S.Amdt. 4426

SA 4426. Mr. MARTINEZ (for himself and Mr. Carper) submitted an
amendment intended to be proposed to amendment SA 4387 submitted by Mr.
Dodd (for himself and Mr. Shelby) to the bill H.R. 3221, moving the
United States toward greater energy independence and security,
developing innovative new technologies, reducing carbon emissions,
creating green jobs, protecting consumers, increasing clean renewable
energy production, and modernizing our energy infrastructure, and to
amend the Internal Revenue Code of 1986 to provide tax incentives for
the production of renewable energy and energy conservation; which was
ordered to lie on the table; as follows:

At the end, add the following:

DIVISION 2

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This Division may be cited as the
``Federal Housing Finance Reform Act of 2007''.
(b) Table of Contents.--The table of contents for this
Division is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Definitions.

TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN
BANKS

Subtitle A--Improvement of Safety and Soundness

Sec. 101. Establishment of the Federal Housing Finance Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Federal Housing Enterprise Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Disclosure of income and charitable contributions by
enterprises.
Sec. 106. Assessments.
Sec. 107. Examiners and accountants.
Sec. 108. Prohibition and withholding of executive compensation.
Sec. 109. Reviews of regulated entities.
Sec. 110. Inclusion of minorities and women; diversity in Agency
workforce.
Sec. 111. Regulations and orders.
Sec. 112. Non-waiver of privileges.
Sec. 113. Risk-Based capital requirements.
Sec. 114. Minimum and critical capital levels.
Sec. 115. Review of and authority over enterprise assets and
liabilities.
Sec. 116. Corporate governance of enterprises.
Sec. 117. Required registration under Securities Exchange Act of 1934.
Sec. 118. Liaison with Financial Institutions Examination Council.
Sec. 119. Guarantee fee study.
Sec. 120. Conforming amendments.

Subtitle B--Improvement of Mission Supervision

Sec. 131. Transfer of product approval and housing goal oversight.
Sec. 132. Review of enterprise products.
Sec. 133. Conforming loan limits.
Sec. 134. Annual housing report regarding regulated entities.
Sec. 135. Annual reports by regulated entities on affordable housing
stock.
Sec. 136. Mortgagor identification requirements for mortgages of
regulated entities.
Sec. 137. Revision of housing goals.
Sec. 138. Duty to serve underserved markets.
Sec. 139. Monitoring and enforcing compliance with housing goals.
Sec. 140. Affordable Housing Fund.
Sec. 141. Consistency with mission.
Sec. 142. Enforcement.
Sec. 143. Conforming amendments.

Subtitle C--Prompt Corrective Action

Sec. 151. Capital classifications.
Sec. 152. Supervisory actions applicable to undercapitalized regulated
entities.
Sec. 153. Supervisory actions applicable to significantly
undercapitalized regulated entities.
Sec. 154. Authority over critically undercapitalized regulated
entities.
Sec. 155. Conforming amendments.

Subtitle D--Enforcement Actions

Sec. 161. Cease-and-desist proceedings.
Sec. 162. Temporary cease-and-desist proceedings.
Sec. 163. Prejudgment attachment.
Sec. 164. Enforcement and jurisdiction.
Sec. 165. Civil money penalties.
Sec. 166. Removal and prohibition authority.
Sec. 167. Criminal penalty.
Sec. 168. Subpoena authority.
Sec. 169. Conforming amendments.

Subtitle E--General Provisions

Sec. 181. Boards of enterprises.
Sec. 182. Report on portfolio operations, safety and soundness, and
mission of enterprises.
Sec. 183. Conforming and technical amendments.
Sec. 184. Study of alternative secondary market systems.
Sec. 185. Effective date.

TITLE II--FEDERAL HOME LOAN BANKS

Sec. 201. Definitions.
Sec. 202. Directors.
Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan
Banks.
Sec. 204. Joint activities of Banks.
Sec. 205. Sharing of information between Federal Home Loan Banks.
Sec. 206. Reorganization of Banks and voluntary merger.
Sec. 207. Securities and Exchange Commission disclosure.
Sec. 208. Community financial institution members.
Sec. 209. Technical and conforming amendments.
Sec. 210. Study of affordable housing program use for long-term care
facilities.
Sec. 211. Effective date.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF
FEDERAL HOUSING ENTERPRISE OVERSIGHT, FEDERAL HOUSING FINANCE BOARD,
AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Subtitle A--Office of Federal Housing Enterprise Oversight

Sec. 301. Abolishment of OFHEO.
Sec. 302. Continuation and coordination of certain regulations.
Sec. 303. Transfer and rights of employees of OFHEO.
Sec. 304. Transfer of property and facilities.

Subtitle B--Federal Housing Finance Board

Sec. 321. Abolishment of the Federal Housing Finance Board.
Sec. 322. Continuation and coordination of certain regulations.
Sec. 323. Transfer and rights of employees of the Federal Housing
Finance Board.
Sec. 324. Transfer of property and facilities.

Subtitle C--Department of Housing and Urban Development

Sec. 341. Termination of enterprise-related functions.
Sec. 342. Continuation and coordination of certain regulations.
Sec. 343. Transfer and rights of employees of Department of Housing and
Urban Development.
Sec. 344. Transfer of appropriations, property, and facilities.

SEC. 2. DEFINITIONS.

Section 1303 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4502) is amended--
(1) in paragraph (7), by striking ``an enterprise'' and
inserting ``a regulated entity'';
(2) by striking ``the enterprise'' each place such term
appears (except in paragraphs (4) and (18)) and inserting
``the regulated entity'';
(3) in paragraph (5), by striking ``Office of Federal
Housing Enterprise Oversight of the Department of Housing and
Urban Development'' and inserting ``Federal Housing Finance
Agency'';
(4) in each of paragraphs (8), (9), (10), and (19), by
striking ``Secretary'' each place that term appears and
inserting ``Director'';
(5) in paragraph (13), by inserting ``, with respect to an
enterprise,'' after ``means'';
(6) by redesignating paragraphs (16) through (19) as
paragraphs (20) through (23), respectively;
(7) by striking paragraphs (14) and (15) and inserting the
following new paragraphs:
``(18) Regulated entity.--The term `regulated entity'
means--
``(A) the Federal National Mortgage Association and any
affiliate thereof;
``(B) the Federal Home Loan Mortgage Corporation and any
affiliate thereof; and
``(C) each Federal home loan bank.
``(19) Regulated entity-affiliated party.--The term
`regulated entity-affiliated party' means--
``(A) any director, officer, employee, or agent for, a
regulated entity, or controlling shareholder of an
enterprise;
``(B) any shareholder, affiliate, consultant, or joint
venture partner of a regulated entity, and any other person,
as determined by the Director (by regulation or on a case-by-
case basis) that participates in the conduct of the affairs
of a regulated entity, except that a shareholder of a
regulated entity shall not be considered to have participated
in the affairs of that regulated entity solely by reason of
being a member or customer of the regulated entity;
``(C) any independent contractor for a regulated entity
(including any attorney, appraiser, or accountant), if--

[[Page S2552]]

``(i) the independent contractor knowingly or recklessly
participates in--

``(I) any violation of any law or regulation;
``(II) any breach of fiduciary duty; or
``(III) any unsafe or unsound practice; and

``(ii) such violation, breach, or practice caused, or is
likely to cause, more than a minimal financial loss to, or a
significant adverse effect on, the regulated entity; and
``(D) any not-for-profit corporation that receives its
principal funding, on an ongoing basis, from any regulated
entity.''.
(8) by redesignating paragraphs (8) through (13) as
paragraphs (12) through (17), respectively; and
(9) by inserting after paragraph (7) the following new
paragraph:
``(11) Federal home loan bank.--The term `Federal home loan
bank' means a bank established under the authority of the
Federal Home Loan Bank Act.'';
(10) by redesignating paragraphs (2) through (7) as
paragraphs (5) through (10), respectively; and
(11) by inserting after paragraph (1) the following new
paragraphs:
``(2) Agency.--The term `Agency' means the Federal Housing
Finance Agency.
``(3) Authorizing statutes.--The term `authorizing
statutes' means--
``(A) the Federal National Mortgage Association Charter
Act;
``(B) the Federal Home Loan Mortgage Corporation Act; and
``(C) the Federal Home Loan Bank Act.
``(4) Board.--The term `Board' means the Federal Housing
Enterprise Board established under section 1313B.''.

TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN
BANKS

Subtitle A--Improvement of Safety and Soundness

SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE
AGENCY.

(a) In General.--The Housing and Community Development Act
of 1992 (12 U.S.C. 4501 et seq.) is amended by striking
sections 1311 and 1312 and inserting the following:

``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE
AGENCY.

``(a) Establishment.--There is established the Federal
Housing Finance Agency, which shall be an independent agency
of the Federal Government.
``(b) General Supervisory and Regulatory Authority.--
``(1) In general.--Each regulated entity shall, to the
extent provided in this title, be subject to the supervision
and regulation of the Agency.
``(2) Authority over fannie mae, freddie mac, and federal
home loan banks.--The Director of the Federal Housing Finance
Agency shall have general supervisory and regulatory
authority over each regulated entity and shall exercise such
general regulatory and supervisory authority, including such
duties and authorities set forth under section 1313 of this
Act, to ensure that the purposes of this Act, the authorizing
statutes, and any other applicable law are carried out. The
Director shall have the same supervisory and regulatory
authority over any joint office of the Federal home loan
banks, including the Office of Finance of the Federal Home
Loan Banks, as the Director has over the individual Federal
home loan banks.
``(c) Savings Provision.--The authority of the Director to
take actions under subtitles B and C shall not in any way
limit the general supervisory and regulatory authority
granted to the Director.

``SEC. 1312. DIRECTOR.

``(a) Establishment of Position.--There is established the
position of the Director of the Federal Housing Finance
Agency, who shall be the head of the Agency.
``(b) Appointment; Term.--
``(1) Appointment.--The Director shall be appointed by the
President, by and with the advice and consent of the Senate,
from among individuals who are citizens of the United States,
have a demonstrated understanding of financial management or
oversight, and have a demonstrated understanding of capital
markets, including the mortgage securities markets and
housing finance.
``(2) Term and removal.--The Director shall be appointed
for a term of 5 years and may be removed by the President
only for cause.
``(3) Vacancy.--A vacancy in the position of Director that
occurs before the expiration of the term for which a Director
was appointed shall be filled in the manner established under
paragraph (1), and the Director appointed to fill such
vacancy shall be appointed only for the remainder of such
term.
``(4) Service after end of term.--An individual may serve
as the Director after the expiration of the term for which
appointed until a successor has been appointed.
``(5) Transitional provision.--Notwithstanding paragraphs
(1) and (2), the Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development shall serve as the Director until a successor has
been appointed under paragraph (1).
``(c) Deputy Director of the Division of Enterprise
Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Enterprise Regulation, who shall be
appointed by the Director from among individuals who are
citizens of the United States, and have a demonstrated
understanding of financial management or oversight and of
mortgage securities markets and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Enterprise Regulation shall have such functions, powers, and
duties with respect to the oversight of the enterprises as
the Director shall prescribe.
``(d) Deputy Director of the Division of Federal Home Loan
Bank Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Federal Home Loan Bank Regulation, who
shall be appointed by the Director from among individuals who
are citizens of the United States, have a demonstrated
understanding of financial management or oversight and of the
Federal Home Loan Bank System and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Federal Home Loan Bank Regulation shall have such functions,
powers, and duties with respect to the oversight of the
Federal home loan banks as the Director shall prescribe.
``(e) Deputy Director for Housing.--
``(1) In general.--The Agency shall have a Deputy Director
for Housing, who shall be appointed by the Director from
among individuals who are citizens of the United States, and
have a demonstrated understanding of the housing markets and
housing finance and of community and economic development.
``(2) Functions.--The Deputy Director for Housing shall
have such functions, powers, and duties with respect to the
oversight of the housing mission and goals of the
enterprises, and with respect to oversight of the housing
finance and community and economic development mission of the
Federal home loan banks, as the Director shall prescribe.
``(f) Limitations.--The Director and each of the Deputy
Directors may not--
``(1) have any direct or indirect financial interest in any
regulated entity or regulated entity-affiliated party;
``(2) hold any office, position, or employment in any
regulated entity or regulated entity-affiliated party; or
``(3) have served as an executive officer or director of
any regulated entity, or regulated entity-affiliated party,
at any time during the 3-year period ending on the date of
appointment of such individual as Director or Deputy
Director.
``(g) Ombudsman.--The Director shall establish the position
of the Ombudsman in the Agency. The Director shall provide
that the Ombudsman will consider complaints and appeals from
any regulated entity and any person that has a business
relationship with a regulated entity and shall specify the
duties and authority of the Ombudsman.''.
(b) Appointment of Director.--Notwithstanding any other
provision of law or of this Division, the President may, any
time after the date of the enactment of this Act, appoint an
individual to serve as the Director of the Federal Housing
Finance Agency, as such office is established by the
amendment made by subsection (a). This subsection shall take
effect on the date of the enactment of this Act.

SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.

(a) In General.--The Housing and Community Development Act
of 1992 (12 U.S.C. 4513) is amended by striking section 1313
and inserting the following new sections:

``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

``(a) Duties.--
``(1) Principal duties.--The principal duties of the
Director shall be--
``(A) to oversee the operations of each regulated entity
and any joint office of the Federal Home Loan Banks; and
``(B) to ensure that--
``(i) each regulated entity operates in a safe and sound
manner, including maintenance of adequate capital and
internal controls;
``(ii) the operations and activities of each regulated
entity foster liquid, efficient, competitive, and resilient
national housing finance markets that minimize the cost of
housing finance (including activities relating to mortgages
on housing for low- and moderate-income families involving a
reasonable economic return that may be less than the return
earned on other activities);
``(iii) each regulated entity complies with this title and
the rules, regulations, guidelines, and orders issued under
this title and the authorizing statutes; and
``(iv) each regulated entity carries out its statutory
mission only through activities that are consistent with this
title and the authorizing statutes.
``(2) Scope of authority.--The authority of the Director
shall include the authority--
``(A) to review and, if warranted based on the principal
duties described in paragraph (1), reject any acquisition or
transfer of a controlling interest in an enterprise; and
``(B) to exercise such incidental powers as may be
necessary or appropriate to fulfill the duties and
responsibilities of the Director in the supervision and
regulation of each regulated entity.
``(b) Delegation of Authority.--The Director may delegate
to officers or employees of the Agency, including each of the
Deputy Directors, any of the functions, powers, or duties of
the Director, as the Director considers appropriate.
``(c) Litigation Authority.--
``(1) In general.--In enforcing any provision of this
title, any regulation or order prescribed under this title,
or any other provision of law, rule, regulation, or order, or
in

[[Page S2553]]

any other action, suit, or proceeding to which the Director
is a party or in which the Director is interested, and in the
administration of conservatorships and receiverships, the
Director may act in the Director's own name and through the
Director's own attorneys, or request that the Attorney
General of the United States act on behalf of the Director.
``(2) Consultation with attorney general.--The Director
shall provide notice to, and consult with, the Attorney
General of the United States before taking an action under
paragraph (1) of this subsection or under section 1344(a),
1345(d), 1348(c), 1372(e), 1375(a), 1376(d), or 1379D(c),
except that, if the Director determines that any delay caused
by such prior notice and consultation may adversely affect
the safety and soundness responsibilities of the Director
under this title, the Director shall notify the Attorney
General as soon as reasonably possible after taking such
action.
``(3) Subject to suit.--Except as otherwise provided by
law, the Director shall be subject to suit (other than suits
on claims for money damages) by a regulated entity or
director or officer thereof with respect to any matter under
this title or any other applicable provision of law, rule,
order, or regulation under this title, in the United States
district court for the judicial district in which the
regulated entity has its principal place of business, or in
the United States District Court for the District of
Columbia, and the Director may be served with process in the
manner prescribed by the Federal Rules of Civil Procedure.

``SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

``(a) Standards.--The Director shall establish standards,
by regulation, guideline, or order, for each regulated entity
relating to--
``(1) adequacy of internal controls and information
systems, including information security and privacy policies
and practices, taking into account the nature and scale of
business operations;
``(2) independence and adequacy of internal audit systems;
``(3) management of credit and counterparty risk, including
systems to identify concentrations of credit risk and
prudential limits to restrict exposure of the regulated
entity to a single counterparty or groups of related
counterparties;
``(4) management of interest rate risk exposure;
``(5) management of market risk, including standards that
provide for systems that accurately measure, monitor, and
control market risks and, as warranted, that establish
limitations on market risk;
``(6) adequacy and maintenance of liquidity and reserves;
``(7) management of any asset and investment portfolio;
``(8) investments and acquisitions by a regulated entity,
to ensure that they are consistent with the purposes of this
Act and the authorizing statutes;
``(9) maintenance of adequate records, in accordance with
consistent accounting policies and practices that enable the
Director to evaluate the financial condition of the regulated
entity;
``(10) issuance of subordinated debt by that particular
regulated entity, as the Director considers necessary;
``(11) overall risk management processes, including
adequacy of oversight by senior management and the board of
directors and of processes and policies to identify, measure,
monitor, and control material risks, including reputational
risks, and for adequate, well-tested business resumption
plans for all major systems with remote site facilities to
protect against disruptive events; and
``(12) such other operational and management standards as
the Director determines to be appropriate.
``(b) Failure To Meet Standards.--
``(1) Plan requirement.--
``(A) In general.--If the Director determines that a
regulated entity fails to meet any standard established under
subsection (a)--
``(i) if such standard is established by regulation, the
Director shall require the regulated entity to submit an
acceptable plan to the Director within the time allowed under
subparagraph (C); and
``(ii) if such standard is established by guideline, the
Director may require the regulated entity to submit a plan
described in clause (i).
``(B) Contents.--Any plan required under subparagraph (A)
shall specify the actions that the regulated entity will take
to correct the deficiency. If the regulated entity is
undercapitalized, the plan may be a part of the capital
restoration plan for the regulated entity under section
1369C.
``(C) Deadlines for submission and review.--The Director
shall by regulation establish deadlines that--
``(i) provide the regulated entities with reasonable time
to submit plans required under subparagraph (A), and
generally require a regulated entity to submit a plan not
later than 30 days after the Director determines that the
entity fails to meet any standard established under
subsection (a); and
``(ii) require the Director to act on plans expeditiously,
and generally not later than 30 days after the plan is
submitted.
``(2) Required order upon failure to submit or implement
plan.--If a regulated entity fails to submit an acceptable
plan within the time allowed under paragraph (1)(C), or fails
in any material respect to implement a plan accepted by the
Director, the following shall apply:
``(A) Required correction of deficiency.--The Director
shall, by order, require the regulated entity to correct the
deficiency.
``(B) Other authority.--The Director may, by order, take
one or more of the following actions until the deficiency is
corrected:
``(i) Prohibit the regulated entity from permitting its
average total assets (as such term is defined in section
1316(b)) during any calendar quarter to exceed its average
total assets during the preceding calendar quarter, or
restrict the rate at which the average total assets of the
entity may increase from one calendar quarter to another.
``(ii) Require the regulated entity--

``(I) in the case of an enterprise, to increase its ratio
of core capital to assets.
``(II) in the case of a Federal home loan bank, to increase
its ratio of total capital (as such term is defined in
section 6(a)(5) of the Federal Home Loan Bank Act (12 U.S.C.
1426(a)(5)) to assets.

``(iii) Require the regulated entity to take any other
action that the Director determines will better carry out the
purposes of this section than any of the actions described in
this subparagraph.
``(3) Mandatory restrictions.--In complying with paragraph
(2), the Director shall take one or more of the actions
described in clauses (i) through (iii) of paragraph (2)(B)
if--
``(A) the Director determines that the regulated entity
fails to meet any standard prescribed under subsection (a);
``(B) the regulated entity has not corrected the
deficiency; and
``(C) during the 18-month period before the date on which
the regulated entity first failed to meet the standard, the
entity underwent extraordinary growth, as defined by the
Director.
``(c) Other Enforcement Authority Not Affected.--The
authority of the Director under this section is in addition
to any other authority of the Director.''.
(b) Independence in Congressional Testimony and
Recommendations.--Section 111 of Public Law 93-495 (12 U.S.C.
250) is amended by striking ``the Federal Housing Finance
Board'' and inserting ``the Director of the Federal Housing
Finance Agency''.

SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD.

(a) In General.--Title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4501 et seq.) is amended
by inserting after section 1313A, as added by section 102 of
this Division, the following new section:

``SEC. 1313B. FEDERAL HOUSING ENTERPRISE BOARD.

``(a) In General.--There is established the Federal Housing
Enterprise Board, which shall advise the Director with
respect to overall strategies and policies in carrying out
the duties of the Director under this title.
``(b) Limitations.--The Board may not exercise any
executive authority, and the Director may not delegate to the
Board any of the functions, powers, or duties of the
Director.
``(c) Composition.--The Board shall be comprised of 3
members, of whom--
``(1) one member shall be the Secretary of the Treasury;
``(2) one member shall be the Secretary of Housing and
Urban Development; and
``(3) one member shall be the Director, who shall serve as
the Chairperson of the Board.
``(d) Meetings.--
``(1) In general.--The Board shall meet upon notice by the
Director, but in no event shall the Board meet less
frequently than once every 3 months.
``(2) Special meetings.--Either the Secretary of the
Treasury or the Secretary of Housing and Urban Development
may, upon giving written notice to the Director, require a
special meeting of the Board.
``(e) Testimony.--On an annual basis, the Board shall
testify before Congress regarding--
``(1) the safety and soundness of the regulated entities;
``(2) any material deficiencies in the conduct of the
operations of the regulated entities;
``(3) the overall operational status of the regulated
entities;
``(4) an evaluation of the performance of the regulated
entities in carrying out their respective missions;
``(5) operations, resources, and performance of the Agency;
and
``(6) such other matters relating to the Agency and its
fulfillment of its mission, as the Board determines
appropriate.''.
(b) Annual Report of the Director.--Section 1319B(a) of the
Housing and Community Development Act of 1992 (12 U.S.C. 4521
(a)) is amended--
(1) in paragraph (3), by striking ``and'' at the end; and
(2) by striking paragraph (4) and inserting the following
new paragraphs:
``(4) an assessment of the Board or any of its members with
respect to--
``(A) the safety and soundness of the regulated entities;
``(B) any material deficiencies in the conduct of the
operations of the regulated entities;
``(C) the overall operational status of the regulated
entities; and
``(D) an evaluation of the performance of the regulated
entities in carrying out their missions;

[[Page S2554]]

``(5) operations, resources, and performance of the Agency;
``(6) a description of the demographic makeup of the
workforce of the Agency and the actions taken pursuant to
section 1319A(b) to provide for diversity in the workforce;
and
``(7) such other matters relating to the Agency and its
fulfillment of its mission.''.

SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES.

Section 1314 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4514) is amended--
(1) in the section heading, by striking ``ENTERPRISES'' and
inserting ``REGULATED ENTITIES'';
(2) in subsection (a)--
(A) in the subsection heading, by striking ``Special
Reports and Reports of Financial Condition'' and inserting
``Regular and Special Reports'';
(B) in paragraph (1)--
(i) in the paragraph heading, by striking ``Financial
condition'' and inserting ``Regular reports''; and
(ii) by striking ``reports of financial condition and
operations'' and inserting ``regular reports on the condition
(including financial condition), management, activities, or
operations of the regulated entity, as the Director considers
appropriate''; and
(C) in paragraph (2), after ``submit special reports''
insert ``on any of the topics specified in paragraph (1) or
such other topics''; and
(3) by adding at the end the following new subsection:
``(c) Reports of Fraudulent Financial Transactions.--
``(1) Requirement to report.--The Director shall require a
regulated entity to submit to the Director a timely report
upon discovery by the regulated entity that it has purchased
or sold a fraudulent loan or financial instrument or suspects
a possible fraud relating to a purchase or sale of any loan
or financial instrument. The Director shall require the
regulated entities to establish and maintain procedures
designed to discover any such transactions.
``(2) Protection from liability for reports.--
``(A) In general.--If a regulated entity makes a report
pursuant to paragraph (1), or a regulated entity-affiliated
party makes, or requires another to make, such a report, and
such report is made in a good faith effort to comply with the
requirements of paragraph (1), such regulated entity or
regulated entity-affiliated party shall not be liable to any
person under any law or regulation of the United States, any
constitution, law, or regulation of any State or political
subdivision of any State, or under any contract or other
legally enforceable agreement (including any arbitration
agreement), for such report or for any failure to provide
notice of such report to the person who is the subject of
such report or any other person identified in the report.
``(B) Rule of construction.--Subparagraph (A) shall not be
construed as creating--
``(i) any inference that the term `person', as used in such
subparagraph, may be construed more broadly than its ordinary
usage so as to include any government or agency of
government; or
``(ii) any immunity against, or otherwise affecting, any
civil or criminal action brought by any government or agency
of government to enforce any constitution, law, or regulation
of such government or agency.''.

SEC. 105. DISCLOSURE OF INCOME AND CHARITABLE CONTRIBUTIONS
BY ENTERPRISES.

Section 1314 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4514), as amended by the preceding
provisions of this Division, is further amended by adding at
the end the following new subsections:
``(d) Disclosure of Charitable Contributions by
Enterprises.--
``(1) Required disclosure.--The Director shall, by
regulation, require each enterprise to submit a report
annually, in a format designated by the Director, containing
the following information:
``(A) Total value.--The total value of contributions made
by the enterprise to nonprofit organizations during its
previous fiscal year.
``(B) Substantial contributions.--If the value of
contributions made by the enterprise to any nonprofit
organization during its previous fiscal year exceeds the
designated amount, the name of that organization and the
value of contributions.
``(C) Substantial contributions to insider-affiliated
charities.--Identification of each contribution whose value
exceeds the designated amount that were made by the
enterprise during the enterprise's previous fiscal year to
any nonprofit organization of which a director, officer, or
controlling person of the enterprise, or a spouse thereof,
was a director or trustee, the name of such nonprofit
organization, and the value of the contribution.
``(2) Definitions.--For purposes of this subsection--
``(A) the term `designated amount' means such amount as may
be designated by the Director by regulation, consistent with
the public interest and the protection of investors for
purposes of this subsection; and
``(B) the Director may, by such regulations as the Director
deems necessary or appropriate in the public interest, define
the terms officer and controlling person.
``(3) Public availability.--The Director shall make the
information submitted pursuant to this subsection publicly
available.
``(e) Disclosure of Income.--Each enterprise shall include,
in each annual report filed under section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m), the income
reported by the issuer to the Internal Revenue Service for
the most recent taxable year. Such income shall--
``(1) be presented in a prominent location in each such
report and in a manner that permits a ready comparison of
such income to income otherwise required to be included in
such reports under regulations issued under such section; and
``(2) be submitted to the Securities and Exchange
Commission in a form and manner suitable for entry into the
EDGAR system of such Commission for public availability under
such system.''.

SEC. 106. ASSESSMENTS.

Section 1316 of the Housing and Community Development 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 Director shall establish and
collect from the regulated entities annual assessments in an
amount not exceeding the amount sufficient to provide for
reasonable costs and expenses of the Agency, including--
``(1) the expenses of any examinations under section 1317
of this Act and under section 20 of the Federal Home Loan
Bank Act;
``(2) the expenses of obtaining any reviews and credit
assessments under section 1319;
``(3) such amounts in excess of actual expenses for any
given year as deemed necessary by the Director to maintain a
working capital fund in accordance with subsection (e); and
``(4) the wind up of the affairs of the Office of Federal
Housing Enterprise Oversight and the Federal Housing Finance
Board under title III of the Federal Housing Finance Reform
Act of 2007.'';
(2) in subsection (b)--
(A) in the subsection heading, by striking ``Enterprises''
and inserting ``Regulated Entities'' ;
(B) by realigning paragraph (2) two ems from the left
margin, so as to align the left margin of such paragraph with
the left margins of paragraph (1);
(C) in paragraph (1)--
(i) by striking ``Each enterprise'' and inserting ``Each
regulated entity'';
(ii) by striking ``each enterprise'' and inserting ``each
regulated entity''; and
(iii) by striking ``both enterprises'' and inserting ``all
of the regulated entities''; and
(D) in paragraph (3)--
(i) in subparagraph (B), by striking ``subparagraph (A)''
and inserting ``clause (i)'';
(ii) by redesignating subparagraphs (A), (B), and (C) as
clauses (i), (ii) and (ii), respectively, and realigning such
clauses, as so redesignated, so as to be indented 6 ems from
the left margin;
(iii) by striking the matter that precedes clause (i), as
so redesignated, and inserting the following:
``(3) Definition of total assets.--For purposes of this
section, the term `total assets' means as follows:
``(A) Enterprises.--With respect to an enterprise, the sum
of--''; and
(iv) by adding at the end the following new subparagraph:
``(B) Federal home loan banks.--With respect to a Federal
home loan bank, the total assets of the Bank, as determined
by the Director in accordance with generally accepted
accounting principles.'';
(3) by striking subsection (c) and inserting the following
new subsection:
``(c) Increased Costs of Regulation.--
``(1) Increase for inadequate capitalization.--The
semiannual payments made pursuant to subsection (b) by any
regulated entity that is not classified (for purposes of
subtitle B) as adequately capitalized may be increased, as
necessary, in the discretion of the Director to pay
additional estimated costs of regulation of the regulated
entity.
``(2) Adjustment for enforcement activities.--The Director
may adjust the amounts of any semiannual payments for an
assessment under subsection (a) that are to be paid pursuant
to subsection (b) by a regulated entity, as necessary in the
discretion of the Director, to ensure that the costs of
enforcement activities under this Act for a regulated entity
are borne only by such regulated entity.
``(3) Additional assessment for deficiencies.--If at any
time, as a result of increased costs of regulation of a
regulated entity that is not classified (for purposes of
subtitle B) as adequately capitalized or as the result of
supervisory or enforcement activities under this Act for a
regulated entity, the amount available from any semiannual
payment made by such regulated entity pursuant to subsection
(b) is insufficient to cover the costs of the Agency with
respect to such entity, the Director may make and collect
from such regulated entity an immediate assessment to cover
the amount of such deficiency for the semiannual period. If,
at the end of any semiannual period during which such an
assessment is made, any amount remains from such assessment,
such remaining amount shall be deducted from the assessment
for such regulated entity for the following semiannual
period.'';

[[Page S2555]]

(4) in subsection (d), by striking ``If'' and inserting
``Except with respect to amounts collected pursuant to
subsection (a)(3), if''; and
(5) by striking subsections (e) through (g) and inserting
the following new subsections:
``(e) Working Capital Fund.--At the end of each year for
which an assessment under this section is made, the Director
shall remit to each regulated entity any amount of assessment
collected from such regulated entity that is attributable to
subsection (a)(3) and is in excess of the amount the Director
deems necessary to maintain a working capital fund.
``(f) Treatment of Assessments.--
``(1) Deposit.--Amounts received by the Director from
assessments under this section may be deposited by the
Director in the manner provided in section 5234 of the
Revised Statutes (12 U.S.C. 192) for monies deposited by the
Comptroller of the Currency.
``(2) Not government funds.--The amounts received by the
Director from any assessment under this section shall not be
construed to be Government or public funds or appropriated
money.
``(3) No apportionment of funds.--Notwithstanding any other
provision of law, the amounts received by the Director from
any assessment under this section shall not be subject to
apportionment for the purpose of chapter 15 of title 31,
United States Code, or under any other authority.
``(4) Use of funds.--The Director may use any amounts
received by the Director from assessments under this section
for compensation of the Director and other employees of the
Agency and for all other expenses of the Director and the
Agency.
``(5) Availability of oversight fund amounts.--
Notwithstanding any other provision of law, any amounts
remaining in the Federal Housing Enterprises Oversight Fund
established under this section (as in effect before the
effective date under section 185 of the Federal Housing
Finance Reform Act of 2007), and any amounts remaining from
assessments on the Federal Home Loan banks pursuant to
section 18(b) of the Federal Home Loan Bank Act (12 U.S.C.
1438(b)), shall, upon such effective date, be treated for
purposes of this subsection as amounts received from
assessments under this section.
``(6) Treasury investments.--
``(A) Authority.--The Director may request the Secretary of
the Treasury to invest such portions of amount received by
the Director from assessments paid under this section that,
in the Director's discretion, are not required to meet the
current working needs of the Agency.
``(B) Government obligations.--Pursuant to a request under
subparagraph (A), the Secretary of the Treasury shall invest
such amounts in government obligations guaranteed as to
principal and interest by the United States with maturities
suitable to the needs of Agency and bearing interest at a
rate determined by the Secretary of the Treasury taking into
consideration current market yields on outstanding marketable
obligations of the United States of comparable maturity.
``(g) Budget and Financial Management.--
``(1) Financial operating plans and forecasts.--The
Director shall provide to the Director of the Office of
Management and Budget copies of the Director's financial
operating plans and forecasts as prepared by the Director in
the ordinary course of the Agency's operations, and copies of
the quarterly reports of the Agency's financial condition and
results of operations as prepared by the Director in the
ordinary course of the Agency's operations.
``(2) Financial statements.--The Agency shall prepare
annually a statement of assets and liabilities and surplus or
deficit; a statement of income and expenses; and a statement
of sources and application of funds.
``(3) Financial management systems.--The Agency shall
implement and maintain financial management systems that
comply substantially with Federal financial management
systems requirements, applicable Federal accounting
standards, and that uses a general ledger system that
accounts for activity at the transaction level.
``(4) Assertion of internal controls.--The Director shall
provide to the Comptroller General an assertion as to the
effectiveness of the internal controls that apply to
financial reporting by the Agency, using the standards
established in section 3512(c) of title 31, United States
Code.
``(5) Rule of construction.--This subsection may not be
construed as implying any obligation on the part of the
Director to consult with or obtain the consent or approval of
the Director of the Office of Management and Budget with
respect to any reports, plans, forecasts, or other
information referred to in paragraph (1) or any jurisdiction
or oversight over the affairs or operations of the Agency.
``(h) Audit of Agency.--
``(1) In general.--The Comptroller General shall annually
audit the financial transactions of the Agency in accordance
with the U.S. generally accepted government auditing
standards as may be prescribed by the Comptroller General of
the United States. The audit shall be conducted at the place
or places where accounts of the Agency are normally kept. The
representatives of the Government Accountability Office shall
have access to the personnel and to all books, accounts,
documents, papers, records (including electronic records),
reports, files, and all other papers, automated data, things,
or property belonging to or under the control of or used or
employed by the Agency pertaining to its financial
transactions and necessary to facilitate the audit, and such
representatives shall be afforded full facilities for
verifying transactions with the balances or securities held
by depositories, fiscal agents, and custodians. All such
books, accounts, documents, records, reports, files, papers,
and property of the Agency shall remain in possession and
custody of the Agency. The Comptroller General may obtain and
duplicate any such books, accounts, documents, records,
working papers, automated data and files, or other
information relevant to such audit without cost to the
Comptroller General and the Comptroller General's right of
access to such information shall be enforceable pursuant to
section 716(c) of title 31, United States Code.
``(2) Report.--The Comptroller General shall submit to the
Congress a report of each annual audit conducted under this
subsection. The report to the Congress shall set forth the
scope of the audit and shall include the statement of assets
and liabilities and surplus or deficit, the statement of
income and expenses, the statement of sources and application
of funds, and such comments and information as may be deemed
necessary to inform Congress of the financial operations and
condition of the Agency, together with such recommendations
with respect thereto as the Comptroller General may deem
advisable. A copy of each report shall be furnished to the
President and to the Agency at the time submitted to the
Congress.
``(3) Assistance and costs.--For the purpose of conducting
an audit under this subsection, the Comptroller General may,
in the discretion of the Comptroller General, employ by
contract, without regard to section 5 of title 41, United
States Code, professional services of firms and organizations
of certified public accountants for temporary periods or for
special purposes. Upon the request of the Comptroller
General, the Director of the Agency shall transfer to the
Government Accountability Office from funds available, the
amount requested by the Comptroller General to cover the full
costs of any audit and report conducted by the Comptroller
General. The Comptroller General shall credit funds
transferred to the account established for salaries and
expenses of the Government Accountability Office, and such
amount shall be available upon receipt and without fiscal
year limitation to cover the full costs of the audit and
report.''.

SEC. 107. EXAMINERS AND ACCOUNTANTS.

(a) Examinations.--Section 1317 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4517) is
amended--
(1) in subsection (a), by adding after the period at the
end the following: ``Each examination under this subsection
of a regulated entity shall include a review of the
procedures required to be established and maintained by the
regulated entity pursuant to section 1314(c) (relating to
fraudulent financial transactions) and the report regarding
each such examination shall describe any problems with such
procedures maintained by the regulated entity.'';
(2) in subsection (b)--
(A) by inserting ``of a regulated entity'' after ``under
this section''; and
(B) by striking ``to determine the condition of an
enterprise for the purpose of ensuring its financial safety
and soundness'' and inserting ``or appropriate''; and
(3) in subsection (c)--
(A) in the second sentence, by inserting ``to conduct
examinations under this section'' before the period; and
(B) in the third sentence, by striking ``from amounts
available in the Federal Housing Enterprises Oversight
Fund''.
(b) Enhanced Authority To Hire Examiners and Accountants.--
Section 1317 of the Housing and Community Development Act of
1992 (12 U.S.C. 4517) is amended by adding at the end the
following new subsection:
``(g) Appointment of Accountants, Economists, Specialists,
and Examiners.--
``(1) Applicability.--This section applies with respect to
any position of examiner, accountant, specialist in financial
markets, specialist in information technology, and economist
at the Agency, with respect to supervision and regulation of
the regulated entities, that is in the competitive service.
``(2) Appointment authority.--The Director may appoint
candidates to any position described in paragraph (1)--
``(A) in accordance with the statutes, rules, and
regulations governing appointments in the excepted service;
and
``(B) notwithstanding any statutes, rules, and regulations
governing appointments in the competitive service.
``(3) Rule of construction.--The appointment of a candidate
to a position under the authority of this subsection shall
not be considered to cause such position to be converted from
the competitive service to the excepted service.''.
(c) Repeal.--Section 20 of the Federal Home Loan Bank Act
(12 U.S.C. 1440) is amended--
(1) by striking the section heading and inserting the
following: ``examinations and gao audits'';
(2) in the third sentence, by striking ``the Board and''
each place such term appears; and
(3) by striking the first two sentences and inserting the
following: ``The Federal home loan banks shall be subject to
examinations by the Director to the extent provided in
section 1317 of the Federal Housing Enterprises

[[Page S2556]]

Financial Safety and Soundness Act of 1992 (12 U.S.C.
4517).''.

SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE
COMPENSATION.

(a) In General.--Section 1318 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4518) is amended--
(1) in the section heading, by striking ``OF EXCESSIVE''
and inserting ``AND WITHHOLDING OF EXECUTIVE'';
(2) by redesignating subsection (b) as subsection (d); and
(3) by inserting after subsection (a) the following new
subsections:
``(b) Factors.--In making any determination under
subsection (a), the Director may take into consideration any
factors the Director considers relevant, including any
wrongdoing on the part of the executive officer, and such
wrongdoing shall include any fraudulent act or omission,
breach of trust or fiduciary duty, violation of law, rule,
regulation, order, or written agreement, and insider abuse
with respect to the regulated entity. The approval of an
agreement or contract pursuant to section 309(d)(3)(B) of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(h)(2)) shall not
preclude the Director from making any subsequent
determination under subsection (a).
``(c) Withholding of Compensation.--In carrying out
subsection (a), the Director may require a regulated entity
to withhold any payment, transfer, or disbursement of
compensation to an executive officer, or to place such
compensation in an escrow account, during the review of the
reasonableness and comparability of compensation.''.
(b) Conforming Amendments.--
(1) Fannie mae.--Section 309(d) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is
amended by adding at the end the following new paragraph:
``(4) Notwithstanding any other provision of this section,
the corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an
agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section
1318 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4518).''.
(2) Freddie mac.--Section 303(h) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by
adding at the end the following new paragraph:
``(4) Notwithstanding any other provision of this section,
the Corporation shall not transfer, disburse, or pay
compensation to any executive officer, or enter into an
agreement with such executive officer, without the approval
of the Director, for matters being reviewed under section
1318 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4518).''.
(3) Federal home loan banks.--Section 7 of the Federal Home
Loan Bank Act (12 U.S.C. 1427) is amended by adding at the
end the following new subsection:
``(l) Withholding of Compensation.--Notwithstanding any
other provision of this section, a Federal home loan bank
shall not transfer, disburse, or pay compensation to any
executive officer, or enter into an agreement with such
executive officer, without the approval of the Director, for
matters being reviewed under section 1318 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4518).''.

SEC. 109. REVIEWS OF REGULATED ENTITIES.

Section 1319 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4519) is amended--
(1) by striking the section designation and heading and
inserting the following:

``SEC. 1319. REVIEWS OF REGULATED ENTITIES.'';

and
(2) by striking ``is a nationally recognized'' and all that
follows through ``1934'' and inserting the following: ``the
Director considers appropriate, including an entity that is
registered under section 15 of the Securities Exchange Act of
1934 (15 U.S.C. 78a) as a nationally registered statistical
rating organization''.

SEC. 110. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN
AGENCY WORKFORCE.

Section 1319A of the Housing and Community Development Act
of 1992 (12 U.S.C. 4520) is amended--
(1) in the section heading, by striking ``EQUAL OPPORTUNITY
IN SOLICITATION OF CONTRACTS'' and inserting ``MINORITY AND
WOMEN INCLUSION; DIVERSITY REQUIREMENTS'';
(2) in subsection (a), by striking ``(a) In General.--Each
enterprise'' and inserting ``(e) Outreach.--Each regulated
entity''; and
(3) by striking subsection (b);
(4) by inserting before subsection (e), as so redesignated
by paragraph (2) of this section, the following new
subsections:
``(a) Office of Minority and Women Inclusion.--Each
regulated entity shall establish an Office of Minority and
Women Inclusion, or designate an office of the entity, that
shall be responsible for carrying out this section and all
matters of the entity relating to diversity in management,
employment, and business activities in accordance with such
standards and requirements as the Director shall establish.
``(b) Inclusion in All Levels of Business Activities.--Each
regulated entity shall develop and implement standards and
procedures to ensure, to the maximum extent possible, the
inclusion and utilization of minorities (as such term is
defined in section 1204(c) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note)) and women, and minority- and women-owned businesses
(as such terms are defined in section 21A(r)(4) of the
Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)) (including
financial institutions, investment banking firms, mortgage
banking firms, asset management firms, broker-dealers,
financial services firms, underwriters, accountants, brokers,
investment consultants, and providers of legal services) in
all business and activities of the regulated entity at all
levels, including in procurement, insurance, and all types of
contracts (including contracts for the issuance or guarantee
of any debt, equity, or mortgage-related securities, the
management of its mortgage and securities portfolios, the
making of its equity investments, the purchase, sale and
servicing of single- and multi-family mortgage loans, and the
implementation of its affordable housing program and
initiatives). The processes established by each regulated
entity for review and evaluation for contract proposals and
to hire service providers shall include a component that
gives consideration to the diversity of the applicant.
``(c) Applicability.--This section shall apply to all
contracts of a regulated entity for services of any kind,
including services that require the services of investment
banking, asset management entities, broker-dealers, financial
services entities, underwriters, accountants, investment
consultants, and providers of legal services.
``(d) Inclusion in Annual Reports.--Each regulated entity
shall include, in the annual report submitted by the entity
to the Director pursuant to section 309(k) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1723a(k)), section 307(c) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1456(c)), and section 20 of the
Federal Home Loan Bank Act (12 U.S.C. 1440), as applicable,
detailed information describing the actions taken by the
entity pursuant to this section, which shall include a
statement of the total amounts paid by the entity to third
party contractors since the last such report and the
percentage of such amounts paid to businesses described in
subsection (b) of this section.''; and
(5) by adding at the end the following new subsection:
``(f) Diversity in Agency Workforce.--The Agency shall take
affirmative steps to seek diversity in its workforce at all
levels of the agency consistent with the demographic
diversity of the United States, which shall include--
``(1) heavily recruiting at historically Black colleges and
universities, Hispanic-serving institutions, women's
colleges, and colleges that typically serve majority minority
populations;
``(2) sponsoring and recruiting at job fairs in urban
communities, and placing employment advertisements in
newspapers and magazines oriented toward women and people of
color;
``(3) partnering with organizations that are focused on
developing opportunities for minorities and women to place
talented young minorities and women in industry internships,
summer employment, and full-time positions; and
``(4) where feasible, partnering with inner-city high
schools, girls' high schools, and high schools with majority
minority populations to establish or enhance financial
literacy programs and provide mentoring.''.

SEC. 111. REGULATIONS AND ORDERS.

Section 1319G of the Housing and Community Development Act
of 1992 (12 U.S.C. 4526) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Authority.--The Director shall issue any regulations,
guidelines, and orders necessary to carry out the duties of
the Director under this title and each of the authorizing
statutes to ensure that the purposes of this title and such
statutes are accomplished.'';
(2) in subsection (b), by inserting ``, this title, or any
of the authorizing statutes'' after ``under this section'';
and
(3) by striking subsection (c).

SEC. 112. NON-WAIVER OF PRIVILEGES.

Part 1 of subtitle A of title XIII of the Housing and
Community Development Act of 1992 (12 U.S.C. 4511) is amended
by adding at the end the following new section:

``SEC. 1319H. PRIVILEGES NOT AFFECTED BY DISCLOSURE.

``(a) In General.--The submission by any person of any
information to the Agency for any purpose in the course of
any supervisory or regulatory process of the Agency shall not
be construed as waiving, destroying, or otherwise affecting
any privilege such person may claim with respect to such
information under Federal or State law as to any person or
entity other than the Agency.
``(b) Rule of Construction.--No provision of subsection (a)
may be construed as implying or establishing that--
``(1) any person waives any privilege applicable to
information that is submitted or transferred under any
circumstance to which subsection (a) does not apply; or
``(2) any person would waive any privilege applicable to
any information by submitting the information to the Agency,
but for this subsection.''.

SEC. 113. RISK-BASED CAPITAL REQUIREMENTS.

(a) In General.--Section 1361 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4611) is amended to read
as follows:

``SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED
ENTITIES.

``(a) In General.--

[[Page S2557]]

``(1) Enterprises.--The Director shall, by regulation,
establish risk-based capital requirements for the enterprises
to ensure that the enterprises operate in a safe and sound
manner, maintaining sufficient capital and reserves to
support the risks that arise in the operations and management
of the enterprises.
``(2) Federal home loan banks.--The Director shall
establish risk-based capital standards under section 6 of the
Federal Home Loan Bank Act for the Federal home loan banks.
``(b) Confidentiality of Information.--Any person that
receives any book, record, or information from the Director
or a regulated entity to enable the risk-based capital
requirements established under this section to be applied
shall--
``(1) maintain the confidentiality of the book, record, or
information in a manner that is generally consistent with the
level of confidentiality established for the material by the
Director or the regulated entity; and
``(2) be exempt from section 552 of title 5, United States
Code, with respect to the book, record, or information.
``(c) No Limitation.--Nothing in this section shall limit
the authority of the Director to require other reports or
undertakings, or take other action, in furtherance of the
responsibilities of the Director under this Act.''.
(b) Federal Home Loan Banks Risk-Based Capital.--Section
6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C.
1426(a)(3)) is amended--
(1) by striking subparagraph (A) and inserting the
following new subparagraph:
``(A) Risk-based capital standards.--The Director shall, by
regulation, establish risk-based capital standards for the
Federal home loan banks to ensure that the Federal home loan
banks operate in a safe and sound manner, with sufficient
permanent capital and reserves to support the risks that
arise in the operations and management of the Federal home
loans banks.''; and
(2) in subparagraph (B), by striking ``(A)(ii)'' and
inserting ``(A)''.

SEC. 114. 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) in subsection (a), by striking ``In General'' and
inserting ``Enterprises''; and
(2) by striking subsection (b) and inserting the following
new subsections:
``(b) Federal Home Loan Banks.--For purposes of this
subtitle, the minimum capital level for each Federal home
loan bank shall be the minimum capital required to be
maintained to comply with the leverage requirement for the
bank established under section 6(a)(2) of the Federal Home
Loan Bank Act (12 U.S.C. 1426(a)(2)).
``(c) Establishment of Revised Minimum Capital Levels.--
Notwithstanding subsections (a) and (b) and notwithstanding
the capital classifications of the regulated entities, the
Director may, by regulations issued under section 1319G,
establish a minimum capital level for the enterprises, for
the Federal home loan banks, or for both the enterprises and
the banks, that is higher than the level specified in
subsection (a) for the enterprises or the level specified in
subsection (b) for the Federal home loan banks, to the extent
needed to ensure that the regulated entities operate in a
safe and sound manner.
``(d) Authority To Require Temporary Increase.--
Notwithstanding subsections (a) and (b) and any minimum
capital level established pursuant to subsection (c), the
Director may, by order, increase the minimum capital level
for a regulated entity on a temporary basis for such period
as the Director may provide if the Director--
``(1) makes any determination specified in subparagraphs
(A) through (C) of section 1364(c)(1);
``(2) determines that the regulated entity has violated any
of the prudential standards established pursuant to section
1313A and, as a result of such violation, determines that an
unsafe and unsound condition exists; or
``(3) determines that an unsafe and unsound condition
exists, except that a temporary increase in minimum capital
imposed on a regulated entity pursuant to this paragraph
shall not remain in place for a period of more than 6 months
unless the Director makes a renewed determination of the
existence of an unsafe and unsound condition.
``(e) Authority To Establish Additional Capital and Reserve
Requirements for Particular Programs.--The Director may, at
any time by order or regulation, establish such capital or
reserve requirements with respect to any program or activity
of a regulated entity as the Director considers appropriate
to ensure that the regulated entity operates in a safe and
sound manner, with sufficient capital and reserves to support
the risks that arise in the operations and management of the
regulated entity.
``(f) Periodic Review.--The Director shall periodically
review the amount of core capital maintained by the
enterprises, the amount of capital retained by the Federal
home loan banks, and the minimum capital levels established
for such regulated entities pursuant to this section. The
Director shall rescind any temporary minimum capital level
increase if the Director determines that the circumstances or
facts justifying the temporary increase are no longer
present.''.
(b) Critical Capital Levels.--
(1) In general.--Section 1363 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4613) is amended--
(A) by striking ``For'' and inserting ``(a) Enterprises.--
For''; and
(B) by adding at the end the following new subsection:
``(b) Federal Home Loan Banks.--
``(1) In general.--For purposes of this subtitle, the
critical capital level for each Federal home loan bank shall
be such amount of capital as the Director shall, by
regulation require.
``(2) Consideration of other critical capital levels.--In
establishing the critical capital level under paragraph (1)
for the Federal home loan banks, the Director shall take due
consideration of the critical capital level established under
subsection (a) for the enterprises, with such modifications
as the Director determines to be appropriate to reflect the
difference in operations between the banks and the
enterprises.''.
(2) Regulations.--Not later than the expiration of the 180-
day period beginning on the effective date under section 185,
the Director of the Federal Housing Finance Agency shall
issue regulations pursuant to section 1363(b) of the Housing
and Community Development Act of 1992 (as added by paragraph
(1) of this subsection) establishing the critical capital
level under such section.

SEC. 115. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND
LIABILITIES.

(a) In General.--Subtitle B of title XIII of the Housing
and Community 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 Levels for Regulated Entities, Special
Enforcement Powers, and Reviews of Assets and Liabilities'';

and
(2) by adding at the end the following new section:

``SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES.

``(a) In General.--The Director shall, by regulation,
establish standards by which the portfolio holdings, or rate
of growth of the portfolio holdings, of the enterprises will
be deemed to be consistent with the mission and the safe and
sound operations of the enterprises. In developing such
standards, the Director shall consider--
``(1) the size or growth of the mortgage market;
``(2) the need for the portfolio in maintaining liquidity
or stability of the secondary mortgage market (including the
market for the mortgage-backed securities the enterprises
issue);
``(3) the need for an inventory of mortgages in connection
with securitizations;
``(4) the need for the portfolio to directly support the
affordable housing mission of the enterprises;
``(5) the liquidity needs of the enterprises;
``(6) any potential risks posed to the enterprises by the
nature of the portfolio holdings; and
``(7) any additional factors that the Director determines
to be necessary to carry out the purpose under the first
sentence of this subsection to establish standards for
assessing whether the portfolio holdings are consistent with
the mission and safe and sound operations of the enterprises.
``(b) Temporary Adjustments.--The Director may, by order,
make temporary adjustments to the established standards for
an enterprise or both enterprises, such as during times of
economic distress or market disruption.
``(c) Authority To Require Disposition or Acquisition.--The
Director shall monitor the portfolio of each enterprise.
Pursuant to subsection (a) and notwithstanding the capital
classifications of the enterprises, the Director may, by
order, require an enterprise, under such terms and conditions
as the Director determines to be appropriate, to dispose of
or acquire any asset, if the Director determines that such
action is consistent with the purposes of this Act or any of
the authorizing statutes.''.
(b) Regulations.--Not later than the expiration of the 180-
day period beginning on the effective date under section 185,
the Director of the Federal Housing Finance Agency shall
issue regulations pursuant to section 1369E(a) of the Housing
and Community Development Act of 1992 (as added by subsection
(a) of this section) establishing the portfolio holdings
standards under such section.

SEC. 116. CORPORATE GOVERNANCE OF ENTERPRISES.

The Housing and Community Development Act of 1992 is
amended by inserting before section 1323 (12 U.S.C. 4543) the
following new section:

``SEC. 1322A. CORPORATE GOVERNANCE OF ENTERPRISES.

``(a) Board of Directors.--
``(1) Independence.--A majority of seated members of the
board of directors of each enterprise shall be independent
board members, as defined under rules set forth by the New
York Stock Exchange, as such rules may be amended from time
to time.
``(2) Frequency of meetings.--To carry out its obligations
and duties under applicable laws, rules, regulations, and
guidelines, the board of directors of an enterprise shall
meet at least eight times a year and not less than once a
calendar quarter.
``(3) Non-management board member meetings.--The non-
management directors of an enterprise shall meet at regularly
scheduled executive sessions without management
participation.
``(4) Quorum; prohibition on proxies.--For the transaction
of business, a quorum of the

[[Page S2558]]

board of directors of an enterprise shall be at least a
majority of the seated board of directors and a board member
may not vote by proxy.
``(5) Information.--The management of an enterprise shall
provide a board member of the enterprise with such adequate
and appropriate information that a reasonable board member
would find important to the fulfillment of his or her
fiduciary duties and obligations.
``(6) Annual review.--At least annually, the board of
directors of each enterprise shall review, with appropriate
professional assistance, the requirements of laws, rules,
regulations, and guidelines that are applicable to its
activities and duties.
``(b) Committees of Boards of Directors.--
``(1) Frequency of meetings.--Any committee of the board of
directors of an enterprise shall meet with sufficient
frequency to carry out its obligations and duties under
applicable laws, rules, regulations, and guidelines.
``(2) Required committees.--Each enterprise shall provide
for the establishment, however styled, of the following
committees of the board of directors:
``(A) Audit committee.
``(B) Compensation committee.
``(C) Nominating/corporate governance committee.

Such committees shall be in compliance with the charter,
independence, composition, expertise, duties,
responsibilities, and other requirements set forth under
section 10A(m) of the Securities Exchange Act of 1934 (15
U.S.C. 78j-1(m)), with respect to the audit committee, and
under rules issued by the New York Stock Exchange, as such
rules may be amended from time to time.
``(c) Compensation.--
``(1) In general.--The compensation of board members,
executive officers, and employees of an enterprise--
``(A) shall not be in excess of that which is reasonable
and appropriate;
``(B) shall be commensurate with the duties and
responsibilities of such persons;
``(C) shall be consistent with the long-term goals of the
enterprise;
``(D) shall not focus solely on earnings performance, but
shall take into account risk management, operational
stability and legal and regulatory compliance as well; and
``(E) shall be undertaken in a manner that complies with
applicable laws, rules, and regulations.
``(2) Reimbursement.--If an enterprise is required to
prepare an accounting restatement due to the material
noncompliance of the enterprise, as a result of misconduct,
with any financial reporting requirement under the securities
laws, the chief executive officer and chief financial officer
of the enterprise shall reimburse the enterprise as provided
under section 304 of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7243). This provision does not otherwise limit the
authority of the Agency to employ remedies available to it
under its enforcement authorities.
``(d) Code of Conduct and Ethics.--
``(1) In general.--An enterprise shall establish and
administer a written code of conduct and ethics that is
reasonably designed to assure the ability of board members,
executive officers, and employees of the enterprise to
discharge their duties and responsibilities, on behalf of the
enterprise, in an objective and impartial manner, and that
includes standards required under section 406 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7264) and other
applicable laws, rules, and regulations.
``(2) Review.--Not less than once every three years, an
enterprise shall review the adequacy of its code of conduct
and ethics for consistency with practices appropriate to the
enterprise and make any appropriate revisions to such code.
``(e) Conduct and Responsibilities of Board of Directors.--
The board of directors of an enterprise shall be responsible
for directing the conduct and affairs of the enterprise in
furtherance of the safe and sound operation of the enterprise
and shall remain reasonably informed of the condition,
activities, and operations of the enterprise. The
responsibilities of the board of directors shall include
having in place adequate policies and procedures to assure
its oversight of, among other matters, the following:
``(1) Corporate strategy, major plans of action, risk
policy, programs for legal and regulatory compliance and
corporate performance, including prudent plans for growth and
allocation of adequate resources to manage operations risk.
``(2) Hiring and retention of qualified executive officers
and succession planning for such executive officers.
``(3) Compensation programs of the enterprise.
``(4) Integrity of accounting and financial reporting
systems of the enterprise, including independent audits and
systems of internal control.
``(5) Process and adequacy of reporting, disclosures, and
communications to shareholders, investors, and potential
investors.
``(6) Extensions of credit to board members and executive
officers.
``(7) Responsiveness of executive officers in providing
accurate and timely reports to Federal regulators and in
addressing the supervisory concerns of Federal regulators in
a timely and appropriate manner.
``(f) Prohibition of Extensions of Credit.--An enterprise
may not directly or indirectly, including through any
subsidiary, extend or maintain credit, arrange for the
extension of credit, or renew an extension of credit, in the
form of a personal loan to or for any board member or
executive officer of the enterprise, as provided by section
13(k) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(k)).
``(g) Certification of Disclosures.--The chief executive
officer and the chief financial officer of an enterprise
shall review each quarterly report and annual report issued
by the enterprise and such reports shall include
certifications by such officers as required by section 302 of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241).
``(h) Change of Audit Partner.--An enterprise may not
accept audit services from an external auditing firm if the
lead or coordinating audit partner who has primary
responsibility for the external audit of the enterprise, or
the external audit partner who has responsibility for
reviewing the external audit has performed audit services for
the enterprise in each of the five previous fiscal years.
``(i) Compliance Program.--
``(1) Requirement.--Each enterprise shall establish and
maintain a compliance program that is reasonably designed to
assure that the enterprise complies with applicable laws,
rules, regulations, and internal controls.
``(2) Compliance officer.--The compliance program of an
enterprise shall be headed by a compliance officer, however
styled, who reports directly to the chief executive officer
of the enterprise. The compliance officer shall report
regularly to the board of directors or an appropriate
committee of the board of directors on compliance with and
the adequacy of current compliance policies and procedures of
the enterprise, and shall recommend any adjustments to such
policies and procedures that the compliance officer considers
necessary and appropriate.
``(j) Risk Management Program.--
``(1) Requirement.--Each enterprise shall establish and
maintain a risk management program that is reasonably
designed to manage the risks of the operations of the
enterprise.
``(2) Risk management officer.--The risk management program
of an enterprise shall be headed by a risk management
officer, however styled, who reports directly to the chief
executive officer of the enterprise. The risk management
officer shall report regularly to the board of directors or
an appropriate committee of the board of directors on
compliance with and the adequacy of current risk management
policies and procedures of the enterprise, and shall
recommend any adjustments to such policies and procedures
that the risk management officer considers necessary and
appropriate.
``(k) Compliance With Other Laws.--
``(1) Deregistered or unregistered common stock.--If an
enterprise deregisters or has not registered its common stock
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, the enterprise shall comply
or continue to comply with sections 10A(m) and 13(k) of the
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k))
and sections 302, 304, and 406 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7241, 7243, 7264), subject to such
requirements as provided by subsection (l) of this section.
``(2) Registered common stock.--An enterprise that has its
common stock registered with the Securities and Exchange
Commission shall maintain such registered status, unless it
provides 60 days prior written notice to the Director stating
its intent to deregister and its understanding that it will
remain subject to the requirements of the sections of the
Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of
2002, subject to such requirements as provided by subsection
(l) of this section.
``(l) Other Matters.--The Director may from time to time
establish standards, by regulation, order, or guideline,
regarding such other corporate governance matters of the
enterprises as the Director considers appropriate.
``(m) Modification of Standards.--In connection with
standards of Federal or State law (including the Revised
Model Corporation Act) or New York Stock Exchange rules that
are made applicable to an enterprise by section 1710.10 of
the Director's rules (12 CFR 1710.10) and by subsections (a),
(b), (g), (i), (j), and (k) of this section, the Director, in
the Director's sole discretion, may modify the standards
contained in this section or in part 1710 of the Director's
rules (12 CFR Part 1710) in accordance with section 553 of
title 5, United States Code, and upon written notice to the
enterprise.''.

SEC. 117. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE ACT
OF 1934.

The Housing and Community Development Act of 1992 is
amended by adding after section 1322A, as added by the
preceding provisions of this Division, the following new
section:

``SEC. 1322B. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE
ACT OF 1934.

``(a) In General.--Each regulated entity shall register at
least one class of the capital stock of such regulated
entity, and maintain such registration with the Securities
and Exchange Commission, under the Securities Exchange Act of
1934.
``(b) Enterprises.--Each enterprise shall comply with
sections 14 and 16 of the Securities Exchange Act of 1934.''.

SEC. 118. LIAISON WITH FINANCIAL INSTITUTIONS EXAMINATION
COUNCIL.

Section 1007 of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3306) is amended--

[[Page S2559]]

(1) in the section heading, by inserting after ``state''
the following: ``and federal housing finance agency''; and
(2) by inserting after ``financial institutions'' the
following: ``, and one representative of the Federal Housing
Finance Agency,''.

SEC. 119. GUARANTEE FEE STUDY.

(a) In General.--The Director of the Federal Housing
Finance Agency, in consultation with the heads of the federal
banking agencies, shall, not later than 18 months after the
date of the enactment of this Act, submit to the Congress a
study concerning the pricing, transparency and reporting of
the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, and the Federal home loan banks
with regard to guarantee fees and concerning analogous
practices, transparency and reporting requirements (including
advances pricing practices by the Federal Home Loan Banks) of
other participants in the business of mortgage purchases and
securitization.
(b) Factors.--The study required by this section shall
examine various factors such as credit risk, counterparty
risk considerations, economic value considerations, and
volume considerations used by the regulated entities (as such
term is defined in section 1303 of the Housing and Community
Development Act of 1992) included in the study in setting the
amount of fees they charge.
(c) Contents of Report.--The report required under
subsection (a) shall identify and analyze--
(1) the factors used by each enterprise (as such term is
defined in section 1303 of the Housing and Community
Development Act of 1992) in determining the amount of the
guarantee fees it charges;
(2) the total revenue the enterprises earn from guarantee
fees;
(3) the total costs incurred by the enterprises for
providing guarantees;
(4) the average guarantee fee charged by the enterprises;
(5) an analysis of how and why the guarantee fees charged
differ from such fees charged during the previous year;
(6) a breakdown of the revenue and costs associated with
providing guarantees, based on product type and risk
classifications; and
(7) other relevant information on guarantee fees with other
participants in the mortgage and securitization business.
(d) Protection of Information.--Nothing in this section may
be construed to require or authorize the Director of the
Federal Housing Finance Agency, in connection with the study
mandated by this section, to disclose information of the
enterprises or other organization that is confidential or
proprietary.
(e) Effective Date.--This section shall take effect on the
date of the enactment of this Act.

SEC. 120. CONFORMING AMENDMENTS.

(a) 1992 Act.--Part 1 of subtitle A of title XIII of the
Housing and Community Development Act of 1992 (12 U.S.C. 4511
et seq.), as amended by the preceding provisions of this
Division, is further amended--
(1) by striking ``an enterprise'' each place such term
appears in such part (except in sections 1313(a)(2)(A),
1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) and inserting ``a
regulated entity'';
(2) by striking ``the enterprise'' each place such term
appears in such part (except in section 1316(b)(3)) and
inserting ``the regulated entity'';
(3) by striking ``the enterprises'' each place such term
appears in such part (except in sections 1312(c)(2), and
1312(e)(2)) and inserting ``the regulated entities'';
(4) by striking ``each enterprise'' each place such term
appears in such part and inserting ``each regulated entity'';
(5) by striking ``Office'' each place such term appears in
such part (except in sections 1311(b)(2), 1312(b)(5),
1315(b), and 1316(a)(4), (g), and (h), 1317(c), and 1319A(a))
and inserting ``Agency'';
(6) in section 1315 (12 U.S.C. 4515)--
(A) in subsection (a)--
(i) in the subsection heading, by striking ``Office
Personnel'' and inserting ``In General''; and
(ii) by striking ``The'' and inserting ``Subject to title
III of the Federal Housing Finance Reform Act of 2007, the'';
(B) by striking subsections (d) and (f); and
(C) by redesignating subsection (e) as subsection (d);
(7) in section 1319B (12 U.S.C. 4521), by striking
``Committee on Banking, Finance and Urban Affairs'' each
place such term appears and inserting ``Committee on
Financial Services''; and
(8) in section 1319F (12 U.S.C. 4525), striking all that
follows ``United States Code'' and inserting ``, the Agency
shall be considered an agency responsible for the regulation
or supervision of financial institutions.''.
(b) Amendments to Fannie Mae Charter Act.--The Federal
National Mortgage Association Charter Act (12 U.S.C. 1716 et
seq.) is amended--
(1) by striking ``Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' each place such term appears, and inserting
``Director of the Federal Housing Finance Agency'', in--
(A) section 303(c)(2) (12 U.S.C. 1718(c)(2));
(B) section 309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)); and
(C) section 309(k)(1); and
(2) in section 309--
(A) in subsections (d)(3)(A) and (n)(1), by striking
``Banking, Finance and Urban Affairs'' each place such term
appears and inserting ``Financial Services''; and
(B) in subsection (m)--
(i) in paragraph (1), by striking ``Secretary'' the second
place such term appears and inserting ``Director'';
(ii) in paragraph (2), by striking ``Secretary'' the second
place such term appears and inserting ``Director''; and
(iii) by striking ``Secretary'' each other place such term
appears and inserting ``Director of the Federal Housing
Finance Agency''; and
(C) in subsection (n), by striking ``Secretary'' each place
such term appears and inserting ``Director of the Federal
Housing Finance Agency''.
(c) Amendments to Freddie Mac Act.--The Federal Home Loan
Mortgage Corporation Act is amended--
(1) by striking ``Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' each place such term appears, and inserting
``Director of the Federal Housing Finance Agency'', in--
(A) section 303(b)(2) (12 U.S.C. 1452(b)(2));
(B) section 303(h)(2) (12 U.S.C. 1452(h)(2)); and
(C) section 307(c)(1) (12 U.S.C. 1456(c)(1));
(2) in sections 303(h)(1) and 307(f)(1) (12 U.S.C.
1452(h)(1), 1456(f)(1)), by striking ``Banking, Finance and
Urban Affairs'' each place such term appears and inserting
``Financial Services'';
(3) in section 306(i) (12 U.S.C. 1455(i))--
(A) by striking ``1316(c)'' and inserting ``306(c)''; and
(B) by striking ``section 106'' and inserting ``section
1316''; and
(4) in section 307 (12 U.S.C. 1456))--
(A) in subsection (e)--
(i) in paragraph (1), by striking ``Secretary'' the second
place such term appears and inserting ``Director'';
(ii) in paragraph (2), by striking ``Secretary'' the second
place such term appears and inserting ``Director''; and
(iii) by striking ``Secretary'' each other place such term
appears and inserting ``Director of the Federal Housing
Finance Agency''; and
(B) in subsection (f), by striking ``Secretary'' each place
such term appears and inserting ``Director of the Federal
Housing Finance Agency''.

Subtitle B--Improvement of Mission Supervision

SEC. 131. TRANSFER OF PRODUCT APPROVAL AND HOUSING GOAL
OVERSIGHT.

Part 2 of subtitle A of title XIII of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is
amended--
(1) by striking the designation and heading for the part
and inserting the following:

``PART 2--PRODUCT APPROVAL BY DIRECTOR, CORPORATE GOVERNANCE, AND
ESTABLISHMENT OF HOUSING GOALS'';

and
(2) by striking sections 1321 and 1322.

SEC. 132. REVIEW OF ENTERPRISE PRODUCTS.

(a) In General.--Part 2 of subtitle A of title XIII of the
Housing and Community Development Act of 1992 is amended by
inserting before section 1323 (12 U.S.C. 4543) the following
new section:

``SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS OF
ENTERPRISES.

``(a) In General.--The Director shall require each
enterprise to obtain the approval of the Director for any
product of the enterprise before initially offering the
product.
``(b) Standard for Approval.--In considering any request
for approval of a product pursuant to subsection (a), the
Director shall make a determination that--
``(1) in the case of a product of the Federal National
Mortgage Association, the Director determines that the
product is authorized under paragraph (2), (3), (4), or (5)
of section 302(b) or section 304 of the Federal National
Mortgage Association Charter Act, (12 U.S.C. 1717(b), 1719);
``(2) in the case of a product of the Federal Home Loan
Mortgage Corporation, the Director determines that the
product is authorized under paragraph (1), (4), or (5) of
section 305(a) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a));
``(3) the product is in the public interest;
``(4) the product is consistent with the safety and
soundness of the enterprise or the mortgage finance system;
and
``(5) the product does not materially impair the efficiency
of the mortgage finance system.
``(c) Procedure for Approval.--
``(1) Submission of request.--An enterprise shall submit to
the Director a written request for approval of a product that
describes the product in such form as prescribed by order or
regulation of the Director.
``(2) Request for public comment.--Immediately upon receipt
of a request for approval of a product, as required under
paragraph (1), the Director shall publish notice of such
request and of the period for public comment pursuant to
paragraph (3) regarding the product, and a description of the
product proposed by the request. The Director shall give
interested parties the opportunity to respond in writing to
the proposed product.
``(3) Public comment period.--During the 30-day period
beginning on the date of publication pursuant to paragraph
(2) of a request for approval of a product, the Director
shall receive public comments regarding the proposed product.
``(4) Offering of product.--
``(A) In general.--Not later than 30 days after the close
of the public comment period

[[Page S2560]]

described in paragraph (3), the Director shall approve or
deny the product, specifying the grounds for such decision in
writing.
``(B) Failure to act.--If the Director fails to act within
the 30-day period described in subparagraph (A), the
enterprise may offer the product.
``(d) Expedited Review.--
``(1) Determination and notice.--If an enterprise
determines that any new activity, service, undertaking, or
offering is not a product, as defined in subsection (f), the
enterprise shall provide written notice to the Director prior
to the commencement of such activity, service, undertaking,
or offering.
``(2) Director determination of applicable procedure.--
Immediately upon receipt of any notice pursuant to paragraph
(1), the Director shall make a determination under paragraph
(3).
``(3) Determination and treatment as product.--If the
Director determines that any new activity, service,
undertaking, or offering consists of, relates to, or involves
a product--
``(A) the Director shall notify the enterprise of the
determination;
``(B) the new activity, service, undertaking, or offering
described in the notice under paragraph (1) shall be
considered a product for purposes of this section; and
``(C) the enterprise shall withdraw its request or submit a
written request for approval of the product pursuant to
subsection (c).
``(e) Conditional Approval.--The Director may conditionally
approve the offering of any product by an enterprise, and may
establish terms, conditions, or limitations with respect to
such product with which the enterprise must comply in order
to offer such product.
``(f) Definition of Product.--For purposes of this section,
the term `product' does not include--
``(1) the automated loan underwriting system of an
enterprise in existence as of the date of the enactment of
the Federal Housing Finance Reform Act of 2007, including any
upgrade to the technology, operating system, or software to
operate the underwriting system; or
``(2) any modification to the mortgage terms and conditions
or mortgage underwriting criteria relating to the mortgages
that are purchased or guaranteed by an enterprise: Provided,
That such modifications do not alter the underlying
transaction so as to include services or financing, other
than residential mortgage financing, or create significant
new exposure to risk for the enterprise or the holder of the
mortgage.
``(g) No Limitation.--Nothing in this section shall be
deemed to restrict--
``(1) the safety and soundness authority of the Director
over all new and existing products or activities; or
``(2) the authority of the Director to review all new and
existing products or activities to determine that such
products or activities are consistent with the statutory
mission of the enterprise.''.
(b) 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 ``implement any new program'' and inserting
``initially offer any product'';
(B) by striking ``section 1303'' and inserting ``section
1321(f)''; and
(C) by striking ``before obtaining the approval of the
Secretary under section 1322'' and inserting ``except in
accordance with section 1321''.
(2) Freddie mac.--Section 305(c) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(c)) is amended--
(A) by striking ``implement any new program'' and inserting
``initially offer any product'';
(B) by striking ``section 1303'' and inserting ``section
1321(f)''; and
(C) by striking ``before obtaining the approval of the
Secretary under section 1322'' and inserting ``except in
accordance with section 1321''.
(3) 1992 act.--Section 1303 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4502), as amended by
section 2 of this Division, is further amended--
(A) by striking paragraph (17) (relating to the definition
of ``new program''); and
(B) by redesignating paragraphs (18) through (23) as
paragraphs (17) through (22), respectively.

SEC. 133. CONFORMING LOAN LIMITS.

(a) Fannie Mae.--
(1) General limit.--Section 302(b)(2) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) is amended--
(A) in the 4th sentence, by striking ``the Resolution Trust
Corporation,''; and
(B) by striking the 7th and 8th sentences and inserting the
following new sentences: ``For 2007, such limitations shall
not exceed $417,000 for a mortgage secured by a single-family
residence, $533,850 for a mortgage secured by a 2-family
residence, $645,300 for a mortgage secured by a 3-family
residence, and $801,950 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
2008, subject to the limitations in this paragraph. Each
adjustment shall be made by adding to or subtracting from
each such amount (as it may have been previously adjusted) a
percentage thereof equal to the percentage increase or
decrease, during the most recent 12-month or four-quarter
period ending before the time of determining such annual
adjustment, in the housing price index maintained by the
Director of the Federal Housing Finance Agency (pursuant to
section 1322 of the Housing and Community Development Act of
1992 (12 U.S.C. 4541)).''.
(2) High-cost area limit.--Section 302(b)(2) of the Federal
National Mortgage Association Charter Act is (12 U.S.C.
1717(b)(2)) is amended by adding after the period at the end
the following: ``Such foregoing limitations shall also be
increased with respect to properties of a particular size
located in any area for which the median price for such size
residence exceeds the foregoing limitation for such size
residence, to the lesser of 150 percent of such foregoing
limitation for such size residence or the amount that is
equal to the median price in such area for such size
residence, except that, subject to the order, if any, issued
by the Director of the Federal Housing Finance Agency
pursuant to section 133(d)(3) of the Federal Housing Finance
Reform Act of 2007, such increase shall apply only with
respect to mortgages on which are based securities issued and
sold by the corporation.''.
(b) Freddie Mac.--
(1) General limit.--Section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is
amended--
(A) in the 3rd sentence, by striking ``the Resolution Trust
Corporation,''; and
(B) by striking the 6th and 7th sentences and inserting the
following new sentences: ``For 2007, such limitations shall
not exceed $417,000 for a mortgage secured by a single-family
residence, $533,850 for a mortgage secured by a 2-family
residence, $645,300 for a mortgage secured by a 3-family
residence, and $801,950 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
2008, subject to the limitations in this paragraph. Each
adjustment shall be made by adding to or subtracting from
each such amount (as it may have been previously adjusted) a
percentage thereof equal to the percentage increase or
decrease, during the most recent 12-month or four-quarter
period ending before the time of determining such annual
adjustment, in the housing price index maintained by the
Director of the Federal Housing Finance Agency (pursuant to
section 1322 of the Housing and Community Development Act of
1992 (12 U.S.C. 4541)).''
(2) High-cost area limit.--Section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act is amended by adding after
the period at the end the following: ``Such foregoing
limitations shall also be increased with respect to
properties of a particular size located in any area for which
the median price for such size residence exceeds the
foregoing limitation for such size residence, to the lesser
of 150 percent of such foregoing limitation for such size
residence or the amount that is equal to the median price in
such area for such size residence, except that, subject to
the order, if any, issued by the Director of the Federal
Housing Finance Agency pursuant to section 133(d)(3) of the
Federal Housing Finance Reform Act of 2007, such increase
shall apply only with respect to mortgages on which are based
securities issued and sold by the Corporation.''.
(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
Division) is amended by inserting after section 1321 (as
added by section 132 of this Division) the following new
section:

``SEC. 1322. HOUSING PRICE INDEX.

``(a) In General.--The Director 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. In establishing such method,
the Director shall take into consideration the monthly survey
of all major lenders conducted by the Federal Housing Finance
Agency 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 under
section 185 of the Federal Housing Finance Reform Act of
2007, any appropriate house price indexes of the Bureau of
the Census of the Department of Commerce, and any other
indexes or measures that the Director considers appropriate.
``(b) GAO Audit.--
``(1) In general.--At such times as are required under
paragraph (2), the Comptroller General of the United States
shall conduct an audit of the methodology established by the
Director under subsection (a) to determine whether the
methodology established is an accurate and appropriate means
of measuring changes to the national average 1-family house
price.
``(2) Timing.--An audit referred to in paragraph (1) shall
be conducted and completed not later than the expiration of
the 180-day period that begins upon each of the following
dates:
``(A) Establishment.--The date upon which such methodology
is initially established under subsection (a) in final form
by the Director.
``(B) Modification or amendment.--Each date upon which any
modification or amendment to such methodology is adopted in
final form by the Director.

[[Page S2561]]

``(3) Report.--Within 30 days of the completion of any
audit conducted under this subsection, the Comptroller
General shall submit a report detailing the results and
conclusions of the audit to the Director, the Committee on
Financial Services of the House of Representatives, and the
Committee on Banking, Housing, and Urban Affairs of the
Senate.''.
(d) Conditions on Conforming Loan Limit for High-Cost
Areas.--
(1) Study.--The Director of the Federal Housing Finance
Agency shall conduct a study under this subsection during the
six-month period beginning on the effective date under
section 185 of this Division.
(2) Issues.--The study under this subsection shall
determine--
(A) the effect that restricting the conforming loan limits
for high-cost areas only to mortgages on which are based
securities issued and sold by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation
(as provided in the last sentence of section 302(b)(2) of the
Federal National Mortgage Association Charter Act and the
last sentence of section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act, pursuant to the amendments made by
subsections (a)(2) and (b)(2) of this section) would have on
the cost to borrowers for mortgages on housing in such high-
cost areas;
(B) the effects that such restrictions would have on the
availability of mortgages for housing in such high-cost
areas; and
(C) the extent to which the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation
will be able to issue and sell securities based on mortgages
for housing located in such high-cost areas.
(3) Determination.--
(A) In general.--Not later than the expiration of the six-
month period specified in paragraph (1), the Director of the
Federal Housing Finance Agency shall make a determination,
based on the results of the study under this subsection, of
whether the restriction of conforming loan limits for high-
cost areas only to mortgages on which are based securities
issued and sold by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation (as provided
in the amendments made by subsections (a)(2) and (b)(2) of
this section) will result in an increase in the cost to
borrowers for mortgages on housing in such high-cost areas.
(B) Order.--If such determination is that costs to
borrowers on housing in such high-cost areas will be
increased by such restrictions, the Director may issue an
order terminating such restrictions, in whole or in part.
(4) Publication.--Not later than the expiration of the six-
month period specified in paragraph (1), the Director of the
Federal Housing Finance Agency shall cause to be published in
the Federal Register--
(A) a report that--
(i) describes the study under this subsection; and
(ii) sets forth the conclusions of the study regarding the
issues to be determined under paragraph (2); and
(B) notice of the determination of the Director under
paragraph (3); and
(C) the order of the Director under paragraph (3).
(5) Definition.--For purposes of this subsection, the term
``conforming loan limits for high-cost areas'' means the
dollar amount limitations applicable under the section
302(b)(2) of the Federal National Mortgage Association
Charter Act and section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act (as amended by subsections (a) and
(b) of this section) for areas described in the last sentence
of such sections (as so amended).

SEC. 134. ANNUAL HOUSING REPORT REGARDING REGULATED ENTITIES.

(a) In General.--The Housing and Community Development Act
of 1992 is amended by striking section 1324 (12 U.S.C. 4544)
and inserting the following new section:

``SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGULATED
ENTITIES.

``(a) In General.--After reviewing and analyzing the
reports submitted under section 309(n) of the Federal
National Mortgage Association Charter Act, section 307(f) of
the Federal Home Loan Mortgage Corporation Act, and section
10(j)(11) of the Federal Home Loan Bank Act (12 U.S.C.
1430(j)(11)), the Director shall submit a report, not later
than October 30 of each year, to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate, on the
activities of each regulated entity.
``(b) Contents.--The report shall--
``(1) discuss the extent to which--
``(A) each enterprise is achieving the annual housing goals
established under subpart B of this part;
``(B) each enterprise is complying with section 1337;
``(C) each Federal home loan bank is complying with section
10(j) of the Federal Home Loan Bank Act; and
``(D) each regulated entity is achieving the purposes of
the regulated entity established by law;
``(2) aggregate and analyze relevant data on income to
assess the compliance by each enterprise with the housing
goals established under subpart B;
``(3) aggregate and analyze data on income, race, and
gender by census tract and other relevant classifications,
and compare such data with larger demographic, housing, and
economic trends;
``(4) examine actions that--
``(A) each enterprise has undertaken or could undertake to
promote and expand the annual goals established under subpart
B and the purposes of the enterprise established by law; and
``(B) each Federal home loan bank has taken or could
undertake to promote and expand the community investment
program and affordable housing program of the bank
established under section subsections (i) and (j) of section
10 of the Federal Home Loan Bank Act;
``(5) examine the primary and secondary multifamily housing
mortgage markets and describe--
``(A) the availability and liquidity of mortgage credit;
``(B) the status of efforts to provide standard credit
terms and underwriting guidelines for multifamily housing and
to securitize such mortgage products; and
``(C) any factors inhibiting such standardization and
securitization;
``(6) examine actions each regulated entity has undertaken
and could undertake to promote and expand opportunities for
first-time homebuyers, including the use of alternative
credit scoring;
``(7) describe any actions taken under section 1325(5) with
respect to originators found to violate fair lending
procedures;
``(8) discuss and analyze existing conditions and trends,
including conditions and trends relating to pricing, in the
housing markets and mortgage markets; and
``(9) identify the extent to which each enterprise is
involved in mortgage purchases and secondary market
activities involving subprime loans (as identified in
accordance with the regulations issued pursuant to section
134(b) of the Federal Housing Finance Reform Act of 2007) and
compare the characteristics of subprime loans purchased and
securitized by the enterprises to other loans purchased and
securitized by the enterprises.
``(c) Data Collection and Reporting.--
``(1) In general.--To assist the Director in analyzing the
matters described in subsection (b) and establishing the
methodology described in section 1322, the Director shall
conduct, on a monthly basis, a survey of mortgage markets in
accordance with this subsection.
``(2) Data points.--Each monthly survey conducted by the
Director under paragraph (1) shall collect data on--
``(A) the characteristics of individual mortgages that are
eligible for purchase by the enterprises and the
characteristics of individual mortgages that are not eligible
for purchase by the enterprises including, in both cases,
information concerning--
``(i) the price of the house that secures the mortgage;
``(ii) the loan-to-value ratio of the mortgage, which shall
reflect any secondary liens on the relevant property;
``(iii) the terms of the mortgage;
``(iv) the creditworthiness of the borrower or borrowers;
and
``(v) whether the mortgage, in the case of a conforming
mortgage, was purchased by an enterprise; and
``(B) such other matters as the Director determines to be
appropriate.
``(3) Public availability.--The Director shall make any
data collected by the Director in connection with the conduct
of a monthly survey available to the public in a timely
manner, provided that the Director may modify the data
released to the public to ensure that the data is not
released in an identifiable form.
``(4) Definition.--For purposes of this subsection, the
term `identifiable form' means any representation of
information that permits the identity of a borrower to which
the information relates to be reasonably inferred by either
direct or indirect means.''.
(b) Standards for Subprime Loans.--The Director shall, not
later than one year after the effective date under section
185, by regulations issued under section 1316G of the Housing
and Community Development Act of 1992, establish standards by
which mortgages purchased and mortgages purchased and
securitized shall be characterized as subprime for the
purpose of, and only for the purpose of, complying with the
reporting requirement under section 1324(b)(9) of such Act.

SEC. 135. ANNUAL REPORTS BY REGULATED ENTITIES ON AFFORDABLE
HOUSING STOCK.

The Housing and Community Development Act of 1992 is
amended by inserting after section 1328 (12 U.S.C. 4548) the
following new section:

``SEC. 1329. ANNUAL REPORTS ON AFFORDABLE HOUSING STOCK.

``(a) In General.--To obtain information helpful in
applying the formula under section 1337(c)(2) for the
affordable housing program under such section and for other
appropriate uses, the regulated entities shall conduct, or
provide for the conducting of, a study on an annual basis to
determine the levels of affordable housing inventory, and the
changes in such levels, in communities throughout the United
States.
``(b) Contents.--The annual study under this section shall
determine, for the United States, each State, and each
community within each State--
``(1) the level of affordable housing inventory, including
affordable rental dwelling units and affordable homeownership
dwelling units;

[[Page S2562]]

``(2) any changes to the level of such inventory during the
12-month period of the study under this section, including--
``(A) any additions to such inventory, disaggregated by the
category of such additions (including new construction or
housing conversion);
``(B) any subtractions from such inventory, disaggregated
by the category of such subtractions (including abandonment,
demolition, or upgrade to market-rate housing);
``(C) the number of new affordable dwelling units placed in
service; and
``(D) the number of affordable housing dwelling units
withdrawn from service;
``(3) the types of financing used to build any dwelling
units added to such inventory level and the period during
which such units are required to remain affordable;
``(4) any excess demand for affordable housing, including
the number of households on rental housing waiting lists and
the tenure of the wait on such lists; and
``(5) such other information as the Director may require.
``(c) Report.--For each annual study conducted pursuant to
this section, the regulated entities shall submit to the
Congress, and make publicly available, a report setting forth
the findings of the study.
``(d) Regulations and Timing.--The Director shall, by
regulation, establish requirements for the studies and
reports under this section, including deadlines for the
submission of such annual reports and standards for
determining affordable housing.''.

SEC. 136. MORTGAGOR IDENTIFICATION REQUIREMENTS FOR MORTGAGES
OF REGULATED ENTITIES.

(a) In General.--Subpart A of part 2 of subtitle A of title
XIII of the Housing and Community Development Act of 1992 (12
U.S.C. 4541 et seq.), as amended by the preceding provisions
of this Division, is further amended by adding at the end the
following new section:

``SEC. 1330. MORTGAGOR IDENTIFICATION REQUIREMENTS FOR
MORTGAGES OF REGULATED ENTITIES.

``(a) Limitation.--The Director shall by regulation
establish standards, and shall enforce compliance with such
standards, that--
``(1) prohibit the enterprises from the purchase, service,
holding, selling, lending on the security of, or otherwise
dealing with any mortgage on a one- to four-family residence
that will be used as the principal residence of the mortgagor
that does not meet the requirements under subsection (b); and
``(2) prohibit the Federal home loan banks from providing
any advances to a member for use in financing, and from
accepting as collateral for any advance to a member, any
mortgage on a one- to four-family residence that will be used
as the principal residence of the mortgagor that does not
meet the requirements under subsection (b).
``(b) Identification Requirements.--The requirements under
this subsection with respect to a mortgage are that the
mortgagor have, at the time of settlement on the mortgage, a
Social Security account number.''.
(b) Fannie Mae.--Section 304 of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1719) is amended
by adding at the end the following new subsection:
``(g) Prohibition Regarding Mortgagor Identification
Requirement.--Nothing in this Act may be construed to
authorize the corporation to purchase, service, hold, sell,
lend on the security of, or otherwise deal with any mortgage
that the corporation is prohibited from so dealing with under
the standards issued under section 1330 of the Housing and
Community Development Act of 1992 by the Director of the
Federal Housing Finance Agency.''.
(c) Freddie Mac.--Section 305 of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454) is amended by
adding at the end the following new subsection:
``(d) Prohibition Regarding Mortgagor Identification
Requirements.--Nothing in this Act may be construed to
authorize the Corporation to purchase, service, hold, sell,
lend on the security of, or otherwise deal with any mortgage
that the Corporation is prohibited from so dealing with under
the standards issued under section 1330 of the Housing and
Community Development Act of 1992 by the Director of the
Federal Housing Finance Agency.''.
(d) Federal Home Loan Banks.--Section 10(a) of the Federal
Home Loan Bank Act (12 U.S.C. 1430(a)) is amended--
(1) by redesignating paragraph (6) as paragraph (7); and
(2) by inserting after paragraph (5) the following new
paragraph:
``(6) Prohibition regarding mortgagor identification
requirements.--Nothing in this Act may be construed to
authorize a Federal Home Loan Bank to provide any advance to
a member for use in financing, or accept as collateral for an
advance under this section, any mortgage that a Bank is
prohibited from so accepting under the standards issued under
section 1330 of the Housing and Community Development Act of
1992 by the Director of the Federal Housing Finance
Agency.''.

SEC. 137. REVISION OF HOUSING GOALS.

(a) Housing Goals.--The Housing and Community Development
Act of 1992 is amended by striking sections 1331 through 1334
(12 U.S.C. 4561-4) and inserting the following new sections:

``SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

``(a) In General.--The Director shall establish, effective
for the first year that begins after the effective date under
section 185 of the Federal Housing Finance Reform Act of 2007
and each year thereafter, annual housing goals, with respect
to the mortgage purchases by the enterprises, as follows:
``(1) Single family housing goals.--Three single-family
housing goals under section 1332.
``(2) Multifamily special affordable housing goals.--A
multifamily special affordable housing goal under section
1333.
``(b) Eliminating Interest Rate Disparities.--
``(1) In general.--Upon request by the Director, an
enterprise shall provide to the Director, in a form
determined by the Director, data the Director may review to
determine whether there exist disparities in interest rates
charged on mortgages to borrowers who are minorities as
compared with comparable mortgages to borrowers of similar
creditworthiness who are not minorities.
``(2) Remedial actions upon preliminary finding.--Upon a
preliminary finding by the Director that a pattern of
disparities in interest rates with respect to any lender or
lenders exists pursuant to the data provided by an enterprise
in paragraph (1), the Director shall--
``(A) refer the preliminary finding to the appropriate
regulatory or enforcement agency for further review;
``(B) require the enterprise to submit additional data with
respect to any lender or lenders, as appropriate and to the
extent practicable, to the Director who shall submit any such
additional data to the regulatory or enforcement agency for
appropriate action; and
``(C) require the enterprise to undertake remedial actions,
as appropriate, pursuant to section 1325(5) (12 U.S.C.
4545(5)).
``(3) Annual report to congress.--The Director shall submit
to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report describing the actions
taken, and being taken, by the Director to carry out this
subsection. No such report shall identify any lender or
lenders who have not been found to have engaged in
discriminatory lending practices pursuant to a final
adjudication on the record, and after opportunity for an
administrative hearing, in accordance with subchapter II of
chapter 5 of title 5, United States Code.
``(4) Protection of identity of individuals.--In carrying
out this subsection, the Director shall ensure that no
property-related or financial information that would enable a
borrower to be identified shall be made public.
``(c) Timing.--The Director shall establish an annual
deadline by which the Director shall establish the annual
housing goals under this subpart for each year, taking into
consideration the need for the enterprises to reasonably and
sufficiently plan their operations and activities in advance,
including operations and activities necessary to meet such
annual goals.

``SEC. 1332. SINGLE-FAMILY HOUSING GOALS.

``(a) In General.--The Director shall establish annual
goals for the purchase by each enterprise of conventional,
conforming, single-family, purchase money mortgages financing
owner-occupied and rental housing for each of the following
categories of families:
``(1) Low-income families.
``(2) Families that reside in low-income areas.
``(3) Very low-income families.
``(b) Refinance Subgoal.--
``(1) In general.--The Director shall establish a separate
subgoal within each goal under subsection (a)(1) for the
purchase by each enterprise of mortgages for low-income
families on single family housing given to pay off or prepay
an existing loan secured by the same property. The Director
shall, for each year, determine whether each enterprise has
complied with the subgoal under this subsection in the same
manner provided under this section for determining compliance
with the housing goals.
``(2) Enforcement.--For purposes of section 1336, the
subgoal established under paragraph (1) of this subsection
shall be considered to be a housing goal established under
this section. Such subgoal shall not be enforceable under any
other provision of this title (including subpart C of this
part) other than section 1336 or under any provision of the
Federal National Mortgage Association Charter Act or the
Federal Home Loan Mortgage Corporation Act.
``(c) Determination of Compliance.--The Director shall
determine, for each year that the housing goals under this
section are in effect pursuant to section 1331(a), whether
each enterprise has complied with the single-family housing
goals established under this section for such year. An
enterprise shall be considered to be in compliance with such
a goal for a year only if, for each of the types of families
described in subsection (a), the percentage of the number of
conventional, conforming, single-family, owner-occupied or
rental, as applicable, purchase money mortgages purchased by
each enterprise in such year that serve such families, meets
or exceeds the target for the year for such type of family
that is established under subsection (d).
``(d) Annual Targets.--
``(1) In general.--Except as provided in paragraph (2), for
each of the types of families described in subsection (a),
the target under this subsection for a year shall be the
average percentage, for the three years that most recently
precede such year and for

[[Page S2563]]

which information under the Home Mortgage Disclosure Act of
1975 is publicly available, of the number of conventional,
conforming, single-family, owner-occupied or rental, as
applicable, purchase money mortgages originated in such year
that serves such type of family, as determined by the
Director using the information obtained and determined
pursuant to paragraphs (3) and (4).
``(2) Authority to increase targets.--
``(A) In general.--The Director may, for any year,
establish by regulation, for any or all of the types of
families described in subsection (a), percentage targets that
are higher than the percentages for such year determined
pursuant to paragraph (1), to reflect expected changes in
market performance related to such information under the Home
Mortgage Disclosure Act of 1975.
``(B) Factors.--In establishing any targets pursuant to
subparagraph (A), the Director shall consider the following
factors:
``(i) National housing needs.
``(ii) Economic, housing, and demographic conditions.
``(iii) The performance and effort of the enterprises
toward achieving the housing goals under this section in
previous years.
``(iv) The size of the conventional mortgage market serving
each of the types of families described in subsection (a)
relative to the size of the overall conventional mortgage
market.
``(v) The ability of the enterprise to lead the industry in
making mortgage credit available.
``(vi) The need to maintain the sound financial condition
of the enterprises.
``(3) HMDA information.--The Director shall annually obtain
information submitted in compliance with the Home Mortgage
Disclosure Act of 1975 regarding conventional, conforming,
single-family, owner-occupied or rental, as applicable,
purchase money mortgages originated and purchased for the
previous year.
``(4) Conforming mortgages.--In determining whether a
mortgage is a conforming mortgage for purposes of this
paragraph, the Director shall consider the original principal
balance of the mortgage loan to be the principal balance as
reported in the information referred to in paragraph (3), as
rounded to the nearest thousand dollars.
``(e) Notice of Determination and Enterprise Comment.--
``(1) Notice.--Within 30 days of making a determination
under subsection (c) regarding a compliance of an enterprise
for a year with a housing goal established under this section
and before any public disclosure thereof, the Director shall
provide notice of the determination to the enterprise, which
shall include an analysis and comparison, by the Director, of
the performance of the enterprise for the year and the
targets for the year under subsection (d).
``(2) Comment period.--The Director shall provide each
enterprise an opportunity to comment on the determination
during the 30-day period beginning upon receipt by the
enterprise of the notice.
``(f) Use of Borrower Income.--In monitoring the
performance of each enterprise pursuant to the housing goals
under this section and evaluating such performance (for
purposes of section 1336), the Director shall consider a
mortgagor's income to be such income at the time of
origination of the mortgage.
``(g) Consideration of Units in Single-Family Rental
Housing.--In establishing any goal under this subpart, the
Director may take into consideration the number of housing
units financed by any mortgage on single-family rental
housing purchased by an enterprise.

``SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

``(a) Establishment.--
``(1) In general.--The Director shall establish, by
regulation, an annual goal for the purchase by each
enterprise of each of the following types of mortgages on
multifamily housing:
``(A) Mortgages that finance dwelling units for low-income
families.
``(B) Mortgages that finance dwelling units for very low-
income families.
``(C) Mortgages that finance dwelling units assisted by the
low-income housing tax credit under section 42 of the
Internal Revenue Code of 1986.
``(2) Additional requirements for smaller projects.--The
Director shall establish, within the goal under this section,
additional requirements for the purchase by each enterprise
of mortgages described in paragraph (1) for multifamily
housing projects of a smaller or limited size, which may be
based on the number of dwelling units in the project or the
amount of the mortgage, or both, and shall include
multifamily housing projects of such smaller sizes as are
typical among such projects that serve rural areas.
``(3) Factors.--In establishing the goal under this section
relating to mortgages on multifamily housing for an
enterprise for a year, the Director shall consider--
``(A) national multifamily mortgage credit needs;
``(B) the performance and effort of the enterprise in
making mortgage credit available for multifamily housing in
previous years;
``(C) the size of the multifamily mortgage market;
``(D) the ability of the enterprise to lead the industry in
making mortgage credit available, especially for underserved
markets, such as for small multifamily projects of 5 to 50
units, multifamily properties in need of rehabilitation, and
multifamily properties located in rural areas; and
``(E) the need to maintain the sound financial condition of
the enterprise.
``(b) Units Financed by Housing Finance Agency Bonds.--The
Director shall give credit toward the achievement of the
multifamily special affordable housing goal under this
section (for purposes of section 1336) to dwelling units in
multifamily housing that otherwise qualifies under such goal
and that is financed by tax-exempt or taxable bonds issued by
a State or local housing finance agency, but only if such
bonds--
``(1) are secured by a guarantee of the enterprise; or
``(2) are not investment grade and are purchased by the
enterprise.
``(c) Use of Tenant Income or Rent.--The Director shall
monitor the performance of each enterprise in meeting the
goals established under this section and shall evaluate such
performance (for purposes of section 1336) based on--
``(1) the income of the prospective or actual tenants of
the property, where such data are available; or
``(2) where the data referred to in paragraph (1) are not
available, rent levels affordable to low-income and very low-
income families.

A rent level shall be considered to be affordable for
purposes of this subsection for an income category referred
to in this subsection if it does not exceed 30 percent of the
maximum income level of such income category, with
appropriate adjustments for unit size as measured by the
number of bedrooms.
``(d) Determination of Compliance.--The Director shall, for
each year that the housing goal under this section is in
effect pursuant to section 1331(a), determine whether each
enterprise has complied with such goal and the additional
requirements under subsection (a)(2).

``SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

``(a) Authority.--An enterprise may petition the Director
in writing at any time during a year to reduce the level of
any goal for such year established pursuant to this subpart.
``(b) Standard for Reduction.--The Director may reduce the
level for a goal pursuant to such a petition only if--
``(1) market and economic conditions or the financial
condition of the enterprise require such action; or
``(2) efforts to meet the goal would result in the
constraint of liquidity, over-investment in certain market
segments, or other consequences contrary to the intent of
this subpart, or section 301(3) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1716(3)) or
section 301(3) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1451 note), as applicable.
``(c) Determination.--The Director shall make a
determination regarding any proposed reduction within 30 days
of receipt of the petition regarding the reduction. The
Director may extend such period for a single additional 15-
day period, but only if the Director requests additional
information from the enterprise. A denial by the Director to
reduce the level of any goal under this section may be
appealed to the United States District Court for the District
of Columbia or the United States district court in the
jurisdiction in which the headquarters of an enterprise is
located.''.
(b) Conforming Amendments.--The Housing and Community
Development Act of 1992 is amended--
(1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter
preceding paragraph (1), by striking ``low- and moderate-
income housing goal'' and all that follows through ``section
1334'' and inserting ``housing goals established under this
subpart''; and
(2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by
striking ``sections 1332, 1333, and 1334,'' and inserting
``this subpart''.
(c) Definitions.--Section 1303 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4502), as amended by the
preceding provisions of this Division, is further amended--
(1) in paragraph (22) (relating to the definition of ``very
low-income''), by striking ``60 percent'' each place such
term appears and inserting ``50 percent'';
(2) by redesignating paragraphs (19) through (22) as
paragraphs (23) through (26), respectively;
(3) by inserting after paragraph (18) the following new
paragraph:
``(22) Rural area.--The term `rural area' has the meaning
given such term in section 520 of the Housing Act of 1949 (42
U.S.C. 1490), except that such term includes micropolitan
areas and tribal trust lands.''.
(4) by redesignating paragraphs (13) through (18) as
paragraphs (16) through (21), respectively;
(5) by inserting after paragraph (12) the following new
paragraph:
``(15) Low-income area.--The term `low income area' means a
census tract or block numbering area in which the median
income does not exceed 80 percent of the median income for
the area in which such census tract or block numbering area
is located, and, for the purposes of section 1332(a)(2),
shall include families having incomes not greater than 100
percent of the area median income who reside in minority
census tracts.'';
(6) by redesignating paragraphs (11) and (12) as paragraphs
(13) and (14), respectively;
(7) by inserting after paragraph (10) the following new
paragraph:

[[Page S2564]]

``(12) Extremely low-income.--The term `extremely low-
income' means--
``(A) in the case of owner-occupied units, income not in
excess of 30 percent of the area median income; and
``(B) in the case of rental units, income not in excess of
30 percent of the area median income, with adjustments for
smaller and larger families, as determined by the
Secretary.'';
(8) by redesignating paragraphs (7) through (10) as
paragraphs (8) through (11), respectively; and
(9) by inserting after paragraph (6) the following new
paragraph:
``(7) Conforming mortgage.--The term `conforming mortgage'
means, with respect to an enterprise, a conventional mortgage
having an original principal obligation that does not exceed
the dollar limitation, in effect at the time of such
origination, under, as applicable--
``(A) section 302(b)(2) of the Federal National Mortgage
Association Charter Act; or
``(B) section 305(a)(2) of the Federal Home Loan Mortgage
Corporation Act.''.

SEC. 138. DUTY TO SERVE UNDERSERVED MARKETS.

(a) Establishment and Evaluation of Performance.--Section
1335 of the Housing and Community Development Act of 1992 (12
U.S.C. 4565) is amended--
(1) in the section heading, by inserting ``DUTY TO SERVE
UNDERSERVED MARKETS AND'' before ``OTHER'';
(2) by striking subsection (b);
(3) in subsection (a)--
(A) in the matter preceding paragraph (1), by inserting
``and to carry out the duty under subsection (a) of this
section'' before ``, each enterprise shall'';
(B) in paragraph (3), by inserting ``and'' after the
semicolon at the end;
(C) in paragraph (4), by striking ``; and'' and inserting a
period;
(D) by striking paragraph (5); and
(E) by redesignating such subsection as subsection (b);
(4) by inserting before subsection (b) (as so redesignated
by paragraph (3)(E) of this subsection) the following new
subsection:
``(a) Duty To Serve Underserved Markets.--
``(1) Duty.--In accordance with the purpose of the
enterprises under section 301(3) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1716) and section
301(b)(3) of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1451 note) to undertake activities relating to
mortgages on housing for very low-, low-, and moderate-income
families involving a reasonable economic return that may be
less than the return earned on other activities, each
enterprise shall have the duty to increase the liquidity of
mortgage investments and improve the distribution of
investment capital available for mortgage financing for
underserved markets.
``(2) Underserved markets.--To meet its duty under
paragraph (1), each enterprise shall comply with the
following requirements with respect to the following
underserved markets:
``(A) Manufactured housing.--The enterprise shall lead the
industry in developing loan products and flexible
underwriting guidelines to facilitate a secondary market for
mortgages on manufactured homes for very low-, low-, and
moderate-income families.
``(B) Affordable housing preservation.--The enterprise
shall lead the industry in developing loan products and
flexible underwriting guidelines to facilitate a secondary
market to preserve housing affordable to very low-, low-, and
moderate-income families, including housing projects
subsidized under--
``(i) the project-based and tenant-based rental assistance
programs under section 8 of the United States Housing Act of
1937;
``(ii) the program under section 236 of the National
Housing Act;
``(iii) the below-market interest rate mortgage program
under section 221(d)(4) of the National Housing Act;
``(iv) the supportive housing for the elderly program under
section 202 of the Housing Act of 1959;
``(v) the supportive housing program for persons with
disabilities under section 811 of the Cranston-Gonzalez
National Affordable Housing Act;
``(vi) the programs under title IV of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11361 et seq.), but only
permanent supportive housing projects subsidized under such
programs; and
``(vii) the rural rental housing program under section 515
of the Housing Act of 1949.
``(C) Rural and other underserved markets.--The enterprise
shall lead the industry in developing loan products and
flexible underwriting guidelines to facilitate a secondary
market for mortgages on housing for very low-, low-, and
moderate-income families in rural areas, and for mortgages
for housing for any other underserved market for very low-,
low-, and moderate-income families that the Secretary
identifies as lacking adequate credit through conventional
lending sources. Such underserved markets may be identified
by borrower type, market segment, or geographic area.''; and
(5) by adding at the end the following new subsection:
``(c) Evaluation and Reporting of Compliance.--
``(1) In general.--Not later than 6 months after the
effective date under section 185 of the Federal Housing
Finance Reform Act of 2007, the Director shall establish a
manner for evaluating whether, and the extent to which, the
enterprises have complied with the duty under subsection (a)
to serve underserved markets and for rating the extent of
such compliance. Using such method, the Director shall, for
each year, evaluate such compliance and rate the performance
of each enterprise as to extent of compliance. The Director
shall include such evaluation and rating for each enterprise
for a year in the report for that year submitted pursuant to
section 1319B(a).
``(2) Separate evaluations.--In determining whether an
enterprise has complied with the duty referred to in
paragraph (1), the Director shall separately evaluate whether
the enterprise has complied with such duty with respect to
each of the underserved markets identified in subsection (a),
taking into consideration--
``(A) the development of loan products and more flexible
underwriting guidelines;
``(B) the extent of outreach to qualified loan sellers in
each of such underserved markets; and
``(C) the volume of loans purchased in each of such
underserved markets.
``(3) Manufactured housing market.--In determining whether
an enterprise has complied with the duty under subparagraph
(A) of subsection (a)(2), the Director may consider loans
secured by both real and personal property.''.
(b) Enforcement.--Subsection (a) of section 1336 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4566(a)) is amended--
(1) in paragraph (1), by inserting ``and with the duty
under section 1335(a) of each enterprise with respect to
underserved markets,'' before ``as provided in this
section''; and
(2) by adding at the end of such subsection, as amended by
the preceding provisions of this title, the following new
paragraph:
``(4) Enforcement of duty to provide mortgage credit to
underserved markets.--The duty under section 1335(a) of each
enterprise to serve underserved markets (as determined in
accordance with section 1335(c)) shall be enforceable under
this section to the same extent and under the same provisions
that the housing goals established under this subpart are
enforceable. Such duty shall not be enforceable under any
other provision of this title (including subpart C of this
part) other than this section or under any provision of the
Federal National Mortgage Association Charter Act or the
Federal Home Loan Mortgage Corporation Act.''.

SEC. 139. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING
GOALS.

(a) Additional Credit for Certain Mortgages.--Section
1336(a) of the Housing and Community Development Act of 1992
(12 U.S.C. 4566(a)) is amended--
(1) in paragraph (2), by inserting ``, except as provided
in paragraph (4),'' after ``which''; and
(2) by adding at the end the following new paragraph:
``(5) Additional credit.--The Director shall assign more
than 125 percent credit toward achievement, under this
section, of the housing goals for mortgage purchase
activities of the enterprises that comply with the
requirements of such goals and support--
``(A) housing that meets energy efficiency or other
environmental standards that are established by a Federal,
State, or local governmental authority with respect to the
geographic area where the housing is located or are otherwise
widely recognized; or
``(B) housing that includes a licensed childcare center.

The availability of additional credit under this paragraph
shall not be used to increase any housing goal, subgoal, or
target established under this subpart.''.
(b) Monitoring and Enforcement.--Section 1336 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4566) is amended--
(1) in subsection (b)--
(A) in the subsection heading, by inserting ``Preliminary''
before ``Determination'';
(B) by striking paragraph (1) and inserting the following
new paragraph:
``(1) Notice.--If the Director preliminarily determines
that an enterprise has failed, or that there is a substantial
probability that an enterprise will fail, to meet any housing
goal established under this subpart, the Director shall
provide written notice to the enterprise of such a
preliminary determination, the reasons for such
determination, and the information on which the Director
based the determination.'';
(C) in paragraph (2)--
(i) in subparagraph (A), by inserting ``finally'' before
``determining'';
(ii) by striking subparagraphs (B) and (C) and inserting
the following new subparagraph:
``(B) Extension or shortening of period.--The Director
may--
``(i) extend the period under subparagraph (A) for good
cause for not more than 30 additional days; and
``(ii) shorten the period under subparagraph (A) for good
cause.''; and
(iii) by redesignating subparagraph (D) as subparagraph
(C); and
(D) in paragraph (3)--
(i) in subparagraph (A), by striking ``determine'' and
inserting ``issue a final determination of'';
(ii) in subparagraph (B), by inserting ``final'' before
``determinations''; and

[[Page S2565]]

(iii) in subparagraph (C)--

(I) by striking ``Committee on Banking, Finance and Urban
Affairs'' and inserting ``Committee on Financial Services'';
and
(II) by inserting ``final'' before ``determination'' each
place such term appears; and

(2) in subsection (c)--
(A) by striking the subsection designation and heading and
all that follows through the end of paragraph (1) and
inserting the following:
``(c) Cease and Desist Orders, Civil Money Penalties, and
Remedies Including Housing Plans.--
``(1) Requirement.--If the Director finds, pursuant to
subsection (b), that there is a substantial probability that
an enterprise will fail, or has actually failed, to meet any
housing goal under this subpart and that the achievement of
the housing goal was or is feasible, the Director may require
that the enterprise submit a housing plan under this
subsection. If the Director makes such a finding and the
enterprise refuses to submit such a plan, submits an
unacceptable plan, fails to comply with the plan or the
Director finds that the enterprise has failed to meet any
housing goal under this subpart, in addition to requiring an
enterprise to submit a housing plan, the Director may issue a
cease and desist order in accordance with section 1341,
impose civil money penalties in accordance with section 1345,
or order other remedies as set forth in paragraph (7) of this
subsection.'';
(B) in paragraph (2)--
(i) by striking ``Contents.--Each housing plan'' and
inserting ``Housing plan.--If the Director requires a housing
plan under this section, such a plan''; and
(ii) in subparagraph (B), by inserting ``and changes in its
operations'' after ``improvements'';
(C) in paragraph (3)--
(i) by inserting ``comply with any remedial action or''
before ``submit a housing plan''; and
(ii) by striking ``under subsection (b)(3) that a housing
plan is required'';
(D) in paragraph (4), by striking the first two sentences
and inserting the following: ``The Director shall review each
submission by an enterprise, including a housing plan
submitted under this subsection, and not later than 30 days
after submission, approve or disapprove the plan or other
action. The Director may extend the period for approval or
disapproval for a single additional 30-day period if the
Director determines such extension necessary.''; and
(E) by adding at the end the following new paragraph:
``(7) Additional remedies for failure to meet goals.--In
addition to ordering a housing plan under this section,
issuing cease and desist orders under section 1341, and
ordering civil money penalties under section 1345, the
Director may seek other actions when an enterprise fails to
meet a goal, and exercise appropriate enforcement authority
available to the Director under this Act to prohibit the
enterprise from initially offering any product (as such term
is defined in section 1321(f)) or engaging in any new
activities, services, undertakings, and offerings and to
order the enterprise to suspend products and activities,
services, undertakings, and offerings pending its achievement
of the goal.''.

SEC. 140. AFFORDABLE HOUSING FUND.

(a) In General.--The Housing and Community Development Act
of 1992 is amended by striking sections 1337 and 1338 (12
U.S.C. 4562 note) and inserting the following new section:

``SEC. 1337. AFFORDABLE HOUSING FUND.

``(a) Establishment and Purpose.--The Director, in
consultation with the Secretary of Housing and Urban
Development, shall establish and manage an affordable housing
fund in accordance with this section, which shall be funded
with amounts allocated by the enterprises under subsection
(b). The purpose of the affordable housing fund shall be to
provide formula grants to grantees for use--
``(1) to increase homeownership for extremely low-and very
low-income families;
``(2) to increase investment in housing in low-income
areas, and areas designated as qualified census tracts or an
area of chronic economic distress pursuant to section 143(j)
of the Internal Revenue Code of 1986 (26 U.S.C. 143(j));
``(3) to increase and preserve the supply of rental and
owner-occupied housing for extremely low- and very low-income
families;
``(4) to increase investment in public infrastructure
development in connection with housing assisted under this
section; and
``(5) to leverage investments from other sources in
affordable housing and in public infrastructure development
in connection with housing assisted under this section.
``(b) Allocation of Amounts by Enterprises.--
``(1) In general.--In accordance with regulations issued by
the Director under subsection (m) and subject to paragraph
(2) of this subsection and subsection (i)(5), each enterprise
shall allocate to the affordable housing fund established
under subsection (a), in each of the years 2007 through 2011,
an amount equal to 1.2 basis points for each dollar of the
average total mortgage portfolio of the enterprise during the
preceding year.
``(2) Suspension of contributions.--The Director shall
temporarily suspend the allocation under paragraph (1) by an
enterprise to the affordable housing fund upon a finding by
the Director that such allocations--
``(A) are contributing, or would contribute, to the
financial instability of the enterprise;
``(B) are causing, or would cause, the enterprise to be
classified as undercapitalized; or
``(C) are preventing, or would prevent, the enterprise from
successfully completing a capital restoration plan under
section 1369C.
``(3) 5-year sunset and report.--
``(A) Sunset.--The enterprises shall not be required to
make allocations to the affordable housing fund in 2012 or in
any year thereafter.
``(B) Report on program continuance.--Not later than June
30, 2011, the Director shall submit to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate a report making recommendations on whether the program
under this section, including the requirement for the
enterprises to make allocations to the affordable housing
fund, should be extended and on any modifications for the
program.
``(4) Prohibition of pass-through of cost of allocations.--
The Director shall, by regulation, prohibit each enterprise
from redirecting such costs, through increased charges or
fees, or decreased premiums, or in any other manner, to the
originators of mortgages purchased or securitized by the
enterprise.
``(c) Affordable Housing Needs Formulas.--
``(1) Allocation for 2007.--
``(A) Allocation percentages for louisiana and
mississippi.--For purposes of subsection (d)(1)(A), the
allocation percentages for 2007 for the grantees under this
section for such year shall be as follows:
``(i) The allocation percentage for the Louisiana Housing
Finance Agency shall be 75 percent.
``(ii) The allocation percentage for the Mississippi
Development Authority shall be 25 percent.
``(B) Use in disaster areas.--Affordable housing grant
amounts for 2007 shall be used only as provided in subsection
(g) only for such eligible activities in areas that were
subject to a declaration by the President of a major disaster
or emergency under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5121 et seq.) in
connection with Hurricane Katrina or Rita of 2005.
``(2) Allocation formula for other years.--The Secretary of
Housing and Urban Development shall, by regulation, establish
a formula to allocate, among the States (as such term is
defined in section 1303) and federally recognized Indian
tribes, the amounts provided by the enterprises in each year
referred to subsection (b)(1), other than 2007, to the
affordable housing fund established under this section. The
formula shall be based on the following factors, with respect
to each State and tribe:
``(A) The ratio of the population of the State or federally
recognized Indian tribe to the aggregate population of all
the States and tribes.
``(B) The percentage of families in the State or federally
recognized Indian tribe that pay more than 50 percent of
their annual income for housing costs.
``(C) The percentage of persons in the State or federally
recognized Indian tribe that are members of extremely low- or
very low-income families.
``(D) The cost of developing or carrying out rehabilitation
of housing in the State or for the federally recognized
Indian tribe.
``(E) The percentage of families in the State or federally
recognized Indian tribe that live in substandard housing.
``(F) The percentage of housing stock in the State or for
the federally recognized Indian tribe that is extremely old
housing.
``(G) Any other factors that the Secretary determines to be
appropriate.
``(3) Failure to establish.--If, in any year referred to in
subsection (b)(1), other than 2007, the regulations
establishing the formula required under paragraph (2) of this
subsection have not been issued by the date that the Director
determines the amounts described in subsection (d)(1) to be
available for affordable housing fund grants in such year,
for purposes of such year any amounts for a State (as such
term is defined in section 1303 of this Act) that would
otherwise be determined under subsection (d) by applying the
formula established pursuant to paragraph (2) of this
subsection shall be determined instead by applying, for such
State, the percentage that is equal to the percentage of the
total amounts made available for such year for allocation
under subtitle A of title II of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12741 et seq.)
that are allocated in such year, pursuant to such subtitle,
to such State (including any insular area or unit of general
local government, as such terms are defined in section 104 of
such Act (42 U.S.C. 12704), that is treated as a State under
section 1303 of this Act) and to participating jurisdictions
and other eligible entities within such State.
``(d) Allocation of Formula Amount; Grants.--
``(1) Formula amount.--For each year referred to in
subsection (b)(1), the Director shall determine the formula
amount under this section for each grantee, which shall be
the amount determined for such grantee--
``(A) for 2007, by applying the allocation percentages
under subparagraph (A) of subsection (c)(1) to the sum of the
total amounts allocated by the enterprises to the affordable
housing fund for such year, less

[[Page S2566]]

any amounts used pursuant to subsection (i)(1); and
``(B) for any other year referred to in subsection (b)(1)
(other than 2007), by applying the formula established
pursuant to paragraph (2) of subsection (c) to the sum of the
total amounts allocated by the enterprises to the affordable
housing fund for such year and any recaptured amounts
available pursuant to subsection (i)(4), less any amounts
used pursuant to subsection (i)(1).
``(2) Notice.--In each year referred to in subsection
(b)(1), not later than 60 days after the date that the
Director determines the amounts described in paragraph (1) to
be available for affordable housing fund grants to grantees
in such year, the Director shall cause to be published in the
Federal Register a notice that such amounts shall be so
available.
``(3) Grant amount.--
``(A) In general.--For each year referred to in subsection
(b)(1), the Director shall make a grant from amounts in the
affordable housing fund to each grantee in an amount that is,
except as provided in subparagraph (B), equal to the formula
amount under this section for the grantee. A grantee may
designate a State housing finance agency, housing and
community development entity, tribally designated housing
entity (as such term is defined in section 4 of the Native
American Housing Assistance and Self-Determination Act of
1997 (25 U.S.C. 4103)) or other qualified instrumentality of
the grantee to receive such grant amounts.
``(B) Reduction for failure to obtain return of misused
funds.--If in any year a grantee fails to obtain
reimbursement or return of the full amount required under
subsection (j)(1)(B) to be reimbursed or returned to the
grantee during such year--
``(i) except as provided in clause (ii)--

``(I) the amount of the grant for the grantee for the
succeeding year, as determined pursuant to subparagraph (A),
shall be reduced by the amount by which such amounts required
to be reimbursed or returned exceed the amount actually
reimbursed or returned; and
``(II) the amount of the grant for the succeeding year for
each other grantee whose grant is not reduced pursuant to
subclause (I) shall be increased by the amount determined by
applying the formula established pursuant to subsection
(c)(2) to the total amount of all reductions for all grantees
for such year pursuant to subclause (I); or

``(ii) in any case in which such failure to obtain
reimbursement or return occurs during a year immediately
preceding a year in which grants under this subsection will
not be made, the grantee shall pay to the Director for
reallocation among the other grantees an amount equal to the
amount of the reduction for the grantee that would otherwise
apply under clause (i)(I).
``(e) Grantee Allocation Plans.--
``(1) In general.--For each year that a grantee receives
affordable housing fund grant amounts, the grantee shall
establish an allocation plan in accordance with this
subsection, which shall be a plan for the distribution of
such grant amounts of the grantee for such year that--
``(A) is based on priority housing needs, as determined by
the grantee in accordance with the regulations established
under subsection (m)(2)(C);
``(B) complies with subsection (f); and
``(C) includes performance goals, benchmarks, and
timetables for the grantee for the production, preservation,
and rehabilitation of affordable rental and homeownership
housing with such grant amounts that comply with the
requirements established by the Director pursuant to
subsection (m)(2)(F).
``(2) Establishment.--In establishing an allocation plan, a
grantee shall notify the public of the establishment of the
plan, provide an opportunity for public comments regarding
the plan, consider any public comments received, and make the
completed plan available to the public.
``(3) Contents.--An allocation plan of a grantee shall set
forth the requirements for eligible recipients under
subsection (h) to apply to the grantee to receive assistance
from affordable housing fund grant amounts, including a
requirement that each such application include--
``(A) a description of the eligible activities to be
conducted using such assistance; and
``(B) a certification by the eligible recipient applying
for such assistance that any housing units assisted with such
assistance will comply with the requirements under this
section.
``(f) Selection of Activities Funded Using Affordable
Housing Fund Grant Amounts.--Affordable housing fund grant
amounts of a grantee may be used, or committed for use, only
for activities that--
``(1) are eligible under subsection (g) for such use;
``(2) comply with the applicable allocation plan under
subsection (e) of the grantee; and
``(3) are selected for funding by the grantee in accordance
with the process and criteria for such selection established
pursuant to subsection (m)(2)(C).
``(g) Eligible Activities.--Affordable housing fund grant
amounts of a grantee shall be eligible for use, or for
commitment for use, only for assistance for--
``(1) the production, preservation, and rehabilitation of
rental housing, including housing under the programs
identified in section 1335(a)(2)(B), except that such grant
amounts may be used for the benefit only of extremely low-
and very low-income families;
``(2) the production, preservation, and rehabilitation of
housing for homeownership, including such forms as
downpayment assistance, closing cost assistance, and
assistance for interest-rate buy-downs, that--
``(A) is available for purchase only for use as a principal
residence by families that qualify both as--
``(i) extremely low- and very-low income families at the
times described in subparagraphs (A) through (C) of section
215(b)(2) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12745(b)(2)); and
``(ii) first-time homebuyers, as such term is defined in
section 104 of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12704), except that any reference in
such section to assistance under title II of such Act shall
for purposes of this section be considered to refer to
assistance from affordable housing fund grant amounts;
``(B) has an initial purchase price that meets the
requirements of section 215(b)(1) of the Cranston-Gonzalez
National Affordable Housing Act;
``(C) is subject to the same resale restrictions
established under section 215(b)(3) of the Cranston-Gonzalez
National Affordable Housing Act and applicable to the
participating jurisdiction that is the State in which such
housing is located; and
``(D) is made available for purchase only by, or in the
case of assistance under this paragraph, is made available
only to, homebuyers who have, before purchase--
``(i) completed a program of counseling with respect to the
responsibilities and financial management involved in
homeownership that is approved by the Director; except that
the Director may, at the request of a State, waive the
requirements of this subparagraph with respect to a
geographic area or areas within the State if: (I) the travel
time or distance involved in providing counseling with
respect to such area or areas, as otherwise required under
this subparagraph, on an in-person basis is excessive or the
cost of such travel is prohibitive; and (II) the State
provides alternative forms of counseling for such area or
areas, which may include interactive telephone counseling,
on-line counseling, interactive video counseling, and
interactive home study counseling and a program of financial
literacy and education to promote an understanding of
consumer, economic, and personal finance issues and concepts,
including saving for retirement, managing credit, long-term
care, and estate planning and education on predatory lending,
identity theft, and financial abuse schemes relating to
homeownership that is approved by the Director, except that
entities providing such counseling shall not discriminate
against any particular form of housing; and
``(ii) demonstrated, in accordance with regulations as the
Director shall issue setting forth requirements for
sufficient evidence, that they are lawfully present in the
United States; and
``(3) public infrastructure development activities in
connection with housing activities funded under paragraph (1)
or (2).
``(h) Eligible Recipients.--Affordable housing fund grant
amounts of a grantee may be provided only to a recipient that
is an organization, agency, or other entity (including a for-
profit entity, a nonprofit entity, and a faith-based
organization) that--
``(1) has demonstrated experience and capacity to conduct
an eligible activity under (g), as evidenced by its ability
to--
``(A) own, construct or rehabilitate, manage, and operate
an affordable multifamily rental housing development;
``(B) design, construct or rehabilitate, and market
affordable housing for homeownership;
``(C) provide forms of assistance, such as downpayments,
closing costs, or interest-rate buy-downs, for purchasers; or
``(D) construct related public infrastructure development
activities in connection with such housing activities;
``(2) demonstrates the ability and financial capacity to
undertake, comply, and manage the eligible activity;
``(3) demonstrates its familiarly with the requirements of
any other Federal, State or local housing program that will
be used in conjunction with such grant amounts to ensure
compliance with all applicable requirements and regulations
of such programs; and
``(4) makes such assurances to the grantee as the Director
shall, by regulation, require to ensure that the recipient
will comply with the requirements of this section during the
entire period that begins upon selection of the recipient to
receive such grant amounts and ending upon the conclusion of
all activities under subsection (g) that are engaged in by
the recipient and funded with such grant amounts.
``(i) Limitations on Use.--
``(1) Required amount for refcorp.--Of the aggregate amount
allocated pursuant to subsection (b) in each year to the
affordable housing fund, 25 percent shall be used as provided
in section 21B(f)(2)(E) of the Federal Home Loan Bank Act (12
U.S.C. 1441b(f)(2)(E)).
``(2) Required amount for homeownership activities.--Of the
aggregate amount of affordable housing fund grant amounts
provided in each year to a grantee, not less than 10 percent
shall be used for activities under paragraph (2) of
subsection (g).
``(3) Maximum amount for public infrastructure development
activities in connection with affordable housing
activities.--Of the aggregate amount of affordable

[[Page S2567]]

housing fund grant amounts provided in each year to a
grantee, not more than 12.5 percent may be used for
activities under paragraph (3) of subsection (g).
``(4) Deadline for commitment or use.--Any affordable
housing fund grant amounts of a grantee shall be used or
committed for use within two years of the date of that such
grant amounts are made available to the grantee. The Director
shall recapture into the affordable housing fund any such
amounts not so used or committed for use and allocate such
amounts under subsection (d)(1) in the first year after such
recapture.
``(5) Use of returns.--The Director shall, by regulation
provide that any return on a loan or other investment of any
affordable housing fund grant amounts of a grantee shall be
treated, for purposes of availability to and use by the
grantee, as affordable housing fund grant amounts.
``(6) Prohibited uses.--The Director shall--
``(A) by regulation, set forth prohibited uses of
affordable housing fund grant amounts, which shall include
use for--
``(i) political activities;
``(ii) advocacy;
``(iii) lobbying, whether directly or through other
parties;
``(iv) counseling services;
``(v) travel expenses; and
``(vi) preparing or providing advice on tax returns;
``(B) by regulation, provide that, except as provided in
subparagraph (C), affordable housing fund grant amounts of a
grantee may not be used for administrative, outreach, or
other costs of--
``(i) the grantee; or
``(ii) any recipient of such grant amounts; and
``(C) by regulation, limit the amount of any affordable
housing fund grant amounts of the grantee for a year that may
be used for administrative costs of the grantee of carrying
out the program required under this section to a percentage
of such grant amounts of the grantee for such year, which may
not exceed 10 percent.
``(7) Prohibition of consideration of use for meeting
housing goals or duty to serve.--In determining compliance
with the housing goals under this subpart and the duty to
serve underserved markets under section 1335, the Director
may not consider any affordable housing fund grant amounts
used under this section for eligible activities under
subsection (g). The Director shall give credit toward the
achievement of such housing goals and such duty to serve
underserved markets to purchases by the enterprises of
mortgages for housing that receives funding from affordable
housing fund grant amounts, but only to the extent that such
purchases by the enterprises are funded other than with such
grant amounts.
``(8) Acceptable identification requirement for occupancy
or assistance.--
``(A) In general.--Any assistance provided with any
affordable housing grant amounts may not be made available
to, or on behalf of, any individual or household unless the
individual provides, or, in the case of a household, all
adult members of the household provide, personal
identification in one of the following forms:
``(i) Social security card with photo identification card
or real id act identification.--

``(I) A social security card accompanied by a photo
identification card issued by the Federal Government or a
State Government; or
``(II) A driver's license or identification card issued by
a State in the case of a State that is in compliance with
title II of the REAL ID Act of 2005 (title II of division B
of Public Law 109-13; 49 U.S.C. 30301 note).

``(ii) Passport.--A passport issued by the United States or
a foreign government.
``(iii) USCIS photo identification card.--A photo
identification card issued by the Secretary of Homeland
Security (acting through the Director of the United States
Citizenship and Immigration Services).
``(B) Regulations.--The Director shall, by regulation,
require that each grantee and recipient take such actions as
the Director considers necessary to ensure compliance with
the requirements of subparagraph (A).
``(j) Accountability of Recipients and Grantees.--
``(1) Recipients.--
``(A) Tracking of funds.--The Director shall--
``(i) require each grantee to develop and maintain a system
to ensure that each recipient of assistance from affordable
housing fund grant amounts of the grantee uses such amounts
in accordance with this section, the regulations issued under
this section, and any requirements or conditions under which
such amounts were provided; and
``(ii) establish minimum requirements for agreements,
between the grantee and recipients, regarding assistance from
the affordable housing fund grant amounts of the grantee,
which shall include--

``(I) appropriate continuing financial and project
reporting, record retention, and audit requirements for the
duration of the grant to the recipient to ensure compliance
with the limitations and requirements of this section and the
regulations under this section; and
``(II) any other requirements that the Director determines
are necessary to ensure appropriate grant administration and
compliance.

``(B) Misuse of funds.--
``(i) Reimbursement requirement.--If any recipient of
assistance from affordable housing fund grant amounts of a
grantee is determined, in accordance with clause (ii), to
have used any such amounts in a manner that is materially in
violation of this section, the regulations issued under this
section, or any requirements or conditions under which such
amounts were provided, the grantee shall require that, within
12 months after the determination of such misuse, the
recipient shall reimburse the grantee for such misused
amounts and return to the grantee any amounts from the
affordable housing fund grant amounts of the grantee that
remain unused or uncommitted for use. The remedies under this
clause are in addition to any other remedies that may be
available under law.
``(ii) Determination.--A determination is made in
accordance with this clause if the determination is--

``(I) made by the Director; or
``(II)(aa) made by the grantee;
``(bb) the grantee provides notification of the
determination to the Director for review, in the discretion
of the Director, of the determination; and
``(cc) the Director does not subsequently reverse the
determination.

``(2) Grantees.--
``(A) Report.--
``(i) In general.--The Director shall require each grantee
receiving affordable housing fund grant amounts for a year to
submit a report, for such year, to the Director that--

``(I) describes the activities funded under this section
during such year with the affordable housing fund grant
amounts of the grantee; and
``(II) the manner in which the grantee complied during such
year with the allocation plan established pursuant to
subsection (e) for the grantee.

``(ii) Public availability.--The Director shall make such
reports pursuant to this subparagraph publicly available.
``(B) Misuse of funds.--If the Director determines, after
reasonable notice and opportunity for hearing, that a grantee
has failed to comply substantially with any provision of this
section and until the Director is satisfied that there is no
longer any such failure to comply, the Director shall--
``(i) reduce the amount of assistance under this section to
the grantee by an amount equal to the amount affordable
housing fund grant amounts which were not used in accordance
with this section;
``(ii) require the grantee to repay the Director an amount
equal to the amount of the amount affordable housing fund
grant amounts which were not used in accordance with this
section;
``(iii) limit the availability of assistance under this
section to the grantee to activities or recipients not
affected by such failure to comply; or
``(iv) terminate any assistance under this section to the
grantee.
``(k) Capital Requirements.--The utilization or commitment
of amounts from the affordable housing fund shall not be
subject to the risk-based capital requirements established
pursuant to section 1361(a).
``(l) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Affordable housing fund grant amounts.--The term
`affordable housing fund grant amounts' means amounts from
the affordable housing fund established under subsection (a)
that are provided to a grantee pursuant to subsection (d)(3).
``(2) Grantee.--The term `grantee' means--
``(A) with respect to 2007, the Louisiana Housing Finance
Agency and the Mississippi Development Authority; and
``(B) with respect to the years referred to in subsection
(b)(1), other than 2007, each State (as such term is defined
in section 1303) and each federally recognized Indian tribe.
``(3) Recipient.--The term `recipient' means an entity
meeting the requirements under subsection (h) that receives
assistance from a grantee from affordable housing fund grant
amounts of the grantee.
``(4) Total mortgage portfolio.--The term `total mortgage
portfolio' means, with respect to a year, the sum, for all
mortgages outstanding during that year in any form, including
whole loans, mortgage-backed securities, participation
certificates, or other structured securities backed by
mortgages, of the dollar amount of the unpaid outstanding
principal balances under such mortgages. Such term includes
all such mortgages or securitized obligations, whether
retained in portfolio, or sold in any form. The Director is
authorized to promulgate rules further defining such term as
necessary to implement this section and to address market
developments.
``(5) Very-low income family.--The term `very low-income
family' has the meaning given such term in section 1303,
except that such term includes any family that resides in a
rural area that has an income that does not exceed the
poverty line (as such term is defined in section 673(2) of
the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C.
9902(2)), including any revision required by such section)
applicable to a family of the size involved.
``(m) Regulations.--
``(1) In general.--The Director, in consultation with the
Secretary of Housing and Urban Development, shall issue
regulations to carry out this section.
``(2) Required contents.--The regulations issued under this
subsection shall include--

[[Page S2568]]

``(A) a requirement that the Director ensure that the
program of each grantee for use of affordable housing fund
grant amounts of the grantee is audited not less than
annually to ensure compliance with this section;
``(B) authority for the Director to audit, provide for an
audit, or otherwise verify a grantee's activities, to ensure
compliance with this section;
``(C) requirements for a process for application to, and
selection by, each grantee for activities meeting the
grantee's priority housing needs to be funded with affordable
housing fund grant amounts of the grantee, which shall
provide for priority in funding to be based upon--
``(i) greatest impact;
``(ii) geographic diversity;
``(iii) ability to obligate amounts and undertake
activities so funded in a timely manner;
``(iv) in the case of rental housing projects under
subsection (g)(1), the extent to which rents for units in the
project funded are affordable, especially for extremely low-
income families;
``(v) in the case of rental housing projects under
subsection (g)(1), the extent of the duration for which such
rents will remain affordable;
``(vi) the extent to which the application makes use of
other funding sources; and
``(vii) the merits of an applicant's proposed eligible
activity;
``(D) requirements to ensure that amounts provided to a
grantee from the affordable housing fund that are used for
rental housing under subsection (g)(1) are used only for the
benefit of extremely low- and very-low income families;
``(E) limitations on public infrastructure development
activities that are eligible pursuant to subsection (g)(3)
for funding with affordable housing fund grant amounts and
requirements for the connection between such activities and
housing activities funded under paragraph (1) or (2) of
subsection (g); and
``(F) requirements and standards for establishment, by
grantees (including the grantees for 2007 pursuant to
subsection (l)(2)(A)), of performance goals, benchmarks, and
timetables for the production, preservation, and
rehabilitation of affordable rental and homeownership housing
with affordable housing fund grant amounts.
``(n) Enforcement of Requirements on Enterprise.--
Compliance by the enterprises with the requirements under
this section shall be enforceable under subpart C. Any
reference in such subpart to this part or to an order, rule,
or regulation under this part specifically includes this
section and any order, rule, or regulation under this
section.
``(o) Affordable Housing Trust Fund.--If, after the
enactment of this Act, in any year, there is enacted any
provision of Federal law establishing an affordable housing
trust fund other than under this title for use only for
grants to provide affordable rental housing and affordable
homeownership opportunities, and the subsequent year is a
year referred to in subsection (b)(1), the Director shall in
such subsequent year and any remaining years referred to in
subsection (b)(1) transfer to such affordable housing trust
fund the aggregate amount allocated pursuant to subsection
(b) in such year to the affordable housing fund under this
section, less any amounts used pursuant to subsection (i)(1).
For such subsequent and remaining years, the provisions of
subsections (c) and (d) shall not apply. Notwithstanding any
other provision of law, assistance provided using amounts
transferred to such affordable housing trust fund pursuant to
this subsection may not be used for any of the activities
specified in clauses (i) through (vi) of subsection (i)(6).
Nothing in this subsection shall be construed to alter the
terms and conditions of the affordable housing fund under
this section or to extend the life of such fund.
``(p) Funding Accountability and Transparency.--Any grant
under this section to a grantee from the affordable housing
fund established under subsection (a), any assistance
provided to a recipient by a grantee from affordable housing
fund grant amounts, and any grant, award, or other assistance
from an affordable housing trust fund referred to in
subsection (o) shall be considered a Federal award for
purposes of the Federal Funding Accountability and
Transparency Act of 2006 (31 U.S.C. 6101 note). Upon the
request of the Director of the Office of Management and
Budget, the Director of the Federal Housing Finance Agency
shall obtain and provide such information regarding any such
grants, assistance, and awards as the Director of the Office
of Management and Budget considers necessary to comply with
the requirements of such Act, as applicable pursuant to the
preceding sentence.''.
(b) Timely Establishment of Affordable Housing Needs
Formula.--
(1) In general.--The Secretary of Housing and Urban
Development shall, not later than the effective date under
section 185 of this Division, issue the regulations
establishing the affordable housing needs formulas in
accordance with the provisions of section 1337(c)(2) of the
Housing and Community Development Act of 1992, as such
section is amended by subsection (a) of this section.
(2) Effective date.--This subsection shall take effect on
the date of the enactment of this Act.
(c) REFCORP Payments.--Section 21B(f)(2) of the Federal
Home Loan Bank Act (12 U.S.C. 1441b(f)(2)) is amended--
(1) in subparagraph (E), by striking ``and (D)'' and
inserting ``(D), and (E)'';
(2) by redesignating subparagraph (E) as subparagraph (F);
and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) Payments by fannie mae and freddie mac.--To the
extent that the amounts available pursuant to subparagraphs
(A), (B), (C), and (D) are insufficient to cover the amount
of interest payments, each enterprise (as such term is
defined in section 1303 of the Housing and Community
Development Act of 1992 (42 U.S.C. 4502)) shall transfer to
the Funding Corporation in each calendar year the amounts
allocated for use under this subparagraph pursuant to section
1337(i)(1) of such Act.''.
(d) GAO Report.--The Comptroller General shall conduct a
study to determine the effects that the affordable housing
fund established under section 1337 of the Housing and
Community Development Act of 1992, as added by the amendment
made by subsection (a) of this section, will have on the
availability and affordability of credit for homebuyers,
including the effects on such credit of the requirement under
such section 1337(b) that the Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation make
allocations of amounts to such fund based on the average
total mortgage portfolios, and the extent to which the costs
of such allocation requirement will be borne by such entities
or will be passed on to homebuyers. Not later than the
expiration of the 12-month period beginning on the date of
the enactment of this Act, the Comptroller General shall
submit a report to the Congress setting forth the results and
conclusions of such study. This subsection shall take effect
on the date of the enactment of this Act.

SEC. 141. CONSISTENCY WITH MISSION.

Subpart B of part 2 of subtitle A of title XIII of the
Housing and Community Development Act of 1992 (12 U.S.C. 4561
et seq.) is amended by adding after section 1337, as added by
section 139 of this Division, the following new section:

``SEC. 1338. CONSISTENCY WITH MISSION.

``This subpart may not be construed to authorize an
enterprise to engage in any program or activity that
contravenes or is inconsistent with the Federal National
Mortgage Association Charter Act or the Federal Home Loan
Mortgage Corporation Act.''.

SEC. 142. ENFORCEMENT.

(a) Cease-and-Desist Proceedings.--Section 1341 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4581) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Grounds for Issuance.--The Director may issue and
serve a notice of charges under this section upon an
enterprise if the Director determines--
``(1) the enterprise has failed to meet any housing goal
established under subpart B, following a written notice and
determination of such failure in accordance with section
1336;
``(2) the enterprise has failed to submit a report under
section 1314, following a notice of such failure, an
opportunity for comment by the enterprise, and a final
determination by the Director;
``(3) the enterprise has failed to submit the information
required under subsection (m) or (n) of section 309 of the
Federal National Mortgage Association Charter Act, or
subsection (e) or (f) of section 307 of the Federal Home Loan
Mortgage Corporation Act;
``(4) the enterprise has violated any provision of this
part or any order, rule or regulation under this part;
``(5) the enterprise has failed to submit a housing plan
that complies with section 1336(c) within the applicable
period; or
``(6) the enterprise has failed to comply with a housing
plan under section 1336(c).'';
(2) in subsection (b)(2), by striking ``requiring the
enterprise to'' and all that follows through the end of the
paragraph and inserting the following: ``requiring the
enterprise to--
``(A) comply with the goal or goals;
``(B) submit a report under section 1314;
``(C) comply with any provision this part or any order,
rule or regulation under such part;
``(D) submit a housing plan in compliance with section
1336(c);
``(E) comply with a housing plan submitted under section
1336(c); or
``(F) provide the information required under subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act or subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act, as
applicable.'';
(3) in subsection (c), by inserting ``date of the'' before
``service of the order''; and
(4) by striking subsection (d).
(b) Authority of Director To Enforce Notices and Orders.--
Section 1344 of the Housing and Community Development Act of
1992 (12 U.S.C. 4584) is amended by striking subsection (a)
and inserting the following new subsection:
``(a) Enforcement.--The Director may, in the discretion of
the Director, 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 the enforcement of any effective
and outstanding notice or order issued under section 1341 or
1345, 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.''.

[[Page S2569]]

(c) Civil Money Penalties.--Section 1345 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4585) is
amended--
(1) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Authority.--The Director may impose a civil money
penalty, in accordance with the provisions of this section,
on any enterprise that has failed to--
``(1) meet any housing goal established under subpart B,
following a written notice and determination of such failure
in accordance with section 1336(b);
``(2) submit a report under section 1314, following a
notice of such failure, an opportunity for comment by the
enterprise, and a final determination by the Director;
``(3) submit the information required under subsection (m)
or (n) of section 309 of the Federal National Mortgage
Association Charter Act, or subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act;
``(4) comply with any provision of this part or any order,
rule or regulation under this part;
``(5) submit a housing plan pursuant to section 1336(c)
within the required period; or
``(6) comply with a housing plan for the enterprise under
section 1336(c).
``(b) Amount of Penalty.--The amount of the penalty, as
determined by the Director, may not exceed--
``(1) for any failure described in paragraph (1), (5), or
(6) of subsection (a), $50,000 for each day that the failure
occurs; and
``(2) for any failure described in paragraph (2), (3), or
(4) of subsection (a), $20,000 for each day that the failure
occurs.'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in subparagraph (A), by inserting ``and'' after the
semicolon at the end;
(ii) in subparagraph (B), by striking ``; and'' and
inserting a period; and
(iii) by striking subparagraph (C); and
(B) in paragraph (2), by inserting after the period at the
end the following: ``In determining the penalty under
subsection (a)(1), the Director shall give consideration to
the length of time the enterprise should reasonably take to
achieve the goal.'';
(3) in the first sentence of subsection (d)--
(A) by striking ``request the Attorney General of the
United States to'' and inserting ``, in the discretion of the
Director,''; and
(B) by inserting ``, or request that the Attorney General
of the United States bring such an action'' before the period
at the end;
(4) by striking subsection (f); and
(5) by redesignating subsection (g) as subsection (f).
(d) Enforcement of Subpoenas.--Section 1348(c) of the
Housing and Community Development Act of 1992 (12 U.S.C.
4588(c)) is amended--
(1) by striking ``request the Attorney General of the
United States to'' and inserting ``, in the discretion of the
Director,''; and
(2) by inserting ``or request that the Attorney General of
the United States bring such an action,'' after ``District of
Columbia,''.
(e) Conforming Amendment.--The heading for subpart C of
part 2 of subtitle A of title XIII of the Housing and
Community Development Act of 1992 is amended to read as
follows:

``Subpart C--Enforcement''.

SEC. 143. CONFORMING AMENDMENTS.

Part 2 of subtitle A of title XIII of the Housing and
Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is
amended--
(1) by striking ``Secretary'' each place such term appears
in such part and inserting ``Director'';
(2) in the section heading for section 1323 (12 U.S.C.
4543), by inserting ``OF ENTERPRISES'' before the period at
the end;
(3) by striking section 1327 (12 U.S.C. 4547);
(4) by striking section 1328 (12 U.S.C. 4548);
(5) by redesignating section 1329 (as amended by section
135) as section 1327;
(6) in sections 1345(c)(1)(A), 1346(a), and 1346(b) (12
U.S.C. 4585(c)(1)(A), 4586(a), and 4586(b)), by striking
``Secretary's'' each place such term appears and inserting
``Director's''; and
(7) by striking section 1349 (12 U.S.C. 4589).

Subtitle C--Prompt Corrective Action

SEC. 151. CAPITAL CLASSIFICATIONS.

(a) In General.--Section 1364 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4614) is amended--
(1) in the heading for subsection (a), by striking ``In
General'' and inserting ``Enterprises''.
(2) in subsection (c)--
(A) by striking ``subsection (b)'' and inserting
``subsection (c)'';
(B) by striking ``enterprises'' and inserting ``regulated
entities''; and
(C) by striking the last sentence;
(3) by redesignating subsections (c) (as so amended by
paragraph (2) of this subsection) and (d) as subsections (d)
and (f), respectively;
(4) by striking subsection (b) and inserting the following
new subsections:
``(b) Federal Home Loan Banks.--
``(1) Establishment and criteria.--For purposes of this
subtitle, the Director shall, by regulation--
``(A) establish the capital classifications specified under
paragraph (2) for the Federal home loan banks;
``(B) establish criteria for each such capital
classification based on the amount and types of capital held
by a bank and the risk-based, minimum, and critical capital
levels for the banks and taking due consideration of the
capital classifications established under subsection (a) for
the enterprises, with such modifications as the Director
determines to be appropriate to reflect the difference in
operations between the banks and the enterprises; and
``(C) shall classify the Federal home loan banks according
to such capital classifications.
``(2) Classifications.--The capital classifications
specified under this paragraph are--
``(A) adequately capitalized;
``(B) undercapitalized;
``(C) significantly undercapitalized; and
``(D) critically undercapitalized.
``(c) Discretionary Classification.--
``(1) Grounds for reclassification.--The Director may
reclassify a regulated entity under paragraph (2) if--
``(A) at any time, the Director determines in writing that
the regulated entity is engaging in conduct that could result
in a rapid depletion of core or total capital or, in the case
of an enterprise, that the value of the property subject to
mortgages held or securitized by the enterprise has decreased
significantly;
``(B) after notice and an opportunity for hearing, the
Director determines that the regulated entity is in an unsafe
or unsound condition; or
``(C) pursuant to section 1371(b), the Director deems the
regulated entity 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 a regulated entity for any reason not specified in this
subsection, if the Director takes any action described in
paragraph (1) the Director may classify a regulated entity--
``(A) as undercapitalized, if the regulated entity is
otherwise classified as adequately capitalized;
``(B) as significantly undercapitalized, if the regulated
entity is otherwise classified as undercapitalized; and
``(C) as critically undercapitalized, if the regulated
entity is otherwise classified as significantly
undercapitalized.''; and
(5) by inserting after subsection (d) (as so redesignated
by paragraph (3) of this subsection), the following new
subsection:
``(e) Restriction on Capital Distributions.--
``(1) In general.--A regulated entity shall make no capital
distribution if, after making the distribution, the regulated
entity would be undercapitalized.
``(2) Exception.--Notwithstanding paragraph (1), the
Director may permit a regulated entity, to the extent
appropriate or applicable, to repurchase, 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 regulated entity in at least an
equivalent amount; and
``(B) will reduce the financial obligations of the
regulated entity or otherwise improve the financial condition
of the entity.''.
(b) Regulations.--Not later than the expiration of the 180-
day period beginning on the effective date under section 185,
the Director of the Federal Housing Finance Agency shall
issue regulations to carry out section 1364(b) of the Housing
and Community Development Act of 1992 (as added by paragraph
(4) of this subsection), relating to capital classifications
for the Federal home loan banks.

SEC. 152. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED
REGULATED ENTITIES.

Section 1365 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4615) is amended--
(1) in the section heading, by striking ``ENTERPRISES'' and
inserting ``REGULATED ENTITIES'';
(2) in subsection (a)--
(A) by redesignating paragraphs (1) and (2) as paragraphs
(2) and (3), respectively;
(B) by inserting before paragraph (2), as so redesignated
by subparagraph (A) of this paragraph, the following
paragraph:
``(1) Required monitoring.--The Director shall--
``(A) closely monitor the condition of any regulated entity
that is classified as undercapitalized;
``(B) closely monitor compliance with the capital
restoration plan, restrictions, and requirements imposed
under this section; and
``(C) periodically review the plan, restrictions, and
requirements applicable to the undercapitalized regulated
entity to determine whether the plan, restrictions, and
requirements are achieving the purpose of this section.'';
and
(C) by inserting at the end the following new paragraphs:
``(4) Restriction of asset growth.--A regulated entity that
is classified as undercapitalized shall not permit its
average total assets (as such term is defined in section
1316(b) during any calendar quarter to exceed its average
total assets during the preceding calendar quarter unless--
``(A) the Director has accepted the capital restoration
plan of the regulated entity;
``(B) any increase in total assets is consistent with the
plan; and
``(C) the ratio of total capital to assets for the
regulated entity increases during the calendar quarter at a
rate sufficient to enable the entity to become adequately
capitalized within a reasonable time.
``(5) Prior approval of acquisitions, new products, and new
activities.--A regulated entity that is classified as
undercapitalized

[[Page S2570]]

shall not, directly or indirectly, acquire any interest in
any entity or initially offer any new product (as such term
is defined in section 1321(f)) or engage in any new activity,
service, undertaking, or offering unless--
``(A) the Director has accepted the capital restoration
plan of the regulated entity, the entity is implementing the
plan, and the Director determines that the proposed action is
consistent with and will further the achievement of the plan;
or
``(B) the Director determines that the proposed action will
further the purpose of this section.'';
(3) in the subsection heading for subsection (b), by
striking ``From Undercapitalized to Significantly
Undercapitalized''; and
(4) by striking subsection (c) and inserting the following
new subsection:
``(c) Other Discretionary Safeguards.--The Director may
take, with respect to a regulated entity that is classified
as undercapitalized, any of the actions authorized to be
taken under section 1366 with respect to a regulated entity
that is classified as significantly undercapitalized, if the
Director determines that such actions are necessary to carry
out the purpose of this subtitle.''.

SEC. 153. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED REGULATED ENTITIES.

Section 1366 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4616) is amended--
(1) in the section heading, by striking ``ENTERPRISES'' and
inserting ``REGULATED ENTITIES'';
(2) in subsection (a)(2)(A), by striking ``enterprise'' the
last place such term appears;
(3) 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, one 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 regulated entity.
``(B) Dismissal of directors or executive officers.--
Require the regulated entity to dismiss from office any
director or executive officer who had held office for more
than 180 days immediately before the entity became
undercapitalized. Dismissal under this subparagraph shall not
be construed to be a removal pursuant to the Director's
enforcement powers provided in section 1377.
``(C) Employ qualified executive officers.--Require the
regulated entity to employ qualified executive officers (who,
if the Director so specifies, shall be subject to approval by
the Director).''; and
(E) by inserting at the end the following new paragraph:
``(8) Other action.--Require the regulated entity to take
any other action that the Director determines will better
carry out the purpose of this section than any of the actions
specified in this paragraph.'';
(4) by redesignating subsection (c) as subsection (d); and
(5) by inserting after subsection (b) the following new
subsection:
``(c) Restriction on Compensation of Executive Officers.--A
regulated entity that is classified as significantly
undercapitalized may not, without prior written approval by
the Director--
``(1) pay any bonus to any executive officer; or
``(2) provide compensation to any executive officer at a
rate exceeding that officer's average rate of compensation
(excluding bonuses, stock options, and profit sharing) during
the 12 calendar months preceding the calendar month in which
the regulated entity became undercapitalized.''.

SEC. 154. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED
REGULATED ENTITIES.

(a) In General.--Section 1367 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4617) is amended to read
as follows:

``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED
REGULATED ENTITIES.

``(a) Appointment of Agency as Conservator or Receiver.--
``(1) In general.--Notwithstanding any other provision of
Federal or State law, if any of the grounds under paragraph
(3) exist, at the discretion of the Director, the Director
may establish a conservatorship or receivership, as
appropriate, for the purpose of reorganizing, rehabilitating,
or winding up the affairs of a regulated entity.
``(2) Appointment.--In any conservatorship or receivership
established under this section, the Director shall appoint
the Agency as conservator or receiver.
``(3) Grounds for appointment.--The grounds for appointing
a conservator or receiver for a regulated entity are as
follows:
``(A) Assets insufficient for obligations.--The assets of
the regulated entity are less than the obligations of the
regulated entity to its creditors and others.
``(B) Substantial dissipation.--Substantial dissipation of
assets or earnings due to--
``(i) any violation of any provision of Federal or State
law; or
``(ii) any unsafe or unsound practice.
``(C) Unsafe or unsound condition.--An unsafe or unsound
condition to transact business.
``(D) Cease-and-desist orders.--Any willful violation of a
cease-and-desist order that has become final.
``(E) Concealment.--Any concealment of the books, papers,
records, or assets of the regulated entity, or any refusal to
submit the books, papers, records, or affairs of the
regulated entity, for inspection to any examiner or to any
lawful agent of the Director.
``(F) Inability to meet obligations.--The regulated entity
is likely to be unable to pay its obligations or meet the
demands of its creditors in the normal course of business.
``(G) Losses.--The regulated entity has incurred or is
likely to incur losses that will deplete all or substantially
all of its capital, and there is no reasonable prospect for
the regulated entity to become adequately capitalized (as
defined in section 1364(a)(1)).
``(H) Violations of law.--Any violation of any law or
regulation, or any unsafe or unsound practice or condition
that is likely to--
``(i) cause insolvency or substantial dissipation of assets
or earnings; or
``(ii) weaken the condition of the regulated entity.
``(I) Consent.--The regulated entity, by resolution of its
board of directors or its shareholders or members, consents
to the appointment.
``(J) Undercapitalization.--The regulated entity is
undercapitalized or significantly undercapitalized (as
defined in section 1364(a)(3) or in regulations issued
pursuant to section 1364(b), as applicable), and--
``(i) has no reasonable prospect of becoming adequately
capitalized;
``(ii) fails to become adequately capitalized, as required
by--

``(I) section 1365(a)(1) with respect to an
undercapitalized regulated entity; or
``(II) section 1366(a)(1) with respect to a significantly
undercapitalized regulated entity;

``(iii) fails to submit a capital restoration plan
acceptable to the Agency within the time prescribed under
section 1369C; or
``(iv) materially fails to implement a capital restoration
plan submitted and accepted under section 1369C.
``(K) Critical undercapitalization.--The regulated entity
is critically undercapitalized, as defined in section
1364(a)(4) or in regulations issued pursuant to section
1364(b), as applicable.
``(L) Money laundering.--The Attorney General notifies the
Director in writing that the regulated entity has been found
guilty of a criminal offense under section 1956 or 1957 of
title 18, United States Code, or section 5322 or 5324 of
title 31, United States Code.
``(4) Mandatory receivership.--
``(A) In general.--The Director shall appoint the Agency as
receiver for a regulated entity if the Director determines,
in writing, that--
``(i) the assets of the regulated entity are, and during
the preceding 30 calendar days have been, less than the
obligations of the regulated entity to its creditors and
others; or
``(ii) the regulated entity is not, and during the
preceding 30 calendar days has not been, generally paying the
debts of the regulated entity (other than debts that are the
subject of a bona fide dispute) as such debts become due.
``(B) Periodic determination required for critically under
capitalized regulated entity.--If a regulated entity is
critically undercapitalized, the Director shall make a
determination, in writing, as to whether the regulated entity
meets the criteria specified in clause (i) or (ii) of
subparagraph (A)--
``(i) not later than 30 calendar days after the regulated
entity initially becomes critically undercapitalized; and
``(ii) at least once during each succeeding 30-calendar day
period.
``(C) Determination not required if receivership already in
place.--Subparagraph (B) shall not apply with respect to a
regulated entity in any period during which the Agency serves
as receiver for the regulated entity.
``(D) Receivership terminates conservatorship.--The
appointment under this section of the Agency as receiver of a
regulated entity shall immediately terminate any
conservatorship established under this title for the
regulated entity.
``(5) Judicial review.--
``(A) In general.--If the Agency is appointed conservator
or receiver under this section, the regulated entity may,
within 30 days of such appointment, bring an action in the
United States District Court for the judicial district in
which the principal place of business of such regulated
entity is located, or in the United States District Court for
the District of Columbia, for an order requiring the Agency
to remove itself as conservator or receiver.
``(B) Review.--Upon the filing of an action under
subparagraph (A), the court shall, upon the merits, dismiss
such action or direct the Agency to remove itself as such
conservator or receiver.
``(6) Directors not liable for acquiescing in appointment
of conservator or receiver.--The members of the board of
directors of a regulated entity shall not be liable to the
shareholders or creditors of the regulated entity for
acquiescing in or consenting in good faith to the appointment
of the Agency as conservator or receiver for that regulated
entity.
``(7) Agency not subject to any other federal agency.--When
acting as conservator or receiver, the Agency shall not be
subject to the direction or supervision of any other agency
of the United States or any

[[Page S2571]]

State in the exercise of the rights, powers, and privileges
of the Agency.
``(b) Powers and Duties of the Agency as Conservator or
Receiver.--
``(1) Rulemaking authority of the agency.--The Agency may
prescribe such regulations as the Agency determines to be
appropriate regarding the conduct of conservatorships or
receiverships.
``(2) General powers.--
``(A) Successor to regulated entity.--The Agency shall, as
conservator or receiver, and by operation of law, immediately
succeed to--
``(i) all rights, titles, powers, and privileges of the
regulated entity, and of any stockholder, officer, or
director of such regulated entity with respect to the
regulated entity and the assets of the regulated entity; and
``(ii) title to the books, records, and assets of any other
legal custodian of such regulated entity.
``(B) Operate the regulated entity.--The Agency may, as
conservator or receiver--
``(i) take over the assets of and operate the regulated
entity with all the powers of the shareholders, the
directors, and the officers of the regulated entity and
conduct all business of the regulated entity;
``(ii) collect all obligations and money due the regulated
entity;
``(iii) perform all functions of the regulated entity in
the name of the regulated entity which are consistent with
the appointment as conservator or receiver; and
``(iv) preserve and conserve the assets and property of
such regulated entity.
``(C) Functions of officers, directors, and shareholders of
a regulated entity.--The Agency may, by regulation or order,
provide for the exercise of any function by any stockholder,
director, or officer of any regulated entity for which the
Agency has been named conservator or receiver.
``(D) Powers as conservator.--The Agency may, as
conservator, take such action as may be--
``(i) necessary to put the regulated entity in a sound and
solvent condition; and
``(ii) appropriate to carry on the business of the
regulated entity and preserve and conserve the assets and
property of the regulated entity, including, if two or more
Federal home loan banks have been placed in conservatorship
contemporaneously, merging two or more such banks into a
single Federal home loan bank.
``(E) Additional powers as receiver.--The Agency may, as
receiver, place the regulated entity in liquidation and
proceed to realize upon the assets of the regulated entity,
having due regard to the conditions of the housing finance
market.
``(F) Organization of new regulated entities.--The Agency
may, as receiver, organize a successor regulated entity that
will operate pursuant to subsection (i).
``(G) Transfer of assets and liabilities.--The Agency may,
as conservator or receiver, transfer any asset or liability
of the regulated entity in default without any approval,
assignment, or consent with respect to such transfer. Any
Federal home loan bank may, with the approval of the Agency,
acquire the assets of any Bank in conservatorship or
receivership, and assume the liabilities of such Bank.
``(H) Payment of valid obligations.--The Agency, as
conservator or receiver, shall, to the extent of proceeds
realized from the performance of contracts or sale of the
assets of a regulated entity, pay all valid obligations of
the regulated entity in accordance with the prescriptions and
limitations of this section.
``(I) Subpoena authority.--
``(i) In general.--

``(I) In general.--The Agency may, as conservator or
receiver, and for purposes of carrying out any power,
authority, or duty with respect to a regulated entity
(including determining any claim against the regulated entity
and determining and realizing upon any asset of any person in
the course of collecting money due the regulated entity),
exercise any power established under section 1348.
``(II) Applicability of law.--The provisions of section
1348 shall apply with respect to the exercise of any power
exercised under this subparagraph in the same manner as such
provisions apply under that section.

``(ii) Authority of director.--A subpoena or subpoena duces
tecum may be issued under clause (i) only by, or with the
written approval of, the Director, or the designee of the
Director.
``(iii) Rule of construction.--This subsection shall not be
construed to limit any rights that the Agency, in any
capacity, might otherwise have under section 1317 or 1379D.
``(J) Contracting for services.--The Agency may, as
conservator or receiver, provide by contract for the carrying
out of any of its functions, activities, actions, or duties
as conservator or receiver.
``(K) Incidental powers.--The Agency may, as conservator or
receiver--
``(i) exercise all powers and authorities specifically
granted to conservators or receivers, respectively, under
this section, and such incidental powers as shall be
necessary to carry out such powers; and
``(ii) take any action authorized by this section, which
the Agency determines is in the best interests of the
regulated entity or the Agency.
``(3) Authority of receiver to determine claims.--
``(A) In general.--The Agency may, as receiver, determine
claims in accordance with the requirements of this subsection
and any regulations prescribed under paragraph (4).
``(B) Notice requirements.--The receiver, in any case
involving the liquidation or winding up of the affairs of a
closed regulated entity, shall--
``(i) promptly publish a notice to the creditors of the
regulated entity to present their claims, together with
proof, to the receiver by a date specified in the notice
which shall be not less than 90 days after the publication of
such notice; and
``(ii) republish such notice approximately 1 month and 2
months, respectively, after the publication under clause (i).
``(C) Mailing required.--The receiver shall mail a notice
similar to the notice published under subparagraph (B)(i) at
the time of such publication to any creditor shown on the
books of the regulated entity--
``(i) at the last address of the creditor appearing in such
books; or
``(ii) upon discovery of the name and address of a claimant
not appearing on the books of the regulated entity within 30
days after the discovery of such name and address.
``(4) Rulemaking authority relating to determination of
claims.--Subject to subsection (c), the Director may
prescribe regulations regarding the allowance or disallowance
of claims by the receiver and providing for administrative
determination of claims and review of such determination.
``(5) Procedures for determination of claims.--
``(A) Determination period.--
``(i) In general.--Before the end of the 180-day period
beginning on the date on which any claim against a regulated
entity is filed with the Agency as receiver, the Agency shall
determine whether to allow or disallow the claim and shall
notify the claimant of any determination with respect to such
claim.
``(ii) Extension of time.--The period described in clause
(i) may be extended by a written agreement between the
claimant and the Agency.
``(iii) Mailing of notice sufficient.--The notification
requirements of clause (i) shall be deemed to be satisfied if
the notice of any determination with respect to any claim is
mailed to the last address of the claimant which appears--

``(I) on the books of the regulated entity;
``(II) in the claim filed by the claimant; or
``(III) in documents submitted in proof of the claim.

``(iv) Contents of notice of disallowance.--If any claim
filed under clause (i) is disallowed, the notice to the
claimant shall contain--

``(I) a statement of each reason for the disallowance; and
``(II) the procedures available for obtaining agency review
of the determination to disallow the claim or judicial
determination of the claim.

``(B) Allowance of proven claim.--The receiver shall allow
any claim received on or before the date specified in the
notice published under paragraph (3)(B)(i), or the date
specified in the notice required under paragraph (3)(C),
which is proved to the satisfaction of the receiver.
``(C) Disallowance of claims filed after end of filing
period.--Claims filed after the date specified in the notice
published under paragraph (3)(B)(i), or the date specified
under paragraph (3)(C), shall be disallowed and such
disallowance shall be final.
``(D) Authority to disallow claims.--
``(i) In general.--The receiver may disallow any portion of
any claim by a creditor or claim of security, preference, or
priority which is not proved to the satisfaction of the
receiver.
``(ii) Payments to less than fully secured creditors.--In
the case of a claim of a creditor against a regulated entity
which is secured by any property or other asset of such
regulated entity, the receiver--

``(I) may treat the portion of such claim which exceeds an
amount equal to the fair market value of such property or
other asset as an unsecured claim against the regulated
entity; and
``(II) may not make any payment with respect to such
unsecured portion of the claim other than in connection with
the disposition of all claims of unsecured creditors of the
regulated entity.

``(iii) Exceptions.--No provision of this paragraph shall
apply with respect to any extension of credit from any
Federal Reserve Bank, Federal home loan bank, or the Treasury
of the United States.
``(E) No judicial review of determination pursuant to
subparagraph (D).--No court may review the determination of
the Agency under subparagraph (D) to disallow a claim. This
subparagraph shall not affect the authority of a claimant to
obtain de novo judicial review of a claim pursuant to
paragraph (6).
``(F) Legal effect of filing.--
``(i) Statute of limitation tolled.--For purposes of any
applicable statute of limitations, the filing of a claim with
the receiver shall constitute a commencement of an action.
``(ii) No prejudice to other actions.--Subject to paragraph
(10), the filing of a claim with the receiver shall not
prejudice any right of the claimant to continue any action
which was filed before the date of the appointment of the
receiver, subject to the determination of claims by the
receiver.
``(6) Provision for judicial determination of claims.--

[[Page S2572]]

``(A) In general.--The claimant may file suit on a claim
(or continue an action commenced before the appointment of
the receiver) in the district or territorial court of the
United States for the district within which the principal
place of business of the regulated entity is located or the
United States District Court for the District of Columbia
(and such court shall have jurisdiction to hear such claim),
before the end of the 60-day period beginning on the earlier
of--
``(i) the end of the period described in paragraph
(5)(A)(i) with respect to any claim against a regulated
entity for which the Agency is receiver; or
``(ii) the date of any notice of disallowance of such claim
pursuant to paragraph (5)(A)(i).
``(B) Statute of limitations.--A claim shall be deemed to
be disallowed (other than any portion of such claim which was
allowed by the receiver), and such disallowance shall be
final, and the claimant shall have no further rights or
remedies with respect to such claim, if the claimant fails,
before the end of the 60-day period described under
subparagraph (A), to file suit on such claim (or continue an
action commenced before the appointment of the receiver).
``(7) Review of claims.--
``(A) Other review procedures.--
``(i) In general.--The Agency shall establish such
alternative dispute resolution processes as may be
appropriate for the resolution of claims filed under
paragraph (5)(A)(i).
``(ii) Criteria.--In establishing alternative dispute
resolution processes, the Agency shall strive for procedures
which are expeditious, fair, independent, and low cost.
``(iii) Voluntary binding or nonbinding procedures.--The
Agency may establish both binding and nonbinding processes,
which may be conducted by any government or private party.
All parties, including the claimant and the Agency, must
agree to the use of the process in a particular case.
``(B) Consideration of incentives.--The Agency shall seek
to develop incentives for claimants to participate in the
alternative dispute resolution process.
``(8) Expedited determination of claims.--
``(A) Establishment required.--The Agency shall establish a
procedure for expedited relief outside of the routine claims
process established under paragraph (5) for claimants who--
``(i) allege the existence of legally valid and enforceable
or perfected security interests in assets of any regulated
entity for which the Agency has been appointed receiver; and
``(ii) allege that irreparable injury will occur if the
routine claims procedure is followed.
``(B) Determination period.--Before the end of the 90-day
period beginning on the date any claim is filed in accordance
with the procedures established under subparagraph (A), the
Director shall--
``(i) determine--

``(I) whether to allow or disallow such claim; or
``(II) whether such claim should be determined pursuant to
the procedures established under paragraph (5); and

``(ii) notify the claimant of the determination, and if the
claim is disallowed, provide a statement of each reason for
the disallowance and the procedure for obtaining agency
review or judicial determination.
``(C) Period for filing or renewing suit.--Any claimant who
files a request for expedited relief shall be permitted to
file a suit, or to continue a suit filed before the
appointment of the receiver, seeking a determination of the
rights of the claimant with respect to such security interest
after the earlier of--
``(i) the end of the 90-day period beginning on the date of
the filing of a request for expedited relief; or
``(ii) the date the Agency denies the claim.
``(D) Statute of limitations.--If an action described under
subparagraph (C) is not filed, or the motion to renew a
previously filed suit is not made, before the end of the 30-
day period beginning on the date on which such action or
motion may be filed under subparagraph (B), the claim shall
be deemed to be disallowed as of the end of such period
(other than any portion of such claim which was allowed by
the receiver), such disallowance shall be final, and the
claimant shall have no further rights or remedies with
respect to such claim.
``(E) Legal effect of filing.--
``(i) Statute of limitation tolled.--For purposes of any
applicable statute of limitations, the filing of a claim with
the receiver shall constitute a commencement of an action.
``(ii) No prejudice to other actions.--Subject to paragraph
(10), the filing of a claim with the receiver shall not
prejudice any right of the claimant to continue any action
that was filed before the appointment of the receiver,
subject to the determination of claims by the receiver.
``(9) Payment of claims.--
``(A) In general.--The receiver may, in the discretion of
the receiver, and to the extent funds are available from the
assets of the regulated entity, pay creditor claims, in such
manner and amounts as are authorized under this section,
which are--
``(i) allowed by the receiver;
``(ii) approved by the Agency pursuant to a final
determination pursuant to paragraph (7) or (8); or
``(iii) determined by the final judgment of any court of
competent jurisdiction.
``(B) Agreements against the interest of the agency.--No
agreement that tends to diminish or defeat the interest of
the Agency in any asset acquired by the Agency as receiver
under this section shall be valid against the Agency unless
such agreement is in writing, and executed by an authorized
official of the regulated entity, except that such
requirements for qualified financial contracts shall be
applied in a manner consistent with reasonable business
trading practices in the financial contracts market.
``(C) Payment of dividends on claims.--The receiver may, in
the sole discretion of the receiver, pay from the assets of
the regulated entity dividends on proved claims at any time,
and no liability shall attach to the Agency, by reason of any
such payment, for failure to pay dividends to a claimant
whose claim is not proved at the time of any such payment.
``(D) Rulemaking authority of the director.--The Director
may prescribe such rules, including definitions of terms, as
the Director deems appropriate to establish a single uniform
interest rate for, or to make payments of post-insolvency
interest to creditors holding proven claims against the
receivership estates of regulated entities following
satisfaction by the receiver of the principal amount of all
creditor claims.
``(10) Suspension of legal actions.--
``(A) In general.--After the appointment of a conservator
or receiver for a regulated entity, the conservator or
receiver may, in any judicial action or proceeding to which
such regulated entity is or becomes a party, request a stay
for a period not to exceed--
``(i) 45 days, in the case of any conservator; and
``(ii) 90 days, in the case of any receiver.
``(B) Grant of stay by all courts required.--Upon receipt
of a request by any conservator or receiver under
subparagraph (A) for a stay of any judicial action or
proceeding in any court with jurisdiction of such action or
proceeding, the court shall grant such stay as to all
parties.
``(11) Additional rights and duties.--
``(A) Prior final adjudication.--The Agency shall abide by
any final unappealable judgment of any court of competent
jurisdiction which was rendered before the appointment of the
Agency as conservator or receiver.
``(B) Rights and remedies of conservator or receiver.--In
the event of any appealable judgment, the Agency as
conservator or receiver shall--
``(i) have all the rights and remedies available to the
regulated entity (before the appointment of such conservator
or receiver) and the Agency, including removal to Federal
court and all appellate rights; and
``(ii) not be required to post any bond in order to pursue
such remedies.
``(C) No attachment or execution.--No attachment or
execution may issue by any court upon assets in the
possession of the receiver.
``(D) Limitation on judicial review.--Except as otherwise
provided in this subsection, no court shall have jurisdiction
over--
``(i) any claim or action for payment from, or any action
seeking a determination of rights with respect to, the assets
of any regulated entity for which the Agency has been
appointed receiver; or
``(ii) any claim relating to any act or omission of such
regulated entity or the Agency as receiver.
``(E) Disposition of assets.--In exercising any right,
power, privilege, or authority as conservator or receiver in
connection with any sale or disposition of assets of a
regulated entity for which the Agency has been appointed
conservator or receiver, the Agency shall conduct its
operations in a manner which maintains stability in the
housing finance markets and, to the extent consistent with
that goal--
``(i) maximizes the net present value return from the sale
or disposition of such assets;
``(ii) minimizes the amount of any loss realized in the
resolution of cases; and
``(iii) ensures adequate competition and fair and
consistent treatment of offerors.
``(12) Statute of limitations for actions brought by
conservator or receiver.--
``(A) In general.--Notwithstanding any provision of any
contract, the applicable statute of limitations with regard
to any action brought by the Agency as conservator or
receiver shall be--
``(i) in the case of any contract claim, the longer of--

``(I) the 6-year period beginning on the date the claim
accrues; or
``(II) the period applicable under State law; and

``(ii) in the case of any tort claim, the longer of--

``(I) the 3-year period beginning on the date the claim
accrues; or
``(II) the period applicable under State law.

``(B) Determination of the date on which a claim accrues.--
For purposes of subparagraph (A), the date on which the
statute of limitations begins to run on any claim described
in such subparagraph shall be the later of--
``(i) the date of the appointment of the Agency as
conservator or receiver; or
``(ii) the date on which the cause of action accrues.
``(13) Revival of expired state causes of action.--
``(A) In general.--In the case of any tort claim described
under subparagraph (B) for

[[Page S2573]]

which the statute of limitations applicable under State law
with respect to such claim has expired not more than 5 years
before the appointment of the Agency as conservator or
receiver, the Agency may bring an action as conservator or
receiver on such claim without regard to the expiration of
the statute of limitation applicable under State law.
``(B) Claims described.--A tort claim referred to under
subparagraph (A) is a claim arising from fraud, intentional
misconduct resulting in unjust enrichment, or intentional
misconduct resulting in substantial loss to the regulated
entity.
``(14) Accounting and recordkeeping requirements.--
``(A) In general.--The Agency as conservator or receiver
shall, consistent with the accounting and reporting practices
and procedures established by the Agency, maintain a full
accounting of each conservatorship and receivership or other
disposition of a regulated entity in default.
``(B) Annual accounting or report.--With respect to each
conservatorship or receivership, the Agency shall make an
annual accounting or report available to the Board, the
Comptroller General of the United States, the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of
Representatives.
``(C) Availability of reports.--Any report prepared under
subparagraph (B) shall be made available by the Agency upon
request to any shareholder of a regulated entity or any
member of the public.
``(D) Recordkeeping requirement.--After the end of the 6-
year period beginning on the date that the conservatorship or
receivership is terminated by the Director, the Agency may
destroy any records of such regulated entity which the
Agency, in the discretion of the Agency, determines to be
unnecessary unless directed not to do so by a court of
competent jurisdiction or governmental agency, or prohibited
by law.
``(15) Fraudulent transfers.--
``(A) In general.--The Agency, as conservator or receiver,
may avoid a transfer of any interest of a regulated entity-
affiliated party, or any person who the conservator or
receiver determines is a debtor of the regulated entity, in
property, or any obligation incurred by such party or person,
that was made within 5 years of the date on which the Agency
was appointed conservator or receiver, if such party or
person voluntarily or involuntarily made such transfer or
incurred such liability with the intent to hinder, delay, or
defraud the regulated entity, the Agency, the conservator, or
receiver.
``(B) Right of recovery.--To the extent a transfer is
avoided under subparagraph (A), the conservator or receiver
may recover, for the benefit of the regulated entity, the
property transferred, or, if a court so orders, the value of
such property (at the time of such transfer) from--
``(i) the initial transferee of such transfer or the
regulated entity-affiliated party or person for whose benefit
such transfer was made; or
``(ii) any immediate or mediate transferee of any such
initial transferee.
``(C) Rights of transferee or obligee.--The conservator or
receiver may not recover under subparagraph (B) from--
``(i) any transferee that takes for value, including
satisfaction or securing of a present or antecedent debt, in
good faith; or
``(ii) any immediate or mediate good faith transferee of
such transferee.
``(D) Rights under this paragraph.--The rights under this
paragraph of the conservator or receiver described under
subparagraph (A) shall be superior to any rights of a trustee
or any other party (other than any party which is a Federal
agency) under title 11, United States Code.
``(16) Attachment of assets and other injunctive relief.--
Subject to paragraph (17), any court of competent
jurisdiction may, at the request of the conservator or
receiver, issue an order in accordance with Rule 65 of the
Federal Rules of Civil Procedure, including an order placing
the assets of any person designated by the Agency or such
conservator under the control of the court, and appointing a
trustee to hold such assets.
``(17) Standards of proof.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any proceeding
under paragraph (16) without regard to the requirement of
such rule that the applicant show that the injury, loss, or
damage is irreparable and immediate.
``(18) Treatment of claims arising from breach of contracts
executed by the receiver or conservator.--
``(A) In general.--Notwithstanding any other provision of
this subsection, any final and unappealable judgment for
monetary damages entered against a receiver or conservator
for the breach of an agreement executed or approved in
writing by such receiver or conservator after the date of its
appointment, shall be paid as an administrative expense of
the receiver or conservator.
``(B) No limitation of power.--Nothing in this paragraph
shall be construed to limit the power of a receiver or
conservator to exercise any rights under contract or law,
including to terminate, breach, cancel, or otherwise
discontinue such agreement.
``(19) General exceptions.--
``(A) Limitations.--The rights of a conservator or receiver
appointed under this section shall be subject to the
limitations on the powers of a receiver under sections 402
through 407 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4402 through 4407).
``(B) Mortgages held in trust.--
``(i) In general.--Any mortgage, pool of mortgages, or
interest in a pool of mortgages, held in trust, custodial, or
agency capacity by a regulated entity for the benefit of
persons other than the regulated entity shall not be
available to satisfy the claims of creditors generally.
``(ii) Holding of mortgages.--Any mortgage, pool of
mortgages, or interest in a pool of mortgages, described
under clause (i) shall be held by the conservator or receiver
appointed under this section for the beneficial owners of
such mortgage, pool of mortgages, or interest in a pool of
mortgages in accordance with the terms of the agreement
creating such trust, custodial, or other agency arrangement.
``(iii) Liability of receiver.--The liability of a receiver
appointed under this section for damages shall, in the case
of any contingent or unliquidated claim relating to the
mortgages held in trust, be estimated in accordance set forth
in the regulations of the Director.
``(c) Priority of Expenses and Unsecured Claims.--
``(1) In general.--Unsecured claims against a regulated
entity, or a receiver, that are proven to the satisfaction of
the receiver shall have priority in the following order:
``(A) Administrative expenses of the receiver.
``(B) Any other general or senior liability of the
regulated entity and claims of other Federal home loan banks
arising from their payment obligations (including joint and
several payment obligations).
``(C) Any obligation subordinated to general creditors.
``(D) Any obligation to shareholders or members arising as
a result of their status as shareholder or members.
``(2) Creditors similarly situated.--All creditors that are
similarly situated under paragraph (1) shall be treated in a
similar manner, except that the Agency may make such other
payments to creditors necessary to maximize the present value
return from the sale or disposition or such regulated
entity's assets or to minimize the amount of any loss
realized in the resolution of cases so long as all creditors
similarly situated receive not less than the amount provided
under subsection (e)(2).
``(3) Definition.--The term `administrative expenses of the
receiver' shall include the actual, necessary costs and
expenses incurred by the receiver in preserving the assets of
the regulated entity or liquidating or otherwise resolving
the affairs of the regulated entity. Such expenses shall
include obligations that are incurred by the receiver after
appointment as receiver that the Director determines are
necessary and appropriate to facilitate the smooth and
orderly liquidation or other resolution of the regulated
entity.
``(d) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
``(1) Authority to repudiate contracts.--In addition to any
other rights a conservator or receiver may have, the
conservator or receiver for any regulated entity may
disaffirm or repudiate any contract or lease--
``(A) to which such regulated entity is a party;
``(B) the performance of which the conservator or receiver,
in its sole discretion, determines to be burdensome; and
``(C) the disaffirmance or repudiation of which the
conservator or receiver determines, in its sole discretion,
will promote the orderly administration of the affairs of the
regulated entity.
``(2) Timing of repudiation.--The conservator or receiver
shall determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable period
following such appointment.
``(3) Claims for damages for repudiation.--
``(A) In general.--Except as otherwise provided under
subparagraph (C) and paragraphs (4), (5), and (6), the
liability of the conservator or receiver for the
disaffirmance or repudiation of any contract pursuant to
paragraph (1) shall be--
``(i) limited to actual direct compensatory damages; and
``(ii) determined as of--

``(I) the date of the appointment of the conservator or
receiver; or
``(II) in the case of any contract or agreement referred to
in paragraph (8), the date of the disaffirmance or
repudiation of such contract or agreement.

``(B) No liability for other damages.--For purposes of
subparagraph (A), the term `actual direct compensatory
damages' shall not include--
``(i) punitive or exemplary damages;
``(ii) damages for lost profits or opportunity; or
``(iii) damages for pain and suffering.
``(C) Measure of damages for repudiation of financial
contracts.--In the case of any qualified financial contract
or agreement to which paragraph (8) applies, compensatory
damages shall be--
``(i) deemed to include normal and reasonable costs of
cover or other reasonable measures of damages utilized in the
industries for such contract and agreement claims; and
``(ii) paid in accordance with this subsection and
subsection (e), except as otherwise specifically provided in
this section.

[[Page S2574]]

``(4) Leases under which the regulated entity is the
lessee.--
``(A) In general.--If the conservator or receiver
disaffirms or repudiates a lease under which the regulated
entity was the lessee, the conservator or receiver shall not
be liable for any damages (other than damages determined
under subparagraph (B)) for the disaffirmance or repudiation
of such lease.
``(B) Payments of rent.--Notwithstanding subparagraph (A),
the lessor under a lease to which that subparagraph applies
shall--
``(i) be entitled to the contractual rent accruing before
the later of the date--

``(I) the notice of disaffirmance or repudiation is mailed;
or
``(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of the
lease;

``(ii) have no claim for damages under any acceleration
clause or other penalty provision in the lease; and
``(iii) have a claim for any unpaid rent, subject to all
appropriate offsets and defenses, due as of the date of the
appointment, which shall be paid in accordance with this
subsection and subsection (e).
``(5) Leases under which the regulated entity is the
lessor.--
``(A) In general.--If the conservator or receiver
repudiates an unexpired written lease of real property of the
regulated entity under which the regulated entity is the
lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease may
either--
``(i) treat the lease as terminated by such repudiation; or
``(ii) remain in possession of the leasehold interest for
the balance of the term of the lease, unless the lessee
defaults under the terms of the lease after the date of such
repudiation.
``(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described under
subparagraph (A) remains in possession of a leasehold
interest under clause (ii) of such subparagraph--
``(i) the lessee--

``(I) shall continue to pay the contractual rent pursuant
to the terms of the lease after the date of the repudiation
of such lease; and
``(II) may offset against any rent payment which accrues
after the date of the repudiation of the lease, and any
damages which accrue after such date due to the
nonperformance of any obligation of the regulated entity
under the lease after such date; and

``(ii) the conservator or receiver shall not be liable to
the lessee for any damages arising after such date as a
result of the repudiation other than the amount of any offset
allowed under clause (i)(II).
``(6) Contracts for the sale of real property.--
``(A) In general.--If the conservator or receiver
repudiates any contract for the sale of real property and the
purchaser of such real property under such contract is in
possession, and is not, as of the date of such repudiation,
in default, such purchaser may either--
``(i) treat the contract as terminated by such repudiation;
or
``(ii) remain in possession of such real property.
``(B) Provisions applicable to purchaser remaining in
possession.--If any purchaser of real property under any
contract described under subparagraph (A) remains in
possession of such property under clause (ii) of such
subparagraph--
``(i) the purchaser--

``(I) shall continue to make all payments due under the
contract after the date of the repudiation of the contract;
and
``(II) may offset against any such payments any damages
which accrue after such date due to the nonperformance (after
such date) of any obligation of the regulated entity under
the contract; and

``(ii) the conservator or receiver shall--

``(I) not be liable to the purchaser for any damages
arising after such date as a result of the repudiation other
than the amount of any offset allowed under clause (i)(II);
``(II) deliver title to the purchaser in accordance with
the provisions of the contract; and
``(III) have no obligation under the contract other than
the performance required under subclause (II).

``(C) Assignment and sale allowed.--
``(i) In general.--No provision of this paragraph shall be
construed as limiting the right of the conservator or
receiver to assign the contract described under subparagraph
(A), and sell the property subject to the contract and the
provisions of this paragraph.
``(ii) No liability after assignment and sale.--If an
assignment and sale described under clause (i) is
consummated, the conservator or receiver shall have no
further liability under the contract described under
subparagraph (A), or with respect to the real property which
was the subject of such contract.
``(7) Provisions applicable to service contracts.--
``(A) Services performed before appointment.--In the case
of any contract for services between any person and any
regulated entity for which the Agency has been appointed
conservator or receiver, any claim of such person for
services performed before the appointment of the conservator
or the receiver shall be--
``(i) a claim to be paid in accordance with subsections (b)
and (e); and
``(ii) deemed to have arisen as of the date the conservator
or receiver was appointed.
``(B) Services performed after appointment and prior to
repudiation.--If, in the case of any contract for services
described under subparagraph (A), the conservator or receiver
accepts performance by the other person before the
conservator or receiver makes any determination to exercise
the right of repudiation of such contract under this
section--
``(i) the other party shall be paid under the terms of the
contract for the services performed; and
``(ii) the amount of such payment shall be treated as an
administrative expense of the conservatorship or
receivership.
``(C) Acceptance of performance no bar to subsequent
repudiation.--The acceptance by any conservator or receiver
of services referred to under subparagraph (B) in connection
with a contract described in such subparagraph shall not
affect the right of the conservator or receiver to repudiate
such contract under this section at any time after such
performance.
``(8) Certain qualified financial contracts.--
``(A) Rights of parties to contracts.--Subject to
paragraphs (9) and (10) and notwithstanding any other
provision of this Division, any other Federal law, or the law
of any State, no person shall be stayed or prohibited from
exercising--
``(i) any right such person has to cause the termination,
liquidation, or acceleration of any qualified financial
contract with a regulated entity that arises upon the
appointment of the Agency as receiver for such regulated
entity at any time after such appointment;
``(ii) any right under any security agreement or
arrangement or other credit enhancement relating to one or
more qualified financial contracts described in clause (i);
or
``(iii) any right to offset or net out any termination
value, payment amount, or other transfer obligation arising
under or in connection with 1 or more contracts and
agreements described in clause (i), including any master
agreement for such contracts or agreements.
``(B) Applicability of other provisions.--Paragraph (10) of
subsection (b) shall apply in the case of any judicial action
or proceeding brought against any receiver referred to under
subparagraph (A), or the regulated entity for which such
receiver was appointed, by any party to a contract or
agreement described under subparagraph (A)(i) with such
regulated entity.
``(C) Certain transfers not avoidable.--
``(i) In general.--Notwithstanding paragraph (11) or any
other Federal or State laws relating to the avoidance of
preferential or fraudulent transfers, the Agency, whether
acting as such or as conservator or receiver of a regulated
entity, may not avoid any transfer of money or other property
in connection with any qualified financial contract with a
regulated entity.
``(ii) Exception for certain transfers.--Clause (i) shall
not apply to any transfer of money or other property in
connection with any qualified financial contract with a
regulated entity if the Agency determines that the transferee
had actual intent to hinder, delay, or defraud such regulated
entity, the creditors of such regulated entity, or any
conservator or receiver appointed for such regulated entity.
``(D) Certain contracts and agreements defined.--In this
subsection:
``(i) Qualified financial contract.--The term `qualified
financial contract' means any securities contract, commodity
contract, forward contract, repurchase agreement, swap
agreement, and any similar agreement that the Agency
determines by regulation, resolution, or order to be a
qualified financial contract for purposes of this paragraph.
``(ii) Securities contract.--The term `securities
contract'--

``(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit, or mortgage loans or interests
therein (including any interest therein or based on the value
thereof) or any option on any of the foregoing, including any
option to purchase or sell any such security, certificate of
deposit, mortgage loan, interest, group or index, or option,
and including any repurchase or reverse repurchase
transaction on any such security, certificate of deposit,
mortgage loan, interest, group or index, or option;
``(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan unless the Agency determines by regulation, resolution,
or order to include any such agreement within the meaning of
such term;
``(III) means any option entered into on a national
securities exchange relating to foreign currencies;
``(IV) means the guarantee by or to any securities clearing
agency of any settlement of cash, securities, certificates of
deposit, mortgage loans or interests therein, group or index
of securities, certificates of deposit, or mortgage loans or
interests therein (including any interest therein or based on
the value thereof) or option on any of the foregoing,
including any option to purchase or sell any such security,
certificate of deposit, mortgage loan, interest, group or
index, or option;
``(V) means any margin loan;

[[Page S2575]]

``(VI) means any other agreement or transaction that is
similar to any agreement or transaction referred to in this
clause;
``(VII) means any combination of the agreements or
transactions referred to in this clause;
``(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
``(IX) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
(IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a securities contract under this
clause, except that the master agreement shall be considered
to be a securities contract under this clause only with
respect to each agreement or transaction under the master
agreement that is referred to in subclause (I), (III), (IV),
(V), (VI), (VII), or (VIII); and
``(X) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in this clause, including any guarantee or
reimbursement obligation in connection with any agreement or
transaction referred to in this clause.

``(iii) Commodity contract.--The term `commodity contract'
means--

``(I) with respect to a futures commission merchant, a
contract for the purchase or sale of a commodity for future
delivery on, or subject to the rules of, a contract market or
board of trade;
``(II) with respect to a foreign futures commission
merchant, a foreign future;
``(III) with respect to a leverage transaction merchant, a
leverage transaction;
``(IV) with respect to a clearing organization, a contract
for the purchase or sale of a commodity for future delivery
on, or subject to the rules of, a contract market or board of
trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a
contract market or board of trade that is cleared by such
clearing organization;
``(V) with respect to a commodity options dealer, a
commodity option;
``(VI) any other agreement or transaction that is similar
to any agreement or transaction referred to in this clause;
``(VII) any combination of the agreements or transactions
referred to in this clause;
``(VIII) any option to enter into any agreement or
transaction referred to in this clause;
``(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), (IV),
(V), (VI), (VII), or (VIII), together with all supplements to
any such master agreement, without regard to whether the
master agreement provides for an agreement or transaction
that is not a commodity contract under this clause, except
that the master agreement shall be considered to be a
commodity contract under this clause only with respect to
each agreement or transaction under the master agreement that
is referred to in subclause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII); or
``(X) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in this clause, including any guarantee or reimbursement
obligation in connection with any agreement or transaction
referred to in this clause.

``(iv) Forward contract.--The term `forward contract'
means--

``(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar
good, article, service, right, or interest which is presently
or in the future becomes the subject of dealing in the
forward contract trade, or product or byproduct thereof, with
a maturity date more than 2 days after the date the contract
is entered into, including, a repurchase transaction, reverse
repurchase transaction, consignment, lease, swap, hedge
transaction, deposit, loan, option, allocated transaction,
unallocated transaction, or any other similar agreement;
``(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
``(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
``(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III),
together with all supplements to any such master agreement,
without regard to whether the master agreement provides for
an agreement or transaction that is not a forward contract
under this clause, except that the master agreement shall be
considered to be a forward contract under this clause only
with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
or (III); or
``(V) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in subclause (I), (II), (III), or (IV), including any
guarantee or reimbursement obligation in connection with any
agreement or transaction referred to in any such subclause.

``(v) Repurchase agreement.--The term `repurchase
agreement' (which definition also applies to a reverse
repurchase agreement)--

``(I) means an agreement, including related terms, which
provides for the transfer of one or more certificates of
deposit, mortgage-related securities (as such term is defined
in the Securities Exchange Act of 1934), mortgage loans,
interests in mortgage-related securities or mortgage loans,
eligible bankers' acceptances, qualified foreign government
securities or securities that are direct obligations of, or
that are fully guaranteed by, the United States or any agency
of the United States against the transfer of funds by the
transferee of such certificates of deposit, eligible bankers'
acceptances, securities, mortgage loans, or interests with a
simultaneous agreement by such transferee to transfer to the
transferor thereof certificates of deposit, eligible bankers'
acceptances, securities, mortgage loans, or interests as
described above, at a date certain not later than 1 year
after such transfers or on demand, against the transfer of
funds, or any other similar agreement;
``(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan unless the Agency
determines by regulation, resolution, or order to include any
such participation within the meaning of such term;
``(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
``(IV) means any option to enter into any agreement or
transaction referred to in subclause (I) or (III);
``(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
or (IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
provides for an agreement or transaction that is not a
repurchase agreement under this clause, except that the
master agreement shall be considered to be a repurchase
agreement under this subclause only with respect to each
agreement or transaction under the master agreement that is
referred to in subclause (I), (III), or (IV); and
``(VI) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in subclause (I), (III), (IV), or (V), including
any guarantee or reimbursement obligation in connection with
any agreement or transaction referred to in any such
subclause.

For purposes of this clause, the term `qualified foreign
government security' means a security that is a direct
obligation of, or that is fully guaranteed by, the central
government of a member of the Organization for Economic
Cooperation and Development (as determined by regulation or
order adopted by the appropriate Federal banking authority).
``(vi) Swap agreement.--The term `swap agreement' means--

``(I) any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, future, or forward
agreement; an equity index or equity swap, option, future, or
forward agreement; a debt index or debt swap, option, future,
or forward agreement; a total return, credit spread or credit
swap, option, future, or forward agreement; a commodity index
or commodity swap, option, future, or forward agreement; or a
weather swap, weather derivative, or weather option;
``(II) any agreement or transaction that is similar to any
other agreement or transaction referred to in this clause and
that is of a type that has been, is presently, or in the
future becomes, the subject of recurrent dealings in the swap
markets (including terms and conditions incorporated by
reference in such agreement) and that is a forward, swap,
future, or option on one or more rates, currencies,
commodities, equity securities or other equity instruments,
debt securities or other debt instruments, quantitative
measures associated with an occurrence, extent of an
occurrence, or contingency associated with a financial,
commercial, or economic consequence, or economic or financial
indices or measures of economic or financial risk or value;
``(III) any combination of agreements or transactions
referred to in this clause;
``(IV) any option to enter into any agreement or
transaction referred to in this clause;
``(V) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), or
(IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
contains an agreement or transaction that is not a swap
agreement under this clause, except that the master agreement
shall be considered to be a swap agreement under this clause
only with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
(III), or (IV); and
``(VI) any security agreement or arrangement or other
credit enhancement related to any agreements or transactions
referred to in subclause (I), (II), (III), (IV), or (V),
including any guarantee or reimbursement obligation in
connection with any agreement or transaction referred to in
any such subclause.

Such term is applicable for purposes of this subsection only
and shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any

[[Page S2576]]

swap agreement under any other statute, regulation, or rule,
including the Securities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding Company Act of 1935,
the Trust Indenture Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act,
the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank
Products Act of 2000.
``(vii) Treatment of master agreement as one agreement.--
Any master agreement for any contract or agreement described
in any preceding clause of this subparagraph (or any master
agreement for such master agreement or agreements), together
with all supplements to such master agreement, shall be
treated as a single agreement and a single qualified
financial contract. If a master agreement contains provisions
relating to agreements or transactions that are not
themselves qualified financial contracts, the master
agreement shall be deemed to be a qualified financial
contract only with respect to those transactions that are
themselves qualified financial contracts.
``(viii) Transfer.--The term `transfer' means every mode,
direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or with
an interest in property, including retention of title as a
security interest and foreclosure of the regulated entity's
equity of redemption.
``(E) Certain protections in event of appointment of
conservator.--Notwithstanding any other provision of this Act
(other than paragraph (13) of this subsection), any other
Federal law, or the law of any State, no person shall be
stayed or prohibited from exercising--
``(i) any right such person has to cause the termination,
liquidation, or acceleration of any qualified financial
contract with a regulated entity in a conservatorship based
upon a default under such financial contract which is
enforceable under applicable noninsolvency law;
``(ii) any right under any security agreement or
arrangement or other credit enhancement relating to one or
more such qualified financial contracts; or
``(iii) any right to offset or net out any termination
values, payment amounts, or other transfer obligations
arising under or in connection with such qualified financial
contracts.
``(F) Clarification.--No provision of law shall be
construed as limiting the right or power of the Agency, or
authorizing any court or agency to limit or delay, in any
manner, the right or power of the Agency to transfer any
qualified financial contract in accordance with paragraphs
(9) and (10) of this subsection or to disaffirm or repudiate
any such contract in accordance with subsection (d)(1) of
this section.
``(G) Walkaway clauses not effective.--
``(i) In general.--Notwithstanding the provisions of
subparagraphs (A) and (E), and sections 403 and 404 of the
Federal Deposit Insurance Corporation Improvement Act of
1991, no walkaway clause shall be enforceable in a qualified
financial contract of a regulated entity in default.
``(ii) Walkaway clause defined.--For purposes of this
subparagraph, the term `walkaway clause' means a provision in
a qualified financial contract that, after calculation of a
value of a party's position or an amount due to or from 1 of
the parties in accordance with its terms upon termination,
liquidation, or acceleration of the qualified financial
contract, either does not create a payment obligation of a
party or extinguishes a payment obligation of a party in
whole or in part solely because of such party's status as a
nondefaulting party.
``(9) Transfer of qualified financial contracts.--In making
any transfer of assets or liabilities of a regulated entity
in default which includes any qualified financial contract,
the conservator or receiver for such regulated entity shall
either--
``(A) transfer to 1 person--
``(i) all qualified financial contracts between any person
(or any affiliate of such person) and the regulated entity in
default;
``(ii) all claims of such person (or any affiliate of such
person) against such regulated entity under any such contract
(other than any claim which, under the terms of any such
contract, is subordinated to the claims of general unsecured
creditors of such regulated entity);
``(iii) all claims of such regulated entity against such
person (or any affiliate of such person) under any such
contract; and
``(iv) all property securing or any other credit
enhancement for any contract described in clause (i) or any
claim described in clause (ii) or (iii) under any such
contract; or
``(B) transfer none of the financial contracts, claims, or
property referred to under subparagraph (A) (with respect to
such person and any affiliate of such person).
``(10) Notification of transfer.--
``(A) In general.--If--
``(i) the conservator or receiver for a regulated entity in
default makes any transfer of the assets and liabilities of
such regulated entity, and
``(ii) the transfer includes any qualified financial
contract,

the conservator or receiver shall notify any person who is a
party to any such contract of such transfer by 5:00 p.m.
(eastern time) on the business day following the date of the
appointment of the receiver in the case of a receivership, or
the business day following such transfer in the case of a
conservatorship.
``(B) Certain rights not enforceable.--
``(i) Receivership.--A person who is a party to a qualified
financial contract with a regulated entity may not exercise
any right that such person has to terminate, liquidate, or
net such contract under paragraph (8)(A) of this subsection
or section 403 or 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991, solely by reason of or
incidental to the appointment of a receiver for the regulated
entity (or the insolvency or financial condition of the
regulated entity for which the receiver has been appointed)--

``(I) until 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the receiver; or
``(II) after the person has received notice that the
contract has been transferred pursuant to paragraph (9)(A).

``(ii) Conservatorship.--A person who is a party to a
qualified financial contract with a regulated entity may not
exercise any right that such person has to terminate,
liquidate, or net such contract under paragraph (8)(E) of
this subsection or section 403 or 404 of the Federal Deposit
Insurance Corporation Improvement Act of 1991, solely by
reason of or incidental to the appointment of a conservator
for the regulated entity (or the insolvency or financial
condition of the regulated entity for which the conservator
has been appointed).
``(iii) Notice.--For purposes of this paragraph, the Agency
as receiver or conservator of a regulated entity shall be
deemed to have notified a person who is a party to a
qualified financial contract with such regulated entity if
the Agency has taken steps reasonably calculated to provide
notice to such person by the time specified in subparagraph
(A).
``(C) Business day defined.--For purposes of this
paragraph, the term `business day' means any day other than
any Saturday, Sunday, or any day on which either the New York
Stock Exchange or the Federal Reserve Bank of New York is
closed.
``(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of a conservator or receiver with respect to any
qualified financial contract to which a regulated entity is a
party, the conservator or receiver for such institution shall
either--
``(A) disaffirm or repudiate all qualified financial
contracts between--
``(i) any person or any affiliate of such person; and
``(ii) the regulated entity in default; or
``(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A) (with
respect to such person or any affiliate of such person).
``(12) Certain security interests not avoidable.--No
provision of this subsection shall be construed as permitting
the avoidance of any legally enforceable or perfected
security interest in any of the assets of any regulated
entity, except where such an interest is taken in
contemplation of the insolvency of the regulated entity, or
with the intent to hinder, delay, or defraud the regulated
entity or the creditors of such regulated entity.
``(13) Authority to enforce contracts.--
``(A) In general.--Notwithstanding any provision of a
contract providing for termination, default, acceleration, or
exercise of rights upon, or solely by reason of, insolvency
or the appointment of a conservator or receiver, the
conservator or receiver may enforce any contract or regulated
entity bond entered into by the regulated entity.
``(B) Certain rights not affected.--No provision of this
paragraph may be construed as impairing or affecting any
right of the conservator or receiver to enforce or recover
under a director's or officer's liability insurance contract
or surety bond under other applicable law.
``(C) Consent requirement.--
``(i) In general.--Except as otherwise provided under this
section, no person may exercise any right or power to
terminate, accelerate, or declare a default under any
contract to which a regulated entity is a party, or to obtain
possession of or exercise control over any property of the
regulated entity, or affect any contractual rights of the
regulated entity, without the consent of the conservator or
receiver, as appropriate, for a period of--

``(I) 45 days after the date of appointment of a
conservator; or

``(II) 90 days after the date of appointment of a receiver.

``(ii) Exceptions.--This paragraph shall--

``(I) not apply to a director's or officer's liability
insurance contract;
``(II) not apply to the rights of parties to any qualified
financial contracts under subsection (d)(8); and
``(III) not be construed as permitting the conservator or
receiver to fail to comply with otherwise enforceable
provisions of such contracts.

``(14) Savings clause.--The meanings of terms used in this
subsection are applicable for purposes of this subsection
only, and shall not be construed or applied so as to
challenge or affect the characterization, definition, or
treatment of any similar terms under any other statute,
regulation, or rule, including the Gramm-Leach-Bliley Act,
the Legal Certainty for Bank Products Act of

[[Page S2577]]

2000, the securities laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of 1934), and the
Commodity Exchange Act.
``(15) Exception for federal reserve and federal home loan
banks.--No provision of this subsection shall apply with
respect to--
``(A) any extension of credit from any Federal home loan
bank or Federal Reserve Bank to any regulated entity; or
``(B) any security interest in the assets of the regulated
entity securing any such extension of credit.
``(e) Valuation of Claims in Default.--
``(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method which the Agency determines to utilize with respect to
a regulated entity in default or in danger of default,
including transactions authorized under subsection (i), this
subsection shall govern the rights of the creditors of such
regulated entity.
``(2) Maximum liability.--The maximum liability of the
Agency, acting as receiver or in any other capacity, to any
person having a claim against the receiver or the regulated
entity for which such receiver is appointed shall equal the
lesser of--
``(A) the amount such claimant would have received if the
Agency had liquidated the assets and liabilities of such
regulated entity without exercising the authority of the
Agency under subsection (i) of this section; or
``(B) the amount of proceeds realized from the performance
of contracts or sale of the assets of the regulated entity.
``(f) Limitation on Court Action.--Except as provided in
this section or at the request of the Director, no court may
take any action to restrain or affect the exercise of powers
or functions of the Agency as a conservator or a receiver.
``(g) Liability of Directors and Officers.--
``(1) In general.--A director or officer of a regulated
entity may be held personally liable for monetary damages in
any civil action by, on behalf of, or at the request or
direction of the Agency, which action is prosecuted wholly or
partially for the benefit of the Agency--
``(A) acting as conservator or receiver of such regulated
entity, or
``(B) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed by such
receiver or conservator,

for gross negligence, including any similar conduct or
conduct that demonstrates a greater disregard of a duty of
care (than gross negligence) including intentional tortious
conduct, as such terms are defined and determined under
applicable State law.
``(2) No limitation.--Nothing in this paragraph shall
impair or affect any right of the Agency under other
applicable law.
``(h) Damages.--In any proceeding related to any claim
against a director, officer, employee, agent, attorney,
accountant, appraiser, or any other party employed by or
providing services to a regulated entity, recoverable damages
determined to result from the improvident or otherwise
improper use or investment of any assets of the regulated
entity shall include principal losses and appropriate
interest.
``(i) Limited-Life Regulated Entities.--
``(1) Organization.--
``(A) Purpose.--If a regulated entity is in default, or if
the Agency anticipates that a regulated entity will default,
the Agency may organize a limited-life regulated entity with
those powers and attributes of the regulated entity in
default or in danger of default that the Director determines
necessary, subject to the provisions of this subsection. The
Director shall grant a temporary charter to the limited-life
regulated entity, and the limited-life regulated entity shall
operate subject to that charter.
``(B) Authorities.--Upon the creation of a limited-life
regulated entity under subparagraph (A), the limited-life
regulated entity may--
``(i) assume such liabilities of the regulated entity that
is in default or in danger of default as the Agency may, in
its discretion, determine to be appropriate, provided that
the liabilities assumed shall not exceed the amount of assets
of the limited-life regulated entity;
``(ii) purchase such assets of the regulated entity that is
in default, or in danger of default, as the Agency may, in
its discretion, determine to be appropriate; and
``(iii) perform any other temporary function which the
Agency may, in its discretion, prescribe in accordance with
this section.
``(2) Charter.--
``(A) Conditions.--The Agency may grant a temporary charter
if the Agency determines that the continued operation of the
regulated entity in default or in danger of default is in the
best interest of the national economy and the housing
markets.
``(B) Treatment as being in default for certain purposes.--
A limited-life regulated entity shall be treated as a
regulated entity in default at such times and for such
purposes as the Agency may, in its discretion, determine.
``(C) Management.--A limited-life regulated entity, upon
the granting of its charter, shall be under the management of
a board of directors consisting of not fewer than 5 nor more
than 10 members appointed by the Agency.
``(D) Bylaws.--The board of directors of a limited-life
regulated entity shall adopt such bylaws as may be approved
by the Agency.
``(3) Capital stock.--No capital stock need be paid into a
limited-life regulated entity by the Agency.
``(4) Investments.--Funds of a limited-life regulated
entity shall be kept on hand in cash, invested in obligations
of the United States or obligations guaranteed as to
principal and interest by the United States, or deposited
with the Agency, or any Federal Reserve bank.
``(5) Exempt status.--Notwithstanding any other provision
of Federal or State law, the limited-life regulated entity,
its franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by
any territory, dependency, or possession thereof, or by any
State, county, municipality, or local taxing authority.
``(6) Winding up.--
``(A) In general.--Subject to subparagraph (B), unless
Congress authorizes the sale of the capital stock of the
limited-life regulated entity, not later than 2 years after
the date of its organization, the Agency shall wind up the
affairs of the limited-life regulated entity.
``(B) Extension.--The Director may, in the discretion of
the Director, extend the status of the limited-life regulated
entity for 3 additional 1-year periods.
``(7) Transfer of assets and liabilities.--
``(A) In general.--
``(i) Transfer of assets and liabilities.--The Agency, as
receiver, may transfer any assets and liabilities of a
regulated entity in default, or in danger of default, to the
limited-life regulated entity in accordance with paragraph
(1).
``(ii) Subsequent transfers.--At any time after a charter
is transferred to a limited-life regulated entity, the
Agency, as receiver, may transfer any assets and liabilities
of such regulated entity in default, or in danger in default,
as the Agency may, in its discretion, determine to be
appropriate in accordance with paragraph (1).
``(iii) Effective without approval.--The transfer of any
assets or liabilities of a regulated entity in default, or in
danger of default, transferred to a limited-life regulated
entity shall be effective without any further approval under
Federal or State law, assignment, or consent with respect
thereto.
``(8) Proceeds.--To the extent that available proceeds from
the limited-life regulated entity exceed amounts required to
pay obligations, such proceeds may be paid to the regulated
entity in default, or in danger of default.
``(9) Powers.--
``(A) In general.--Each limited-life regulated entity
created under this subsection shall have all corporate powers
of, and be subject to the same provisions of law as, the
regulated entity in default or in danger of default to which
it relates, except that--
``(i) the Agency may--

``(I) remove the directors of a limited-life regulated
entity; and
``(II) fix the compensation of members of the board of
directors and senior management, as determined by the Agency
in its discretion, of a limited-life regulated entity;

``(ii) the Agency may indemnify the representatives for
purposes of paragraph (1)(B), and the directors, officers,
employees, and agents of a limited-life regulated entity on
such terms as the Agency determines to be appropriate; and
``(iii) the board of directors of a limited-life regulated
entity--

``(I) shall elect a chairperson who may also serve in the
position of chief executive officer, except that such person
shall not serve either as chairperson or as chief executive
officer without the prior approval of the Agency; and
``(II) may appoint a chief executive officer who is not
also the chairperson, except that such person shall not serve
as chief executive officer without the prior approval of the
Agency.

``(B) Stay of judicial action.--Any judicial action to
which a limited-life regulated entity becomes a party by
virtue of its acquisition of any assets or assumption of any
liabilities of a regulated entity in default shall be stayed
from further proceedings for a period of up to 45 days at the
request of the limited-life regulated entity. Such period may
be modified upon the consent of all parties.
``(10) Obtaining of credit and incurring of debt.--
``(A) In general.--The limited-life regulated entity may
obtain unsecured credit and incur unsecured debt in the
ordinary course of business.
``(B) Inability to obtain credit.--If the limited-life
regulated entity is unable to obtain unsecured credit the
Director may authorize the obtaining of credit or the
incurring of debt--
``(i) with priority over any or all administrative
expenses;
``(ii) secured by a lien on property that is not otherwise
subject to a lien; or
``(iii) secured by a junior lien on property that is
subject to a lien.
``(C) Limitations.--
``(i) In general.--The Director, after notice and a
hearing, may authorize the obtaining of credit or the
incurring of debt secured by a senior or equal lien on
property that is subject to a lien (other than mortgages that
collateralize the mortgage-backed securities issued or
guaranteed by the regulated entity) only if--

``(I) the limited-life regulated entity is unable to obtain
such credit otherwise; and

[[Page S2578]]

``(II) there is adequate protection of the interest of the
holder of the lien on the property which such senior or equal
lien is proposed to be granted.

``(ii) Burden of proof.--In any hearing under this
subsection, the Director has the burden of proof on the issue
of adequate protection.
``(D) Effect on debts and liens.--The reversal or
modification on appeal of an authorization under this
paragraph to obtain credit or incur debt, or of a grant under
this section of a priority or a lien, does not affect the
validity of any debt so incurred, or any priority or lien so
granted, to an entity that extended such credit in good
faith, whether or not such entity knew of the pendency of the
appeal, unless such authorization and the incurring of such
debt, or the granting of such priority or lien, were stayed
pending appeal.
``(11) Issuance of preferred debt.--A limited-life
regulated entity may, subject to the approval of the Director
and subject to such terms and conditions as the Director may
prescribe, issue notes, bonds, or other debt obligations of a
class to which all other debt obligations of the limited-life
regulated entity shall be subordinate in right and payment.
``(12) No federal status.--
``(A) Agency status.--A limited-life regulated entity is
not an agency, establishment, or instrumentality of the
United States.
``(B) Employee status.--Representatives for purposes of
paragraph (1)(B), interim directors, directors, officers,
employees, or agents of a limited-life regulated entity are
not, solely by virtue of service in any such capacity,
officers or employees of the United States. Any employee of
the Agency or of any Federal instrumentality who serves at
the request of the Agency as a representative for purposes of
paragraph (1)(B), interim director, director, officer,
employee, or agent of a limited-life regulated entity shall
not--
``(i) solely by virtue of service in any such capacity lose
any existing status as an officer or employee of the United
States for purposes of title 5, United States Code, or any
other provision of law; or
``(ii) receive any salary or benefits for service in any
such capacity with respect to a limited-life regulated entity
in addition to such salary or benefits as are obtained
through employment with the Agency or such Federal
instrumentality.
``(13) Additional powers.--In addition to any other powers
granted under this subsection, a limited-life regulated
entity may--
``(A) extend a maturity date or change in an interest rate
or other term of outstanding securities;
``(B) issue securities of the limited-life regulated
entity, for cash, for property, for existing securities, or
in exchange for claims or interests, or for any other
appropriate purposes; and
``(C) take any other action not inconsistent with this
section.
``(j) Other Exemptions.--When acting as a receiver, the
following provisions shall apply with respect to the Agency:
``(1) Exemption from taxation.--The Agency, including its
franchise, its capital, reserves, and surplus, and its
income, shall be exempt from all taxation imposed by any
State, country, municipality, or local taxing authority,
except that any real property of the Agency shall be subject
to State, territorial, county, municipal, or local taxation
to the same extent according to its value as other real
property is taxed, except that, notwithstanding the failure
of any person to challenge an assessment under State law of
the value of such property, and the tax thereon, shall be
determined as of the period for which such tax is imposed.
``(2) Exemption from attachment and liens.--No property of
the Agency shall be subject to levy, attachment, garnishment,
foreclosure, or sale without the consent of the Agency, nor
shall any involuntary lien attach to the property of the
Agency.
``(3) Exemption from penalties and fines.--The Agency shall
not be liable for any amounts in the nature of penalties or
fines, including those arising from the failure of any person
to pay any real property, personal property, probate, or
recording tax or any recording or filing fees when due.
``(k) Prohibition of Charter Revocation.--In no case may a
receiver appointed pursuant to this section revoke, annul, or
terminate the charter of a regulated entity.''.
(b) Conforming Amendments.--
(1) Housing and community development act of 1992.--
Subtitle B of title XIII of the Housing and Community
Development Act of 1992 is amended by striking sections 1369
(12 U.S.C. 4619), 1369A (12 U.S.C. 4620), and 1369B (12
U.S.C. 4621).
(2) Federal home loan banks.--Section 25 of the Federal
Home Loan Bank Act (12 U.S.C. 1445) is amended to read as
follows:

``SEC. 25. SUCCESSION OF FEDERAL HOME LOAN BANKS.

``Each Federal Home Loan Bank shall have succession until
it is voluntarily merged with another Bank under this Act, or
until it is merged, reorganized, rehabilitated, liquidated,
or otherwise wound up by the Director in accordance with the
provisions of section 1367 of the Housing and Community
Development Act of 1992, or by further Act of Congress.''.

SEC. 155. CONFORMING AMENDMENTS.

Title XIII of the Housing and Community Development Act of
1992, as amended by the preceding provisions of this
Division, is further amended--
(1) in sections 1365 (12 U.S.C. 4615) through 1369D (12
U.S.C. 4623), but not including section 1367 (12 U.S.C. 4617)
as amended by section 154 of this Division--
(A) by striking ``An enterprise'' each place such term
appears and inserting ``A regulated entity'';
(B) by striking ``an enterprise'' each place such term
appears and inserting ``a regulated entity''; and
(C) by striking ``the enterprise'' each place such term
appears and inserting ``the regulated entity'';
(2) in section 1366 (12 U.S.C. 4616)--
(A) in subsection (b)(7), by striking ``section 1369
(excluding subsection (a)(1) and (2))'' and inserting
``section 1367''; and
(B) in subsection (d), by striking ``the enterprises'' and
inserting ``the regulated entities'';
(3) in section 1368(d) (12 U.S.C. 4618(d)), by striking
``Committee on Banking, Finance and Urban Affairs'' and
inserting ``Committee on Financial Services'';
(4) in section 1369C (12 U.S.C. 4622)--
(A) in subsection (a)(4), by striking ``activities
(including existing and new programs)'' and inserting
``activities, services, undertakings, and offerings
(including existing and new products (as such term is defined
in section 1321(f))''; and
(B) in subsection (c), by striking ``any enterprise'' and
inserting ``any regulated entity''; and
(5) in subsections (a) and (d) of section 1369D, by
striking ``section 1366 or 1367 or action under section
1369)'' each place such phrase appears and inserting
``section 1367)''.

Subtitle D--Enforcement Actions

SEC. 161. CEASE-AND-DESIST PROCEEDINGS.

Section 1371 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4631) is amended--
(1) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Issuance for Unsafe or Unsound Practices and
Violations of Rules or Laws.--If, in the opinion of the
Director, a regulated entity or any regulated entity-
affiliated party is engaging or has engaged, or the Director
has reasonable cause to believe that the regulated entity or
any regulated entity-affiliated party is about to engage, in
an unsafe or unsound practice in conducting the business of
the regulated entity or is violating or has violated, or the
Director has reasonable cause to believe that the regulated
entity or any regulated entity-affiliated party is about to
violate, a law, rule, or regulation, or any condition imposed
in writing by the Director in connection with the granting of
any application or other request by the regulated entity or
any written agreement entered into with the Director, the
Director may issue and serve upon the regulated entity or
such party a notice of charges in respect thereof. The
Director may not, pursuant to this section, enforce
compliance 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 Federal National Mortgage Association Charter Act (12
U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1456(e), (f)), or with paragraph (5) of section 10(j)
of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)).
``(b) Issuance for Unsatisfactory Rating.--If a regulated
entity receives, in its most recent report of examination, a
less-than-satisfactory rating for asset quality, management,
earnings, or liquidity, the Director may (if the deficiency
is not corrected) deem the regulated entity to be engaging in
an unsafe or unsound practice for purposes of this
subsection.'';
(2) in subsection (c)(2), by striking ``enterprise,
executive officer, or director'' and inserting ``regulated
entity or regulated entity-affiliated party''; and
(3) in subsection (d)--
(A) in the matter preceding paragraph (1), by striking
``enterprise, executive officer, or director'' and inserting
``regulated entity or regulated entity-affiliated party'';
(B) in paragraph (1)--
(i) by striking ``an executive officer or a director'' and
inserting ``a regulated entity affiliated party''; and
(ii) by inserting ``(including reimbursement of
compensation under section 1318)'' after ``reimbursement'';
(C) in paragraph (6), by striking ``and'' at the end;
(D) by redesignating paragraph (7) as paragraph (8); and
(E) by inserting after paragraph (6) the following new
paragraph:
``(7) to effect an attachment on a regulated entity or
regulated entity-affiliated party subject to an order under
this section or section 1372; and''.

SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS.

Section 1372 of the Housing and Community Development 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 Director
determines that the violation or threatened violation or the
unsafe or unsound practice or practices specified in the

[[Page S2579]]

notice of charges served upon the regulated entity or any
regulated entity-affiliated party pursuant to section
1371(a), or the continuation thereof, is likely to cause
insolvency or significant dissipation of assets or earnings
of the regulated entity, or is likely to weaken the condition
of the regulated entity prior to the completion of the
proceedings conducted pursuant to sections 1371 and 1373, the
Director may issue a temporary order requiring the regulated
entity or such party to cease and desist from any such
violation or practice and to take affirmative action to
prevent or remedy such insolvency, dissipation, condition, or
prejudice pending completion of such proceedings. Such order
may include any requirement authorized under section
1371(d).'';
(2) in subsection (b), by striking ``enterprise, executive
officer, or director'' and inserting ``regulated entity or
regulated entity-affiliated party'';
(3) in subsection (d)--
(A) by striking ``An enterprise, executive officer, or
director'' and inserting ``A regulated entity or regulated
entity-affiliated party''; and
(B) by striking ``the enterprise, executive officer, or
director'' and inserting ``the regulated entity or regulated
entity-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 Director
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
regulated entity 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. 163. PREJUDGMENT ATTACHMENT.

The Housing and Community Development Act of 1992 is
amended by inserting after section 1375 (12 U.S.C. 4635) the
following new section:

``SEC. 1375A. PREJUDGMENT ATTACHMENT.

``(a) In General.--In any action brought pursuant to this
title, or in actions brought in aid of, or to enforce an
order in, any administrative or other civil action for money
damages, restitution, or civil money penalties brought
pursuant to this title, the court may, upon application of
the Director or Attorney General, as applicable, issue a
restraining order that--
``(1) prohibits any person subject to the proceeding from
withdrawing, transferring, removing, dissipating, or
disposing of any funds, assets or other property; and
``(2) appoints a person on a temporary basis to administer
the restraining order.
``(b) Standard.--
``(1) Showing.--Rule 65 of the Federal Rules of Civil
Procedure shall apply with respect to any proceeding under
subsection (a) without regard to the requirement of such rule
that the applicant show that the injury, loss, or damage is
irreparable and immediate.
``(2) State proceeding.--If, in the case of any proceeding
in a State court, the court determines that rules of civil
procedure available under the laws of such State provide
substantially similar protections to a party's right to due
process as Rule 65 (as modified with respect to such
proceeding by paragraph (1)), the relief sought under
subsection (a) may be requested under the laws of such
State.''.

SEC. 164. ENFORCEMENT AND JURISDICTION.

Section 1375 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4635) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Enforcement.--The Director may, in the discretion of
the Director, 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
regulated entity 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. 165. CIVIL MONEY PENALTIES.

Section 1376 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4636) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1), by striking ``,
or any executive officer or director'' and inserting ``or any
regulated-entity affiliated party''; and
(B) in paragraph (1)--
(i) by striking ``the Federal National Mortgage Association
Charter Act, the Federal Home Loan Mortgage Corporation Act''
and inserting ``any provision of any of the authorizing
statutes'';
(ii) by striking ``or Act'' and inserting ``or statute'';
(iii) by striking ``or subsection'' and inserting ``,
subsection''; and
(iv) by inserting ``, or paragraph (5) or (12) of section
10(j) of the Federal Home Loan Bank Act'' before the
semicolon at the end;
(2) by striking subsection (b) and inserting the following
new subsection:
``(b) Amount of Penalty.--
``(1) First tier.--Any regulated entity which, or any
regulated entity-affiliated party who--
``(A) violates any provision of this title, any provision
of any of the authorizing statutes, or any order, condition,
rule, or regulation under any such title or statute, except
that the Director may not, pursuant to this section, enforce
compliance 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 Federal National Mortgage Association Charter Act (12
U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section
307 of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1456(e), (f)), or with paragraph (5) or (12) of
section 10(j) of the Federal Home Loan Bank Act;
``(B) violates any final or temporary order or notice
issued pursuant to this title;
``(C) violates any condition imposed in writing by the
Director in connection with the grant of any application or
other request by such regulated entity; or
``(D) violates any written agreement between the regulated
entity and the Director,
shall forfeit and pay a civil money penalty of not more than
$10,000 for each day during which such violation continues.
``(2) Second tier.--Notwithstanding paragraph (1)--
``(A) if a regulated entity, or a regulated entity-
affiliated party--
``(i) commits any violation described in any subparagraph
of paragraph (1);
``(ii) recklessly engages in an unsafe or unsound practice
in conducting the affairs of such regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) the violation, practice, or breach--
``(i) is part of a pattern of misconduct;
``(ii) causes or is likely to cause more than a minimal
loss to such regulated entity; 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 paragraphs (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 subparagraph of paragraph (1);
``(ii) engages in any unsafe or unsound practice in
conducting the affairs of such regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) knowingly or recklessly causes a substantial loss to
such regulated entity 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 determined 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.'';
(3) in subsection (c)(1)(B), by striking ``enterprise,
executive officer, or director'' and inserting ``regulated
entity or regulated entity-affiliated party'';
(4) in subsection (d), by striking the first sentence and
inserting the following: ``If a regulated entity or regulated
entity-affiliated party fails to comply 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 subsection (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 Columbia, or
the United States district court within the jurisdiction of
which the headquarters of the regulated entity is located, to
obtain a monetary judgment 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 authorized by the
Director by rule, regulation, or order''.

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, 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 Director
determines that--
``(1) any regulated entity-affiliated party has, directly
or indirectly--

[[Page S2580]]

``(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;
``(B) engaged or participated in any unsafe or unsound
practice in connection with any regulated 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 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 soundness 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 such party, in any
manner, in the conduct of the affairs of any regulated
entity.
``(b) Suspension Order.--
``(1) Suspension or prohibition authority.--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 regulated entity; and
``(ii) serves such party with written notice of the
suspension order; and
``(B) prohibit the regulated entity from releasing to or on
behalf of the regulated entity-affiliated party any
compensation or other payment of money or other thing of
current or potential value in connection with any
resignation, removal, retirement, or other termination of
employment or office of the party.
``(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 regulated 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 such action, 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 Director 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 appear at the hearing in
person or by a duly authorized 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
suspension or removal from office, or prohibition from
participation in the conduct of the affairs of the regulated
entity, as it may deem appropriate, together with an order
prohibiting 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.
``(d) Prohibition of Certain Specific Activities.--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 transfer,
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 paragraph (2), any
person who, pursuant to an order issued under this section,
has been removed or suspended from office in a regulated
entity or prohibited 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 written consent.--If,
on or after the date an order is issued under this section
which removes or suspends from office any regulated entity-
affiliated party or prohibits such party from participating
in the conduct 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 entity described in the
written consent. If the Director grants such a written
consent, it shall publicly disclose such consent.
``(3) Violation of paragraph (1) treated as violation of
order.--Any violation of paragraph (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 specifically
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 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 prohibition.
``(h) Suspension or Removal of Regulated Entity-Affiliated
Party Charged With Felony.--
``(1) Suspension or prohibition.--
``(A) In general.--Whenever any regulated entity-affiliated
party is charged in any information, indictment, or
complaint, with the commission of or participation in a crime
involving dishonesty or breach of trust which is punishable
by imprisonment for a term exceeding one year under State or
Federal law, 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 regulated
entity, by written notice served upon such party--
``(i) suspend such party from office or prohibit such party
from further participation 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 regulated entity-affiliated party any
compensation or other payment of money or other thing of
current or potential value in connection with the period of
any such suspension or with any resignation, removal,
retirement, or other termination of employment or office of
the party.
``(B) Provisions applicable to notice.--
``(i) Copy.--A copy of any notice under paragraph (1)(A)
shall also be served upon the regulated entity.
``(ii) Effective period.--A suspension or prohibition under
subparagraph (A) shall remain in effect until the
information, indictment, or complaint referred to in such
subparagraph is finally disposed of or until terminated by
the Director.
``(2) Removal or prohibition.--
``(A) In general.--If a judgment of conviction or an
agreement to enter a pretrial diversion 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
regulated entity, issue and serve upon such party an order
that--
``(i) removes such party from office or prohibits such
party from further participation 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 regulated entity-affiliated party any
compensation or other payment of money or other thing of
current or potential value in connection with the termination
of employment or office of the party.
``(B) Provisions applicable to order.--
``(i) Copy.--A copy of any order under paragraph (2)(A)
shall also be served upon the regulated entity, whereupon 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 finding 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

[[Page S2581]]

entity affairs, and to prohibit compensation or other payment
of money or other thing of current or potential value in
connection with any resignation, removal, retirement, or
other termination of employment or office of the party,
pursuant to subsections (a), (d), or (e) of this section.
``(iii) Effective period.--Any notice of suspension or
order of removal issued under this subsection shall remain
effective and outstanding until the completion of any hearing
or appeal authorized under paragraph (4) unless terminated by
the Director.
``(3) Authority of remaining board members.--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 entity 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 director 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 participation.--Within 30
days from service of any notice of suspension or order of
removal issued pursuant to paragraph (1) or (2) of this
subsection, the regulated entity-affiliated party concerned
may request 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 regulated
entity by such party does not, or is not likely to, pose a
threat to the interests of the regulated entity 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 materials (or, at the
discretion of the Director, oral testimony) 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 regulated entity will be continued, terminated, or
otherwise modified, or whether the order removing such party
from office or prohibiting such party from further
participation in any manner in the conduct of the affairs of
the regulated entity, and prohibiting compensation in
connection with termination will be rescinded or otherwise
modified. Such notification shall contain a statement of the
basis for the Director's decision, if adverse to such party.
The Director is authorized 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 District of Columbia or in
the Federal judicial district in which the headquarters of
the regulated entity is located, unless the party afforded
the hearing consents to another place, and shall be conducted
in accordance 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 decision, it shall render its
decision (which shall include findings 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 provided, the Director 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 Director may modify, terminate, 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 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 Circuit
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 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. Review of such proceedings shall be had as
provided in chapter 7 of title 5, United States Code. The
judgment and decree of the court shall be final, except that
the same shall be subject to review by the Supreme 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 review under paragraph (2) shall
not, unless specifically 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 Federal National
Mortgage Association Charter Act (12 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 Development 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
action under section 1377 of the Housing and Community
Development Act of 1992 temporarily results in a lesser
number, the''.

SEC. 167. CRIMINAL PENALTY.

Subtitle C of title XIII of the Housing and Community
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 Division) the following new section:

``SEC. 1378. CRIMINAL PENALTY.

``Whoever, being subject to an order in effect under
section 1377, without the prior written approval of the
Director, 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 of
any regulated entity shall, notwithstanding section 3571 of
title 18, be fined not more than $1,000,000, imprisoned 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 redesignated by
section 166(a)(1) of this Division, is further amended--
(1) by striking ``request the Attorney General of the
United States to'' and inserting ``, in the discretion 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 Community
Development Act of 1992 (12 U.S.C. 4631 et seq.), as amended
by the preceding provisions of this Division, 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 redesignated by
section 166(a)(1) of this Division--
(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 inserting ``such director,
executive officer, or regulated entity-affiliated party'';
(3) in section 1379A (12 U.S.C. 4638), as so redesignated
by section 166(a)(1) of this Division, by inserting ``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 regulated
entity'';
(5) by striking ``an enterprise'' each place such term
appears in such subtitle and inserting ``a regulated
entity'';
(6) by striking ``the enterprise'' each place such term
appears in such subtitle and inserting ``the regulated
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.--
(1) In general.--Section 308(b) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723(b)) is
amended--
(A) in the first sentence, by striking ``eighteen persons,
five of whom shall be appointed annually by the President of
the United States, and the remainder of whom'' and inserting
``13 persons, or such other number that the Director
determines appropriate, 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) Transitional provision.--The amendments made by
paragraph (1) shall not apply

[[Page S2582]]

to any appointed position of the board of directors of the
Federal National Mortgage Association until the expiration of
the annual term for such position during which the effective
date under Section 185 occurs.
(b) Freddie Mac.--
(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 ``18 persons, 5 of
whom shall be appointed annually by the President of the
United States and the remainder of whom'' and inserting ``13
persons, or such other number as the Director determines
appropriate, 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 appointed member may
be removed from office by the President for good cause''; and
(C) in subparagraph (C)--
(i) by striking the first sentence; and
(ii) by striking ``elective''.
(2) Transitional provision.--The amendments 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 during which the effective date under Section 185
occurs.

SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY AND
SOUNDNESS, AND MISSION OF ENTERPRISES.

Not later than the expiration of the 12-month period
beginning on the effective date under section 185, the
Director of the Federal Housing Finance Agency shall submit 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 (including the use
of derivatives for hedging purposes), compared with off-
balance sheet liabilities of the enterprises (including
mortgage-backed securities guaranteed by the enterprises);
(3) an analysis of portfolio holdings for safety and
soundness purposes;
(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 Corporation 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 limited or reduced over time.

SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS.

(a) 1992 Act.--Title XIII of the Housing and Community
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 inserting
``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 striking ``Director of
the Office of Federal Housing Enterprise Oversight of the
Department of Housing and Urban Development'' and inserting
``Director of the Federal Housing Finance Agency''.
(d) Department of Housing and Urban Development 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) Exclusion from senior executive service.--Section
3132(a)(1)(D) of title 5, United States Code, is amended--
(A) by striking ``the Federal Housing Finance Board,''; and
(B) by striking ``the Office of Federal Housing Enterprise
Oversight of the Department 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 Appropriations Act.--
Section 10001 of the 1997 Emergency Supplemental
Appropriations Act for Recovery From Natural Disasters, and
for Overseas Peacekeeping Efforts, Including Those In Bosnia
(42 U.S.C. 3548) is amended--
(1) by striking ``the Government National Mortgage
Association, and the Office of Federal Housing Enterprise
Oversight'' and inserting ``and the Government National
Mortgage Association''; and
(2) by striking ``, the Government National Mortgage
Association, or the Office of Federal Housing Enterprise
Oversight'' and inserting ``or the Government National
Mortgage Association''.
(i) National Homeownership Trust Act.--Section 302(b)(4) of
the Cranston-Gonzalez National Affordable 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 Housing 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 alternatives to the current
secondary market system for housing finance, taking into
consideration changes in the structure of financial and
housing finance markets and institutions since the creation
of the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.
(b) Contents.--The study under this section shall--
(1) include, among the alternatives to the current
secondary market system analyzed--
(A) repeal of the chartering Acts for the Federal National
Mortgage Association and the Federal Home Loan Mortgage
Corporation;
(B) establishing bank-like mechanisms for granting new
charters for limited purposed mortgage securitization
entities;
(C) permitting the Director of the Federal Housing Finance
Agency to grant new charters for limited purpose mortgage
securitization entities, which shall include analyzing the
terms on which such charters should be granted, including
whether such charters should be sold, or whether such
charters and the charters for the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation
should be taxed or otherwise assessed a monetary price; and
(D) such other alternatives as the Director considers
appropriate;
(2) examine all of the issues involved in making the
transition to a completely private secondary mortgage market
system;
(3) examine the technological advancements the private
sector has made in providing liquidity in the secondary
mortgage market and how such advancements have affected
liquidity in the secondary mortgage market; and
(4) examine how taxpayers would be impacted by each
alternative system, including the complete privatization of
the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.
(c) Report.--The Director of the Federal Housing Finance
Agency shall submit a report to the Congress on the study not
later than the expiration of the 24-month period beginning on
the effective date under section 185.

SEC. 185. EFFECTIVE DATE.

Except as specifically provided otherwise in this title,
this title shall take effect on and the amendments made by
this title shall take effect on, and shall apply beginning
on, the expiration of the 6-month period beginning on the
date of the enactment of this Act.

TITLE II--FEDERAL HOME LOAN BANKS

SEC. 201. DEFINITIONS.

Section 2 of the Federal Home Loan Bank Act (12 U.S.C.
1422) is amended--
(1) by striking paragraphs (1), (10), and (11);
(2) by redesignating paragraphs (2) through (9) as
paragraphs (1) through (8), respectively;
(3) by redesignating paragraphs (12) and (13) as paragraphs
(9) and (10), respectively; and
(4) by adding at the end the following:
``(11) Director.--The term `Director' means the Director of
the Federal Housing Finance Agency.
``(12) Agency.--The term `Agency' means the Federal Housing
Finance Agency.''.

SEC. 202. DIRECTORS.

(a) Election.--Section 7 of the Federal Home Loan Bank Act
(12 U.S.C. 1427) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Number; Election; Qualifications; Conflicts of
Interest.--
``(1) In general.--The management of each Federal Home Loan
Bank shall be vested in a board of 13 directors, or such
other number as the Director determines appropriate, each of
whom shall be a citizen of the United States. All directors
of a Bank who are not independent directors pursuant to
paragraph (3) shall be elected by the members.
``(2) Member directors.--A majority of the directors of
each Bank shall be officers or directors of a member of such
Bank that is located in the district in which such Bank is
located.
``(3) Independent directors.--At least two-fifths of the
directors of each Bank shall be independent directors, who
shall be appointed by the Director of the Federal Housing
Finance Agency from a list of individuals

[[Page S2583]]

recommended by the Federal Housing Enterprise Board. The
Federal Housing Enterprise Board may recommend individuals
who are identified by the Board's own independent process or
included on a list of individuals recommended by the board of
directors of the Bank involved, which shall be submitted to
the Federal Housing Enterprise Board by such board of
directors. The number of individuals on any such list
submitted by a Bank's board of directors shall be equal to at
least two times the number of independent directorships to be
filled. All independent directors appointed shall meet the
following criteria:
``(A) In general.--Each independent director shall be a
bona fide resident of the district in which such Bank is
located.
``(B) Public interest directors.--At least 2 of the
independent directors under this paragraph of each Bank shall
be representatives chosen from organizations with more than a
2-year history of representing consumer or community
interests on banking services, credit needs, housing,
community development, economic development, or financial
consumer protections.
``(C) Other directors.--
``(i) Qualifications.--Each independent director that is
not a public interest director under subparagraph (B) shall
have demonstrated knowledge of, or experience in, financial
management, auditing and accounting, risk management
practices, derivatives, project development, or
organizational management, or such other knowledge or
expertise as the Director may provide by regulation.
``(ii) Consultation with banks.--In appointing other
directors to serve on the board of a Federal home loan bank,
the Director of the Federal Housing Finance Agency may
consult with each Federal home loan bank about the knowledge,
skills, and expertise needed to assist the board in better
fulfilling its responsibilities.
``(D) Conflicts of interest.--Notwithstanding subsection
(f)(2), an independent director under this paragraph of a
Bank may not, during such director's term of office, serve as
an officer of any Federal Home Loan Bank or as a director or
officer of any member of a Bank.
``(E) Community demographics.--In appointing independent
directors of a Bank pursuant to this paragraph, the Director
shall take into consideration the demographic makeup of the
community most served by the Affordable Housing Program of
the Bank pursuant to section 10(j).'';
(2) in the first sentence of subsection (b), by striking
``elective directorship'' and inserting ``member directorship
established pursuant to subsection (a)(2)'';
(3) in subsection (c)--
(A) by striking ``elective'' each place such term appears
and inserting ``member'', except--
(i) in the second sentence, the second place such term
appears; and
(ii) each place such term appears in the fifth sentence;
(B) in the first sentence, by inserting after ``less than
one'' the following: ``or two, as determined by the board of
directors of the appropriate Federal home loan bank,''; and
(C) in the second sentence--
(i) by inserting ``(A) except as provided in clause (B) of
this sentence,'' before ``if at any time''; and
(ii) by inserting before the period at the end the
following: ``, and (B) clause (A) of this sentence shall not
apply to the directorships of any Federal home loan bank
resulting from the merger of any two or more such banks'';
and
(4) by striking ``elective'' each place such term appears
(except in subsections (c), (e), and (f)).
(b) Terms.--
(1) In general.--Section 7(d) of the Federal Home Loan Bank
Act (12 U.S.C. 1427(d)) is amended--
(A) in the first sentence, by striking ``3 years'' and
inserting ``4 years''; and
(B) in the second sentence--
(i) by striking ``Federal Home Loan Bank System
Modernization Act of 1999'' and inserting ``Federal Housing
Finance Reform Act of 2007''; and
(ii) by striking ``1/3'' and inserting ``1/4''.
(2) Savings provision.--The amendments made by paragraph
(1) shall not apply to the term of office of any director of
a Federal home loan bank who is serving as of the effective
date of this title under section 211, including any director
elected to fill a vacancy in any such office.
(c) Continued Service of Independent Directors After
Expiration of Term.--Section 7(f)(2) of the Federal Home Loan
Bank Act (12 U.S.C. 1427(f)(2)) is amended--
(1) in the second sentence, by striking ``or the term of
such office expires, whichever occurs first'';
(2) by adding at the end the following new sentence: ``An
independent Bank director may continue to serve as a director
after the expiration of the term of such director until a
successor is appointed.'';
(3) in the paragraph heading, by striking ``Appointed'' and
inserting ``Independent''; and
(4) by striking ``appointive'' each place such term appears
and inserting ``independent''.
(d) Conforming Amendments.--Section 7(f)(3) of the Federal
Home Loan Bank Act (12 U.S.C. 1427(f)(3)) is amended--
(1) in the paragraph heading, by striking ``Elected'' and
inserting ``Member''; and
(2) by striking ``elective'' each place such term appears
in the first and third sentences and inserting ``member''.
(e) Compensation.--Subsection (i) of section 7 of the
Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended to
read as follows:
``(i) Directors' Compensation.--
``(1) In general.--Each Federal home loan bank may pay the
directors on the board of directors for the bank reasonable
and appropriate compensation for the time required of such
directors, and reasonable and appropriate expenses incurred
by such directors, in connection with service on the board of
directors, in accordance with resolutions adopted by the
board of directors and subject to the approval of the
Director.
``(2) Annual report by the board.--The Director shall
include, in the annual report submitted to the Congress
pursuant to section 1319B of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, information
regarding the compensation and expenses paid by the Federal
home loan banks to the directors on the boards of directors
of the banks.''.
(f) Transition Rule.--Any member of the board of directors
of a Federal Home Loan Bank serving as of the effective date
under section 211 may continue to serve as a member of such
board of directors for the remainder of the term of such
office as provided in section 7 of the Federal Home Loan Bank
Act, as in effect before such effective date.

SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVERSIGHT OF FEDERAL
HOME LOAN BANKS.

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.),
other than in provisions of that Act added or amended
otherwise by this Division, is amended--
(1) by striking sections 2A and 2B (12 U.S.C. 1422a,
1422b);
(2) in section 6 (12 U.S.C. 1426(b)(1))--
(A) in subsection (b)(1), in the matter preceding
subparagraph (A), by striking ``Finance Board approval'' and
inserting ``approval by the Director''; and
(B) in each of subsections (c)(4)(B) and (d)(2), by
striking ``Finance Board regulations'' each place that term
appears and inserting ``regulations of the Director'';
(3) in section 8 (12 U.S.C. 1428), in the section heading,
by striking ``by the board'';
(4) in section 10(b) (12 U.S.C. 1430(b)), by striking ``by
formal resolution'';
(5) in section 10 (12 U.S.C. 1430), by adding at the end
the following new subsection:
``(k) Monitoring and Enforcing Compliance With Affordable
Housing and Community Investment Program Requirements.--The
requirements under subsection (i) and (j) that the Banks
establish Community Investment and Affordable Housing
Programs, respectively, and contribute to the Affordable
Housing Program, shall be enforceable by the Director with
respect to the Banks in the same manner and to the same
extent as the housing goals under subpart B of part 2 of
subtitle A of title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4561 et seq.) are
enforceable under section 1336 of such Act with respect to
the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.'';
(6) in section 11 (12 U.S.C. 1431)--
(A) in subsection (b)--
(i) in the first sentence--

(I) by striking ``The Board'' and inserting ``The Office of
Finance, as agent for the Banks,''; and
(II) by striking ``the Board'' and inserting ``such
Office''; and

(ii) in the second and fourth sentences, by striking ``the
Board'' each place such term appears and inserting ``the
Office of Finance'';
(B) in subsection (c)--
(i) by striking ``the Board'' the first place such term
appears and inserting ``the Office of Finance, as agent for
the Banks,''; and
(ii) by striking ``the Board'' the second place such term
appears and inserting ``such Office''; and
(C) in subsection (f)--
(i) by striking the two commas after ``permit'' and
inserting ``or''; and
(ii) by striking the comma after ``require'';
(7) in section 15 (12 U.S.C. 1435), by inserting ``or the
Director'' after ``the Board'';
(8) in section 18 (12 U.S.C. 1438), by striking subsection
(b);
(9) in section 21 (12 U.S.C. 1441)--
(A) in subsection (b)--
(i) in paragraph (5), by striking ``Chairperson of the
Federal Housing Finance Board'' and inserting ``Director'';
and
(ii) in the heading for paragraph (8), by striking
``federal housing finance board'' and inserting ``director'';
and
(B) in subsection (i), in the heading for paragraph (2), by
striking ``Federal housing finance board'' and inserting
``Director'';
(10) in section 23 (12 U.S.C. 1443), by striking ``Board of
Directors of the Federal Housing Finance Board'' and
inserting ``Director'';
(11) by striking ``the Board'' each place such term appears
in such Act (except in section 15 (12 U.S.C. 1435), section
21(f)(2) (12 U.S.C. 1441(f)(2)), subsections (a),
(k)(2)(B)(i), and (n)(6)(C)(ii) of section 21A (12 U.S.C.
1441a), subsections (f)(2)(C), and (k)(7)(B)(ii) of section
21B (12 U.S.C. 1441b), and the first two places such term
appears in section 22 (12 U.S.C. 1442)) and inserting ``the
Director'';
(12) by striking ``The Board'' each place such term appears
in such Act (except in sections 7(e) (12 U.S.C. 1427(e)), and
11(b) (12 U.S.C. 1431(b)) and inserting ``The Director'';

[[Page S2584]]

(13) by striking ``the Board's'' each place such term
appears in such Act and inserting ``the Director's'';
(14) by striking ``The Board's'' each place such term
appears in such Act and inserting ``The Director's'';
(15) by striking ``the Finance Board'' each place such term
appears in such Act and inserting ``the Director'';
(16) by striking ``Federal Housing Finance Board'' each
place such term appears and inserting ``Director'';
(17) in section 11(i) (12 U.S.C. 1431(i), by striking ``the
Chairperson of''; and
(18) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), by
striking ``Chairperson of the''.

SEC. 204. JOINT ACTIVITIES OF BANKS.

Section 11 of the Federal Home Loan Bank Act (12 U.S.C.
1431) is amended by adding at the end the following new
subsection:
``(l) Joint Activities.--Subject to the regulation of the
Director, any two or more Federal Home Loan Banks may
establish a joint office for the purpose of performing
functions for, or providing services to, the Banks on a
common or collective basis, or may require that the Office of
Finance perform such functions or services, but only if the
Banks are otherwise authorized to perform such functions or
services individually.''.

SEC. 205. SHARING OF INFORMATION BETWEEN FEDERAL HOME LOAN
BANKS.

(a) In General.--The Federal Home Loan Bank Act is amended
by inserting after section 20 (12 U.S.C. 1440) the following
new section:

``SEC. 20A. SHARING OF INFORMATION BETWEEN FEDERAL HOME LOAN
BANKS.

``(a) Regulatory Authority.--The Director shall prescribe
such regulations as may be necessary to ensure that each
Federal Home Loan Bank has access to information that the
Bank needs to determine the nature and extent of its joint
and several liability.
``(b) No Waiver of Privilege.--The Director shall not be
deemed to have waived any privilege applicable to any
information concerning a Federal Home Loan Bank by
transferring, or permitting the transfer of, that information
to any other Federal Home Loan Bank for the purpose of
enabling the recipient to evaluate the nature and extent of
its joint and several liability.''.
(b) Regulations.--The regulations required under the
amendment made by subsection (a) shall be issued in final
form not later than 6 months after the effective date under
section 211 of this Division.

SEC. 206. REORGANIZATION OF BANKS AND VOLUNTARY MERGER.

Section 26 of the Federal Home Loan Bank Act (12 U.S.C.
1446) is amended--
(1) by inserting ``(a) Reorganization.--'' before
``Whenever''; and
(2) by striking ``liquidated or'' each place such phrase
appears;
(3) by striking ``liquidation or''; and
(4) by adding at the end the following new subsection:
``(b) Voluntary Mergers.--Any two or more Banks may, with
the approval of the Director, and the approval of the boards
of directors of the Banks involved, merge. The Director shall
promulgate regulations establishing the conditions and
procedures for the consideration and approval of any such
voluntary merger, including the procedures for Bank member
approval.''.

SEC. 207. SECURITIES AND EXCHANGE COMMISSION DISCLOSURE.

(a) In General.--The Federal Home Loan Banks shall be
exempt from compliance with--
(1) sections 13(e), 14(a), 14(c), and 17A of the Securities
Exchange Act of 1934 and related Commission regulations; and
(2) section 15 of that Act and related Securities and
Exchange Commission regulations with respect to transactions
in capital stock of the Banks.
(b) Member Exemption.--The members of the Federal Home Loan
Banks shall be exempt from compliance with sections 13(d),
13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of
1934 and related Securities and Exchange Commission
regulations with respect to their ownership of, or
transactions in, capital stock of the Federal Home Loan
Banks.
(c) Exempted and Government Securities.--
(1) Capital stock.--The capital stock issued by each of the
Federal Home Loan Banks under section 6 of the Federal Home
Loan Bank Act are--
(A) exempted securities within the meaning of section
3(a)(2) of the Securities Act of 1933; and
(B) ``exempted securities'' within the meaning of section
3(a)(12)(A) of the Securities Exchange Act of 1934.
(2) Other obligations.--The debentures, bonds, and other
obligations issued under section 11 of the Federal Home Loan
Bank Act are--
(A) exempted securities within the meaning of section
3(a)(2) of the Securities Act of 1933;
(B) ``government securities'' within the meaning of section
3(a)(42) of the Securities Exchange Act of 1934;
(C) excluded from the definition of ``government securities
broker'' within section 3(a)(43) of the Securities Exchange
Act of 1934;
(D) excluded from the definition of ``government securities
dealer'' within section 3(a)(44) of the Securities Exchange
Act of 1934; and
(E) ``government securities'' within the meaning of section
2(a)(16) of the Investment Company Act of 1940.
(d) Exemption From Reporting Requirements.--The Federal
Home Loan Banks shall be exempt from periodic reporting
requirements pertaining to--
(1) the disclosure of related party transactions that occur
in the ordinary course of business of the Banks with their
members; and
(2) the disclosure of unregistered sales of equity
securities.
(e) Tender Offers.--The Securities and Exchange
Commission's rules relating to tender offers shall not apply
in connection with transactions in capital stock of the
Federal Home Loan Banks.
(f) Regulations.--In issuing any final regulations to
implement provisions of this section, the Securities and
Exchange Commission shall consider the distinctive
characteristics of the Federal Home Loan Banks when
evaluating the accounting treatment with respect to the
payment to Resolution Funding Corporation, the role of the
combined financial statements of the twelve Banks, the
accounting classification of redeemable capital stock, and
the accounting treatment related to the joint and several
nature of the obligations of the Banks.

SEC. 208. COMMUNITY FINANCIAL INSTITUTION MEMBERS.

(a) Total Asset Requirement.--Paragraph (10) of section 2
of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so
redesignated by section 201(3) of this Division, is amended
by striking ``$500,000,000'' each place such term appears and
inserting ``$1,000,000,000''.
(b) Use of Advances for Community Development Activities.--
Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C.
1430(a)) is amended--
(1) in paragraph (2)(B)--
(A) by striking ``and''; and
(B) by inserting ``, and community development activities''
before the period at the end;
(2) in paragraph (3)(E), by inserting ``or community
development activities'' after ``agriculture,''; and
(3) in paragraph (6)--
(A) by striking ``and''; and
(B) by inserting ``, and `community development activities'
'' before ``shall''.

SEC. 209. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Right to Financial Privacy Act of 1978.--Section
1113(o) of the Right to Financial Privacy Act of 1978 (12
U.S.C. 3413(o)) is amended--
(1) by striking ``Federal Housing Finance Board'' and
inserting ``Federal Housing Finance Agency''; and
(2) by striking ``Federal Housing Finance Board's'' and
inserting ``Federal Housing Finance Agency's''.
(b) Riegle Community Development and Regulatory Improvement
Act of 1994.--Section 117(e) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C.
4716(e)) is amended by striking ``Federal Housing Finance
Board'' and inserting ``Federal Housing Finance Agency''.
(c) Title 18, United States Code.--Title 18, United States
Code, is amended by striking ``Federal Housing Finance
Board'' each place such term appears in each of sections 212,
657, 1006, 1014, and inserting ``Federal Housing Finance
Agency''.
(d) MARA Act of 1997.--Section 517(b)(4) of the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42
U.S.C. 1437f note) is amended by striking ``Federal Housing
Finance Board'' and inserting ``Federal Housing Finance
Agency''.
(e) Title 44, United States Code.--Section 3502(5) of title
44, United States Code, is amended by striking ``Federal
Housing Finance Board'' and inserting ``Federal Housing
Finance Agency''.
(f) Access to Local TV Act of 2000.--Section
1004(d)(2)(D)(iii) of the Launching Our Communities' Access
to Local Television Act of 2000 (47 U.S.C.
1103(d)(2)(D)(iii)) is amended by striking ``Office of
Federal Housing Enterprise Oversight, the Federal Housing
Finance Board'' and inserting ``Federal Housing Finance
Agency''.
(g) Sarbanes-Oxley Act of 2002.--Section
105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7215(B)(5)(b)(ii)(II)) is amended by inserting ``and
the Director of the Federal Housing Finance Agency'' after
``Commission,''.

SEC. 210. STUDY OF AFFORDABLE HOUSING PROGRAM USE FOR LONG-
TERM CARE FACILITIES.

The Comptroller General shall conduct a study of the use of
affordable housing programs of the Federal home loan banks
under section 10(j) of the Federal Home Loan Bank Act to
determine how and the extent to which such programs are used
to assist long-term care facilities for low- and moderate-
income individuals, and the effectiveness and adequacy of
such assistance in meeting the needs of affected communities.
The study shall examine the applicability of such use to the
affordable housing programs required to be established by the
enterprises pursuant to the amendment made by section 139 of
this Division. The Comptroller General shall submit a report
to the Director of the Federal Housing Finance Agency and the
Congress regarding the results of the study not later than
the expiration of the 1-year period beginning on the date of
the enactment of this Act. This section shall take effect on
the date of the enactment of this Act.

SEC. 211. EFFECTIVE DATE.

Except as specifically provided otherwise in this title,
this title shall take effect on

[[Page S2585]]

and the amendments made by this title shall take effect on,
and shall apply beginning on, the expiration of the 6-month
period beginning on the date of the enactment of this Act.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF
FEDERAL HOUSING ENTERPRISE OVERSIGHT, FEDERAL HOUSING FINANCE BOARD,
AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Subtitle A--Office of Federal Housing Enterprise Oversight

SEC. 301. ABOLISHMENT OF OFHEO.

(a) In General.--Effective at the end of the 6-month period
beginning on the date of the enactment of this Act, the
Office of Federal Housing Enterprise Oversight of the
Department of Housing and Urban Development and the positions
of the Director and Deputy Director of such Office are
abolished.
(b) Disposition of Affairs.--During the 6-month period
beginning on the date of the enactment of this Act, the
Director of the Office of Federal Housing Enterprise
Oversight shall, for the purpose of winding up the affairs of
the Office of Federal Housing Enterprise Oversight and in
addition to carrying out its other responsibilities under
law--
(1) manage the employees of such Office and provide for the
payment of the compensation and benefits of any such employee
which accrue before the effective date of the transfer of
such employee pursuant to section 303; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Office.
(c) Status of Employees Before Transfer.--The amendments
made by title I and the abolishment of the Office of Federal
Housing Enterprise Oversight under subsection (a) of this
section may not be construed to affect the status of any
employee of such Office as employees of an agency of the
United States for purposes of any other provision of law
before the effective date of the transfer of any such
employee pursuant to section 303.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing Finance
Agency may use the property of the Office of Federal Housing
Enterprise Oversight to perform functions which have been
transferred to the Director of the Federal Housing Finance
Agency for such time as is reasonable to facilitate the
orderly transfer of functions transferred pursuant to any
other provision of this Division or any amendment made by
this Division to any other provision of law.
(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to
any such agency, department, or instrumentality, which was
providing supporting services to the Office of Federal
Housing Enterprise Oversight before the expiration of the
period under subsection (a) in connection with functions that
are transferred to the Director of the Federal Housing
Finance Agency shall--
(A) continue to provide such services, on a reimbursable
basis, until the transfer of such functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of
any right, duty, or obligation of the United States, the
Director of the Office of Federal Housing Enterprise
Oversight, or any other person, which--
(A) arises under or pursuant to the title XIII of the
Housing and Community Development Act of 1992, the Federal
National Mortgage Association Charter Act, the Federal Home
Loan Mortgage Corporation Act, or any other provision of law
applicable with respect to such Office; and
(B) existed on the day before the abolishment under
subsection (a) of this section.
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Director of the Office of Federal
Housing Enterprise Oversight in connection with functions
that are transferred to the Director of the Federal Housing
Finance Agency shall abate by reason of the enactment of this
Act, except that the Director of the Federal Housing Finance
Agency shall be substituted for the Director of the Office of
Federal Housing Enterprise Oversight as a party to any such
action or proceeding.

SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN
REGULATIONS.

All regulations, orders, determinations, and resolutions
that--
(1) were issued, made, prescribed, or allowed to become
effective by--
(A) the Office of Federal Housing Enterprise Oversight; or
(B) a court of competent jurisdiction and that relate to
functions transferred by this subtitle; and
(2) are in effect on the date of the abolishment under
section 301(a) of this Division, shall remain in effect
according to the terms of such regulations, orders,
determinations, and resolutions, and shall be enforceable by
or against the Director of the Federal Housing Finance Agency
until modified, terminated, set aside, or superseded in
accordance with applicable law by such Director, as the case
may be, any court of competent jurisdiction, or operation of
law.

SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

(a) Transfer.--Each employee of the Office of Federal
Housing Enterprise Oversight shall be transferred to the
Federal Housing Finance Agency for employment no later than
the date of the abolishment under section 301(a) of this
Division and such transfer shall be deemed a transfer of
function for purposes of section 3503 of title 5, United
States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same
status, tenure, grade, and pay as that held on the day
immediately preceding the transfer. Each such employee
holding a permanent position shall not be involuntarily
separated or reduced in grade or compensation for 12 months
after the date of transfer, except for cause or, if the
employee is a temporary employee, separated in accordance
with the terms of the appointment.
(c) Appointment Authority for Excepted Service Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service, any appointment authority
established pursuant to law or regulations of the Office of
Personnel Management for filling such positions shall be
transferred, subject to paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Finance Agency may decline a transfer of authority
under paragraph (1) (and the employees appointed pursuant
thereto) to the extent that such authority relates to
positions excepted from the competitive service because of
their confidential, policy-making, policy-determining, or
policy-advocating character.
(d) Reorganization.--If the Director of the Federal Housing
Finance Agency determines, after the end of the 1-year period
beginning on the date of the abolishment under section
301(a), that a reorganization of the combined work force is
required, that reorganization shall be deemed a major
reorganization for purposes of affording affected employees
retirement under section 8336(d)(2) or 8414(b)(1)(B) of title
5, United States Code.
(e) Employee Benefit Programs.--Any employee of the Office
of Federal Housing Enterprise Oversight accepting employment
with the Director of the Federal Housing Finance Agency as a
result of a transfer under subsection (a) may retain for 12
months after the date such transfer occurs membership in any
employee benefit program of the Federal Housing Finance
Agency or the Office of Federal Housing Enterprise Oversight,
as applicable, including insurance, to which such employee
belongs on the date of the abolishment under section 301(a)
if--
(1) the employee does not elect to give up the benefit or
membership in the program; and
(2) the benefit or program is continued by the Director of
the Federal Housing Finance Agency,

The difference in the costs between the benefits which would
have been provided by such agency and those provided by this
section shall be paid by the Director of the Federal Housing
Finance Agency. If any employee elects to give up membership
in a health insurance program or the health insurance program
is not continued by such Director, the employee shall be
permitted to select an alternate Federal health insurance
program within 30 days of such election or notice, without
regard to any other regularly scheduled open season.

SEC. 304. TRANSFER OF PROPERTY AND FACILITIES.

Upon the abolishment under section 301(a), all property of
the Office of Federal Housing Enterprise Oversight shall
transfer to the Director of the Federal Housing Finance
Agency.

Subtitle B--Federal Housing Finance Board

SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.

(a) In General.--Effective at the end of the 6-month period
beginning on the date of enactment of this Act, the Federal
Housing Finance Board (in this title referred to as the
``Board'') is abolished.
(b) Disposition of Affairs.--During the 6-month period
beginning on the date of enactment of this Act, the Board,
for the purpose of winding up the affairs of the Board and in
addition to carrying out its other responsibilities under
law--
(1) shall manage the employees of such Board and provide
for the payment of the compensation and benefits of any such
employee which accrue before the effective date of the
transfer of such employee under section 323; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Board.
(c) Status of Employees Before Transfer.--The amendments
made by titles I and II and the abolishment of the Board
under subsection (a) may not be construed to affect the
status of any employee of such Board as employees of an
agency of the United States for purposes of any other
provision of law before the effective date of the transfer of
any such employee under section 323.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing Finance
Agency may use the property of the Board to perform functions
which have been transferred to the Director of the Federal
Housing Finance Agency for such time as is reasonable to
facilitate the orderly transfer of functions transferred
under any other provision of this Division or any amendment
made by this Division to any other provision of law.

[[Page S2586]]

(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to
any such agency, department, or instrumentality, which was
providing supporting services to the Board before the
expiration of the period under subsection (a) in connection
with functions that are transferred to the Director of the
Federal Housing Finance Agency shall--
(A) continue to provide such services, on a reimbursable
basis, until the transfer of such functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of
any right, duty, or obligation of the United States, a member
of the Board, or any other person, which--
(A) arises under the Federal Home Loan Bank Act or any
other provision of law applicable with respect to such Board;
and
(B) existed on the day before the effective date of the
abolishment under subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Board in connection with
functions that are transferred to the Director of the Federal
Housing Finance Agency shall abate by reason of the enactment
of this Act, except that the Director of the Federal Housing
Finance Agency shall be substituted for the Board or any
member thereof as a party to any such action or proceeding.

SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN
REGULATIONS.

(a) In General.--All regulations, orders, determinations,
and resolutions described under subsection (b) shall remain
in effect according to the terms of such regulations, orders,
determinations, and resolutions, and shall be enforceable by
or against the Director of the Federal Housing Finance Agency
until modified, terminated, set aside, or superseded in
accordance with applicable law by such Director, any court of
competent jurisdiction, or operation of law.
(b) Applicability.--A regulation, order, determination, or
resolution is described under this subsection if it--
(1) was issued, made, prescribed, or allowed to become
effective by--
(A) the Board; or
(B) a court of competent jurisdiction and relates to
functions transferred by this subtitle; and
(2) is in effect on the effective date of the abolishment
under section 321(a).

SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL
HOUSING FINANCE BOARD.

(a) Transfer.--Each employee of the Board shall be
transferred to the Federal Housing Finance Agency for
employment not later than the effective date of the
abolishment under section 321(a), and such transfer shall be
deemed a transfer of function for purposes of section 3503 of
title 5, United States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same
status, tenure, grade, and pay as that held on the day
immediately preceding the transfer. Each such employee
holding a permanent position shall not be involuntarily
separated or reduced in grade or compensation for 12 months
after the date of transfer, except for cause or, if the
employee is a temporary employee, separated in accordance
with the terms of the appointment.
(c) Appointment Authority for Excepted and Senior Executive
Service Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service or the Senior Executive
Service, any appointment authority established under law or
by regulations of the Office of Personnel Management for
filling such positions shall be transferred, subject to
paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Finance Agency may decline a transfer of authority
under paragraph (1) to the extent that such authority relates
to positions excepted from the competitive service because of
their confidential, policymaking, policy-determining, or
policy-advocating character, and noncareer positions in the
Senior Executive Service (within the meaning of section
3132(a)(7) of title 5, United States Code).
(d) Reorganization.--If the Director of the Federal Housing
Finance Agency determines, after the end of the 1-year period
beginning on the effective date of the abolishment under
section 321(a), that a reorganization of the combined
workforce is required, that reorganization shall be deemed a
major reorganization for purposes of affording affected
employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Board accepting
employment with the Federal Housing Finance Agency as a
result of a transfer under subsection (a) may retain for 12
months after the date on which such transfer occurs
membership in any employee benefit program of the Federal
Housing Finance Agency or the Board, as applicable, including
insurance, to which such employee belongs on the effective
date of the abolishment under section 321(a) if--
(A) the employee does not elect to give up the benefit or
membership in the program; and
(B) the benefit or program is continued by the Director of
the Federal Housing Finance Agency.
(2) Cost differential.--The difference in the costs between
the benefits which would have been provided by the Board and
those provided by this section shall be paid by the Director
of the Federal Housing Finance Agency. If any employee elects
to give up membership in a health insurance program or the
health insurance program is not continued by such Director,
the employee shall be permitted to select an alternate
Federal health insurance program within 30 days after such
election or notice, without regard to any other regularly
scheduled open season.

SEC. 324. TRANSFER OF PROPERTY AND FACILITIES.

Upon the effective date of the abolishment under section
321(a), all property of the Board shall transfer to the
Director of the Federal Housing Finance Agency.

Subtitle C--Department of Housing and Urban Development

SEC. 341. TERMINATION OF ENTERPRISE-RELATED FUNCTIONS.

(a) Termination Date.--For purposes of this subtitle, the
term ``termination date'' means the date that occurs 6 months
after the date of the enactment of this Act.
(b) Determination of Transferred Functions and Employees.--
(1) In general.--Not later than the expiration of the 3-
month period beginning on the date of the enactment of this
Act, the Secretary, in consultation with the Director of the
Office of Federal Housing Enterprise Oversight, shall
determine--
(A) the functions, duties, and activities of the Secretary
of Housing and Urban Development regarding oversight or
regulation of the enterprises under or pursuant to the
authorizing statutes, title XIII of the Housing and Community
Development Act of 1992, and any other provisions of law, as
in effect before the date of the enactment of this Act, but
not including any such functions, duties, and activities of
the Director of the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban Development
and such Office; and
(B) the employees of the Department of Housing and Urban
Development necessary to perform such functions, duties, and
activities.
(2) Enterprise-related functions.--For purposes of this
subtitle, the term ``enterprise-related functions of the
Department'' means the functions, duties, and activities of
the Department of Housing and Urban Development determined
under paragraph (1)(A).
(3) Enterprise-related employees.--For purposes of this
subtitle, the term ``enterprise-related employees of the
Department'' means the employees of the Department of Housing
and Urban Development determined under paragraph (1)(B).
(c) Disposition of Affairs.--During the 6-month period
beginning on the date of enactment of this Act, the Secretary
of Housing and Urban Development (in this title referred to
as the ``Secretary''), for the purpose of winding up the
affairs of the Secretary regarding the enterprise-related
functions of the Department of Housing and Urban Development
(in this title referred to as the ``Department'') and in
addition to carrying out the Secretary's other
responsibilities under law regarding such functions--
(1) shall manage the enterprise-related employees of the
Department and provide for the payment of the compensation
and benefits of any such employee which accrue before the
effective date of the transfer of any such employee under
section 343; and
(2) may take any other action necessary for the purpose of
winding up the enterprise-related functions of the
Department.
(d) Status of Employees Before Transfer.--The amendments
made by titles I and II and the termination of the
enterprise-related functions of the Department under
subsection (b) may not be construed to affect the status of
any employee of the Department as employees of an agency of
the United States for purposes of any other provision of law
before the effective date of the transfer of any such
employee under section 343.
(e) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing Finance
Agency may use the property of the Secretary to perform
functions which have been transferred to the Director of the
Federal Housing Finance Agency for such time as is reasonable
to facilitate the orderly transfer of functions transferred
under any other provision of this Division or any amendment
made by this Division to any other provision of law.
(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to
any such agency, department, or instrumentality, which was
providing supporting services to the Secretary regarding
enterprise-related functions of the Department before the
termination date under subsection (a) in connection with such
functions that are transferred to the Director of the Federal
Housing Finance Agency shall--
(A) continue to provide such services, on a reimbursable
basis, until the transfer of such functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(f) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of
any right, duty, or

[[Page S2587]]

obligation of the United States, the Secretary, or any other
person, which--
(A) arises under the authorizing statutes, title XIII of
the Housing and Community Development Act of 1992, or any
other provision of law applicable with respect to the
Secretary, in connection with the enterprise-related
functions of the Department; and
(B) existed on the day before the termination date under
subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Secretary in connection with the
enterprise-related functions of the Department shall abate by
reason of the enactment of this Act, except that the Director
of the Federal Housing Finance Agency shall be substituted
for the Secretary or any member thereof as a party to any
such action or proceeding.

SEC. 342. CONTINUATION AND COORDINATION OF CERTAIN
REGULATIONS.

(a) In General.--All regulations, orders, and
determinations described in subsection (b) shall remain in
effect according to the terms of such regulations, orders,
determinations, and resolutions, and shall be enforceable by
or against the Director of the Federal Housing Finance Agency
until modified, terminated, set aside, or superseded in
accordance with applicable law by such Director, any court of
competent jurisdiction, or operation of law.
(b) Applicability.--A regulation, order, or determination
is described under this subsection if it--
(1) was issued, made, prescribed, or allowed to become
effective by--
(A) the Secretary; or
(B) a court of competent jurisdiction and that relate to
the enterprise-related functions of the Department; and
(2) is in effect on the termination date under section
341(a).

SEC. 343. TRANSFER AND RIGHTS OF EMPLOYEES OF DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT.

(a) Transfer.--
(1) In general.--Except as provided in paragraph (2), each
enterprise-related employee of the Department shall be
transferred to the Federal Housing Finance Agency for
employment not later than the termination date under section
341(a) and such transfer shall be deemed a transfer of
function for purposes of section 3503 of title 5, United
States Code.
(2) Authority to decline.--An enterprise-related employee
of the Department may, in the discretion of the employee,
decline transfer under paragraph (1) to a position in the
Federal Housing Finance Agency and shall be guaranteed a
position in the Department with the same status, tenure,
grade, and pay as that held on the day immediately preceding
the date that such declination was made. Each such employee
holding a permanent position shall not be involuntarily
separated or reduced in grade or compensation for 12 months
after the date that the transfer would otherwise have
occurred, except for cause or, if the employee is a temporary
employee, separated in accordance with the terms of the
appointment.
(b) Guaranteed Positions.--Each enterprise-related employee
of the Department transferred under subsection (a) shall be
guaranteed a position with the same status, tenure, grade,
and pay as that held on the day immediately preceding the
transfer. Each such employee holding a permanent position
shall not be involuntarily separated or reduced in grade or
compensation for 12 months after the date of transfer, except
for cause or, if the employee is a temporary employee,
separated in accordance with the terms of the appointment.
(c) Appointment Authority for Excepted and Senior Executive
Service Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service or the Senior Executive
Service, any appointment authority established under law or
by regulations of the Office of Personnel Management for
filling such positions shall be transferred, subject to
paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Finance Agency may decline a transfer of authority
under paragraph (1) (and the employees appointed pursuant
thereto) to the extent that such authority relates to
positions excepted from the competitive service because of
their confidential, policymaking, policy-determining, or
policy-advocating character, and noncareer positions in the
Senior Executive Service (within the meaning of section
3132(a)(7) of title 5, United States Code).
(d) Reorganization.--If the Director of the Federal Housing
Finance Agency determines, after the end of the 1-year period
beginning on the termination date under section 341(a), that
a reorganization of the combined workforce is required, that
reorganization shall be deemed a major reorganization for
purposes of affording affected employees retirement under
section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States
Code.
(e) Employee Benefit Programs.--
(1) In general.--Any enterprise-related employee of the
Department accepting employment with the Federal Housing
Finance Agency as a result of a transfer under subsection (a)
may retain for 12 months after the date on which such
transfer occurs membership in any employee benefit program of
the Federal Housing Finance Agency or the Department, as
applicable, including insurance, to which such employee
belongs on the termination date under section 341(a) if--
(A) the employee does not elect to give up the benefit or
membership in the program; and
(B) the benefit or program is continued by the Director of
the Federal Housing Finance Agency.
(2) Cost differential.--The difference in the costs between
the benefits which would have been provided by the Department
and those provided by this section shall be paid by the
Director of the Federal Housing Finance Agency. If any
employee elects to give up membership in a health insurance
program or the health insurance program is not continued by
such Director, the employee shall be permitted to select an
alternate Federal health insurance program within 30 days
after such election or notice, without regard to any other
regularly scheduled open season.

SEC. 344. TRANSFER OF APPROPRIATIONS, PROPERTY, AND
FACILITIES.

Upon the termination date under section 341(a), all assets,
liabilities, contracts, property, records, and unexpended
balances of appropriations, authorizations, allocations, and
other funds employed, held, used, arising from, available to,
or to be made available to the Department in connection with
enterprise-related functions of the Department shall transfer
to the Director of the Federal Housing Finance Agency.
Unexpended funds transferred by this section shall be used
only for the purposes for which the funds were originally
authorized and appropriated.

____________________