I
107TH CONGRESS
2D SESSION
H. R. 5126
To prohibit the provision of Federal funds to the housing-related government-
sponsored enterprises and to remove certain competitive advantages
granted under law to such enterprises.
IN THE HOUSE OF REPRESENTATIVES
JULY 15, 2002
Mr. PAUL introduced the following bill; which was referred to the Committee
on Financial Services
A BILL
To prohibit the provision of Federal funds to the housing-
related government-sponsored enterprises and to remove
certain competitive advantages granted under law to such
enterprises.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Free Housing Market
Enhancement Act’’.
SEC. 2. PROHIBITION OF FEDERAL FUNDS FOR HOUSING-
RELATED GOVERNMENT-SPONSORED ENTER-
PRISES.
Notwithstanding any other provision of law, no Fed-
eral funds may be provided, directly or indirectly, to the
Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, or any Federal Home
Loan Bank.
SEC. 3. AMENDMENTS TO FEDERAL NATIONAL MORTGAGE
ASSOCIATION CHARTER ACT.
(a) EXEMPTION FROM STATE TAXATION.—Section
309(c) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1723a(c)) is amended—
(1) by striking paragraph (2); and
(2) by striking ‘‘(1)’’.
(b) AUTHORITY OF TREASURY TO APPROVE DEBT
ISSUES.—Section 304(b) of the Federal National Mort-
gage Association Charter Act (12 U.S.C. 1719(b)) is
amended—
(1) by striking ‘‘, upon the approval of the Sec-
retary of the Treasury,’’; and
(2) by striking ‘‘with the approval of the Sec-
retary of the Treasury’’.
(c) AUTHORITY TO BORROW FROM TREASURY.—
Section 304 of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1719) is amended by striking sub-
section (c).
(d) DEPOSITARY AUTHORITY.—Section 309(g) of the
Federal National Mortgage Association Charter Act (12
U.S.C. 1723a(g)) is amended—
(1) by striking ‘‘each of the bodies corporate
named in section 302(a)(2)’’ and inserting ‘‘the As-
sociation’’; and
(2) by striking ‘‘such bodies corporate’’ and in-
serting ‘‘the bodies corporate named in section
302(a)(2)’’.
(e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN-
VESTMENTS.—The first sentence of section 311 of the
Federal National Mortgage Association Charter Act (12
U.S.C. 1723c) is amended by striking ‘‘either of the bodies
corporate named in section 302(a)(2)’’ and inserting ‘‘the
Association’’.
(f) APPOINTMENT OF MEMBERS OF BOARD OF DI-
RECTORS.—
(1) IN GENERAL.—Section 308(b) of the Fed-
eral National Mortgage Association Charter Act (12
U.S.C. 1723(b)) is amended—
(A) in the first sentence, by striking ‘‘five
of whom shall be appointed annually by the
President of the United States, and the remain-
der of whom’’ and inserting ‘‘who’’;
(B) in the second sentence, by striking
‘‘appointed by the President’’;
(C) in the third sentence—
(i) by striking ‘‘appointed or’’; and
(ii) by striking ‘‘, except that any
such appointed member may be removed
from office by the President for good
cause’’;
(D) in the fourth sentence, by striking
‘‘elective’’; and
(E) by striking the fifth sentence.
(2) APPLICABILITY.—The amendments made
by paragraph (1) shall apply only with respect to the
first election of members of the board of directors of
the Federal National Mortgage Association occur-
ring after the date of the enactment of this Act, and
the board resulting from such election, and to elec-
tions and boards thereafter.
SEC. 4. AMENDMENTS TO FEDERAL HOME LOAN MORT-
GAGE CORPORATION.
(a) EXEMPTION FROM STATE TAXATION.—Section
303 of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1452) is amended by striking subsection (e).
(b) AUTHORITY OF TREASURY TO APPROVE DEBT
ISSUES.—Section 306(j) of the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1455(j)) is amended—
(1) by striking ‘‘(1)’’;
(2) by striking ‘‘be issued upon the approval of
the Secretary of the Treasury and shall’’;
(3) by striking ‘‘with the approval of the Sec-
retary of the Treasury’’; and
(4) by striking paragraphs (2) and (3).
(c) AUTHORITY TO BORROW FROM TREASURY.—
Section 306 of the Federal Home Loan Mortgage Cor-
poration Act (12 U.S.C. 1455) is amended by striking
subsection (c).
(d) DEPOSITARY AUTHORITY.—Section 303(d) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1452(d)) is amended by striking the second and third sen-
tences.
(e) DESIGNATION OF OBLIGATIONS AS LAWFUL IN-
VESTMENTS.—Section 303 of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452) is amended
by striking subsection (g).
(f) APPOINTMENT OF MEMBERS OF BOARD OF DI-
RECTORS.—
(1) IN
GENERAL.—Section 303(a)(2) of the
Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1452(a)(2)) is amended—
(A) in subparagraph (A)—
(i) in the first sentence, by striking ‘‘5
of whom shall be appointed annually by
the President of the United States and the
remainder of whom’’ and inserting ‘‘who’’;
and
(ii) in the second sentence, by striking
‘‘appointed by the President of the United
States’’;
(B) in subparagraph (B)—
(i) by striking ‘‘such or’’; and
(ii) by striking ‘‘, except that any ap-
pointed member may be removed from of-
fice by the President for good cause’’; and
(C) in subparagraph (C)—
(i) by striking the first sentence; and
(ii) by striking ‘‘elective’’.
(2) APPLICABILITY.—The amendments made
by paragraph (1) shall apply only with respect to the
first election of members of the Board of Directors
of the Federal Home Loan Mortgage Corporation
occurring after the date of the enactment of this