‘‘(I) any violation of any law or 
regulation; 
‘‘(II) any breach of fiduciary 
duty; or 
‘‘(III) any unsafe or unsound 
practice; and 
‘‘(ii) such violation, breach, or prac-
tice caused, or is likely to cause, more than 
a minimal financial loss to, or a significant 
adverse effect on, the regulated entity; 
and’’. 
‘‘(D) any not-for-profit corporation that re-
ceives its principal funding, on an ongoing 
basis, from any regulated entity.’’; 
(8) by redesignating paragraphs (8) through 
(13) as paragraphs (12) through (17), respectively; 
and 
(9) by inserting after paragraph (7) the fol-
lowing new paragraph: 
‘‘(11) FEDERAL HOME LOAN BANK.—The term 
‘Federal home loan bank’ means a bank established 
under the authority of the Federal Home Loan 
Bank Act.’’;
(10) by redesignating paragraphs (2) through 
(7) as paragraphs (5) through (10), respectively; 
and 
(11) by inserting after paragraph (1) the fol-
lowing new paragraphs: 
‘‘(2) AGENCY.—The term ‘Agency’ means the 
Federal Housing Finance Agency. 
‘‘(3) AUTHORIZING STATUTES.—The term ‘au-
thorizing statutes’ means—
‘‘(A) the Federal National Mortgage Asso-
ciation Charter Act; 
‘‘(B) the Federal Home Loan Mortgage 
Corporation Act; and 
‘‘(C) the Federal Home Loan Bank Act. 
‘‘(4) BOARD.—The term ‘Board’ means the 
Housing Finance Oversight Board established under 
section 1313B.’’.
TITLE I—REFORM OF REGULA-
TION OF ENTERPRISES AND 
FEDERAL HOME LOAN BANKS 
Subtitle A—Improvement of Safety 
and Soundness 
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FI-
NANCE AGENCY. 
(a) IN GENERAL.—The Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4501 et seq.) is amend-
ed by striking sections 1311 and 1312 and inserting the 
following: 
‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING 
FINANCE AGENCY. 
‘‘(a) ESTABLISHMENT.—There is established the 
Federal Housing Finance Agency, which shall be an inde-
pendent agency of the Federal Government. 
‘‘(b) GENERAL SUPERVISORY AND REGULATORY AU-
THORITY.—
‘‘(1) IN GENERAL.—Each regulated entity shall, 
to the extent provided in this title, be subject to the 
supervision and regulation of the Agency. 
‘‘(2) AUTHORITY OVER FANNIE MAE, FREDDIE 
MAC, AND FEDERAL HOME LOAN BANKS.—The Di-
rector of the Federal Housing Finance Agency shall 
have general supervisory and regulatory authority
over each regulated entity and shall exercise such 
general regulatory authority, including such duties 
and authorities set forth under section 1313 of this 
Act, to ensure that the purposes of this Act, the au-
thorizing statutes, and any other applicable law are 
carried out. 
‘‘(c) SAVINGS PROVISION.—The authority of the Di-
rector to take actions under subtitles B and C shall not 
in any way limit the general supervisory and regulatory 
authority granted to the Director. 
‘‘SEC. 1312. DIRECTOR. 
‘‘(a) ESTABLISHMENT OF POSITION.—There is estab-
lished the position of the Director of the Federal Housing 
Finance Agency, who shall be the head of the Agency. 
‘‘(b) APPOINTMENT; TERM.—
‘‘(1) APPOINTMENT.—The Director shall be ap-
pointed by the President, by and with the advice and 
consent of the Senate, from among individuals who 
are citizens of the United States, have a dem-
onstrated understanding of financial management or 
oversight, and have a demonstrated understanding 
of capital markets, including the mortgage securities 
markets and housing finance.
‘‘(2) TERM AND REMOVAL.—The Director shall 
be appointed for a term of 5 years and may be re-
moved by the President only for cause. 
‘‘(3) VACANCY.—A vacancy in the position of 
Director that occurs before the expiration of the 
term for which a Director was appointed shall be 
filled in the manner established under paragraph 
(1), and the Director appointed to fill such vacancy 
shall be appointed only for the remainder of such 
term. 
‘‘(4) SERVICE AFTER END OF TERM.—An indi-
vidual may serve as the Director after the expiration 
of the term for which appointed until a successor 
has been appointed. 
‘‘(5) 
TRANSITIONAL
PROVISION.—Notwith-
standing paragraphs (1) and (2), the Director of the 
Office of Federal Housing Enterprise Oversight of 
the Department of Housing and Urban Development 
shall serve as the Director until a successor has been 
appointed under paragraph (1). 
‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF EN-
TERPRISE REGULATION.—
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director of the Division of Enterprise Regu-
lation, who shall be appointed by the Director from
among individuals who are citizens of the United 
States, have a demonstrated understanding of finan-
cial management or oversight and of mortgage secu-
rities markets and housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director of the 
Division of Enterprise Regulation shall have such 
functions, powers, and duties with respect to the 
oversight of the enterprises as the Director shall pre-
scribe. 
‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED-
ERAL HOME LOAN BANK REGULATION.—
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director of the Division of Federal Home 
Loan Bank Regulation, who shall be appointed by 
the Director from among individuals who are citi-
zens of the United States, have a demonstrated un-
derstanding of financial management or oversight 
and of the Federal Home Loan Bank System and 
housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director of the 
Division of Federal Home Loan Bank Regulation 
shall have such functions, powers, and duties with 
respect to the oversight of the Federal home loan 
banks as the Director shall prescribe. 
‘‘(e) DEPUTY DIRECTOR FOR HOUSING.—
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director for Housing, who shall be ap-
pointed by the Director from among individuals who 
are citizens of the United States, and have a dem-
onstrated understanding of the housing markets and 
housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director for 
Housing shall have such functions, powers, and du-
ties with respect to the oversight of the housing mis-
sion and goals of the enterprises, and with respect 
to oversight of the housing mission of the Federal 
home loan banks, as the Director shall prescribe. 
‘‘(f) LIMITATIONS.—The Director and each of the 
Deputy Directors may not—
‘‘(1) have any direct or indirect financial inter-
est in any regulated entity or regulated entity-affili-
ated party; 
‘‘(2) hold any office, position, or employment in 
any regulated entity or regulated entity-affiliated 
party; or 
‘‘(3) have served as an executive officer or di-
rector of any regulated entity, or regulated entity-af-
filiated party, at any time during the 3-year period 
ending on the date of appointment of such individual 
as Director or Deputy Director.
‘‘(g) OMBUDSMAN.—The Director shall establish, by 
regulation, an Office of the Ombudsman in the Agency. 
Such regulations shall provide that the Ombudsman will 
consider complaints and appeals from any regulated entity 
and any person that has a business relationship with a 
regulated entity and shall specify the duties and authority 
of the Ombudsman.’’. 
(b) APPOINTMENT OF DIRECTOR.—Notwithstanding 
any other provision of law or of this Act, the President 
may, any time after the date of the enactment of this Act, 
appoint an individual to serve as the Director of the Fed-
eral Housing Finance Agency, as such office is established 
by the amendment made by subsection (a). This sub-
section shall take effect on the date of the enactment of 
this Act. 
SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR. 
(a) IN GENERAL.—The Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4513) is amended by 
striking section 1313 and inserting the following new sec-
tions: 
‘‘SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR. 
‘‘(a) DUTIES.—
‘‘(1) PRINCIPAL DUTIES.—The principal duties 
of the Director shall be—
‘‘(A) to oversee the operations of each reg-
ulated entity; and 
‘‘(B) to ensure that—
‘‘(i) each regulated entity operates in 
a safe and sound manner, including main-
tenance of adequate capital and internal 
controls; 
‘‘(ii) the operations and activities of 
each regulated entity foster liquid, effi-
cient, competitive, and resilient national 
housing finance markets that minimize the 
cost of housing finance (including activities 
relating to mortgages on housing for low- 
and moderate- income families involving a 
reasonable economic return that may be 
less than the return earned on other activi-
ties); 
‘‘(iii) each regulated entity complies 
with this title and the rules, regulations, 
guidelines, and orders issued under this 
title and the authorizing statutes; and 
‘‘(iv) each regulated entity carries out 
its statutory mission only through activi-
ties that are consistent with this title and 
the authorizing statutes.
‘‘(2) SCOPE OF AUTHORITY.—The authority of 
the Director shall include the authority—
‘‘(A) to review and, if warranted based on 
the principal duties described in paragraph (1), 
reject any acquisition or transfer of a control-
ling interest in an enterprise; and 
‘‘(B) to exercise such incidental powers as 
may be necessary or appropriate to fulfill the 
duties and responsibilities of the Director in the 
supervision and regulation of each regulated en-
tity. 
‘‘(b) DELEGATION
OF AUTHORITY.—The Director 
may delegate to officers or employees of the Agency, in-
cluding each of the Deputy Directors, any of the functions, 
powers, or duties of the Director, as the Director considers 
appropriate. 
‘‘(c) LITIGATION AUTHORITY.—
‘‘(1) IN GENERAL.—In enforcing any provision 
of this title, any regulation or order prescribed under 
this title, or any other provision of law, rule, regula-
tion, or order, or in any other action, suit, or pro-
ceeding to which the Director is a party or in which 
the Director is interested, and in the administration 
of conservatorships and receiverships, the Director 
may act in the Director’s own name and through the
Director’s own attorneys, or request that the Attor-
ney General of the United States act on behalf of 
the Director. 
‘‘(2) CONSULTATION
WITH
ATTORNEY
GEN-
ERAL.—The Director shall provide notice to, and 
consult with, the Attorney General of the United 
States before taking an action under paragraph (1) 
of this subsection or under section 1344(a), 1345(d), 
1348(c), 1372(e), 1375(a), 1376(d), or 1379D(c), 
except that, if the Director determines that any 
delay caused by such prior notice and consultation 
may adversely affect the safety and soundness re-
sponsibilities of the Director under this title, the Di-
rector shall notify the Attorney General as soon as 
reasonably possible after taking such action. 
‘‘(3) SUBJECT TO SUIT.—Except as otherwise 
provided by law, the Director shall be subject to suit 
(other than suits on claims for money damages) by 
a regulated entity or director or officer thereof with 
respect to any matter under this title or any other 
applicable provision of law, rule, order, or regulation 
under this title, in the United States district court 
for the judicial district in which the regulated entity 
has its principal place of business, or in the United 
States District Court for the District of Columbia,
and the Director may be served with process in the 
manner prescribed by the Federal Rules of Civil 
Procedure. 
‘‘SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS 
STANDARDS. 
‘‘(a) STANDARDS.—The Director shall establish 
standards, by regulation, guideline, or order, for each reg-
ulated entity relating to—
‘‘(1) adequacy of internal controls and informa-
tion systems taking into account the nature and 
scale of business operations; 
‘‘(2) independence and adequacy of internal 
audit systems; 
‘‘(3) management of credit and counterparty 
risk, including systems to identify concentrations of 
credit risk and prudential limits to restrict exposure 
of the regulated entity to a single counterparty or 
groups of related counterparties; 
‘‘(4) management of interest rate risk exposure; 
‘‘(5) management of market risk, including 
standards that provide for systems that accurately 
measure, monitor, and control market risks and, as 
warranted, that establish limitations on market risk; 
‘‘(6) adequacy and maintenance of liquidity and 
reserves;
‘‘(7) management of any asset and investment 
portfolio; 
‘‘(8) investments and acquisitions by a regu-
lated entity, to ensure that they are consistent with 
the purposes of this Act and the authorizing stat-
utes; 
‘‘(9) maintenance of adequate records, in ac-
cordance with consistent accounting policies and 
practices that enable the Director to evaluate the fi-
nancial condition of the regulated entity; 
‘‘(10) issuance of subordinated debt by that 
particular regulated entity, as the Director considers 
necessary; 
‘‘(11) overall risk management processes, in-
cluding adequacy of oversight by senior management 
and the board of directors and of processes and poli-
cies to identify, measure, monitor, and control mate-
rial risks, including reputational risks, and for ade-
quate, well-tested business resumption plans for all 
major systems with remote site facilities to protect 
against disruptive events; and 
‘‘(12) such other operational and management 
standards as the Director determines to be appro-
priate. 
‘‘(b) FAILURE TO MEET STANDARDS.—
‘‘(1) PLAN REQUIREMENT.—
‘‘(A) IN GENERAL.—If the Director deter-
mines that a regulated entity fails to meet any 
standard established under subsection (a)—
‘‘(i) if such standard is established by 
regulation, the Director shall require the 
regulated entity to submit an acceptable 
plan to the Director within the time al-
lowed under subparagraph (C); and 
‘‘(ii) if such standard is established by 
guideline, the Director may require the 
regulated entity to submit a plan described 
in clause (i). 
‘‘(B) 
CONTENTS.—Any 
plan 
required 
under subparagraph (A) shall specify the ac-
tions that the regulated entity will take to cor-
rect the deficiency. If the regulated entity is 
undercapitalized, the plan may be a part of the 
capital restoration plan for the regulated entity 
under section 1369C. 
‘‘(C) DEADLINES
FOR
SUBMISSION
AND 
REVIEW.—The Director shall by regulation es-
tablish deadlines that—
‘‘(i) provide the regulated entities with 
reasonable time to submit plans required
under subparagraph (A), and generally re-
quire a regulated entity to submit a plan 
not later than 30 days after the Director 
determines that the entity fails to meet 
any standard established under subsection 
(a); and 
‘‘(ii) require the Director to act on 
plans expeditiously, and generally not later 
than 30 days after the plan is submitted. 
‘‘(2) REQUIRED ORDER UPON FAILURE TO SUB-
MIT OR IMPLEMENT PLAN.—If a regulated entity 
fails to submit an acceptable plan within the time al-
lowed under paragraph (1)(C), or fails in any mate-
rial respect to implement a plan accepted by the Di-
rector, the following shall apply: 
‘‘(A) REQUIRED
CORRECTION
OF
DEFI-
CIENCY.—The Director shall, by order, require 
the regulated entity to correct the deficiency. 
‘‘(B) OTHER
AUTHORITY.—The Director 
may, by order, take one or more of the fol-
lowing actions until the deficiency is corrected: 
‘‘(i) Prohibit the regulated entity from 
permitting its average total assets (as such 
term is defined in section 1316(b)) during 
any calendar quarter to exceed its average
total assets during the preceding calendar 
quarter, or restrict the rate at which the 
average total assets of the entity may in-
crease from one calendar quarter to an-
other. 
‘‘(ii) Require the regulated entity—
‘‘(I) in the case of an enterprise, 
to increase its ratio of core capital to 
assets. 
‘‘(II) in the case of a Federal 
home loan bank, to increase its ratio 
of total capital (as such term is de-
fined in section 6(a)(5) of the Federal 
Home Loan Bank Act (12 U.S.C. 
1426(a)(5)) to assets. 
‘‘(iii) Require the regulated entity to 
take any other action that the Director de-
termines will better carry out the purposes 
of this section than any of the actions de-
scribed in this subparagraph. 
‘‘(3) MANDATORY
RESTRICTIONS.—In com-
plying with paragraph (2), the Director shall take 
one or more of the actions described in clauses (i) 
through (iii) of paragraph (2)(B) if—