277
District Court for the District of Columbia, or the United 
States district court for the judicial district in which the 
headquarters of the regulated entity is located, for a stay 
of such suspension and/or prohibition and any prohibition 
under subsection (b)(1)(B) pending the completion of the 
administrative proceedings pursuant to the notice served 
upon such party under this section, and such court shall 
have jurisdiction to stay such suspension and/or prohibi-
tion. 
‘‘(h) SUSPENSION OR REMOVAL OF REGULATED EN-
TITY-AFFILIATED PARTY CHARGED WITH FELONY.—
‘‘(1) SUSPENSION OR PROHIBITION.—
‘‘(A) IN GENERAL.—Whenever any regu-
lated entity-affiliated party is charged in any 
information, indictment, or complaint, with the 
commission of or participation in a crime in-
volving dishonesty or breach of trust which is 
punishable by imprisonment for a term exceed-
ing one year under State or Federal law, the 
Director may, if continued service or participa-
tion by such party may pose a threat to the 
regulated entity or impair public confidence in 
the regulated entity, by written notice served 
upon such party—
278
‘‘(i) suspend such party from office or 
prohibit such party from further participa-
tion in any manner in the conduct of the 
affairs of any regulated entity; and 
‘‘(ii) prohibit the regulated entity 
from releasing to or on behalf of the regu-
lated entity-affiliated party any compensa-
tion or other payment of money or other 
thing of current or potential value in con-
nection with the period of any such sus-
pension or with any resignation, removal, 
retirement, or other termination of employ-
ment or office of the party. 
‘‘(B) PROVISIONS
APPLICABLE
TO
NO-
TICE.—
‘‘(i) COPY.—A copy of any notice 
under paragraph (1)(A) shall also be 
served upon the regulated entity. 
‘‘(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 Director. 
‘‘(2) REMOVAL OR PROHIBITION.—
279
‘‘(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 a regulated entity-affiliated party in 
connection with a crime described in paragraph 
(1)(A), at such time as such judgment is not 
subject to further appellate review, the Director 
may, if continued service or participation by 
such party may pose a threat to the regulated 
entity or impair public confidence in the regu-
lated entity, issue and serve upon such party an 
order that—
‘‘(i) removes such party from office or 
prohibits such party from further partici-
pation in any manner in the conduct of the 
affairs of the regulated entity without the 
prior written consent of the Director; and 
‘‘(ii) prohibits the regulated entity 
from releasing to or on behalf of the regu-
lated entity-affiliated party any compensa-
tion or other payment of money or other 
thing of current or potential value in con-
nection with the termination of employ-
ment or office of the party.
280
‘‘(B) 
PROVISIONS
APPLICABLE
TO 
ORDER.—
‘‘(i) COPY.—A copy of any order 
under paragraph (2)(A) shall also be 
served upon the regulated entity, where-
upon the regulated entity-affiliated party 
who is subject to the order (if a director or 
an officer) shall cease to be a director or 
officer of such regulated entity. 
‘‘(ii) EFFECT OF ACQUITTAL.—A find-
ing of not guilty or other disposition of the 
charge shall not preclude the Director from 
instituting proceedings after such finding 
or disposition to remove such party from 
office or to prohibit further participation in 
regulated entity affairs, and to prohibit 
compensation or other payment of money 
or other thing of current or potential value 
in connection with any resignation, re-
moval, retirement, or other termination of 
employment or office of the party, pursu-
ant to subsections (a), (d), or (e) of this 
section. 
‘‘(iii) EFFECTIVE
PERIOD.—Any no-
tice of suspension or order of removal
281
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 Director. 
‘‘(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 a regulated enti-
ty 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 a regulated entity are suspended pursuant to this 
section, the Director shall appoint persons to serve 
temporarily 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 regulated entity and 
their respective successors take office. 
‘‘(4) HEARING
REGARDING
CONTINUED
PAR-
TICIPATION.—Within 30 days from service of any 
notice of suspension or order of removal issued pur-
282
suant to paragraph (1) or (2) of this subsection, the 
regulated entity-affiliated party concerned may re-
quest in writing an opportunity to appear before the 
Director to show that the continued service to or 
participation in the conduct of the affairs of the reg-
ulated entity by such party does not, or is not likely 
to, pose a threat to the interests of the regulated en-
tity or threaten to impair public confidence in the 
regulated entity. Upon receipt of any such request, 
the Director shall fix a time (not more than 30 days 
after receipt of such request, unless extended at the 
request of such party) and place at which such party 
may appear, personally or through counsel, before 
one or more members of the Director or designated 
employees of the Director to submit written mate-
rials (or, at the discretion of the Director, oral testi-
mony) and oral argument. Within 60 days of such 
hearing, the Director shall notify such party whether 
the suspension or prohibition from participation in 
any manner in the conduct of the affairs of the reg-
ulated entity will be continued, terminated, or other-
wise modified, or whether the order removing such 
party from office or prohibiting such party from fur-
ther participation in any manner in the conduct of 
the affairs of the regulated entity, and prohibiting
283
compensation in connection with termination will be 
rescinded or otherwise modified. Such notification 
shall contain a statement of the basis for the Direc-
tor’s decision, if adverse to such party. The Director 
is authorized to prescribe such rules as may be nec-
essary 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 regulated entity is 
located, unless the party afforded the hearing con-
sents to another place, and shall be conducted in ac-
cordance with the provisions of chapter 5 of title 5, 
United States Code. After such hearing, and within 
90 days after the Director has notified the parties 
that the case has been submitted to it for final deci-
sion, it shall render its decision (which shall include 
findings of fact upon which its decision is predi-
cated) 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
284
provided in paragraph (2), and thereafter until the 
record in the proceeding has been filed as so pro-
vided, the Director may at any time, upon such no-
tice and in such manner as it shall deem proper, 
modify, terminate, or set aside any such order. Upon 
such filing of the record, the Director may modify, 
terminate, or set aside any such order with permis-
sion 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 
regulated entity or the regulated entity-affiliated 
party concerned, 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 Cir-
cuit or court of appeals of the United States for the 
circuit in which the headquarters of the regulated 
entity is located, within 30 days after the date of 
service of such order, a written petition praying that 
the order of the Director be modified, terminated, or 
set aside. A copy of such petition shall be forthwith 
transmitted by the clerk of the court to the Director, 
and thereupon the Director shall file in the court the 
record in the proceeding, as provided in section 2112
285
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 Director. Re-
view 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 Director.’’. 
(b) CONFORMING AMENDMENTS.—
(1) 1992 ACT.—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’’. 
(2) FANNIE MAE CHARTER ACT.—The second 
sentence of subsection (b) of section 308 of the Fed-
eral National Mortgage Association Charter Act (12
286
U.S.C. 1723(b)) is amended by striking ‘‘The’’ and 
inserting ‘‘Except to the extent that action under 
section 1377 of the Housing and Community Devel-
opment Act of 1992 temporarily results in a lesser 
number, the’’. 
(3) FREDDIE MAC ACT.—The second sentence 
of subparagraph (A) of section 303(a)(2) of the 
Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1452(a)(2)(A)) is amended by striking 
‘‘The’’ and inserting ‘‘Except to the extent that ac-
tion under section 1377 of the Housing and Commu-
nity Development Act of 1992 temporarily results in 
a lesser number, the’’. 
SEC. 167. 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 Di-
rector, knowingly participates, directly or indirectly, in any 
manner (including by engaging in an activity specifically 
prohibited in such an order) in the conduct of the affairs
287
of any regulated entity 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.’’. 
SEC. 168. SUBPOENA AUTHORITY. 
Section 1379D(c) of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4641(c)), as so re-
designated by section 165(a)(1) of this Act, is further 
amended—
(1) by striking ‘‘request the Attorney General 
of the United States to’’ and inserting ‘‘, in the dis-
cretion of the Director,’’; 
(2) by inserting ‘‘or request that the Attorney 
General of the United States bring such an action,’’ 
after ‘‘District of Columbia,’’; and 
(3) by striking ‘‘or may, under the direction 
and control of the Attorney General, bring such an 
action’’. 
SEC. 169. CONFORMING AMENDMENTS. 
Subtitle C of title XIII of the Housing and Commu-
nity Development Act of 1992 is amended—
(1) in section 1372(c)(1) (12 U.S.C. 4632(c)), 
by striking ‘‘that enterprise’’ and inserting ‘‘that 
regulated entity’’; 
(2) in section 1379 (12 U.S.C. 4637), as so re-
designated by section 165(a)(1) of this Act—
288
(A) by inserting ‘‘, or of a regulated entity-
affiliated party,’’ before ‘‘shall not affect’’; and 
(B) by striking ‘‘such director or executive 
officer’’ each place such term appears and in-
serting ‘‘such director, executive officer, or reg-
ulated entity-affiliated party’’; 
(3) in section 1379A (12 U.S.C. 4638), as so 
redesignated by section 165(a)(1) of this Act, by in-
serting ‘‘or against a regulated entity-affiliated 
party,’’ before ‘‘or impair’’; 
(4) by striking ‘‘An enterprise’’ each place such 
term appears in such subtitle and inserting ‘‘A regu-
lated entity’’; 
(5) by striking ‘‘an enterprise’’ each place such 
term appears in such subtitle and inserting ‘‘a regu-
lated entity’’; 
(6) by striking ‘‘the enterprise’’ each place such 
term appears in such subtitle and inserting ‘‘the reg-
ulated entity’’; and 
(7) by striking ‘‘any enterprise’’ each place such 
term appears in such subtitle and inserting ‘‘any 
regulated entity’’. 
Subtitle E—General Provisions 
SEC. 181. BOARDS OF ENTERPRISES. 
(a) FANNIE MAE.—
289
(1) IN
GENERAL.—Subsection (b) of section 
308 of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1723(b)) is amended in the 
first sentence by striking ‘‘eighteen persons,’’ and 
inserting ‘‘not less than 7 and not more than 15 
persons,’’. 
(2) TRANSITIONAL
PROVISION.—The amend-
ments made by paragraph (1) shall not apply to any 
appointed position of the board of directors of the 
Federal National Mortgage Association until the ex-
piration of the annual term for such position during 
which the effective date under section 185 occurs. 
(b) FREDDIE MAC.—
(1) IN
GENERAL.—Paragraph (2) of section 
303(a) of the Federal Home Loan Mortgage Cor-
poration Act (12 U.S.C. 1452(a)(2) is amended in 
subparagraph (A) by striking ‘‘eighteen persons,’’ 
and inserting ‘‘not less than 7 and not more than 
15 persons,’’. 
(2) TRANSITIONAL
PROVISION.—The amend-
ments made by paragraph (1) shall not apply to any 
appointed position of the Board of Directors of the 
Federal Home Loan Mortgage Corporation until the 
expiration of the annual term for such position dur-
290
ing which the effective date under section 185 oc-
curs. 
SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY 
AND SOUNDNESS, AND MISSION OF ENTER-
PRISES. 
Not later than the expiration of the 12-month period 
beginning on the effective date under section 185, the Di-
rector of the Federal Housing Finance Agency shall sub-
mit a report to the Congress which shall include—
(1) a description of the portfolio holdings of the 
enterprises (as such term is defined in section 1303 
of the Housing and Community Development Act of 
1992 (12 U.S.C. 4502) in mortgages (including 
whole loans and mortgage-backed securities), non-
mortgages, and other assets; 
(2) a description of the risk implications for the 
enterprises of such holdings and the consequent risk 
management undertaken by the enterprises (includ-
ing the use of derivatives for hedging purposes), 
compared with off-balance sheet liabilities of the en-
terprises (including mortgage-backed securities guar-
anteed by the enterprises); 
(3) an analysis of portfolio holdings for safety 
and soundness purposes;
291
(4) an assessment of whether portfolio holdings 
fulfill the mission purposes of the enterprises under 
the Federal National Mortgage Association Charter 
Act and the Federal Home Loan Mortgage Corpora-
tion Act; and 
(5) an analysis of the potential systemic risk 
implications for the enterprises, the housing and 
capital markets, and the financial system of portfolio 
holdings, and whether such holdings should be lim-
ited or reduced over time. 
SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) 1992 ACT.—Title XIII of the Housing and Com-
munity Development Act of 1992 is amended by striking 
section 1383 (12 U.S.C. 1451 note). 
(b) TITLE 18, UNITED STATES CODE.—Section 1905 
of title 18, United States Code, is amended by striking 
‘‘Office of Federal Housing Enterprise Oversight’’ and in-
serting ‘‘Federal Housing Finance Agency’’. 
(c) FLOOD DISASTER PROTECTION ACT OF 1973.—
Section 102(f)(3)(A) of the Flood Disaster Protection Act 
of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by strik-
ing ‘‘Director of the Office of Federal Housing Enterprise 
Oversight of the Department of Housing and Urban De-
velopment’’ and inserting ‘‘Director of the Federal Hous-
ing Finance Agency’’.
292
(d) DEPARTMENT OF HOUSING AND URBAN DEVEL-
OPMENT ACT.—Section 5 of the Department of Housing 
and Urban Development Act (42 U.S.C. 3534) is amended 
by striking subsection (d). 
(e) TITLE 5, UNITED STATES CODE.—
(1) DIRECTOR’S PAY RATE.—Section 5313 of 
title 5, United States Code, is amended by striking 
the item relating to the Director of the Office of 
Federal Housing Enterprise Oversight, Department 
of Housing and Urban Development and inserting 
the following new item: 
‘‘Director of the Federal Housing Finance Agency.’’. 
(2) DEPUTY DIRECTORS’ PAY RATE.—Section 
5314 of title 5, United States Code, is amended by 
adding at the end the following new item: 
‘‘Deputy Directors, Federal Housing Finance Agency 
(3).’’. 
(3) PAY RATE FOR MEMBERS OF HOUSING FI-
NANCE OVERSIGHT BOARD.—Section 5315 of title 5, 
United States Code, is amended by adding at the 
end the following new item: 
‘‘Members, Housing Finance Oversight Board.’’. 
(4) EXCLUSION
FROM
SENIOR
EXECUTIVE 
SERVICE.—Section 3132(a)(1)(D) of title 5, United 
States Code, is amended by striking ‘‘the Office of
293
Federal Housing Enterprise Oversight of the De-
partment of Housing and Urban Development’’ and 
inserting ‘‘the Federal Housing Finance Agency’’. 
(f) INSPECTOR GENERAL ACT
OF 1978.—Section 
8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. 
App.) is amended by striking ‘‘Federal Housing Finance 
Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 
(g) FEDERAL DEPOSIT INSURANCE ACT.—Section 
11(t)(2)(A) of the Federal Deposit Insurance Act (12 
U.S.C.1821(t)(2)(A)) is amended by adding at the end the 
following new clause: 
‘‘(vii) The Federal Housing Finance 
Agency.’’. 
(h) 1997 EMERGENCY SUPPLEMENTAL APPROPRIA-
TIONS ACT.—Section 10001 of the 1997 Emergency Sup-
plemental Appropriations Act for Recovery From Natural 
Disasters, and for Overseas Peacekeeping Efforts, Includ-
ing Those In Bosnia (42 U.S.C. 3548) is amended—
(1) by striking ‘‘the Government National Mort-
gage Association, and the Office of Federal Housing 
Enterprise Oversight’’ and inserting ‘‘and the Gov-
ernment National Mortgage Association’’; and 
(2) by striking ‘‘, the Government National 
Mortgage Association, or the Office of Federal
294
Housing Enterprise Oversight’’ and inserting ‘‘or 
the Government National Mortgage Association’’. 
(i) NATIONAL HOMEOWNERSHIP TRUST ACT .—Sec-
tion 302(b)(4) of the Cranston-Gonzalez National Afford-
able Housing Act (42 U.S.C. 12851(b)(4)) is amended by 
striking ‘‘the chairperson of the Federal Housing Finance 
Board’’ and inserting ‘‘the Director of the Federal Hous-
ing Finance Agency’’. 
SEC. 184. STUDY OF ALTERNATIVE SECONDARY MARKET 
SYSTEMS. 
(a) IN GENERAL.—The Director of the Federal 
Housing Finance Agency, in consultation with the Board 
of Governors of the Federal Reserve System, the Secretary 
of the Treasury, and the Secretary of Housing and Urban 
Development, shall conduct a comprehensive study of the 
effects on financial and housing finance markets of alter-
natives to the current secondary market system for hous-
ing finance, taking into consideration changes in the struc-
ture of financial and housing finance markets and institu-
tions since the creation of the Federal National Mortgage 
Association and the Federal Home Loan Mortgage Cor-
poration. 
(b) CONTENTS.—The study under this section 
shall—