[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1508 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 1508
To address regulation of secondary mortgage market enterprises, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 31 (legislative day, July 21), 2003
Mr. Hagel (for himself, Mr. Sununu, and Mrs. Dole) introduced the
following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban AffairsYYYYYYYYYYYYYYY
_______________________________________________________________________
A BILL
To address regulation of secondary mortgage market enterprises, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Federal Enterprise
Regulatory Reform Act of 2003''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC
Subtitle A--Improvement of Supervision
Sec. 101. Establishment of Office of Federal Enterprise Supervision in
the Department of the Treasury.
Sec. 102. Duties and authorities of Director and HUD.
Sec. 103. Examiners and accountants.
Sec. 104. Regulations.
Sec. 105. Assessments.
Sec. 106. Independence of Director in congressional testimony and
recommendations.
Sec. 107. Limitation on nonmission-related assets.
Sec. 108. Reports.
Sec. 109. Risk-based capital test for enterprises.
Sec. 110. Minimum and critical capital levels.
Sec. 111. Definitions.
Subtitle B--Prompt Corrective Action
Sec. 131. Capital classifications.
Sec. 132. Supervisory actions applicable to undercapitalized
enterprises.
Sec. 133. Supervisory actions applicable to significantly
undercapitalized enterprises.
Subtitle C--Enforcement Actions
Sec. 151. Cease-and-desist proceedings.
Sec. 152. Temporary cease-and-desist proceedings.
Sec. 153. Removal and prohibition authority.
Sec. 154. Enforcement and jurisdiction.
Sec. 155. Civil money penalties.
Sec. 156. Criminal penalty.
Subtitle D--Reports to Congress
Sec. 161. Studies and reports.
Subtitle E--General Provisions
Sec. 171. Conforming and technical amendments.
Sec. 172. Effective date.
TITLE II--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY
Sec. 201. Abolishment of OFHEO.
Sec. 202. Continuation and coordination of certain regulations.
Sec. 203. Transfer and rights of employees of OFHEO.
Sec. 204. Transfer of property and facilities.
TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MAC
Subtitle A--Improvement of Supervision
SEC. 101. ESTABLISHMENT OF OFFICE OF FEDERAL ENTERPRISE SUPERVISION IN
THE DEPARTMENT OF THE TREASURY.
(a) In General.--Part 1 of Subtitle A of title XIII of the Housing
and Community Development Act of 1992 is amended by striking sections
1311 and 1312 (12 U.S.C. 4511, 4512) and inserting the following:
``SEC. 1311. ESTABLISHMENT OF OFFICE OF FEDERAL ENTERPRISE SUPERVISION.
``(a) Establishment.--
``(1) In general.--There is established the Office of
Federal Enterprise Supervision, which shall be an office in the
Department of the Treasury.
``(2) Authority.--The Office shall succeed to the authority
of the Director of the Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban Development
and the general regulatory and any other authority of the
Secretary of Housing and Urban Development with respect to the
enterprises (except as specifically provided otherwise in this
Act, the Federal National Mortgage Association Charter Act (12
U.S.C. 1716 et seq.), the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.), and any other
provision of Federal law).
``(b) Prohibition of Merger of Office.--Notwithstanding any other
provision of this law, the Secretary of the Treasury may not merge or
consolidate the Office, or any of the functions or responsibilities of
the Office, with any function or program administered by the Secretary.
``(c) Savings Provision.--The authority of the Director to take
actions under subtitles B and C does not in any way limit the general
supervisory and regulatory authority granted to the Director under
subsection (a).
``SEC. 1312. DIRECTOR.
``(a) Establishment of Position.--There is established the position
of the Director of the Office of Federal Enterprise Supervision, who
shall be the head of the Office.
``(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.
``(2) Term.--The Director shall be appointed for a term of
5 years.
``(3) Vacancy.--
``(A) In general.--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).
``(B) Term.--The Director appointed to fill a
vacancy under subparagraph (A) shall be appointed only
for the remainder of such term.
``(4) Service after end of term.--An individual may serve
as Director after the expiration of the term for which the
individual was appointed until a successor Director 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 on the date of enactment of the Federal Enterprise
Regulatory Reform Act of 2003, shall be the Director until the
date on which that individual's term as Director of the Office
of Federal Housing Enterprise Oversight would have expired.
``(c) Prohibition on Financial Interests.--The Director shall not
have a direct or indirect financial interest in any enterprise, nor
hold any office, position, or employment in any enterprise.''.
(b) Appointment of Director.--Notwithstanding the effective date
under section 172 or any other provision of law, the President may, at
any time after the date of enactment of this Act, appoint an individual
to serve as the Director in accordance with the provisions of the
amendment made by subsection (a) of this section.
SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR AND HUD.
(a) In General.--Section 1313 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4513) is amended to read as follows:
``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.
``(a) Duties.--
``(1) Principal duties.--The principal duties of the
Director shall be to ensure that the enterprises--
``(A) operate in a financially safe and sound
manner;
``(B) carry out their missions in a financially
safe and sound manner and only through activities that
have been authorized under, and are consistent with the
purposes of, the provisions of Federal law that charter
the enterprises; and
``(C) remain adequately capitalized.
``(2) Other duties.--To the extent consistent with
paragraph (1), the duty of the Director shall be to exercise
general supervisory and regulatory authority over the
enterprises, in accordance with this title, the Federal
National Mortgage Association Charter Act (12 U.S.C. 1716 et
seq.), the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1451 et seq.), and any other provisions of law.
``(b) Authority Exclusive of Secretary.--Except as specifically
provided under this Act, the Federal National Mortgage Association
Charter Act, the Federal Home Loan Mortgage Corporation Act, or any
other provision of Federal law, the authority of the Director with
respect to the enterprises shall not be subject to the review,
approval, or intervention of the Secretary of the Treasury.
``(c) Delegation of Authority.--The Director may delegate to
officers and employees of the Director any of the functions, powers,
and duties of the Director, with respect to supervision and regulation
of the enterprises, as the Director considers appropriate.''.
(b) Prior Approval Authority for New Programs.--Part 1 of Subtitle
A of title XIII of the Housing and Community Development Act of 1992
(12 U.S.C. 4501 et seq.) is amended by adding at the end the following:
``SEC. 1319H. PRIOR APPROVAL AUTHORITY FOR NEW PROGRAMS.
``(a) In General.--The Director shall require each enterprise to
obtain the approval of the Director for any new program of the
enterprise before implementing the program.
``(b) Standard for Approval.--The Director shall approve any new
program of an enterprise for purposes of subsection (a) unless--
``(1) in the case of a new program of the Federal National
Mortgage Association, the Director determines that the program
is not authorized under section 304 or paragraph (2), (3), (4),
or (5) of section 302(b) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1717(b));
``(2) in the case of a new program of the Federal Home Loan
Mortgage Corporation, the Director determines that the program
is not authorized under paragraph (1), (4), or (5) of section
305(a) of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1451 et seq.); or
``(3) the Director determines that the new program is not
in the public interest.
``(c) Procedure for Approval.--
``(1) Submission of request.--An enterprise shall submit to
the Director a written request for approval of a new program
under subparagraph (A) that describes the program in such form
as prescribed by order or regulation of the Director.
``(2) Response.--
``(A) In general.--Not later than 45 days after the
date of submission of a request for approval under
paragraph (1), the Director shall--
``(i) approve the request; or
``(ii) deny the request and submit a report
explaining the reasons for the denial to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking,
Housing and Urban Affairs of the Senate.
``(B) Extension.--The Director may extend the time
period under subparagraph (A) for a single additional
15 day period only if the Director requests additional
information from the enterprise.
``(3) Failure to respond.--If the Director fails to approve
the request or fails to submit a report under paragraph
(2)(A)(ii) during the period provided, the request shall be
considered to have been approved by the Director.
``(4) Review of disapproval.--
``(A) Submission of new information.--If the
Director submits a report under paragraph (2)(A)(ii)
denying a request for reasons listed under paragraph
(1) or (2) of subsection (b), the Director shall allow
the enterprise to submit new information in support of
the request for approval.
``(B) New programs not in the public interest.--If
the Director submits a report under paragraph
(2)(A)(ii) denying a request after finding that the
program is not in the public interest under subsection
(b)(3), the Director shall provide the enterprise with
notice and opportunity for a hearing on the record
regarding such denial.''.
(c) Repeal of HUD Authority.--Part 2 of Subtitle A of title XIII of
the Housing and Community Development Act of 1992 (12 U.S.C. 4501 et
seq.) is amended by striking sections 1321 and 1322.
(d) Authority of HUD for Housing Goals.--
(1) In general.--Section 1331 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4561) is amended--
(A) in the first sentence of subsection (a), by
inserting ``of Housing and Urban Development'' after
``The Secretary''; and
(B) by adding at the end the following:
``(d) Definition.--For purposes of this part, the term `Secretary'
means the Secretary of Housing and Urban Development.''.
(2) Annual report on housing goals.--Section 1324 of the
Housing and Community Development Act of 1992 (12 U.S.C. 4544)
is amended by inserting ``of Housing and Urban Development''
after ``Secretary'' each place such term appears.
(e) Technical and Conforming Amendments.--
(1) Fannie mae.--Section 302(b)(6) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1716(b)(6)) is
amended by striking ``Secretary under section 1322'' and
inserting ``Director under section 1319H''.
(2) Freddie mac.--Section 305(c) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(c)) is amended by
striking ``Secretary under section 1322'' and inserting
``Director under section 1319H''.
(3) Financial institutions examination council.--Section
1004(a) of the Federal Financial Institutions Examination
Council Act of 1978 (12 U.S.C. 3303(a)) is amended--
(A) in paragraph (5), by striking the period; and
(B) by adding at the end the following:
``(6) the Director of the Office of Federal Enterprise
Supervision.''.
SEC. 103. 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 the second sentence of subsection (c), by striking
``The'' and inserting ``During the 3-year period that begins
upon the date of enactment of the Federal Enterprise Regulatory
Reform Act of 2003, the''; and
(2) in subsection (d), by striking ``Federal Reserve
banks'' and inserting ``Director of the Office of Thrift
Supervision''.
(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:
``(g) Appointment of Accountants, Economists, and Examiners.--
``(1) Applicability.--This section applies with respect to
any position of examiner, accountant, and economist at the
Office, with respect to supervision and regulation of the
enterprises, that is in the competitive service.
``(2) Appointment authority.--
``(A) In general.--The Director may appoint
candidates to any position described in paragraph (1)--
``(i) in accordance with the statutes,
rules, and regulations governing appointments
in the excepted service; and
``(ii) notwithstanding any statutes, rules,
and regulations governing appointments in the
competitive service.
``(B) Rule of construction.--The appointment of a
candidate to a position under this paragraph shall not
be considered to cause such position to be converted
from the competitive service to the excepted service.
``(3) Reports.--
``(A) In general.--Not later than 90 days after the
end of fiscal year 2003 (for fiscal year 2003) and 90
days after the end of fiscal year 2005 (for fiscal
years 2004 and 2005), the Director shall submit a
report with respect to its exercise of the authority
granted by paragraph (2) during such fiscal years to
the--
``(i) Committee on Government Reform and
the Committee on Financial Services of the
House of Representatives; and
``(ii) Committee on Governmental Affairs
and the Committee on Banking, Housing, and
Urban Affairs of the Senate.
``(B) Contents.--The reports submitted under
subparagraph (A) shall describe the changes in the
hiring process authorized by paragraph (2), including
relevant information related to--
``(i) the quality of candidates;
``(ii) the procedures used by the Director
to select candidates through the streamlined
hiring process;
``(iii) the numbers, types, and grades of
employees hired under the authority;
``(iv) any benefits or shortcomings
associated with the use of the authority;
``(v) the effect of the exercise of the
authority on the hiring of veterans and other
demographic groups; and
``(vi) the way in which managers were
trained in the administration of the
streamlined hiring system.''.
SEC. 104. REGULATIONS.
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:
``(a) Authority.--The Director shall issue any regulations and
orders necessary to carry out the duties of the Director, with respect
to supervision and regulation of the enterprises, under this title, the
Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et
seq.), and the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1451 et seq.), and to ensure that the purposes of this title and such
Acts are accomplished.''; and
(2) in subsection (c), by striking ``Committee on Banking,
Finance and Urban Affairs'' and inserting ``Committee on
Financial Services''.
SEC. 105. 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:
``(a) Annual Assessments.--The Director shall establish and collect
from the enterprises annual assessments in an amount not exceeding the
amount sufficient to provide for all reasonable costs and expenses of
the Office, including--
``(1) the expenses of any examinations under section 1317;
and
``(2) the expenses of obtaining any reviews and credit
assessments under subsection section 1319.'';
(2) in subsection (b), in paragraph (2), by moving the
margin 2 ems to the right;
(3) in subsection (c), by adding at the end the following:
``The Director may adjust the amounts of any semiannual
assessments for an assessment under subsection (a) that are to
be paid pursuant to subsection (b) by an enterprise, as
necessary in the discretion of the Director, to ensure that the costs
of enforcement activities under subtitles B and C for an enterprise are
borne only by that enterprise.'';
(4) in subsection (f), by striking ``Any assessments
collected'' and all that follows and inserting the following:
``Notwithstanding any other provision of law, any assessments
collected by the Director pursuant to this section shall be
deposited in the Fund in an account for the Director. Any
amounts in the Fund are hereby made available, without fiscal
year limitation, to the Director (to the extent of amounts in
the Director's account) for carrying out the supervisory and
regulatory responsibilities of the Director, with respect to
the enterprises, including any necessary administrative and
nonadministrative expenses of the Director in carrying out the
purposes of this title, the Federal National Mortgage
Association Charter Act (12 U.S.C. 1716 et seq.), and the
Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et
seq.).''; and
(5) in subsection (g), by striking paragraphs (1) and (2)
and inserting the following:
``(1) Financial operating plans and forecasts.--Before the
beginning of each fiscal year, the Director shall submit a copy
of the financial operating plans and forecasts for the Office
to the Director of the Office of Management and Budget.
``(2) Reports of operations.--As soon as practicable after
the end of each fiscal year and each quarter thereof, the
Director shall submit a copy of the report of the results of
the operations of the Office during such period to the Director
of the Office of Management and Budget.''.
SEC. 106. INDEPENDENCE OF DIRECTOR IN CONGRESSIONAL TESTIMONY AND
RECOMMENDATIONS.
Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by
inserting ``the Director of the Office of Federal Enterprise
Supervision of the Department of the Treasury,'' after ``the Federal
Housing Finance Board,''.
SEC. 107. LIMITATION ON NONMISSION-RELATED ASSETS.
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 Enterprises, Special
Enforcement Powers, and Limitation on Nonmission-Related Assets'';
and
(2) by adding at the end the following:
``SEC. 1369E. LIMITATION ON NONMISSION-RELATED ASSETS.
``(a) In General.--The Director may, by regulation, determine the
type and amount of nonmission-related assets that an enterprise may
hold at any time. The Director shall, in any such regulation, define
the term `nonmission-related asset' for purposes of this section.
``(b) Rule of Construction.--Subsection (a) may not be construed to
authorize an enterprise to engage in any new program relating to any
nonmission-related asset without obtaining the prior approval of the
Director in accordance with section 1319H.''.
SEC. 108. REPORTS.
Sections 1327 and 1328 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4547, 4548) are amended by striking ``Secretary''
each place it appears and inserting ``Director''.
SEC. 109. RISK-BASED CAPITAL TEST FOR ENTERPRISES.
Section 1361 of the Housing and Community Development Act of 1992
(12 U.S.C. 4611) is amended--
(1) in subsection (a)(2)(A), by inserting ``, or change in
such other manner as the Director considers appropriate,''
after ``subparagraph (C),'';
(2) in subsection (b)(1), by adding at the end the
following: ``Notwithstanding subsection (a), the Director may,
in the sole discretion of the Director, make any assumptions
that the Director considers appropriate regarding interest
rates, home prices, and new business. Such assessment shall
ensure that enterprise risk-based capital standards are, to the
greatest extent feasible, comparable to those imposed by the
appropriate Federal banking agency (as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813)) for
comparable risk. The risk-based assessment relating to new
business under this paragraph shall ensure that the enterprise
is able to remain a viable enterprise in full compliance with
all applicable risk-based capital and minimum capital
standards, and that it can fulfill its role of ensuring
appropriate secondary market liquidity throughout the stress
test.''; and
(3) in subsection (c)(2), by inserting ``, or such other
percentage as the Director considers appropriate'' before the
period at the end.
SEC. 110. 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) by striking subsection (b);
(2) by striking ``(a) In General.--''; and
(3) in the matter preceding paragraph (1), by inserting
before ``the sum of'' the following: ``the amount established
by the Director, by regulation or order, as such amount may be
adjusted from time-to-time by the Director to achieve the
purposes of this title, that is not less than''.
(b) Critical Capital Level.--Section 1363 of the Housing and
Community Development Act of 1992 (12 U.S.C. 4613) is amended, in the
matter preceding paragraph (1), by inserting before ``the sum of'' the
following: ``the amount established by the Director, by regulation or
order, as such amount may be adjusted from time-to-time by the Director
to achieve the purposes of this title, that is not less than''.
SEC. 111. DEFINITIONS.
Section 1303 of the Housing and Community Development Act of 1992
(12 U.S.C. 4502) is amended--
(1) in paragraph (5), by striking ``Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' and inserting ``Federal Enterprise Supervision of
the Department of the Treasury'';
(2) in paragraphs (8), (9), (10), and (19), by inserting
``of Housing and Urban Development'' after ``Secretary'' each
place such term appears;
(3) in paragraph (14), by striking ``Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development'' and inserting ``Federal Enterprise Supervision of
the Department of the Treasury'';
(4) by striking paragraph (15);
(5) by redesignating paragraphs (7) through (14) (as
amended by the preceding provisions of this Act) as paragraphs
(8) through (15), respectively; and
(6) by inserting after paragraph (6) the following:
``(7) Enterprise-affiliated party.--The term `enterprise-
affiliated party' means--
``(A) any director, officer, employee, or
controlling stockholder of, or agent for, an
enterprise;
``(B) any shareholder, consultant, joint venture
partner, and any other person as determined by the
Director (by regulation or case-by-case) who
participates in the conduct of the affairs of an
enterprise; and
``(C) any independent contractor (including any
attorney, appraiser, or accountant) who 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,
which caused or is likely to cause more than a minimal
financial loss to, or a significant adverse effect on,
the enterprise.''.
Subtitle B--Prompt Corrective Action
SEC. 131. CAPITAL CLASSIFICATIONS.
Section 1364 of the Housing and Community Development Act of 1992
(12 U.S.C. 4614) is amended--
(1) by striking subsection (b) and inserting the following:
``(b) Discretionary Classification.--
``(1) Grounds for reclassification.--The Director may
reclassify an enterprise under paragraph (2) if--
``(A) at any time, the Director determines in
writing that an enterprise is engaging in conduct that
could result in a rapid depletion of core capital or
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 an enterprise is in an
unsafe or unsound condition; or
``(C) pursuant to section 1371(b), the Director
deems an enterprise 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
an enterprise for any reason not specified in this subsection,
if the Director takes any action described in paragraph (1) the
Director may classify an enterprise--
``(A) as undercapitalized, if the enterprise is
otherwise classified as adequately capitalized;
``(B) as significantly undercapitalized, if the
enterprise is otherwise classified as undercapitalized;
and
``(C) as critically undercapitalized, if the
enterprise is otherwise classified as significantly
undercapitalized.'';
(2) by redesignating subsection (d) as subsection (e); and
(3) by inserting after subsection (c) the following:
``(d) Restriction on Capital Distributions.--
``(1) In general.--An enterprise shall make no capital
distribution if, after making the distribution, the enterprise
would be undercapitalized.
``(2) Exception.--Notwithstanding paragraph (1), the
Director may permit an enterprise 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 enterprise in
at least an equivalent amount; and
``(B) will reduce the financial obligations of the
enterprise or otherwise improve the financial condition
of the enterprise.''.
SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED
ENTERPRISES.
(a) Effective Date for Supervisory Actions.--Section 1365(c) of the
Housing and Community Development Act of 1992 (12 U.S.C. 4615(c)) is
amended by striking ``1-year'' and inserting ``6-month''.
(b) Supervisory Actions.--Section 1365 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4615) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (1) and (2) as
paragraphs (2) and (3), respectively;
(B) by inserting before paragraph (2) the
following:
``(1) Required monitoring.--The Director shall--
``(A) closely monitor the condition of any
undercapitalized enterprise;
``(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
enterprise to determine whether the plan, restrictions,
and requirements are achieving the purpose of this
section.''; and
(C) by inserting at the end the following:
``(4) Restriction of asset growth.--An undercapitalized
enterprise shall not permit its average total assets during any
calendar quarter to exceed its average total assets during the
preceding calendar quarter unless--
``(A) the Board has accepted the enterprise's
capital restoration plan;
``(B) any increase in total assets is consistent
with the plan; and
``(C) the ratio of tangible equity to assets of the
enterprise increases during the calendar quarter at a
rate sufficient to enable the enterprise to become
adequately capitalized within a reasonable time.
``(5) Prior approval of acquisitions and issuance of new
products.--An undercapitalized enterprise shall not, directly
or indirectly, acquire any interest in any entity or issue a
new product unless--
``(A) the Director has accepted the capital
restoration plan of the enterprise, the enterprise 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.''; and
(2) in the subsection heading for subsection (b), by
striking ``From Undercapitalized to Significantly
Undercapitalized'';
(3) by redesignating subsection (c) (as amended by
subsection (a)) as subsection (d); and
(4) by inserting after subsection (b) the following:
``(c) Other Discretionary Safeguards.--The Director may take, with
respect to an undercapitalized enterprise, any of the actions
authorized to be taken under section 1366 with respect to a
significantly undercapitalized enterprise, if the Director determines
that such actions are necessary to carry out the purpose of this
subtitle.''.
SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED ENTERPRISES.
Section 1366 of the Housing and Community Development Act of 1992
(12 U.S.C. 4616) is amended--
(1) 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,
1 or more'';
(C) by redesignating paragraphs (5) and (6) as
paragraphs (6) and (7), respectively;
(D) by inserting after paragraph (4) the following:
``(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 enterprise.
``(B) Dismissal of directors or executive
officers.--Require the enterprise to dismiss from
office any director or executive officer who had held
office for more than 180 days immediately before the
enterprise became undercapitalized. Dismissal under
this subparagraph shall not be construed to be a
removal pursuant to the Director's enforcement powers
under section 1377.
``(C) Employ qualified executive officers.--Require
the enterprise 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:
``(8) Other action.--Require the enterprise 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.'';
(2) by redesignating subsection (c) as subsection (d); and
(3) by inserting after subsection (b) the following:
``(c) Restriction on Compensation of Executive Officers.--An
enterprise that is classified as significantly undercapitalized may
not, without prior written approval by the Director--
``(A) pay any bonus to any executive officer; or
``(B) 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 enterprise became
undercapitalized.''.
Subtitle C--Enforcement Actions
SEC. 151. 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:
``(a) Issuance for Unsafe or Unsound Practices and Violations of
Rules or Laws.--
``(1) In general.--If, in the opinion of the Director, an
enterprise or any enterprise-affiliated party is engaging or
has engaged, or the Director has reasonable cause to believe
that the enterprise or any enterprise-affiliated party is about
to engage, in an unsafe or unsound practice in conducting the
business of the enterprise or is violating or has violated, or
the Director has reasonable cause to believe that the
enterprise or any enterprise-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 enterprise or any written agreement
entered into with the Director, the Director may issue and serve upon
the enterprise or such party a notice of charges in respect thereof.
``(2) Limitations.--The Director may not enforce compliance
with--
``(A) any housing goal established under subpart B
of part 2 of subtitle A of this title;
``(B) section 1336 or 1337 of this title;
``(C) subsection (m) or (n) of section 309 of the
Federal National Mortgage Association Charter Act (12
U.S.C. 1723a(m), (n)); or
``(D) subsection (e) or (f) of section 307 of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1456(e), (f)).
``(b) Issuance for Unsatisfactory Rating.--If an enterprise
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 enterprise to be engaging in an unsafe or unsound practice for
purposes of this subsection.''; and
(2) in subsection (c)(2), by striking ``or director'' and
inserting ``director, or enterprise-affiliated party''.
SEC. 152. 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:
``(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 notice of charges served upon the
enterprise or any enterprise-affiliated party under section 1371(a), or
the continuation thereof, is likely to cause insolvency or significant
dissipation of assets or earnings of the enterprise, or is likely to
weaken the condition of the enterprise prior to the completion of the
proceedings conducted pursuant to sections 1371 and 1373, the Director
may issue a temporary order requiring the enterprise 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 subsection
1371(d).'';
(2) in subsection (b), by striking ``or director'' and
inserting ``director, or enterprise-affiliated party'';
(3) in subsection (d), by striking ``or director'' and
inserting ``director, or enterprise-affiliated party''; and
(4) by striking subsection (e) and inserting the following:
``(e) Enforcement.--In the case of violation or threatened
violation of, or failure to obey, a temporary cease-and-desist order
issued under 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
enterprise 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. 153. 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 through 1379B (12 U.S.C.
4637-41) as sections 1379 through 1379D, respectively; and
(2) by inserting after section 1376 (12 U.S.C. 4636) the
following:
``SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.
``(a) Authority To Issue Order.--Whenever the Director determines
that--
``(1) any enterprise-affiliated party has, directly or
indirectly--
``(A) violated--
``(i) any law or regulation;
``(ii) any cease-and-desist order which has
become final;
``(iii) any condition imposed in writing by
the Director in connection with the grant of
any application or other request by such
enterprise; or
``(iv) any written agreement between such
enterprise and the Director;
``(B) engaged or participated in any unsafe or
unsound practice in connection with any enterprise; 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 enterprise 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
enterprise,
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 enterprise.
``(b) Suspension Order.--
``(1) Suspension or prohibition authority.--If the Director
serves written notice under subsection (a) to any enterprise-
affiliated party of the Director's intention to issue an order
under, the Director may suspend such party from office or
prohibit such party from further participation in any manner in the
conduct of the affairs of the enterprise, if the Director--
``(A) determines that such action is necessary for
the protection of the enterprise; and
``(B) serves such party with written notice of the
suspension order.
``(2) Effective period.--Any suspension order issued under
subsection (a)--
``(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 subsection (a) to any enterprise-affiliated party,
the Director shall serve a copy of such order on any enterprise
with which such party is affiliated at the time such order is
issued.
``(c) Notice, Hearing, and Order.--A notice of intention to remove
an enterprise-affiliated party from office or to prohibit such party
from participating in the conduct of the affairs of an enterprise 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 enterprise, as it
may deem appropriate. Any such order shall become effective at the
expiration of 30 days after service upon such enterprise 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 enterprise;
``(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 enterprise;
``(3) violate any voting agreement previously approved by
the Director; or
``(4) vote for a director, or serve or act as an
enterprise-affiliated party.
``(e) Industry-Wide Prohibition.--
``(1) In general.--Except as provided in subparagraph (2),
any person who, pursuant to an order issued under subsection
(h), has been removed or suspended from office in an enterprise
or prohibited from participating in the conduct of the affairs
of an enterprise 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 enterprise.
``(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 enterprise-affiliated
party or prohibits such party from participating in the conduct
of the affairs of an enterprise, 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 enterprise 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 Enterprise-Affiliated
Party.--Within 10 days after any enterprise-affiliated party has been
suspended from office or prohibited from participation in the conduct
of the affairs of an enterprise 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 enterprise is located, for a stay of such
suspension or prohibition 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
or prohibition.
``(h) Suspension or Removal of Enterprise-Affiliated Party Charged
With Felony.--
``(1) Suspension or prohibition.--
``(A) In general.--Whenever any enterprise-
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 enterprise or
impair public confidence in the enterprise, by written
notice served upon such party, suspend such party from
office or prohibit such party from further
participation in any manner in the conduct of the
affairs of any enterprise.
``(B) Provisions applicable to notice.--
``(i) Copy.--A copy of any notice under
paragraph (1)(A) shall also be served upon the
enterprise.
``(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 an enterprise-
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 enterprise or impair public confidence
in the enterprise, issue and serve upon such party an order removing
such party from office or prohibiting such party from further
participation in any manner in the conduct of the affairs of the
enterprise without the prior written consent of the Director.
``(B) Provisions applicable to order.--
``(i) Copy.--A copy of any order under
paragraph (2)(A) shall also be served upon the
enterprise, whereupon the enterprise-affiliated
party who is subject to the order (if a
director or an officer) shall cease to be a
director or officer of such enterprise.
``(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 enterprise
affairs under subsection (a), (d), or (e).
``(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.--
``(A) In general.--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 an
enterprise 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.
``(B) Suspension of all directors.--In the event
all of the directors of an enterprise 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 enterprise 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 enterprise-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 enterprise by such party does
not, or is not likely to, pose a threat to the interests of the
enterprise or threaten to impair public confidence in the
enterprise. 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 enterprise 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 enterprise 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
enterprise 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
the court for final decision, the court 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 enterprise or the enterprise-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 enterprise 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 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 action
under section 1377 of the Housing and Community Development Act
of 1992 temporarily results in a lesser number, the''.
SEC. 154. 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:
``(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 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. 155. 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), in the matter preceding paragraph
(1), by striking ``or any executive officer or'' and inserting
``any executive officer of an enterprise, any enterprise-
affiliated party, or any'';
(2) by striking subsection (b) and inserting the following:
``(b) Amount of Penalty.--
``(1) First tier.--Any enterprise which, or any enterprise-
affiliated party who--
``(A) violates any provision of this title, the
Federal National Mortgage Association Charter Act (12
U.S.C. 1716 et seq.), the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.), or any order,
condition, rule, or regulation under any such title or
Act, except that the Director may not 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)), or
with subsection (e) or (f) of section 307 of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1456(e), (f));
``(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 enterprise;
``(D) violates any written agreement between the
enterprise and the Director; or
``(E) engages in any conduct the Director
determines to be an unsafe or unsound practice,
shall forfeit and pay a civil penalty of not more than $10,000
for each day during which such violation continues.
``(2) Second tier.--Notwithstanding paragraph (1)--
``(A) if an enterprise, or an enterprise-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 enterprise; 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 enterprise; or
``(iii) results in pecuniary gain or other
benefit to such party,
the enterprise or enterprise-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 enterprise which, or any enterprise-affiliated party who--
``(A) knowingly--
``(i) commits any violation described in
any subparagraph of paragraph (1);
``(ii) engages in any unsafe or unsound
practice in conducting the affairs of such
enterprise; or
``(iii) breaches any fiduciary duty; and
``(B) knowingly or recklessly causes a substantial
loss to such enterprise 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 an
enterprise, an amount not to exceed $2,000,000; and
``(B) in the case of any enterprise, $2,000,000.'';
and
(3) in subsection (d)--
(A) by striking ``or director'' each place such
term appears and inserting ``director, or enterprise-
affiliated party'';
(B) by striking ``request the Attorney General of
the United States to'';
(C) by inserting ``, or the United States district
court within the jurisdiction of which the headquarters
of the enterprise is located,'' after ``District of
Columbia''; and
(D) by striking ``, or may, under the direction and
control of the Attorney General, bring such an
action''.
SEC. 156. 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 this Act) the following:
``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 enterprise shall, notwithstanding
section 3571 of title 18, be fined not more than $1,000,000, imprisoned
for not more than 5 years, or both.''.
Subtitle D--Reports to Congress
SEC. 161. STUDIES AND REPORTS.
(a) Insured Depository Institution Holdings of Enterprise Debt and
Mortgage-Backed Securities.--Not later than 180 days after the date of
enactment of the Federal Enterprise Regulatory Reform Act of 2003, the
Secretary of the Treasury, the Board of Governors of the Federal
Reserve System, the Board of Directors of the Federal Deposit Insurance
Corporation, and the National Credit Union Administration Board shall
jointly submit a report to Congress regarding--
(1) the extent to which obligations issued or guaranteed by
the enterprises (including mortgage-backed securities) are held
by federally insured depository institutions, including such
extent by type of institution and such extent relative to the
capital of the institution;
(2) the extent to which the unlimited holdings by federally
insured depository institutions of the obligations of the
enterprises could produce systemic risk issues, particularly
for the safety and soundness of the banking system in the
United States, in the event of default or failure by an
enterprise; and
(3) the effects on the enterprises, the banking industry,
and mortgage markets, if prudent limits on the holdings of
enterprise obligations were placed on federally insured
depository institutions.
(b) Portfolio Operations, Risk Management, and Mission.--
(1) In general.--Not later than one year after the date of
enactment of the Federal Enterprise Regulatory Reform Act of
2003, the Director shall submit a report to Congress--
(A) describing the holdings of the enterprises in
retained mortgages and repurchased mortgage-backed
securities and the use of derivatives for hedging
purposes;
(B) describing the extent of such holdings relative
to other assets and the risk implications of such
holdings;
(C) containing an analysis of such holdings for
safety and soundness or mission compliance purposes;
and
(D) containing an assessment of whether such
holdings and other assets of the enterprises fulfill
the mission purposes of the enterprises under the
Federal National Mortgage Association Charter Act (12
U.S.C. 1716 et seq.) and the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.).
(2) Consultation.--The Director shall consult with the
Comptroller General of the United States in preparing the
report under this subsection and in conducting any research,
analyses, and assessments for the report.
(c) Study of Merger of FHFB With OFES.--
(1) In general.--The Secretary of the Treasury, after
consultation with the Secretary of Housing and Urban
Development and the Board of Governors of the Federal Reserve
System, shall study the feasibility and advisability of merging
the Federal Housing Finance Board and the Office of Federal
Enterprise Supervision of the Department of the Treasury.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress on the results of the study
conducted under paragraph (1).
(d) Study of Consolidation of OTS With OFES.--
(1) Study.--The Secretary of the Treasury shall study the
feasibility and efficacy of consolidating the Office of Thrift
Supervision with the Office of Federal Enterprise Supervision
of the Department of the Treasury.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress on the results of the study
conducted under paragraph (1).
(e) Recommendations.--Each report submitted pursuant to this
section shall include specific recommendations of appropriate policies,
limitations, regulations, legislation, or other actions to deal
appropriately and effectively with the issues addressed by such report.
(f) Definitions.--As used in this section, the terms ``Director''
and ``enterprise'' have the meanings given those terms under section
1303 of the Housing and Community Development Act of 1992 (42 U.S.C.
4502).
(g) Clerical Amendments.--Part 3 of subtitle A of title XIII the
Housing and Community Development Act of 1992 (106 Stat. 3969) is
amended--
(1) by striking sections 1351, 1352, and 1353 (Public Law
102-550; 106 Stat. 3969), except that the provisions of law
amended by such sections repealed shall not be affected by such
repeal; and
(2) by striking sections 1354, 1355, and 1356 (12 U.S.C.
4601-3).
Subtitle E--General Provisions
SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS.
(a) Amendments to 1992 Act.--Title XIII of the Housing and
Community Development Act of 1992 (12 U.S.C. 4501 et seq.), as amended
this Act, is further amended--
(1) 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 II of the Federal Enterprise
Regulatory Reform Act of 2003, the'';
(B) in subsection (d)--
(i) in the subsection heading, by striking
``HUD'' and inserting ``Department of the
Treasury''; and
(ii) by striking ``Housing and Urban
Development'' and inserting ``the Department of
the Treasury''; and
(C) by striking subsection (f);
(2) in section 1319A (12 U.S.C. 4520)--
(A) by striking ``(a) In General.--''; and
(B) by striking subsection (b);
(3) in section 1319F (12 U.S.C. 4525), by striking
paragraph (2);
(4) in the section heading for section 1328, by striking
``secretary'' and inserting ``director'';
(5) in section 1361 (12 U.S.C. 4611)--
(A) in subsection (e)(1), by striking the first
sentence and inserting the following: ``The Director
shall establish the risk-based capital test under this
section by regulation.''; and
(B) in subsection (f), by striking ``the
Secretary,'';
(6) in section 1364(c) (12 U.S.C. 4614(c)), by striking the
last sentence;
(7) in section 1367(a)(2) (12 U.S.C. 4617(a)(2)), by
striking ``with the written concurrence of the Secretary of the
Treasury,'';
(8) by striking section 1383;
(9) by striking ``Committee on Banking, Finance and Urban
Affairs'' and inserting ``Committee on Financial Services''
each place such term appears in sections 1319B, 1319G(c),
1328(a), 1336(b)(3)(C), 1337, and 1369(a)(3); and
(10) by striking ``Secretary'' and inserting ``Director''
each place such term appears in--
(A) subpart A of part 2 of subtitle A (except in
sections 1322, 1324, and 1325); and
(B) subtitle B (except in section 1361(d)(1) and
1369E); and
(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 Office of Federal Enterprise Supervision of
the Department of the Treasury'', 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(n)--
(A) in paragraph (1), by inserting ``the Director
of the Office of Federal Enterprise Supervision of the
Department of the Treasury,'' after ``Senate,''; and
(B) in paragraph (3)(B), by striking ``Secretary''
and inserting ``Director of the Office of Federal
Enterprise Supervision of the Department of the
Treasury''.
(c) Amendments to Freddie Mac Act.--The Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 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 Office of Federal Enterprise Supervision of
the Department of the Treasury'', 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 section 306(i) (12 U.S.C. 1455(i))--
(A) by striking ``section 1316(c)'' and inserting
``section 306(c)''; and
(B) by striking ``section 106'' and inserting
``section 1316''; and
(3) in section 307 (12 U.S.C. 1456)--
(A) in subsection (f)--
(i) in paragraph (1), by inserting ``the
Director of the Office of Federal Enterprise
Supervision of the Department of the
Treasury,'' after ``Senate,''; and
(ii) in paragraph (3)(B), by striking
``Secretary'' and inserting ``Director of the
Office of Federal Enterprise Supervision of the
Department of the Treasury''.
(d) Amendment to 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 ``Office of
Federal Enterprise Supervision of the Department of the Treasury''.
(e) Amendments to 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 Office of Federal
Enterprise Supervision of the Department of the Treasury''.
(f) Amendment to 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).
(g) Amendment to Title 5, United States Code.--Section 5315 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 Office of Federal Enterprise Oversight,
Department of the Treasury.''.
SEC. 172. EFFECTIVE DATE.
Except as specifically provided otherwise in this title, the
amendments made by this title shall take effect on, and shall apply
beginning on, the expiration of the 1-year period beginning on the date
of enactment of this Act.
TITLE II--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY
SEC. 201. ABOLISHMENT OF OFHEO.
(a) In General.--Effective at the end of the 1-year period
beginning on the date of 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 1-year period beginning on
the date of enactment of this Act, the Director of the Office of
Federal Housing Enterprise Oversight shall, solely for the purpose of
winding up the affairs of the Office of Federal Housing Enterprise
Oversight--
(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 any transfer of such
employee pursuant to section 203; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Office.
(c) Status of Employees as Federal Agency Employees.--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 during any time such employee is so employed.
(d) Use of Property and Services.--
(1) Property.--The Director of the Office of Federal
Enterprise Supervision of the Department of the Treasury may
use the property of the Office of Federal Housing Enterprise
Oversight to perform functions that have been transferred to
the Director of the Office of Federal Enterprise Supervision
for such time as is reasonable to facilitate the orderly
transfer of functions under any other provision of this Act, or
any amendment made by this Act 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 Office of Federal Enterprise
Supervision of the Department of the Treasury 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 (12
U.S.C. 4501 et seq.), the Federal National Mortgage
Association Charter Act (12 U.S.C. 1716 et seq.), the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1451 et seq.), 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 shall abate by reason of the
enactment of this Act, except that the Director of the Office
of Federal Enterprise Supervision of the Department of the
Treasury shall be substituted for the Director of the Office of
Federal Housing Enterprise Oversight as a party to any such
action or proceeding.
SEC. 202. 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;
(B) the Secretary of Housing and Urban Development
and that relate to the Secretary's authority under--
(i) title XIII of the Housing and Community
Development Act of 1992 (12 U.S.C. 4501 et
seq.);
(ii) under the Federal National Mortgage
Association Charter Act (12 U.S.C. 1716 et
seq.), with respect to the Federal National
Mortgage Association; or
(iii) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.); or
(C) a court of competent jurisdiction and that
relate to functions transferred by this Act; and
(2) are in effect on the date of the abolishment under
section 201(a) of this Act,
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 Office of Federal Enterprise Supervision of
the Department of the Treasury until modified, terminated, set aside,
or superseded in accordance with applicable law by such Board, any
court of competent jurisdiction, or operation of law.
SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.
(a) Authority to Transfer.--The Director of the Office of Federal
Enterprise Supervision of the Department of the Treasury may transfer
employees of the Office of Federal Housing Enterprise Oversight to the
Office of Federal Enterprise Supervision for employment no later than
the date of the abolishment under section 201(a) of this Act, as the
Director considers appropriate. This Act and the amendments made by
this Act shall not be considered to result in the transfer of any
function from one agency to another or the replacement of one agency by
another, for purposes of section 3505 of title 5, United States Code,
except to the extent that the Director of the Office of Federal
Enterprise Supervision specifically provides so.
(b) Appointment Authority for Excepted and Senior Executive Service
Employees.--
(1) In general.--Subject to paragraph (2), in the case of
employees occupying positions in the excepted service or the
Senior Executive Service, any appointment authority established
pursuant to law or regulations of the Office of Personnel
Management for filling such positions shall be transferred.
(2) Decline of transfer.--The Director of the Office of
Federal Enterprise Supervision of the Department of the
Treasury 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, and
noncareer positions in the Senior Executive Service (within the
meaning of section 3132(a)(7) of title 5, United States Code).
(c) Reorganization.--If the Director of the Office of Federal
Enterprise Supervision of the Department of the Treasury determines,
after the end of the 1-year period beginning on the date of the
abolishment under section 201(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.
(d) Employee Benefit Programs.--
(1) In general.--Any employee of the Office of Federal
Housing Enterprise Oversight accepting employment with the
Director of the Office of Federal Enterprise Supervision of the
Department of the Treasury as a result of a transfer under
subsection (a) may retain for 18 months after the date such
transfer occurs membership in any employee benefit program of
the Director of the Office of Federal Enterprise Supervision of
the Department of the Treasury 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 201(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 Office of Federal Enterprise
Supervision.
(2) Payment of differential.--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 Office of Federal Enterprise Supervision. 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. 204. TRANSFER OF PROPERTY AND FACILITIES.
Upon the abolishment under section 201(a), all property of the
Office of Federal Housing Enterprise Oversight shall transfer to the
Director of the Office of Federal Enterprise Supervision of the
Department of the Treasury.
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