I 
108TH CONGRESS 
1ST SESSION H. R. 3071
To prohibit the provision of Federal funds to the housing-related government-
sponsored enterprises and to remove certain competitive advantages 
granted under law to such enterprises. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 10, 2003
Mr. PAUL introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To prohibit the provision of Federal funds to the housing-
related government-sponsored enterprises and to remove 
certain competitive advantages granted under law to such 
enterprises.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Free Housing Market 
Enhancement Act’’.
SEC. 2. PROHIBITION OF FEDERAL FUNDS FOR HOUSING-
RELATED GOVERNMENT-SPONSORED ENTER-
PRISES. 
Notwithstanding any other provision of law, no Fed-
eral funds may be provided, directly or indirectly, to the 
Federal National Mortgage Association, the Federal 
Home Loan Mortgage Corporation, or any Federal Home 
Loan Bank. 
SEC. 3. AMENDMENTS TO FEDERAL NATIONAL MORTGAGE 
ASSOCIATION CHARTER ACT. 
(a) EXEMPTION FROM STATE TAXATION.—Section 
309(c) of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1723a(c)) is amended—
(1) by striking paragraph (2); and 
(2) by striking ‘‘(1)’’. 
(b) AUTHORITY OF TREASURY TO APPROVE DEBT 
ISSUES.—Section 304(b) of the Federal National Mort-
gage Association Charter Act (12 U.S.C. 1719(b)) is 
amended—
(1) by striking ‘‘, upon the approval of the Sec-
retary of the Treasury,’’; and 
(2) by striking ‘‘with the approval of the Sec-
retary of the Treasury’’. 
(c) AUTHORITY TO BORROW FROM TREASURY.—Sec-
tion 304 of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1719) is amended by striking sub-
section (c). 
(d) DEPOSITARY AUTHORITY.—Section 309(g) of the 
Federal National Mortgage Association Charter Act (12 
U.S.C. 1723a(g)) is amended—
(1) by striking ‘‘each of the bodies corporate 
named in section 302(a)(2)’’ and inserting ‘‘the As-
sociation’’; and 
(2) by striking ‘‘such bodies corporate’’ and in-
serting ‘‘the bodies corporate named in section 
302(a)(2)’’. 
(e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN-
VESTMENTS.—The first sentence of section 311 of the 
Federal National Mortgage Association Charter Act (12 
U.S.C. 1723c) is amended by striking ‘‘either of the bodies 
corporate named in section 302(a)(2)’’ and inserting ‘‘the 
Association’’. 
(f) APPOINTMENT OF MEMBERS OF BOARD OF DI-
RECTORS.—
(1) IN GENERAL.—Section 308(b) of the Fed-
eral National Mortgage Association Charter Act (12 
U.S.C. 1723(b)) is amended—
(A) in the first sentence, by striking ‘‘five 
of whom shall be appointed annually by the
President of the United States, and the remain-
der of whom’’ and inserting ‘‘who’’; 
(B) in the second sentence, by striking 
‘‘appointed by the President’’; 
(C) in the third sentence—
(i) by striking ‘‘appointed or’’; and 
(ii) by striking ‘‘, except that any 
such appointed member may be removed 
from office by the President for good 
cause’’; 
(D) in the fourth sentence, by striking 
‘‘elective’’; and 
(E) by striking the fifth sentence. 
(2) APPLICABILITY.—The amendments made 
by paragraph (1) shall apply only with respect to the 
first election of members of the board of directors of 
the Federal National Mortgage Association occur-
ring after the date of the enactment of this Act, and 
the board resulting from such election, and to elec-
tions and boards thereafter. 
SEC. 4. AMENDMENTS TO FEDERAL HOME LOAN MORT-
GAGE CORPORATION ACT. 
(a) EXEMPTION FROM STATE TAXATION.—Section 
303 of the Federal Home Loan Mortgage Corporation Act 
(12 U.S.C. 1452) is amended by striking subsection (e).
(b) AUTHORITY OF TREASURY TO APPROVE DEBT 
ISSUES.—Section 306(j) of the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1455(j)) is amended—
(1) by striking ‘‘(1)’’; 
(2) by striking ‘‘be issued upon the approval of 
the Secretary of the Treasury and shall’’; 
(3) by striking ‘‘with the approval of the Sec-
retary of the Treasury’’; and 
(4) by striking paragraphs (2) and (3). 
(c) AUTHORITY TO BORROW FROM TREASURY.—Sec-
tion 306 of the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1455) is amended by striking subsection 
(c). 
(d) DEPOSITARY AUTHORITY.—Section 303(d) of the 
Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
1452(d)) is amended by striking the second and third sen-
tences. 
(e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN-
VESTMENTS.—Section 303 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1452) is amended 
by striking subsection (g). 
(f) APPOINTMENT OF MEMBERS OF BOARD OF DI-
RECTORS.—
(1) IN
GENERAL.—Section 303(a)(2) of the 
Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1452(a)(2)) is amended—
(A) in subparagraph (A)—
(i) in the first sentence, by striking ‘‘5 
of whom shall be appointed annually by 
the President of the United States and the 
remainder of whom’’ and inserting ‘‘who’’; 
and 
(ii) in the second sentence, by striking 
‘‘appointed by the President of the United 
States’’; 
(B) in subparagraph (B)—
(i) by striking ‘‘such or’’; and 
(ii) by striking ‘‘, except that any ap-
pointed member may be removed from of-
fice by the President for good cause’’; and 
(C) in subparagraph (C)—
(i) by striking the first sentence; and 
(ii) by striking ‘‘elective’’. 
(2) APPLICABILITY.—The amendments made 
by paragraph (1) shall apply only with respect to the 
first election of members of the Board of Directors 
of the Federal Home Loan Mortgage Corporation 
occurring after the date of the enactment of this
Act, and the Board resulting from such election, and 
to elections and Boards thereafter. 
SEC. 5. AMENDMENTS TO FEDERAL HOME LOAN BANK ACT. 
(a) EXEMPTION FROM STATE TAXATION.—
(1) NOTES AND OBLIGATIONS.—The first sen-
tence of section 13 of the Federal Home Loan Bank 
Act (12 U.S.C. 1433) is amended by striking ‘‘, by 
any Territory,’’ and all that follows through ‘‘local 
taxing authority’’. 
(2) BANKS.—The second sentence of section 13 
of the Federal Home Loan Bank Act (12 U.S.C. 
1433) is amended by striking ‘‘, by any Territory,’’ 
and all that follows through ‘‘taxed’’. 
(b) AUTHORITY TO BORROW FROM TREASURY.—
Section 11 of the Federal Home Loan Bank Act (12 
U.S.C. 1431) is amended by striking subsection (i). 
(c) DEPOSITARY AUTHORITY.—The Federal Home 
Loan Bank Act is amended—
(1) by striking section 14 (12 U.S.C. 1434); 
and 
(2) in section 15 (12 U.S.C. 1435), by striking 
the second sentence. 
(d) DESIGNATION OF OBLIGATIONS AS LAWFUL IN-
VESTMENTS.—Section 15 of the Federal Home Loan 
Bank Act (12 U.S.C. 1435), as amended by subsection