II 

108TH CONGRESS 

1ST SESSION S. 1656

To address regulation of secondary mortgage market enterprises, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25, 2003

Mr. CORZINE introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL

To address regulation of secondary mortgage market 

enterprises, and for other purposes.

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 ‘‘Federal Housing Enterprise Oversight Modernization 

6 Act of 2003’’. 

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

8 this Act is as follows:

Sec. 1. Short title and table of contents. 

TITLE I—REFORM OF REGULATION OF FANNIE MAE AND 

FREDDIE MAC 
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Subtitle A—Improvement of Supervision 

Sec. 101. Establishment of Office of Federal Housing Enterprise Supervision in 

the Department of the Treasury. 

Sec. 102. Duties and authorities of Director and HUD. 

Sec. 103. Examiners and accountants. 

Sec. 104. Regulations. 

Sec. 105. Assessments. 

Sec. 106. Independence of Director in congressional testimony and recommendations. 

Sec. 107. Nonmortgage-related investments. 

Sec. 108. Reports. 

Sec. 109. Review of enterprises. 

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

Sec. 111. Minimum and critical capital levels. 

Sec. 112. Required disclosures. 

Sec. 113. Federal Housing Finance Board. 

Sec. 114. Definitions. 

Subtitle B—Prompt Corrective Action 

Sec. 131. Capital classifications. 

Sec. 132. Supervisory actions applicable to undercapitalized enterprises. 

Sec. 133. Supervisory actions applicable to significantly undercapitalized enterprises. 

Subtitle C—Enforcement Actions 

Sec. 151. Cease-and-desist proceedings. 

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

Sec. 153. Removal and prohibition authority. 

Sec. 154. Enforcement and jurisdiction. 

Sec. 155. Civil money penalties. 

Sec. 156. Criminal penalty. 

Subtitle D—General Provisions 

Sec. 161. Conforming and technical amendments. 

Sec. 162. Effective date. 

TITLE II—TRANSFER OF FUNCTIONS, PERSONNEL, AND 

PROPERTY 

Sec. 201. Abolishment of OFHEO. 

Sec. 202. Continuation and coordination of certain regulations. 

Sec. 203. Transfer and rights of employees of OFHEO. 

Sec. 204. Transfer of property and facilities.
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•S 1656 IS 

1 TITLE I—REFORM OF REGULA2 TION OF FANNIE MAE AND 

3 FREDDIE MAC 

4 Subtitle A—Improvement of 

5 Supervision 

6 SEC. 101. ESTABLISHMENT OF OFFICE OF FEDERAL HOUS7 ING ENTERPRISE SUPERVISION IN THE DE8 PARTMENT OF THE TREASURY. 

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

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

11 4501 et seq.) is amended by striking sections 1311 and 

12 1312 and inserting the following: 

13 ‘‘SEC. 1311. ESTABLISHMENT OF OFFICE OF FEDERAL 

14 HOUSING ENTERPRISE SUPERVISION. 

15 ‘‘(a) ESTABLISHMENT.—

16 ‘‘(1) IN GENERAL.—There is established the 

17 Office of Federal Housing Enterprise Supervision, 

18 which shall be an office in the Department of the 

19 Treasury. 

20 ‘‘(2) AUTHORITY.—The Office shall succeed to 

21 the authority of the Director of the Office of Federal 

22 Housing Enterprise Oversight of the Department of 

23 Housing and Urban Development and the general 

24 regulatory and any other authority of the Secretary 

25 of Housing and Urban Development with respect to 
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1 the enterprises (except as specifically provided other2 wise in this title, the Federal National Mortgage As3 sociation Charter Act (12 U.S.C. 1716 et seq.), the 

4 Federal Home Loan Mortgage Corporation Act (12 

5 U.S.C. 1451 et seq.), or any other provision of Fed6 eral law). 

7 ‘‘(b) PROHIBITION OF MERGER OF OFFICE.—Not8 withstanding any other provision of law, the Secretary of 

9 the Treasury may not merge or consolidate the Office, or 

10 any of the functions or responsibilities of the Office, with 

11 any function or program administered by the Secretary. 

12 ‘‘(c) SAVINGS PROVISION.—The authority of the Di13 rector to take actions under subtitles B and C does not 

14 in any way limit the general supervisory and regulatory 

15 authority granted to the Director under subsection (a). 

16 ‘‘SEC. 1312. DIRECTOR. 

17 ‘‘(a) ESTABLISHMENT OF POSITION.—There is estab18 lished the position of the Director of the Office of Federal 

19 Housing Enterprise Supervision, who shall be the head of 

20 the Office. 

21 ‘‘(b) APPOINTMENT; TERM.—

22 ‘‘(1) APPOINTMENT.—The Director shall be ap23 pointed by the President, by and with the advice and 

24 consent of the Senate, from among individuals who 

25 are citizens of the United States.
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1 ‘‘(2) TERM.—The Director shall be appointed 

2 for a term of 5 years. 

3 ‘‘(3) VACANCY.—

4 ‘‘(A) IN GENERAL.—A vacancy in the posi5 tion of Director that occurs before the expira6 tion of the term for which a Director was ap7 pointed shall be filled in the manner established 

8 under paragraph (1). 

9 ‘‘(B) TERM.—The Director appointed to 

10 fill a vacancy under subparagraph (A) shall be 

11 appointed only for the remainder of such term. 

12 ‘‘(4) SERVICE AFTER END OF TERM.—An indi13 vidual may serve as Director after the expiration of 

14 the term for which the individual was appointed 

15 until a successor has been appointed. 

16 ‘‘(5) TRANSITIONAL PROVISION.—Notwith17 standing paragraphs (1) and (2), the Director of the 

18 Office of Federal Housing Enterprise Oversight of 

19 the Department of Housing and Urban Development 

20 on the date of enactment of the Federal Housing 

21 Enterprise Oversight Modernization Act of 2003, 

22 shall serve as the Director until not later than 1 

23 year after the date of enactment of that Act. 

24 ‘‘(c) PROHIBITION ON FINANCIAL INTERESTS.—The 

25 Director shall not have a direct or indirect financial inter-
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1 est in any enterprise, nor hold any office, position, or em2 ployment in any enterprise.’’. 

3 (b) APPOINTMENT OF DIRECTOR.—Notwithstanding 

4 the effective date under section 162, or any other provision 

5 of law, the President may, at any time after the date of 

6 enactment of this Act, appoint an individual to serve as 

7 the Director of the Office of Federal Housing Enterprise 

8 Supervision, as established under this Act, in accordance 

9 with section 1312 of the Federal Housing Enterprises Fi10 nancial Safety and Soundness Act of 1992, as amended 

11 by subsection (a) of this section. 

12 SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR AND 

13 HUD. 

14 (a) IN GENERAL.—Section 1313 of the Housing and 

15 Community Development Act of 1992 (12 U.S.C. 4513) 

16 is amended to read as follows: 

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

18 ‘‘(a) DUTIES.—

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

20 of the Director shall be to ensure that the enter21 prises—

22 ‘‘(A) operate in a financially safe and 

23 sound manner; 

24 ‘‘(B) carry out their missions in a finan25 cially safe and sound manner, and only through 
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1 activities that have been authorized under, and 

2 are consistent with the purposes of, the provi3 sions of the Federal National Mortgage Asso4 ciation Charter Act (12 U.S.C. 1716 et seq.), 

5 and the Federal Home Loan Mortgage Cor6 poration Act (12 U.S.C. 1451 et seq.), as appli7 cable; and 

8 ‘‘(C) remain adequately capitalized. 

9 ‘‘(2) OTHER DUTIES.—To the extent consistent 

10 with paragraph (1), the Director shall exercise gen11 eral supervisory and regulatory authority over the 

12 enterprises, in accordance with this title, the Federal 

13 National Mortgage Association Charter Act (12 

14 U.S.C. 1716 et seq.), the Federal Home Loan Mort15 gage Corporation Act (12 U.S.C. 1451 et seq.), and 

16 any other applicable provision of law. 

17 ‘‘(b) AUTHORITY EXCLUSIVE OF SECRETARY.—Ex18 cept as specifically provided under this title, the Federal 

19 National Mortgage Association Charter Act, the Federal 

20 Home Loan Mortgage Corporation Act, or any other pro21 vision of Federal law, the authority of the Director with 

22 respect to the enterprises shall not be subject to the re23 view, approval, or intervention of the Secretary of the 

24 Treasury. 
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1 ‘‘(c) DELEGATION OF AUTHORITY.—The Director 

2 may delegate to officers and employees of the Office any 

3 of the functions, powers, and duties of the Director, with 

4 respect to supervision and regulation of the enterprises, 

5 as the Director considers appropriate.’’. 

6 (b) PRIOR APPROVAL AUTHORITY FOR NEW PRO7 GRAMS.—Part 1 of Subtitle A of the Federal Housing En8 terprises Financial Safety and Soundness Act of 1992 (12 

9 U.S.C. 4501 et seq.) is amended by adding at the end 

10 the following: 

11 ‘‘SEC. 1319H. PRIOR APPROVAL AUTHORITY FOR NEW PRO12 GRAMS. 

13 ‘‘(a) IN GENERAL.—The Director, in consultation 

14 with the Secretary of Housing and Urban Development, 

15 shall require each enterprise to obtain the approval of the 

16 Director, in the manner prescribed by regulation of the 

17 Director, for any new program of the enterprise before im18 plementing the program. 

19 ‘‘(b) STANDARD FOR APPROVAL.—The Director shall 

20 approve any new program of an enterprise for purposes 

21 of subsection (a), unless—

22 ‘‘(1) in the case of a new program of the Fed23 eral National Mortgage Association, the Director de24 termines that the program is not authorized under 

25 section 304 or paragraph (2), (3), (4), or (5) of sec-
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1 tion 302(b) of the Federal National Mortgage Asso2 ciation Charter Act (12 U.S.C. 1717(b)); 

3 ‘‘(2) in the case of a new program of the Fed4 eral Home Loan Mortgage Corporation, the Director 

5 determines that the program is not authorized under 

6 paragraph (1), (4), or (5) of section 305(a) of the 

7 Federal Home Loan Mortgage Corporation Act (12 

8 U.S.C. 1451 et seq.); or 

9 ‘‘(3) the Director determines that the new pro10 gram is inconsistent with or undermines the safe 

11 and sound operation of the enterprise, consistent 

12 with section 1313(a)(1). 

13 ‘‘(c) PROCEDURE FOR APPROVAL.—

14 ‘‘(1) SUBMISSION OF REQUEST.—An enterprise 

15 shall submit to the Director a written request for 

16 approval of a new program under this section that 

17 describes the program in such form as prescribed by 

18 regulation of the Director. 

19 ‘‘(2) RESPONSE.—

20 ‘‘(A) IN GENERAL.—Not later than 45 

21 days after the date of submission of a request 

22 for approval under paragraph (1), the Director 

23 shall—

24 ‘‘(i) approve the request; or
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1 ‘‘(ii) deny the request and submit a 

2 report explaining the reasons for the denial 

3 to the Committee on Financial Services of 

4 the House of Representatives and the 

5 Committee on Banking, Housing, and 

6 Urban Affairs of the Senate. 

7 ‘‘(B) EXTENSION.—The Director may ex8 tend the time period under subparagraph (A) 

9 for a single additional 15-day period only if the 

10 Director requests additional information from 

11 the enterprise. 

12 ‘‘(3) FAILURE TO RESPOND.—If the Director 

13 fails to approve a request for approval under this 

14 section, or fails to submit a report under paragraph 

15 (2)(A)(ii) during the period provided, the request 

16 shall be considered to have been approved by the Di17 rector. 

18 ‘‘(4) REVIEW OF DISAPPROVAL.—

19 ‘‘(A) SUBMISSION OF NEW INFORMA20 TION.—If the Director submits a report under 

21 paragraph (2)(A)(ii) denying a request for rea22 sons listed under paragraph (1) or (2) of sub23 section (b), the Director shall provide the enter24 prise submitting the request with a timely op-
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1 portunity to review and supplement the admin2 istrative record. 

3 ‘‘(B) NEW PROGRAMS NOT IN THE PUBLIC

4 INTEREST.—If the Director submits a report 

5 under paragraph (2)(A)(ii) denying a request 

6 after finding that the program is inconsistent 

7 with or undermines the safe and sound oper8 ation of the enterprise, as described in sub9 section (b)(3), the Director shall provide the en10 terprise with notice and opportunity for a hear11 ing on the record regarding such denial.’’. 

12 (c) REPEAL OF HUD AUTHORITY.—Part 2 of sub13 title A of title XIII of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4501 et seq.) is amended 

15 by striking sections 1321 and 1322. 

16 (d) AUTHORITY OF HUD FOR HOUSING GOALS.—

17 (1) IN GENERAL.—Section 1331 of the Housing 

18 and Community Development Act of 1992 (12 

19 U.S.C. 4561) is amended—

20 (A) in the first sentence of subsection (a), 

21 by inserting ‘‘of Housing and Urban Develop22 ment’’ after ‘‘The Secretary’’; and 

23 (B) by adding at the end the following: 
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1 ‘‘(d) DEFINITION.—For purposes of this part, the 

2 term ‘Secretary’ means the Secretary of Housing and 

3 Urban Development.’’. 

4 (2) ANNUAL REPORT ON HOUSING GOALS.—

5 Section 1324 of the Housing and Community Devel6 opment Act of 1992 (12 U.S.C. 4544) is amended 

7 by inserting ‘‘of Housing and Urban Development’’ 

8 after ‘‘Secretary’’ each place such term appears. 

9 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

10 (1) FANNIE MAE.—Section 302(b)(6) of the 

11 Federal National Mortgage Association Charter Act 

12 (12 U.S.C. 1717(b)(6)) is amended by striking ‘‘Sec13 retary under section 1322’’ and inserting ‘‘Director 

14 under section 1319H’’. 

15 (2) FREDDIE MAC.—Section 305(c) of the Fed16 eral Home Loan Mortgage Corporation Act (12 

17 U.S.C. 1454(c)) is amended by striking ‘‘Secretary 

18 under section 1322’’ and inserting ‘‘Director under 

19 section 1319H’’. 

20 (3) FINANCIAL INSTITUTIONS EXAMINATION

21 COUNCIL.—Section 1004(a) of the Federal Financial 

22 Institutions Examination Council Act of 1978 (12 

23 U.S.C. 3303(a)) is amended—

24 (A) in paragraph (5), by striking the pe25 riod at the end and inserting ‘‘; and’’; and 
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1 (B) by adding at the end the following: 

2 ‘‘(6) the Director of the Office of Federal 

3 Housing Enterprise Supervision.’’. 

4 SEC. 103. EXAMINERS AND ACCOUNTANTS. 

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

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

7 4517) is amended—

8 (1) in the second sentence of subsection (c), by 

9 striking ‘‘The’’ and inserting ‘‘During the 3-year pe10 riod beginning on the date of enactment of the Fed11 eral Housing Enterprise Oversight Modernization 

12 Act of 2003, the’’; and 

13 (2) in subsection (d), by striking ‘‘Federal Re14 serve banks’’ and inserting ‘‘Director of the Office 

15 of Thrift Supervision’’. 

16 (b) ENHANCED AUTHORITY TO HIRE EXAMINERS

17 AND ACCOUNTANTS.—Section 1317 of the Housing and 

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

19 is amended by adding at the end the following: 

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

21 AND EXAMINERS.—

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

23 respect to any position of examiner, accountant, and 

24 economist at the Office, with respect to supervision 
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1 and regulation of the enterprises, that is in the com2 petitive service. 

3 ‘‘(2) APPOINTMENT AUTHORITY.—

4 ‘‘(A) IN GENERAL.—The Director may ap5 point candidates to any position described in 

6 paragraph (1)—

7 ‘‘(i) in accordance with the statutes, 

8 rules, and regulations governing appoint9 ments in the excepted service; and 

10 ‘‘(ii) notwithstanding any statutes, 

11 rules, and regulations governing appoint12 ments in the competitive service. 

13 ‘‘(B) RULE OF CONSTRUCTION.—The ap14 pointment of a candidate to a position under 

15 this paragraph shall not be considered to cause 

16 such position to be converted from the competi17 tive service to the excepted service. 

18 ‘‘(3) REPORTS.—

19 ‘‘(A) IN GENERAL.—Not later than 90 

20 days after the end of fiscal year 2003 (for fiscal 

21 year 2003) and 90 days after the end of fiscal 

22 year 2005 (for fiscal years 2004 and 2005), the 

23 Director shall submit a report with respect to 

24 the exercise of the authority granted to the Di-
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1 rector by paragraph (2) during such fiscal years 

2 to the— 

3 ‘‘(i) Committee on Government Re4 form and the Committee on Financial 

5 Services of the House of Representatives; 

6 and 

7 ‘‘(ii) Committee on Governmental Af8 fairs and the Committee on Banking, 

9 Housing, and Urban Affairs of the Senate. 

10 ‘‘(B) CONTENTS.—The reports submitted 

11 under subparagraph (A) shall describe the 

12 changes in the hiring process authorized by 

13 paragraph (2), including relevant information 

14 related to—

15 ‘‘(i) the quality of candidates; 

16 ‘‘(ii) the procedures used by the Di17 rector to select candidates through the 

18 streamlined hiring process; 

19 ‘‘(iii) the numbers, types, and grades 

20 of employees hired under the authority; 

21 ‘‘(iv) any benefits or shortcomings as22 sociated with the use of the authority; 

23 ‘‘(v) the effect of the exercise of the 

24 authority on the hiring of veterans and 

25 other demographic groups;
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1 ‘‘(vi) the way in which managers were 

2 trained in the administration of the 

3 streamlined hiring system; and 

4 ‘‘(vii) a list of the specific functional 

5 responsibilities of Office personnel (such as 

6 examinations, supervision, regulatory over7 sight, and risk analysis) and the percent8 age of the total personnel employed within 

9 the Office that are engaged in each such 

10 activity.’’. 

11 (c) ALLOCATION OF PERSONNEL RESOURCES.—Sec12 tion 1315 of the Housing and Community Development 

13 Act of 1992 (12 U.S.C. 4515), as amended by this Act, 

14 is amended by adding at the end the following: 

15 ‘‘(f) MAINTENANCE OF ADEQUATE EXAMINATION

16 AND SUPERVISORY PERSONNEL.—In carrying out this 

17 Act, the Director shall ensure that a significant amount 

18 of the Office resources allocated for the hiring and support 

19 of personnel are applied to personnel engaged in the exam20 ination and supervision of the enterprises.’’. 

21 SEC. 104. REGULATIONS. 

22 Section 1319G of the Housing and Community De23 velopment Act of 1992 (12 U.S.C. 4526) is amended in 

24 subsection (c), by striking ‘‘Committee on Banking, Fi-
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1 nance and Urban Affairs’’ and inserting ‘‘Committee on 

2 Financial Services’’. 

3 SEC. 105. ASSESSMENTS. 

4 Section 1316 of the Housing and Community Devel5 opment Act of 1992 (12 U.S.C. 4516) is amended—

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

7 following: 

8 ‘‘(a) ANNUAL ASSESSMENTS.—The Director shall es9 tablish and collect from the enterprises annual assess10 ments in an amount not exceeding the amount sufficient 

11 to provide for all reasonable costs and expenses of the Of12 fice, including—

13 ‘‘(1) the expenses of any examination under 

14 section 1317; and 

15 ‘‘(2) the expenses of obtaining any review or 

16 credit assessment under section 1319.’’; 

17 (2) in subsection (b), in paragraph (2), by mov18 ing the margin 2 ems to the right; 

19 (3) in subsection (c), by adding at the end the 

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

21 any semiannual assessments for an assessment 

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

23 subsection (b) by an enterprise, as necessary in the 

24 discretion of the Director, to ensure that the costs 
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1 of enforcement activities under subtitles B and C for 

2 an enterprise are borne only by that enterprise.’’; 

3 (4) in subsection (f), by striking ‘‘Any assess4 ments collected’’ and all that follows through the 

5 end of the subsection and inserting the following: 

6 ‘‘Notwithstanding any other provision of law, any 

7 assessments collected by the Director pursuant to 

8 this section shall be deposited in the Fund in an ac9 count for the Director. Any amounts in the Fund 

10 are hereby made available, without fiscal year limita11 tion, to the Director (to the extent of amounts in the 

12 Director’s account) for carrying out the supervisory 

13 and regulatory responsibilities of the Director with 

14 respect to the enterprises, including any necessary 

15 administrative and nonadministrative expenses of 

16 the Director in carrying out the purposes of this 

17 title, the Federal National Mortgage Association 

18 Charter Act (12 U.S.C. 1716 et seq.), and the Fed19 eral Home Loan Mortgage Corporation Act (12 

20 U.S.C. 1451 et seq.).’’; and 

21 (5) in subsection (g), by striking paragraphs 

22 (1) and (2) and inserting the following: 

23 ‘‘(1) FINANCIAL OPERATING PLANS AND FORE24 CASTS.—Before the beginning of each fiscal year, 

25 the Director shall submit a copy of the financial op-
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1 erating plans and forecasts for the Office to the Di2 rector of the Office of Management and Budget. 

3 ‘‘(2) REPORTS OF OPERATIONS.—As soon as 

4 practicable after the end of each fiscal year and each 

5 quarter thereof, the Director shall submit a copy of 

6 the report of the results of the operations of the Of7 fice during such period to the Director of the Office 

8 of Management and Budget.’’. 

9 SEC. 106. INDEPENDENCE OF DIRECTOR IN CONGRES10 SIONAL TESTIMONY AND RECOMMENDA11 TIONS. 

12 Section 111 of Public Law 93–495 (12 U.S.C. 250) 

13 is amended by inserting ‘‘the Director of the Office of 

14 Federal Housing Enterprise Supervision of the Depart15 ment of the Treasury,’’ after ‘‘the Federal Housing Fi16 nance Board,’’.

17 SEC. 107. NONMORTGAGE-RELATED INVESTMENTS. 

18 Subtitle B of title XIII of the Housing and Commu19 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

20 is amended—

21 (1) by striking the subtitle designation and 

22 heading and inserting the following:
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1 ‘‘Subtitle B—Required Capital Lev2 els for Enterprises, Special En3 forcement Powers, and Non4 mortgage-Related Assets’’; 

5 and 

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

7 ‘‘SEC. 1369E. NONMORTGAGE-RELATED ASSETS. 

8 ‘‘(a) IN GENERAL.—

9 ‘‘(1) LIQUIDITY PORTFOLIO.—On a quarterly 

10 basis, the Director shall review and provide written 

11 comment to each enterprise on the nonmortgage-re12 lated assets held by each enterprise in the liquidity 

13 portfolio of such enterprise. The Director shall de14 fine the term ‘nonmortgage-related asset’ for pur15 poses of this section. 

16 ‘‘(2) ASSETS OUTSIDE OF LIQUIDITY PORT17 FOLIO.—The Director may review and provide writ18 ten comment to each enterprise on the quality and 

19 appropriateness of nonmortgage-related assets held 

20 by an enterprise outside of the liquid portfolio of 

21 such enterprise. 

22 ‘‘(b) REPORT.—On a biennial basis, the Director 

23 shall submit a report to Congress containing information 

24 on—
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1 ‘‘(1) any written comments provided to the en2 terprises under subsection (a)(1) or (2); and 

3 ‘‘(2) whether or not each enterprise is in com4 pliance with the Sound Practices for Managing Li5 quidity in Banking Organisations established by the 

6 Basel Committee, or any successor thereto.’’. 

7 SEC. 108. REPORTS. 

8 Sections 1327 and 1328 of the Housing and Commu9 nity Development Act of 1992 (12 U.S.C. 4547, 4548) 

10 are amended by striking ‘‘Secretary’’ each place it appears 

11 and inserting ‘‘Director’’. 

12 SEC. 109. REVIEWS OF ENTERPRISES. 

13 Section 1319 of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4519) is amended—

15 (1) by striking the heading and inserting the 

16 following: 

17 ‘‘SEC. 1319. REVIEW OF ENTERPRISES.’’; 

18 (2) by inserting after ‘‘any entity’’ the fol19 lowing: ‘‘that the Director considers appropriate, in20 cluding an entity’’; 

21 (3) by inserting ‘‘(a) AUTHORITY TO PROVIDE

22 FOR REVIEWS.—’’ before ‘‘The’’; and 

23 (4) by adding at the end the following new sub24 section: 
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1 ‘‘(b) BIENNIAL DETERMINATION OF CREDIT RAT2 ING.—

3 ‘‘(1) IN GENERAL.—On a biennial basis, the Di4 rector shall provide for 2 entities recognized by the 

5 Division of Market Regulation of the Securities and 

6 Exchange Commission as nationally recognized sta7 tistical rating organizations, each to conduct an as8 sessment of the financial condition of each enterprise 

9 for the purpose of determining the level of risk that 

10 the enterprise will be unable to meet its obligations, 

11 taking into consideration the legal status evidenced 

12 by the statements required under—

13 ‘‘(A) the penultimate sentence of section 

14 304(b) of the Federal National Mortgage Asso15 ciation Charter Act (12 U.S.C. 1719(b)); 

16 ‘‘(B) the last sentence of section 304(d) of 

17 the Federal National Mortgage Association 

18 Charter Act (12 U.S.C. 1719(d)); 

19 ‘‘(C) the penultimate sentence of section 

20 304(e) of the Federal National Mortgage Asso21 ciation Charter Act (12 U.S.C. 1719(e)); and 

22 ‘‘(D) section 306(h)(2) of the Federal 

23 Home Loan Mortgage Corporation Act (12 

24 U.S.C. 1455(h)(2)). 
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1 ‘‘(2) CREDIT RATING.—The assessment under 

2 paragraph (1) shall include—

3 ‘‘(A) assigning a credit rating for each en4 terprise, using a scale similar to that used by 

5 such organization with respect to obligations of 

6 other financial institutions; and 

7 ‘‘(B) the report regarding such assessment 

8 and the rating in the report of the Director 

9 under section 1319B(a).’’.

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

11 Section 1361 of the Housing and Community Devel12 opment Act of 1992 (12 U.S.C. 4611) is amended—

13 (1) by redesignating subsections (d), (e), and 

14 (f) as subsections (f), (g), and (h), respectively; and 

15 (2) by inserting after subsection (c) the fol16 lowing: 

17 ‘‘(d) PERIODIC REVIEW OF RISK-BASED CAPITAL

18 TEST.—

19 ‘‘(1) IN GENERAL.—Not later than 5 years 

20 after the date of enactment of the Federal Housing 

21 Enterprise Oversight Modernization Act of 2003, 

22 and once every 5 years thereafter, the Director shall 

23 conduct a review of the risk-based capital test adopt24 ed in accordance with this subtitle and submit a re25 port to Congress on the findings of such review, the 
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1 appropriateness of the risk-based capital test, and 

2 any legislative recommendations that would, as nec3 essary—

4 ‘‘(A) better align capital with risk; and 

5 ‘‘(B) reflect evolving best practices for 

6 risk-based capital standards for large, complex 

7 financial institutions.’’

8 ‘‘(2) SAVINGS PROVISION.—Notwithstanding 

9 paragraph (1), the Director shall retain all authority 

10 under this section to modify the current risk-based 

11 capital rule as the Director determines. 

12 ‘‘(e) REVIEW OF RISK-BASED CAPITAL LEVEL.—

13 Notwithstanding any other provision of law, if the Direc14 tor determines that the risk-based capital level of an enter15 prise is inadequate, the Director may make such adjust16 ments to the risk-based capital level of that enterprise as 

17 the Director determines necessary to ensure the safe and 

18 sound financial operation of that enterprise.’’. 

19 SEC. 111. MINIMUM AND CRITICAL CAPITAL LEVELS. 

20 Section 1362(b) of the Housing and Community De21 velopment Act of 1992 (12 U.S.C. 4612) is amended to 

22 read as follows: 

23 ‘‘(b) AUTHORITY TO ISSUE REGULATIONS.—The Di24 rector shall issue such regulations as the Director deter-
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1 mines necessary to ensure that the enterprises comply 

2 with the requirements of subsection (a).’’. 

3 SEC. 112. REQUIRED DISCLOSURES. 

4 (a) FANNIE MAE AND FREDDIE MAC.—Part 1 of 

5 subtitle A of the Federal Housing Enterprises Financial 

6 Safety and Soundness Act of 1992 (12 U.S.C. 4501 et 

7 seq.), as amended by this Act, is amended by adding at 

8 the end the following: 

9 ‘‘SEC. 1319I. REGISTRATION OF STOCK AND PUBLIC DIS10 CLOSURES. 

11 ‘‘(a) REGISTRATION OF STOCK UNDER THE SECURI12 TIES EXCHANGE ACT.—

13 ‘‘(1) IN GENERAL.—Notwithstanding its status 

14 as an exempted security for purposes of the Securi15 ties Exchange Act of 1934 pursuant to section 311 

16 of the Federal National Mortgage Association Char17 ter Act and section 306 of the Federal Home Loan 

18 Mortgage Corporation Act, as applicable, the com19 mon stock of each enterprise shall be subject to—

20 ‘‘(A) section 12(g) of the Securities Ex21 change Act of 1934; and 

22 ‘‘(B) sections 14 and 16 of that Act. 

23 ‘‘(2) REVIEW.—All reports, statements, and 

24 forms filed with the Securities and Exchange Com25 mission under this subsection shall be reviewed and
26

•S 1656 IS 

1 commented upon by the Commission to the same ex2 tent and with the same frequency as comparable re3 ports and materials filed by other issuers. 

4 ‘‘(b) CREDIT RATING.—An enterprise shall annually 

5 disclose to the public the credit rating of such enterprise. 

6 ‘‘(c) MORTGAGE PORTFOLIO.—An enterprise shall 

7 disclose to the public, on a monthly basis, the effect on 

8 its mortgage portfolio of—

9 ‘‘(1) a 50 basis point change in interest rates; 

10 and 

11 (2) a 25 basis point change in the slope of the 

12 yield curve. 

13 ‘‘(d) CREDIT RISK DISCLOSURES.—An enterprise 

14 shall disclose to the public, on a quarterly basis, the finan15 cial impact on the enterprise of an immediate 5 percent 

16 decline in the average price of single-family housing within 

17 the United States.’’. 

18 (b) FEDERAL HOME LOAN BANKS.—Section 6 of the 

19 Federal Home Loan Bank Act (12 U.S.C. 1426) is 

20 amended by adding at the end the following: 

21 ‘‘(i) REGISTRATION AND REPORTING REQUIRE22 MENTS.—

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

24 provision of law, the Class A stock and Class B 
27

•S 1656 IS 

1 stock issued by each Federal home loan bank shall 

2 be subject to—

3 ‘‘(A) section 12(g) of the Securities Ex4 change Act of 1934; and 

5 ‘‘(B) sections 14 and 16 of that Act. 

6 ‘‘(2) REVIEW.—All reports, statements, and 

7 forms filed with the Securities and Exchange Com8 mission under this subsection shall be reviewed and 

9 commented upon by the Commission to the same ex10 tent and with the same frequency as comparable re11 ports and materials filed by other issuers.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect on the date of enactment of 

14 this Act, or such later date as determined by the Securities 

15 and Exchange Commission. 

16 SEC. 113. FEDERAL HOUSING FINANCE BOARD. 

17 (a) APPOINTMENT OF SECRETARY OF THE TREAS18 URY TO FHFB.—Section 2(11) of the Federal Home 

19 Loan Bank Act (12 U.S.C. 1422(11)) is amended by strik20 ing ‘‘Secretary of Housing and Urban Development’’ and 

21 inserting ‘‘Secretary of the Treasury’’. 

22 (b) STUDY OF MERGER OF FHFB WITH OFHES.—

23 (1) IN GENERAL.—The Secretary of the Treas24 ury, after consultation with the Secretary of Hous25 ing and Urban Development, shall study and report 
28

•S 1656 IS 

1 on any recommendations regarding the consolidation 

2 of the responsibilities of the Federal Housing Fi3 nance Board, including oversight of the Federal 

4 home loan banks, and the Office of Federal Housing 

5 Enterprise Supervision of the Department of the 

6 Treasury. 

7 (2) REPORT.—Not later than 6 months after 

8 the date of enactment of this Act, the Secretary of 

9 the Treasury shall submit a report to Congress on—

10 (A) the results of the study conducted 

11 under subsection (a); and 

12 (B) any recommendations regarding legis13 lative or administrative changes. 

14 SEC. 114. DEFINITIONS. 

15 Section 1303 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4502) is amended—

17 (1) in each of paragraphs (5) and (14), by 

18 striking ‘‘Federal Housing Enterprise Oversight of 

19 the Department of Housing and Urban Develop20 ment’’ each place that term appears and inserting 

21 ‘‘Federal Housing Enterprise Supervision of the De22 partment of the Treasury’’; 

23 (2) in paragraphs (8), (9), (10), and (19), by 

24 inserting ‘‘of Housing and Urban Development’’ 

25 after ‘‘Secretary’’ each place that term appears; 
29

•S 1656 IS 

1 (3) by striking paragraph (15); 

2 (4) by redesignating paragraphs (7) through 

3 (14) (as amended by this Act) as paragraphs (8) 

4 through (15), respectively; and 

5 (5) by inserting after paragraph (6) the fol6 lowing: 

7 ‘‘(7) ENTERPRISE-AFFILIATED PARTY.—The 

8 term ‘enterprise-affiliated party’ means—

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

10 controlling stockholder of, or agent for, an en11 terprise; 

12 ‘‘(B) any shareholder, consultant, joint 

13 venture partner, and any other person, as de14 termined by the Director (by regulation or case15 by-case), who participates in the conduct of the 

16 affairs of an enterprise; and 

17 ‘‘(C) any independent contractor (including 

18 any attorney, appraiser, or accountant), to the 

19 extent that such person knowingly or recklessly 

20 participates in—

21 ‘‘(i) any violation of any law or regu22 lation; 

23 ‘‘(ii) any breach of fiduciary duty; or 

24 ‘‘(iii) any unsafe or unsound practice, 
30

•S 1656 IS 

1 which caused or is likely to cause more than a 

2 minimal financial loss to, or a significant ad3 verse effect on, the enterprise.’’. 

4 Subtitle B—Prompt Corrective 

5 Action

6 SEC. 131. CAPITAL CLASSIFICATIONS. 

7 Section 1364 of the Housing and Community Devel8 opment Act of 1992 (12 U.S.C. 4614) is amended—

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

10 following: 

11 ‘‘(b) DISCRETIONARY CLASSIFICATION.—

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

13 Director may reclassify an enterprise under para14 graph (2), if—

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

16 in writing that an enterprise is engaging in con17 duct that could result in a rapid depletion of 

18 core capital or that the value of the property 

19 subject to mortgages held or securitized by the 

20 enterprise has decreased significantly; 

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

22 hearing, the Director determines that an enter23 prise is in an unsafe or unsound condition; or
31

•S 1656 IS 

1 ‘‘(C) pursuant to section 1371(b), the Di2 rector deems an enterprise to be engaging in an 

3 unsafe or unsound practice. 

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

5 other action authorized under this title, including 

6 the reclassification of an enterprise for any reason 

7 not specified in this subsection, if the Director takes 

8 any action described in paragraph (1) the Director 

9 may classify an enterprise—

10 ‘‘(A) as undercapitalized, if the enterprise 

11 is otherwise classified as adequately capitalized; 

12 ‘‘(B) as significantly undercapitalized, if 

13 the enterprise is otherwise classified as under14 capitalized; and 

15 ‘‘(C) as critically undercapitalized, if the 

16 enterprise is otherwise classified as significantly 

17 undercapitalized.’’; 

18 (2) by redesignating subsection (d) as sub19 section (e); and 

20 (3) by inserting after subsection (c) the fol21 lowing: 

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

23 ‘‘(1) IN GENERAL.—An enterprise shall make 

24 no capital distribution if, after making the distribu25 tion, the enterprise would be undercapitalized. 
32

•S 1656 IS 

1 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

2 (1), the Director may permit an enterprise to repur3 chase, redeem, retire, or otherwise acquire shares or 

4 ownership interests, if the repurchase, redemption, 

5 retirement, or other acquisition—

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

7 issuance of additional shares or obligations of 

8 the enterprise in at least an equivalent amount; 

9 and 

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

11 the enterprise or otherwise improve the finan12 cial condition of the enterprise.’’. 

13 SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDER14 CAPITALIZED ENTERPRISES. 

15 (a) EFFECTIVE DATE FOR SUPERVISORY ACTIONS.—

16 Regulations issued by the Director of the Office of Federal 

17 Housing Enterprise Supervision under section 1361(e) of 

18 the Federal Housing Enterprises Financial Safety and 

19 Soundness Act of 1992, as amended by section 

20 161(a)(5)(A) of this Act, shall become effective not earlier 

21 than 6 months after the date of enactment of this Act.

22 (b) SUPERVISORY ACTIONS.—Section 1365 of the 

23 Housing and Community Development Act of 1992 (12 

24 U.S.C. 4615) is amended—

25 (1) in subsection (a)—
33

•S 1656 IS 

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: 

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

6 shall—

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

8 undercapitalized enterprise; 

9 ‘‘(B) closely monitor compliance with the 

10 capital restoration plan, restrictions, and re11 quirements imposed under this section; and 

12 ‘‘(C) periodically review the plan, restric13 tions, and requirements applicable to the under14 capitalized enterprise to determine whether the 

15 plan, restrictions, and requirements are achiev16 ing the purpose of this section.’’; and 

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

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

19 undercapitalized enterprise shall not permit its aver20 age total assets during any calendar quarter to ex21 ceed its average total assets during the preceding 

22 calendar quarter, unless—

23 ‘‘(A) the Board has accepted the capital 

24 restoration plan of the enterprise; 
34

•S 1656 IS 

1 ‘‘(B) any increase in total assets is con2 sistent with the plan; and 

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

4 of the enterprise increases during the calendar 

5 quarter at a rate sufficient to enable the enter6 prise to become adequately capitalized within a 

7 reasonable time. 

8 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND

9 ISSUANCE OF NEW PRODUCTS.—An undercapitalized 

10 enterprise shall not, directly or indirectly, acquire

11 any interest in any entity or issue a new product, 

12 unless—

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

14 restoration plan of the enterprise, the enterprise 

15 is implementing the plan, and the Director de16 termines that the proposed action is consistent 

17 with and will further the achievement of the 

18 plan; or 

19 ‘‘(B) the Director determines that the pro20 posed action will further the purpose of this 

21 section.’’; 

22 (2) in the subsection heading for subsection (b), 

23 by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI24 CANTLY UNDERCAPITALIZED’’; 
35

•S 1656 IS 

1 (3) by redesignating subsection (c) (as amended 

2 by subsection (a) of this section) as subsection (d); 

3 and 

4 (4) by inserting after subsection (b) the fol5 lowing: 

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

7 Director may take, with respect to an undercapitalized en8 terprise, any of the actions authorized to be taken under 

9 section 1366 with respect to a significantly undercapital10 ized enterprise, if the Director determines that such ac11 tions are necessary to carry out the purpose of this sub12 title.’’. 

13 SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI14 CANTLY UNDERCAPITALIZED ENTERPRISES. 

15 Section 1366 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4616) is amended—

17 (1) in subsection (b)—

18 (A) in the subsection heading, by striking 

19 ‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 

20 inserting ‘‘SPECIFIC ACTIONS’’; 

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

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

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

24 at any time, 1 or more’’;
36

•S 1656 IS 

1 (C) by redesignating paragraphs (5) and 

2 (6) as paragraphs (6) and (7), respectively; 

3 (D) by inserting after paragraph (4) the 

4 following: 

5 ‘‘(5) IMPROVEMENT OF MANAGEMENT.—

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

7 new election for the board of directors of the 

8 enterprise. 

9 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU10 TIVE OFFICERS.—Require the enterprise to dis11 miss from office any director or executive offi12 cer who had held office for more than 180 days 

13 immediately before the date on which the enter14 prise became undercapitalized. Dismissal under 

15 this subparagraph shall not be construed to be 

16 a removal pursuant to the Director’s enforce17 ment powers under section 1377. 

18 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF19 FICERS.—Require the enterprise to employ 

20 qualified executive officers (who, if the Director 

21 so specifies, shall be subject to approval by the 

22 Director).’’; and 

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

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

25 to take any other action that the Director deter-
37

•S 1656 IS 

1 mines will better carry out the purpose of this sec2 tion than any of the other actions specified in this 

3 paragraph.’’; 

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

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

8 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECU9 TIVE OFFICERS.—An enterprise that is classified as sig10 nificantly undercapitalized may not, without prior written 

11 approval by the Director—

12 ‘‘(A) pay any bonus to any executive offi13 cer; or 

14 ‘‘(B) provide compensation to any execu15 tive officer at a rate exceeding the average rate 

16 of compensation of that officer (excluding bo17 nuses, stock options, and profit sharing) during 

18 the 12 calendar months preceding the calendar 

19 month in which the enterprise became classified 

20 as significantly undercapitalized.’’. 

21 Subtitle C—Enforcement Actions

22 SEC. 151. CEASE-AND-DESIST PROCEEDINGS. 

23 Section 1371 of the Housing and Community Devel24 opment Act of 1992 (12 U.S.C. 4631) is amended—
38

•S 1656 IS 

1 (1) by striking subsections (a) and (b) and in2 serting the following: 

3 ‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC4 TICES AND VIOLATIONS OF RULES OR LAWS.—

5 ‘‘(1) IN GENERAL.—The Director may issue 

6 and serve upon the enterprise or an enterprise-affili7 ated party a notice of charges under this section if—

8 ‘‘(A) in the opinion of the Director, an en9 terprise or any enterprise-affiliated party is en10 gaging or has engaged, or the Director has rea11 sonable cause to believe that the enterprise or 

12 any enterprise-affiliated party is about to en13 gage, in an unsafe or unsound practice in con14 ducting the business of the enterprise or is vio15 lating or has violated; or 

16 ‘‘(B) the Director has reasonable cause to 

17 believe that the enterprise or any enterprise-af18 filiated party is about to violate, a law, rule, or 

19 regulation, or any condition imposed in writing 

20 by the Director in connection with the granting 

21 of any application or other request by the enter22 prise or any written agreement entered into 

23 with the Director. 

24 ‘‘(2) LIMITATIONS.—The Director may not en25 force compliance with—
39

•S 1656 IS 

1 ‘‘(A) any housing goal established under 

2 subpart B of part 2 of subtitle A; 

3 ‘‘(B) section 1336 or 1337; 

4 ‘‘(C) subsection (m) or (n) of section 309 

5 of the Federal National Mortgage Association 

6 Charter Act (12 U.S.C. 1723a(m), (n)); or 

7 ‘‘(D) subsection (e) or (f) of section 307 of 

8 the Federal Home Loan Mortgage Corporation 

9 Act (12 U.S.C. 1456(e), (f)). 

10 ‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If 

11 an enterprise receives, in its most recent report of exam12 ination, a less-than-satisfactory rating for asset quality, 

13 management, earnings, or liquidity, the Director may (if 

14 the deficiency is not corrected) deem the enterprise to be 

15 engaging in an unsafe or unsound practice for purposes 

16 of this subsection.’’; and 

17 (2) in subsection (c)(2), by striking ‘‘or direc18 tor’’ and inserting ‘‘director, or enterprise-affiliated 

19 party’’. 

20 SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

21 Section 1372 of the Housing and Community Devel22 opment Act of 1992 (12 U.S.C. 4632) is amended—

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

24 following: 

25 ‘‘(a) GROUNDS FOR ISSUANCE.—
40

•S 1656 IS 

1 ‘‘(1) IN GENERAL.—The Director may issue a 

2 temporary order under paragraph (2) if the Director 

3 determines that the violation or threatened violation 

4 or the unsafe or unsound practice or practices speci5 fied in the notice of charges served upon the enter6 prise or any enterprise-affiliated party under section 

7 1371(a), or the continuation thereof, is likely to 

8 cause insolvency or significant dissipation of assets 

9 or earnings of the enterprise, or is likely to weaken 

10 the condition of the enterprise prior to the comple11 tion of the proceedings conducted pursuant to sec12 tions 1371 and 1373. 

13 ‘‘(2) CONTENTS OF ORDER.—Upon making a 

14 determination under paragraph (1), the Director 

15 may issue a temporary order requiring the enterprise 

16 or such party to cease and desist from any such vio17 lation or practice and to take affirmative action to 

18 prevent or remedy such insolvency, dissipation, con19 dition, or prejudice pending completion of such pro20 ceedings. Such order may include any requirement 

21 authorized under section 1371(d).’’; 

22 (2) in subsection (b), by striking ‘‘or director’’ 

23 and inserting ‘‘director, or enterprise-affiliated 

24 party’’;
41

•S 1656 IS 

1 (3) in subsection (d), striking ‘‘or director’’ and 

2 inserting ‘‘director, or enterprise-affiliated party’’; 

3 and 

4 (4) by striking subsection (e) and in inserting 

5 the following: 

6 ‘‘(e) ENFORCEMENT.—

7 ‘‘(1) IN GENERAL.—In the case of violation or 

8 threatened violation of, or failure to obey, a tem9 porary cease-and-desist order issued under this sec10 tion, the Director may apply to the United States 

11 District Court for the District of Columbia or the 

12 United States district court within the jurisdiction of 

13 which the headquarters of the enterprise is located, 

14 for an injunction to enforce such order. 

15 ‘‘(2) ISSUANCE OF INJUNCTION.—If the court 

16 determines that there has been a violation or threat17 ened violation or failure to obey a temporary cease18 and-desist order under paragraph (1), the court 

19 shall issue an injunction against the enterprise to 

20 enforce such order.’’. 

21 SEC. 153. REMOVAL AND PROHIBITION AUTHORITY. 

22 (a) IN GENERAL.—Subtitle C of the Federal Housing 

23 Enterprises Financial Safety and Soundness Act (12 

24 U.S.C. 4501 et seq.) is amended—
42

•S 1656 IS 

1 (1) by redesignating sections 1377 through 

2 1379B (12 U.S.C. 4637–41) as sections 1379 

3 through 1379D, respectively; and 

4 (2) by inserting after section 1376 (12 U.S.C. 

5 4636) the following:

6 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

7 ‘‘(a) AUTHORITY TO ISSUE ORDER.—

8 ‘‘(1) IN GENERAL.—The Director may serve 

9 upon an enterprise-affiliated party a written notice 

10 of the Director’s intention to remove such party 

11 from office or to prohibit any further participation 

12 by such party, in any manner, in the conduct of the 

13 affairs of any enterprise in any case to which para14 graph (2) applies. 

15 ‘‘(2) CRITERIA.—The Director may serve writ16 ten notice under paragraph (1) whenever the Direc17 tor determines that—

18 ‘‘(A) any enterprise-affiliated party has, di19 rectly or indirectly—

20 ‘‘(i) violated—

21 ‘‘(I) any law or regulation; 

22 ‘‘(II) any cease-and-desist order 

23 which has become final; 

24 ‘‘(III) any condition imposed in 

25 writing by the Director in connection 
43

•S 1656 IS 

1 with the grant of any application or 

2 other request by such enterprise; or 

3 ‘‘(IV) any written agreement be4 tween such enterprise and the Direc5 tor; 

6 ‘‘(ii) engaged or participated in any 

7 unsafe or unsound practice in connection 

8 with any enterprise; or

9 ‘‘(iii) committed or engaged in any 

10 act, omission, or practice which constitutes 

11 a breach of such party’s fiduciary duty; 

12 ‘‘(B) by reason of the violation, practice, or 

13 breach described in any subparagraph of para14 graph (1)—

15 ‘‘(i) such enterprise has suffered or 

16 will probably suffer financial loss or other 

17 damage; or 

18 ‘‘(ii) such party has received financial 

19 gain or other benefit by reason of such vio20 lation, practice, or breach; and 

21 ‘‘(C) such violation, practice, or breach—

22 ‘‘(i) involves personal dishonesty on 

23 the part of such party; or 
44

•S 1656 IS 

1 ‘‘(ii) demonstrates willful or con2 tinuing disregard by such party for the 

3 safety or soundness of such enterprise. 

4 ‘‘(b) SUSPENSION ORDER.—

5 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR6 ITY.—If the Director serves written notice under 

7 subsection (a) to any enterprise-affiliated party of 

8 the Director’s intention to issue an order, the Direc9 tor may suspend such party from office or prohibit 

10 such party from further participation in any manner 

11 in the conduct of the affairs of the enterprise, if the 

12 Director—

13 ‘‘(A) determines that such action is nec14 essary for the protection of the enterprise; and 

15 ‘‘(B) serves such party with written notice 

16 of the suspension order. 

17 ‘‘(2) EFFECTIVE PERIOD.—Any suspension 

18 order issued under this section—

19 ‘‘(A) shall become effective upon service; 

20 and 

21 ‘‘(B) unless a court issues a stay of such 

22 order under subsection (g), shall remain in ef23 fect and enforceable until—

24 ‘‘(i) the date on which the Director 

25 dismisses the charges contained in the no-
45

•S 1656 IS 

1 tice served under subsection (a) with re2 spect to such party; or 

3 ‘‘(ii) the effective date of an order 

4 issued by the Director to such party under 

5 subsection (a). 

6 ‘‘(3) COPY OF ORDER.—If the Director issues a 

7 suspension order under this section to any enter8 prise-affiliated party, the Director shall serve a copy 

9 of such order on any enterprise with which such 

10 party is affiliated at the time such order is issued. 

11 ‘‘(c) NOTICE, HEARING, AND ORDER.—

12 ‘‘(1) IN GENERAL.—A notice of intention to re13 move an enterprise-affiliated party from office or to 

14 prohibit such party from participating in the con15 duct of the affairs of an enterprise shall—

16 ‘‘(A) contain a statement of the facts con17 stituting grounds for such action; and 

18 ‘‘(B) fix a time and place at which a hear19 ing will be held on such action. 

20 ‘‘(2) HEARING.—The Director shall hold the 

21 hearing not earlier than 30 days nor later than 60 

22 days after the date of service of notice under para23 graph (1), unless an earlier or a later date is set by 

24 the Director at the request of—
46

•S 1656 IS 

1 ‘‘(A) the enterprise-affiliated party, and for 

2 good cause shown; or 

3 ‘‘(B) the Attorney General of the United 

4 States. 

5 ‘‘(3) REMOVAL OR PROHIBITION.—

6 ‘‘(A) IN GENERAL.—The Director may 

7 issue such orders of suspension or removal from 

8 office, or prohibition from participation in the 

9 conduct of the affairs of the enterprise, if—

10 ‘‘(i) the enterprise-affiliated party 

11 named in the notice issued under para12 graph (1) fails to appear at the hearing in 

13 person, or by a duly authorized representa14 tive; or 

15 ‘‘(ii) the Director determines, based 

16 upon the record of the hearing, that any of 

17 the grounds for removal or prohibition 

18 specified in the notice issued under para19 graph (1) have been established. 

20 ‘‘(B) EFFECTIVE DATE OF ORDER.—Any 

21 order issued under subparagraph (A) shall be22 come effective at 30 days after service of the 

23 order to the enterprise-affiliated party and the 

24 relevant enterprise, except in the case of an 
47

•S 1656 IS 

1 order issued upon consent, which shall become 

2 effective at the time specified therein. 

3 ‘‘(C) TERM.—Any order issued under sub4 paragraph (A) shall remain effective and en5 forceable, except to such extent as it is stayed, 

6 modified, terminated, or set aside by action of 

7 the Director or a reviewing court. 

8 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI9 TIES.—Any person subject to an order issued under this 

10 section shall not—

11 ‘‘(1) participate in any manner in the conduct 

12 of the affairs of any enterprise; 

13 ‘‘(2) solicit, procure, transfer, attempt to trans14 fer, vote, or attempt to vote any proxy, consent, or 

15 authorization with respect to any voting rights in 

16 any enterprise; 

17 ‘‘(3) violate any voting agreement previously 

18 approved by the Director; or 

19 ‘‘(4) vote for a director, or serve or act as an 

20 enterprise-affiliated party. 

21 ‘‘(e) INDUSTRY-WIDE PROHIBITION.—

22 ‘‘(1) IN GENERAL.—Except as provided in sub23 paragraph (2), any person who, pursuant to an 

24 order issued under subsection (h), has been removed

25 or suspended from office in an enterprise or prohib-
48

•S 1656 IS 

1 ited from participating in the conduct of the affairs 

2 of an enterprise may not, while such order is in ef3 fect, continue or commence to hold any office in, or

4 participate in any manner in the conduct of the af5 fairs of any enterprise. 

6 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT7 TEN CONSENT.—If, on or after the date an order is 

8 issued under this section which removes or suspends 

9 from office any enterprise-affiliated party or pro10 hibits such party from participating in the conduct 

11 of the affairs of an enterprise, such party receives 

12 the written consent of the Director, the order shall, 

13 to the extent of such consent, cease to apply to such 

14 party with respect to the enterprise described in the 

15 written consent. If the Director grants such a writ16 ten consent, the Director shall publicly disclose such 

17 consent. 

18 ‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED

19 AS VIOLATION OF ORDER.—Any violation of para20 graph (1) by any person who is subject to an order 

21 described in such subsection shall be treated as a 

22 violation of the order. 

23 ‘‘(f) APPLICABILITY.—This section shall only apply 

24 to a person who is an individual, unless the Director spe-
49

•S 1656 IS 

1 cifically finds that it should apply to a corporation, firm, 

2 or other business enterprise. 

3 ‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF

4 ENTERPRISE-AFFILIATED PARTY.—Not later than 10 

5 days after any enterprise-affiliated party has been sus6 pended from office or prohibited from participation in the 

7 conduct of the affairs of an enterprise under this section, 

8 such party may apply to the United States District Court 

9 for the District of Columbia, or the United States district 

10 court for the judicial district in which the headquarters 

11 of the enterprise is located, for a stay of such suspension 

12 or prohibition pending the completion of the administra13 tive proceedings pursuant to the notice served upon such 

14 party under this section, and such court shall have juris15 diction to stay such suspension or prohibition. 

16 ‘‘(h) SUSPENSION OR REMOVAL OF ENTERPRISE-AF17 FILIATED PARTY CHARGED WITH FELONY.—

18 ‘‘(1) SUSPENSION OR PROHIBITION.—

19 ‘‘(A) IN GENERAL.—Whenever any enter20 prise-affiliated party is charged in any informa21 tion, indictment, or complaint, with the commis22 sion of or participation in a crime involving dis23 honesty or breach of trust which is punishable 

24 by imprisonment for a term exceeding 1 year 

25 under State or Federal law, the Director may, 
50

•S 1656 IS 

1 if continued service or participation by such 

2 party may pose a threat to the enterprise or im3 pair public confidence in the enterprise, by writ4 ten notice served upon such party, suspend 

5 such party from office or prohibit such party 

6 from further participation in any manner in the 

7 conduct of the affairs of any enterprise. 

8 ‘‘(B) PROVISIONS APPLICABLE TO NO9 TICE.—

10 ‘‘(i) COPY.—A copy of any notice 

11 under subparagraph (A) shall also be 

12 served upon the relevant enterprise. 

13 ‘‘(ii) EFFECTIVE PERIOD.—A suspen14 sion or prohibition under subparagraph (A) 

15 shall remain in effect until the informa16 tion, indictment, or complaint referred to 

17 in such subparagraph is finally disposed of 

18 or until terminated by the Director. 

19 ‘‘(2) REMOVAL OR PROHIBITION.—

20 ‘‘(A) IN GENERAL.—If a judgment of con21 viction or an agreement to enter a pretrial di22 version or other similar program is entered 

23 against an enterprise-affiliated party in connec24 tion with a crime described in paragraph 

25 (1)(A), at such time as such judgment is not
51

•S 1656 IS 

1 subject to further appellate review, the Director 

2 may, if continued service or participation by 

3 such party may pose a threat to the enterprise 

4 or impair public confidence in the enterprise, 

5 issue and serve upon such party an order re6 moving such party from office or prohibiting 

7 such party from further participation in any 

8 manner in the conduct of the affairs of the en9 terprise without the prior written consent of the 

10 Director. 

11 ‘‘(B) PROVISIONS APPLICABLE TO

12 ORDER.—

13 ‘‘(i) COPY.—A copy of any order 

14 under paragraph (2)(A) shall also be 

15 served upon the relevant enterprise, where16 upon the enterprise-affiliated party who is 

17 subject to the order (if a director or an of18 ficer) shall cease to be a director or officer 

19 of such enterprise. 

20 ‘‘(ii) EFFECT OF ACQUITTAL.—A find21 ing of not guilty or other disposition of the 

22 charge shall not preclude the Director from 

23 instituting proceedings after such finding 

24 or disposition to remove such party from 

25 office or to prohibit further participation in 
52

•S 1656 IS 

1 enterprise affairs under subsection (a), (d), 

2 or (e). 

3 ‘‘(iii) EFFECTIVE PERIOD.—Any no4 tice of suspension or order of removal 

5 issued under this subsection shall remain 

6 effective and outstanding until the comple7 tion of any hearing or appeal authorized 

8 under paragraph (4) unless terminated by 

9 the Director. 

10 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM11 BERS.—

12 ‘‘(A) IN GENERAL.—If at any time, be13 cause of the suspension of 1 or more directors 

14 pursuant to this section, there shall be on the 

15 board of directors of an enterprise less than a 

16 quorum of directors not so suspended, all pow17 ers and functions vested in or exercisable by 

18 such board shall vest in and be exercisable by 

19 the director or directors on the board not so 

20 suspended, until such time as there shall be a 

21 quorum of the board of directors. 

22 ‘‘(B) SUSPENSION OF ALL DIRECTORS.—In 

23 the event all of the directors of an enterprise 

24 are suspended pursuant to this section, the Di25 rector shall appoint persons to serve tempo-
53

•S 1656 IS 

1 rarily as directors in their place and stead 

2 pending the termination of such suspensions, or 

3 until such time as those who have been sus4 pended, cease to be directors of the enterprise 

5 and their respective successors take office. 

6 ‘‘(4) HEARING REGARDING CONTINUED PAR7 TICIPATION.—

8 ‘‘(A) IN GENERAL.—Not later than 30 

9 days after receipt of service of any notice of 

10 suspension or order of removal issued under 

11 paragraph (1) or (2), the enterprise-affiliated 

12 party may request in writing an opportunity to 

13 appear before the Director to show that the 

14 continued service to or participation in the con15 duct of the affairs of the enterprise by such 

16 party does not, or is not likely to, pose a threat 

17 to the interests of the enterprise or threaten to 

18 impair public confidence in the enterprise. 

19 ‘‘(B) TIMING.—Upon receipt of a request 

20 for a hearing under subparagraph (A), the Di21 rector shall fix a time (not more than 30 days 

22 after receipt of such request, unless extended at 

23 the request of such party) and place at which 

24 such party may appear, personally or through 

25 counsel, before the Director or 1 or more des-
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•S 1656 IS 

1 ignated employees of the Director, to submit 

2 written materials (or, at the discretion of the 

3 Director, oral testimony) and oral argument. 

4 ‘‘(C) NOTIFICATION OF DETERMINA5 TION.—Not later than 60 days after the hear6 ing under this paragraph, the Director shall no7 tify the enterprise-affiliated party whether the 

8 suspension or prohibition from participation in 

9 any manner in the conduct of the affairs of the 

10 enterprise will be continued, terminated, or oth11 erwise modified, or whether the order removing 

12 such party from office or prohibiting such party 

13 from further participation in any manner in the 

14 conduct of the affairs of the enterprise will be 

15 rescinded or otherwise modified. Such notifica16 tion shall contain a statement of the basis for 

17 the Director’s decision, if adverse to such party. 

18 ‘‘(D) RULES.—The Director is authorized 

19 to prescribe such rules as may be necessary to 

20 carry out the purposes of this subsection. 

21 ‘‘(i) HEARINGS AND JUDICIAL REVIEW.—

22 ‘‘(1) VENUE AND PROCEDURE.—

23 ‘‘(A) IN GENERAL.—Any hearing provided 

24 for in this section shall be held in the District 

25 of Columbia or in the Federal judicial district 
55

•S 1656 IS 

1 in which the headquarters of the enterprise is 

2 located, unless the party afforded the hearing 

3 consents to another place, and shall be con4 ducted in accordance with the provisions of 

5 chapter 5 of title 5, United States Code. 

6 ‘‘(B) ISSUANCE OF DECISION.—After a 

7 hearing under subparagraph (A), and within 90 

8 days after the Director has notified the parties 

9 that the case has been submitted to the court 

10 for final decision, the court shall render its de11 cision (which shall include findings of fact upon 

12 which its decision is predicated) and shall issue 

13 and serve upon each party to the proceeding an 

14 order or orders consistent with the provisions of 

15 this section. Judicial review of any such order 

16 shall be exclusively as provided in this sub17 section. 

18 ‘‘(C) MODIFICATION.—Unless a petition 

19 for review is timely filed in a court of appeals 

20 of the United States, as provided in paragraph 

21 (2), and thereafter until the record in the pro22 ceeding has been filed as so provided, the Direc23 tor may at any time, upon such notice and in 

24 such manner as it shall deem proper, modify, 

25 terminate, or set aside any such order. Upon
56

•S 1656 IS 

1 such filing of the record, the Director may mod2 ify, terminate, or set aside any such order with 

3 permission of the court. 

4 ‘‘(2) REVIEW OF ORDER.—

5 ‘‘(A) IN GENERAL.—Any party to any pro6 ceeding under paragraph (1) may obtain a re7 view of any order served pursuant to paragraph 

8 (1) (other than an order issued with the con9 sent of the enterprise or the enterprise-affiliated 

10 party concerned, or an order issued under sub11 section (h) of this section) by filing in the 

12 United States Court of Appeals for the District 

13 of Columbia Circuit or court of appeals of the 

14 United States for the circuit in which the head15 quarters of the enterprise is located, within 30 

16 days after the date of service of such order, a 

17 written petition praying that the order of the 

18 Director be modified, terminated, or set aside. 

19 ‘‘(B) FILING OF RECORD.—A copy of a pe20 tition filed under subparagraph (A) shall be 

21 transmitted by the clerk of the court to the Di22 rector, and thereupon the Director shall file in 

23 the court the record in the proceeding, as pro24 vided in section 2112 of title 28, United States 

25 Code. 
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•S 1656 IS 

1 ‘‘(C) JURISDICTION.—Upon the filing of a 

2 petition under subparagraph (A), the court in 

3 which it is filed shall have jurisdiction, which 

4 upon the filing of the record shall (except as 

5 provided in the last sentence of paragraph (1)) 

6 be exclusive, to affirm, modify, terminate, or set 

7 aside, in whole or in part, the order of the Di8 rector. 

9 ‘‘(D) REVIEW.—Review of the petition by 

10 the court shall be had as provided in chapter 7 

11 of title 5, United States Code. The judgment 

12 and decree of the court shall be final, except 

13 that the same shall be subject to review by the 

14 Supreme Court upon certiorari, as provided in 

15 section 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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•S 1656 IS 

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 action 

14 under section 1377 of the Housing and Community 

15 Development Act of 1992 temporarily results in a 

16 lesser number, the’’. 

17 SEC. 154. ENFORCEMENT AND JURISDICTION. 

18 Section 1375 of the Housing and Community Devel19 opment Act of 1992 (12 U.S.C. 4635) is amended—

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

21 following: 

22 ‘‘(a) ENFORCEMENT.—The Director may, in the dis23 cretion of the Director, apply to the United States District 

24 Court for the District of Columbia, or the United States 

25 district court within the jurisdiction of which the head-
59

•S 1656 IS 

1 quarters of the enterprise is located, for the enforcement 

2 of any effective and outstanding notice or order issued 

3 under this subtitle or subtitle B, or request that the Attor4 ney General of the United States bring such an action.

5 Such court shall have jurisdiction and power to order and 

6 require compliance with such notice or order.’’; and 

7 (2) in subsection (b), by striking ‘‘or 1376’’ and 

8 inserting ‘‘1376, or 1377’’. 

9 SEC. 155. CIVIL MONEY PENALTIES. 

10 Section 1376 of the Housing and Community Devel11 opment Act of 1992 (12 U.S.C. 4636) is amended—

12 (1) in subsection (a), in the matter preceding 

13 paragraph (1), by striking ‘‘or any executive officer 

14 or’’ and inserting ‘‘any executive officer of an enter15 prise, any enterprise-affiliated party, or any’’; 

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

17 following:

18 ‘‘(b) AMOUNT OF PENALTY.—

19 ‘‘(1) FIRST TIER.—Any enterprise which, or 

20 any enterprise-affiliated party who—

21 ‘‘(A) violates any provision of this title, the 

22 Federal National Mortgage Association Charter 

23 Act (12 U.S.C. 1716 et seq.), the Federal 

24 Home Loan Mortgage Corporation Act (12 

25 U.S.C. 1451 et seq.), or any order, condition, 
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•S 1656 IS 

1 rule, or regulation under any such title or Act, 

2 except that the Director may not enforce com3 pliance with any housing goal established under 

4 subpart B of part 2 of subtitle A of this title, 

5 with section 1336 or 1337 of this title, with 

6 subsection (m) or (n) of section 309 of the Fed7 eral National Mortgage Association Charter Act 

8 (12 U.S.C. 1723a(m), (n)), or with subsection 

9 (e) or (f) of section 307 of the Federal Home 

10 Loan Mortgage Corporation Act (12 U.S.C. 

11 1456(e), (f)); 

12 ‘‘(B) violates any final or temporary order 

13 or notice issued pursuant to this title; 

14 ‘‘(C) violates any condition imposed in 

15 writing by the Director in connection with the 

16 grant of any application or other request by 

17 such enterprise; 

18 ‘‘(D) violates any written agreement be19 tween the enterprise and the Director; or 

20 ‘‘(E) engages in any conduct the Director 

21 determines to be an unsafe or unsound practice, 

22 shall forfeit and pay a civil penalty of not more than 

23 $10,000 for each day during which such violation 

24 continues.
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•S 1656 IS 

1 ‘‘(2) SECOND TIER.—Notwithstanding para2 graph (1)—

3 ‘‘(A) if an enterprise, or an enterprise-af4 filiated party—

5 ‘‘(i) commits any violation described 

6 in any subparagraph of paragraph (1); 

7 ‘‘(ii) recklessly engages in an unsafe 

8 or unsound practice in conducting the af9 fairs of such enterprise; or 

10 ‘‘(iii) breaches any fiduciary duty; and 

11 ‘‘(B) the violation, practice, or breach—

12 ‘‘(i) is part of a pattern of mis13 conduct; 

14 ‘‘(ii) causes or is likely to cause more 

15 than a minimal loss to such enterprise; or 

16 ‘‘(iii) results in pecuniary gain or 

17 other benefit to such party, 

18 the enterprise or enterprise-affiliated party shall for19 feit and pay a civil penalty of not more than 

20 $50,000 for each day during which such violation, 

21 practice, or breach continues. 

22 ‘‘(3) THIRD TIER.—Notwithstanding para23 graphs (1) and (2), any enterprise which, or any en24 terprise-affiliated party who—

25 ‘‘(A) knowingly—
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•S 1656 IS 

1 ‘‘(i) commits any violation described 

2 in any subparagraph of paragraph (1); 

3 ‘‘(ii) engages in any unsafe or un4 sound practice in conducting the affairs of 

5 such enterprise; or 

6 ‘‘(iii) breaches any fiduciary duty; and 

7 ‘‘(B) knowingly or recklessly causes a sub8 stantial loss to such enterprise or a substantial 

9 pecuniary gain or other benefit to such party by 

10 reason of such violation, practice, or breach, 

11 shall forfeit and pay a civil penalty in an amount not 

12 to exceed the applicable maximum amount deter13 mined under paragraph (4) for each day during 

14 which such violation, practice, or breach continues. 

15 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR

16 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).—

17 The maximum daily amount of any civil penalty 

18 which may be assessed pursuant to paragraph (3) 

19 for any violation, practice, or breach described in 

20 such paragraph is—

21 ‘‘(A) in the case of any person other than 

22 an enterprise, an amount not to exceed 

23 $2,000,000; and 

24 ‘‘(B) in the case of any enterprise, 

25 $2,000,000.’’; and 
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•S 1656 IS 

1 (3) in subsection (d)—

2 (A) by striking ‘‘or director’’ each place 

3 such term appears and inserting ‘‘director, or 

4 enterprise-affiliated party’’; 

5 (B) by striking ‘‘request the Attorney Gen6 eral of the United States to’’; 

7 (C) by inserting ‘‘, or the United States 

8 district court within the jurisdiction of which 

9 the headquarters of the enterprise is located,’’ 

10 after ‘‘District of Columbia’’; and 

11 (D) by striking ‘‘, or may, under the direc12 tion and control of the Attorney General, bring 

13 such an action’’. 

14 SEC. 156. CRIMINAL PENALTY. 

15 Subtitle C of title XIII of the Housing and Commu16 nity Development Act of 1992 (12 U.S.C. 4631 et seq.) 

17 is amended by inserting after section 1377 (as added by 

18 this Act) the following: 

19 ‘‘SEC. 1378. CRIMINAL PENALTY. 

20 ‘‘Whoever, being subject to an order in effect under 

21 section 1377, without the prior written approval of the Di22 rector, knowingly participates, directly or indirectly, in any 

23 manner (including by engaging in an activity specifically 

24 prohibited in such an order) in the conduct of the affairs 

25 of any enterprise shall, notwithstanding section 3571 of
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•S 1656 IS 

1 title 18, be fined not more than $1,000,000, imprisoned 

2 for not more than 5 years, or both.’’. 

3 Subtitle D—General Provisions 

4 SEC. 161. CONFORMING AND TECHNICAL AMENDMENTS. 

5 (a) AMENDMENTS TO 1992 ACT.—Title XIII of the 

6 Housing and Community Development Act of 1992 (12 

7 U.S.C. 4501 et seq.), as amended this Act, is amended—

8 (1) in section 1315 (12 U.S.C. 4515)—

9 (A) in subsection (a)—

10 (i) in the subsection heading, by strik11 ing ‘‘OFFICE PERSONNEL’’ and inserting 

12 ‘‘IN GENERAL’’; and

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

14 ‘‘Subject to title II of the Federal Housing 

15 Enterprise Oversight Modernization Act of 

16 2003, the’’; 

17 (B) in subsection (d)—

18 (i) in the subsection heading, by strik19 ing ‘‘HUD’’ and inserting ‘‘DEPARTMENT

20 OF THE TREASURY’’; and 

21 (ii) by striking ‘‘Housing and Urban 

22 Development’’ and inserting ‘‘the Depart23 ment of the Treasury’’; and 

24 (C) by striking subsection (f); 

25 (2) in section 1319A (12 U.S.C. 4520)—
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•S 1656 IS 

1 (A) by striking ‘‘(a) IN GENERAL.—’’; and 

2 (B) by striking subsection (b); 

3 (3) in section 1319F (12 U.S.C. 4525), by 

4 striking paragraph (2); 

5 (4) in the section heading for section 1328, by 

6 striking ‘‘SECRETARY’’ and inserting ‘‘DIREC7 TOR’’;

8 (5) in section 1361 (12 U.S.C. 4611)—

9 (A) in subsection (e)(1), by striking the 

10 first sentence and inserting the following: ‘‘The 

11 Director shall establish the risk-based capital 

12 test under this section by regulation.’’; and 

13 (B) in subsection (f), by striking ‘‘the Sec14 retary,’’; 

15 (6) in section 1364(c) (12 U.S.C. 4614(c)), by 

16 striking the last sentence; 

17 (7) in section 1367(a)(2) (12 U.S.C. 

18 4617(a)(2)), by striking ‘‘with the written concur19 rence of the Secretary of the Treasury,’’; 

20 (8) by striking section 1383; 

21 (9) by striking ‘‘Committee on Banking, Fi22 nance and Urban Affairs’’ and inserting ‘‘Committee 

23 on Financial Services’’ each place such term appears 

24 in sections 1319B, 1319G(c), 1328(a), 

25 1336(b)(3)(C), 1337, and 1369(a)(3); and
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•S 1656 IS 

1 (10) by striking ‘‘Secretary’’ and inserting ‘‘Di2 rector’’ each place such term appears in—

3 (A) subpart A of part 2 of subtitle A (ex4 cept in sections 1322, 1324, and 1325); and 

5 (B) subtitle B (except in section 

6 1361(d)(1) and 1369E). 

7 (b) AMENDMENTS TO TABLE OF CONTENTS OF

8 1992 ACT.—Section 1(b) of the Housing and Com9 munity Development Act of 1992 (12 U.S.C. 81 

10 note) is amended—

11 (1) by striking the matter relating to section 

12 1311 and inserting the following:

‘‘Sec. 1311. Establishment of Office of Federal Housing Enterprise Supervision.’’;

13 (2) by striking the matter relating to section 

14 1313 and inserting the following:

‘‘Sec. 1313. Duties and authorities of director.’’;

15 (3) by inserting after the matter relating to sec16 tion 1319G the following:

‘‘Sec. 1319H. Prior approval authority for new programs. 

‘‘Sec. 1319I. Registration of stock and public disclosures.’’;

17 (4) by striking the matter relating to section 

18 1319 and inserting the following:

‘‘Sec. 1319. Review of enterprises.’’;

19 (5) by striking the matter relating to section 

20 1328 and inserting the following:

‘‘Sec. 1328. Reports by Director.’’;
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•S 1656 IS 

1 (6) by striking the heading relating to subtitle 

2 B of title XIII and inserting the following:

Subtitle B—Required Capital Levels for Enterprises, Special Enforcement 

Powers, and Nonmortgage-Related Assets’’;

3 (7) by inserting after the matter relating to sec4 tion 1369D the following:

‘‘Sec. 1369E. Nonmortgage-related assets.’’;

5 (8) by redesignating the matter relating to sec6 tions 1377 through 1379B as sections 1379 through 

7 1379D, respectively; and 

8 (9) by inserting after the matter relating to sec9 tion 1376 the following:

‘‘Sec. 1377. Removal and prohibition authority. 

‘‘Sec. 1378. Criminal penalty.’’.

10 (c) AMENDMENTS TO FANNIE MAE CHARTER ACT.—

11 The Federal National Mortgage Association Charter Act 

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

13 (1) by striking ‘‘Director of the Office of Fed14 eral Housing Enterprise Oversight of the Depart15 ment of Housing and Urban Development’’ each 

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

17 the Office of Federal Housing Enterprise Super18 vision of the Department of the Treasury’’, in—

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

20 1718(c)(2));

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

22 1723a(d)(3)(B)); and 
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•S 1656 IS 

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

2 (2) in section 309(n)—

3 (A) in paragraph (1), by inserting ‘‘the Di4 rector of the Office of Federal Housing Enter5 prise Supervision of the Department of the 

6 Treasury,’’ after ‘‘Senate,’’; and 

7 (B) in paragraph (3)(B), by striking ‘‘Sec8 retary’’ and inserting ‘‘Director of the Office of 

9 Federal Housing Enterprise Supervision of the 

10 Department of the Treasury’’. 

11 (d) AMENDMENTS TO FREDDIE MAC ACT.—The 

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

13 1451 et seq.) is amended—

14 (1) by striking ‘‘Director of the Office of Fed15 eral Housing Enterprise Oversight of the Depart16 ment of Housing and Urban Development’’ each 

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

18 the Office of Federal Housing Enterprise Super19 vision of the Department of the Treasury’’, in—

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

21 1452(b)(2));

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

23 1452(h)(2)); and 

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

25 1456(c)(1)); 
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•S 1656 IS 

1 (2) in section 306(i) (12 U.S.C. 1455(i))—

2 (A) by striking ‘‘section 1316(c)’’ and in3 serting ‘‘section 306(c)’’; and 

4 (B) by striking ‘‘section 106’’ and insert5 ing ‘‘section 1316’’; and 

6 (3) in section 307 (12 U.S.C. 1456)—

7 (A) in subsection (f)—

8 (i) in paragraph (1), by inserting ‘‘the 

9 Director of the Office of Federal Housing 

10 Enterprise Supervision of the Department 

11 of the Treasury,’’ after ‘‘Senate,’’; and 

12 (ii) in paragraph (3)(B), by striking 

13 ‘‘Secretary’’ and inserting ‘‘Director of the 

14 Office of Federal Housing Enterprise Su15 pervision of the Department of the Treas16 ury’’.

17 (e) AMENDMENT TO TITLE 18, UNITED STATES

18 CODE.—Section 1905 of title 18, United States Code, is 

19 amended by striking ‘‘Office of Federal Housing Enter20 prise Oversight’’ and inserting ‘‘Office of Federal Housing 

21 Enterprise Supervision of the Department of the Treas22 ury’’. 

23 (f) AMENDMENTS TO FLOOD DISASTER PROTECTION

24 ACT OF 1973.—Section 102(f)(3)(A) of the Flood Dis25 aster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) 
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•S 1656 IS 

1 is amended by striking ‘‘Director of the Office of Federal 

2 Housing Enterprise Oversight of the Department of Hous3 ing and Urban Development’’ and inserting ‘‘Director of 

4 the Office of Federal Housing Enterprise Supervision of 

5 the Department of the Treasury’’. 

6 (g) AMENDMENT TO DEPARTMENT OF HOUSING AND

7 URBAN DEVELOPMENT ACT.—Section 5 of the Depart8 ment of Housing and Urban Development Act (42 U.S.C. 

9 3534) is amended by striking subsection (d). 

10 (h) AMENDMENT TO TITLE 5, UNITED STATES

11 CODE.—Section 5315 of title 5, United States Code, is 

12 amended by striking the item relating to the Director of 

13 the Office of Federal Housing Enterprise Oversight, De14 partment of Housing and Urban Development and insert15 ing the following new item: 

16 ‘‘Director of the Office of Federal Housing En17 terprise Supervision, Department of the Treasury.’’. 

18 SEC. 162. EFFECTIVE DATE. 

19 Except as specifically provided otherwise in this title, 

20 the amendments made by this title shall take effect on, 

21 and shall apply beginning on, the expiration of the 1-year 

22 period beginning on the date of enactment of this Act.
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•S 1656 IS 

1 TITLE II—TRANSFER OF FUNC2 TIONS, PERSONNEL, AND 

3 PROPERTY 

4 SEC. 201. ABOLISHMENT OF OFHEO. 

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 Office of Federal Housing Enterprise Oversight of the De8 partment of Housing and Urban Development and the po9 sitions of the Director and Deputy Director of such Office 

10 are abolished.

11 (b) DISPOSITION OF AFFAIRS.—During the 1-year 

12 period beginning on the date of enactment of this Act, the 

13 Director of the Office of Federal Housing Enterprise 

14 Oversight shall, solely for the purpose of winding up the 

15 affairs of the Office of Federal Housing Enterprise Over16 sight—

17 (1) manage the employees of such Office and 

18 provide for the payment of the compensation and 

19 benefits of any such employee which accrue before 

20 the effective date of any transfer of such employee 

21 pursuant to section 203; and 

22 (2) may take any other action necessary for the 

23 purpose of winding up the affairs of the Office. 

24 (c) STATUS OF EMPLOYEES AS FEDERAL AGENCY

25 EMPLOYEES.—The amendments made by title I and the 
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•S 1656 IS 

1 abolishment of the Office of Federal Housing Enterprise 

2 Oversight under subsection (a) of this section may not be 

3 construed to affect the status of any employee of such Of4 fice as employees of an agency of the United States for 

5 purposes of any other provision of law during any time 

6 such employee is so employed. 

7 (d) USE OF PROPERTY AND SERVICES.—

8 (1) PROPERTY.—The Director of the Office of 

9 Federal Housing Enterprise Supervision of the De10 partment of the Treasury may use the property of 

11 the Office of Federal Housing Enterprise Oversight 

12 to perform functions that have been transferred to 

13 the Director of the Office of Federal Housing Enter14 prise Supervision for such time as is reasonable to 

15 facilitate the orderly transfer of functions under any 

16 other provision of this Act, or any amendment made 

17 by this Act to any other provision of law. 

18 (2) AGENCY SERVICES.—Any agency, depart19 ment, or other instrumentality of the United States, 

20 and any successor to any such agency, department, 

21 or instrumentality, which was providing supporting 

22 services to the Office of Federal Housing Enterprise 

23 Oversight before the expiration of the period under 

24 subsection (a) in connection with functions that are 

25 transferred to the Director of the Office of Federal 
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•S 1656 IS 

1 Housing Enterprise Supervision of the Department 

2 of the Treasury shall—

3 (A) continue to provide such services, on a 

4 reimbursable basis, until the transfer of such 

5 functions is complete; and 

6 (B) consult with any such agency to co7 ordinate and facilitate a prompt and reasonable 

8 transition. 

9 (e) SAVINGS PROVISIONS.—

10 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA11 TIONS NOT AFFECTED.—Subsection (a) shall not af12 fect the validity of any right, duty, or obligation of 

13 the United States, the Director of the Office of Fed14 eral Housing Enterprise Oversight, or any other per15 son, which—

16 (A) arises under or pursuant to the title 

17 XIII of the Housing and Community Develop18 ment Act of 1992 (12 U.S.C. 4501 et seq.), the 

19 Federal National Mortgage Association Charter 

20 Act (12 U.S.C. 1716 et seq.), the Federal 

21 Home Loan Mortgage Corporation Act (12 

22 U.S.C. 1451 et seq.), or any other provision of 

23 law applicable with respect to such Office; and 

24 (B) existed on the day before the abolish25 ment under subsection (a) of this section. 
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•S 1656 IS 

1 (2) CONTINUATION OF SUITS.—No action or 

2 other proceeding commenced by or against the Di3 rector of the Office of Federal Housing Enterprise 

4 Oversight shall abate by reason of the enactment of 

5 this Act, except that the Director of the Office of 

6 Federal Housing Enterprise Supervision of the De7 partment of the Treasury shall be substituted for 

8 the Director of the Office of Federal Housing Enter9 prise Oversight as a party to any such action or pro10 ceeding. 

11 SEC. 202. CONTINUATION AND COORDINATION OF CERTAIN 

12 REGULATIONS. 

13 All regulations, orders, determinations, and resolu14 tions that—

15 (1) were issued, made, prescribed, or allowed to 

16 become effective by—

17 (A) the Office of Federal Housing Enter18 prise Oversight; 

19 (B) the Secretary of Housing and Urban 

20 Development and that relate to the Secretary’s 

21 authority under—

22 (i) title XIII of the Housing and Com23 munity Development Act of 1992 (12 

24 U.S.C. 4501 et seq.);
75

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1 (ii) the Federal National Mortgage 

2 Association Charter Act (12 U.S.C. 1716 

3 et seq.), with respect to the Federal Na4 tional Mortgage Association; or 

5 (iii) the Federal Home Loan Mort6 gage Corporation Act (12 U.S.C. 1451 et 

7 seq.); or 

8 (C) a court of competent jurisdiction and 

9 that relate to functions transferred by this Act; 

10 and 

11 (2) are in effect on the date of the abolishment 

12 under section 201(a) of this Act, 

13 shall remain in effect according to the terms of such regu14 lations, orders, determinations, and resolutions, and shall 

15 be enforceable by or against the Director of the Office of 

16 Federal Housing Enterprise Supervision of the Depart17 ment of the Treasury until modified, terminated, set aside, 

18 or superseded in accordance with applicable law by such 

19 Board, any court of competent jurisdiction, or operation 

20 of law. 

21 SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF 

22 OFHEO. 

23 (a) AUTHORITY TO TRANSFER.—The Director of the 

24 Office of Federal Housing Enterprise Supervision of the 

25 Department of the Treasury may transfer employees of 
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1 the Office of Federal Housing Enterprise Oversight to the 

2 Office of Federal Housing Enterprise Supervision for em3 ployment no later than the date of the abolishment under 

4 section 201(a) of this Act, as the Director considers ap5 propriate. This Act and the amendments made by this Act 

6 shall not be considered to result in the transfer of any 

7 function from one agency to another or the replacement 

8 of 1 agency by another, for purposes of section 3505 of 

9 title 5, United States Code, except to the extent that the 

10 Director of the Office of Federal Housing Enterprise Su11 pervision specifically provides so. 

12 (b) APPOINTMENT AUTHORITY FOR EXCEPTED AND

13 SENIOR EXECUTIVE SERVICE EMPLOYEES.—

14 (1) IN GENERAL.—Subject to paragraph (2), in 

15 the case of employees occupying positions in the ex16 cepted service or the Senior Executive Service, any 

17 appointment authority established pursuant to law 

18 or regulations of the Office of Personnel Manage19 ment for filling such positions shall be transferred. 

20 (2) DECLINE OF TRANSFER.—The Director of 

21 the Office of Federal Housing Enterprise Super22 vision of the Department of the Treasury may de23 cline a transfer of authority under paragraph (1) 

24 (and the employees appointed pursuant thereto) to 

25 the extent that such authority relates to positions 
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1 excepted from the competitive service because of 

2 their confidential, policy-making, policy-determining, 

3 or policy-advocating character, and noncareer posi4 tions in the Senior Executive Service (within the 

5 meaning of section 3132(a)(7) of title 5, United 

6 States Code). 

7 (c) REORGANIZATION.—If the Director of the Office 

8 of Federal Housing Enterprise Supervision of the Depart9 ment of the Treasury determines, after the end of the 1-

10 year period beginning on the date of the abolishment 

11 under section 201(a), that a reorganization of the com12 bined work force is required, that reorganization shall be 

13 deemed a major reorganization for purposes of affording 

14 affected employees retirement under section 8336(d)(2) or 

15 8414(b)(1)(B) of title 5, United States Code. 

16 (d) EMPLOYEE BENEFIT PROGRAMS.—

17 (1) IN GENERAL.—Any employee of the Office 

18 of Federal Housing Enterprise Oversight accepting 

19 employment with the Director of the Office of Fed20 eral Housing Enterprise Supervision of the Depart21 ment of the Treasury as a result of a transfer under 

22 subsection (a) may retain for 18 months after the 

23 date such transfer occurs membership in any em24 ployee benefit program of the Director of the Office 

25 of Federal Housing Enterprise Supervision of the 
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1 Department of the Treasury or the Office of Federal 

2 Housing Enterprise Oversight, as applicable, includ3 ing insurance, to which such employee belongs on 

4 the date of the abolishment under section 201(a) 

5 if—

6 (A) the employee does not elect to give up 

7 the benefit or membership in the program; and 

8 (B) the benefit or program is continued by 

9 the Director of the Office of Federal Housing 

10 Enterprise Supervision. 

11 (2) PAYMENT OF DIFFERENTIAL.—The dif12 ference in the costs between the benefits which 

13 would have been provided by such agency and those 

14 provided by this section shall be paid by the Director 

15 of the Office of Federal Housing Enterprise Super16 vision. If any employee elects to give up membership 

17 in a health insurance program or the health insur18 ance program is not continued by such Director, the 

19 employee shall be permitted to select an alternate 

20 Federal health insurance program within 30 days of 

21 such election or notice, without regard to any other 

22 regularly scheduled open season. 

23 SEC. 204. TRANSFER OF PROPERTY AND FACILITIES. 

24 Upon the abolishment under section 201(a), all prop25 erty of the Office of Federal Housing Enterprise Oversight 
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1 shall transfer to the Director of the Office of Federal 

2 Housing Enterprise Supervision of the Department of the 

3 Treasury.

Æ