I
107TH CONGRESS
1ST SESSION
H. R. 1409
To reform the regulation of certain housing-related Government-sponsored
enterprises, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 4, 2001
Mr. BAKER introduced the following bill; which was referred to the Committee
on Financial Services
A BILL
To reform the regulation of certain housing-related
Government-sponsored enterprises, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Secondary Mortgage Market Enterprises Regulatory Im-
provement Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
TITLE I—REFORM OF REGULATION OF FANNIE MAE AND
FREDDIE MAC
Subtitle A—Improvement of Supervision
Sec. 101. Transfer of authority to regulate safety and soundness of enterprises
to Board of Governors of Federal Reserve System.
Sec. 102. Duties and authorities of Board.
Sec. 103. Regulations.
Sec. 104. Assessments.
Sec. 105. Termination of general regulatory authority of HUD.
Sec. 106. Approval of Board for new activities.
Sec. 107. Limitation on nonmission-related assets.
Sec. 108. Conforming loan limits.
Sec. 109. Registration of securities.
Sec. 110. Treasury line of credit.
Sec. 111. Public disclosure of information.
Sec. 112. Risk-based capital test for enterprises.
Sec. 113. Minimum and critical capital levels.
Sec. 114. Definitions.
Subtitle B—Prompt Corrective Action
Sec. 131. Capital classifications.
Sec. 132. Supervisory actions applicable to undercapitalized enterprises.
Sec. 133. Supervisory actions applicable to significantly undercapitalized enter-
prises.
Sec. 134. Receivership.
Subtitle C—Enforcement Actions
Sec. 151. Cease-and-desist proceedings.
Sec. 152. Temporary cease-and-desist proceedings.
Sec. 153. Removal and prohibition authority.
Sec. 154. Enforcement and jurisdiction.
Sec. 155. Civil money penalties.
Sec. 156. Criminal penalty.
Subtitle D—Reporting Regarding Enterprises
Sec. 161. Reporting regarding enterprises.
Subtitle E—General Provisions
Sec. 171. Conforming and technical amendments.
Sec. 172. Effective date.
TITLE II—TRANSFER OF FUNCTIONS, PERSONNEL, AND
PROPERTY
Sec. 201. Abolishment of OFHEO.
Sec. 202. Continuation and coordination of certain regulations.
Sec. 203. Transfer and rights of employees of OFHEO.
Sec. 204. Transfer of property and facilities.
TITLE I—REFORM OF REGULA-
TION OF FANNIE MAE AND
FREDDIE MAC
Subtitle A—Improvement of
Supervision
SEC. 101. TRANSFER OF AUTHORITY TO REGULATE SAFETY
AND 
SOUNDNESS 
OF 
ENTERPRISES 
TO
BOARD OF GOVERNORS OF FEDERAL RE-
SERVE SYSTEM.
Part 1 of subtitle A of title XIII of the Housing and
Community Development Act of 1992 is amended by strik-
ing sections 1311 and 1312 (12 U.S.C. 4511, 4512) and
inserting the following new section:
‘‘SEC. 1311. SUPERVISION AND REGULATION BY FEDERAL
RESERVE BOARD.
‘‘(a) IN GENERAL.—The enterprises shall, to the ex-
tent provided in this title, be subject to the supervision
and regulation of the Board of Governors of the Federal
Reserve System. The Board shall succeed to the authority
of the Director of the Office of Federal Housing Enter-
prise Oversight of the Department of Housing and Urban
Development and the general regulatory and any other au-
thority of the Secretary of Housing and Urban Develop-
ment with respect to the enterprises (except as specifically
provided otherwise in this Act, the Federal National Mort-
gage Association Charter Act, the Federal Home Loan
Mortgage Corporation Act, and any other provision of
Federal law).
‘‘(b) DELEGATION OF AUTHORITY.—Pursuant to sec-
tion 11(k) of the Federal Reserve Act, the Board of Gov-
ernors of the Federal Reserve System may carry out any
of its responsibilities for ongoing supervision and examina-
tion of the enterprises through one or more of the Federal
Reserve banks. The Board may not delegate any rule-
making or policymaking responsibilities.
‘‘(c) SAVINGS PROVISION.—The authority of the
Board to take actions under subtitles B and C does not
in any way limit the general supervisory and regulatory
authority granted to the Board under subsection (a).’’.
SEC. 102. DUTIES AND AUTHORITIES OF BOARD.
Section 1313 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4513) is amended to read
as follows:
‘‘SEC. 1313. DUTIES AND AUTHORITIES OF BOARD.
‘‘(a) DUTIES.—
‘‘(1) PRINCIPAL DUTIES.—The principal duties
under this title of the Board shall be to ensure that
the enterprises—
‘‘(A) operate in a financially safe and
sound manner;
‘‘(B) carry out their missions only through
activities that are authorized under, and con-
sistent with the purposes of, the provisions of
Federal law that charter the enterprises; and
‘‘(C) remain adequately capitalized.
‘‘(2) OTHER DUTIES.—To the extent consistent
with paragraph (1), the duty of the Board shall be
to exercise general supervisory and regulatory au-
thority over the enterprises, in accordance with this
title, the Federal National Mortgage Association
Charter Act, the Federal Home Loan Mortgage Cor-
poration Act, and any other provisions of law.
‘‘(b) DELEGATION OF AUTHORITY.—The Board may
delegate to officers and employees of the Board any of
the functions, powers, and duties of the Board, with re-
spect to supervision and regulation of the enterprises, as
the Board considers appropriate.’’.
SEC. 103. REGULATIONS.
Section 1319G of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4526) is amended—
(1) by striking subsection (a) and inserting the
following new subsection:
‘‘(a) AUTHORITY.—The Board shall issue any regula-
tions and orders necessary to carry out the duties of the
Board, with respect to supervision and regulation of the
enterprises, under this title, the Federal National Mort-
gage Association Charter Act, and the Federal Home
Loan Mortgage Corporation Act, and to ensure that the
purposes of this title and such Acts are accomplished.’’;
and
(2) in subsection (c), by striking ‘‘Committee on
Banking, Finance and Urban Affairs’’ and inserting
‘‘Committee on Financial Services’’.
SEC. 104. ASSESSMENTS.
Section 1316 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4516) is amended—
(1) by striking subsection (a) and inserting the
following new subsection:
‘‘(a) ANNUAL ASSESSMENTS.—The Board shall es-
tablish and collect from the enterprises annual assess-
ments in an amount not exceeding the sum of—
‘‘(1) the amount sufficient to provide for rea-
sonable costs and expenses of the Board, with re-
spect to regulation and supervision of the enter-
prises, including the expenses of any examinations
under section 1317; and
‘‘(2) the amount sufficient to provide for rea-
sonable costs and expenses of the Department of
Housing and Urban Development in carrying out
section 1325 and subparts B and C of this sub-
title.’’;
(2) in subsection (c), by adding at the end the
following new sentence: ‘‘The Board may adjust the
amounts of any semiannual assessments to be paid
pursuant to subsection (b) by the enterprises, as
necessary in the discretion of the Board, to ensure
that the costs of enforcement activities under sub-
titles B and C for an enterprise are borne only by
that enterprise.’’;
(3) by striking subsection (e) and inserting the
following new subsection:
‘‘(e) PAYMENT TO HUD FOR COSTS RELATING TO
HOUSING GOALS.—The Board shall, on a fiscal year basis,
transfer from the Federal Housing Enterprises Oversight
Fund established under subsection (f) to the Secretary of
Housing and Urban Development an amount equal to the
amount determined under subsection (a)(2) for such fiscal
year.’’;
(4) in subsection (f), by striking the last sen-
tence and inserting the following new sentence:
‘‘Notwithstanding any other provision of law, any
assessments collected pursuant to this section and
any amounts in the Fund shall not be construed to
be Government or public funds or appropriated
money, shall not be subject to apportionment for
purposes of chapter 15 of title 31, United States
Code, or under any other authority, and shall be
available without fiscal year limitation for carrying
out the supervisory and regulatory responsibilities of
the Board with respect to the enterprises, including
any necessary administrative and nonadministrative
expenses of the Board in carrying out the purposes
of this title, the Federal National Mortgage Associa-
tion Charter Act, and the Federal Home Loan Mort-
gage Corporation Act, and for annual payments
under subsection (e).’’; and
(5) in subsection (g)—
(A) by striking paragraphs (1) and (2) and
inserting the following new paragraphs:
‘‘(1) FINANCIAL OPERATING PLANS AND FORE-
CASTS.—Before the beginning of each fiscal year—
‘‘(A) the Board shall submit a copy of the
financial operating plans and forecasts for the
Board, with respect to regulation and super-
vision of the enterprises, to the Director of the
Office of Management and Budget; and
‘‘(B) the Secretary of Housing and Urban
Development shall submit a copy of the finan-
cial operating plans and forecasts for the De-
partment of Housing and Urban Development,
with respect to responsibilities and activities
under section 1325 and subtitles B and C of
this title, to the Board.
‘‘(2) REPORTS
OF
OPERATIONS.—As soon as
practicable after the end of each fiscal year and each
quarter thereof—
‘‘(A) the Board shall submit a copy of the
report of the results of the operations of the
Board, with respect to regulation and super-
vision of the enterprises, during such period to
the Director of the Office of Management and
Budget; and
‘‘(B) the Secretary of Housing and Urban
Development shall submit a report of the re-
sults of the operations of the Department of
Housing and Urban Development, with respect
to responsibilities and activities under section
1325 and subtitles B and C of this title, to the
Board.’’; and
(B) in paragraph (3)—
(i) by striking ‘‘(A)’’; and
(ii) by striking ‘‘, and (B)’’ and in-
serting the following: ‘‘. The annual plans,
forecasts, and reports required under para-
graphs (1)(B) and (2)(B) shall be in-
cluded’’.
SEC. 105. TERMINATION OF GENERAL REGULATORY AU-
THORITY OF HUD.
(a) IN GENERAL.—Part 2 of subtitle A of title XIII
of the Housing and Community Development Act of 1992
is amended—
(1) by striking the heading for the part and the
heading for subpart A and inserting the following:
‘‘PART 2—NEW ACTIVITIES, HOUSING
INFORMATION, AND HOUSING GOALS
‘‘Subpart A—New Activities and Housing
Information’’;
and
(2) by striking section 1321 (12 U.S.C. 4541).
(b) RETENTION OF FAIR HOUSING RESPONSIBIL-
ITIES.—Section 1325 of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4545) is amended, in
the matter preceding paragraph (1), by inserting ‘‘of
Housing and Urban Development’’ after ‘‘The Secretary’’.
(c) RETENTION OF AUTHORITY TO ESTABLISH AND
ENFORCE HOUSING GOALS.—Part 2 of subtitle A of the
Housing and Community Development Act of 1992 is
amended—
(1) by inserting ‘‘of Housing and Urban Devel-
opment (in this subpart referred to as the ‘Sec-
retary’)’’ after ‘‘The Secretary’’, each place such
term appears in—
(A) the first sentence of section 1331(a)
(12 U.S.C. 4561(a)); and
(B) section 1341(a) (12 U.S.C. 4581(a));
(2) in section 1332 (12 U.S.C. 4562), by strik-
ing subsection (d);
(3) in section 1333 (12 U.S.C. 4563), by strik-
ing subsection (d);
(4) in section 1334 (12 U.S.C. 4564), by strik-
ing subsection (d);
(5) in section 1336 (12 U.S.C. 4566)—
(A) in subsection (b)(3)(C), by inserting
‘‘the Board,’’ after ‘‘notice to the enterprise,’’;
and
(B) in subsection (c)(5), by inserting ‘‘,
and to the Board,’’ after ‘‘housing plan’’;
(6) by striking sections 1337 and 1338 (12
U.S.C. 4567, 4562 note);
(7) 
in 
section 
1341(b)(1) 
(12 
U.S.C.
4581(b)(1)), by inserting after the period at the end
the following new sentence: ‘‘Immediately upon
issuing and serving a notice of charges under this
section, the Secretary shall submit a copy of such
notice to the Board.’’;
(8) in section 1345 (12 U.S.C. 4585)—
(A) in subsection (c)(1)(A), by inserting
‘‘and the Board’’ after ‘‘enterprise’’; and
(B) in subsection (d), by inserting ‘‘, upon
notification to the Board,’’ after ‘‘1343’’; and
(9) in section 1346(a) (12 U.S.C. 4586(a)), in
the matter preceding paragraph (1), by inserting
‘‘and to the Board’’ after ‘‘the public’’.
(d) AUTHORITY OF BOARD OVER DETERMINATIONS
BY HUD.—Section 1331 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4561) is amended—
(1) in the section heading by inserting ‘‘AND
AUTHORITY OF BOARD’’ before the period at the
end; and
(2) by adding at the end the following new sub-
section:
‘‘(d) AUTHORITY OF BOARD.—The Board may review
any action of the Secretary of Housing and Urban Devel-
opment made in carrying out the Secretary’s responsibil-
ities under this subtitle as the Board considers necessary
to ensure that the enterprises comply with section
1313(a)(1).’’.
SEC. 106. APPROVAL OF BOARD FOR NEW ACTIVITIES.
(a) IN GENERAL.—Section 1322 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4542)
is amended to read as follows:
‘‘SEC. 1322. PRIOR APPROVAL AUTHORITY FOR NEW ACTIVI-
TIES.
‘‘(a) AUTHORITY.—The Board shall have the author-
ity to approve all new activities, and to review all ongoing
activities, of an enterprise to ensure compliance with the
Federal National Mortgage Association Charter Act or the
Federal Home Loan Mortgage Corporation Act, as appli-
cable.
‘‘(b) REQUIREMENT FOR PRIOR APPROVAL.—An en-
terprise may not commence any new activity before obtain-
ing the approval of the Board for the new activity, in ac-
cordance with this section.
‘‘(c) STANDARD FOR APPROVAL.—The Board may
approve a new activity of an enterprise only if—
‘‘(1) the new activity is authorized—
‘‘(A) with respect to the Federal National
Mortgage Association, under the Federal Na-
tional Mortgage Association Charter Act or
other Federal law; and
‘‘(B) with respect to the Federal Home
Loan Mortgage Corporation, under the Federal
Home Loan Mortgage Corporation Act or other
Federal law;
‘‘(2) the Board determines that the enterprise
can conduct the new activity in a safe and sound
manner; and
‘‘(3) the Board determines that the new activity
is in the public interest.
‘‘(d) PROCEDURE FOR APPROVAL.—The Board shall,
by regulation, establish procedures for the enterprises to
obtain the approval of the Board for purposes of sub-
section (b).’’.
(b) DEFINITION
OF NEW ACTIVITY.—Paragraph
(13) of section 1303 of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4502(13)) is amended
to read as follows:
‘‘(13) NEW ACTIVITY.—The term ‘new activity’
means, with respect to the enterprises, any program,
activity, business process, or investment that directly
or indirectly provides financing or other services re-
lated to conventional mortgages (including pur-
chasing, servicing, selling, and lending on the secu-
rity of such mortgages) that—
‘‘(A) is significantly different from pro-
grams, activities, business processes, or invest-
ments that (i) have been approved under this
Act, or (ii) were approved or engaged in by an
enterprise before the date of the enactment of
the Housing and Community Development Act
of 1992; or
‘‘(B) represents an expansion, in terms of
the dollar volume or number of mortgages or
securities involved, of programs above limits ex-
pressly contained in any prior approval.’’.
(c) CONFORMING AMENDMENTS.—
(1) FANNIE
MAE.—Section 302(b)(6) of the
Federal National Mortgage Association Charter Act
(12 U.S.C. 1717(b)(6)) is amended—
(A) by striking ‘‘program’’ and inserting
‘‘activity’’; and
(B) by striking ‘‘Secretary’’ and inserting
‘‘Board of Governors of the Federal Reserve
System’’.
(2) FREDDIE MAC.—Section 305(c) of the Fed-
eral Home Loan Mortgage Corporation Act (12
U.S.C. 1454(c)) is amended—
(A) by striking ‘‘program’’ and inserting
‘‘activity’’; and
(B) by striking ‘‘Secretary’’ and inserting
‘‘Board of Governors of the Federal Reserve
System’’.
(3) 1992 ACT.—Section 1369C(a)(4) of the
Housing and Community Development Act of 1992
(12 U.S.C. 4622(a)(4)) is amended by striking ‘‘pro-
grams’’ and inserting ‘‘activities’’.
SEC. 107. LIMITATION ON NONMISSION-RELATED ASSETS.
Subtitle B of title XIII of the Housing and Commu-
nity 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:
‘‘Subtitle B—Required Capital Lev-
els for Enterprises, Special En-
forcement Powers, and Limita-
tion on Nonmission-Related As-
sets’’;
and
(2) by adding at the end the following new sec-
tion:
‘‘SEC. 1369E. LIMITATION ON NONMISSION-RELATED AS-
SETS.
‘‘(a) IN GENERAL.—The Board shall, by regulation,
limit the nonmission-related assets that an enterprise may
hold at any time. The Board shall define the term ‘non-
mission-related asset’ for purposes of this section.
‘‘(b) RULE OF CONSTRUCTION.—Subsection (a) may
not be construed to authorize an enterprise to engage in
any new activity (as such term is defined in section 1303)
relating to any nonmission-related asset without obtaining
the prior approval of the Board in accordance with section
1322.’’.
SEC. 108. CONFORMING LOAN LIMITS.
(a) FANNIE MAE.—Section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) is amended by striking the 7th and 8th sen-
tences and inserting the following new sentences: ‘‘Such
limitations shall not exceed $275,000 for a mortgage se-
cured by a single-family residence, $351,950 for a mort-
gage secured by a 2-family residence, $425,400 for a
mortgage secured by a 3-family residence, and $528,700
for a mortgage secured by a 4-family residence, except
that such maximum limitations shall be adjusted effective
January 1 of each year beginning with 2002, subject to
the limitations in this paragraph. Each adjustment shall
be made by adding to each such amount (as it may have
been previously adjusted) a percentage thereof equal to the
percentage increase during the 12-month period ending
with the previous October in the housing price index main-
tained by the Board of Governors of the Federal Reserve
System (pursuant to section 1321 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541)).
If, upon the conclusion of such 12-month period, the level
of the housing price index does not exceed the highest level
attained by such index upon the conclusion of the previous
such 12-month periods, no such adjustment may be made
for the January 1 first occurring thereafter.’’.
(b) FREDDIE MAC.—Section 305(a)(2) of the Fed-
eral National Mortgage Association Charter Act (12
U.S.C. 1454(a)(2)) is amended by striking the 6th and
7th sentences and inserting the following new sentences:
‘‘Such limitations shall not exceed $275,000 for a mort-
gage secured by a single-family residence, $351,950 for
a mortgage secured by a 2-family residence, $425,400 for
a mortgage secured by a 3-family residence, and $528,700
for a mortgage secured by a 4-family residence, except
that such maximum limitations shall be adjusted effective
January 1 of each year beginning with 2002, subject to
the limitations in this paragraph. Each adjustment shall
be made by adding to each such amount (as it may have
been previously adjusted) a percentage thereof equal to the
percentage increase during the 12-month period ending
with the previous October in the housing price index main-
tained by the Board of Governors of the Federal Reserve
System (pursuant to section 1321 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541)).
If, upon the conclusion of such 12-month period, the level
of the housing price index does not exceed the highest level
attained by such index upon the conclusion of the previous
such 12-month periods, no such adjustment may be made
for the January 1 first occurring thereafter.’’.
(c) HOUSING PRICE INDEX.—Subpart A of part 2 of
subtitle A of title XIII of the Housing and Community
Development Act of 1992 (as amended by the preceding
provisions of this Act) is amended by inserting before sec-
tion 1322 (12 U.S.C. 4542) the following new section:
‘‘SEC. 1321. HOUSING PRICE INDEX.
‘‘The Board shall establish and maintain a method
of assessing the national average 1-family house price for
use for adjusting the conforming loan limitations of the
enterprises (as such term is defined in section 1303 of
Federal Housing Enterprises Financial Safety and Sound-
ness Act of 1992). In establishing such method, the Board
shall take into consideration the monthly survey of all
major lenders conducted by the Federal Housing Finance
Board to determine the national average 1-family house
price, the House Price Index maintained by the Office of
Federal Housing Enterprise Oversight of the Department
of Housing and Urban Development before the effective
date of the Secondary Mortgage Market Enterprises Reg-
ulatory Improvement Act, any appropriate house price in-
dexes of the Bureau of the Census of the Department of
Commerce, and any other indexes or measures that the
Board considers appropriate.’’.
SEC. 109. REGISTRATION OF SECURITIES.
(a) FANNIE MAE.—
(1) MORTGAGE-BACKED
SECURITIES.—Section
304(d) of the Federal National Mortgage Associa-
tion Charter Act (12 U.S.C. 1719(d)) is amended by
striking the fourth sentence and inserting the fol-
lowing new sentence: ‘‘Securities issued by the cor-
poration under this subsection shall not be exempt
securities within the meaning of the laws adminis-
tered by the Securities and Exchange Commission,
but such securities shall not be subject to fees under
section 6(b) of the Securities Act of 1933 or under
section 13(e) or 14(g) of the Securities Exchange
Act of 1934.’’.
(2) 
SUBORDINATE
OBLIGATIONS.—Section
304(e) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1719(e)) is amended by
striking the fourth sentence and inserting the fol-
lowing new sentence: ‘‘Securities issued by the cor-
poration under this subsection shall not be exempt
securities within the meaning of the laws adminis-
tered by the Securities and Exchange Commission,
but such securities shall not be subject to fees under
section 6(b) of the Securities Act of 1933 or under
section 13(e) or 14(g) of the Securities Exchange
Act of 1934.’’.
(3) SECURITIES.—Section 311 of the Federal
National Mortgage Association Charter Act (12
U.S.C. 1723c) is amended—
(A) in the second sentence, by inserting
‘‘by the Association’’ after ‘‘issued’’; and
(B) by adding at the end the following new
sentence: ‘‘Any stock, obligations, securities,
participations, or other instruments issued by
the corporation pursuant to this title shall not
be exempt securities within the meaning of the
laws administered by the Securities and Ex-
change Commission, but such stock, obligations,
securities, participations, or other instruments
shall not be subject to fees under section 6(b)
of the Securities Act of 1933 or under section
13(e) or 14(g) of the Securities Exchange Act
of 1934.’’.
(b) FREDDIE MAC.—Subsection (g) of section 306 of
the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1455(g)) is amended to read as follows:
‘‘(g) Any securities issued or guaranteed by the Cor-
poration shall not be exempt securities within the meaning
of the laws administered by the Securities and Exchange
Commission, but such securities shall not be subject to
fees under section 6(b) of the Securities Act of 1933 or
under section 13(e) or 14(g) of the Securities Exchange
Act of 1934.’’.
SEC. 110. TREASURY LINE OF CREDIT.
(a) FANNIE MAE.—The first sentence of section
304(c) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1719(c)) is amended by striking
‘‘The’’ and inserting ‘‘Upon a request by the Board of
Governors of the Federal Reserve System, the’’.
(b) FREDDIE MAC.—The first sentence of paragraph
(1) of section 306(c) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1455(c)(1)) is amended by
striking ‘‘The’’ and inserting ‘‘Upon a request by the
Board of Governors of the Federal Reserve System, the’’.
SEC. 111. PUBLIC DISCLOSURE OF INFORMATION.
Section 1314 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4514) is amended—
(1) in the section heading by striking ‘‘BY EN-
TERPRISES’’ and inserting ‘‘AND INFORMATION’’;
and
(2) by adding at the end the following new sub-
section:
‘‘(c) PUBLIC DISCLOSURE OF INFORMATION.—The
Board shall, by regulation, require each enterprise to dis-
close to the public, on not less than an annual basis, such
financial, business, and other information that the Board
determines would be in the public interest.’’.
SEC. 112. RISK-BASED CAPITAL TEST FOR ENTERPRISES.
Section 1361 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4611) is amended—
(1) in subsection (a)(2)(A), by inserting ‘‘or
change in such other manner as the Board considers
appropriate,’’ after ‘‘subparagraph (C),’’;
(2) in subsection (b)(1), by inserting after the
period at the end the following: ‘‘Notwithstanding
subsection (a), the Board may, in the sole discretion
of the Board, make any assumptions that the Board
considers appropriate regarding interest rates, home
prices, and new business.’’; and
(3) in subsection (c)(2), by inserting ‘‘or such
other percentage as the Board considers appro-
priate’’ before the period at the end.
SEC. 113. MINIMUM AND CRITICAL CAPITAL LEVELS.
(a) MINIMUM CAPITAL LEVEL.—Section 1362 of the
Housing and Community Development Act of 1992 (12
U.S.C. 4612) is amended—
(1) by striking subsection (b);
(2) by striking ‘‘(a) IN GENERAL.—’’; and
(3) in the matter preceding paragraph (1), by
inserting before ‘‘the sum of’’ the following: ‘‘the
amount established by the Board, by regulation or
order, as such amount may be adjusted from time-
to-time by the Board to achieve the purposes of this
title, that is not less than’’.
(b) CRITICAL CAPITAL LEVEL.—Section 1363 of the
Housing and Community Development Act of 1992 (12
U.S.C. 4613) is amended, in the matter preceding para-
graph (1), by inserting before ‘‘the sum of’’ the following:
‘‘the amount established by the Board, by regulation or
order, as such amount may be adjusted from time-to-time
by the Board to achieve the purposes of this title, that
is not less than’’.
SEC. 114. DEFINITIONS.
Section 1303 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4502) is amended—
(1) in paragraphs (8), (9), (10), and (19), by
inserting ‘‘of Housing and Urban Development’’
after ‘‘Secretary’’ each place such term appears;
(2) by striking paragraphs (5), (14), and (15);
(3) by redesignating paragraphs (7) through
(13) (as amended by the preceding provisions of this
Act) as paragraphs (8) through (14), respectively;
(4) by redesignating paragraphs (16) through
(19) as paragraphs (15) through (18), respectively;
(5) by inserting after paragraph (6) the fol-
lowing new paragraph:
‘‘(7) 
ENTERPRISE-AFFILIATED
PARTY.—The
term ‘enterprise-affiliated party’ means—
‘‘(A) any director, officer, employee, or
controlling stockholder of, or agent for, an en-
terprise;
‘‘(B) any shareholder, consultant, joint
venture partner, and any other person as deter-
mined by the Board (by regulation or case-by-
case) who participates in the conduct of the af-
fairs of an enterprise; 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.’’;
(6) by redesignating paragraphs (2), (3), (4) as
paragraphs (3), (4), and (5), respectively; and
(7) by inserting after paragraph (1) the fol-
lowing new paragraph:
‘‘(2) BOARD.—The term ‘Board’ means the
Board of Governors of the Federal Reserve Sys-
tem.’’.
Subtitle B—Prompt Corrective
Action
SEC. 131. CAPITAL CLASSIFICATIONS.
Section 1364 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4614) is amended—
(1) by striking subsection (b) and inserting the
following new subsection:
‘‘(b) DISCRETIONARY CLASSIFICATION.—
‘‘(1) GROUNDS
FOR
RECLASSIFICATION.—The
Board may reclassify an enterprise under paragraph
(2) if—
‘‘(A) at any time, the Board determines in
writing that an enterprise is engaging in con-
duct not approved by the Board that could re-
sult in a rapid depletion of core capital or that
the value of the property subject to mortgages
held or securitized by the enterprise has de-
creased significantly;
‘‘(B) after notice and an opportunity for
hearing, the Board determines that an enter-
prise is in an unsafe or unsound condition; or
‘‘(C) pursuant to section 1371(b), the
Board deems an enterprise to be engaging in an
unsafe or unsound practice.
‘‘(2) RECLASSIFICATION.—In addition to any
other action authorized under this title, including
the reclassification of an enterprise for any reason
not specified in this subsection, if the Board takes
any action described in paragraph (1) the Board
may classify an enterprise—
‘‘(A) as undercapitalized, if the enterprise
is otherwise classified as adequately capitalized;
‘‘(B) as significantly undercapitalized, if
the enterprise is otherwise classified as under-
capitalized; and
‘‘(C) as critically undercapitalized, if the
enterprise is otherwise classified as significantly
undercapitalized.’’;
(2) by redesignating subsection (d) as sub-
section (e); and
(3) by inserting after subsection (c) the fol-
lowing new subsection:
‘‘(d) RESTRICTION ON CAPITAL DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—An enterprise shall make
no capital distribution if, after making the distribu-
tion, the enterprise would be undercapitalized.
‘‘(2) EXCEPTION.—Notwithstanding paragraph
(1), the Board may permit an enterprise to repur-
chase, redeem, retire, or otherwise acquire shares or
ownership interests if the repurchase, redemption,
retirement, or other acquisition—
‘‘(A) is made in connection with the
issuance of additional shares or obligations of
the enterprise in at least an equivalent amount;
and
‘‘(B) will reduce the financial obligations of
the enterprise or otherwise improve the finan-
cial condition of the enterprise.’’.
SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED ENTERPRISES.
(a) EFFECTIVE DATE FOR SUPERVISORY ACTIONS.—
Section 1365(c) of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 4615(c)) is amended by
striking ‘‘1-year’’ and inserting ‘‘6-month’’.
(b) SUPERVISORY ACTIONS.—Section 1365 of the
Housing and Community Development Act of 1992 (12
U.S.C. 4615) is amended—
(1) 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 
Board
shall—
‘‘(A) closely monitor the condition of any
undercapitalized enterprise;
‘‘(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 enterprise to determine whether the
plan, restrictions, and requirements are achiev-
ing the purpose of this section.’’; and
(C) by inserting at the end the following
new paragraphs:
‘‘(4) RESTRICTION
OF
ASSET
GROWTH.—An
undercapitalized enterprise shall not permit its aver-
age total assets during any calendar quarter to ex-
ceed its average total assets during the preceding
calendar quarter unless—
‘‘(A) the Board has accepted the enter-
prise’s capital restoration plan;
‘‘(B) any increase in total assets is con-
sistent with the plan; and
‘‘(C) the enterprise’s ratio of tangible eq-
uity to assets increases during the calendar
quarter at a rate sufficient to enable the enter-
prise to become adequately capitalized within a
reasonable time.
‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND
ISSUANCE OF NEW PRODUCTS.—An undercapitalized
enterprise shall not, directly or indirectly, acquire
any interest in any entity or issue a new product
unless—
‘‘(A) the Board has accepted the enter-
prise’s capital restoration plan, the enterprise is
implementing the plan, and the Board deter-
mines that the proposed action is consistent
with and will further the achievement of the
plan; or
‘‘(B) the Board determines that the pro-
posed action will further the purpose of this
section.’’; and
(2) in the subsection heading for subsection (b),
by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI-
CANTLY UNDERCAPITALIZED’’;
(3) by redesignating subsection (c) (as amended
by subsection (a) of this section) as subsection (d);
and
(4) by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The
Board may take, with respect to an undercapitalized en-
terprise, any of the actions authorized to be taken under
section 1366 with respect to a significantly undercapital-
ized enterprise, if the Board determines that such actions
are necessary to carry out the purpose of this subtitle.’’.
SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI-
CANTLY UNDERCAPITALIZED ENTERPRISES.
Section 1366 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4616) is amended—
(1) 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, 1 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
enterprise.
‘‘(B) DISMISSAL OF DIRECTORS OR EXECU-
TIVE OFFICERS.—Require the enterprise to dis-
miss from office any director or executive offi-
cer who had held office for more than 180 days
immediately before the enterprise became
undercapitalized. Dismissal under this subpara-
graph shall not be construed to be a removal
pursuant to the Board’s enforcement powers
provided in section 1377.
‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF-
FICERS.—Require the enterprise to employ
qualified executive officers (who, if the Board so
specifies, shall be subject to approval by the
Board).’’; and
(E) by inserting at the end the following
new paragraph:
‘‘(8) OTHER ACTION.—Require the enterprise
to take any other action that the Board determines
will better carry out the purpose of this section than
any of the actions specified in this paragraph.’’;
(2) by redesignating subsection (c) as sub-
section (d); and
(3) by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) RESTRICTION ON COMPENSATION OF EXECU-
TIVE OFFICERS.—An enterprise that is classified as sig-
nificantly undercapitalized may not, without prior written
approval by the Board—
‘‘(A) pay any bonus to any executive offi-
cer; or
‘‘(B) provide compensation to any execu-
tive officer at a rate exceeding that officer’s av-
erage rate of compensation (excluding bonuses,
stock options, and profit sharing) during the 12
calendar months preceding the calendar month
in which the enterprise became undercapital-
ized.’’.
SEC. 134. RECEIVERSHIP.
Section 1368 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4618) is amended to read
as follows:
‘‘SEC. 1368. APPOINTMENT OF RECEIVERS
‘‘(a) APPOINTMENT.—
‘‘(1) AUTHORITY.—Upon a determination that
an enterprise is critically undercapitalized and a de-
termination that the enterprise meets such other
conditions for taking action pursuant to this sub-
section as the Board shall by regulation establish,
the Board may, notwithstanding section 1367(a)(1),
appoint a receiver for the enterprise in accordance
with this section and in lieu of appointment of a
conservator pursuant to section 1367. If the Board
takes action pursuant to this subsection, the Board
shall appoint the receiver not later than 30 days
after providing notice under paragraph (2) of this
subsection.
‘‘(2) NOTICE.—Upon making a determination
under paragraph (1) to appoint a receiver for an en-
terprise, the Board shall provide written notice to
the enterprise, the Committee on Financial Services
of the House of Representatives, and the Committee
on Banking, Housing, and Urban Affairs of the
Senate—
‘‘(A) that a receiver will be appointed for
the enterprise;
‘‘(B) stating the reasons for the appoint-
ment of the receiver; and
‘‘(C) identifying the person or govern-
mental agency that the Board intends to ap-
point as a receiver.
‘‘(3) QUALIFICATIONS.—The receiver shall be—
‘‘(A) the Board or any other governmental
agency; or
‘‘(B) any person that—
‘‘(i) has no claim against, or financial
interest in, the enterprise or other basis for
a conflict of interest; and
‘‘(ii) has the financial and manage-
ment expertise necessary to carry out the
duties under subsection (c).
‘‘(b) JUDICIAL REVIEW.—The provisions of section
1369(b) shall apply to the appointment of a receiver pur-
suant to this section to the same extent that such provi-
sions apply to the appointment of a conservator pursuant
to this subtitle.
‘‘(c) DUTIES.—A receiver appointed pursuant to this
section shall be appointed for the purpose, and shall have
the duty, of liquidating or winding up the affairs of the
enterprise, in accordance with such regulations as the
Board may issue.
‘‘(d) REPLACEMENT, POWERS, LIABILITY PROTEC-
TION.—The provisions of subsections (c) and (d) of section
1369, section 1369A, and section 1369B shall apply to
a receiver appointed pursuant to this section to the same
extent that such provisions apply to a conservator ap-
pointed pursuant to this subtitle. In addition to any pow-
ers under section 1369A, a receiver appointed pursuant
to this section shall have such powers with respect to an
enterprise, as the Board may by regulation provide, that
the Federal Deposit Insurance Corporation has under sec-
tion 11 of the Federal Deposit Insurance Act (12 U.S.C.
1821) with respect to a insured depository institution
when acting as a receiver under such section.’’.
Subtitle C—Enforcement Actions
SEC. 151. CEASE-AND-DESIST PROCEEDINGS.
Section 1371 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4631) is amended—
(1) by striking subsections (a) and (b) and in-
serting the following new subsections:
‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC-
TICES AND VIOLATIONS OF RULES OR LAWS.—If, in the
opinion of the Board, an enterprise or any enterprise-af-
filiated party is engaging or has engaged, or the Board
has reasonable cause to believe that the enterprise or any
enterprise-affiliated party is about to engage, in an unsafe
or unsound practice in conducting the business of the en-
terprise or is violating or has violated, or the Board has
reasonable cause to believe that the enterprise or any en-
terprise-affiliated party is about to violate, a law, rule, or
regulation, or any condition imposed in writing by the
Board in connection with the granting of any application
or other request by the enterprise or any written agree-
ment entered into with the Board, the Board may issue
and serve upon the enterprise or such party a notice of
charges in respect thereof. The Board may not enforce
compliance with any housing goal established under sub-
part B of part 2 of subtitle A of this title, with section
1336 or 1337 of this title, with subsection (m) or (n) of
section 309 of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1723a(m), (n)), or with subsection
(e) or (f) of section 307 of the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1456(e), (f)).
‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If
an enterprise receives, in its most recent report of exam-
ination, a less-than-satisfactory rating for asset quality,
management, earnings, or liquidity, the Board may (if the
deficiency is not corrected) deem the enterprise to be en-
gaging in an unsafe or unsound practice for purposes of
this subsection.’’; and
(2) in subsection (c)(2), by striking ‘‘or direc-
tor’’ and inserting ‘‘director, or enterprise-affiliated
party’’.
SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS.
Section 1372 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4632) is amended—
(1) by striking subsection (a) and inserting the
following new subsection:
‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Board
determines that the violation or threatened violation or the
unsafe or unsound practice or practices specified in the
notice of charges served upon the enterprise or any enter-
prise-affiliated party pursuant to section 1371(a), or the
continuation thereof, is likely to cause insolvency or sig-
nificant dissipation of assets or earnings of the enterprise,
or is likely to weaken the condition of the enterprise prior
to the completion of the proceedings conducted pursuant
to sections 1371 and 1373, the Board may issue a tem-
porary order requiring the enterprise or such party to
cease and desist from any such violation or practice and
to take affirmative action to prevent or remedy such insol-
vency, dissipation, condition, or prejudice pending comple-
tion of such proceedings. Such order may include any re-
quirement authorized under subsection 1371(d).’’;
(2) in subsection (b), by striking ‘‘or director’’
and inserting ‘‘director, or enterprise-affiliated
party’’;
(3) in subsection (d), striking ‘‘or director’’ and
inserting ‘‘director, or enterprise-affiliated party’’;
and
(4) by striking subsection (e) and in inserting
the following new subsection:
‘‘(e) ENFORCEMENT.—In the case of violation or
threatened violation of, or failure to obey, a temporary
cease-and-desist order issued pursuant to this section, the
Board may apply to the United States District Court for
the District of Columbia or the United States district
court within the jurisdiction of which the headquarters of
the enterprise is located, for an injunction to enforce such
order, and, if the court determines that there has been
such violation or threatened violation or failure to obey,
it shall be the duty of the court to issue such injunction.’’.
SEC. 153. REMOVAL AND PROHIBITION AUTHORITY.
(a) IN GENERAL.—Subtitle C of title XIII of the
Housing and Community Development Act of 1992 is
amended—
(1) by redesignating sections 1377 through
1379B (12 U.S.C. 4637–41) as sections 1379
through 1379D, respectively; and
(2) by inserting after section 1376 (12 U.S.C.
4636) the following new section:
‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.
‘‘(a) AUTHORITY TO ISSUE ORDER.—Whenever the
Board determines that—
‘‘(1) any enterprise-affiliated party has, directly
or indirectly—
‘‘(A) violated—
‘‘(i) any law or regulation;
‘‘(ii) any cease-and-desist order which
has become final;
‘‘(iii) any condition imposed in writing
by the Board in connection with the grant
of any application or other request by such
enterprise; or
‘‘(iv) any written agreement between
such enterprise and the Board;
‘‘(B) engaged or participated in any unsafe
or unsound practice in connection with any en-
terprise; or
‘‘(C) committed or engaged in any act,
omission, or practice which constitutes a breach
of such party’s fiduciary duty;
‘‘(2) by reason of the violation, practice, or
breach described in any subparagraph of paragraph
(1)—
‘‘(A) such enterprise has suffered or will
probably suffer financial loss or other damage;
or
‘‘(B) such party has received financial gain
or other benefit by reason of such violation,
practice, or breach; and
‘‘(3) such violation, practice, or breach—
‘‘(A) involves personal dishonesty on the
part of such party; or
‘‘(B) demonstrates willful or continuing
disregard by such party for the safety or sound-
ness of such enterprise,
the Board may serve upon such party a written notice of
the Board’s intention to remove such party from office or
to prohibit any further participation by such party, in any
manner, in the conduct of the affairs of any enterprise.
‘‘(b) SUSPENSION ORDER.—
‘‘(1) SUSPENSION
OR
PROHIBITION
AUTHOR-
ITY.—If the Board serves written notice under sub-
section (a) to any enterprise-affiliated party of the
Board’s intention to issue an order under such sub-
section, the Board may suspend such party from of-
fice or prohibit such party from further participation
in any manner in the conduct of the affairs of the
enterprise, if the Board—
‘‘(A) determines that such action is nec-
essary for the protection of the enterprise; and
‘‘(B) serves such party with written notice
of the suspension order.
‘‘(2) EFFECTIVE
PERIOD.—Any suspension
order issued under subsection (a)—
‘‘(A) shall become effective upon service;
and
‘‘(B) unless a court issues a stay of such
order under subsection (g) of this section, shall
remain in effect and enforceable until—
‘‘(i) the date the Board dismisses the
charges contained in the notice served
under subsection (a) with respect to such
party; or
‘‘(ii) the effective date of an order
issued by the Board to such party under
subsection (a).
‘‘(3) COPY OF ORDER.—If the Board issues a
suspension order under subsection (a) to any enter-
prise-affiliated party, the Board shall serve a copy of
such order on any enterprise with which such party
is affiliated at the time such order is issued.
‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of
intention to remove an enterprise-affiliated party from of-
fice or to prohibit such party from participating in the
conduct of the affairs of an enterprise shall contain a
statement of the facts constituting grounds for such ac-
tion, and shall fix a time and place at which a hearing
will be held on such action. Such hearing shall be fixed
for a date not earlier than 30 days nor later than 60 days
after the date of service of such notice, unless an earlier
or a later date is set by the Board at the request of (1)
such party, and for good cause shown, or (2) the Attorney
General of the United States. Unless such party shall ap-
pear at the hearing in person or by a duly authorized rep-
resentative, such party shall be deemed to have consented
to the issuance of an order of such removal or prohibition.
In the event of such consent, or if upon the record made
at any such hearing the Board shall find that any of the
grounds specified in such notice have been established, the
Board may issue such orders of suspension or removal
from office, or prohibition from participation in the con-
duct of the affairs of the enterprise, as it may deem appro-
priate. Any such order shall become effective at the expira-
tion of 30 days after service upon such enterprise and such
party (except in the case of an order issued upon consent,
which shall become effective at the time specified therein).
Such order shall remain effective and enforceable except
to such extent as it is stayed, modified, terminated, or set
aside by action of the Board or a reviewing court.
‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI-
TIES.—Any person subject to an order issued under this
section shall not—
‘‘(1) participate in any manner in the conduct
of the affairs of any enterprise;
‘‘(2) solicit, procure, transfer, attempt to trans-
fer, vote, or attempt to vote any proxy, consent, or
authorization with respect to any voting rights in
any enterprise;
‘‘(3) violate any voting agreement previously
approved by the Board; or
‘‘(4) vote for a director, or serve or act as an
enterprise-affiliated party.
‘‘(e) INDUSTRY-WIDE PROHIBITION.—
‘‘(1) IN GENERAL.—Except as provided in sub-
paragraph (2), any person who, pursuant to an
order issued under subsection (h), has been removed
or suspended from office in an enterprise or prohib-
ited from participating in the conduct of the affairs
of an enterprise may not, while such order is in ef-
fect, continue or commence to hold any office in, or
participate in any manner in the conduct of the af-
fairs of any enterprise.
‘‘(2) EXCEPTION IF BOARD PROVIDES WRITTEN
CONSENT.—If, on or after the date an order is
issued under this section which removes or suspends
from office any enterprise-affiliated party or pro-
hibits such party from participating in the conduct
of the affairs of an enterprise, such party receives
the written consent of the Board, the order shall, to
the extent of such consent, cease to apply to such
party with respect to the enterprise described in the
written consent. If the Board grants such a written
consent, it shall publicly disclose such consent.
‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED
AS VIOLATION OF ORDER.—Any violation of para-
graph (1) by any person who is subject to an order
described in such subsection shall be treated as a
violation of the order.
‘‘(f) APPLICABILITY.—This section shall only apply
to a person who is an individual, unless the Board specifi-
cally finds that it should apply to a corporation, firm, or
other business enterprise.
‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF
ENTERPRISE-AFFILIATED PARTY.—Within 10 days after
any enterprise-affiliated party has been suspended from
office and/or prohibited from participation in the conduct
of the affairs of an enterprise under this section, such
party may apply to the United States District Court for
the District of Columbia, or the United States district
court for the judicial district in which the headquarters
of the enterprise is located, for a stay of such suspension
and/or prohibition pending the completion of the adminis-
trative proceedings pursuant to the notice served upon
such party under this section, and such court shall have
jurisdiction to stay such suspension and/or prohibition.
‘‘(h) SUSPENSION OR REMOVAL OF ENTERPRISE-AF-
FILIATED PARTY CHARGED WITH FELONY.—
‘‘(1) SUSPENSION OR PROHIBITION.—
‘‘(A) IN GENERAL.—Whenever any enter-
prise-affiliated party is charged in any informa-
tion, indictment, or complaint, with the commis-
sion of or participation in a crime involving dis-
honesty or breach of trust which is punishable
by imprisonment for a term exceeding one year
under State or Federal law, the Board may, if
continued service or participation by such party
may pose a threat to the enterprise or impair
public confidence in the enterprise, by written
notice served upon such party, suspend such
party from office or prohibit such party from
further participation in any manner in the con-
duct of the affairs of any enterprise.
‘‘(B) PROVISIONS
APPLICABLE
TO
NO-
TICE.—
‘‘(i) COPY.—A copy of any notice
under paragraph (1)(A) shall also be
served upon the enterprise.
‘‘(ii) EFFECTIVE PERIOD.—A suspen-
sion or prohibition under subparagraph (A)
shall remain in effect until the informa-
tion, indictment, or complaint referred to
in such subparagraph is finally disposed of
or until terminated by the Board.
‘‘(2) REMOVAL OR PROHIBITION.—
‘‘(A) IN GENERAL.—If a judgment of con-
viction or an agreement to enter a pretrial di-
version or other similar program is entered
against an enterprise-affiliated party in connec-
tion with a crime described in paragraph
(1)(A), at such time as such judgment is not
subject to further appellate review, the Board
may, if continued service or participation by
such party may pose a threat to the enterprise
or impair public confidence in the enterprise,
issue and serve upon such party an order re-
moving such party from office or prohibiting
such party from further participation in any
manner in the conduct of the affairs of the en-
terprise without the prior written consent of the
Board.
‘‘(B) 
PROVISIONS
APPLICABLE
TO
ORDER.—
‘‘(i) COPY.—A copy of any order
under paragraph (2)(A) shall also be
served upon the enterprise, whereupon the
enterprise-affiliated party who is subject to
the order (if a director or an officer) shall
cease to be a director or officer of such en-
terprise.
‘‘(ii) EFFECT OF ACQUITTAL.—A find-
ing of not guilty or other disposition of the
charge shall not preclude the Board from
instituting proceedings after such finding
or disposition to remove such party from
office or to prohibit further participation in
enterprise affairs pursuant to subsections
(a), (d), or (e) of this section.
‘‘(iii) EFFECTIVE
PERIOD.—Any no-
tice of suspension or order of removal
issued under this subsection shall remain
effective and outstanding until the comple-
tion of any hearing or appeal authorized
under paragraph (4) unless terminated by
the Board.
‘‘(3) AUTHORITY OF REMAINING BOARD MEM-
BERS.—If at any time, because of the suspension of
one or more directors pursuant to this section, there
shall be on the board of directors of an enterprise
less than a quorum of directors not so suspended, all
powers and functions vested in or exercisable by
such board shall vest in and be exercisable by the di-
rector or directors on the board not so suspended,
until such time as there shall be a quorum of the
board of directors. In the event all of the directors
of an enterprise are suspended pursuant to this sec-
tion, the Board shall appoint persons to serve tem-
porarily as directors in their place and stead pending
the termination of such suspensions, or until such
time as those who have been suspended, cease to be
directors of the enterprise and their respective suc-
cessors take office.
‘‘(4) HEARING
REGARDING
CONTINUED
PAR-
TICIPATION.—Within 30 days from service of any
notice of suspension or order of removal issued pur-
suant to paragraph (1) or (2) of this subsection, the
enterprise-affiliated party concerned may request in
writing an opportunity to appear before the Board
to show that the continued service to or participation
in the conduct of the affairs of the enterprise by
such party does not, or is not likely to, pose a threat
to the interests of the enterprise or threaten to im-
pair public confidence in the enterprise. Upon re-
ceipt of any such request, the Board shall fix a time
(not more than 30 days after receipt of such re-
quest, unless extended at the request of such party)
and place at which such party may appear, person-
ally or through counsel, before one or more members
of the Board designated employees of the Board to
submit written materials (or, at the discretion of the
Board, oral testimony) and oral argument. Within
60 days of such hearing, the Board shall notify such
party whether the suspension or prohibition from
participation in any manner in the conduct of the af-
fairs of the enterprise will be continued, terminated,
or otherwise modified, or whether the order remov-
ing such party from office or prohibiting such party
from further participation in any manner in the con-
duct of the affairs of the enterprise will be rescinded
or otherwise modified. Such notification shall con-
tain a statement of the basis for the Board’s deci-
sion, if adverse to such party. The Board is author-
ized to prescribe such rules as may be necessary to
effectuate the purposes of this subsection.
‘‘(i) HEARINGS AND JUDICIAL REVIEW.—
‘‘(1) VENUE
AND
PROCEDURE.—Any hearing
provided for in this section shall be held in the Dis-
trict of Columbia or in the Federal judicial district
in which the headquarters of the enterprise is lo-
cated, unless the party afforded the hearing consents
to another place, and shall be conducted in accord-
ance with the provisions of chapter 5 of title 5,
United States Code. After such hearing, and within
90 days after the Board has notified the parties that
the case has been submitted to it for final decision,
it shall render its decision (which shall include find-
ings of fact upon which its decision is predicated)
and shall issue and serve upon each party to the
proceeding an order or orders consistent with the
provisions of this section. Judicial review of any
such order shall be exclusively as provided in this
subsection. Unless a petition for review is timely
filed in a court of appeals of the United States, as
provided in paragraph (2), and thereafter until the
record in the proceeding has been filed as so pro-
vided, the Board may at any time, upon such notice
and in such manner as it shall deem proper, modify,
terminate, or set aside any such order. Upon such
filing of the record, the Board may modify, termi-
nate, or set aside any such order with permission of
the court.
‘‘(2) REVIEW OF ORDER.—Any party to any
proceeding under paragraph (1) may obtain a review
of any order served pursuant to paragraph (1)
(other than an order issued with the consent of the
enterprise or the enterprise-affiliated party con-
cerned, or an order issued under subsection (h) of
this section) by the filing in the United States Court
of Appeals for the District of Columbia Circuit or
court of appeals of the United States for the circuit
in which the headquarters of the enterprise is lo-
cated, within 30 days after the date of service of
such order, a written petition praying that the order
of the Board be modified, terminated, or set aside.
A copy of such petition shall be forthwith trans-
mitted by the clerk of the court to the Board, and
thereupon the Board shall file in the court the
record in the proceeding, as provided in section 2112
of title 28, United States Code. Upon the filing of
such petition, such court shall have jurisdiction,
which upon the filing of the record shall (except as
provided in the last sentence of paragraph (1)) be
exclusive, to affirm, modify, terminate, or set aside,
in whole or in part, the order of the Board. Review
of such proceedings shall be had as provided in
chapter 7 of title 5, United States Code. The judg-
ment and decree of the court shall be final, except
that the same shall be subject to review by the Su-
preme Court upon certiorari, as provided in section
1254 of title 28, United States Code.
‘‘(3) PROCEEDINGS NOT TREATED AS STAY.—
The commencement of proceedings for judicial re-
view under paragraph (2) shall not, unless specifi-
cally ordered by the court, operate as a stay of any
order issued by the Board.’’.
(b) CONFORMING AMENDMENT.—Section 1317(f) of
the Housing and Community Development Act of 1992
(12 U.S.C. 4517(f)) is amended by striking ‘‘section
1379B’’ and inserting ‘‘section 1379D’’.
SEC. 154. ENFORCEMENT AND JURISDICTION.
Section 1375 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4635) is amended—
(1) by striking subsection (a) and inserting the
following new subsection:
‘‘(a) ENFORCEMENT.—The Board may in its discre-
tion apply to the United States District Court for the Dis-
trict of Columbia, or the United States district court with-
in the jurisdiction of which the headquarters of the enter-
prise is located, for the enforcement of any effective and
outstanding notice or order issued under this subtitle or
subtitle B, or request that the Attorney General of the
United States bring such an action. Such court shall have
jurisdiction and power to order and require compliance
with such notice or order.’’; and
(2) in subsection (b), by striking ‘‘or 1376’’ and
inserting ‘‘1376, or 1377’’
SEC. 155. CIVIL MONEY PENALTIES.
Section 1376 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4636) is amended—
(1) in subsection (a), in the matter preceding
paragraph (1), by striking ‘‘or any executive officer
or’’ and inserting ‘‘any executive officer of an enter-
prise, any enterprise-affiliated party, or any’’;
(2) by striking subsection (b) and inserting the
following new subsection:
‘‘(b) AMOUNT OF PENALTY.—
‘‘(1) FIRST
TIER.—Any enterprise which, or
any enterprise-affiliated party who—
‘‘(A) violates any provision of this title, the
Federal National Mortgage Association Charter
Act (12 U.S.C. 1716 et seq.), the Federal
Home Loan Mortgage Corporation Act (12
U.S.C. 1451 et seq.), or any order, condition,
rule, or regulation under any such title or Act,
except that the Board may not enforce compli-
ance with any housing goal established under
subpart B of part 2 of subtitle A of this title,
with section 1336 or 1337 of this title, with
subsection (m) or (n) of section 309 of the Fed-
eral National Mortgage Association Charter Act
(12 U.S.C. 1723a(m), (n)), or with subsection
(e) or (f) of section 307 of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C.
1456(e), (f));
‘‘(B) violates any final or temporary order
or notice issued pursuant to this title;
‘‘(C) violates any condition imposed in
writing by the Board in connection with the
grant of any application or other request by
such enterprise;
‘‘(D) violates any written agreement be-
tween the enterprise and the Board; or
‘‘(E) engages in any conduct the Board de-
termines to be an unsafe or unsound practice,
shall forfeit and pay a civil penalty of not more than
$5,000 for each day during which such violation con-
tinues.
‘‘(2) SECOND
TIER.—Notwithstanding para-
graph (1)—
‘‘(A) if an enterprise, or an enterprise-af-
filiated party—
‘‘(i) commits any violation described
in any subparagraph of paragraph (1);
‘‘(ii) recklessly engages in an unsafe
or unsound practice in conducting the af-
fairs of such enterprise; or
‘‘(iii) breaches any fiduciary duty
which violation, practice, or breach; and
‘‘(B) the violation, practice, or breach—
‘‘(i) is part of a pattern of mis-
conduct;
‘‘(ii) causes or is likely to cause more
than a minimal loss to such enterprise; or
‘‘(iii) results in pecuniary gain or
other benefit to such party,
the enterprise or enterprise-affiliated party shall for-
feit and pay a civil penalty of not more than
$25,000 for each day during which such violation,
practice, or breach continues.
‘‘(3) 
THIRD
TIER.—Notwithstanding 
para-
graphs (1) and (2), any enterprise which, or any en-
terprise-affiliated party who—
‘‘(A) knowingly—
‘‘(i) commits any violation described
in any subparagraph of paragraph (1);
‘‘(ii) engages in any unsafe or un-
sound practice in conducting the affairs of
such enterprise; or
‘‘(iii) breaches any fiduciary duty; and
‘‘(B) knowingly or recklessly causes a sub-
stantial loss to such enterprise or a substantial
pecuniary gain or other benefit to such party by
reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not
to exceed the applicable maximum amount deter-
mined under paragraph (4) for each day during
which such violation, practice, or breach continues.
‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR
ANY
VIOLATION
DESCRIBED
IN
PARAGRAPH
(3).—
The maximum daily amount of any civil penalty
which may be assessed pursuant to paragraph (3)
for any violation, practice, or breach described in
such paragraph is—
‘‘(A) in the case of any person other than
an enterprise, an amount not to exceed
$1,000,000; and
‘‘(B) in the case of any enterprise,
$1,000,000.’’; and
(3) in subsection (d)—
(A) by striking ‘‘or director’’ each place
such term appears and inserting ‘‘director, or
enterprise-affiliated party’’;
(B) by striking ‘‘request the Attorney Gen-
eral of the United States to’’;
(C) by inserting ‘‘, or the United States
district court within the jurisdiction of which
the headquarters of the enterprise is located,’’
after ‘‘District of Columbia’’; and
(D) by striking ‘‘, or may, under the direc-
tion and control of the Attorney General, bring
such an action’’.
SEC. 156. CRIMINAL PENALTY.
Subtitle C of title XIII of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 4631 et seq.)
is amended by inserting after section 1377 (as added by
the preceding provisions of this Act) the following new sec-
tion:
‘‘SEC. 1378. CRIMINAL PENALTY.
‘‘Whoever, being subject to an order in effect under
section 1377, without the prior written approval of the
Board, knowingly participates, directly or indirectly, in
any manner (including by engaging in an activity specifi-
cally prohibited in such an order) in the conduct of the
affairs of any enterprise shall, notwithstanding section
3571 of title 18, be fined not more than $1,000,000, im-
prisoned for not more than 5 years, or both.’’.
Subtitle D—Reporting Regarding
Enterprises
SEC. 161. REPORTING REGARDING ENTERPRISES.
Part 3 of subtitle A of the Housing and Community
Development Act of 1992 is amended—
(1) by striking sections 1351, 1352, and 1353
(Public Law 102–550; 106 Stat. 3969), except the
provisions of law amended by such sections repealed
shall not be affected by such repeal; and
(2) by striking sections 1354, 1355, and 1356
(12 U.S.C. 4601–3) and inserting the following new
section: