Agency shall issue regulations pursuant to section 1369E(a) 
of the Housing and Community Development Act of 1992 
(as added by subsection (a) of this section) establishing the 
portfolio holdings standards under such section. 
SEC. 116. CORPORATE GOVERNANCE OF ENTERPRISES. 
The Housing and Community Development Act of 
1992 is amended by inserting before section 1323 (12 U.S.C. 
4543) the following new section: 
‘‘SEC. 1322A. CORPORATE GOVERNANCE OF ENTERPRISES. 
‘‘(a) BOARD OF DIRECTORS.— 
‘‘(1) INDEPENDENCE.—A majority of seated 
members of the board of directors of each enterprise 
shall be independent board members, as defined under 
rules set forth by the New York Stock Exchange, as 
such rules may be amended from time to time. 
‘‘(2) FREQUENCY OF MEETINGS.—To carry out 
its obligations and duties under applicable laws, 
rules, regulations, and guidelines, the board of direc-
tors of an enterprise shall meet at least eight times a 
year and not less than once a calendar quarter. 
‘‘(3) NON-MANAGEMENT BOARD MEMBER MEET-
INGS.—The non-management directors of an enter-
prise shall meet at regularly scheduled executive ses-
sions without management participation. 
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‘‘(4) QUORUM; PROHIBITION ON PROXIES.—For 
the transaction of business, a quorum of the board of 
directors of an enterprise shall be at least a majority 
of the seated board of directors and a board member 
may not vote by proxy. 
‘‘(5) INFORMATION.—The management of an en-
terprise shall provide a board member of the enter-
prise with such adequate and appropriate informa-
tion that a reasonable board member would find im-
portant to the fulfillment of his or her fiduciary du-
ties and obligations. 
‘‘(6) ANNUAL REVIEW.—At least annually, the 
board of directors of each enterprise shall review, with 
appropriate professional assistance, the requirements 
of laws, rules, regulations, and guidelines that are ap-
plicable to its activities and duties. 
‘‘(b) COMMITTEES OF BOARDS OF DIRECTORS.— 
‘‘(1) FREQUENCY OF MEETINGS.—Any committee 
of the board of directors of an enterprise shall meet 
with sufficient frequency to carry out its obligations 
and duties under applicable laws, rules, regulations, 
and guidelines. 
‘‘(2) REQUIRED COMMITTEES.—Each enterprise 
shall provide for the establishment, however styled, of 
the following committees of the board of directors: 
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‘‘(A) Audit committee. 
‘‘(B) Compensation committee. 
‘‘(C) Nominating/corporate governance com-
mittee. 
Such committees shall be in compliance with the 
charter, independence, composition, expertise, duties, 
responsibilities, and other requirements set forth 
under section 10A(m) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78j–1(m)), with respect to the 
audit committee, and under rules issued by the New 
York Stock Exchange, as such rules may be amended 
from time to time. 
‘‘(c) COMPENSATION.— 
‘‘(1) IN GENERAL.—The compensation of board 
members, executive officers, and employees of an en-
terprise— 
‘‘(A) shall not be in excess of that which is 
reasonable and appropriate; 
‘‘(B) shall be commensurate with the duties 
and responsibilities of such persons; 
‘‘(C) shall be consistent with the long-term 
goals of the enterprise; 
‘‘(D) shall not focus solely on earnings per-
formance, but shall take into account risk man-
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agement, operational stability and legal and reg-
ulatory compliance as well; and 
‘‘(E) shall be undertaken in a manner that 
complies with applicable laws, rules, and regula-
tions. 
‘‘(2) REIMBURSEMENT.—If an enterprise is re-
quired to prepare an accounting restatement due to 
the material noncompliance of the enterprise, as a re-
sult of misconduct, with any financial reporting re-
quirement under the securities laws, the chief execu-
tive officer and chief financial officer of the enterprise 
shall reimburse the enterprise as provided under sec-
tion 304 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7243). This provision does not otherwise limit 
the authority of the Agency to employ remedies avail-
able to it under its enforcement authorities. 
‘‘(d) CODE OF CONDUCT AND ETHICS.— 
‘‘(1) IN GENERAL.—An enterprise shall establish 
and administer a written code of conduct and ethics 
that is reasonably designed to assure the ability of 
board members, executive officers, and employees of 
the enterprise to discharge their duties and respon-
sibilities, on behalf of the enterprise, in an objective 
and impartial manner, and that includes standards 
required under section 406 of the Sarbanes-Oxley Act 
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of 2002 (15 U.S.C. 7264) and other applicable laws, 
rules, and regulations. 
‘‘(2) REVIEW.—Not less than once every three 
years, an enterprise shall review the adequacy of its 
code of conduct and ethics for consistency with prac-
tices appropriate to the enterprise and make any ap-
propriate revisions to such code. 
‘‘(e) CONDUCT AND RESPONSIBILITIES OF BOARD OF 
DIRECTORS.—The board of directors of an enterprise shall 
be responsible for directing the conduct and affairs of the 
enterprise in furtherance of the safe and sound operation 
of the enterprise and shall remain reasonably informed of 
the condition, activities, and operations of the enterprise. 
The responsibilities of the board of directors shall include 
having in place adequate policies and procedures to assure 
its oversight of, among other matters, the following: 
‘‘(1) Corporate strategy, major plans of action, 
risk policy, programs for legal and regulatory compli-
ance and corporate performance, including prudent 
plans for growth and allocation of adequate resources 
to manage operations risk. 
‘‘(2) Hiring and retention of qualified executive 
officers and succession planning for such executive of-
ficers. 
‘‘(3) Compensation programs of the enterprise. 
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‘‘(4) Integrity of accounting and financial re-
porting systems of the enterprise, including inde-
pendent audits and systems of internal control. 
‘‘(5) Process and adequacy of reporting, disclo-
sures, and communications to shareholders, investors, 
and potential investors. 
‘‘(6) Extensions of credit to board members and 
executive officers. 
‘‘(7) Responsiveness of executive officers in pro-
viding accurate and timely reports to Federal regu-
lators and in addressing the supervisory concerns of 
Federal regulators in a timely and appropriate man-
ner. 
‘‘(f) PROHIBITION OF EXTENSIONS OF CREDIT.—An 
enterprise may not directly or indirectly, including through 
any subsidiary, extend or maintain credit, arrange for the 
extension of credit, or renew an extension of credit, in the 
form of a personal loan to or for any board member or exec-
utive officer of the enterprise, as provided by section 13(k) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(k)). 
‘‘(g) CERTIFICATION OF DISCLOSURES.—The chief ex-
ecutive officer and the chief financial officer of an enterprise 
shall review each quarterly report and annual report issued 
by the enterprise and such reports shall include certifi-
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cations by such officers as required by section 302 of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241). 
‘‘(h) CHANGE
OF AUDIT PARTNER.—An enterprise 
may not accept audit services from an external auditing 
firm if the lead or coordinating audit partner who has pri-
mary responsibility for the external audit of the enterprise, 
or the external audit partner who has responsibility for re-
viewing the external audit has performed audit services for 
the enterprise in each of the five previous fiscal years. 
‘‘(i) COMPLIANCE PROGRAM.— 
‘‘(1) REQUIREMENT.—Each enterprise shall es-
tablish and maintain a compliance program that is 
reasonably designed to assure that the enterprise com-
plies with applicable laws, rules, regulations, and in-
ternal controls. 
‘‘(2) COMPLIANCE
OFFICER.—The compliance 
program of an enterprise shall be headed by a compli-
ance officer, however styled, who reports directly to 
the chief executive officer of the enterprise. The com-
pliance officer shall report regularly to the board of 
directors or an appropriate committee of the board of 
directors on compliance with and the adequacy of 
current compliance policies and procedures of the en-
terprise, and shall recommend any adjustments to 
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such policies and procedures that the compliance offi-
cer considers necessary and appropriate. 
‘‘(j) RISK MANAGEMENT PROGRAM.— 
‘‘(1) REQUIREMENT.—Each enterprise shall es-
tablish and maintain a risk management program 
that is reasonably designed to manage the risks of the 
operations of the enterprise. 
‘‘(2) RISK
MANAGEMENT
OFFICER.—The risk 
management program of an enterprise shall be headed 
by a risk management officer, however styled, who re-
ports directly to the chief executive officer of the enter-
prise. The risk management officer shall report regu-
larly to the board of directors or an appropriate com-
mittee of the board of directors on compliance with 
and the adequacy of current risk management policies 
and procedures of the enterprise, and shall rec-
ommend any adjustments to such policies and proce-
dures that the risk management officer considers nec-
essary and appropriate. 
‘‘(k) COMPLIANCE WITH OTHER LAWS.— 
‘‘(1) DEREGISTERED
OR
UNREGISTERED
COM-
MON STOCK.—If an enterprise deregisters or has not 
registered its common stock with the Securities and 
Exchange Commission under the Securities Exchange 
Act of 1934, the enterprise shall comply or continue 
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to comply with sections 10A(m) and 13(k) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78j–1(m), 
78m(k)) and sections 302, 304, and 406 of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7241, 7243, 
7264), subject to such requirements as provided by 
subsection (l) of this section. 
‘‘(2) REGISTERED COMMON STOCK.—An enter-
prise that has its common stock registered with the 
Securities and Exchange Commission shall maintain 
such registered status, unless it provides 60 days 
prior written notice to the Director stating its intent 
to deregister and its understanding that it will re-
main subject to the requirements of the sections of the 
Securities Exchange Act of 1934 and the Sarbanes- 
Oxley Act of 2002, subject to such requirements as 
provided by subsection (l) of this section. 
‘‘(l) OTHER MATTERS.—The Director may from time 
to time establish standards, by regulation, order, or guide-
line, regarding such other corporate governance matters of 
the enterprises as the Director considers appropriate. 
‘‘(m) MODIFICATION OF STANDARDS.—In connection 
with standards of Federal or State law (including the Re-
vised Model Corporation Act) or New York Stock Exchange 
rules that are made applicable to an enterprise by section 
1710.10 of the Director’s rules (12 C.F.R. 1710.10) and by 
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