resource bank and the office of finance shall be au-
dited in accordance with paragraph (1) of section
9105(a) of title 31, United States Code, and may be
audited in accordance with paragraph (4) of such
section.
‘‘(2) EXCEPTION TO EXCLUSION FROM GOVERN-
MENT
CORPORATION
CONTROL
ACT.—Section
9107(c)(2) of title 31, United States Code, shall not
apply to any enterprise resource bank or the office
of finance.
‘‘(3) SELECTION OF EXTERNAL AUDITORS.—
‘‘(A) IN
GENERAL.—The enterprise re-
source banks and the office of finance shall con-
tract jointly for an annual external audit.
‘‘(B) ROLE
OF
THE
BOARD.—Notwith-
standing any other provision of law, the Fi-
nance Board shall not participate in the audit
contracting process under this paragraph except
that the Finance Board may establish require-
ments for external audit contracts and require-
ments to assure consistency in financial re-
port.’’.
(e) SECTION 16.—
(1) Section 16(a) of the Federal Home Loan
Bank Act (12 U.S.C. 1436(a)) is amended—
(A) in the 3d sentence, by striking ‘‘and
then only with the approval of the Federal
Housing Finance Board’’ and inserting ‘‘subject
to such regulations as may be prescribed by the
Finance Board’’; and
(B) by striking the 4th sentence and in-
serting the following new sentence: ‘‘No enter-
prise resource bank may make any dividend
payment pursuant to the preceding sentence
without the approval of the Finance Board un-
less the amount of retained earnings and re-
serves (other than loan loss reserves) of the
bank after the payment of such dividend would
equal or exceed the amount of capital required
in order for the bank to be treated as ade-
quately capitalized under all relevant capital
measures in effect pursuant to section 6A(c).’’.
(2) Section 16 of the Federal Home Loan Bank
Act (12 U.S.C. 1436) is amended by adding at the
end the following new subsection:
‘‘(d) OWNERSHIP INTEREST IN RETAINED EARNINGS
RECOGNIZED.—Subject to any other provision of this Act,
each enterprise resource bank and, indirectly, the voting
shareholders of each bank, shall have an ownership inter-
est in, and a property right in, the retained earnings of
the bank.’’.
(f) REPEAL OF SECTIONS 2A, 2B, AND 24.—The
Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.)
is amended by striking sections 2A, 2B, and 24.
SEC. 13. INCORPORATION OF BANKS; CORPORATE POWERS.
Section 12 of the Federal Home Loan Bank Act is
amended to read as follows:
‘‘SEC. 12. INCORPORATION OF BANKS; CORPORATE POW-
ERS.
‘‘(a) ORGANIZATIONAL CERTIFICATES.—
‘‘(1) CUSTODIANSHIP.—The Finance Board
shall be the custodian of the organizational certifi-
cates of the enterprise resource banks previously
filed with the Federal Home Loan Bank Board (as
in existence before the end of the 60-day period be-
ginning on the date of the enactment of the Finan-
cial Institutions Reform, Recovery, and Enforcement
Act of 1989) or the Finance Board.
‘‘(2) REPLACEMENT OF LOST OR DESTROYED
CERTIFICATE.—If the organizational certificate of an
enterprise resource bank is lost or destroyed, the
board of directors of the bank shall provide the Fi-
nance Board with a substitute certificate containing
such information as the Finance Board may require.
100
‘‘(3) AMENDMENT IN CASE OF MERGER, COM-
BINATION, OR CONSOLIDATION.—If 2 or more enter-
prise resource banks merge, combine, or otherwise
consolidate, the resulting bank shall provide the Fi-
nance Board with an amended organizational certifi-
cate containing such information as the Finance
Board may require.
‘‘(b) CORPORATE STATUS.—Each enterprise resource
bank shall be a corporation.
‘‘(c) POWERS.—Each enterprise resource bank shall
have the following powers:
‘‘(1) To adopt, alter, and use a corporate seal.
‘‘(2) To make contracts.
‘‘(3) To purchase or lease and hold or dispose
of such real estate as may be necessary or conven-
ient for the transaction of the business of the bank.
‘‘(4) To sue and be sued, to complain, and to
defend, in any court of competent jurisdiction.
‘‘(5) To select, employ, and fix the compensa-
tion of such officers, employees, attorneys, and
agents as the board of directors determines to be
necessary for the transaction of the business of the
bank.
101
‘‘(6) To define the duties of, and require bonds
of, officers, employees, attorneys, and agents of the
bank and fix the penalties of any such bonds.
‘‘(7) To dismiss at pleasure officers, employees,
attorneys, and agents of the bank.
‘‘(8) By the board of directors, to prescribe,
amend, and repeal bylaws and policies governing the
manner in which the affairs of the bank may be ad-
ministered.
‘‘(9) Such incidental powers as are not incon-
sistent with the provisions of this Act and are cus-
tomary and usual in corporations generally.
‘‘(d) PROHIBITION ON EXCESSIVE COMPENSATION.—
‘‘(1) IN GENERAL.—The Finance Board shall
prohibit the enterprise resource banks from provid-
ing compensation to any employee of the bank that
is not reasonable and comparable with compensation
for employment in other similar businesses (includ-
ing other financial institutions or major financial
services companies) involving similar duties and re-
sponsibilities.
‘‘(2) LIMITATION
ON
FINANCE
BOARD’S
AU-
THORITY TO SET COMPENSATION.—In carrying out
paragraph (1), the Financial Board may not pre-
102
scribe or set a specific level or range of compensa-
tion.
‘‘(e) STATUS OF BANK EMPLOYEES.—Notwithstand-
ing any other provision of this Act, no officer, employee,
or agent of an enterprise resource bank or the office of
finance of such banks shall be considered to be an officer
or employee of the United States for purposes of title 5,
United States Code.
‘‘(f) GUARANTEED HOUSING PROJECT LOANS.—
Subject to such regulations as may be prescribed by the
Finance Board, an enterprise resource bank may acquire,
hold, or dispose of, in whole or in part, or facilitate the
acquisition, holding, or disposition by members of such
bank of, any housing project loan which has the benefit
of any guaranty under section 221, 222, or 224 of the
Foreign Assistance Act of 1961, any interest in any such
loan, or any commitment or agreement with respect to any
such loan or interest.’’.
SEC. 14. SUCCESSION OF ENTERPRISE RESOURCE BANKS.
Section 25 of the Federal Home Loan Bank Act (12
U.S.C. 1445) is amended by inserting ‘‘, operation of
law,’’ after ‘‘the Board under this Act’’.
104
trust, or other security arrangement
was executed.
‘‘(B) CERTAIN
LOANS
INCLUDED.—The
term ‘home mortgage loan’ includes—
‘‘(i) such classes of first liens as are
commonly given to secure advances on real
estate, under the laws of the State in
which the real estate is located, by institu-
tions authorized under this Act to become
members of an enterprise resource bank;
and
‘‘(ii) the credit instruments, if any, se-
cured by such liens.
‘‘(C) QUALIFIED REAL ESTATE; QUALIFIED
LEASEHOLD.—The term ‘qualified real estate’
and ‘qualified leasehold’ mean real estate upon
which is located, or which comprises or in-
cludes, 1 or more homes or other dwelling
units.
‘‘(D) DEFINITION OF FURTHER TERMS.—
The Finance Board may define any term used
in this paragraph.’’.
(c) RESIDENTIAL MORTGAGE ASSETS DEFINED.—
Section 2 of the Federal Home Loan Bank Act (12 U.S.C.
1422) is amended—
105
(1) by redesignating paragraphs (7), (8), (9),
(10), (11), and (12) as paragraphs (6), (7), (8), (9),
(10), and (11), respectively; and
(2) by adding at the end the following new
paragraph:
‘‘(12) RESIDENTIAL MORTGAGE ASSETS.—The
term ‘residential mortgage asset’—
‘‘(A) means a home mortgage, deed of
trust, or other security arrangement upon real
estate that is solely residential; and
‘‘(B) includes any mortgage pass-through
security or mortgage debt security representing
an interest in, or which is collateralized by,
home mortgage loans.’’.
(d) REGULATED
FINANCIAL
INSTITUTION
DE-
FINED.—Section 2 of the Federal Home Loan Bank Act
(12 U.S.C. 1422) is amended by adding after paragraph
(12) (as added by subsection (c) of this section) the follow-
ing new paragraph:
‘‘(13) REGULATED FINANCIAL INSTITUTION.—
The term ‘regulated financial institution’ means—
‘‘(A) any depository institution (as defined
in section 3(c) of the Federal Deposit Insurance
Act; and
106
‘‘(B) any insured or noninsured credit
union (as such terms are defined in section
101(7) of the Federal Credit Union Act).’’.
(e) CAPITAL DISTRIBUTION DEFINED.—Section 2 of
the Federal Home Loan Bank Act (12 U.S.C. 1422) is
amended by adding after paragraph (13) (as added by
subsection (d) of this section) the following new para-
graph:
‘‘(14) CAPITAL DISTRIBUTION.—The term ‘cap-
ital distribution’ means—
‘‘(A) any dividend or other distribution in
cash or other property made with respect to any
shares of, or other ownership interest in, an en-
terprise resource bank, other than a dividend
consisting only of shares of any such bank;
‘‘(B) any payment in cash or other prop-
erty made by an enterprise resource bank to re-
purchase, redeem, retire, or otherwise acquire
any of the shares of the bank, including any ex-
tension of credit made to finance an acquisition
by a bank of such shares; and
‘‘(C) any transaction that the Finance
Board determines by regulation to be, in sub-
stance, a distribution of capital of an enterprise
resource bank.’’.
107
(f) BANK-AFFILIATED PARTY.—Section 2 of the
Federal Home Loan Bank Act (12 U.S.C. 1422) is
amended by adding after paragraph (14) (as added by
subsection (e) of this section) the following new para-
graph:
‘‘(15) BANK-AFFILIATED
PARTY.—The term
‘bank-affiliated party’ means—
‘‘(A) any director, officer, or employee of,
or agent for, an enterprise resource bank;
‘‘(B) any voting shareholder, consultant,
joint venture partner, and any other person as
determined by the Finance Board who partici-
pates in the conduct of the affairs of an enter-
prise resource bank; and
‘‘(C) any independent contractor (including
any attorney, appraiser, or accountant) who
knowingly or recklessly participates in—
‘‘(i) any violation of any law or regu-
lation;
‘‘(ii) any breach of fiduciary duty; or
‘‘(iii) any unsafe or unsound practice,
which caused or is likely to cause more than a
minimal financial loss to, or a significant ad-
verse effect on, the enterprise resource bank.’’.
108
(g) VOTING SHAREHOLDER.—Section 2 of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1422) is amended
by adding after paragraph (15) (as added by subsection
(f) of this section) the following new paragraph:
‘‘(16) VOTING SHAREHOLDER.—The term ‘vot-
ing shareholder’ means any regulated financial insti-
tution or insurance company which holds any voting
stock of an enterprise resource bank.’’.
Æ