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‘‘(B) as significantly undercapitalized, if 
the regulated entity is otherwise classified as 
undercapitalized; and 
‘‘(C) as critically undercapitalized, if the 
regulated entity is otherwise classified as sig-
nificantly undercapitalized.’’; and 
(5) by inserting after subsection (d) (as so re-
designated by paragraph (3) of this subsection), the 
following new subsection: 
‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 
‘‘(1) IN
GENERAL.—A regulated entity shall 
make no capital distribution if, after making the dis-
tribution, the regulated entity would be under-
capitalized. 
‘‘(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Director may permit a regulated entity, to 
the extent appropriate or applicable, to repurchase, 
redeem, retire, or otherwise acquire shares or owner-
ship interests if the repurchase, redemption, retire-
ment, or other acquisition— 
‘‘(A) is made in connection with the 
issuance of additional shares or obligations of 
the regulated entity in at least an equivalent 
amount; and
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‘‘(B) will reduce the financial obligations of 
the regulated entity or otherwise improve the fi-
nancial condition of the entity.’’. 
(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 to carry out section 1364(b) 
of the Housing and Community Development Act of 1992 
(as added by paragraph (4) of this subsection), relating 
to capital classifications for the Federal home loan banks. 
SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED REGULATED ENTITIES. 
Section 1365 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4615) is amended— 
(1) in the section heading, by striking ‘‘ENTER-
PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 
(2) in subsection (a)— 
(A) by redesignating paragraphs (1) and 
(2) as paragraphs (2) and (3), respectively; 
(B) by inserting before paragraph (2) the 
following paragraph: 
‘‘(1) REQUIRED
MONITORING.—The Director 
shall—
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‘‘(A) closely monitor the condition of any 
regulated entity that is classified as under-
capitalized; 
‘‘(B) closely monitor compliance with the 
capital restoration plan, restrictions, and re-
quirements imposed under this section; and 
‘‘(C) periodically review the plan, restric-
tions, and requirements applicable to the under-
capitalized regulated entity to determine wheth-
er the plan, restrictions, and requirements are 
achieving the purpose of this section.’’; and 
(C) by inserting at the end the following 
new paragraphs: 
‘‘(4) RESTRICTION OF ASSET GROWTH.—A reg-
ulated entity that is classified as undercapitalized 
shall not permit its average total assets (as such 
term is defined in section 1316(b) during any cal-
endar quarter to exceed its average total assets dur-
ing the preceding calendar quarter unless— 
‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity; 
‘‘(B) any increase in total assets is con-
sistent with the plan; and 
‘‘(C) the ratio of total capital to assets for 
the regulated entity increases during the cal-
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endar quarter at a rate sufficient to enable the 
entity to become adequately capitalized within a 
reasonable time. 
‘‘(5) PRIOR APPROVAL OF ACQUISITIONS, NEW 
PROGRAMS, AND NEW BUSINESS ACTIVITIES.—A reg-
ulated entity that is classified as undercapitalized 
shall not, directly or indirectly, acquire any interest 
in any entity or engage in any new program or new 
business activity unless— 
‘‘(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
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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.’’. 
SEC. 143. 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 ‘‘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 insert-
ing ‘‘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;
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(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. 
‘‘(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-
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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: 
‘‘(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. 144. 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:
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‘‘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 
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—
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‘‘(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. 
‘‘(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)).
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‘‘(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-
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
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‘‘(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. 
‘‘(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) 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
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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. 
‘‘(5) 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-
ment of the Agency as conservator or receiver for 
that regulated entity. 
‘‘(6) 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