‘‘(II) includes any combination of 

6 such agreements and any option to 

7 enter into any such agreement. 

8 ‘‘(vii) TREATMENT OF MASTER

9 AGREEMENT AS 1 QUALIFIED FINANCIAL

10 CONTRACT.—Any master agreement for 

11 any agreements described under this sub12 paragraph, together with all supplements 

13 to such master agreement, shall be treated 

14 as 1 qualified financial contract. 

15 ‘‘(viii) TRANSFER.—The term ‘trans16 fer’ has the meaning given to such term in 

17 section 101 of title 11, United States 

18 Code. 

19 ‘‘(E) CERTAIN PROTECTIONS IN EVENT OF

20 APPOINTMENT OF CONSERVATOR.—Notwith21 standing any other provision of this Act (other 

22 than paragraph (12) of this subsection), any 

23 other Federal law, or the law of any State, no 

24 person shall be stayed or prohibited from exer25 cising— 
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1 ‘‘(i) any right such person has to 

2 cause the termination, liquidation, or accel3 eration of any qualified financial contract 

4 with an enterprise in a conservatorship 

5 based upon a default under such financial 

6 contract which is enforceable under appli7 cable noninsolvency law; 

8 ‘‘(ii) any right under any security ar9 rangement relating to such qualified finan10 cial contracts; or 

11 ‘‘(iii) any right to offset or net out 

12 any termination values, payment amounts, 

13 or other transfer obligations arising under 

14 or in connection with such qualified finan15 cial contracts. 

16 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON17 TRACTS.—In making any transfer of assets or liabil18 ities of an enterprise in default which includes any 

19 qualified financial contract, the conservator or re20 ceiver for such enterprise shall either— 

21 ‘‘(A) transfer to 1 person— 

22 ‘‘(i) all qualified financial contracts 

23 between— 

24 ‘‘(I) any person (or any affiliate 

25 of such person); and 
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1 ‘‘(II) the enterprise in default; 

2 ‘‘(ii) all claims of such person (or any 

3 affiliate of such person) against such en4 terprise under any such contract (other 

5 than any claim which, under the terms of 

6 any such contract, is subordinated to the 

7 claims of general unsecured creditors of 

8 such enterprise); 

9 ‘‘(iii) all claims of such enterprise 

10 against such person (or any affiliate of 

11 such person) under any such contract; and 

12 ‘‘(iv) all property securing any claim 

13 described in clause (ii) or (iii) under any 

14 such contract; or 

15 ‘‘(B) transfer none of the financial con16 tracts, claims, or property referred to under 

17 subparagraph (A) (with respect to such person 

18 and any affiliate of such person). 

19 ‘‘(10) NOTIFICATION OF TRANSFER.— 

20 ‘‘(A) IN GENERAL.—If— 

21 ‘‘(i) the conservator or receiver for an 

22 enterprise in default makes any transfer of 

23 the assets and liabilities of such enterprise, 

24 and 
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1 ‘‘(ii) the transfer includes any quali2 fied financial contract, 

3 the conservator or receiver shall use best efforts 

4 to notify any person who is a party to any such 

5 contract of such transfer by 12 p.m. (noon) 

6 (Eastern Standard Time) on the business day 

7 following such transfer. 

8 ‘‘(B) BUSINESS DAY DEFINED.—For pur9 poses of this paragraph, the term ‘business day’ 

10 means any day other than any Saturday, Sun11 day, or any day on which either the New York 

12 Stock Exchange or the Federal Reserve Bank 

13 of New York is closed. 

14 ‘‘(11) CERTAIN SECURITY INTERESTS NOT

15 AVOIDABLE.—No provision of this subsection shall 

16 be construed as permitting the avoidance of any le17 gally enforceable or perfected security interest in any 

18 of the assets of any enterprise, except where such an 

19 interest is taken in contemplation of the insolvency 

20 of the enterprise, or with the intent to hinder, delay, 

21 or defraud the enterprise or the creditors of such en22 terprise. 

23 ‘‘(12) AUTHORITY TO ENFORCE CONTRACTS.— 

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

25 provision of a contract providing for termi-
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1 nation, default, acceleration, or exercise of 

2 rights upon, or solely by reason of, insolvency 

3 or the appointment of a conservator or receiver, 

4 the conservator or receiver may enforce any 

5 contract, other than a contract for director’s or 

6 officer’s liability or an enterprise bond, entered 

7 into by the enterprise. 

8 ‘‘(B) CERTAIN RIGHTS NOT AFFECTED.— 

9 No provision of this paragraph may be con10 strued as impairing or affecting any right of the 

11 conservator or receiver to enforce or recover 

12 under a director’s or officer’s liability insurance 

13 contract or enterprise bond under other applica14 ble law. 

15 ‘‘(C) CONSENT REQUIREMENT.— 

16 ‘‘(i) IN GENERAL.—Except as other17 wise provided under this section, no person 

18 may exercise any right or power to termi19 nate, accelerate, or declare a default under 

20 any contract to which an enterprise is a 

21 party, or to obtain possession of or exercise 

22 control over any property of the enterprise, 

23 or affect any contractual rights of the en24 terprise, without the consent of the conser-
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1 vator or receiver, as appropriate, for a pe2 riod of— 

3 ‘‘(I) 45 days after the date of ap4 pointment of a conservator; or 

5 ‘‘(II) 90 days after the date of 

6 appointment of a receiver. 

7 ‘‘(ii) EXCEPTIONS.—This subpara8 graph shall— 

9 ‘‘(I) not apply to a director’s or 

10 officer’s liability insurance contract; 

11 ‘‘(II) not apply to the rights of 

12 parties to certain qualified financial 

13 contracts under subsection (d)(8); and 

14 ‘‘(III) not be construed as per15 mitting the conservator or receiver to 

16 fail to comply with otherwise enforce17 able provisions of such contracts. 

18 ‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 

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

20 provision of Federal law or the law of any State, and 

21 regardless of the method which the Agency deter22 mines to utilize with respect to an enterprise in de23 fault or in danger of default, including transactions 

24 authorized under subsection (i), this subsection shall 

25 govern the rights of the creditors of such enterprise. 
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1 ‘‘(2) MAXIMUM LIABILITY.—The maximum li2 ability of the Agency, acting as receiver or in any 

3 other capacity, to any person having a claim against 

4 the receiver or the enterprise for which such receiver 

5 is appointed shall equal the lesser of— 

6 ‘‘(A) the amount such claimant would have 

7 received if the Agency had liquidated the assets 

8 and liabilities of such enterprise without exer9 cising the authority of the Agency under sub10 section (i) of this section; or 

11 ‘‘(B) the amount of proceeds realized from 

12 the performance of contracts or sale of the as13 sets of the enterprise. 

14 ‘‘(f) LIMITATION ON COURT ACTION.—Except as 

15 provided in this section or at the request of the Director, 

16 no court may take any action to restrain or affect the exer17 cise of powers or functions of the Agency as a conservator 

18 or a receiver. 

19 ‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 

20 ‘‘(1) IN GENERAL.—A director or officer of an 

21 enterprise may be held personally liable for mone22 tary damages in any civil action by, on behalf of, or 

23 at the request or direction of the Agency, which ac24 tion is prosecuted wholly or partially for the benefit 

25 of the Agency— 
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1 ‘‘(A) acting as conservator or receiver of 

2 such enterprise, or 

3 ‘‘(B) acting based upon a suit, claim, or 

4 cause of action purchased from, assigned by, or 

5 otherwise conveyed by such receiver or conser6 vator, 

7 for gross negligence, including any similar conduct 

8 or conduct that demonstrates a greater disregard of 

9 a duty of care (than gross negligence) including in10 tentional tortious conduct, as such terms are defined 

11 and determined under applicable State law. 

12 ‘‘(2) NO LIMITATION.—Nothing in this para13 graph shall impair or affect any right of the Agency 

14 under other applicable law. 

15 ‘‘(h) DAMAGES.—In any proceeding related to any 

16 claim against a director, officer, employee, agent, attorney, 

17 accountant, appraiser, or any other party employed by or 

18 providing services to an enterprise, recoverable damages 

19 determined to result from the improvident or otherwise 

20 improper use or investment of any assets of the enterprise 

21 shall include principal losses and appropriate interest. 

22 ‘‘(i) LIMITED-LIFE ENTERPRISE.— 

23 ‘‘(1) ORGANIZATION.— 

24 ‘‘(A) PURPOSE.—If an enterprise is in de25 fault, or if the Agency anticipates that an en-
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1 terprise will default, the Agency may organize a 

2 limited-life enterprise with those powers and at3 tributes of the enterprise in default or in dan4 ger of default that the Director determines nec5 essary, subject to the provisions of this sub6 section. The Director shall grant a temporary 

7 charter to the limited-life enterprise, and the 

8 limited-life enterprise shall operate subject to 

9 that charter. 

10 ‘‘(B) AUTHORITIES.—Upon the creation of 

11 a limited-life enterprise under subparagraph 

12 (A), the limited-life enterprise may— 

13 ‘‘(i) assume such liabilities of the en14 terprise that is in default or in danger of 

15 default as the Agency may, in its discre16 tion, determine to be appropriate, provided 

17 that the liabilities assumed shall not exceed 

18 the amount of assets of the limited-life en19 terprise; 

20 ‘‘(ii) purchase such assets of the en21 terprise that is in default, or in danger of 

22 default, as the Agency may, in its discre23 tion, determine to be appropriate; and 

24 ‘‘(iii) perform any other temporary 

25 function which the Agency may, in its dis-
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1 cretion, prescribe in accordance with this 

2 section. 

3 ‘‘(2) CHARTER.— 

4 ‘‘(A) CONDITIONS.—The Agency may 

5 grant a temporary charter if the Agency deter6 mines that the continued operation of the enter7 prise in default or in danger of default is in the 

8 best interest of the national economy and the 

9 housing markets. 

10 ‘‘(B) LIMITED-LIFE ENTERPRISE TREATED

11 AS BEING IN DEFAULT FOR CERTAIN PUR12 POSES.—A limited-life enterprise shall be treat13 ed as an enterprise in default at such times and 

14 for such purposes as the Agency may, in its dis15 cretion, determine. 

16 ‘‘(C) MANAGEMENT.—A limited-life enter17 prise, upon the granting of its charter, shall be 

18 under the management of a board of directors 

19 consisting of not fewer than 5 nor more than 

20 10 members appointed by the Agency. 

21 ‘‘(D) BYLAWS.—The board of directors of 

22 a limited-life enterprise shall adopt such bylaws 

23 as may be approved by the Agency. 

24 ‘‘(3) CAPITAL STOCK.—No capital stock need 

25 be paid into a limited-life enterprise by the Agency. 
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1 ‘‘(4) INVESTMENTS.—Funds of a limited-life 

2 enterprise shall be kept on hand in cash, invested in 

3 obligations of the United States or obligations guar4 anteed as to principal and interest by the United 

5 States, or deposited with the Agency, or any Federal 

6 Reserve bank. 

7 ‘‘(5) EXEMPT STATUS.—Notwithstanding any 

8 other provision of Federal or State law, the limited9 life enterprise, its franchise, property, and income 

10 shall be exempt from all taxation now or hereafter 

11 imposed by the United States, by any territory, de12 pendency, or possession thereof, or by any State, 

13 county, municipality, or local taxing authority. 

14 ‘‘(6) OTHER EXEMPTIONS.—When acting as a 

15 receiver, the following provisions shall apply with re16 spect to the Agency: 

17 ‘‘(A) The Agency, including its franchise, 

18 its capital, reserves, and surplus, and its in19 come, shall be exempt from all taxation imposed 

20 by any State, country, municipality, or local 

21 taxing authority, except that any real property 

22 of the Agency shall be subject to State, terri23 torial, county, municipal, or local taxation to 

24 the same extent according to its value as other 

25 real property is taxed, except that, notwith-
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1 standing the failure of any person to challenge 

2 an assessment under State law of the value of 

3 such property, and the tax thereon, shall be de4 termined as of the period for which such tax is 

5 imposed. 

6 ‘‘(B) No property of the Agency shall be 

7 subject to levy, attachment, garnishment, fore8 closure, or sale without the consent of the 

9 Agency, nor shall any involuntary lien attach to 

10 the property of the Agency. 

11 ‘‘(C) The Agency shall not be liable for any 

12 amounts in the nature of penalties or fines, in13 cluding those arising from the failure of any 

14 person to pay any real property, personal prop15 erty, probate, or recording tax or any recording 

16 or filing fees when due. 

17 ‘‘(7) WINDING UP.— 

18 ‘‘(A) IN GENERAL.—Subject to subpara19 graph (B), unless Congress authorizes the sale 

20 of the capital stock of the limited-life enter21 prise, not later than 2 years after the date of 

22 its organization, the Agency shall wind up the 

23 affairs of the limited-life enterprise. 

24 ‘‘(B) EXTENSION.—The Director may, in 

25 the discretion of the Director, extend the status 
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1 of the limited-life enterprise for 3 additional 1- 

2 year periods. 

3 ‘‘(8) TRANSFER OF ASSETS AND LIABILITIES.— 

4 ‘‘(A) IN GENERAL.— 

5 ‘‘(i) TRANSFER OF ASSETS AND LI6 ABILITIES.—The Agency, as receiver, may 

7 transfer any assets and liabilities of an en8 terprise in default, or in danger of default, 

9 to the limited-life enterprise in accordance 

10 with paragraph (1). 

11 ‘‘(ii) SUBSEQUENT TRANSFERS.—At 

12 any time after a charter is transferred to 

13 a limited-life enterprise, the Agency, as re14 ceiver, may transfer any assets and liabil15 ities of such enterprise in default, or in 

16 danger in default, as the Agency may, in 

17 its discretion, determine to be appropriate 

18 in accordance with paragraph (1). 

19 ‘‘(iii) EFFECTIVE WITHOUT AP20 PROVAL.—The transfer of any assets or li21 abilities of an enterprise in default, or in 

22 danger of default, transferred to a limited23 life enterprise shall be effective without 

24 any further approval under Federal or 
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1 State law, assignment, or consent with re2 spect thereto. 

3 ‘‘(9) PROCEEDS.—To the extent that available 

4 proceeds from the limited-life enterprise exceed 

5 amounts required to pay obligations, such proceeds 

6 may be paid to the enterprise in default, or in dan7 ger of default. 

8 ‘‘(10) POWERS OF LIMITED-LIFE ENTER9 PRISES.— 

10 ‘‘(A) IN GENERAL.—Each limited-life en11 terprise created under this subsection shall have 

12 all corporate powers of, and be subject to the 

13 same provisions of law as, the enterprise in de14 fault or in danger of default to which it relates, 

15 except that— 

16 ‘‘(i) the Agency may— 

17 ‘‘(I) remove the directors of a 

18 limited-life enterprise; and 

19 ‘‘(II) fix the compensation of 

20 members of the board of directors and 

21 senior management, as determined by 

22 the Agency in its discretion, of a lim23 ited-life enterprise; 

24 ‘‘(ii) the Agency may indemnify the 

25 representatives for purposes of paragraph 
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1 (1)(B), and the directors, officers, employ2 ees, and agents of a limited-life enterprise 

3 on such terms as the Agency determines to 

4 be appropriate; and 

5 ‘‘(iii) the board of directors of a lim6 ited-life enterprise— 

7 ‘‘(I) shall elect a chairperson who 

8 may also serve in the position of chief 

9 executive officer, except that such per10 son shall not serve either as chair11 person or as chief executive officer 

12 without the prior approval of the 

13 Agency; and 

14 ‘‘(II) may appoint a chief execu15 tive officer who is not also the chair16 person, except that such person shall 

17 not serve as chief executive officer 

18 without the prior approval of the 

19 Agency. 

20 ‘‘(B) STAY OF JUDICIAL ACTION.—Any ju21 dicial action to which a limited-life enterprise 

22 becomes a party by virtue of its acquisition of 

23 any assets or assumption of any liabilities of an 

24 enterprise in default shall be stayed from fur25 ther proceedings for a period of up to 45 days 
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1 at the request of the limited-life enterprise. 

2 Such period may be modified upon the consent 

3 of all parties. 

4 ‘‘(11) NO FEDERAL STATUS.— 

5 ‘‘(A) AGENCY STATUS.—A limited-life en6 terprise is not an agency, establishment, or in7 strumentality of the United States. 

8 ‘‘(B) EMPLOYEE STATUS.—Representa9 tives for purposes of paragraph (1)(B), interim 

10 directors, directors, officers, employees, or 

11 agents of a limited-life enterprise are not, solely 

12 by virtue of service in any such capacity, offi13 cers or employees of the United States. Any 

14 employee of the Agency or of any Federal in15 strumentality who serves at the request of the 

16 Agency as a representative for purposes of 

17 paragraph (1)(B), interim director, director, of18 ficer, employee, or agent of a limited-life enter19 prise shall not— 

20 ‘‘(i) solely by virtue of service in any 

21 such capacity lose any existing status as 

22 an officer or employee of the United States 

23 for purposes of title 5, United States Code, 

24 or any other provision of law; or 
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1 ‘‘(ii) receive any salary or benefits for 

2 service in any such capacity with respect to 

3 a limited-life enterprise in addition to such 

4 salary or benefits as are obtained through 

5 employment with the Agency or such Fed6 eral instrumentality. 

7 ‘‘(j) PROHIBITION OF CHARTER REVOCATION.—In 

8 no case may a receiver appointed pursuant to this section 

9 revoke, annul, or terminate the charter of an enterprise. 

10 ‘‘(k) OBTAINING CREDIT BY A LIMITED-LIFE EN11 TERPRISE.— 

12 ‘‘(1) IN GENERAL.—The limited-life enterprise 

13 may obtain unsecured credit and incur unsecured 

14 debt in the ordinary course of business. 

15 ‘‘(2) INABILITY TO OBTAIN CREDIT.—If the 

16 limited-life enterprise is unable to obtain unsecured 

17 credit the Director may authorize the obtaining of 

18 credit or the incurring of debt— 

19 ‘‘(A) with priority over any or all adminis20 trative expenses; 

21 ‘‘(B) secured by a lien on property that is 

22 not otherwise subject to a lien; or 

23 ‘‘(C) secured by a junior lien on property 

24 that is subject to a lien. 

25 ‘‘(3) LIMITATIONS.— 
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1 ‘‘(A) IN GENERAL.—The Director, after 

2 notice and a hearing, may authorize the obtain3 ing of credit or the incurring of debt secured by 

4 a senior or equal lien on property that is sub5 ject to a lien (other than mortgages that 

6 collateralize the mortgage-backed securities 

7 issued or guaranteed by the enterprise) only 

8 if— 

9 ‘‘(i) the limited-life enterprise is un10 able to obtain such credit otherwise; and 

11 ‘‘(ii) there is adequate protection of 

12 the interest of the holder of the lien on the 

13 property which such senior or equal lien is 

14 proposed to be granted. 

15 ‘‘(B) BURDEN OF PROOF.—In any hearing 

16 under this subsection, the Director has the bur17 den of proof on the issue of adequate protec18 tion. 

19 ‘‘(4) AFFECT ON DEBTS AND LIENS.—The re20 versal or modification on appeal of an authorization 

21 under this subsection to obtain credit or incur debt, 

22 or of a grant under this section of a priority or a 

23 lien, does not affect the validity of any debt so in24 curred, or any priority or lien so granted, to an enti25 ty that extended such credit in good faith, whether 
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1 or not such entity knew of the pendency of the ap2 peal, unless such authorization and the incurring of 

3 such debt, or the granting of such priority or lien, 

4 were stayed pending appeal.’’. 

5 (b) FEDERAL HOME LOAN BANKS.—Section 26 of 

6 the Federal Home Loan Bank Act (12 U.S.C. 1446) is 

7 amended— 

8 (1) by inserting ‘‘(a)’’ before ‘‘Whenever’’; 

9 (2) in the first sentence, by inserting ‘‘or pursu10 ant to a determination and notice under section 

11 1368(d) of the Federal Housing Enterprises Finan12 cial Safety and Soundness Act of 1992 that a Fed13 eral home loan bank is critically undercapitalized,’’ 

14 after ‘‘such action,’’; and 

15 (3) by adding at the end the following new sub16 section: 

17 ‘‘(b) The Director shall, by regulation, provide for the 

18 authority, procedures, and conditions in liquidating and 

19 reorganizing critically undercapitalized Federal home loan 

20 banks pursuant to subsection (a), taking due consideration 

21 of the authorities, procedures, and conditions established 

22 under section 1367 of the Federal Housing Enterprises 

23 Financial Safety and Soundness Act of 1992, with respect 

24 to the enterprises, with such modifications as the Director 
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1 determines to be appropriate to reflect the difference in 

2 operations between the banks and the enterprises.’’. 

3 (c) CONFORMING AMENDMENTS.—Subtitle B of title 

4 XIII of the Housing and Community Development Act of 

5 1992 is amended by striking sections 1369 (12 U.S.C. 

6 4619), 1369A (12 U.S.C. 4620), and 1369B (12 U.S.C. 

7 4621) 

8 SEC. 145. CONFORMING AMENDMENTS. 

9 Subtitle B of title XIII of the Housing and Commu10 nity Development Act of 1992 (42 U.S.C. 4611 et seq.), 

11 as amended by the preceding provisions of this Act, is fur12 ther amended— 

13 (1) in sections 1365 (12 U.S.C. 4615) through 

14 1369D (12 U.S.C. 4623), but not including section 

15 1367 (12 U.S.C. 4617) as added by section 144 of 

16 this Act— 

17 (A) by striking ‘‘An enterprise’’ each place 

18 such term appears and inserting ‘‘A regulated 

19 entity’’; 

20 (B) by striking ‘‘an enterprise’’ each place 

21 such term appears and inserting ‘‘a regulated 

22 entity’’; and 

23 (C) by striking ‘‘the enterprise’’ each place 

24 such term appears and inserting ‘‘the regulated 

25 entity’’; 
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1 (2) in section 1366(d) (12 U.S.C. 4616(d)), by 

2 striking ‘‘the enterprises’’ and inserting ‘‘the regu3 lated entities’’; 

4 (3) in section 1368(d) (12 U.S.C. 4618(d)), by 

5 striking ‘‘Committee on Banking, Finance and 

6 Urban Affairs’’ and inserting ‘‘Committee on Finan7 cial Services’’; and 

8 (4) in section 1369C(c) (12 U.S.C. 4622(c)), by 

9 striking ‘‘any enterprise’’ and inserting ‘‘any regu10 lated entity’’. 

11 Subtitle D—Enforcement Actions 

12 SEC. 161. CEASE-AND-DESIST PROCEEDINGS. 

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

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

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

19 opinion of the Director, a regulated entity or any regulated 

20 entity-affiliated party is engaging or has engaged, or the 

21 Director has reasonable cause to believe that the regulated 

22 entity or any regulated entity-affiliated party is about to 

23 engage, in an unsafe or unsound practice in conducting 

24 the business of the regulated entity or is violating or has 

25 violated, or the Director has reasonable cause to believe 
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1 that the regulated entity or any regulated entity-affiliated 

2 party is about to violate, a law, rule, or regulation, or any 

3 condition imposed in writing by the Director in connection 

4 with the granting of any application or other request by 

5 the regulated entity or any written agreement entered into 

6 with the Director, the Director may issue and serve upon 

7 the regulated entity or such party a notice of charges in 

8 respect thereof. The Director may not enforce compliance 

9 with any housing goal established under subpart B of part 

10 2 of subtitle A of this title, with section 1336 or 1337 

11 of this title, with subsection (m) or (n) of section 309 of 

12 the Federal National Mortgage Association Charter Act 

13 (12 U.S.C. 1723a(m), (n)), with subsection (e) or (f) of 

14 section 307 of the Federal Home Loan Mortgage Corpora15 tion Act (12 U.S.C. 1456(e), (f)), or with paragraph (5) 

16 or (12) of section 10(j) of the Federal Home Loan Bank 

17 Act (12 U.S.C. 1430(j)). 

18 ‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If a 

19 regulated entity receives, in its most recent report of ex20 amination, a less-than-satisfactory rating for asset quality, 

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

22 the deficiency is not corrected) deem the regulated entity 

23 to be engaging in an unsafe or unsound practice for pur24 poses of this subsection.’’; 
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1 (2) in subsection (c)(2), by striking ‘‘or direc2 tor’’ and inserting ‘‘director, or regulated entity-af3 filiated party’’; and 

4 (3) in subsection (d)— 

5 (A) in paragraph (1), by inserting ‘‘(in6 cluding reimbursement of compensation under 

7 section 1318)’’ after ‘‘reimbursement’’; 

8 (B) in paragraph (6), by striking ‘‘and’’ at 

9 the end; 

10 (C) by redesignating paragraph (7) as 

11 paragraph (8); and 

12 (D) by inserting after paragraph (6) the 

13 following new paragraph: 

14 ‘‘(7) to effect an attachment on a regulated en15 tity or regulated entity-affiliated party subject to an 

16 order under this section or section 1372; and’’. 

17 SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

18 Section 1372 of the Housing and Community Devel19 opment Act of 1992 (12 U.S.C. 4632) is amended— 

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

21 following new subsection: 

22 ‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Direc23 tor determines that the violation or threatened violation 

24 or the unsafe or unsound practice or practices specified 

25 in the notice of charges served upon the regulated entity 
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1 or any regulated entity-affiliated party pursuant to section 

2 1371(a), or the continuation thereof, is likely to cause in3 solvency or significant dissipation of assets or earnings of 

4 the regulated entity, or is likely to weaken the condition 

5 of the regulated entity prior to the completion of the pro6 ceedings conducted pursuant to sections 1371 and 1373, 

7 the Director may issue a temporary order requiring the 

8 regulated entity or such party to cease and desist from 

9 any such violation or practice and to take affirmative ac10 tion to prevent or remedy such insolvency, dissipation, 

11 condition, or prejudice pending completion of such pro12 ceedings. Such order may include any requirement author13 ized under subsection 1371(d).’’; 

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

15 and inserting ‘‘director, or regulated entity-affiliated 

16 party’’; 

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

18 inserting ‘‘director, or regulated entity-affiliated 

19 party’’; and 

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

21 the following new subsection: 

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

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

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

25 Director may apply to the United States District Court 
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1 for the District of Columbia or the United States district 

2 court within the jurisdiction of which the headquarters of 

3 the regulated entity is located, for an injunction to enforce 

4 such order, and, if the court determines that there has 

5 been such violation or threatened violation or failure to 

6 obey, it shall be the duty of the court to issue such injunc7 tion. Such an injunction may include an injunction to ef8 fect an attachment on a regulated entity or regulated-enti9 ty affiliated party.’’. 

10 SEC. 163. ENFORCEMENT AND JURISDICTION. 

11 Section 1375 of the Housing and Community Devel12 opment Act of 1992 (12 U.S.C. 4635) is amended— 

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

14 following new subsection: 

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 or order 

21 issued under this subtitle or subtitle B, or request that 

22 the Attorney General of the United States bring such an 

23 action. Such court shall have jurisdiction and power to 

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

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

2 inserting ‘‘1376, or 1377’’. 

3 SEC. 164. CIVIL MONEY PENALTIES. 

4 Section 1376 of the Housing and Community Devel5 opment Act of 1992 (12 U.S.C. 4636) is amended— 

6 (1) in subsection (a)— 

7 (A) in the matter preceding paragraph (1), 

8 by striking ‘‘or any executive officer or’’ and in9 serting ‘‘any executive officer of a regulated en10 tity, any regulated entity-affiliated party, or 

11 any’’; and 

12 (B) in paragraph (1)— 

13 (i) by inserting ‘‘Federal Home Loan 

14 Bank Act,’’ after ‘‘Corporation Act,’’; 

15 (ii) by striking ‘‘or subsection’’ and 

16 inserting ‘‘, subsection’’; and 

17 (iii) by inserting ‘‘, or paragraph (5) 

18 or (12) of section 10(j) of the Federal 

19 Home Loan Bank Act’’ before the semi20 colon at the end; 

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

22 following new subsection: 

23 ‘‘(b) AMOUNT OF PENALTY.— 

24 ‘‘(1) FIRST TIER.—Any regulated entity which, 

25 or any regulated entity-affiliated party who— 
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1 ‘‘(A) violates any provision of this title, the 

2 Federal National Mortgage Association Charter 

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

4 Home Loan Mortgage Corporation Act (12 

5 U.S.C. 1451 et seq.), the Federal Home Loan 

6 Bank Act (12 U.S.C. 1421 et seq., or any 

7 order, condition, rule, or regulation under any 

8 such title or Act, except that the Director may 

9 not enforce compliance with any housing goal 

10 established under subpart B of part 2 of sub11 title A of this title, with section 1336 or 1337 

12 of this title, with subsection (m) or (n) of sec13 tion 309 of the Federal National Mortgage As14 sociation Charter Act (12 U.S.C. 1723a(m), 

15 (n)), with subsection (e) or (f) of section 307 of 

16 the Federal Home Loan Mortgage Corporation 

17 Act (12 U.S.C. 1456(e), (f)), or with paragraph 

18 (5) or (12) of section 10(j) of the Federal 

19 Home Loan Bank Act; 

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

21 or notice issued pursuant to this title; 

22 ‘‘(C) violates any condition imposed in 

23 writing by the Director in connection with the 

24 grant of any application or other request by 

25 such regulated entity; 
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1 ‘‘(D) violates any written agreement be2 tween the regulated entity and the Director; or 

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

4 determines to be an unsafe or unsound practice, 

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

6 $10,000 for each day during which such violation 

7 continues. 

8 ‘‘(2) SECOND TIER.—Notwithstanding para9 graph (1)— 

10 ‘‘(A) if a regulated entity, or a regulated 

11 entity-affiliated party— 

12 ‘‘(i) commits any violation described 

13 in any subparagraph of paragraph (1); 

14 ‘‘(ii) recklessly engages in an unsafe 

15 or unsound practice in conducting the af16 fairs of such regulated entity; or 

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

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

19 ‘‘(i) is part of a pattern of mis20 conduct; 

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

22 than a minimal loss to such regulated enti23 ty; or 

24 ‘‘(iii) results in pecuniary gain or 

25 other benefit to such party, 
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1 the regulated entity or regulated entity-affiliated 

2 party shall forfeit and pay a civil penalty of not 

3 more than $50,000 for each day during which such 

4 violation, practice, or breach continues. 

5 ‘‘(3) THIRD TIER.—Notwithstanding para6 graphs (1) and (2), any regulated entity which, or 

7 any regulated entity-affiliated party who— 

8 ‘‘(A) knowingly— 

9 ‘‘(i) commits any violation or engages 

10 in any conduct described in any subpara11 graph of paragraph (1); 

12 ‘‘(ii) engages in any unsafe or un13 sound practice in conducting the affairs of 

14 such regulated entity; or 

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

16 ‘‘(B) knowingly or recklessly causes a sub17 stantial loss to such regulated entity or a sub18 stantial pecuniary gain or other benefit to such 

19 party by reason of such violation, practice, or 

20 breach, 

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

22 to exceed the applicable maximum amount deter23 mined under paragraph (4) for each day during 

24 which such violation, practice, or breach continues. 
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1 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR

2 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).— 

3 The maximum daily amount of any civil penalty 

4 which may be assessed pursuant to paragraph (3) 

5 for any violation, practice, or breach described in 

6 such paragraph is— 

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

8 a regulated entity, an amount not to exceed 

9 $2,000,000; and 

10 ‘‘(B) in the case of any regulated entity, 

11 $2,000,000.’’; 

12 (3) in subsection (c)(1)(B), by inserting ‘‘regu13 lated entity-affiliated party,’’ after ‘‘executive offi14 cer,’’; and 

15 (4) in subsection (d)— 

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

17 such term appears and inserting ‘‘director, or 

18 regulated entity-affiliated party’’; 

19 (B) by striking ‘‘request the Attorney Gen20 eral of the United States to’’; 

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

22 district court within the jurisdiction of which 

23 the headquarters of the regulated entity is lo24 cated,’’ after ‘‘District of Columbia’’; and 
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1 (D) by striking ‘‘, or may, under the direc2 tion and control of the Attorney General, bring 

3 such an action’’. 

4 SEC. 165. REMOVAL AND PROHIBITION AUTHORITY. 

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

6 Housing and Community Development Act of 1992 is 

7 amended— 

8 (1) by redesignating sections 1377, 1378, 1379, 

9 1379A, and 1379B (12 U.S.C. 4637–41) as sections 

10 1379, 1379A, 1379B, 1379C, and 1379D, respec11 tively; and 

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

13 4636) the following new section: 

14 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

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

16 Director determines that— 

17 ‘‘(1) any regulated entity-affiliated party has, 

18 directly or indirectly— 

19 ‘‘(A) violated— 

20 ‘‘(i) any law or regulation; 

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

22 has become final; 

23 ‘‘(iii) any condition imposed in writing 

24 by the Director in connection with the 
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1 grant of any application or other request 

2 by such regulated entity; or 

3 ‘‘(iv) any written agreement between 

4 such regulated entity and the Director; 

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

6 or unsound practice in connection with any reg7 ulated entity; or 

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

9 omission, or practice which constitutes a breach 

10 of such party’s fiduciary duty; 

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

12 breach described in any subparagraph of paragraph 

13 (1)— 

14 ‘‘(A) such regulated entity has suffered or 

15 will probably suffer financial loss or other dam16 age; or 

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

18 or other benefit by reason of such violation, 

19 practice, or breach; and 

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

21 ‘‘(A) involves personal dishonesty on the 

22 part of such party; or 

23 ‘‘(B) demonstrates willful or continuing 

24 disregard by such party for the safety or sound25 ness of such regulated entity, 
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1 the Director may serve upon such party a written notice 

2 of the Director’s intention to remove such party from of3 fice or to prohibit any further participation by such party, 

4 in any manner, in the conduct of the affairs of any regu5 lated entity. 

6 ‘‘(b) SUSPENSION ORDER.— 

7 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR8 ITY.—If the Director serves written notice under 

9 subsection (a) to any regulated entity-affiliated party 

10 of the Director’s intention to issue an order under 

11 such subsection, the Director may— 

12 ‘‘(A) suspend such party from office or 

13 prohibit such party from further participation 

14 in any manner in the conduct of the affairs of 

15 the regulated entity, if the Director— 

16 ‘‘(i) determines that such action is 

17 necessary for the protection of the regu18 lated entity; and 

19 ‘‘(ii) serves such party with written 

20 notice of the suspension order; and 

21 ‘‘(B) prohibit the regulated entity from re22 leasing to or on behalf of the regulated entity23 affiliated party any compensation or other pay24 ment of money or other thing of current or po25 tential value in connection with any resignation, 
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1 removal, retirement, or other termination of 

2 employment or office of the party. 

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

4 order issued under this subsection— 

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

6 and 

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

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

9 remain in effect and enforceable until— 

10 ‘‘(i) the date the Director dismisses 

11 the charges contained in the notice served 

12 under subsection (a) with respect to such 

13 party; or 

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

15 issued by the Director to such party under 

16 subsection (a). 

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

18 suspension order under this subsection to any regu19 lated entity-affiliated party, the Director shall serve 

20 a copy of such order on any regulated entity with 

21 which such party is affiliated at the time such order 

22 is issued. 

23 ‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of 

24 intention to remove a regulated entity-affiliated party 

25 from office or to prohibit such party from participating 
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1 in the conduct of the affairs of a regulated entity shall 

2 contain a statement of the facts constituting grounds for 

3 such action, and shall fix a time and place at which a hear4 ing will be held on such action. Such hearing shall be fixed 

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

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

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

8 (1) such party, and for good cause shown, or (2) the At9 torney General of the United States. Unless such party 

10 shall appear at the hearing in person or by a duly author11 ized representative, such party shall be deemed to have 

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

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

14 record made at any such hearing the Director shall find 

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

16 established, the Director may issue such orders of suspen17 sion or removal from office, or prohibition from participa18 tion in the conduct of the affairs of the regulated entity, 

19 as it may deem appropriate, together with an order pro20 hibiting compensation described in subsection (b)(1)(B). 

21 Any such order shall become effective at the expiration 

22 of 30 days after service upon such regulated entity and 

23 such party (except in the case of an order issued upon 

24 consent, which shall become effective at the time specified 

25 therein). Such order shall remain effective and enforceable 
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1 except to such extent as it is stayed, modified, terminated, 

2 or set aside by action of the Director or a reviewing court. 

3 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI4 TIES.—Any person subject to an order issued under this 

5 section shall not— 

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

7 of the affairs of any regulated entity; 

8 ‘‘(2) solicit, procure, transfer, attempt to trans9 fer, vote, or attempt to vote any proxy, consent, or 

10 authorization with respect to any voting rights in 

11 any regulated entity; 

12 ‘‘(3) violate any voting agreement previously 

13 approved by the Director; or 

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

15 regulated entity-affiliated party. 

16 ‘‘(e) INDUSTRY-WIDE PROHIBITION.— 

17 ‘‘(1) IN GENERAL.—Except as provided in para18 graph (2), any person who, pursuant to an order 

19 issued under this section, has been removed or sus20 pended from office in a regulated entity or prohib21 ited from participating in the conduct of the affairs 

22 of a regulated entity may not, while such order is in 

23 effect, continue or commence to hold any office in, 

24 or participate in any manner in the conduct of the 

25 affairs of, any regulated entity. 
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1 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT2 TEN CONSENT.—If, on or after the date an order is 

3 issued under this section which removes or suspends 

4 from office any regulated entity-affiliated party or 

5 prohibits such party from participating in the con6 duct of the affairs of a regulated entity, such party 

7 receives the written consent of the Director, the 

8 order shall, to the extent of such consent, cease to 

9 apply to such party with respect to the regulated en10 tity described in the written consent. If the Director 

11 grants such a written consent, it shall publicly dis12 close such consent. 

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

14 AS VIOLATION OF ORDER.—Any violation of para15 graph (1) by any person who is subject to an order 

16 described in such subsection shall be treated as a 

17 violation of the order. 

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

19 to a person who is an individual, unless the Director spe20 cifically finds that it should apply to a corporation, firm, 

21 or other business enterprise. 

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

23 REGULATED ENTITY-AFFILIATED PARTY.—Within 10 

24 days after any regulated entity-affiliated party has been 

25 suspended from office and/or prohibited from participation 
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1 in the conduct of the affairs of a regulated entity under 

2 this section, such party may apply to the United States 

3 District Court for the District of Columbia, or the United 

4 States district court for the judicial district in which the 

5 headquarters of the regulated entity is located, for a stay 

6 of such suspension and/or prohibition and any prohibition 

7 under subsection (b)(1)(B) pending the completion of the 

8 administrative proceedings pursuant to the notice served 

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

10 have jurisdiction to stay such suspension and/or prohibi11 tion. 

12 ‘‘(h) SUSPENSION OR REMOVAL OF REGULATED EN13 TITY-AFFILIATED PARTY CHARGED WITH FELONY.— 

14 ‘‘(1) SUSPENSION OR PROHIBITION.— 

15 ‘‘(A) IN GENERAL.—Whenever any regu16 lated entity-affiliated party is charged in any 

17 information, indictment, or complaint, with the 

18 commission of or participation in a crime in19 volving dishonesty or breach of trust which is 

20 punishable by imprisonment for a term exceed21 ing one year under State or Federal law, the 

22 Director may, if continued service or participa23 tion by such party may pose a threat to the 

24 regulated entity or impair public confidence in 
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1 the regulated entity, by written notice served 

2 upon such party— 

3 ‘‘(i) suspend such party from office or 

4 prohibit such party from further participa5 tion in any manner in the conduct of the 

6 affairs of any regulated entity; and 

7 ‘‘(ii) prohibit the regulated entity 

8 from releasing to or on behalf of the regu9 lated entity-affiliated party any compensa10 tion or other payment of money or other 

11 thing of current or potential value in con12 nection with the period of any such sus13 pension or with any resignation, removal, 

14 retirement, or other termination of employ15 ment or office of the party. 

16 ‘‘(B) PROVISIONS APPLICABLE TO NO17 TICE.— 

18 ‘‘(i) COPY.—A copy of any notice 

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

20 served upon the regulated entity. 

21 ‘‘(ii) EFFECTIVE PERIOD.—A suspen22 sion or prohibition under subparagraph (A) 

23 shall remain in effect until the informa24 tion, indictment, or complaint referred to 
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1 in such subparagraph is finally disposed of 

2 or until terminated by the Director. 

3 ‘‘(2) REMOVAL OR PROHIBITION.— 

4 ‘‘(A) IN GENERAL.—If a judgment of con5 viction or an agreement to enter a pretrial di6 version or other similar program is entered 

7 against a regulated entity-affiliated party in 

8 connection with a crime described in paragraph 

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

10 subject to further appellate review, the Director 

11 may, if continued service or participation by 

12 such party may pose a threat to the regulated 

13 entity or impair public confidence in the regu14 lated entity, issue and serve upon such party an 

15 order that— 

16 ‘‘(i) removes such party from office or 

17 prohibits such party from further partici18 pation in any manner in the conduct of the 

19 affairs of the regulated entity without the 

20 prior written consent of the Director; and 

21 ‘‘(ii) prohibits the regulated entity 

22 from releasing to or on behalf of the regu23 lated entity-affiliated party any compensa24 tion or other payment of money or other 

25 thing of current or potential value in con-
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1 nection with the termination of employ2 ment or office of the party. 

3 ‘‘(B) PROVISIONS APPLICABLE TO

4 ORDER.— 

5 ‘‘(i) COPY.—A copy of any order 

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

7 served upon the regulated entity, where8 upon the regulated entity-affiliated party 

9 who is subject to the order (if a director or 

10 an officer) shall cease to be a director or 

11 officer of such regulated entity. 

12 ‘‘(ii) EFFECT OF ACQUITTAL.—A find13 ing of not guilty or other disposition of the 

14 charge shall not preclude the Director from 

15 instituting proceedings after such finding 

16 or disposition to remove such party from 

17 office or to prohibit further participation in 

18 regulated entity affairs, and to prohibit 

19 compensation or other payment of money 

20 or other thing of current or potential value 

21 in connection with any resignation, re22 moval, retirement, or other termination of 

23 employment or office of the party, pursu24 ant to subsections (a), (d), or (e) of this 

25 section. 
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1 ‘‘(iii) EFFECTIVE PERIOD.—Any no2 tice of suspension or order of removal 

3 issued under this subsection shall remain 

4 effective and outstanding until the comple5 tion of any hearing or appeal authorized 

6 under paragraph (4) unless terminated by 

7 the Director. 

8 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM9 BERS.—If at any time, because of the suspension of 

10 one or more directors pursuant to this section, there 

11 shall be on the board of directors of a regulated enti12 ty less than a quorum of directors not so suspended, 

13 all powers and functions vested in or exercisable by 

14 such board shall vest in and be exercisable by the di15 rector or directors on the board not so suspended, 

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

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

18 of a regulated entity are suspended pursuant to this 

19 section, the Director shall appoint persons to serve 

20 temporarily as directors in their place and stead 

21 pending the termination of such suspensions, or 

22 until such time as those who have been suspended 

23 cease to be directors of the regulated entity and 

24 their respective successors take office. 
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1 ‘‘(4) HEARING REGARDING CONTINUED PAR2 TICIPATION.—Within 30 days from service of any 

3 notice of suspension or order of removal issued pur4 suant to paragraph (1) or (2) of this subsection, the 

5 regulated entity-affiliated party concerned may re6 quest in writing an opportunity to appear before the 

7 Director to show that the continued service to or 

8 participation in the conduct of the affairs of the reg9 ulated entity by such party does not, or is not likely 

10 to, pose a threat to the interests of the regulated en11 tity or threaten to impair public confidence in the 

12 regulated entity. Upon receipt of any such request, 

13 the Director shall fix a time (not more than 30 days 

14 after receipt of such request, unless extended at the 

15 request of such party) and place at which such party 

16 may appear, personally or through counsel, before 

17 one or more members of the Director or designated 

18 employees of the Director to submit written mate19 rials (or, at the discretion of the Director, oral testi20 mony) and oral argument. Within 60 days of such 

21 hearing, the Director shall notify such party whether 

22 the suspension or prohibition from participation in 

23 any manner in the conduct of the affairs of the reg24 ulated entity will be continued, terminated, or other25 wise modified, or whether the order removing such 
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1 party from office or prohibiting such party from fur2 ther participation in any manner in the conduct of 

3 the affairs of the regulated entity, and prohibiting 

4 compensation in connection with termination will be 

5 rescinded or otherwise modified. Such notification 

6 shall contain a statement of the basis for the Direc7 tor’s decision, if adverse to such party. The Director 

8 is authorized to prescribe such rules as may be nec9 essary to effectuate the purposes of this subsection. 

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

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

12 provided for in this section shall be held in the Dis13 trict of Columbia or in the Federal judicial district 

14 in which the headquarters of the regulated entity is 

15 located, unless the party afforded the hearing con16 sents to another place, and shall be conducted in ac17 cordance with the provisions of chapter 5 of title 5, 

18 United States Code. After such hearing, and within 

19 90 days after the Director has notified the parties 

20 that the case has been submitted to it for final deci21 sion, it shall render its decision (which shall include 

22 findings of fact upon which its decision is predi23 cated) and shall issue and serve upon each party to 

24 the proceeding an order or orders consistent with 

25 the provisions of this section. Judicial review of any 
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1 such order shall be exclusively as provided in this 

2 subsection. Unless a petition for review is timely 

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

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

5 record in the proceeding has been filed as so pro6 vided, the Director may at any time, upon such no7 tice and in such manner as it shall deem proper, 

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

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

10 terminate, or set aside any such order with permis11 sion of the court. 

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

13 proceeding under paragraph (1) may obtain a review 

14 of any order served pursuant to paragraph (1) 

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

16 regulated entity or the regulated entity-affiliated 

17 party concerned, or an order issued under subsection 

18 (h) of this section) by the filing in the United States 

19 Court of Appeals for the District of Columbia Cir20 cuit or court of appeals of the United States for the 

21 circuit in which the headquarters of the regulated 

22 entity is located, within 30 days after the date of 

23 service of such order, a written petition praying that 

24 the order of the Director be modified, terminated, or 

25 set aside. A copy of such petition shall be forthwith 
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1 transmitted by the clerk of the court to the Director, 

2 and thereupon the Director shall file in the court the 

3 record in the proceeding, as provided in section 2112 

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

5 such petition, such court shall have jurisdiction, 

6 which upon the filing of the record shall (except as 

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

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

9 in whole or in part, the order of the Director. Re10 view of such proceedings shall be had as provided in 

11 chapter 7 of title 5, United States Code. The judg12 ment and decree of the court shall be final, except 

13 that the same shall be subject to review by the Su14 preme Court upon certiorari, as provided in section 

15 1254 of title 28, United States Code. 

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

17 The commencement of proceedings for judicial re18 view under paragraph (2) shall not, unless specifi19 cally ordered by the court, operate as a stay of any 

20 order issued by the Director.’’. 

21 (b) CONFORMING AMENDMENTS.— 

22 (1) 1992 ACT.—Section 1317(f) of the Housing 

23 and Community Development Act of 1992 (12 

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

25 1379B’’ and inserting ‘‘section 1379D’’. 
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1 (2) FANNIE MAE CHARTER ACT.—The second 

2 sentence of subsection (b) of section 308 of the Fed3 eral National Mortgage Association Charter Act (12 

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

5 inserting ‘‘Except to the extent that action under 

6 section 1377 of the Housing and Community Devel7 opment Act of 1992 temporarily results in a lesser 

8 number, the’’. 

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

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

11 Federal Home Loan Mortgage Corporation Act (12 

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

13 ‘‘The’’ and inserting ‘‘Except to the extent that ac14 tion under section 1377 of the Housing and Commu15 nity Development Act of 1992 temporarily results in 

16 a lesser number, the’’. 

17 SEC. 166. CRIMINAL PENALTY. 

18 Subtitle C of title XIII of the Housing and Commu19 nity Development Act of 1992 (12 U.S.C. 4631 et seq.) 

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

21 the preceding provisions of this Act) the following new sec22 tion: 

23 ‘‘SEC. 1378. CRIMINAL PENALTY. 

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

25 section 1377, without the prior written approval of the Di-
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1 rector, knowingly participates, directly or indirectly, in any 

2 manner (including by engaging in an activity specifically 

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

4 of any regulated entity shall, notwithstanding section 

5 3571 of title 18, be fined not more than $1,000,000, im6 prisoned for not more than 5 years, or both.’’. 

7 SEC. 167. CONFORMING AMENDMENTS. 

8 Subtitle C of title XIII of the Housing and Commu9 nity Development Act of 1992 is amended— 

10 (1) in section 1372(c)(1) (12 U.S.C. 4632(c)), 

11 by striking ‘‘that enterprise’’ and inserting ‘‘that 

12 regulated entity’’; 

13 (2) in section 1379 (12 U.S.C. 4637), as so re14 designated by section 165(a)(1) of this Act— 

15 (A) by inserting ‘‘, or of a regulated entity16 affiliated party,’’ before ‘‘shall not affect’’; and 

17 (B) by striking ‘‘such director or executive 

18 officer’’ each place such term appears and in19 serting ‘‘such director, executive officer, or reg20 ulated entity-affiliated party’’; 

21 (3) in section 1379A (12 U.S.C. 4638), as so 

22 redesignated by section 165(a)(1) of this Act, by in23 serting ‘‘or against a regulated entity-affiliated 

24 party,’’ before ‘‘or impair’’; 
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1 (4) by striking ‘‘An enterprise’’ each place such 

2 term appears in such subtitle and inserting ‘‘A regu3 lated entity’’; 

4 (5) by striking ‘‘an enterprise’’ each place such 

5 term appears in such subtitle and inserting ‘‘a regu6 lated entity’’; 

7 (6) by striking ‘‘the enterprise’’ each place such 

8 term appears in such subtitle and inserting ‘‘the reg9 ulated entity’’; and 

10 (7) by striking ‘‘any enterprise’’ each place such 

11 term appears in such subtitle and inserting ‘‘any 

12 regulated entity’’. 

13 Subtitle E—General Provisions 

14 SEC. 181. PRESIDENTIALLY APPOINTED DIRECTORS OF EN15 TERPRISES. 

16 (a) FANNIE MAE.— 

17 (1) IN GENERAL.—Subsection (b) of section 

18 308 of the Federal National Mortgage Association 

19 Charter Act (12 U.S.C. 1723(b)) is amended— 

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

21 of whom shall be appointed annually by the 

22 President of the United States, and the remain23 der of whom’’ and inserting ‘‘who’’; 

24 (B) in the second sentence, by striking 

25 ‘‘appointed by the President’’; 
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1 (C) in the third sentence— 

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

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

4 such appointed member may be removed 

5 from office by the President for good 

6 cause’’; 

7 (D) in the fourth sentence, by striking 

8 ‘‘elective’’; and 

9 (E) by striking the fifth sentence. 

10 (2) TRANSITIONAL PROVISION.—The amend11 ments made by paragraph (1) shall not apply to any 

12 appointed position of the board of directors of the 

13 Federal National Mortgage Association until the ex14 piration of the annual term for such position during 

15 which the effective date under section 184 occurs. 

16 (b) FREDDIE MAC.— 

17 (1) IN GENERAL.—Paragraph (2) of section 

18 303(a) of the Federal Home Loan Mortgage Cor19 poration Act (12 U.S.C. 1452(a)(2)) is amended— 

20 (A) in subparagraph (A)— 

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

22 of whom shall be appointed annually by 

23 the President of the United States and the 

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

25 and 
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1 (ii) in the second sentence, by striking 

2 ‘‘appointed by the President of the United 

3 States’’; 

4 (B) in subparagraph (B)— 

5 (i) by striking ‘‘such or’’; and 

6 (ii) by striking ‘‘, except that any ap7 pointed member may be removed from of8 fice by the President for good cause’’; and 

9 (C) in subparagraph (C)— 

10 (i) by striking the first sentence; and 

11 (ii) by striking ‘‘elective’’. 

12 (2) TRANSITIONAL PROVISION.—The amend13 ments made by paragraph (1) shall not apply to any 

14 appointed position of the Board of Directors of the 

15 Federal Home Loan Mortgage Corporation until the 

16 expiration of the annual term for such position dur17 ing which the effective date under section 184 oc18 curs. 

19 SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY 

20 AND SOUNDNESS, AND MISSION OF ENTER21 PRISES. 

22 Not later than the expiration of the 12-month period 

23 beginning on the effective date under section 184, the Di24 rector of the Federal Housing Finance Agency shall sub25 mit a report to the Congress which shall include— 
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1 (1) a description of the portfolio holdings of the 

2 enterprises (as such term is defined in section 1303 

3 of the Housing and Community Development Act of 

4 1992 (12 U.S.C. 4502) in mortgages (including 

5 whole loans and mortgage-backed securities), non6 mortgages, and other assets; 

7 (2) a description of the risk implications for the 

8 enterprises of such holdings and the consequent risk 

9 management undertaken by the enterprises (includ10 ing the use of derivatives for hedging purposes), 

11 compared with off-balance sheet obligations of the 

12 enterprises (including mortgage-backed securities 

13 guaranteed by the enterprises); 

14 (3) an analysis of portfolio holdings for safety 

15 and soundness purposes; 

16 (4) an assessment of whether portfolio holdings 

17 fulfill the mission purposes of the enterprises under 

18 the Federal National Mortgage Association Charter 

19 Act and the Federal Home Loan Mortgage Corpora20 tion Act; and 

21 (5) an analysis of the potential systemic risk 

22 implications for the enterprises, the housing and 

23 capital markets, and the financial system of portfolio 

24 holdings, and whether such holdings should be lim25 ited or reduced over time. 
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1 SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS. 

2 (a) AMENDMENT TO 1992 ACT.—Title XIII of the 

3 Housing and Community Development Act of 1992 is 

4 amended by striking section 1383 (12 U.S.C. 1451 note). 

5 (b) AMENDMENT TO TITLE 18, UNITED STATES

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

7 amended by striking ‘‘Office of Federal Housing Enter8 prise Oversight’’ and inserting ‘‘Federal Housing Finance 

9 Agency’’ . 

10 (c) AMENDMENTS TO FLOOD DISASTER PROTECTION

11 ACT OF 1973.—Section 102(f)(3)(A) of the Flood Dis12 aster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) 

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

14 Housing Enterprise Oversight of the Department of Hous15 ing and Urban Development’’ and inserting ‘‘Director of 

16 the Federal Housing Finance Agency’’. 

17 (d) AMENDMENT TO DEPARTMENT OF HOUSING AND

18 URBAN DEVELOPMENT ACT.—Section 5 of the Depart19 ment of Housing and Urban Development Act (42 U.S.C. 

20 3534) is amended by striking subsection (d). 

21 (e) AMENDMENT TO TITLE 5, UNITED STATES

22 CODE.—Section 5313 of title 5, United States Code, is 

23 amended by striking the item relating to the Director of 

24 the Office of Federal Housing Enterprise Oversight, De25 partment of Housing and Urban Development and insert26 ing the following new item: 
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1 ‘‘Director of the Federal Housing Finance Agency.’’. 

2 SEC. 184. EFFECTIVE DATE. 

3 Except as specifically provided otherwise in this title, 

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

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

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

7 TITLE II—FEDERAL HOME LOAN 

8 BANKS 

9 SEC. 201. DEFINITIONS. 

10 Section 2 of the Federal Home Loan Bank Act (12 

11 U.S.C. 1422) is amended— 

12 (1) by striking paragraphs (1) and (10); 

13 (2) by redesignating paragraphs (2) through 

14 (9) as paragraphs (1) through (8), respectively; 

15 (3) by redesignating paragraphs (11) through 

16 (13) as paragraphs (9) through (11), respectively; 

17 and 

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

19 ‘‘(12) DIRECTOR.—The term ‘Director’ means 

20 the Director of the Federal Housing Finance Agen21 cy. 

22 ‘‘(13) AGENCY.—The term ‘Agency’ means the 

23 Federal Housing Finance Agency.’’. 
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1 SEC. 202. DIRECTORS. 

2 (a) ELECTION.—Section 7 of the Federal Home Loan 

3 Bank Act (12 U.S.C. 1427) is amended— 

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

5 following: 

6 ‘‘(a) NUMBER; ELECTION; QUALIFICATIONS; CON7 FLICTS OF INTEREST.— 

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

9 and except to the extent that action under section 

10 1377 of the Federal Housing Enterprises Financial 

11 Safety and Soundness Act of 1992 results in a lesser 

12 number, the management of each Federal Home 

13 Loan Bank shall be vested in a board of 13 direc14 tors, or such other number as the Director deter15 mines appropriate, each of whom— 

16 ‘‘(A) shall be elected by the members; and 

17 ‘‘(B) shall be either a bona fide resident of 

18 the district in which such bank is located or an 

19 officer or director of a member of such bank lo20 cated in that district. 

21 ‘‘(2) PUBLIC INTEREST.—At least 2 directors 

22 elected under paragraph (1) shall be representatives 

23 chosen from organizations with more than a 2-year 

24 history of representing consumer or community in25 terests on banking services, credit needs, housing, or 

26 financial consumer protections.’’; 
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1 (2) in subsection (d)— 

2 (A) in the first sentence, by striking ‘‘, 

3 whether elected or appointed,’’; 

4 (B) in the second sentence, by striking ‘‘or 

5 appointed’’; and 

6 (C) in the third sentence, by striking ‘‘an 

7 elective’’ each place such term appears and in8 serting ‘‘a’’; 

9 (3) by striking ‘‘elective’’ each place such term 

10 appears (except in subsection (e)); and 

11 (4) in subsection (f), by striking ‘‘appointed or’’ 

12 each place that term appears. 

13 (b) TERMS.— 

14 (1) IN GENERAL.—Section 7(d) of the Federal 

15 Home Loan Bank Act (12 U.S.C. 1427(i)) is 

16 amended— 

17 (A) in the first sentence, by striking ‘‘3 

18 years’’ and inserting ‘‘4 years’’; and 

19 (B) in the second sentence— 

20 (i) by striking ‘‘Federal Home Loan 

21 Bank System Modernization Act of 1999’’ 

22 and inserting ‘‘Federal Housing Finance 

23 Reform Act of 2005’’; and 

24 (ii) by striking ‘‘1/3’’ and inserting 

25 ‘‘1/4’’. 
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1 (2) SAVINGS PROVISION.—The amendments 

2 made by paragraph (1) shall not apply to the term 

3 of office of any director of a Federal home loan bank 

4 who is serving as of the effective date of this Act 

5 under section 184, including any director elected to 

6 fill a vacancy in any such office. 

7 (c) COMPENSATION.—Subsection (i) of section 7 of 

8 the Federal Home Loan Bank Act (12 U.S.C. 1427(i)) 

9 is amended to read as follows: 

10 ‘‘(i) DIRECTORS’ COMPENSATION.— 

11 ‘‘(1) IN GENERAL.—Each Federal home loan 

12 bank may pay the directors on the board of directors 

13 for the bank reasonable compensation for the time 

14 required of such directors, and reasonable expenses 

15 incurred by such directors, in connection with service 

16 on the board of directors, in accordance with resolu17 tions adopted by the board of directors and subject 

18 to the approval of the board. 

19 ‘‘(2) ANNUAL REPORT BY THE BOARD.—The 

20 Director shall include, in the annual report sub21 mitted to the Congress pursuant to section 1319B of 

22 the Federal Housing Enterprises Financial Safety 

23 and Soundness Act of 1992, information regarding 

24 the compensation and expenses paid by the Federal 
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1 home loan banks to the directors on the boards of 

2 directors of the banks.’’. 

3 SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVER4 SIGHT OF FEDERAL HOME LOAN BANKS. 

5 The Federal Home Loan Bank Act (12 U.S.C. 1421 

6 et seq.), other than in provisions of that Act added or 

7 amended otherwise by this Act, is amended— 

8 (1) by striking sections 2A and 2B (12 U.S.C. 

9 1422a, 1422b); 

10 (2) in section 6 (12 U.S.C. 1426(b)(1))— 

11 (A) in subsection (b)(1), in the matter pre12 ceding subparagraph (A), by striking ‘‘Finance 

13 Board approval’’ and inserting ‘‘approval by the 

14 Director’’; and 

15 (B) in each of subsections (c)(4)(B) and 

16 (d)(2), by striking ‘‘Finance Board regulations’’ 

17 each place that term appears and inserting 

18 ‘‘regulations of the Director’’; 

19 (3) in section 8 (12 U.S.C. 1428), in the sec20 tion heading, by striking ‘‘BY THE BOARD’’; 

21 (4) in section 10(b) (12 U.S.C. 1430), by strik22 ing ‘‘by formal resolution’’; 

23 (5) in section 18 (12 U.S.C. 1438), by striking 

24 subsection (b); 

25 (6) in section 21 (12 U.S.C. 1441)— 
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1 (A) in subsection (b)— 

2 (i) in paragraph (5), by striking 

3 ‘‘Chairperson of the Federal Housing Fi4 nance Board’’ and inserting ‘‘Director’’; 

5 and 

6 (ii) in the heading for paragraph (8), 

7 by striking ‘‘FEDERAL HOUSING FINANCE

8 BOARD’’ and inserting ‘‘DIRECTOR’’; and 

9 (B) in subsection (i), in the heading for 

10 paragraph (2), by striking ‘‘FEDERAL HOUSING

11 FINANCE BOARD’’ and inserting ‘‘DIRECTOR’’; 

12 (7) in section 23 (12 U.S.C. 1443), by striking 

13 ‘‘Board of Directors of the Federal Housing Finance 

14 Board’’ and inserting ‘‘Director’’; 

15 (8) by striking ‘‘the Board’’ each place such 

16 term appears in such Act (except in subsections (a), 

17 (b), and (c) of section 11 (12 U.S.C. 1431), section 

18 15 (12 U.S.C. 1435), section 21(f)(2) (12 U.S.C. 

19 1441(f)(2)), subsections (a), (k)(2)(B)(i), and 

20 (n)(6)(C)(ii) of section 21A (12 U.S.C. 1441a), sub21 sections (e)(7), (f)(2)(C), and (k)(7)(B)(ii) of section 

22 21B (12 U.S.C. 1441b), the first two places such 

23 term appears in section 22 (12 U.S.C. 1442), and 

24 section 25 (12 U.S.C. 1445)) and inserting ‘‘the Di25 rector’’; 
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1 (9) by striking ‘‘The Board’’ each place such 

2 term appears in such Act (except in sections 7(e) 

3 (12 U.S.C. 1427(e)), and 11(b) (12 U.S.C. 1431(b)) 

4 and inserting ‘‘The Director’’; 

5 (10) by striking ‘‘the Board’s’’ each place such 

6 term appears in such Act and inserting ‘‘the Direc7 tor’s’’; 

8 (11) by striking ‘‘The Board’s’’ each place such 

9 term appears in such Act and inserting ‘‘The Direc10 tor’s’’; 

11 (12) by striking ‘‘The Finance Board’’ each 

12 place such term appears in such Act and inserting 

13 ‘‘The Director’’; 

14 (13) by striking ‘‘the Finance Board’’ each 

15 place such term appears in such Act and inserting 

16 ‘‘the Director’’; 

17 (14) by striking ‘‘Federal Housing Finance 

18 Board’’ each place such term appears and inserting 

19 ‘‘Director’’; 

20 (15) by striking ‘‘Federal Home Loan Bank 

21 Board’’ each place such term appears in such Act 

22 (except in section 21A(n)(9)(B) (12 

23 U.S.C.1441a(n)(9)(B)) and inserting ‘‘Director’’; 

24 (16) in section 11(i) (12 U.S.C. 1431(i), by 

25 striking ‘‘the Chairperson of’’; and 
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1 (17) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), 

2 by striking ‘‘Chairperson of the’’. 

3 SEC. 204. DEBT ISSUING FACILITY. 

4 The Federal Home Loan Bank Act (12 U.S.C. 1421 

5 et seq.) is amended by inserting after section 11 the fol6 lowing: 

7 ‘‘SEC. 11A. FEDERAL HOME LOAN BANK FINANCE COR8 PORATION. 

9 ‘‘(a) ESTABLISHMENT.— 

10 ‘‘(1) IN GENERAL.—There is hereby established 

11 the Federal Home Loan Bank Finance Corporation, 

12 which shall be a jointly owned subsidiary of the Fed13 eral Home Loan Banks (in this section referred to 

14 as the ‘Corporation’). 

15 ‘‘(2) PURPOSES.—The purpose of the Corpora16 tion shall be— 

17 ‘‘(A) to issue and service the consolidated 

18 obligations of the Federal Home Loan Banks in 

19 accordance with this Act; and 

20 ‘‘(B) to perform all other necessary and 

21 proper functions in relation to the issuance and 

22 service of such obligations, as fiscal agent on 

23 behalf of the Federal Home Loan Banks, and 

24 any other functions performed by the Office of 

25 Finance on behalf of the Financing Corporation 
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1 (established under section 21) and the Resolu2 tion Funding Corporation (established under 

3 section 21B). 

4 ‘‘(3) TRANSFER OF FUNCTIONS.— 

5 ‘‘(A) IN GENERAL.—The functions of the 

6 Office of Finance of the Federal Home Loan 

7 Banks, shall be transferred to the Corporation 

8 immediately upon the conclusion of the organi9 zational meeting of the board of directors (re10 ferred to in this subsection as the ‘effective 

11 time’) established under subsection (c). 

12 ‘‘(B) ORGANIZATIONAL MEETING.—The 

13 organizational meeting of the board of directors 

14 of the Corporation shall occur as soon as prac15 ticable after the date of enactment of the Fed16 eral Housing Finance Reform Act of 2005. 

17 ‘‘(C) INTERIM PROCEDURES.—Until the 

18 transfer under subparagraph (A), the Office of 

19 Finance established as a joint office of the Fed20 eral Home Loan Banks (referred to in this sub21 section as the ‘predecessor office’) shall con22 tinue to operate as if this section had not been 

23 enacted. 

24 ‘‘(D) REFERENCES.—After the transfer 

25 under subparagraph (A), any reference under 
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1 any Federal law to the Office of Finance and 

2 the Managing Director of the Office of Finance 

3 shall be deemed to be references to the Cor4 poration and the chief executive officer of the 

5 Corporation, respectively. 

6 ‘‘(4) SUCCESSION.— 

7 ‘‘(A) ASSETS AND LIABILITIES.—At the 

8 transfer under paragraph (3)(A), the Corpora9 tion shall, by operation of law and without any 

10 further action by the Federal Housing Finance 

11 Board, the predecessor office, or any court, suc12 ceed to the assets of, and assume all debts, obli13 gations, contracts, and other liabilities of the 

14 predecessor office, matured or unmatured, ac15 crued or absolute, contingent or otherwise, and 

16 whether or not reflected or reserved against on 

17 balance sheets, books of account, or records of 

18 the predecessor office. 

19 ‘‘(B) CONTRACTS.—At the time of the 

20 transfer under paragraph (3)(A), the existing 

21 contractual obligations of the Federal Housing 

22 Finance Board, solely in its capacity as issuer 

23 of consolidated obligations of the Federal Home 

24 Loan Banks and the predecessor office shall, by 

25 operation of law and without any further action 
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1 by the Federal Housing Finance Board, the 

2 predecessor office, or any court, become obliga3 tions, entitlements, and instruments of the Cor4 poration. 

5 ‘‘(C) TAXATION.—The succession to as6 sets, assumption of liabilities, conversion of ob7 ligations and instruments, and effectuation of 

8 any other transaction by the Corporation to 

9 carry out this subsection shall not be treated as 

10 a taxable event under the laws of any State, or 

11 any political subdivision thereof. 

12 ‘‘(b) POWERS.—Subject to the provisions of this Act, 

13 and such regulations as the Director may prescribe, the 

14 Corporation shall have the power to— 

15 ‘‘(1) issue voting capital stock to the Federal 

16 Home Loan Banks; 

17 ‘‘(2) issue and service Federal Home Loan 

18 Bank consolidated notes, consolidated bonds, con19 solidated debentures and other consolidated obliga20 tions under section 11 of this Act on behalf of the 

21 Federal Home Loan Banks; 

22 ‘‘(3) determine the amount, maturities, rate of 

23 interest, terms, and other conditions of Federal 

24 Home Loan Bank consolidated obligations; 

25 ‘‘(4) adopt, alter, and use a corporate seal; 
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1 ‘‘(5) make contracts; 

2 ‘‘(6) sue and be sued in the corporate capacity 

3 of the Corporation, and to complain and defend in 

4 any action brought by or against the Corporation in 

5 any court of competent jurisdiction; 

6 ‘‘(7) determine the terms and conditions under 

7 which the Corporation may indemnify its directors, 

8 officers, employees, and agents; 

9 ‘‘(8) determine and implement the methodology 

10 for assessments of the Federal Home Loan Banks to 

11 fund all of the expenses of the Corporation; and 

12 ‘‘(9) exercise such incidental powers not incon13 sistent 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 shall ad22 minister the affairs of the Corporation in accordance 

23 with the provisions of this Act. 

24 ‘‘(3) INTERIM APPOINTMENTS.—If the presi25 dent of any Federal Home Loan Bank is vacant, the 
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1 person serving in such capacity on an acting basis 

2 shall serve on the board of directors of the Corpora3 tion until replaced by the next person to fill the of4 fice of president of the Federal Home Loan Bank. 

5 ‘‘(4) POWERS.—The board of directors shall ex6 ercise such powers as may be necessary or advisable 

7 to carry out the purposes of this section, including 

8 the power to— 

9 ‘‘(A) set policies for the management and 

10 operation of the Corporation; 

11 ‘‘(B) approve a strategic business plan for 

12 the Corporation; 

13 ‘‘(C) review, adopt and monitor annual op14 eration and capital budgets of the Corporation; 

15 ‘‘(D) constitute and perform the duties of 

16 an audit committee, which to the extent pos17 sible shall operate consistent with— 

18 ‘‘(i) the requirements established for 

19 the Federal Home Loan Banks; and 

20 ‘‘(ii) the requirements pertaining to 

21 audit committee reports set forth in the 

22 rules of Securities and Exchange Commis23 sion; 

24 ‘‘(E) select, employ, determine the com25 pensation for, and assign the duties and func-
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1 tions of the president of the Corporation, who 

2 shall— 

3 ‘‘(i) be the chief executive officer for 

4 the Corporation and shall direct the imple5 mentation of the policies adopted by the 

6 board of directors of the Corporation; 

7 ‘‘(ii) serve as a member of the Direc8 torate of the Financing Corporation, under 

9 section 21(b)(1)(A); and 

10 ‘‘(iii) serve as a member of the Direc11 torate of the Resolution Funding Corpora12 tion, under section 21B(c)(1)(A); 

13 ‘‘(F) provide for the review and approval 

14 of all contracts of the Corporation; 

15 ‘‘(G) have the exclusive authority to em16 ploy and contract for the services of an inde17 pendent, external auditor for the annual and 

18 quarterly combined financial statements of the 

19 Federal Home Loan Banks; and 

20 ‘‘(H) select, evaluate, determine the com21 pensation of, and, as appropriate, replace the 

22 internal auditor of the Corporation, who may be 

23 removed only by vote of the board of directors 

24 of the Corporation. 
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1 ‘‘(5) PAY.—The members of the board of direc2 tors of the Corporation shall not receive compensa3 tion for their services as members of the board of di4 rectors. 

5 ‘‘(6) QUORUM REQUIREMENT.— 

6 ‘‘(A) IN GENERAL.—No business of the 

7 Corporation may be conducted by the board of 

8 directors unless a quorum of the members of 

9 the board of directors is present in person or by 

10 telephone, or through action taken by written 

11 consent executed by all of the directors. 

12 ‘‘(B) NUMBER.—Directors representing a 

13 majority of the members of the board of direc14 tors shall constitute a quorum. 

15 ‘‘(C) VOTE REQUIRED.—Action taken by 

16 the board of directors shall be approved by a 

17 majority of the directors in attendance at any 

18 meeting at which a quorum is present, unless 

19 the board of directors adopts procedures requir20 ing a greater voting requirement. 

21 ‘‘(7) APPOINTMENT OF OFFICERS AND ADOP22 TION OF RULES OF PROCEDURE.—The board of di23 rectors of the Corporation shall— 
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1 ‘‘(A) select, from among the members of 

2 such board, a Chairperson and a Vice Chair3 person; and 

4 ‘‘(B) adopt by-laws and other rules of pro5 cedure for actions before the board of directors, 

6 including the establishment of 1 or more com7 mittees to take action on behalf of the board of 

8 directors, and the delegation of powers of the 

9 board of directors to any committee or officer 

10 of the Corporation. 

11 ‘‘(d) STOCK.— 

12 ‘‘(1) ISSUANCE OF EQUAL AMOUNT TO EACH

13 BANK.—The Corporation shall issue to each Federal 

14 home loan bank one share of voting capital stock, 

15 with a par value of $100 per share. 

16 ‘‘(2) RESTRICTED TRANSFERABILITY.—Stock 

17 issued under paragraph (1) may be owned and held 

18 only by the Federal Home Loan Banks. 

19 ‘‘(3) PAYMENT UPON ISSUANCE.—Upon 

20 issuance of any share of stock under this subsection 

21 to any Federal Home Loan Bank, the bank shall 

22 pay to the Corporation the total amount due for 

23 such stock. 

24 ‘‘(4) DISTRIBUTION REQUIREMENT.— 
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1 ‘‘(A) IN GENERAL.—The total amount of 

2 outstanding stock of the Corporation shall, at 

3 all times, be distributed equally among all the 

4 Federal Home Loan Banks. 

5 ‘‘(B) PROCEDURES.—The board of direc6 tors of the Corporation shall adopt procedures 

7 to implement subparagraph (A). 

8 ‘‘(e) STATUS.—Except to the extent expressly pro9 vided in this Act, or in rules and regulations promulgated 

10 by the Director, or unless the context clearly indicates oth11 erwise, the Corporation shall be accorded the same status 

12 as a Federal Home Loan Bank for purposes of any law, 

13 including sections 2B and 13 of this Act.’’. 

14 SEC. 205. SECURITIES AND EXCHANGE COMMISSION DIS15 CLOSURE. 

16 (a) IN GENERAL.—The Federal Home Loan Banks 

17 shall be exempt from compliance with— 

18 (1) sections 13(e), 14(a), 14(c), and 17A of the 

19 Securities Exchange Act of 1934 and related Com20 mission regulations; and 

21 (2) section 15 of that Act and related Securities 

22 and Exchange Commission regulations with respect 

23 to transactions in capital stock of the Banks. 

24 (b) MEMBER EXEMPTION.—The members of the 

25 Federal Home Loan Banks shall be exempt from compli-
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1 ance with sections 13(d), 13(f), 13(g), 14(d), and 16 of 

2 the Securities Exchange Act of 1934 and related Securi3 ties and Exchange Commission regulations with respect 

4 to their ownership of, or transactions in, capital stock of 

5 the Federal Home Loan Banks. 

6 (c) EXEMPTED AND GOVERNMENT SECURITIES.— 

7 (1) CAPITAL STOCK.—The capital stock issued 

8 by each of the Federal Home Loan Banks under 

9 section 6 of the Federal Home Loan Bank Act are— 

10 (A) exempted securities within the mean11 ing of section 3(a)(2) of the Securities Act of 

12 1933; and 

13 (B) ‘‘exempted securities’’ within the 

14 meaning of section 3(a)(12)(A) of the Securities 

15 Exchange Act of 1934. 

16 (2) OTHER OBLIGATIONS.—The debentures, 

17 bonds, and other obligations issued under section 11 

18 of the Federal Home Loan Bank Act are— 

19 (A) exempted securities within the mean20 ing of section 3(a)(2) of the Securities Act of 

21 1933; 

22 (B) ‘‘government securities’’ within the 

23 meaning of section 3(a)(42) of the Securities 

24 Exchange Act of 1934; 
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1 (C) excluded from the definition of ‘‘gov2 ernment securities broker’’ within section 

3 3(a)(43) of the Securities Exchange Act of 

4 1934; 

5 (D) excluded from the definition of ‘‘gov6 ernment securities dealer’’ within section 

7 3(a)(44) of the Securities Exchange Act of 

8 1934; and 

9 (E) ‘‘government securities’’ within the 

10 meaning of section 2(a)(16) of the Investment 

11 Company Act of 1940. 

12 (d) EXEMPTION FROM REPORTING REQUIRE13 MENTS.—The Federal Home Loan Banks shall be exempt 

14 from periodic reporting requirements pertaining to— 

15 (1) the disclosure of related party transactions 

16 that occur in the ordinary course of business of the 

17 Banks with their members; and 

18 (2) the disclosure of unregistered sales of equity 

19 securities. 

20 (e) TENDER OFFERS.—The Securities and Exchange 

21 Commission’s rules relating to tender offers shall not 

22 apply in connection with transactions in capital stock of 

23 the Federal Home Loan Banks. 

24 (f) REGULATIONS.—In issuing final regulations to 

25 implement provisions of this section, the Securities and 
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1 Exchange Commission shall consider the distinctive char2 acteristics of the Federal Home Loan Banks when evalu3 ating the accounting treatment with respect to the pay4 ment to REFCORP, the role of the combined financial 

5 statements of the twelve Banks, the accounting classifica6 tion of redeemable capital stock, and the accounting treat7 ment related to the joint and several nature of the obliga8 tions of the Banks. 

9 SEC. 206. COMMUNITY FINANCIAL INSTITUTION MEMBERS. 

10 (a) TOTAL ASSET REQUIREMENT.—Paragraph (12) 

11 of section 2 of the Federal Home Loan Bank Act (12 

12 U.S.C. 1422(12)), as so redesignated by section 202(2)of 

13 this Act, is amended by striking ‘‘$500,000,000’’ each 

14 place such term appears and inserting ‘‘$1,000,000,000’’. 

15 (b) USE OF ADVANCES FOR COMMUNITY DEVELOP16 MENT ACTIVITIES.—Section 10(a) of the Federal Home 

17 Loan Bank Act (12 U.S.C. 1430(a)) is amended—

18 (1) in paragraph (2)(B)—

19 (A) by striking ‘‘and’’; and 

20 (B) by inserting ‘‘, and community devel21 opment activities’’ before the period at the end; 

22 and 

23 (2) in paragraph (6)—

24 (A) by striking ‘‘and’’; and 
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1 (B) by inserting ‘‘and ‘community develop2 ment activities’ ’’ before ‘‘shall’’. 

3 TITLE III—TRANSFER OF FUNC4 TIONS, PERSONNEL, AND 

5 PROPERTY OF OFFICE OF 

6 FEDERAL HOUSING ENTER7 PRISE OVERSIGHT AND FED8 ERAL HOUSING FINANCE 

9 BOARD 

10 Subtitle A—Office of Federal 

11 Housing Enterprise Oversight 

12 SEC. 301. ABOLISHMENT OF OFHEO. 

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

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

15 the Office of Federal Housing Enterprise Oversight of the 

16 Department of Housing and Urban Development and the 

17 positions of the Director and Deputy Director of such Of18 fice are abolished. 

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

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

21 the Director of the Office of Federal Housing Enterprise 

22 Oversight shall, solely for the purpose of winding up the 

23 affairs of the Office of Federal Housing Enterprise Over24 sight— 
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1 (1) manage the employees of such Office and 

2 provide for the payment of the compensation and 

3 benefits of any such employee which accrue before 

4 the effective date of the transfer of such employee 

5 pursuant to section 303; and 

6 (2) may take any other action necessary for the 

7 purpose of winding up the affairs of the Office. 

8 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

9 The amendments made by title I and the abolishment of 

10 the Office of Federal Housing Enterprise Oversight under 

11 subsection (a) of this section may not be construed to af12 fect the status of any employee of such Office as employ13 ees of an agency of the United States for purposes of any 

14 other provision of law before the effective date of the 

15 transfer of any such employee pursuant to section 303. 

16 (d) USE OF PROPERTY AND SERVICES.— 

17 (1) PROPERTY.—The Director of the Federal 

18 Housing Finance Agency may use the property of 

19 the Office of Federal Housing Enterprise Oversight 

20 to perform functions which have been transferred to 

21 the Director of the Federal Housing Finance Agency 

22 for such time as is reasonable to facilitate the or23 derly transfer of functions transferred pursuant to 

24 any other provision of this Act or any amendment 

25 made by this Act to any other provision of law. 
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1 (2) AGENCY SERVICES.—Any agency, depart2 ment, or other instrumentality of the United States, 

3 and any successor to any such agency, department, 

4 or instrumentality, which was providing supporting 

5 services to the Office of Federal Housing Enterprise 

6 Oversight before the expiration of the period under 

7 subsection (a) in connection with functions that are 

8 transferred to the Director of the Federal Housing 

9 Finance Agency shall— 

10 (A) continue to provide such services, on a 

11 reimbursable basis, until the transfer of such 

12 functions is complete; and 

13 (B) consult with any such agency to co14 ordinate and facilitate a prompt and reasonable 

15 transition. 

16 (e) SAVINGS PROVISIONS.— 

17 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA18 TIONS NOT AFFECTED.—Subsection (a) shall not af19 fect the validity of any right, duty, or obligation of 

20 the United States, the Director of the Office of Fed21 eral Housing Enterprise Oversight, or any other per22 son, which— 

23 (A) arises under or pursuant to the title 

24 XIII of the Housing and Community Develop25 ment Act of 1992, the Federal National Mort-
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1 gage Association Charter Act, the Federal 

2 Home Loan Mortgage Corporation Act, or any 

3 other provision of law applicable with respect to 

4 such Office; and 

5 (B) existed on the day before the abolish6 ment under subsection (a) of this section. 

7 (2) CONTINUATION OF SUITS.—No action or 

8 other proceeding commenced by or against the Di9 rector of the Office of Federal Housing Enterprise 

10 Oversight in connection with functions that are 

11 transferred to the Director of the Federal Housing 

12 Finance Agency shall abate by reason of the enact13 ment of this Act, except that the Director of the 

14 Federal Housing Finance Agency shall be sub15 stituted for the Director of the Office of Federal 

16 Housing Enterprise Oversight as a party to any 

17 such action or proceeding. 

18 SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN 

19 REGULATIONS. 

20 All regulations, orders, determinations, and resolu21 tions that— 

22 (1) were issued, made, prescribed, or allowed to 

23 become effective by— 

24 (A) the Office of Federal Housing Enter25 prise Oversight; 
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1 (B) the Secretary of Housing and Urban 

2 Development and that relate to the Secretary’s 

3 authority under— 

4 (i) title XIII of the Housing and Com5 munity Development Act of 1992; 

6 (ii) under the Federal National Mort7 gage Association Charter Act, with respect 

8 to the Federal National Mortgage Associa9 tion; or 

10 (iii) the Federal Home Loan Mort11 gage Corporation Act; or 

12 (C) a court of competent jurisdiction and 

13 that relate to functions transferred by this Act; 

14 and 

15 (2) are in effect on the date of the abolishment 

16 under section 301(a) of this Act, 

17 shall remain in effect according to the terms of such regu18 lations, orders, determinations, and resolutions, and shall 

19 be enforceable by or against the Director of the Federal 

20 Housing Finance Agency until modified, terminated, set 

21 aside, or superseded in accordance with applicable law by 

22 such Director, as the case may be, any court of competent 

23 jurisdiction, or operation of law. 
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1 SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF 

2 OFHEO. 

3 (a) TRANSFER.—Each employee of the Office of Fed4 eral Housing Enterprise Oversight shall be transferred to 

5 the Federal Housing Finance Agency for employment no 

6 later than the date of the abolishment under section 

7 301(a) of this Act and such transfer shall be deemed a 

8 transfer of function for purposes of section 3503 of title 

9 5, United States Code. 

10 (b) GUARANTEED POSITIONS.—Each employee trans11 ferred under subsection (a) shall be guaranteed a position 

12 with the same status, tenure, grade, and pay as that held 

13 on the day immediately preceding the transfer. Each such 

14 employee holding a permanent position shall not be invol15 untarily separated or reduced in grade or compensation 

16 for 12 months after the date of transfer, except for cause 

17 or, if the employee is a temporary employee, separated in 

18 accordance with the terms of the appointment. 

19 (c) APPOINTMENT AUTHORITY FOR EXCEPTED

20 SERVICE EMPLOYEES.— 

21 (1) IN GENERAL.—In the case of employees oc22 cupying positions in the excepted service, any ap23 pointment authority established pursuant to law or 

24 regulations of the Office of Personnel Management 

25 for filling such positions shall be transferred, subject 

26 to paragraph (2). 
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1 (2) DECLINE OF TRANSFER.—The Director of 

2 the Federal Housing Finance Agency may decline a 

3 transfer of authority under paragraph (1) (and the 

4 employees appointed pursuant thereto) to the extent 

5 that such authority relates to positions excepted 

6 from the competitive service because of their con7 fidential, policy-making, policy-determining, or pol8 icy-advocating character. 

9 (d) REORGANIZATION.—If the Director of the Fed10 eral Housing Finance Agency determines, after the end 

11 of the 1-year period beginning on the date of the abolish12 ment under section 201(a), that a reorganization of the 

13 combined work force is required, that reorganization shall 

14 be deemed a major reorganization for purposes of afford15 ing affected employees retirement under section 

16 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

17 Code. 

18 (e) EMPLOYEE BENEFIT PROGRAMS.—Any employee 

19 of the Office of Federal Housing Enterprise Oversight ac20 cepting employment with the Director of the Federal 

21 Housing Finance Agency as a result of a transfer under 

22 subsection (a) may retain for 12 months after the date 

23 such transfer occurs membership in any employee benefit 

24 program of the Federal Housing Finance Agency or the 

25 Office of Federal Housing Enterprise Oversight, as appli-
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1 cable, including insurance, to which such employee belongs 

2 on the date of the abolishment under section 201(a) if— 

3 (1) the employee does not elect to give up the 

4 benefit or membership in the program; and 

5 (2) the benefit or program is continued by the 

6 Director of the Federal Housing Finance Agency; 

7 The difference in the costs between the benefits which 

8 would have been provided by such agency and those pro9 vided by this section shall be paid by the Director of the 

10 Federal Housing Finance Agency. If any employee elects 

11 to give up membership in a health insurance program or 

12 the health insurance program is not continued by such Di13 rector, the employee shall be permitted to select an alter14 nate Federal health insurance program within 30 days of 

15 such election or notice, without regard to any other regu16 larly scheduled open season. 

17 SEC. 304. TRANSFER OF PROPERTY AND FACILITIES. 

18 Upon the abolishment under section 301(a), all prop19 erty of the Office of Federal Housing Enterprise Oversight 

20 shall transfer to the Director of the Federal Housing Fi21 nance Agency. 
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1 Subtitle B—Federal Housing 

2 Finance Board 

3 SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FI4 NANCE BOARD. 

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

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

7 Federal Housing Finance Board (in this title referred to 

8 as the ‘‘Board’’) is abolished. 

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

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

11 Board, solely for the purpose of winding up the affairs 

12 of the Board— 

13 (1) shall manage the employees of such Board 

14 and provide for the payment of the compensation 

15 and benefits of any such employee which accrue be16 fore the effective date of the transfer of such em17 ployee under section 323; and 

18 (2) may take any other action necessary for the 

19 purpose of winding up the affairs of the Board. 

20 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

21 The amendments made by titles I and II and the abolish22 ment of the Board under subsection (a) may not be con23 strued to affect the status of any employee of such Board 

24 as employees of an agency of the United States for pur25 poses of any other provision of law before the effective 
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1 date of the transfer of any such employee under section 

2 403. 

3 (d) USE OF PROPERTY AND SERVICES.— 

4 (1) PROPERTY.—The Director of the Federal 

5 Housing Finance Agency may use the property of 

6 the Board to perform functions which have been 

7 transferred to the Director of the Federal Housing 

8 Finance Agency for such time as is reasonable to fa9 cilitate the orderly transfer of functions transferred 

10 under any other provision of this Act or any amend11 ment made by this Act to any other provision of law. 

12 (2) AGENCY SERVICES.—Any agency, depart13 ment, or other instrumentality of the United States, 

14 and any successor to any such agency, department, 

15 or instrumentality, which was providing supporting 

16 services to the Board before the expiration of the 1- 

17 year period under subsection (a) in connection with 

18 functions that are transferred to the Director of the 

19 Federal Housing Finance Agency shall— 

20 (A) continue to provide such services, on a 

21 reimbursable basis, until the transfer of such 

22 functions is complete; and 

23 (B) consult with any such agency to co24 ordinate and facilitate a prompt and reasonable 

25 transition. 
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1 (e) SAVINGS PROVISIONS.— 

2 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA3 TIONS NOT AFFECTED.—Subsection (a) shall not af4 fect the validity of any right, duty, or obligation of 

5 the United States, a member of the Board, or any 

6 other person, which— 

7 (A) arises under title XIII of the Housing 

8 and Community Development Act of 1992, the 

9 Federal National Mortgage Association Charter 

10 Act, the Federal Home Loan Mortgage Cor11 poration Act, the Federal Home Loan Bank 

12 Act, or any other provision of law applicable 

13 with respect to such Board; and 

14 (B) existed on the day before the effective 

15 date of the abolishment under subsection (a). 

16 (2) CONTINUATION OF SUITS.—No action or 

17 other proceeding commenced by or against the 

18 Board in connection with functions that are trans19 ferred to the Director of the Federal Housing Fi20 nance Agency shall abate by reason of the enactment 

21 of this Act, except that the Director of the Federal 

22 Housing Finance Agency shall be substituted for the 

23 Board or any member thereof as a party to any such 

24 action or proceeding. 
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1 SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN 

2 REGULATIONS. 

3 (a) IN GENERAL.—All regulations, orders, and deter4 minations described under subsection (b) shall remain in 

5 effect according to the terms of such regulations, orders, 

6 determinations, and resolutions, and shall be enforceable 

7 by or against the Director of the Federal Housing Finance 

8 Agency until modified, terminated, set aside, or super9 seded in accordance with applicable law by such Director, 

10 any court of competent jurisdiction, or operation of law. 

11 (b) APPLICABILITY.—A regulation, order, or deter12 mination is described under this subsection if it— 

13 (1) was issued, made, prescribed, or allowed to 

14 become effective by— 

15 (A) the Board; or 

16 (B) a court of competent jurisdiction and 

17 that relate to functions transferred by this Act; 

18 and 

19 (2) is in effect on the effective date of the abol20 ishment under section 321(a). 

21 SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE 

22 FEDERAL HOUSING FINANCE BOARD. 

23 (a) TRANSFER.—Each employee of the Board shall 

24 be transferred to the Federal Housing Finance Agency for 

25 employment not later than the effective date of the abol26 ishment under section 321(a), and such transfer shall be 
236 

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1 deemed a transfer of function for purposes of section 3503 

2 of title 5, United States Code. 

3 (b) GUARANTEED POSITIONS.—Each employee trans4 ferred under subsection (a) shall be guaranteed a position 

5 with the same status, tenure, grade, and pay as that held 

6 on the day immediately preceding the transfer. Each such 

7 employee holding a permanent position shall not be invol8 untarily separated or reduced in grade or compensation 

9 for 12 months after the date of transfer, except for cause 

10 or, if the employee is a temporary employee, separated in 

11 accordance with the terms of the appointment. 

12 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

13 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 

14 (1) IN GENERAL.—In the case of employees oc15 cupying positions in the excepted service or the Sen16 ior Executive Service, any appointment authority es17 tablished under law or by regulations of the Office 

18 of Personnel Management for filling such positions 

19 shall be transferred, subject to paragraph (2). 

20 (2) DECLINE OF TRANSFER.—The Director of 

21 the Federal Housing Finance Agency may decline a 

22 transfer of authority under paragraph (1) to the ex23 tent that such authority relates to positions excepted 

24 from the competitive service because of their con25 fidential, policymaking, policy-determining, or policy- 
237 

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1 advocating character, and noncareer positions in the 

2 Senior Executive Service (within the meaning of sec3 tion 3132(a)(7) of title 5, United States Code). 

4 (d) REORGANIZATION.—If the Director of the Fed5 eral Housing Finance Agency determines, after the end 

6 of the 1-year period beginning on the effective date of the 

7 abolishment under section 321(a), that a reorganization 

8 of the combined workforce is required, that reorganization 

9 shall be deemed a major reorganization for purposes of 

10 affording affected employees retirement under section 

11 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

12 Code. 

13 (e) EMPLOYEE BENEFIT PROGRAMS.— 

14 (1) IN GENERAL.—Any employee of the Board 

15 accepting employment with the Federal Housing Fi16 nance Agency as a result of a transfer under sub17 section (a) may retain for 12 months after the date 

18 on which such transfer occurs membership in any 

19 employee benefit program of the Federal Housing 

20 Finance Agency or the Board, as applicable, includ21 ing insurance, to which such employee belongs on 

22 the effective date of the abolishment under section 

23 321(a) if— 

24 (A) the employee does not elect to give up 

25 the benefit or membership in the program; and 
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1 (B) the benefit or program is continued by 

2 the Director of the Federal Housing Finance 

3 Agency. 

4 (2) COST DIFFERENTIAL.—The difference in 

5 the costs between the benefits which would have 

6 been provided by the Board and those provided by 

7 this section shall be paid by the Director of the Fed8 eral Housing Finance Agency. If any employee elects 

9 to give up membership in a health insurance pro10 gram or the health insurance program is not contin11 ued by such Director, the employee shall be per12 mitted to select an alternate Federal health insur13 ance program within 30 days after such election or 

14 notice, without regard to any other regularly sched15 uled open season. 

16 SEC. 324. TRANSFER OF PROPERTY AND FACILITIES. 

17 Upon the effective date of the abolishment under sec18 tion 321(a), all property of the Board shall transfer to 

19 the Director of the Federal Housing Finance Agency. 

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