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‘‘(b) FEDERAL HOME LOAN BANKS.—For purposes 
of this subtitle, the minimum capital level for each Federal 
home loan bank shall be the minimum capital required to 
be maintained to comply with the leverage requirement for 
the bank established under section 6(a)(2) of the Federal 
Home Loan Bank Act (12 U.S.C. 1426(a)(2)). 
‘‘(c) ESTABLISHMENT OF REVISED MINIMUM CAP-
ITAL LEVELS.—Notwithstanding subsections (a) and (b) 
and notwithstanding the capital classifications of the regu-
lated entities, the Director may, by regulations issued 
under section 1319G, establish a minimum capital level 
for the enterprises, for the Federal home loan banks, or 
for both the enterprises and the banks, that is higher than 
the level specified in subsection (a) for the enterprises or 
the level specified in subsection (b) for the Federal home 
loan banks, to the extent needed to ensure that the regu-
lated entities operate in a safe and sound manner. 
‘‘(d) AUTHORITY TO REQUIRE TEMPORARY IN-
CREASE.—Notwithstanding subsections (a) and (b) and 
any minimum capital level established pursuant to sub-
section (c), the Director may, by order, increase the min-
imum capital level for a regulated entity on a temporary 
basis for such period as the Director may provide if the 
Director— 
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‘‘(1) makes any determination specified in sub-
paragraphs (A) through (C) of section 1364(c)(1); 
‘‘(2) determines that the regulated entity has 
violated any of the prudential standards established 
pursuant to section 1313A and, as a result of such 
violation, determines that an unsafe and unsound 
condition exists; or 
‘‘(3) determines that an unsafe and unsound 
condition exists, except that a temporary increase in 
minimum capital imposed on a regulated entity pur-
suant to this paragraph shall not remain in place for 
a period of more than 6 months unless the Director 
makes a renewed determination of the existence of 
an unsafe and unsound condition. 
‘‘(e) AUTHORITY TO ESTABLISH ADDITIONAL CAP-
ITAL AND RESERVE REQUIREMENTS FOR PARTICULAR 
PROGRAMS.—The Director may, at any time by order or 
regulation, establish such capital or reserve requirements 
with respect to any program or activity of a regulated enti-
ty as the Director considers appropriate to ensure that 
the regulated entity operates in a safe and sound manner, 
with sufficient capital and reserves to support the risks 
that arise in the operations and management of the regu-
lated entity. 
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‘‘(f) PERIODIC REVIEW.—The Director shall periodi-
cally review the amount of core capital maintained by the 
enterprises, the amount of capital retained by the Federal 
home loan banks, and the minimum capital levels estab-
lished for such regulated entities pursuant to this section. 
The Director shall rescind any temporary minimum cap-
ital level increase if the Director determines that the cir-
cumstances or facts justifying the temporary increase are 
no longer present.’’. 
(b) CRITICAL CAPITAL LEVELS.— 
(1) IN GENERAL.—Section 1363 of the Housing 
and Community Development Act of 1992 (12 
U.S.C. 4613) is amended— 
(A) by striking ‘‘For’’ and inserting ‘‘(a) 
ENTERPRISES.—FOR’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(b) FEDERAL HOME LOAN BANKS.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
title, the critical capital level for each Federal home 
loan bank shall be such amount of capital as the Di-
rector shall, by regulation require. 
‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP-
ITAL
LEVELS.—In establishing the critical capital 
level under paragraph (1) for the Federal home loan 
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banks, the Director shall take due consideration of 
the critical capital level established under subsection 
(a) for the enterprises, with such modifications as 
the Director determines to be appropriate to reflect 
the difference in operations between the banks and 
the enterprises.’’. 
(2) REGULATIONS.—Not later than the expira-
tion of the 180-day period beginning on the effective 
date under section 185, the Director of the Federal 
Housing Finance Agency shall issue regulations pur-
suant to section 1363(b) of the Housing and Com-
munity Development Act of 1992 (as added by para-
graph (1) of this subsection) establishing the critical 
capital level under such section. 
SEC. 115. REVIEW OF AND AUTHORITY OVER ENTERPRISE 
ASSETS AND LIABILITIES. 
(a) IN GENERAL.—Subtitle B of title XIII of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4611 et seq.) is amended— 
(1) by striking the subtitle designation and 
heading and inserting the following: 
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‘‘Subtitle B—Required Capital Lev-
els for Regulated Entities, Spe-
cial Enforcement Powers, and 
Reviews of Assets and Liabil-
ities’’; 
and 
(2) by adding at the end the following new sec-
tion: 
‘‘SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABIL-
ITIES. 
‘‘(a) IN GENERAL.—The Director shall, by regula-
tion, establish standards by which the portfolio holdings, 
or rate of growth of the portfolio holdings, of the enter-
prises will be deemed to be consistent with the mission 
and the safe and sound operations of the enterprises. In 
developing such standards, the Director shall consider— 
‘‘(1) the size or growth of the mortgage market; 
‘‘(2) the need for the portfolio in maintaining li-
quidity or stability of the secondary mortgage mar-
ket (including the market for the mortgage-backed 
securities the enterprises issue); 
‘‘(3) the need for an inventory of mortgages in 
connection with securitizations; 
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‘‘(4) the need for the portfolio to directly sup-
port the affordable housing mission of the enter-
prises; 
‘‘(5) the liquidity needs of the enterprises; 
‘‘(6) any potential risks posed to the enterprises 
by the nature of the portfolio holdings; and 
‘‘(7) any additional factors that the Director 
determines to be necessary to carry out the purpose 
under the first sentence of this subsection to estab-
lish standards for assessing whether the portfolio 
holdings are consistent with the mission and safe 
and sound operations of the enterprises. 
‘‘(b) TEMPORARY
ADJUSTMENTS.—The Director 
may, by order, make temporary adjustments to the estab-
lished standards for an enterprise or both enterprises, 
such as during times of economic distress or market dis-
ruption. 
‘‘(c) AUTHORITY TO REQUIRE DISPOSITION OR AC-
QUISITION.—The Director shall monitor the portfolio of 
each enterprise. Pursuant to subsection (a) and notwith-
standing the capital classifications of the enterprises, the 
Director may, by order, require an enterprise, under such 
terms and conditions as the Director determines to be ap-
propriate, to dispose of or acquire any asset, if the Direc-
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tor determines that such action is consistent with the pur-
poses of this Act or any of the authorizing statutes.’’. 
(b) REGULATIONS.—Not later than the expiration of 
the 180-day period beginning on the effective date under 
section 185, the Director of the Federal Housing Finance 
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 Ex-
change, 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-
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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 
MEETINGS.—The non-management directors of an 
enterprise shall meet at regularly scheduled execu-
tive sessions without management participation. 
‘‘(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 ma-
jority of the seated board of directors and a board 
member may not vote by proxy. 
‘‘(5) INFORMATION.—The management of an 
enterprise shall provide a board member of the en-
terprise with such adequate and appropriate infor-
mation that a reasonable board member would find 
important to the fulfillment of his or her fiduciary 
duties and obligations. 
‘‘(6) ANNUAL REVIEW.—At least annually, the 
board of directors of each enterprise shall review, 
with appropriate professional assistance, the require-
ments of laws, rules, regulations, and guidelines that 
are applicable to its activities and duties. 
‘‘(b) COMMITTEES OF BOARDS OF DIRECTORS.— 
‘‘(1) FREQUENCY
OF
MEETINGS.—Any com-
mittee of the board of directors of an enterprise 
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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: 
‘‘(A) Audit committee. 
‘‘(B) Compensation committee. 
‘‘(C) 
Nominating/corporate 
governance 
committee. 
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; 
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‘‘(B) shall be commensurate with the du-
ties 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-
agement, operational stability and legal and 
regulatory 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 
result of misconduct, with any financial reporting re-
quirement under the securities laws, the chief execu-
tive officer and chief financial officer of the enter-
prise shall reimburse the enterprise as provided 
under section 304 of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7243). This provision does not oth-
erwise limit the authority of the Agency to employ 
remedies available to it under its enforcement au-
thorities. 
‘‘(d) CODE OF CONDUCT AND ETHICS.— 
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‘‘(1) IN GENERAL.—An enterprise shall estab-
lish and administer a written code of conduct and 
ethics that is reasonably designed to assure the abil-
ity of board members, executive officers, and em-
ployees of the enterprise to discharge their duties 
and responsibilities, on behalf of the enterprise, in 
an objective and impartial manner, and that includes 
standards required under section 406 of the Sar-
banes-Oxley Act 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: 
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‘‘(1) Corporate strategy, major plans of action, 
risk policy, programs for legal and regulatory com-
pliance and corporate performance, including pru-
dent plans for growth and allocation of adequate re-
sources to manage operations risk. 
‘‘(2) Hiring and retention of qualified executive 
officers and succession planning for such executive 
officers. 
‘‘(3) Compensation programs of the enterprise. 
‘‘(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, inves-
tors, 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 
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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 executive officer of the enterprise, as provided by sec-
tion 13(k) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m(k)). 
‘‘(g) CERTIFICATION OF DISCLOSURES.—The chief 
executive officer and the chief financial officer of an enter-
prise shall review each quarterly report and annual report 
issued by the enterprise and such reports shall include cer-
tifications 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 
reviewing 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 
complies with applicable laws, rules, regulations, and 
internal controls. 
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‘‘(2) COMPLIANCE
OFFICER.—The compliance 
program of an enterprise shall be headed by a com-
pliance officer, however styled, who reports directly 
to the chief executive officer of the enterprise. The 
compliance officer shall report regularly to the board 
of directors or an appropriate committee of the 
board of directors on compliance with and the ade-
quacy of current compliance policies and procedures 
of the enterprise, and shall recommend any adjust-
ments to such policies and procedures that the com-
pliance officer 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 head-
ed by a risk management officer, however styled, 
who reports directly to the chief executive officer of 
the enterprise. The risk management officer shall re-
port regularly to the board of directors or an appro-
priate committee of the board of directors on compli-
ance with and the adequacy of current risk manage-
ment policies and procedures of the enterprise, and 
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shall recommend any adjustments to such policies 
and procedures that the risk management officer 
considers necessary 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 Ex-
change Act of 1934, the enterprise shall comply or 
continue to comply with sections 10A(m) and 13(k) 
of the Securities Exchange Act of 1934 (15 U.S.C. 
78j–1(m), 78m(k)) and sections 302, 304, and 406 
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 
7243, 7264), subject to such requirements as pro-
vided 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 Sar-
banes-Oxley Act of 2002, subject to such require-
ments as provided by subsection (l) of this section. 
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