S.Amdt. 3742

SA 3742. Mr. McCAIN submitted an amendment intended to be proposed to
amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself and
Mrs. Lincoln)) to the bill S. 3217, to promote the financial stability
of the United States by improving accountability and transparency in
the financial system, to end ``too big to fail'', to protect the
American taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes; which was ordered
to lie on the table; as follows:

At the end of title X, add the following:

Subtitle I--GSE Bailout Elimination and Taxpayer Protection

SECTION 1111. SHORT TITLE.

This subtitle may be cited as the ``GSE Bailout Elimination
and Taxpayer Protection Act''.

SEC. 1112. DEFINITIONS.

For purposes of this subtitle, the following definitions
shall apply:
(1) Charter.--The term ``charter'' means--
(A) with respect to the Federal National Mortgage
Association, the Federal National Mortgage Association
Charter Act (12 U.S.C. 1716 et seq.); and
(B) with respect to the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1451 et seq.).
(2) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(3) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association; and
(B) the Federal Home Loan Mortgage Corporation.
(4) Guarantee.--The term ``guarantee'' means, with respect
to an enterprise, the credit support of the enterprise that
is provided by the Federal Government through its charter as
a government-sponsored enterprise.

SEC. 1113. TERMINATION OF CURRENT CONSERVATORSHIP.

(a) In General.--Upon the expiration of the period referred
to in subsection (b), the Director of the Federal Housing
Finance Agency shall determine, with respect to each
enterprise, if the enterprise is financially viable at that
time and--
(1) if the Director determines that the enterprise is
financially viable, immediately take all actions necessary to
terminate the conservatorship for the enterprise that is in
effect pursuant to section 1367 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4617); or
(2) if the Director determines that the enterprise is not
financially viable, immediately appoint the Federal Housing
Finance Agency as receiver under section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 and carry out such receivership under the authority of
such section.
(b) Timing.--The period referred to in this subsection is,
with respect to an enterprise--
(1) except as provided in paragraph (2), the 24-month
beginning upon the date of the enactment of this Act; or
(2) if the Director determines before the expiration of the
period referred to in paragraph (1) that the financial
markets would be adversely affected without the extension of
such period under this paragraph with respect to that
enterprise, and upon making such determination notifies the
Congress in writing of such determination, the 30-month
period beginning upon the date of the enactment of this Act.
(c) Financial Viability.--The Director may not determine
that an enterprise is financially viable for purposes of
subsection (a) if the Director determines that any of the
conditions for receivership set forth in paragraph (3) or (4)
of section 1367(a) of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C.
4617(a)) exists at the time with respect to the enterprise.

SEC. 1114. LIMITATION OF ENTERPRISE AUTHORITY UPON EMERGENCE
FROM CONSERVATORSHIP.

(a) Revised Authority.--Upon the expiration of the period
referred to in section 1113(b), if the Director makes the
determination under section 1113(a)(1), the following
provisions shall take effect:
(1) Repeal of housing goals.--
(A) Repeal.--The Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 is amended by striking
sections 1331 through 1336 (12 U.S.C. 4561-6).

[[Page S2975]]

(B) Conforming amendments.--Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended--
(i) in section 1303(28) (12 U.S.C. 4502(28)), by striking
``and, for the purposes'' and all that follows through
``designated disaster areas'';
(ii) in section 1324(b)(1)(A) (12 U.S.C. 4544(b)(1)(A))--

(I) by striking clauses (i), (ii), and (iv);
(II) in clause (iii), by inserting ``and'' after the
semicolon at the end; and
(III) by redesignating clauses (iii) and (v) as clauses (i)
and (ii), respectively;

(iii) in section 1338(c)(10) (12 U.S.C. 4568(c)(10)), by
striking subparagraph (E);
(iv) in section 1339(h) (12 U.S.C. 4569), by striking
paragraph (7);
(v) in section 1341 (12 U.S.C. 4581)--

(I) in subsection (a)--

(aa) in paragraph (1), by inserting ``or'' after the
semicolon at the end;
(bb) in paragraph (2), by striking the semicolon at the end
and inserting a period; and
(cc) by striking paragraphs (3) and (4); and

(II) in subsection (b)(2)--

(aa) in subparagraph (A), by inserting ``or'' after the
semicolon at the end;
(bb) by striking subparagraphs (B) and (C); and
(cc) by redesignating subparagraph (D) as subparagraph (B);
(vi) in section 1345(a) (12 U.S.C. 4585(a))--

(I) in paragraph (1), by inserting ``or'' after the
semicolon at the end;
(II) in paragraph (2), by striking the semicolon at the end
and inserting a period; and
(III) by striking paragraphs (3) and (4); and

(vii) in section 1371(a)(2) (12 U.S.C. 4631(a)(2))--

(I) by striking ``with any housing goal established under
subpart B of part 2 of subtitle A of this title,''; and
(II) by striking ``section 1336 or''.

(2) Portfolio limitations.--Subtitle B of title XIII of the
Housing and Community Development Act of 1992 (12 U.S.C. 4611
et seq.) is amended by adding at the end the following new
section:

``SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF ENTERPRISES.

``(a) Restriction.--No enterprise shall own, as of any
applicable date in this subsection or thereafter, mortgage
assets in excess of--
``(1) upon the expiration of the period referred to in
section 1113(b) of the GSE Bailout Elimination and Taxpayer
Protection Act or thereafter, $850,000,000,000;
``(2) upon the expiration of the 1-year period that begins
on the date described in paragraph (1) or thereafter,
$700,000,000,000;
``(3) upon the expiration of the 2-year period that begins
on the date described in paragraph (1) or thereafter,
$500,000,000,000; and
``(4) upon the expiration of the 3-year period that begins
on the date described in paragraph (1), $250,000,000,000.
``(b) Definition of Mortgage Assets.--For purposes of this
section, the term `mortgage assets' means, with respect to an
enterprise, assets of such enterprise consisting of
mortgages, mortgage loans, mortgage-related securities,
participation certificates, mortgage-backed commercial paper,
obligations of real estate mortgage investment conduits and
similar assets, in each case to the extent such assets would
appear on the balance sheet of such enterprise in accordance
with generally accepted accounting principles in effect in
the United States as of September 7, 2008 (as set forth in
the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the
Financial Accounting Standards Board from time to time; and
without giving any effect to any change that may be made
after September 7, 2008, in respect of Statement of Financial
Accounting Standards No. 140 or any similar accounting
standard).''.
(3) Increase in minimum capital requirement.--Section 1362
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4612), as amended by section
1111 of the Housing and Economic Recovery Act of 2008 (Public
Law 110-289), is amended--
(A) in subsection (a), by striking ``For purposes of this
subtitle, the minimum capital level for each enterprise shall
be'' and inserting ``The minimum capital level established
under subsection (g) for each enterprise may not be lower
than'';
(B) in subsection (c)--
(i) by striking ``subsections (a) and'' and inserting
``subsection'';
(ii) by striking ``regulated entities'' the first place
such term appears and inserting ``Federal Home Loan Banks'';
(iii) by striking ``for the enterprises,'';
(iv) by striking ``, or for both the enterprises and the
banks,'';
(v) by striking ``the level specified in subsection (a) for
the enterprises or''; and
(vi) by striking ``the regulated entities operate'' and
inserting ``such banks operate'';
(C) in subsection (d)(1)--
(i) by striking ``subsections (a) and'' and inserting
``subsection''; and
(ii) by striking ``regulated entity'' each place such term
appears and inserting ``Federal home loan bank'';
(D) in subsection (e), by striking ``regulated entity''
each place such term appears and inserting ``Federal home
loan bank'';
(E) in subsection (f)--
(i) by striking ``the amount of core capital maintained by
the enterprises,''; and
(ii) by striking ``regulated entities'' and inserting
``banks''; and
(F) by adding at the end the following new subsection:
``(g) Establishment of Revised Minimum Capital Levels.--
``(1) In general.--The Director shall cause the enterprises
to achieve and maintain adequate capital by establishing
minimum levels of capital for such the enterprises and by
using such other methods as the Director deems appropriate.
``(2) Authority.--The Director shall have the authority to
establish such minimum level of capital for an enterprise in
excess of the level specified under subsection (a) as the
Director, in the Director's discretion, deems to be necessary
or appropriate in light of the particular circumstances of
the enterprise.
``(h) Failure To Maintain Revised Minimum Capital Levels.--
``(1) Unsafe and unsound practice or condition.--Failure of
a enterprise to maintain capital at or above its minimum
level as established pursuant to subsection (g) of this
section may be deemed by the Director, in his discretion, to
constitute an unsafe and unsound practice or condition within
the meaning of this title.
``(2) Directive to achieve capital level.--
``(A) Authority.--In addition to, or in lieu of, any other
action authorized by law, including paragraph (1), the
Director may issue a directive to an enterprise that fails to
maintain capital at or above its required level as
established pursuant to subsection (g) of this section.
``(B) Plan.--Such directive may require the enterprise to
submit and adhere to a plan acceptable to the Director
describing the means and timing by which the enterprise shall
achieve its required capital level.
``(C) Enforcement.--Any such directive issued pursuant to
this paragraph, including plans submitted pursuant thereto,
shall be enforceable under the provisions of subtitle C of
this title to the same extent as an effective and outstanding
order issued pursuant to subtitle C of this title which has
become final.
``(3) Adherence to plan.--
``(A) Consideration.--The Director may consider such
enterprise's progress in adhering to any plan required under
this subsection whenever such enterprise seeks the requisite
approval of the Director for any proposal which would divert
earnings, diminish capital, or otherwise impede such
enterprise's progress in achieving its minimum capital level.
``(B) Denial.--The Director may deny such approval where it
determines that such proposal would adversely affect the
ability of the enterprise to comply with such plan.''.
(4) Repeal of increases to conforming loan limits.--
(A) Repeal of temporary increases.--
(i) Continuing appropriations resolution, 2010.--Section
167 of the Continuing Appropriations Resolution, 2010 (as
added by section 104 of division B of Public Law 111-88; 123
Stat. 2973) is hereby repealed.
(ii) American recovery and reinvestment act of 2009.--
Section 1203 of division A of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 225) is
hereby repealed.
(iii) Economic stimulus act of 2008.--Section 201 of the
Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat.
619) is hereby repealed.
(B) Repeal of general limit and permanent high-cost area
increase.--Paragraph (2) of section 302(b) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) and paragraph (2) of section 305(a) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)) are each amended to read as such sections were in
effect immediately before the enactment of the Housing and
Economic Recovery Act of 2008 (Public Law 110-289).
(C) Repeal of new housing price index.--Section 1322 of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992, as added by section 1124(d) of the Housing and
Economic Recovery Act of 2008 (Public Law 110-289), is hereby
repealed.
(D) Repeal.--Section 1124 of the Housing and Economic
Recovery Act of 2008 (Public Law 110-289) is hereby repealed.
(E) Establishment of conforming loan limit.--For the year
in which the expiration of the period referred to in section
1113(b) occurs, the limitations governing the maximum
original principal obligation of conventional mortgages that
may be purchased by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation, referred to
in section 302(b)(2) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1717(b)(2)) and section
305(a)(2) of the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1454(a)(2)), respectively, shall be considered to
be--
(i) $417,000 for a mortgage secured by a single-family
residence,
(ii) $533,850 for a mortgage secured by a 2-family
residence,
(iii) $645,300 for a mortgage secured by a 3-family
residence, and
(iv) $801,950 for a mortgage secured by a 4-family
residence,
and such limits shall be adjusted effective each January 1
thereafter in accordance with such sections 302(b)(2) and
305(a)(2).
(F) Prohibition of purchase of mortgages exceeding median
area home price.--
(i) Fannie mae.--Section 302(b)(2) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is
amended

[[Page S2976]]

by adding at the end the following new sentence:
``Notwithstanding any other provision of this title, the
corporation may not purchase any mortgage for a property
having a principal obligation that exceeds the median home
price, for properties of the same size, for the area in which
such property subject to the mortgage is located.''.
(ii) Freddie mac.--Section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is
amended by adding at the end the following new sentence:
``Notwithstanding any other provision of this title, the
Corporation may not purchase any mortgage for a property
having a principal obligation that exceeds the median home
price, for properties of the same size, for the area in which
such property subject to the mortgage is located.''.
(5) Requirement of minimum down payment for mortgages
purchased.--
(A) Fannie mae.--Subsection (b) of section 302 of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1717(b)) is amended by adding at the end the following new
paragraph:
``(7) Notwithstanding any other provision of this Act, the
corporation may not newly purchase any mortgage unless the
mortgagor has paid, in cash or its equivalent on account of
the property securing repayment such mortgage, in accordance
with regulations issued by the Director of the Federal
Housing Finance Agency, not less than--
``(A) for any mortgage purchased during the 12-month period
beginning upon the expiration of the period referred to in
section 1113(b) of the GSE Bailout Elimination and Taxpayer
Protection Act, 5 percent of the appraised value of the
property;
``(B) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (A) of this paragraph, 7.5 percent of the
appraised value of the property; and
``(C) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (B) of this paragraph, 10 percent of the
appraised value of the property.''.
(B) Freddie mac.--Subsection (a) of section 305 of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)) is amended by adding at the end the following new
paragraph:
``(6) Notwithstanding any other provision of this Act, the
Corporation may not newly purchase any mortgage unless the
mortgagor has paid, in cash or its equivalent on account of
the property securing repayment such mortgage, in accordance
with regulations issued by the Director of the Federal
Housing Finance Agency, not less than--
``(A) for any mortgage purchased during the 12-month period
beginning upon the expiration of the period referred to in
section 1113(b) of the GSE Bailout Elimination and Taxpayer
Protection Act, 5 percent of the appraised value of the
property;
``(B) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (A) of this paragraph, 7.5 percent of the
appraised value of the property; and
``(C) for any mortgage purchased during the 12-month period
beginning upon the expiration of the 12-month period referred
to in subparagraph (B) of this paragraph, 10 percent of the
appraised value of the property.''.
(6) Requirement to pay state and local taxes.--
(A) Fannie mae.--Paragraph (2) of section 309(c) of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1723a(c)(2)) is amended--
(i) by striking ``shall be exempt from'' and inserting
``shall be subject to''; and
(ii) by striking ``except that any'' and inserting ``and
any''.
(B) Freddie mac.--Section 303(e) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(e)) is amended--
(i) by striking ``shall be exempt from'' and inserting
``shall be subject to''; and
(ii) by striking ``except that any'' and inserting ``and
any''.
(7) Repeals relating to registration of securities.--
(A) Fannie mae.--
(i) Mortgage-backed securities.--Section 304(d) of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1719(d)) is amended by striking the fourth sentence.
(ii) Subordinate obligations.--Section 304(e) of the
Federal National Mortgage Association Charter Act (12 U.S.C.
1719(e)) is amended by striking the fourth sentence.
(B) Freddie mac.--Section 306 of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1455) is amended by
striking subsection (g).
(8) Recoupment of costs for federal guarantee.--
(A) Assessments.--The Director of the Federal Housing
Finance Agency shall establish and collect from each
enterprise assessments in the amount determined under
subparagraph (B). In determining the method and timing for
making such assessments, the Director shall take into
consideration the determinations and conclusions of the study
under subsection (b) of this section.
(B) Determination of costs of guarantee.--Assessments under
subparagraph (A) with respect to an enterprise shall be in
such amount as the Director determines necessary to recoup to
the Federal Government the full value of the benefit the
enterprise receives from the guarantee provided by the
Federal Government for the obligations and financial
viability of the enterprise, based upon the dollar value of
such benefit in the market to such enterprise when not
operating under conservatorship or receivership. To determine
such amount, the Director shall establish a risk-based
pricing mechanism as the Director considers appropriate,
taking into consideration the determinations and conclusions
of the study under subsection (b).
(C) Treatment of recouped amounts.--The Director shall
cover into the general fund of the Treasury any amounts
received from assessments made under this paragraph.
(b) GAO Study Regarding Recoupment of Costs for Federal
Government Guarantee.--The Comptroller General of the United
States shall conduct a study to determine a risk-based
pricing mechanism to accurately determine the value of the
benefit the enterprises receive from the guarantee provided
by the Federal Government for the obligations and financial
viability of the enterprises. Such study shall establish a
dollar value of such benefit in the market to each enterprise
when not operating under conservatorship or receivership,
shall analyze various methods of the Federal Government
assessing a charge for such value received (including methods
involving an annual fee or a fee for each mortgage purchased
or securitized), and shall make a recommendation of the best
such method for assessing such charge. Not later than 12
months after the date of enactment of this Act, the
Comptroller General shall submit to the Congress a report
setting forth the determinations and conclusions of such
study.

SEC. 1115. REQUIRED WIND DOWN OF OPERATIONS AND DISSOLUTION
OF ENTERPRISE.

(a) Applicability.--This section shall apply to an
enterprise upon the expiration of the 3-year period referred
to in section 1113(b).
(b) Repeal of Charter.--Upon the applicability of this
section to an enterprise, the charter for the enterprise is
repealed and the enterprise shall have no authority to
conduct new business under such charter, except that the
provisions of such charter in effect immediately before such
repeal shall continue to apply with respect to the rights and
obligations of any holders of outstanding debt obligations
and mortgage-backed securities of the enterprise.
(c) Wind Down.--Upon the applicability of this section to
an enterprise, the Director and the Secretary of the Treasury
shall jointly take such action, and may prescribe such
regulations and procedures, as may be necessary to wind down
the operations of an enterprise as an entity chartered by the
United States Government over the duration of the 10-year
period beginning upon the applicability of this section to
the enterprise (pursuant to subsection (a)) in an orderly
manner consistent with this subtitle and the ongoing
obligations of the enterprise.
(d) Division of Assets and Liabilities; Authority To
Establish Holding Corporation and Dissolution Trust Fund.--
The action and procedures required under subsection (c)--
(1) shall include the establishment and execution of plans
to provide for an equitable division and distribution of
assets and liabilities of the enterprise, including any
liability of the enterprise to the United States Government
or a Federal reserve bank that may continue after the end of
the period described in subsection (a); and
(2) may provide for establishment of--
(A) a holding corporation organized under the laws of any
State of the United States or the District of Columbia for
the purposes of the reorganization and restructuring of the
enterprise; and
(B) one or more trusts to which to transfer--
(i) remaining debt obligations of the enterprise, for the
benefit of holders of such remaining obligations; or
(ii) remaining mortgages held for the purpose of backing
mortgage-backed securities, for the benefit of holders of
such remaining securities.
______