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‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity, the en-
tity is implementing the plan, and the Director 
determines that the proposed action is con-
sistent with and will further the achievement of 
the plan; or 
‘‘(B) the Director determines that the pro-
posed action will further the purpose of this 
section.’’; 
(3) in the subsection heading for subsection (b), 
by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI-
CANTLY UNDERCAPITALIZED’’; and 
(4) by striking subsection (c) and inserting the 
following new subsection: 
‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The 
Director may take, with respect to a regulated entity that 
is classified as undercapitalized, any of the actions author-
ized to be taken under section 1366 with respect to a regu-
lated entity that is classified as significantly undercapital-
ized, if the Director determines that such actions are nec-
essary to carry out the purpose of this subtitle.’’. 
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SEC. 153. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI-
CANTLY 
UNDERCAPITALIZED 
REGULATED 
ENTITIES. 
Section 1366 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4616) is amended— 
(1) in the section heading, by striking ‘‘ENTER-
PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 
(2) in subsection (a)(2)(A), by striking ‘‘enter-
prise’’ the last place such term appears; 
(3) in subsection (b)— 
(A) in the subsection heading, by striking 
‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 
inserting ‘‘SPECIFIC ACTIONS’’. 
(B) in the matter preceding paragraph (1), 
by striking ‘‘may, at any time, take any’’ and 
inserting ‘‘shall carry out this section by taking, 
at any time, one or more’’; 
(C) by redesignating paragraphs (5) and 
(6) as paragraphs (6) and (7), respectively; 
(D) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) IMPROVEMENT
OF
MANAGEMENT.—Take 
one or more of the following actions: 
‘‘(A) NEW ELECTION OF BOARD.—Order a 
new election for the board of directors of the 
regulated entity. 
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‘‘(B) DISMISSAL OF DIRECTORS OR EXECU-
TIVE OFFICERS.—Require the regulated entity 
to dismiss from office any director or executive 
officer who had held office for more than 180 
days immediately before the entity became 
undercapitalized. Dismissal under this subpara-
graph shall not be construed to be a removal 
pursuant to the Director’s enforcement powers 
provided in section 1377. 
‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF-
FICERS.—Require the regulated entity to em-
ploy qualified executive officers (who, if the Di-
rector so specifies, shall be subject to approval 
by the Director).’’; and 
(E) by inserting at the end the following 
new paragraph: 
‘‘(8) OTHER
ACTION.—Require the regulated 
entity to take any other action that the Director de-
termines will better carry out the purpose of this 
section than any of the actions specified in this 
paragraph.’’; 
(4) by redesignating subsection (c) as sub-
section (d); and 
(5) by inserting after subsection (b) the fol-
lowing new subsection: 
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‘‘(c) RESTRICTION ON COMPENSATION OF EXECU-
TIVE OFFICERS.—A regulated entity that is classified as 
significantly undercapitalized may not, without prior writ-
ten approval by the Director— 
‘‘(1) pay any bonus to any executive officer; or 
‘‘(2) provide compensation to any executive offi-
cer at a rate exceeding that officer’s average rate of 
compensation (excluding bonuses, stock options, and 
profit sharing) during the 12 calendar months pre-
ceding the calendar month in which the regulated 
entity became undercapitalized.’’. 
SEC. 154. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
(a) IN GENERAL.—Section 1367 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4617) 
is amended to read as follows: 
‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
‘‘(a) APPOINTMENT OF AGENCY AS CONSERVATOR 
OR RECEIVER.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal or State law, if any of the 
grounds under paragraph (3) exist, at the discretion 
of the Director, the Director may establish a con-
servatorship or receivership, as appropriate, for the 
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purpose of reorganizing, rehabilitating, or winding 
up the affairs of a regulated entity. 
‘‘(2) APPOINTMENT.—In any conservatorship or 
receivership established under this section, the Di-
rector shall appoint the Agency as conservator or re-
ceiver. 
‘‘(3) 
GROUNDS
FOR
APPOINTMENT.—The 
grounds for appointing a conservator or receiver for 
a regulated entity are as follows: 
‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA-
TIONS.—The assets of the regulated entity are 
less than the obligations of the regulated entity 
to its creditors and others. 
‘‘(B) SUBSTANTIAL
DISSIPATION.—Sub-
stantial dissipation of assets or earnings due 
to— 
‘‘(i) any violation of any provision of 
Federal or State law; or 
‘‘(ii) any unsafe or unsound practice. 
‘‘(C) UNSAFE OR UNSOUND CONDITION.— 
An unsafe or unsound condition to transact 
business. 
‘‘(D) CEASE-AND-DESIST
ORDERS.—Any 
willful violation of a cease-and-desist order that 
has become final. 
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‘‘(E) CONCEALMENT.—Any concealment of 
the books, papers, records, or assets of the reg-
ulated entity, or any refusal to submit the 
books, papers, records, or affairs of the regu-
lated entity, for inspection to any examiner or 
to any lawful agent of the Director. 
‘‘(F) INABILITY TO MEET OBLIGATIONS.— 
The regulated entity is likely to be unable to 
pay its obligations or meet the demands of its 
creditors in the normal course of business. 
‘‘(G) LOSSES.—The regulated entity has 
incurred or is likely to incur losses that will de-
plete all or substantially all of its capital, and 
there is no reasonable prospect for the regu-
lated entity to become adequately capitalized 
(as defined in section 1364(a)(1)). 
‘‘(H) VIOLATIONS OF LAW.—Any violation 
of any law or regulation, or any unsafe or un-
sound practice or condition that is likely to— 
‘‘(i) cause insolvency or substantial 
dissipation of assets or earnings; or 
‘‘(ii) weaken the condition of the regu-
lated entity. 
‘‘(I) CONSENT.—The regulated entity, by 
resolution of its board of directors or its share-
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holders or members, consents to the appoint-
ment. 
‘‘(J) UNDERCAPITALIZATION.—The regu-
lated entity is undercapitalized or significantly 
undercapitalized 
(as 
defined 
in 
section 
1364(a)(3) or in regulations issued pursuant to 
section 1364(b), as applicable), and— 
‘‘(i) has no reasonable prospect of be-
coming adequately capitalized; 
‘‘(ii) fails to become adequately cap-
italized, as required by— 
‘‘(I) section 1365(a)(1) with re-
spect to an undercapitalized regulated 
entity; or 
‘‘(II) section 1366(a)(1) with re-
spect to a significantly undercapital-
ized regulated entity; 
‘‘(iii) fails to submit a capital restora-
tion plan acceptable to the Agency within 
the time prescribed under section 1369C; 
or 
‘‘(iv) materially fails to implement a 
capital restoration plan submitted and ac-
cepted under section 1369C. 
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‘‘(K) CRITICAL UNDERCAPITALIZATION.— 
The regulated entity is critically undercapital-
ized, as defined in section 1364(a)(4) or in reg-
ulations issued pursuant to section 1364(b), as 
applicable. 
‘‘(L) MONEY LAUNDERING.—The Attorney 
General notifies the Director in writing that the 
regulated entity has been found guilty of a 
criminal offense under section 1956 or 1957 of 
title 18, United States Code, or section 5322 or 
5324 of title 31, United States Code. 
‘‘(4) MANDATORY RECEIVERSHIP.— 
‘‘(A) IN GENERAL.—The Director shall ap-
point the Agency as receiver for a regulated en-
tity if the Director determines, in writing, 
that— 
‘‘(i) the assets of the regulated entity 
are, and during the preceding 30 calendar 
days have been, less than the obligations of 
the regulated entity to its creditors and 
others; or 
‘‘(ii) the regulated entity is not, and 
during the preceding 30 calendar days has 
not been, generally paying the debts of the 
regulated entity (other than debts that are 
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the subject of a bona fide dispute) as such 
debts become due. 
‘‘(B) 
PERIODIC
DETERMINATION
RE-
QUIRED FOR CRITICALLY UNDER CAPITALIZED 
REGULATED ENTITY.—If a regulated entity is 
critically undercapitalized, the Director shall 
make a determination, in writing, as to whether 
the regulated entity meets the criteria specified 
in clause (i) or (ii) of subparagraph (A)— 
‘‘(i) not later than 30 calendar days 
after the regulated entity initially becomes 
critically undercapitalized; and 
‘‘(ii) at least once during each suc-
ceeding 30-calendar day period. 
‘‘(C) DETERMINATION NOT REQUIRED IF 
RECEIVERSHIP ALREADY IN PLACE.—Subpara-
graph (B) shall not apply with respect to a reg-
ulated entity in any period during which the 
Agency serves as receiver for the regulated enti-
ty. 
‘‘(D) RECEIVERSHIP
TERMINATES
CON-
SERVATORSHIP.—The appointment under this 
section of the Agency as receiver of a regulated 
entity shall immediately terminate any con-
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servatorship established under this title for the 
regulated entity. 
‘‘(5) JUDICIAL REVIEW.— 
‘‘(A) IN GENERAL.—If the Agency is ap-
pointed conservator or receiver under this sec-
tion, the regulated entity may, within 30 days 
of such appointment, bring an action in the 
United States District Court for the judicial 
district in which the principal place of business 
of such regulated entity is located, or in the 
United States District Court for the District of 
Columbia, for an order requiring the Agency to 
remove itself as conservator or receiver. 
‘‘(B) REVIEW.—Upon the filing of an ac-
tion under subparagraph (A), the court shall, 
upon the merits, dismiss such action or direct 
the Agency to remove itself as such conservator 
or receiver. 
‘‘(6) DIRECTORS
NOT
LIABLE
FOR
ACQUI-
ESCING IN APPOINTMENT OF CONSERVATOR OR RE-
CEIVER.—The members of the board of directors of 
a regulated entity shall not be liable to the share-
holders or creditors of the regulated entity for acqui-
escing in or consenting in good faith to the appoint-
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ment of the Agency as conservator or receiver for 
that regulated entity. 
‘‘(7) AGENCY
NOT
SUBJECT
TO
ANY
OTHER 
FEDERAL AGENCY.—When acting as conservator or 
receiver, the Agency shall not be subject to the di-
rection or supervision of any other agency of the 
United States or any State in the exercise of the 
rights, powers, and privileges of the Agency. 
‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON-
SERVATOR OR RECEIVER.— 
‘‘(1) RULEMAKING AUTHORITY OF THE AGEN-
CY.—The Agency may prescribe such regulations as 
the Agency determines to be appropriate regarding 
the conduct of conservatorships or receiverships. 
‘‘(2) GENERAL POWERS.— 
‘‘(A) SUCCESSOR
TO
REGULATED
ENTI-
TY.—The Agency shall, as conservator or re-
ceiver, and by operation of law, immediately 
succeed to— 
‘‘(i) all rights, titles, powers, and 
privileges of the regulated entity, and of 
any stockholder, officer, or director of such 
regulated entity with respect to the regu-
lated entity and the assets of the regulated 
entity; and 
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‘‘(ii) title to the books, records, and 
assets of any other legal custodian of such 
regulated entity. 
‘‘(B) OPERATE
THE
REGULATED
ENTI-
TY.—The Agency may, as conservator or re-
ceiver— 
‘‘(i) take over the assets of and oper-
ate the regulated entity with all the powers 
of the shareholders, the directors, and the 
officers of the regulated entity and conduct 
all business of the regulated entity; 
‘‘(ii) collect all obligations and money 
due the regulated entity; 
‘‘(iii) perform all functions of the reg-
ulated entity in the name of the regulated 
entity which are consistent with the ap-
pointment as conservator or receiver; and 
‘‘(iv) preserve and conserve the assets 
and property of such regulated entity. 
‘‘(C) FUNCTIONS
OF
OFFICERS, DIREC-
TORS, AND SHAREHOLDERS OF A REGULATED 
ENTITY.—The Agency may, by regulation or 
order, provide for the exercise of any function 
by any stockholder, director, or officer of any 
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regulated entity for which the Agency has been 
named conservator or receiver. 
‘‘(D) POWERS
AS
CONSERVATOR.—The 
Agency may, as conservator, take such action 
as may be— 
‘‘(i) necessary to put the regulated en-
tity in a sound and solvent condition; and 
‘‘(ii) appropriate to carry on the busi-
ness of the regulated entity and preserve 
and conserve the assets and property of 
the regulated entity, including, if two or 
more Federal home loan banks have been 
placed 
in 
conservatorship 
contempora-
neously, merging two or more such banks 
into a single Federal home loan bank. 
‘‘(E) 
ADDITIONAL
POWERS
AS
RE-
CEIVER.—The Agency may, as receiver, place 
the regulated entity in liquidation and proceed 
to realize upon the assets of the regulated enti-
ty, having due regard to the conditions of the 
housing finance market. 
‘‘(F) ORGANIZATION OF NEW REGULATED 
ENTITIES.—The Agency may, as receiver, orga-
nize a successor regulated entity that will oper-
ate pursuant to subsection (i). 
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