I
104TH CONGRESS
2D SESSION
H. R. 3167
To reform the Federal Home Loan Bank System, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 27, 1996
Mr. BAKER of Louisiana (for himself, Mr. KANJORSKI, Mr. MCCOLLUM, Mr.
BACHUS, Mr. KING, Mr. HAYWORTH, Mr. CHRYSLER, Mr. CREMEANS,
Mr. FOX of Pennsylvania, Mr. METCALF, Mr. WELLER, Mr. LAFALCE,
Mr. ORTON, and Mr. BENTSEN) introduced the following bill; which was
referred to the Committee on Banking and Financial Services
A BILL
To reform the Federal Home Loan Bank System, 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; TABLE OF CONTENTS; FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Enterprise Resource Bank Act of 1996’’.
(b) TABLE OF CONTENTS.—The table of sections for
this Act is as follows:
Sec. 1. Short title; table of contents; findings.
Sec. 2. Redesignation of Federal home loan banks as enterprise resource banks.
Sec. 3. Provisions relating to banks and bank membership.
Sec. 4. Federal Housing Finance Board.
Sec. 5. The Office of Finance.
Sec. 6. Capital.
Sec. 7. Prompt corrective action.
Sec. 8. Management of banks.
Sec. 9. Sustainable economic development program.
Sec. 10. Enforcement authority to promote safety and soundness of enterprise
resource banks.
Sec. 11. Resolution Funding Corporation obligation.
Sec. 12. Powers and duties of banks; technical and conforming amendments.
Sec. 13. Incorporation of banks; corporate powers.
Sec. 14. Succession of enterprise resource banks.
Sec. 15. Definitions.
(c) FINDINGS.—The Congress finds the following:
(1) The Federal Home Loan Bank System was
established in 1932 primarily to provide a source of
intermediate- and long-term credit for State savings
institutions to finance long-term residential mort-
gages and to provide a source for liquidity loans for
such institutions, neither of which was readily avail-
able for such institutions at that time.
(2) Recently, the System’s membership has
been expanded to include other depository institu-
tions that are significant housing lenders.
(3) That portion of all savings associations and
other depository institutions which are specialized
mortgage lending has decreased, both with respect to
the volume of loans and as a percentage of market
share and may continue to decrease.
(4) The establishment of the Federal National
Mortgage Association, the Federal Home Loan
Mortgage Corporation, and the Government Na-
tional Mortgage Association and the subsequent de-
velopment of an extensive private secondary market
for residential mortgages has challenged the Federal
Home 
Loan 
Bank 
System 
as 
a 
source 
of
intermediate- and long-term credit to support pri-
mary residential mortgage lenders.
(5) For most depository institutions, residential
mortgage lending has been incorporated into a prod-
uct mix of community banking that typically pro-
vides a range of mortgage, consumer, and commer-
cial loans in their communities.
(6) Community banks have a difficult time
accessing capital markets and adequately funding
intermediate- and long-term assets held by the bank
for investment purposes, particularly community
banks located in rural areas where nonfarm busi-
nesses tend to rely heavily on community banks as
their primary lender.
(7) Since community banks in rural areas, like
savings associations in the 1930s, tend to draw most
of their funds from local deposits, credit for borrow-
ers in rural areas may be difficult to obtain and the
economy of rural America could benefit from in-
creased competition if community banks in rural
areas were provided with enhanced access to capital
markets.
(8) Access to liquidity through Federal home
loan banks greatly benefits well-managed, ade-
quately-capitalized community banks because—
(A) term advances reduce interest rate
risk; and
(B) the ability of a community bank to ob-
tain advances to offset deposit decreases or to
temporarily fund portfolios during an increase
in loan demands reduces the bank’s overall cost
of operation and allows the community bank to
better serve its market and community.
(9) Used prudently, the Federal Home Loan
Bank System is an integral tool to assist properly-
regulated, well-capitalized community banks, espe-
cially community banks in rural areas and under-
served neighborhoods, to obtain a more stable fund-
ing source for intermediate- and long-term assets.
SEC. 2. REDESIGNATION OF FEDERAL HOME LOAN BANKS
AS ENTERPRISE RESOURCE BANKS.
(a) IN GENERAL.—Each Federal home loan bank is
hereby redesignated as an enterprise resource bank.
(b) UNIVERSAL CONFORMING AMENDMENTS.—
(1) FEDERAL HOME LOAN BANK.—The Federal
Home Loan Bank Act (12 U.S.C. 1421 et seq.) is
amended by striking ‘‘Federal Home Loan Bank’’
and ‘‘Federal Home Loan Banks’’ each place such
terms appear in such Act (other than in connection
with a reference to the Federal Home Loan Bank
System) and inserting ‘‘enterprise resource bank’’
and ‘‘enterprise resource banks’’, respectively.
(2) FEDERAL HOME LOAN BANK SYSTEM.—The
Federal Home Loan Bank Act (12 U.S.C. 1421 et
seq.) is amended by striking ‘‘Federal Home Loan
Bank System’’ and inserting ‘‘enterprise resource
bank system’’.
(c) REDESIGNATION OF ACT.—
(1) IN
GENERAL.—The Federal Home Loan
Bank Act (12 U.S.C. 1421 et seq.) is amended by
striking the clause that appears after the enacting
clause and before section 2 and inserting the follow-
ing new section:
‘‘SECTION 1. SHORT TITLE.
‘‘This Act may be cited as the ‘Enterprise Resource
Bank System Act’.’’.
(2) REFERENCES
TO
FEDERAL
HOME
LOAN
BANK ACT.—Any reference in this Act and any other
Federal law to the Federal Home Loan Bank Act
shall be deemed, as of the date of the enactment of
this Act, to be a reference to the Enterprise Re-
source Bank System Act.
(d) REFERENCES
TO
FEDERAL
HOME
LOAN
BANKS.—Any reference in a Federal law to any Federal
home loan bank shall be deemed, as of the date of the
enactment of this Act, to be a reference to an enterprise
resource bank.
SEC. 3. PROVISIONS RELATING TO BANKS AND BANK MEM-
BERSHIP.
The Federal Home Loan Bank Act (12 U.S.C. 1421)
is amended by inserting after section 4 the following new
section:
‘‘SEC. 5. MISSION STATEMENT; ENTERPRISE RESOURCE
BANKS.
‘‘(a) MISSION.—The enterprise resource banks are
established by the Congress as profitmaking financial in-
stitutions whose purposes are as follows:
‘‘(1) To promote residential mortgage lending
(including mortgages on housing for low- and mod-
erate-income families).
‘‘(2) To facilitate community and economic de-
velopment lending, including rural economic develop-
ment lending.
‘‘(3) To assist such lending, safely and soundly,
through a program of collateralized advances and
other financial services that provide long-term fund-
ing, liquidity, operational, and interest rate risk
management to the bank’s shareholders and certain
mortgagees who are not shareholders of the bank.
‘‘(b) DISTRICTS.—
‘‘(1) IN GENERAL.—Subject to subsection (c),
there are 12 districts which shall be known as enter-
prise resource bank districts.
‘‘(2) NAME OF DISTRICT.—Each district shall
bear a name descriptive of the geographic location of
the district.
‘‘(3) DISTRICTS DESIGNATED.—Subject to sub-
section (c), the 12 districts shall be comprised as fol-
lows:
‘‘(A) District 1 shall be composed of the
States of Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, and Vermont.
‘‘(B) District 2 shall be composed of the
States of New Jersey and New York, the Com-
monwealth of Puerto Rico, and the territory of
the Virgin Islands.
‘‘(C) District 3 shall be composed of the
States of Delaware, Pennsylvania, and West
Virginia.
‘‘(D) District 4 shall be composed of the
States of Alabama, Florida, Georgia, Maryland,
North Carolina, South Carolina, and Virginia,
and the District of Columbia.
‘‘(E) District 5 shall be composed of the
States of Kentucky, Ohio, and Tennessee.
‘‘(F) District 6 shall be composed of the
States of Indiana and Michigan.
‘‘(G) District 7 shall be composed of the
States of Illinois and Wisconsin.
‘‘(H) District 8 shall be composed of the
States of Iowa, Minnesota, Missouri, North Da-
kota, and South Dakota.
‘‘(I) District 9 shall be composed of the
States of Arkansas, Louisiana, Mississippi, New
Mexico, and Texas.
‘‘(J) District 10 shall be composed of the
States of Colorado, Kansas, Nebraska, and
Oklahoma.
‘‘(K) District 11 shall be composed of the
States of Arizona, California, and Nevada.
‘‘(L) District 12 shall be composed of the
States of Alaska, Hawaii, Idaho, Montana, Or-
egon, Utah, Washington, and Wyoming, and
the territories of Guam and the Pacific Islands.
‘‘(4) SINGLE BANK IN EACH DISTRICT.—There
shall be 1 enterprise resource bank in each district.
‘‘(5) NO ADDITIONAL BANKS AUTHORIZED.—No
additional enterprise resource banks may be char-
tered by the Finance Board after the date of the en-
actment of the Enterprise Resource Bank Act of
1996, except in connection with a transaction under
subsection (c).
‘‘(c) MERGERS, CONSOLIDATIONS
AND COMBINA-
TIONS OF BANKS.—
‘‘(1) MERGER, CONSOLIDATION, AND COMBINA-
TION AUTHORITY.—In addition to the authority of
the Finance Board under section 6A and notwith-
standing subsection (b), 2 or more enterprise re-
source banks may merge or otherwise combine or
consolidate.
‘‘(2) PREREQUISITES
FOR
TRANSACTION.—A
merger, combination, or consolidation of enterprise
banks may be consummated under this subsection
only if the transaction is approved by—
‘‘(A) a majority of the board of directors
of each bank participating in the transaction;
and
‘‘(B) the holders of a majority of the vot-
ing shares of capital stock of each such bank.
‘‘(3) EFFECTIVE
DATE
OF
TRANSACTION.—If
the requirements of paragraph (2) have been met, a
merger, combination, or consolidation of enterprise
resource banks shall be effective as of the date the
following conditions are met:
‘‘(A) A certificate of merger, combination,
or consolidation (in such form as the Finance
Board shall prescribe) is—
‘‘(i) executed by the banks participat-
ing in such transaction; and
‘‘(ii) filed with the Finance Board in
accordance with section 12(a)(3).
‘‘(B) The Finance Board has—
‘‘(i) approved the transaction in ac-
cordance with paragraph (12)(A); or
‘‘(ii) not disapproved the transaction
in accordance with paragraph (12)(B) be-
fore the end of the 120-day period begin-
ning on the date of the filing described in
subparagraph (A)(ii).
‘‘(4) MERGER AGREEMENT.—
‘‘(A) IN GENERAL.—Any merger, combina-
tion, or consolidation of enterprise resource
banks under this subsection shall be carried out
pursuant to an agreement entered into by all
the enterprise resource banks participating in
the transaction.
‘‘(B) CONTENTS
OF
AGREEMENT.—Any
agreement referred to in subparagraph (A)
shall specify—
‘‘(i) the terms and conditions of the
merger, combination, or consolidation;
‘‘(ii) the amendments to the charter
documents of the resulting bank to be af-
fected by the transaction, if any;
‘‘(iii) the location of the principal of-
fice of the resulting bank;
‘‘(iv) the manner of converting the
shares of each of the banks participating
in the transaction into shares of the result-
ing bank; and
‘‘(v) such other details or provisions
as are appropriate.
‘‘(5) SUCCESSION IN INTEREST.—Upon the ef-
fective date of any merger, combination, or consoli-
dation of enterprise resource banks under this sub-
section—
‘‘(A) the separate existence of any bank
participating in the transaction other than the
resulting bank shall cease to exist;
‘‘(B) the resulting bank shall—
‘‘(i) succeed to all the rights and
properties of each of the banks described
in subparagraph (A) without other trans-
fer; and
‘‘(ii) be subject to all the debts and li-
abilities of each such bank in the same
manner as if the resulting bank had in-
curred such debts and liabilities.
‘‘(6) EXISTING RIGHTS NOT AFFECTED.—This
subsection shall not affect any right of any creditor
of any enterprise resource bank which is participat-
ing in any merger, combination, or consolidation
under this subsection.
‘‘(7) PRESERVATION OF LIENS.—All liens upon
the property of any enterprise resource bank which
is participating in any merger, combination, or con-
solidation under this subsection shall continue to be
effective after the consummation of the transaction
except that any lien upon property of any bank other
than the resulting bank shall be effective only with
respect to the property which was subject to the lien
immediately before consummation of the transaction.
‘‘(8) CONTINUATION OF SUITS.—
‘‘(A) IN
GENERAL.—No action or other
proceeding commenced by or against any enter-
prise resource bank which is participating in
any merger, combination, or consolidation
under this subsection shall abate by reason of
the consummation of such transaction.
‘‘(B) 
SUBSTITUTION
OF
RESULTING
BANK.—In any action or proceeding described
in subparagraph (A), the enterprise resource
bank resulting from the transaction referred to
in such subparagraph shall be substituted for
the enterprise resource bank involved in such
action or proceeding before the consummation
of the transaction.
‘‘(C) 
APPLICABILITY
TO
RESULTING
BANK.—Any final judgment or other determina-
tion which becomes final in any action or pro-
ceeding described in subparagraph (A) shall be
binding on the bank resulting from the trans-
action referred to in such subparagraph.
‘‘(9) NUMBER OF ELECTED DIRECTORS OF RE-
SULTING BANK.—Subject to section 7(a), any Bank
resulting from a merger, combination, or consolida-
tion pursuant to this section may have a number of
elected directors equal to or less than the total num-
ber of elected directors of all the banks which par-
ticipated in such transaction (as determined imme-
diately before such transaction).
‘‘(10) NUMBER OF APPOINTED DIRECTORS OF
RESULTING BANK.—The number of appointed direc-
tors of any enterprise resource bank resulting from
a merger, combination, or consolidation pursuant to
this section shall be not less than 1⁄2 and not more
than 3⁄4 of the number of elected directors.
‘‘(11) ADJUSTMENT
OF
DISTRICT
BOUND-
ARIES.—After a merger, combination, or consolida-
tion of 2 or more enterprise resource banks under
this subsection is consummated, the Finance Board
shall adjust the districts established pursuant to
subsection (b) to reflect such merger, combination,
or consolidation.
‘‘(12) FINANCE BOARD AUTHORITY.—Upon re-
ceipt of a certificate of merger, combination, or con-
solidation filed with the Finance Board in accord-
ance with section 12(a)(3), the Finance Board
may—
‘‘(A) approve the transaction on the basis
of a determination that the transaction provides
for a resulting enterprise resource bank which
is safe and sound; or
‘‘(B) disapprove the transaction on the
basis of a determination that the transaction
does not provide for a resulting enterprise re-
source bank which is safe and sound.
‘‘(d) PROHIBITION ON JOINT OFFICES.—Except with
regard to the office of finance or to the extent specifically
provided in this Act, there shall be no joint or collective
offices of the enterprise resource banks.’’.
SEC. 4. FEDERAL HOUSING FINANCE BOARD.
(a) IN GENERAL.—Section 3 of the Federal Home
Loan Bank Act (12 U.S.C. 1423) is amended to read as
follows:
‘‘SEC. 3. FEDERAL HOUSING FINANCE BOARD.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—There shall be a Federal
Housing Finance Board in the executive branch
which shall be an independent agency to regulate the
safety and soundness of the enterprise resource
banks.
‘‘(2) DUTIES.—The duties of the Finance
Board shall be the following:
‘‘(A) To ensure that the enterprise re-
source banks—
‘‘(i) operate in accordance with this
Act and in a safe and sound manner; and
‘‘(ii) remain adequately capitalized.
‘‘(B) To ensure that programs adminis-
tered by any enterprise resource bank are con-
sistent with, and contribute to the fulfillment
of, the mission of the bank.
‘‘(C) To provide periodic reports to the
Congress regarding the safety and soundness
and the composition of the shareholders in the
enterprise resource banks and the extent to
which such banks are fulfilling their mission.
‘‘(3) CLARIFICATION
OF
AUTHORITY
OF
FI-
NANCE BOARD.—The Finance Board shall have no
authority—
‘‘(A) to manage the operations of any en-
terprise resource bank;
‘‘(B) to manage the sustainable economic
development program of any enterprise resource
bank, including the community investment pro-
gram or the affordable housing program of any
such bank; or
‘‘(C) to approve or disapprove funding by
any such bank for any program referred to in
subparagraph (B).
‘‘(b) COMPOSITION OF FINANCE BOARD.—
‘‘(II) a commitment to provide
specialized housing, small business, or
rural credit.
‘‘(C) 1 director appointed by the President,
by and with the advice and consent of the Sen-
ate, from among individuals who—
‘‘(i) are citizens of the United States;
and
‘‘(ii) have extensive experience or
training in financial safety and soundness
regulation.
‘‘(2) TERMS.—
‘‘(A) IN GENERAL.—Each director of the
Finance Board appointed under subparagraph
(B) or (C) of paragraph (1) shall be appointed
for a term of 7 years.
‘‘(B) INTERIM
APPOINTMENTS.—Any di-
rector appointed to fill a vacancy occurring be-
fore the expiration of the term for which such
director’s predecessor was appointed shall be
appointed only for the remainder of such term.
‘‘(C) CONTINUATION
OF
SERVICE.—Each
director may continue to serve after the expira-
tion of the term to which such director was ap-
pointed until a successor has been appointed
and qualified.
‘‘(3) 
CHAIRPERSON
AND
ACTING
CHAIR-
PERSON.—
‘‘(A) CHAIRPERSON.—The President shall
designate 1 of the directors appointed pursuant
to subparagraph (B) or (C) of paragraph (1) to
be the Chairperson of the Finance Board.
‘‘(B) SERVICE AS CHIEF EXECUTIVE OFFI-
CER.—The Chairperson shall be the chief exec-
utive officer of the Finance Board.
‘‘(C) ACTING CHAIRPERSON.—
‘‘(i) IN GENERAL.—The Chairperson
shall designate another director to serve as
Acting Chairperson during the absence or
disability of the Chairperson.
‘‘(ii) SELECTION BY DIRECTORS.—If a
designation by the Chairperson has not
been made pursuant to clause (i) and the
position of Chairperson becomes vacant,
the remaining directors shall elect a direc-
tor to serve as the Acting Chairperson
until a Chairperson has been appointed.
‘‘(D) POWERS
AND
RESPONSIBILITY
OF
CEO.—
‘‘(i) IN GENERAL.—As the chief exec-
utive officer, the Chairperson shall be re-
sponsible for—
‘‘(I) the overall management, or-
ganization, and functioning of the Fi-
nance Board in accordance with the
policies established and regulations
prescribed by the Finance Board;
‘‘(II) directing the implementa-
tion of regulations prescribed and
policies established by the Finance
Board; and
‘‘(III) appoint, remove, promote,
direct, and set rates of compensation
for employees, attorneys, and agents
of the Finance Board consistent with
the policies established by the Finance
Board pursuant to subsection (e)(1).
‘‘(ii) MEETINGS.—The Chairperson
may call a meeting of the Finance Board.
‘‘(iii) DELEGATION.—The Chairperson
may delegate any authority of the Chair-
person as the chief executive officer of the
Finance Board to any officer or employee
of the Finance Board, including another
director of the Finance Board.
‘‘(iv) GOVERNING
STANDARDS.—In
carrying out the duties of the chief execu-
tive officer, the Chairperson shall be sub-
ject to and governed by the policies adopt-
ed by the Finance Board and any regu-
latory decision, finding, or determination
made by the Finance Board.
‘‘(4) REPRESENTATIONAL REQUIREMENTS.—
‘‘(A) POLITICAL AFFILIATION.—Not more
than 2 directors may be members of the same
political party.
‘‘(B) DISTRICT
REPRESENTATION.—Not
more than 1 director may be appointed from
any single district of the enterprise resource
Bank System.
‘‘(5) VACANCY.—Any vacancy on the Finance
Board shall be filled in the manner in which the
original appointment was made.
‘‘(6) LIMITATIONS
ON
CONFLICTS
OF
INTER-
EST.—No director on the Finance Board may, while
serving as a director—
‘‘(A) serve as a director, officer, employee,
counsel, or agent of any enterprise resource
bank; or
‘‘(B) hold shares of, serve as a director, of-
ficer, employee, counsel, or agent of, or have
any other financial interest in any member of
any such bank.
‘‘(7) FULL-TIME SERVICE.—No director other
than the Chairperson may serve on the Finance
Board on a full-time basis.
‘‘(8) QUORUM.—3 directors shall constitute a
quorum.
‘‘(9) DELEGATION BY SECRETARY.—The Sec-
retary of Housing and Urban Development may del-
egate such Secretary’s position on the Finance
Board to an officer of such Secretary’s agency who
has been appointed to such office by the President,
by and with the advice and consent of the Senate.
‘‘(10) TRANSITIONAL PROVISION.—
‘‘(A) CONTINUED
SERVICE
OF
FEDERAL
HOUSING
FINANCE
BOARD
DIRECTORS.—Any
director of the Federal Housing Finance Board
whose term has not expired before the date of
enactment of the Enterprise Resource Bank Act
of 1996 shall remain a director of the Finance
Board and shall be deemed to have been ap-
pointed under subparagraph (B) or (C) of para-
graph (1), as designated by the President.
‘‘(B) TERMS OF APPOINTMENT.—Subject
to subparagraph (C), the President shall deter-
mine the length of the term of any director de-
scribed in subparagraph (A) and shall deter-
mine which director described in subparagraph
(A), if any, shall serve as the Chairperson of
the Finance Board.
‘‘(C) STAGGERED TERMS.—In establishing
the terms of any director under subparagraph
(B), the President shall provide that 1 such di-
rector shall serve a 1-year term, 1 director shall
serve a 3-year term, and 1 director shall serve
a 5-year term.
‘‘(c) GENERAL
POWERS.—Subject to subsection
(a)(3), the Finance Board shall have the following powers:
‘‘(1) To maintain such oversight of the enter-
prise resource banks and the office of finance as
may be necessary to ensure that such banks and the
office of finance operate in accordance with this Act
and in a financially safe and sound manner.
‘‘(2) To prescribe or issue, and enforce, such
regulations and orders as the Finance Board deter-
mines to be necessary to carry out the provisions of
this Act.
‘‘(3) To suspend or remove for cause a director,
officer, employee, or agent of any enterprise resource
bank or the office of finance.
‘‘(4) To determine necessary expenditures of
the Finance Board under this Act and the manner
in which such expenditures shall be incurred, al-
lowed, and paid.
‘‘(5) To use the United States mails in the
same manner and under the same conditions as a
department or agency of the United States.
‘‘(6) To sue and be sued and to complain and
defend, by and through the Finance Board’s own at-
torneys, in any action brought by or against the Fi-
nance Board in any court of competent jurisdiction.
‘‘(7) To make contracts.
‘‘(8) To exercise incidental powers that are con-
sistent with this Act and are appropriate to carry
out the provisions of this Act.
‘‘(d) RECEIPTS OF THE FINANCE BOARD.—
‘‘(1) DEPOSIT IN TREASURY.—Receipts of the
Finance Board derived from assessments imposed on
the enterprise resource banks and from other
sources shall be deposited in an account of the Fi-
nance Board in the Treasury of the United States.
‘‘(2) PAYMENT OF EXPENSES.—Salaries of the
directors and other employees of the Finance Board
and all other expenses of the Finance Board may be
paid from the receipts described in paragraph (1).
‘‘(3) TREATMENT
OF
AMOUNTS
RECEIVED.—
Notwithstanding any other provision of law—
‘‘(A) no amount received by the Finance
Board pursuant to any assessment imposed on
any enterprise resource bank or any other in-
come of the Finance Board may be construed
to be Government funds or appropriated money;
‘‘(B) no authority of the Finance Board to
spend or otherwise obligate any such amount
may be treated as budget authority, spending
authority, or credit authority or as authority to
obligate funds of the United States, notwith-
standing the fact that the receipts described in
paragraph (1) are deposited in the account of
the Finance Board in the Treasury; and
‘‘(C) no such amount shall be subject to
apportionment for purposes of chapter 15 of
title 31, United States Code, or under any
other authority.
‘‘(e) STAFF.—
‘‘(1) IN GENERAL.—The Finance Board may
provide for the employment, direction, compensation,
and number of employees, attorneys, and agents of
the Finance Board.
‘‘(2) PROHIBITION ON DELEGATION TO BANKS
OR THE OFFICE OF FINANCE.—The Finance Board
may not delegate, or provide for the delegation of,
any function of the Finance Board to any employee
or administrative unit of any bank or the office of
finance.
‘‘(3) RESTATEMENT OF PRIOR LAW.—The com-
pensation of staff, attorneys, and agents shall be
paid without regard to the provisions of other laws
applicable to officers or employees of the United
States, except that the chairperson and the other ap-
pointed directors shall be compensated pursuant to
sections 5314 and 5315 of title 5, United States
Code, respectively.
‘‘(f) ANNUAL REPORTS.—
‘‘(1) BOARD
REPORTS.—The Finance Board
shall make an annual report to the Congress regard-
ing—
‘‘(A) the safety and soundness of the en-
terprise resource banks and the office of fi-
nance;
‘‘(B) the fulfillment of the mission of the
banks under this Act; and
‘‘(C) the composition of the shareholders in
the enterprise resource banks.
‘‘(2) BANK REPORTS.—The enterprise resource
banks shall submit a collective annual report to the
Finance Board on the fulfillment of the mission of
the banks under this Act.
‘‘(3) AFFORDABLE HOUSING ADVISORY COUN-
CILS.—The affordable housing advisory councils of
the enterprise resource banks shall each submit an
annual report to the Finance Board on the fulfill-
ment by such bank of its affordable housing mission
under section 10.
‘‘(g) SUSPENSION OR REMOVAL OF BANK EMPLOY-
EES FOR CAUSE.—
‘‘(1) WRITTEN NOTICE.—In exercising any au-
thority under subsection (c)(3) to suspend or remove
for cause a director, officer, employee, or agent of
any enterprise resource bank or the office of finance,
the Finance Board shall provide written notice of
such suspension or removal and the cause of the sus-
pension or removal to such director, officer, em-
ployee, or agent and to such bank or office.
‘‘(2) HEARING.—The notice provided pursuant
to paragraph (1) shall establish the time and place
for a hearing on the suspension or removal in ac-
cordance with section 554 of title 5, United States
Code.’’.
(b) INDEPENDENCE OF FINANCE BOARD.—Section
111 of Public Law 93–495 (12 U.S.C. 250) is amended
by striking ‘‘the Federal Home Loan Bank Board,’’ and
inserting ‘‘the Director of the Office of Thrift Supervision,
the Federal Housing Finance Board,’’.
SEC. 5. THE OFFICE OF FINANCE.
Section 4 of the Federal Home Loan Bank Act (12
U.S.C. 1424) is amended to read as follows:
‘‘SEC. 4. THE OFFICE OF FINANCE.
‘‘(a) OPERATION.—The enterprise resource banks
shall operate jointly an office of finance (hereafter in this
section referred to as the ‘office’) to issue the notes, bonds,
and debentures of the enterprise resource banks in accord-
ance with this Act.
‘‘(b) POWERS.—Subject to the other provisions of
this Act and such safety and soundness regulations as the
Finance Board may prescribe, the office shall be author-
ized by the enterprise resource banks to act as the agent
of such banks to issue enterprise resource bank notes,
bonds and debentures pursuant to section 11 of this Act
on behalf of the banks.
‘‘(c) CENTRAL BOARD OF DIRECTORS.—
‘‘(1) ESTABLISHMENT.—The enterprise re-
source banks shall establish a central board of direc-
tors of the office of finance to administer the affairs
of the office in accordance with the provisions of this
Act.
‘‘(2) COMPOSITION
OF
BOARD.—Each enter-
prise resource bank shall annually select 1 individual
who, as of the time of the election, is an officer or
director of such bank to serve as a member of the
policy review board.
‘‘(d) STATUS.—Except to the extent expressly pro-
vided in this Act, the office shall be treated as an enter-
prise resource bank for purposes of any law.
‘‘(e) MONITORING INVESTMENT EXPOSURE.—
‘‘(1) DAILY POSITION REPORTING REQUIRED.—
‘‘(A) IN
GENERAL.—Beginning 30 days
after the date of the enactment of the Enter-
prise Resource Bank Act of 1996, each enter-
prise resource bank shall regularly report the
bank’s closing position on all of the bank’s in-
vestments and qualified financial contracts (as
defined in section 11(e)(8)(D) of the Federal
Deposit Insurance Act) to the Finance Board.
‘‘(B) FINANCE BOARD REQUIREMENTS.—
The Finance Board may specify the contents of
the reports required under subparagraph (A).
‘‘(2) SYSTEM PROCEDURES.—In addition to the
reports required under paragraph (1), the Finance
Board, the enterprise resource banks, and the office
shall jointly establish procedures for monitoring the
investment exposure, including credit and interest
rate risk, of the banks’ individual and combined in-
vestment portfolios.’’.
SEC. 6. CAPITAL.
(a) IN GENERAL.—Section 6 of the Federal Home
Loan Bank Act (12 U.S.C. 1426) is amended by striking
all that precedes subsection (h) and inserting the follow-
ing:
‘‘SEC. 6. CAPITAL STRUCTURE OF ENTERPRISE RESOURCE
BANKS.
‘‘(a) CAPITAL STRUCTURE PLAN.—Before the end of
the 6-month period beginning on the date of the enact-
ment of the Enterprise Resource Bank Act of 1996, the
board of directors of each enterprise resource bank shall
complete a plan for establishing and implementing a cap-
ital structure for such bank which—
‘‘(1) the board of directors determines is the
best suited for the condition and operation of the
bank and the interests of the stockholders of the
bank;
‘‘(2) meets the requirements of subsection (b);
and
‘‘(3) meets the minimum capital standards and
requirements established under subsection (c) and
any regulations prescribed by the Finance Board
pursuant to such subsection.
‘‘(b) CONTENTS OF PLAN.—The capital structure of
each enterprise resource bank shall meet the following re-
quirements:
‘‘(1) REDUCTION OF EQUITY INVESTMENTS.—
The plan shall include a timetable for reducing, by
such amount as the board of directors may deter-
mine to be appropriate, the amount of the equity in-
vestment of the shareholders of the bank as of the
date of the enactment of the Enterprise Resource
Bank Act of 1996.
‘‘(2) UNIFORM STANDARDS FOR SHAREHOLD-
ERS.—The plan shall establish uniform standards,
criteria, and requirements for the issuance of shares
of any class of stock of the bank.
‘‘(3) PROCEDURE FOR MEETING CORE CAPITAL
REQUIREMENT.—The plan shall establish the proc-
ess by which the bank may meet the core capital re-
quirement in subsection (c)(5) as soon as practicable
after the date of the enactment of the Enterprise
Resource Bank Act of 1996.
‘‘(4) LIMITED TRANSFERABILITY OF STOCK.—
The plan shall provide that any equity securities is-
sued by the bank shall be available only to, held only
by, and tradable only among, shareholders of the
bank or institutions eligible to become stockholders
of the bank under subsection (d).
‘‘(5) DESCRIPTION OF STOCK AND RIGHTS OF
STOCKHOLDERS.—The plan shall provide for and de-
scribe the terms, rights (voting, liquidation, and
other rights), and preferences (such as dividends) of
not more than 2 classes of stock and any class or
series of any other type of equity security issued or
to be issued by the bank.
‘‘(6) ACQUISITION, TRANSFER, AND
REDEMP-
TION OF STOCK.—The plan shall identify the man-
ner in which any equity securities to be issued by
the bank may be sold, transferred, or redeemed.
‘‘(7) FINAL
DISPOSITION
OF
OWNERSHIP
IN-
TERESTS OF STOCKHOLDER.—The plan shall provide
for the manner of disposition of any outstanding eq-
uity securities held by, and the liquidation of any
claims of the bank against, a stockholder who pro-
vides notice of intention to dispose of all ownership
interest in the enterprise resource bank.
‘‘(c) CAPITAL STANDARDS.—
‘‘(1) IN GENERAL.—The Finance Board shall
prescribe, by regulation, uniform capital standards
applicable to each enterprise resource bank which
shall include—
‘‘(A) a leverage limit;
‘‘(B) a risk-based capital requirement; and
‘‘(C) a core capital requirement.
‘‘(2) RISK-BASED CAPITAL TEST.—The Finance
Board shall establish a risk-based capital test sub-
stantially similar to the risk-based capital test estab-
lished by the Director of the Office of Federal Hous-
ing Enterprise Oversight of the Department of
Housing and Urban Development pursuant to sec-
tion 1361 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992, with
such modifications as the Finance Board determines
appropriate to reflect differences in operation be-
tween the enterprise resource bank system and the
enterprises (as defined in section 1303(6) of such
Act).
‘‘(3) MINIMUM LEVERAGE LIMIT.—The leverage
limit established by the Finance Board shall require
each enterprise resource bank to maintain total cap-
ital in an amount not less than the applicable
amount in the following subparagraphs, as deter-
mined in accordance with generally accepted ac-
counting principles:
‘‘(A) 5 percent of the total assets of the
bank, during any period in which—
‘‘(i) the bank does not meet the re-
quirement of paragraph (5); and
‘‘(ii) the amount of the capital of the
bank which is taken into account under
paragraph (5) is less than 0.5 percent of
such total assets.
‘‘(B) 4.5 percent of the total assets of the
bank, during any period in which—
‘‘(i) the bank does not meet the re-
quirement of paragraph (5); and
‘‘(ii) the amount of the capital of the
bank which is taken into account under
paragraph (5) is 0.5 percent or more, and
less than 1 percent, of such total assets.
‘‘(C) 4 percent of the bank’s total assets
during any period in which—
‘‘(i) the amount of the capital of the
bank which is taken into account under
paragraph (5) is 1 percent or more of such
total assets; and
‘‘(ii) the bank is obligated, under sec-
tion 21B(f)(2)(C), to provide funding to
cover interests payments on obligations is-
sued by the Resolution Funding Corpora-
tion.
‘‘(D) 3 percent of the bank’s total assets
during any other period.
‘‘(4) RISK-BASED
CAPITAL
STANDARD.—The
risk-based capital standard established by the Fi-
nance Board shall require each enterprise resource
bank to maintain total capital in an amount not less
than the greater of the following:
‘‘(A) 10 percent of the risk-adjusted assets
of the bank, as determined using the risk
weighting established by the Bank for Inter-
national Settlements pursuant to the Basel Ac-
cord.
‘‘(B) The amount which enables the bank
to maintain a positive equity account under the
application of the risk-based capital test estab-
lished by the Finance Board pursuant to para-
graph (2).
‘‘(5) CORE UNREDEEMABLE CAPITAL REQUIRE-
MENT.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Finance Board shall require
each enterprise resource bank to maintain, as
soon as practicable after the date of the enact-
ment of the Enterprise Resource Bank Act of
1996, such amount of total capital as the Fi-
nance Board may prescribe in any of the follow-
ing forms or combination of forms:
‘‘(i) Retained earnings.
‘‘(ii) A risk-insurance pool.
‘‘(iii) Nonredeemable stock of the
bank.
‘‘(iv) Stock of the bank as to which
any right to redeem is explicitly suspended
during any period in which the bank is
undercapitalized.
‘‘(B) MINIMUM
AMOUNT.—The amount
prescribed by the Finance Board under sub-
paragraph (A) may not be less than 1 percent
of the total assets of the bank.
‘‘(d) CRITERIA FOR ELIGIBILITY FOR OWNERSHIP
INTEREST IN A BANK.—
‘‘(1) IN GENERAL.—Any insured depository in-
stitution and insured credit union, and, except as
provided in paragraph (5), only such institutions
and credit unions, may acquire and retain shares of
stock of an enterprise resource bank.
‘‘(2) RULES AND REQUIREMENTS.—Subject to
the requirements of this section, the board of direc-
tors of each enterprise resource bank shall promptly
prescribe regulations, consistent with this Act, gov-
erning the capital stock of such bank and other pro-
visions of this section.
‘‘(3) WHOLE MORTGAGE TEST FOR LARGE DE-
POSITORY INSTITUTIONS.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), an institution which has total assets
of $500,000,000 or more at any time after
June 30, 1998, shall not be eligible to obtain
new long-term advances from an enterprise re-
source bank if the institution does not maintain
an investment in whole mortgage loans in ac-
cordance with the following table:
Not less than the following per-
cent of the total assets of
the institution are invested
‘‘Annually—
in whole mortgage loans—
During the 1-year period beginning on July 1, 1998 ..............
7%
Not less than the following per-
cent of the total assets of
the institution are invested
‘‘Annually—
in whole mortgage loans—
During the 1-year period beginning on July 1, 1999 ..............
8%
During the 1-year period beginning on July 1, 2000 ..............
9%
After June 30, 2001 ................................................................
10%
‘‘(B) 
WHOLE
MORTGAGE
LOAN
DE-
FINED.—For purposes of this subsection, the
term ‘whole mortgage loan’ does not include—
‘‘(i) a partial interest in a residential
mortgage on improved residential real
property; or
‘‘(ii) a security that represents an in-
terest in a residential mortgage loan.
‘‘(4) DESIGNATION OF BANK.—An institution
which is eligible to acquire and retain shares of an
enterprise resource bank under paragraph (1) may
only acquire the shares of, or secure advances
from—
‘‘(A) the enterprise resource bank of the
district in which is located the institution’s
principal place of business; or
‘‘(B) the bank of a district adjoining the
district described in subparagraph (A) if—
‘‘(i) demanded by convenience; and
‘‘(ii) an application by such institution
to the bank and the Finance Board for the
acquisition of shares of such bank is—
‘‘(I) approved by the bank; and
‘‘(II) not disapproved by the Fi-
nance Board before the end of the 30-
day period beginning on the date the
Finance Board receives the applica-
tion from such institution.
‘‘(5) 
EXCEPTION
FOR
CERTAIN
NONDEPOSITORY
INSTITUTIONS.—Any 
company
which, as of the day before the date of the enact-
ment of the Enterprise Resource Bank Act of 1996,
was a member of a Federal home loan bank may
continue, subject to this Act, to be a voting share-
holder of the bank after such date with all rights
and privileges as a voting shareholder.
‘‘(e) CAPITAL STOCK.—
‘‘(1) CLASSES OF STOCK.—
‘‘(A) VOTING CAPITAL STOCK.—No enter-
prise resource bank may issue more than 1
class of voting capital stock.
‘‘(B) PREFERRED STOCK.—
‘‘(i) IN GENERAL.—The board of di-
rectors of any enterprise resource bank
may authorize the bank to issue a floating
rate preferred stock with cumulative divi-
dend which may be transferred at any time
to another stockholder of the bank but
may not be redeemed for at least 2 years
after the date of issuance.
‘‘(ii) ELIGIBILITY FOR CORE CAPITAL
POOL.—Preferred stock issued under this
subparagraph may be taken into account
for purposes of the core capital require-
ment in subsection (c)(5).
‘‘(iii) ISSUANCE
TO
VOTING
SHARE-
HOLDERS.—Only voting shareholders may
acquire and retain preferred stock issued
by an enterprise resource bank under this
subparagraph.
‘‘(2) MINIMUM AND MAXIMUM INVESTMENT RE-
QUIREMENTS AUTHORIZED.—
‘‘(A) IN GENERAL.—The board of directors
of each enterprise resource bank may establish
any minimum investment requirement and any
maximum amount limit on the total amount of
voting capital stock which may be held directly
or indirectly by any stockholder as the board of
directors determines to be appropriate and con-
sistence with the mission of the bank.
‘‘(B) BASIS FOR REQUIREMENT.—A mini-
mum investment requirement or maximum in-
vestment limit may be based on—
‘‘(i) a fixed dollar amount;
‘‘(ii) a percentage of the total assets
of the shareholder;
‘‘(iii) a percentage of the total amount
of voting shares of the bank which are con-
trolled by the shareholder; or
‘‘(iv) such other criteria as the board
of directors may, in the discretion of the
board, determine to be reasonable.
‘‘(C) 
ADVANCES-RELATED
REQUIRE-
MENT.—The minimum investment of each
shareholder of an enterprise resource bank in
the voting stock of such bank, as determined on
the basis of the amount of outstanding ad-
vances from such bank to the member, shall be
an amount which is equal to not less than 3.0
percent of such advances and not more than 6.0
percent of such advances, as determined by the
board of directors of the bank from time to
time.
‘‘(3) DIVESTITURE.—The board of directors of
any enterprise resource bank may order, after a
hearing, the divestiture by any stockholder of all
ownership interests of such stockholder in the bank,
if—
‘‘(A) in the opinion of the board of direc-
tors, such stockholder has failed to comply with
a provision of this Act, any regulation pre-
scribed under this Act, or any other applicable
law; or
‘‘(B) the stockholder has been determined
to be insolvent, or otherwise subject to the ap-
pointment of a conservator, receiver, or other
legal custodian, by a state or Federal authority
with regulatory and supervisory responsibility
for such member.
‘‘(4) RETIREMENT OF STOCK DISTRICT-WIDE.—
‘‘(A) IN GENERAL.—Upon a determination
of the board of directors of an enterprise re-
source bank, a bank may retire all, or any por-
tion, of the outstanding stock of the bank in ex-
cess of the total of any applicable minimum in-
vestment amounts of all stockholders of the
bank, if the board of directors determines that
the bank is adequately capitalized, and would
remain adequately capitalized if all of the fol-
lowing stocks were deducted from the bank’s
capital:
‘‘(i) Stock of the bank which the bank
proposes to retire under this subpara-
graph.
‘‘(ii) Stock of the bank which is sub-
ject to pending applications for retirement,
and pending notices of intention to dispose
of all stock of the bank.
‘‘(B) RETIREMENT REQUIRED TO BE MADE
ON A PRO RATA BASIS.—The determination of
the amount of shares held by each stockholder
of a bank which are subject to retirement pur-
suant to a determination by the board of direc-
tors of the bank in accordance with subpara-
graph (A) shall be made on a pro rata basis for
like stock.
‘‘(C) RETIREMENT SUBJECT TO MINIMUM
INVESTMENT
REQUIREMENTS.—No retirement
of shares held by a stockholder of a bank may
be made under this paragraph to the extent
such retirement of shares would cause the
amount of such stockholder’s remaining invest-
ment in the capital stock of the bank after such
retirement to fall below any applicable mini-
mum investment amount.
‘‘(5) IMPAIRMENT OF CAPITAL.—If the Finance
Board or the board of directors of an enterprise re-
source bank determines that the paid-in capital of
the bank is likely to be impaired as a result of losses
in or depreciation of the assets of the bank, the en-
terprise resource bank shall withhold that portion of
the amount due any stockholder with respect to any
redemption or retirement of stock which bears the
same ratio to the total of such amount as the
amount of the impaired capital bears to the total
amount of capital.
‘‘(6) POLICIES.—Subject to the requirements of
this section, the board of directors of each enterprise
resource bank shall promptly establish policies, con-
sistent with this Act, governing the capital stock of
such bank and other provisions of this section.’’.
(b) REDUCTION
OF PERIOD REQUIRED BEFORE
FULLY
DIVESTED
STOCKHOLDER
MAY
REACQUIRE
SHARES OF A BANK.—Subsection (h) of section 6 of the
Federal Home Loan Bank Act (12 U.S.C. 1426) (as
amended by subsection (a)) is amended—
(1) by redesignating such subsection as sub-
section (f);
(2) by striking ‘‘10’’ and inserting ‘‘5’’; and
(3) by inserting before the period at the end ‘‘,
except that any institution that withdrew from mem-
bership in any such bank before December 31, 1995,
may acquire an ownership interest in a enterprise
resource bank at any time after such date subject to
the requirements of this Act.’’.
(c) ELIGIBILITY OF NON-QTL SAVINGS ASSOCIA-
TIONS TO OBTAIN NEW ADVANCES AND MAINTAIN AD-
VANCES.—Section 10(m)(3)(B) of the Home Owners’
Loan Act (12 U.S.C. 1467a(m)(3)(B)) is amended—
(1) in clause (i), by striking subclause (III) and
redesignating subclause (IV) as subclause (III); and
(2) in clause (ii), by striking subclause (II).
(d) VOLUNTARY MEMBERSHIP OF FEDERAL SAVINGS
ASSOCIATIONS.—Section 5(f) of the Home Owners’ Loan
Act (12 U.S.C. 1464(f)) is amended to read as follows:
‘‘(f) VOLUNTARY MEMBERSHIP IN ENTERPRISE RE-
SOURCE BANK.—Each Federal savings association may be
eligible to acquire shares of stock in an enterprise resource
bank in the manner provided in the Enterprise Resource
Bank System Act.’’.
SEC. 7. PROMPT CORRECTIVE ACTION.
The Federal Home Loan Bank Act (12 U.S.C. 1421
et seq.) is amended by inserting after section 6 the follow-
ing new section:
‘‘SEC. 6A. PROMPT CORRECTIVE ACTION.
‘‘(a) PURPOSES.—The purposes of this section are to
ensure that the enterprise resource banks remain—
‘‘(1) adequately capitalized;
‘‘(2) able to raise funds in the capital markets;
and
‘‘(3) able meet the obligations of such banks
under this Act.
‘‘(b) 
CAPITAL
CLASSIFICATIONS.—The 
Finance
Board shall classify the capital adequacy of enterprise re-
source banks in accordance with the following capital cat-
egories:
‘‘(1) ADEQUATELY
CAPITALIZED.—An enter-
prise resource bank shall be classified as adequately
capitalized if such bank meets the required mini-
mum level for each relevant capital measure.
‘‘(2) UNDERCAPITALIZED.—An enterprise re-
source bank shall be classified as undercapitalized if
such bank fails to meet the minimum level for any
capital measure required by this Act, or any addi-
tional capital requirement that may be established
for such bank by the Finance Board.
‘‘(3) CRITICALLY UNDERCAPITALIZED.—An en-
terprise resource bank shall be classified as critically
undercapitalized if the capital of such bank fails to
meet any level specified under section 6(c)(1).
‘‘(4) 
CAPITAL
CATEGORIES.—The 
Finance
Board shall, by regulation, specify for each relevant
capital measure the levels at which an enterprise re-
source bank is adequately capitalized, undercapital-
ized, and critically undercapitalized.
‘‘(5) QUARTERLY
EVALUATION
OF
CAPITAL
ADEQUACY.—
‘‘(A) IN
GENERAL.—The Finance Board
shall—
‘‘(i) evaluate the capital adequacy of
each enterprise resource bank at least once
in each calendar quarter, and
‘‘(ii) classify the capital adequacy of
the bank in accordance with the categories
established pursuant to paragraph (1).
‘‘(B) JUDICIAL REVIEW.—For the purpose
of obtaining judicial review of—
‘‘(i) any classification of the capital
adequacy of an enterprise resource bank
under subparagraph (A); or
‘‘(ii) any action taken by the Finance
Board pursuant to such classification,
the classification, or the action taken pursuant
to a classification, shall be treated as a final
order of the Finance Board.
‘‘(c) PROVISION APPLICABLE TO ALL ENTERPRISE
RESOURCE BANKS.—
‘‘(1) CAPITAL DISTRIBUTIONS RESTRICTED.—
An enterprise resource bank shall make no capital
distribution if, after making the distribution, the
bank would be undercapitalized.
‘‘(2) 
EXCEPTIONS.—Notwithstanding 
para-
graph (1)—
‘‘(A) an enterprise resource bank may re-
deem a voting shareholder’s stock in accordance
with section 6(e)(3); and
‘‘(B) the Finance Board may permit an
enterprise resource bank to repurchase, redeem,
retire, or otherwise acquire the shares of the
bank if the repurchase, redemption, retirement,
or other acquisition—
‘‘(i) is made in connection with the is-
suance of additional shares of the bank in
at least an equivalent amount; and
‘‘(ii) will reduce the bank’s financial
obligations or otherwise improve the bank’s
financial condition.
‘‘(d) 
SUPERVISORY
ACTIONS
APPLICABLE
TO
UNDERCAPITALIZED ENTERPRISE RESOURCE BANKS.—
‘‘(1) MANDATORY ACTIONS.—
‘‘(A) CAPITAL AND INCOME RESTORATION
PLANS.—Any undercapitalized enterprise re-
source bank shall file an acceptable capital and
income restoration plan with the Finance
Board, in accordance with subsection (f).
‘‘(B) RECLASSIFICATION
FROM
UNDER-
CAPITALIZED
TO
CRITICALLY
UNDERCAPI-
TALIZED.—The Finance Board shall reclassify
as critically undercapitalized any enterprise re-
source bank that is classified as under-
capitalized if—
‘‘(i) the bank does not submit an ac-
ceptable capital and income restoration
plan within the time periods prescribed;
‘‘(ii) if the Finance Board does not
approve the capital and income restoration
plan submitted; or
‘‘(iii) the Finance Board determines
that the bank has failed to make, in good
faith, reasonable efforts to comply with an
accepted capital and income restoration
plan.
‘‘(C) PRIOR APPROVAL FOR NEW ACTIVI-
TIES.—The Finance Board shall require an
undercapitalized enterprise resource bank to ob-
tain prior approval from the Finance Board be-
fore engaging in any new activities.
‘‘(2) DISCRETIONARY
ACTIONS.—The Finance
Board may, with respect to an undercapitalized en-
terprise resource bank, take such other actions as
the Finance Board determines are necessary or ap-
propriate to carry out the purpose of this section in-
cluding—
‘‘(A) imposition of restrictions on growth
in assets;
‘‘(B) limitations on increases in bank obli-
gations;
‘‘(C) imposition of restrictions on activities
that the Finance Board determines create ex-
cessive risk to the bank; and
‘‘(D) requiring changes in or any restric-
tion on the board of directors or management
of the bank.
‘‘(e) SUPERVISORY ACTIONS APPLICABLE TO CRITI-
CALLY
UNDERCAPITALIZED
ENTERPRISE
RESOURCE
BANKS.—
‘‘(1) MERGER, LIQUIDATION, REORGANIZATION,
OR OTHER ACTION REQUIRED.—The Finance Board
shall—
‘‘(A) combine, by merger or otherwise, any
critically undercapitalized enterprise resource
bank with another enterprise resource bank;
‘‘(B) liquidate or reorganize any such criti-
cally under capitalized bank; or
‘‘(C) take such other action in connection
with such bank as the Finance Board deter-
mines would better achieve the purpose of this
section.
‘‘(2) 
PERIODIC
REDETERMINATION
RE-
QUIRED.—Any determination by the Finance Board
under paragraph (1) to take any action with respect
to a critically undercapitalized enterprise resource
bank other than combining, reorganizing, or liq-
uidating the bank shall cease to be effective not later
than the end of the 90-day period after the deter-
mination was made and the bank shall be combined,
reorganized or liquidated unless the Finance Board
makes a new determination.
ing the 30-day period beginning upon the ap-
pointment of the conservator in the United
States District Court for the District of Colum-
bia for an order requiring the Finance Board to
terminate the appointment of the conservator.
‘‘(B) STANDARD OF REVIEW.—A decision
of the Finance Board to appoint a conservator
may be set aside only if the court finds that the
decision was arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with
applicable laws.
‘‘(C) LIMITATION ON JURISDICTION.—Ex-
cept as otherwise provided in this subsection, no
court may take any action regarding the re-
moval of a conservator or otherwise restrain or
affect the exercise of powers or functions of a
conservator.
‘‘(D) CONSENSUAL
APPOINTMENTS.—Ap-
pointment of a conservator pursuant to consent
of the bank shall not be subject to judicial re-
view under this subsection.
‘‘(5) REPLACEMENT.—
‘‘(A) IN
GENERAL.—The Finance Board
may, without notice or hearing, replace a con-