```

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4889 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4889

To establish a term certain for the conservatorships of Fannie Mae and 
  Freddie Mac, to provide conditions for continued operation of such 
 enterprises, and to provide for the wind down of such operations and 
                  the dissolution of such enterprises.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 19, 2010

   Mr. Hensarling (for himself, Mr. Pence, Mr. Price of Georgia, Mr. 
Flake, Mr. Marchant, Mr. Akin, Mr. Bartlett, Mr. Latta, Mr. Pitts, Mrs. 
Schmidt, Mr. Garrett of New Jersey, Mr. Olson, Mr. Duncan, Mr. Platts, 
   and Mr. Smith of Texas) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
To establish a term certain for the conservatorships of Fannie Mae and 
  Freddie Mac, to provide conditions for continued operation of such 
 enterprises, and to provide for the wind down of such operations and 
                  the dissolution of such enterprises.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``GSE Bailout Elimination and Taxpayer 
Protection Act''.

SEC. 2. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Charter.--The term ``charter'' means--
                    (A) with respect to the Federal National Mortgage 
                Association, the Federal National Mortgage Association 
                Charter Act (12 U.S.C. 1716 et seq.); and
                    (B) with respect to the Federal Home Loan Mortgage 
                Corporation, the Federal Home Loan Mortgage Corporation 
                Act (12 U.S.C. 1451 et seq.).
            (2) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (3) Enterprise.--The term ``enterprise'' means--
                    (A) the Federal National Mortgage Association; and
                    (B) the Federal Home Loan Mortgage Corporation.
            (4) Guarantee.--The term ``guarantee'' means, with respect 
        to an enterprise, the credit support of the enterprise that is 
        provided by the Federal Government through its charter as a 
        government-sponsored enterprise.

SEC. 3. TERMINATION OF CURRENT CONSERVATORSHIP.

    (a) In General.--Upon the expiration of the period referred to in 
subsection (b), the Director of the Federal Housing Finance Agency 
shall determine, with respect to each enterprise, if the enterprise is 
financially viable at that time and--
            (1) if the Director determines that the enterprise is 
        financially viable, immediately take all actions necessary to 
        terminate the conservatorship for the enterprise that is in 
        effect pursuant to section 1367 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992 (12 
        U.S.C. 4617); or
            (2) if the Director determines that the enterprise is not 
        financially viable, immediately appoint the Federal Housing 
        Finance Agency as receiver under section 1367 of the Federal 
        Housing Enterprises Financial Safety and Soundness Act of 1992 
        and carry out such receivership under the authority of such 
        section.
    (b) Timing.--The period referred to in this subsection is, with 
respect to an enterprise--
            (1) except as provided in paragraph (2), the 24-month 
        beginning upon the date of the enactment of this Act; or
            (2) if the Director determines before the expiration of the 
        period referred to in paragraph (1) that the financial markets 
        would be adversely affected without the extension of such 
        period under this paragraph with respect to that enterprise, 
        and upon making such determination notifies the Congress in 
        writing of such determination, the 30-month period beginning 
        upon the date of the enactment of this Act.
    (c) Financial Viability.--The Director may not determine that an 
enterprise is financially viable for purposes of subsection (a) if the 
Director determines that any of the conditions for receivership set 
forth in paragraph (3) or (4) of section 1367(a) of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4617(a)) exists at the time with respect to the enterprise.

SEC. 4. LIMITATION OF ENTERPRISE AUTHORITY UPON EMERGENCE FROM 
              CONSERVATORSHIP.

    (a) Revised Authority.--Upon the expiration of the period referred 
to in section 3(b), if the Director makes the determination under 
section 3(a)(1), the following provisions shall take effect:
            (1) Repeal of housing goals.--
                    (A) Repeal.--The Federal Housing Enterprises 
                Financial Safety and Soundness Act of 1992 is amended 
                by striking sections 1331 through 1336 (12 U.S.C. 4561-
                6).
                    (B) Conforming amendments.--Federal Housing 
                Enterprises Financial Safety and Soundness Act of 1992 
                is amended--
                            (i) in section 1303(28) (12 U.S.C. 
                        4502(28)), by striking ``and, for the 
                        purposes'' and all that follows through 
                        ``designated disaster areas'';
                            (ii) in section 1324(b)(1)(A) (12 U.S.C. 
                        4544(b)(1)(A))--
                                    (I) by striking clauses (i), (ii), 
                                and (iv);
                                    (II) in clause (iii), by inserting 
                                ``and'' after the semicolon at the end; 
                                and
                                    (III) by redesignating clauses 
                                (iii) and (v) as clauses (i) and (ii), 
                                respectively;
                            (iii) in section 1338(c)(10) (12 U.S.C. 
                        4568(c)(10)), by striking subparagraph (E);
                            (iv) in section 1339(h) (12 U.S.C. 4569), 
                        by striking paragraph (7);
                            (v) in section 1341 (12 U.S.C. 4581)--
                                    (I) in subsection (a)--
                                            (aa) in paragraph (1), by 
                                        inserting ``or'' after the 
                                        semicolon at the end;
                                            (bb) in paragraph (2), by 
                                        striking the semicolon at the 
                                        end and inserting a period; and
                                            (cc) by striking paragraphs 
                                        (3) and (4); and
                                    (II) in subsection (b)(2)--
                                            (aa) in subparagraph (A), 
                                        by inserting ``or'' after the 
                                        semicolon at the end;
                                            (bb) by striking 
                                        subparagraphs (B) and (C); and
                                            (cc) by redesignating 
                                        subparagraph (D) as 
                                        subparagraph (B);
                            (vi) in section 1345(a) (12 U.S.C. 
                        4585(a))--
                                    (I) in paragraph (1), by inserting 
                                ``or'' after the semicolon at the end;
                                    (II) in paragraph (2), by striking 
                                the semicolon at the end and inserting 
                                a period; and
                                    (III) by striking paragraphs (3) 
                                and (4); and
                            (vii) in section 1371(a)(2) (12 U.S.C. 
                        4631(a)(2))--
                                    (I) by striking ``with any housing 
                                goal established under subpart B of 
                                part 2 of subtitle A of this title,''; 
                                and
                                    (II) by striking ``section 1336 
                                or''.
            (2) Portfolio limitations.--Subtitle B of title XIII of the 
        Housing and Community Development Act of 1992 (12 U.S.C. 4611 
        et seq.) is amended by adding at the end the following new 
        section:

``SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF ENTERPRISES.

    ``(a) Restriction.--No enterprise shall own, as of any applicable 
date in this subsection or thereafter, mortgage assets in excess of--
            ``(1) upon the expiration of the period referred to in 
        section 3(b) of the GSE Bailout Elimination and Taxpayer 
        Protection Act or thereafter, $850,000,000,000;
            ``(2) upon the expiration of the 1-year period that begins 
        on the date described in paragraph (1) or thereafter, 
        $700,000,000,000;
            ``(3) upon the expiration of the 2-year period that begins 
        on the date described in paragraph (1) or thereafter, 
        $500,000,000,000; and
            ``(4) upon the expiration of the 3-year period that begins 
        on the date described in paragraph (1), $250,000,000,000.
    ``(b) Definition of Mortgage Assets.--For purposes of this section, 
the term `mortgage assets' means, with respect to an enterprise, assets 
of such enterprise consisting of mortgages, mortgage loans, mortgage-
related securities, participation certificates, mortgage-backed 
commercial paper, obligations of real estate mortgage investment 
conduits and similar assets, in each case to the extent such assets 
would appear on the balance sheet of such enterprise in accordance with 
generally accepted accounting principles in effect in the United States 
as of September 7, 2008 (as set forth in the opinions and 
pronouncements of the Accounting Principles Board and the American 
Institute of Certified Public Accountants and statements and 
pronouncements of the Financial Accounting Standards Board from time to 
time; and without giving any effect to any change that may be made 
after September 7, 2008, in respect of Statement of Financial 
Accounting Standards No. 140 or any similar accounting standard).''.
            (3) Increase in minimum capital requirement.--Section 1362 
        of the Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992 (12 U.S.C. 4612), as amended by section 
        1111 of the Housing and Economic Recovery Act of 2008 (Public 
        Law 110-289), is amended--
                    (A) in subsection (a), by striking ``For purposes 
                of this subtitle, the minimum capital level for each 
                enterprise shall be'' and inserting ``The minimum 
                capital level established under subsection (g) for each 
                enterprise may not be lower than'';
                    (B) in subsection (c)--
                            (i) by striking ``subsections (a) and'' and 
                        inserting ``subsection'';
                            (ii) by striking ``regulated entities'' the 
                        first place such term appears and inserting 
                        ``Federal Home Loan Banks'';
                            (iii) by striking ``for the enterprises,'';
                            (iv) by striking ``, or for both the 
                        enterprises and the banks,'';
                            (v) by striking ``the level specified in 
                        subsection (a) for the enterprises or''; and
                            (vi) by striking ``the regulated entities 
                        operate'' and inserting ``such banks operate'';
                    (C) in subsection (d)(1)--
                            (i) by striking ``subsections (a) and'' and 
                        inserting ``subsection''; and
                            (ii) by striking ``regulated entity'' each 
                        place such term appears and inserting ``Federal 
                        home loan bank'';
                    (D) in subsection (e), by striking ``regulated 
                entity'' each place such term appears and inserting 
                ``Federal home loan bank'';
                    (E) in subsection (f)--
                            (i) by striking ``the amount of core 
                        capital maintained by the enterprises,''; and
                            (ii) by striking ``regulated entities'' and 
                        inserting ``banks''; and
                    (F) by adding at the end the following new 
                subsection:
    ``(g) Establishment of Revised Minimum Capital Levels.--
            ``(1) In general.--The Director shall cause the enterprises 
        to achieve and maintain adequate capital by establishing 
        minimum levels of capital for such the enterprises and by using 
        such other methods as the Director deems appropriate.
            ``(2) Authority.--The Director shall have the authority to 
        establish such minimum level of capital for an enterprise in 
        excess of the level specified under subsection (a) as the 
        Director, in the Director's discretion, deems to be necessary 
        or appropriate in light of the particular circumstances of the 
        enterprise.
    ``(h) Failure To Maintain Revised Minimum Capital Levels.--
            ``(1) Unsafe and unsound practice or condition.--Failure of 
        a enterprise to maintain capital at or above its minimum level 
        as established pursuant to subsection (g) of this section may 
        be deemed by the Director, in his discretion, to constitute an 
        unsafe and unsound practice or condition within the meaning of 
        this title.
            ``(2) Directive to achieve capital level.--
                    ``(A) Authority.--In addition to, or in lieu of, 
                any other action authorized by law, including paragraph 
                (1), the Director may issue a directive to an 
                enterprise that fails to maintain capital at or above 
                its required level as established pursuant to 
                subsection (g) of this section.
                    ``(B) Plan.--Such directive may require the 
                enterprise to submit and adhere to a plan acceptable to 
                the Director describing the means and timing by which 
                the enterprise shall achieve its required capital 
                level.
                    ``(C) Enforcement.--Any such directive issued 
                pursuant to this paragraph, including plans submitted 
                pursuant thereto, shall be enforceable under the 
                provisions of subtitle C of this title to the same 
                extent as an effective and outstanding order issued 
                pursuant to subtitle C of this title which has become 
                final.
            ``(3) Adherence to plan.--
                    ``(A) Consideration.--The Director may consider 
                such enterprise's progress in adhering to any plan 
                required under this subsection whenever such enterprise 
                seeks the requisite approval of the Director for any 
                proposal which would divert earnings, diminish capital, 
                or otherwise impede such enterprise's progress in 
                achieving its minimum capital level.
                    ``(B) Denial.--The Director may deny such approval 
                where it determines that such proposal would adversely 
                affect the ability of the enterprise to comply with 
                such plan.''.
            (4) Repeal of increases to conforming loan limits.--
                    (A) Repeal of temporary increases.--
                            (i) Continuing appropriations resolution, 
                        2010.--Section 167 of the Continuing 
                        Appropriations Resolution, 2010 (as added by 
                        section 104 of division B of Public Law 111-88; 
                        123 Stat. 2973) is hereby repealed.
                            (ii) American recovery and reinvestment act 
                        of 2009.--Section 1203 of division A of the 
                        American Recovery and Reinvestment Act of 2009 
                        (Public Law 111-5; 123 Stat. 225) is hereby 
                        repealed.
                            (iii) Economic stimulus act of 2008.--
                        Section 201 of the Economic Stimulus Act of 
                        2008 (Public Law 110-185; 122 Stat. 619) is 
                        hereby repealed.
                    (B) Repeal of general limit and permanent high-cost 
                area increase.--Paragraph (2) of section 302(b) of the 
                Federal National Mortgage Association Charter Act (12 
                U.S.C. 1717(b)(2)) and paragraph (2) of section 305(a) 
                of the Federal Home Loan Mortgage Corporation Act (12 
                U.S.C. 1454(a)(2)) are each amended to read as such 
                sections were in effect immediately before the 
                enactment of the Housing and Economic Recovery Act of 
                2008 (Public Law 110-289).
                    (C) Repeal of new housing price index.--Section 
                1322 of the Federal Housing Enterprises Financial 
                Safety and Soundness Act of 1992, as added by section 
                1124(d) of the Housing and Economic Recovery Act of 
                2008 (Public Law 110-289), is hereby repealed.
                    (D) Repeal.--Section 1124 of the Housing and 
                Economic Recovery Act of 2008 (Public Law 110-289) is 
                hereby repealed.
                    (E) Establishment of conforming loan limit.--For 
                the year in which the expiration of the period referred 
                to in section 3(b) of this section occurs, the 
                limitations governing the maximum original principal 
                obligation of conventional mortgages that may be 
                purchased by the Federal National Mortgage Association 
                and the Federal Home Loan Mortgage Corporation, 
                referred to in section 302(b)(2) of the Federal 
                National Mortgage Association Charter Act (12 U.S.C. 
                1717(b)(2)) and section 305(a)(2) of the Federal Home 
                Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), 
                respectively, shall be considered to be--
                            (i) $417,000 for a mortgage secured by a 
                        single-family residence,
                            (ii) $533,850 for a mortgage secured by a 
                        2-family residence,
                            (iii) $645,300 for a mortgage secured by a 
                        3-family residence, and
                            (iv) $801,950 for a mortgage secured by a 
                        4-family residence,
                and such limits shall be adjusted effective each 
                January 1 thereafter in accordance with such sections 
                302(b)(2) and 305(a)(2).
                    (F) Prohibition of purchase of mortgages exceeding 
                median area home price.--
                            (i) Fannie mae.--Section 302(b)(2) of the 
                        Federal National Mortgage Association Charter 
                        Act (12 U.S.C. 1717(b)(2)) is amended by adding 
                        at the end the following new sentence: 
                        ``Notwithstanding any other provision of this 
                        title, the corporation may not purchase any 
                        mortgage for a property having a principal 
                        obligation that exceeds the median home price, 
                        for properties of the same size, for the area 
                        in which such property subject to the mortgage 
                        is located.''.
                            (ii) Freddie mac.--Section 305(a)(2) of the 
                        Federal Home Loan Mortgage Corporation Act (12 
                        U.S.C. 1454(a)(2)) is amended by adding at the 
                        end the following new sentence: 
                        ``Notwithstanding any other provision of this 
                        title, the Corporation may not purchase any 
                        mortgage for a property having a principal 
                        obligation that exceeds the median home price, 
                        for properties of the same size, for the area 
                        in which such property subject to the mortgage 
                        is located.''.
            (5) Requirement of minimum downpayment for mortgages 
        purchased.--
                    (A) Fannie mae.--Subsection (b) of section 302 of 
                the Federal National Mortgage Association Charter Act 
                (12 U.S.C. 1717(b)) is amended by adding at the end the 
                following new paragraph:
    ``(7) Notwithstanding any other provision of this Act, the 
corporation may not newly purchase any mortgage unless the mortgagor 
has paid, in cash or its equivalent on account of the property securing 
repayment such mortgage, in accordance with regulations issued by the 
Director of the Federal Housing Finance Agency, not less than--
            ``(A) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the period referred to in 
        section 3(b) of the GSE Bailout Elimination and Taxpayer 
        Protection Act, 5 percent of the appraised value of the 
        property;
            ``(B) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the 12-month period referred 
        to in subparagraph (A) of this paragraph, 7.5 percent of the 
        appraised value of the property; and
            ``(C) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the 12-month period referred 
        to in subparagraph (B) of this paragraph, 10 percent of the 
        appraised value of the property.''.
                    (B) Freddie mac.--Subsection (a) of section 305 of 
                the Federal Home Loan Mortgage Corporation Act (12 
                U.S.C. 1454(a)) is amended by adding at the end the 
                following new paragraph:
    ``(6) Notwithstanding any other provision of this Act, the 
Corporation may not newly purchase any mortgage unless the mortgagor 
has paid, in cash or its equivalent on account of the property securing 
repayment such mortgage, in accordance with regulations issued by the 
Director of the Federal Housing Finance Agency, not less than--
            ``(A) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the period referred to in 
        section 3(b) of the GSE Bailout Elimination and Taxpayer 
        Protection Act, 5 percent of the appraised value of the 
        property;
            ``(B) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the 12-month period referred 
        to in subparagraph (A) of this paragraph, 7.5 percent of the 
        appraised value of the property; and
            ``(C) for any mortgage purchased during the 12-month period 
        beginning upon the expiration of the 12-month period referred 
        to in subparagraph (B) of this paragraph, 10 percent of the 
        appraised value of the property.''.
            (6) Requirement to pay state and local taxes.--
                    (A) Fannie mae.--Paragraph (2) of section 309(c) of 
                the Federal National Mortgage Association Charter Act 
                (12 U.S.C. 1723a(c)(2)) is amended--
                            (i) by striking ``shall be exempt from'' 
                        and inserting ``shall be subject to''; and
                            (ii) by striking ``except that any'' and 
                        inserting ``and any''.
                    (B) Freddie mac.--Section 303(e) of the Federal 
                Home Loan Mortgage Corporation Act (12 U.S.C. 1452(e)) 
                is amended--
                            (i) by striking ``shall be exempt from'' 
                        and inserting ``shall be subject to''; and
                            (ii) by striking ``except that any'' and 
                        inserting ``and any''.
            (7) Repeals relating to registration of securities.--
                    (A) Fannie mae.--
                            (i) Mortgage-backed securities.--Section 
                        304(d) of the Federal National Mortgage 
                        Association Charter Act (12 U.S.C. 1719(d)) is 
                        amended by striking the fourth sentence.
                            (ii) Subordinate obligations.--Section 
                        304(e) of the Federal National Mortgage 
                        Association Charter Act (12 U.S.C. 1719(e)) is 
                        amended by striking the fourth sentence.
                    (B) Freddie mac.--Section 306 of the Federal Home 
                Loan Mortgage Corporation Act (12 U.S.C. 1455) is 
                amended by striking subsection (g).
            (8) Recoupment of costs for federal guarantee.--
                    (A) Assessments.--The Director of the Federal 
                Housing Finance Agency shall establish and collect from 
                each enterprise assessments in the amount determined 
                under subparagraph (B). In determining the method and 
                timing for making such assessments, the Director shall 
                take into consideration the determinations and 
                conclusions of the study under subsection (b) of this 
                section.
                    (B) Determination of costs of guarantee.--
                Assessments under subparagraph (A) with respect to an 
                enterprise shall be in such amount as the Director 
                determines necessary to recoup to the Federal 
                Government the full value of the benefit the enterprise 
                receives from the guarantee provided by the Federal 
                Government for the obligations and financial viability 
                of the enterprise, based upon the dollar value of such 
                benefit in the market to such enterprise when not 
                operating under conservatorship or receivership. To 
                determine such amount, the Director shall establish a 
                risk-based pricing mechanism as the Director considers 
                appropriate, taking into consideration the 
                determinations and conclusions of the study under 
                subsection (b) of this section.
                    (C) Treatment of recouped amounts.--The Director 
                shall cover into the general fund of the Treasury any 
                amounts received from assessments made under this 
                paragraph.
    (b) GAO Study Regarding Recoupment of Costs for Federal Government 
Guarantee.--The Comptroller General of the United States shall conduct 
a study to determine a risk-based pricing mechanism to accurately 
determine the value of the benefit the enterprises receive from the 
guarantee provided by the Federal Government for the obligations and 
financial viability of the enterprises. Such study shall establish a 
dollar value of such benefit in the market to each enterprise when not 
operating under conservatorship or receivership, shall analyze various 
methods of the Federal Government assessing a charge for such value 
received (including methods involving an annual fee or a fee for each 
mortgage purchased or securitized), and shall make a recommendation of 
the best such method for assessing such charge. Not later than 12 
months after the date of the enactment of this Act, the Comptroller 
General shall submit to the Congress a report setting forth the 
determinations and conclusions of such study.

SEC. 5. REQUIRED WIND DOWN OF OPERATIONS AND DISSOLUTION OF ENTERPRISE.

    (a) Applicability.--This section shall apply to an enterprise upon 
the expiration of the 3-year period referred to in section 3(b).
    (b) Repeal of Charter.--Upon the applicability of this section to 
an enterprise, the charter for the enterprise is repealed and the 
enterprise shall have no authority to conduct new business under such 
charter, except that the provisions of such charter in effect 
immediately before such repeal shall continue to apply with respect to 
the rights and obligations of any holders of outstanding debt 
obligations and mortgage-backed securities of the enterprise.
    (c) Wind Down.--Upon the applicability of this section to an 
enterprise, the Director and the Secretary of the Treasury shall 
jointly take such action, and may prescribe such regulations and 
procedures, as may be necessary to wind down the operations of an 
enterprise as an entity chartered by the United States Government over 
the duration of the 10-year period beginning upon the applicability of 
this section to the enterprise (pursuant to subsection (a)) in an 
orderly manner consistent with this Act and the ongoing obligations of 
the enterprise.
    (d) Division of Assets and Liabilities; Authority To Establish 
Holding Corporation and Dissolution Trust Fund.--The action and 
procedures required under subsection (c)--
            (1) shall include the establishment and execution of plans 
        to provide for an equitable division and distribution of assets 
        and liabilities of the enterprise, including any liability of 
        the enterprise to the United States Government or a Federal 
        reserve bank that may continue after the end of the period 
        described in subsection (ca); and
            (2) may provide for establishment of--
                    (A) a holding corporation organized under the laws 
                of any State of the United States or the District of 
                Columbia for the purposes of the reorganization and 
                restructuring of the enterprise; and
                    (B) one or more trusts to which to transfer--
                            (i) remaining debt obligations of the 
                        enterprise, for the benefit of holders of such 
                        remaining obligations; or
                            (ii) remaining mortgages held for the 
                        purpose of backing mortgage-backed securities, 
                        for the benefit of holders of such remaining 
                        securities.
                                 <all>
```