267
‘‘(ii) recklessly engages in an unsafe 
or unsound practice in conducting the af-
fairs of such regulated entity; or 
‘‘(iii) breaches any fiduciary duty; 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 regulated enti-
ty; or 
‘‘(iii) results in pecuniary gain or 
other benefit to such party, 
the regulated entity or regulated entity-affiliated 
party shall forfeit and pay a civil penalty of not 
more than $50,000 for each day during which such 
violation, practice, or breach continues. 
‘‘(3) 
THIRD
TIER.—Notwithstanding 
para-
graphs (1) and (2), any regulated entity which, or 
any regulated entity-affiliated party who—
‘‘(A) knowingly—
‘‘(i) commits any violation or engages 
in any conduct described in any subpara-
graph of paragraph (1);
268
‘‘(ii) engages in any unsafe or un-
sound practice in conducting the affairs of 
such regulated entity; or 
‘‘(iii) breaches any fiduciary duty; and 
‘‘(B) knowingly or recklessly causes a sub-
stantial loss to such regulated entity or a sub-
stantial 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 
a regulated entity, an amount not to exceed 
$2,000,000; and 
‘‘(B) in the case of any regulated entity, 
$2,000,000.’’;
269
(3) in subsection (c)(1)(B), by striking ‘‘enter-
prise, executive officer, or director’’ and inserting 
‘‘regulated 
entity 
or 
regulated 
entity-affiliated 
party’’; 
(4) in subsection (d), by striking the first sen-
tence and inserting the following: ‘‘If a regulated en-
tity or regulated entity-affiliated party fails to com-
ply with an order of the Director imposing a civil 
money penalty under this section, after the order is 
no longer subject to review as provided under sub-
section (c)(1) and section 1374, the Director may, in 
the discretion of the Director, bring an action in the 
United States District Court for the District of Co-
lumbia, or the United States district court within 
the jurisdiction of which the headquarters of the reg-
ulated entity is located, to obtain a monetary judg-
ment against the regulated entity or regulated entity 
affiliated party and such other relief as may be 
available, or request that the Attorney General of 
the United States bring such an action.’’; and 
(5) in subsection (g), by striking ‘‘subsection 
(b)(3)’’ and inserting ‘‘this section, unless author-
ized by the Director by rule, regulation, or order’’.
270
SEC. 166. 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, 1378, 1379, 
1379A, and 1379B (12 U.S.C. 4637–41) as sections 
1379, 1379A, 1379B, 1379C, and 1379D, respec-
tively; 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 
Director determines that—
‘‘(1) any regulated entity-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 Director in connection with the 
grant of any application or other request 
by such regulated entity; or 
‘‘(iv) any written agreement between 
such regulated entity and the Director;
271
‘‘(B) engaged or participated in any unsafe 
or unsound practice in connection with any reg-
ulated entity; 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 regulated entity has suffered or 
will probably suffer financial loss or other dam-
age; 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 regulated entity, the Director may 
serve upon such party a written notice of the 
Director’s intention to remove such party from 
office or to prohibit any further participation by
272
such party, in any manner, in the conduct of 
the affairs of any regulated entity. 
‘‘(b) SUSPENSION ORDER.—
‘‘(1) SUSPENSION
OR
PROHIBITION
AUTHOR-
ITY.—If the Director serves written notice under 
subsection (a) to any regulated entity-affiliated party 
of the Director’s intention to issue an order under 
such subsection, the Director may—
‘‘(A) suspend such party from office or 
prohibit such party from further participation 
in any manner in the conduct of the affairs of 
the regulated entity, if the Director—
‘‘(i) determines that such action is 
necessary for the protection of the regu-
lated entity; and 
‘‘(ii) serves such party with written 
notice of the suspension order; and 
‘‘(B) prohibit the regulated entity from re-
leasing to or on behalf of the regulated entity-
affiliated party any compensation or other pay-
ment of money or other thing of current or po-
tential value in connection with any resignation, 
removal, retirement, or other termination of 
employment or office of the party.
273
‘‘(2) EFFECTIVE
PERIOD.—Any suspension 
order issued under this subsection—
‘‘(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 Director 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 Director to such party under 
subsection (a). 
‘‘(3) COPY OF ORDER.—If the Director issues a 
suspension order under this subsection to any regu-
lated entity-affiliated party, the Director shall serve 
a copy of such order on any regulated entity with 
which such party is affiliated at the time such order 
is issued. 
‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of 
intention to remove a regulated entity-affiliated party 
from office or to prohibit such party from participating 
in the conduct of the affairs of a regulated entity shall 
contain a statement of the facts constituting grounds for
274
such action, and shall fix a time and place at which a hear-
ing 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 Director at the request of 
(1) such party, and for good cause shown, or (2) the At-
torney General of the United States. Unless such party 
shall appear at the hearing in person or by a duly author-
ized representative, 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 Director shall find 
that any of the grounds specified in such notice have been 
established, the Director may issue such orders of suspen-
sion or removal from office, or prohibition from participa-
tion in the conduct of the affairs of the regulated entity, 
as it may deem appropriate, together with an order pro-
hibiting compensation described in subsection (b)(1)(B). 
Any such order shall become effective at the expiration 
of 30 days after service upon such regulated entity 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 Director or a reviewing court.
275
‘‘(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 regulated entity; 
‘‘(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 regulated entity; 
‘‘(3) violate any voting agreement previously 
approved by the Director; or 
‘‘(4) vote for a director, or serve or act as a 
regulated entity-affiliated party. 
‘‘(e) INDUSTRY-WIDE PROHIBITION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any person who, pursuant to an order 
issued under this section, has been removed or sus-
pended from office in a regulated entity or prohib-
ited from participating in the conduct of the affairs 
of a regulated entity may not, while such order is in 
effect, continue or commence to hold any office in, 
or participate in any manner in the conduct of the 
affairs of, any regulated entity. 
‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT-
TEN CONSENT.—If, on or after the date an order is
276
issued under this section which removes or suspends 
from office any regulated entity-affiliated party or 
prohibits such party from participating in the con-
duct of the affairs of a regulated entity, such party 
receives the written consent of the Director, the 
order shall, to the extent of such consent, cease to 
apply to such party with respect to the regulated en-
tity described in the written consent. If the Director 
grants such a written consent, it shall publicly dis-
close 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 Director spe-
cifically finds that it should apply to a corporation, firm, 
or other business enterprise. 
‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF 
REGULATED
ENTITY-AFFILIATED
PARTY.—Within 10 
days after any regulated entity-affiliated party has been 
suspended from office and/or prohibited from participation 
in the conduct of the affairs of a regulated entity under 
this section, such party may apply to the United States