[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 190 Introduced in Senate (IS)]
109th CONGRESS
1st Session
S. 190
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 26, 2005
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 AfairsYYYYYYYYYYYYYYYY
_______________________________________________________________________
A BILL
To address the 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Federal Housing
Enterprise Regulatory Reform Act of 2005''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--REFORM OF REGULATION OF ENTERPRISES
Subtitle A--Improvement of Safety and Soundness Supervision
Sec. 101. Establishment of the Federal Housing Enterprise Regulatory
Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Federal Housing Enterprise Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Examiners and accountants; authority to contract for reviews
of enterprises.
Sec. 106. Assessments.
Sec. 107. Regulations and orders.
Sec. 108. Prudential management and operations standards.
Sec. 109. Limitation on nonmission-related assets.
Sec. 110. Risk-based capital test for enterprises.
Sec. 111. Limit on golden parachutes.
Sec. 112. Reporting of fraudulent loans.
Subtitle B--Improvement of Mission Supervision
Sec. 121. Transfer of program approval and housing goal oversight.
Sec. 122. Review of enterprise programs, and activities.
Sec. 123. Authority to require reports by enterprises.
Sec. 124. Monitoring and enforcing compliance with housing goals.
Sec. 125. Assumption by director of other HUD responsibilities.
Sec. 126. Administrative and judicial enforcement proceedings.
Subtitle C--Prompt Corrective Action
Sec. 141. Capital classifications.
Sec. 142. Supervisory actions applicable to undercapitalized regulated
entities.
Sec. 143. Supervisory actions applicable to significantly
undercapitalized regulated entities.
Sec. 144. Authority over critically undercapitalized enterprises.
Subtitle D--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.
Sec. 157. Notice after separation from service.
Subtitle E--Other Reporting Regarding Regulated Entities
Sec. 161. Reporting regarding regulated entities.
Subtitle F--General Provisions
Sec. 171. Conforming and technical amendments.
Sec. 172. Presidentially appointed directors of enterprises.
Sec. 173. Effective date.
TITLE II--FEDERAL HOME LOAN BANKS
Sec. 201. Directors.
Sec. 202. Definitions.
Sec. 203. Agency oversight of Federal Home Loan Banks.
Sec. 204. Debt issuing facility.
Sec. 205. Exclusion from certain securities reporting requirements.
Sec. 206. Limitation on golden parachutes.
TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND
THE FEDERAL HOUSING FINANCE BOARD
Subtitle A--OFHEO
Sec. 301. Abolishment of OFHEO.
Sec. 302. Continuation and coordination of certain regulations.
Sec. 303. Transfer and rights of employees of OFHEO.
Sec. 304. Transfer of property and facilities.
Subtitle B--Federal Housing Finance Board
Sec. 311. Abolishment of the Federal Housing Finance Board.
Sec. 312. Continuation and coordination of certain regulations.Board.
Sec. 314. Transfer of property and facilities.
TITLE IV--MISCELLANEOUS PROVISIONS
Sec. 401. Study and report on Basel II and enterprise debt.
Sec. 402. Affordable housing reporting.
SEC. 2. DEFINITIONS.
Section 1303 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4502) is amended--
(1) in paragraph (5), by striking ``Office of Federal
Housing Enterprise Oversight of the Department of Housing and
Urban Development'' and inserting ``Federal Housing Enterprise
Regulatory Agency'';
(2) in each of paragraphs (8), (9), (10), and (19), by
striking ``Secretary'' each place that term appears and
inserting ``Director'';
(3) in paragraph (14), by striking ``Office of Federal
Housing Enterprise Oversight of the Department of Housing and
Urban Development'' and inserting ``Federal Housing Enterprise
Regulatory Agency'';
(4) by redesignating paragraphs (16) through (19) as
paragraphs (21) through (24), respectively;
(5) by striking paragraph (15) and inserting the following:
``(20) Regulated entity.--The term `regulated entity'
means--
``(A) the Federal National Mortgage Association and
any affiliate thereof;
``(B) the Federal Home Loan Mortgage Corporation
and any affiliate thereof; and
``(C) any Federal Home Loan Bank.'';
(6) by striking paragraph (13) and by redesignating
paragraphs (7), (8), (9), (10), (11), (12), and (14) as
paragraphs (13) through (19), respectively;
(7) by redesignating paragraphs (2) through (4) as
paragraphs (5) through (7), respectively;
(8) by inserting after paragraph (7), as redesignated, the
following:
``(8) Default; Danger of Default.--
``(A) Default.--The term `default' means, with
respect to an enterprise, any adjudication or other
official determination by any court of competent
jurisdiction, or the Agency, pursuant to which a
conservator, receiver, limited-life enterprise, or
legal custodian is appointed for an enterprise.
``(B) In danger of default.--The term `in danger of
default' means an enterprise with respect to which--
``(i) in the opinion of the Agency--
``(I) the enterprise is not likely
to be able to pay the obligations of
the enterprise in the normal course of
business; or
``(II) the enterprise has incurred
or is likely to incur losses that will
deplete all or substantially all of its
capital; and
``(ii) there is no reasonable prospect that
the capital of the enterprise will be
replenished.''.
(9) by redesignating paragraph (1) as paragraph (2);
(10) by inserting after paragraph (2), as redesignated the
following:
``(3) Authorizing statutes.--The term `authorizing
statutes' means--
``(A) the Federal National Mortgage Association
Charter Act;
``(B) the Federal Home Loan Mortgage Corporation
Act; and
``(C) the Federal Home Loan Bank Act.
``(4) Board.--The term `Board' means the Federal Housing
Enterprise Board established under section 1313A.'';
(11) by redesignated paragraph (6) as paragraph (10), and
by inserting after paragraph (10), as redesignated, the
following:
``(11) Enterprise-affiliated party.--The term `enterprise-
affiliated party' means--
``(A) any director, officer, employee, or
controlling stockholder of, or agent for, a regulated
entity;
``(B) any shareholder, affiliate, consultant, or
joint venture partner of a regulated entity, and any
other person, as determined by the Director (by
regulation or on a case-by-case basis) that
participates in the conduct of the affairs of a
regulated entity; and
``(C) any independent contractor for a regulated
entity (including any attorney, appraiser, or
accountant), if--
``(i) the independent contractor knowingly
or recklessly participates in--
``(I) any violation of any law or
regulation;
``(II) any breach of fiduciary
duty; or
``(III) any unsafe or unsound
practice; and
``(ii) such violation, breach, or practice
caused, or is likely to cause, more than a
minimal financial loss to, or a significant
adverse effect on, the regulated entity; and
``(D) any not-for-profit corporation that receives
its principal funding, on an ongoing basis, from any
regulated entity.'';
(12) by inserting before paragraph (2), as redesignated,
the following:
``(1) Agency; director.--The term--
``(A) `Agency' means the Federal Housing Enterprise
Regulatory Agency established under section 1311; and
``(B) `Director' means the Director of the Agency,
appointed under section 1312.''; and
(13) by adding at the end the following:
``(25) Violation.--The term `violation' includes any action
(alone or in combination with another or others) for or toward
causing, bringing about, participating in, counseling, or
aiding or abetting a violation.''.
TITLE I--REFORM OF REGULATION OF ENTERPRISES
Subtitle A--Improvement of Safety and Soundness Supervision
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING ENTERPRISE REGULATORY
AGENCY.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1311
and 1312 and inserting the following:
``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING ENTERPRISE REGULATORY
AGENCY.
``(a) Establishment.--There is established the Federal Housing
Enterprise Regulatory Agency, which shall be an independent agency of
the Federal Government.
``(b) General Supervisory and Regulatory Authority.--
``(1) In general.--Each regulated entity shall, to the
extent provided in this title, be subject to the supervision
and regulation of the Agency.
``(2) Authority over fannie mae and freddie mac, the
federal home loan banks, and the federal home loan bank finance
corporation.--The Director shall have general regulatory
authority over each regulated entity and the Federal Home Loan
Bank Finance Corporation, and shall exercise such general
regulatory authority, including such duties and authorities set
forth under section 1313 of this Act, to ensure that the
purposes of this Act, the authorizing statutes, and any other
applicable law are carried out.
``(c) Savings Provision.--The authority of the Director to take
actions under subtitles B and C shall not in any way limit the general
supervisory and regulatory authority granted to the Director under
subsection (b).
``SEC. 1312. DIRECTOR.
``(a) Establishment of Position.--There is established the position
of the Director of the Agency, who shall be the head of the Agency.
``(b) Appointment; Term.--
``(1) Appointment.--The Director shall be appointed by the
President, by and with the advice and consent of the Senate,
from among individuals who are citizens of the United States,
have a demonstrated understanding of financial management or
oversight, and have a demonstrated understanding of capital
markets, including the mortgage securities markets and housing
finance.
``(2) Term.--The Director shall be appointed for a term of
6 years, unless removed before the end of such term for cause
by the President.
``(3) Vacancy.--A vacancy in the position of Director that
occurs before the expiration of the term for which a Director
was appointed shall be filled in the manner established under
paragraph (1), and the Director appointed to fill such vacancy
shall be appointed only for the remainder of such term.
``(4) Service after end of term.--An individual may serve
as the Director after the expiration of the term for which
appointed until a successor has been appointed.
``(5) Transitional provision.--Notwithstanding paragraphs
(1) and (2), the person serving as 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 Housing Enterprise Regulatory Reform Act of 2005, shall
serve as the Director until a successor has been appointed
under paragraph (1).
``(c) Deputy Director of the Division of Enterprise Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Enterprise Regulation, who shall be
designated by the Director from among individuals who are
citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a
demonstrated understanding of mortgage securities markets and
housing finance.
``(2) Functions.--The Deputy Director of the Division of
Enterprise Regulation shall have such functions, powers, and
duties with respect to the oversight of the enterprises as the
Director shall prescribe.
``(d) Deputy Director of the Division of Federal Home Loan Bank
Regulation.--
``(1) In general.--The Agency shall have a Deputy Director
of the Division of Federal Home Loan Bank Regulation, who shall
be designated by the Director from among individuals who are
citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a
demonstrated understanding of the Federal Home Loan Bank System
and housing finance.
``(2) Functions.--The Deputy Director of the Division of
Federal Home Loan Bank Regulation shall have such functions,
powers, and duties with respect to the oversight of the Federal
Home Loan Banks as the Director shall prescribe.
``(e) Deputy Director for Housing Mission and Goals.--
``(1) In general.--The Agency shall have a Deputy Director
for Housing Mission and Goals, who shall be designated by the
Director from among individuals who are citizens of the United
States, and have a demonstrated understanding of the housing
markets and housing finance.
``(2) Functions.--The Deputy Director for Housing Mission
and Goals shall have such functions, powers, and duties with
respect to the oversight of the housing mission and goals of
the enterprises as the Director shall prescribe.
``(f) Acting Director.--In the event of the death, resignation,
sickness, or absence of the Director, the Board shall, by a majority
vote, designate either the Deputy Director of the Division of
Enterprise Regulation, the Deputy Director of the Division of Federal
Home Loan Bank Regulation, or the Deputy Director for Housing Mission
and Goals, to serve as acting Director until the return of the
Director, or the appointment of a successor pursuant to subsection (b).
``(g) Limitations.--The Director and each of the Deputy Directors
may not--
``(1) have any direct or indirect financial interest in any
regulated entity or enterprise-affiliated party;
``(2) hold any office, position, or employment in any
regulated entity or enterprise-affiliated party; or
``(3) have served as an executive officer or director of
any regulated entity, or enterprise-affiliated party, at any
time during the 3-year period ending on the date of appointment
of such individual as Director or Deputy Director.''.
SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.
(a) In General.--Section 1313 of the Federal Housing Enterprises
Financial Safety and Soundness 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--
``(A) to oversee the prudential operations of each
regulated entity, on a consolidated basis; and
``(B) to ensure that--
``(i) each regulated entity operates in a
safe and sound manner, including maintenance of
adequate capital and internal controls;
``(ii) the operations and activities of
each regulated entity foster liquid, efficient,
competitive, and resilient national housing
finance markets (including activities relating
to mortgages on housing for low- and moderate-
income families involving a reasonable economic
return that may be less than the return earned
on other activities);
``(iii) each regulated entity complies with
this title and the rules, regulations,
guidelines, and orders issued under this title
and the authorizing statutes;
``(iv) each regulated entity carries out
its statutory mission only through activities
that are authorized under and consistent with
this title and the authorizing statutes;
``(v) the activities of each regulated
entity and the manner in which such regulated
entity is operated are consistent with the
public interest; and
``(vi) each regulated entity remains
adequately capitalized, after due consideration
of the risk to such regulated entity.
``(2) Scope of authority.--The authority of the Director
shall include the authority--
``(A) to review and, if warranted based on the
principal duties described in paragraph (1), reject any
acquisition or transfer of a controlling interest in an
enterprise; and
``(B) to exercise such incidental powers as may be
necessary or appropriate to fulfill the duties and
responsibilities of the Director in the supervision and
regulation of each regulated entity.
``(b) Delegation of Authority.--The Director may delegate to
officers and employees of the Agency any of the functions, powers, or
duties of the Director, as the Director considers appropriate.
``(c) Litigation Authority.--
``(1) In general.--In enforcing any provision of this
title, any regulation or order prescribed under this title, or
any other provision of law, rule, regulation, or order, or in
any other action, suit, or proceeding to which the Director is
a party or in which the Director is interested, and in the
administration of conservatorships and receiverships, the
Director may act in the Director's own name and through the
Director's own attorneys.
``(2) Subject to suit.--Except as otherwise provided by
law, the Director shall be subject to suit (other than suits on
claims for money damages) by a regulated entity with respect to
any matter under this title or any other applicable provision
of law, rule, order, or regulation under this title, in the
United States district court for the judicial district in which
the regulated entity has its principal place of business, or in
the United States District Court for the District of Columbia,
and the Director may be served with process in the manner
prescribed by the Federal Rules of Civil Procedure.''.
(b) Independence in Congressional Testimony and Recommendations.--
Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by striking
``the Federal Housing Finance Board'' and inserting ``the Director of
the Federal Housing Enterprise Regulatory Agency''.
SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD.
(a) In General.--The Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by
inserting after section 1313 the following:
``SEC. 1313A. FEDERAL HOUSING ENTERPRISE BOARD.
``(a) In General.--There is established the Federal Housing
Enterprise Board.
``(b) Duties.--The Board shall advise the Director with respect to
overall strategies and policies in carrying out the duties of the
Director under this title. Except as otherwise provided under this Act,
the Board shall not exercise any executive authority.
``(c) Composition.--The Board shall be comprised of 4 members, of
whom--
``(1) 1 member shall be the Secretary of the Treasury;
``(2) 1 member shall be the Secretary of Housing and Urban
Development;
``(3) 1 member shall be the Chairman of the Securities and
Exchange Commission; and
``(4) 1 member shall be the Director, who shall serve as
the Chairperson of the Board.
``(d) Meetings.--
``(1) In general.--The Board shall meet upon notice by the
Director, but in no event shall the Board meet less frequently
than once every 3 months.
``(2) Special meetings.--Either the Secretary of the
Treasury, the Secretary of Housing and Urban Development, or
the Chairman of the Securities and Exchange Commission may,
upon giving written notice to the Director, require a special
meeting of the Board.
``(e) Testimony.--On an annual basis, the Board shall testify
before Congress regarding--
``(1) the safety and soundness of the regulated entities;
``(2) any material deficiencies in the conduct of the
operations of the regulated entities;
``(3) the overall operational status of the regulated
entities;
``(4) an evaluation of the performance of the regulated
entities in carrying out their respective missions;
``(5) operations, resources, and performance of the Agency;
and
``(6) such other matters relating to the Agency and its
fulfillment of its mission, as the Board determines
appropriate.''.
(b) Annual Report of the Director.--Section 1319B(a) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4521 (a)) is amended--
(1) in paragraph (3), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (4), by striking the period at the end and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following:
``(5) the assessment of the Board or any of its members
with respect to--
``(A) the safety and soundness of the regulated
entities;
``(B) any material deficiencies in the conduct of
the operations of the regulated entities;
``(C) the overall operational status of the
regulated entities; and
``(D) an evaluation of the performance of the
regulated entities in carrying out their respective
missions;
``(6) operations, resources, and performance of the Agency;
and
``(7) such other matters relating to the Agency and its
fulfillment of its mission.''.
SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES.
Section 1314 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4514) is amended--
(1) in the section heading, by striking ``enterprises'' and
inserting ``regulated entities'';
(2) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(3) by striking ``the enterprise'' and inserting ``the
regulated entity''; and
(4) in subsection (a)--
(A) in the subsection heading, by striking
``Special Reports and Reports of Financial Condition''
and inserting ``Regular and Special Reports'';
(B) in paragraph (1)--
(i) by striking the paragraph heading and
inserting the following:
``(1) Regular reports.--''; and
(ii) by striking ``reports of financial
condition and operations'' and inserting
``regular reports, including financial
statements determined on a fair value basis, on
the condition (including financial condition),
management, activities, or operations of the
regulated entity, as the Director considers
appropriate''; and
(C) in paragraph (2), by striking ``whenever'' and
inserting ``on any of the topics specified in paragraph
(1) or any other relevant topics, if''.
SEC. 105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT FOR REVIEWS
OF REGULATED ENTITIES.
(a) In General.--Section 1317 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is
amended--
(1) in subsection (a), by striking ``enterprise'' each
place that term appears and inserting ``regulated entity'';
(2) in subsection (b), by striking ``an enterprise'' and
inserting ``a regulated entity'';
(3) in subsection (c), in the second sentence, by inserting
before the period ``to conduct examinations under this
section'';
(4) by redesignating subsections (d) through (f) as (e)
through (g); and
(5) by inserting after subsection (c) the following:
``(d) Inspector General.--There shall be within the Agency an
Inspector General, who shall be appointed in accordance with section
3(a) of the Inspector General Act of 1978.''.
(b) Direct Hire Authority To Hire Accountants, Economists, and
Examiners.--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:
``(h) Appointment of Accountants, Economists, and Examiners.--
``(1) Applicability.--This section shall apply with respect
to any position of examiner, accountant, economist, and
specialist in financial markets and in technology at the
Agency, with respect to supervision and regulation of the
enterprises, that is in the competitive service.
``(2) Appointment authority.--The Director may appoint
candidates to any position described in paragraph (1)--
``(A) in accordance with the statutes, rules, and
regulations governing appointments in the excepted
service; and
``(B) notwithstanding any statutes, rules, and
regulations governing appointments in the competitive
service.''.
(c) Amendments to Inspector General Act.--Section 11 of the
Inspector General Act of 1978 (5 U.S.C. 11 App.) is amended--
(1) in paragraph (1), by inserting ``, the Director of the
Federal Housing Enterprises Regulatory Agency'' after ``Social
Security Administration''; and
(2) in paragraph (2), by inserting ``, the Federal Housing
Enterprises Regulatory Agency'' after ``Social Security
Administration''.
(d) Authority To Contract for Reviews of Regulated Entities.--
Section 1319 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4519) is amended in the section
heading, by striking ``by rating organization''.
SEC. 106. ASSESSMENTS.
Section 1316 of the Federal Housing Enterprises Financial Safety
and Soundness 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 regulated entities annual assessments in an amount not
exceeding the amount sufficient to provide for reasonable costs and
expenses of the Agency, including--
``(1) the expenses of any examinations under section 1317;
``(2) the expenses of obtaining any reviews and credit
assessments under section 1319; and
``(3) such amounts in excess of actual expenses for any
given fiscal year, as deemed necessary by the Director to
maintain working capital.'';
(2) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(3) by striking ``enterprise'' each place that term appears
(other than as described in paragraph (1)), except in
subparagraphs (A) and (B) of subsection (b)(3), and inserting
``regulated entity'';
(4) in subsection (b)--
(A) in paragraph (2), by moving the margin 2 ems to
the left; and
(B) in paragraph (3)(B), by striking ``by the
enterprise'' and inserting ``by an enterprise'';
(5) 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 a regulated entity, as
the Director determines necessary to ensure that the costs of
enforcement activities under subtitles B and C for an
enterprise are borne only by that regulated entity.'';
(6) in subsection (d), by striking ``If'' and inserting
``Except with respect to amounts collected pursuant to
subsection (a)(3), if'';
(7) by striking subsection (e) and inserting the following:
``(e) Remission of Assessment.--At the end of each year for which
an assessment under this section is made, the Director shall remit to
each regulated entity any amount of an assessment collected from the
regulated entity that is attributable to subsection (a)(3), and is in
excess of the amount that the Director deems necessary to maintain
working capital.'';
(8) by striking subsection (f) and inserting the following:
``(f) No Appropriated Funds.--Salaries of the Director and other
employees of the Agency, and all other expenses thereof, may be paid
from assessments collected under this subsection or other sources, and
shall not be construed to be Government funds or appropriated monies,
or subject to apportionment for the purposes of chapter 15 of title 31,
United States Code, or any other authority.'';
(9) in subsection (g)--
(A) by striking ``the Secretary and'' each place
that term appears; and
(B) in paragraph (3)--
(i) by striking ``(A)''; and
(ii) by striking ``, and (B)'' and all that
follows through the end of the paragraph and
inserting a period; and
(10) by adding at the end the following:
``(h) Payment of Expenses.--
``(1) Home loan banks.--The expenses for performing
examination, regulation, supervision, and enforcement functions
of the Federal Home Loan Banks by the Director, or any other
agency, shall not be paid from any assessments collected by the
Director from the enterprises.
``(2) Enterprises.--The expenses for performing
examination, regulation, supervision, and enforcement function
of the enterprises by the Director, or any other agency, shall
not be paid from any assessments collected by the Director from
the Federal Home Loan Banks.''.
SEC. 107. REGULATIONS AND ORDERS.
(a) Authority.--Section 1319G of the Federal Housing Enterprises
Financial Safety and Soundness 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,
guidelines, directives, or orders necessary to carry out the duties of
the Director under this title or the authorizing statutes, and to
ensure that the purposes of this title and the authorizing statutes are
accomplished.''; and
(2) in subsection (c), by striking ``Committee on Banking,
Finance and Urban Affairs'' and inserting ``Committee on
Financial Services''.
(b) Clarification of Mission.--Part 1 of subtitle A of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.) is amended by adding after section 1319H, as added
by this Act, the following:
``SEC. 1319I. CLARIFICATION OF MISSION.
``(a) Loan Origination.--The Director shall prescribe a regulation
defining what activities constitute loan origination and are,
therefore, impermissible for the enterprises. The regulation shall
clarify that loan origination is impermissible to the enterprises
whether done directly or indirectly.
``(b) Defining the Boundary.--The Director shall prescribe
regulations defining the boundary between the primary mortgage market,
in which the enterprises are not permitted to participate directly or
indirectly, and the secondary mortgage market, in which the enterprises
are permitted to operate. Such regulations shall make clear that--
``(1) the secondary market operations can only involve a
mortgage loan after it has been closed and funded;
``(2) primary market activities include any activities that
involve direct contact with a mortgage borrower, before or
after the loan closes, except that an enterprise may make
direct contact with a borrower whose loan that enterprise
currently owns or guarantees when that loan has defaulted or is
in imminent danger of defaulting;
``(3) underwriting a loan for origination, directly or
indirectly, is a primary market activity; and
``(4) document and custodial functions are primary market
activities, and therefore impermissible to the enterprises,
until the purchase of the related loan in the secondary market.
``(c) Deadline.--The Director shall prescribe regulations required
by this section in accordance with applicable requirements of title 5,
United States Code, and shall issue them in final form not later than
18 months after the date of enactment of this section.
``(d) No Grandfathering.--No activity or investment of an
enterprise shall be presumed permissible because it occurred or was
occurring on the date of enactment of this section. The Director shall
use reasonable procedures to address any such activity or
investment.''.
SEC. 108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.
Part 1 of subtitle A of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by
inserting after section 1313 the following new section:
``SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.
``The Director may establish standards, by regulation, order, or
guideline, for each enterprise relating to--
``(1) adequacy of internal controls and information systems
taking into account the nature and scale of business
operations;
``(2) independence and adequacy of internal audit systems;
``(3) management of interest rate risk exposure;
``(4) management of market risk, including standards that
provide for systems that accurately measure, monitor, and
control market risks and, as warranted, that establish
limitations on market risk;
``(5) adequacy and maintenance of liquidity and reserves;
``(6) management of asset and investment portfolio growth;
``(7) investments and acquisitions of assets by an
enterprise, to ensure that they are consistent with the
purposes of this title and the authorizing statutes;
``(8) overall risk management processes, including adequacy
of oversight by senior management and the board of directors
and of processes and policies to identify, measure, monitor,
and control material risks, including reputational risks, and
for adequate, well-tested business resumption plans for all
major systems with remote site facilities to protect against
disruptive events; and
``(9) such other operational and management standards as
the Director determines to be appropriate.''.
SEC. 109. 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. 110. RISK-BASED CAPITAL TEST FOR ENTERPRISES.
(a) Risk Capital Levels.--Section 1361 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611)
is amended to read as follows:
``SEC. 1361. RISK-BASED CAPITAL LEVELS.
``(a) In General.--The Director shall, by regulation, establish
risk-based capital requirements for each of the regulated entities to
ensure that the regulated entities operate in a safe and sound manner,
with sufficient capital and reserves to support the risks that arise in
the operations and management of each regulated entity.
``(b) Required Registration Under the Securities Exchange Act of
1934.--
``(1) In general.--Each regulated entity shall register at
least one class of the capital stock of such regulated entity,
and maintain such registration with the Securities and Exchange
Commission, under the Securities Exchange Act of 1934.
``(2) Enterprises.--Each enterprise shall comply with
sections 14 and 16 of the Securities Exchange Act of 1934.
``(c) No Limitation.--Nothing in this section shall limit the
authority of the Director to require other reports or undertakings in
furtherance of the responsibilities of the Director under this Act.''.
(b) Minimum Capital Levels for Enterprises.--Section 1362 of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4612) is amended--
(1) in the section heading, by inserting ``for
enterprises'' after ``levels''; and
(2) by striking subsection (b) and inserting the following:
``(b) Regulatory Discretion.--The Director may, by regulation,
establish a minimum capital level that is higher than the level
specified in subsection (a).''.
SEC. 111. LIMIT ON GOLDEN PARACHUTES.
Section 1318 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4518) is amended by adding at the
end the following:
``(c) Authority To Regulate or Prohibit Certain Forms of Benefits
to Affiliated Parties.--
``(1) Golden parachutes and indemnification payments.--The
Agency may prohibit or limit, by regulation or order, any
golden parachute payment or indemnification payment.
(2) Factors to be taken into account.--The Agency shall
prescribe, by regulation, the factors to be considered by the
Agency in taking any action pursuant to paragraph (1), which
may include such factors as--
``(A) whether there is a reasonable basis to
believe that the affiliated party has committed any
fraudulent act or omission, breach of trust or
fiduciary duty, or insider abuse with regard to the
enterprise that has had a material affect on the
financial condition of the enterprise;
``(B) whether there is a reasonable basis to
believe that the affiliated party is substantially
responsible for the insolvency of the enterprise, the
appointment of a conservator or receiver for the
enterprise, or the enterprise's troubled condition (as
defined in the regulations prescribed pursuant to
section 32(f));
``(C) whether there is a reasonable basis to
believe that the affiliated party has materially
violated any applicable Federal or State law or
regulation that has had a material affect on the
financial condition of the enterprise;
``(D) whether the affiliated party was in a
position of managerial or fiduciary responsibility; and
``(E) the length of time the party was affiliated
with the enterprise, and the degree to which--
``(i) the payment reasonably reflects
compensation earned over the period of
employment; and
``(ii) the compensation involved represents
a reasonable payment for services rendered.
``(3) Certain payments prohibited.--No enterprise may
prepay the salary or any liability or legal expense of any
affiliated party if such payment is made--
``(A) in contemplation of the insolvency of such
enterprise, or after the commission of an act of
insolvency; and
``(B) with a view to, or has the result of--
``(i) preventing the proper application of
the assets of the enterprise to creditors; or
``(ii) preferring one creditor over
another.
``(4) Golden parachute payment defined.--For purposes of
this subsection--
``(A) In general.--The term `golden parachute
payment' means any payment (or any agreement to make
any payment) in the nature of compensation by any
enterprise for the benefit of any affiliated party
pursuant to an obligation of such enterprise that--
``(i) is contingent on the termination of
such party's affiliation with the enterprise;
and
``(ii) is received on or after the date on
which--
``(I) the enterprise became
insolvent;
``(II) any conservator or receiver
is appointed for such enterprise; or
``(III) the Agency determines that
the enterprise is in a troubled
condition (as defined in the
regulations of the Agency).
``(B) Certain payments in contemplation of an
event.--Any payment which would be a golden parachute
payment but for the fact that such payment was made
before the date referred to in subparagraph (A)(ii)
shall be treated as a golden parachute payment if the
payment was made in contemplation of the occurrence of
an event described in any subclause of such
subparagraph.
``(C) Certain payments not included.--The term
`golden parachute payment' shall not include--
``(i) any payment made pursuant to a
retirement plan which is qualified (or is
intended to be qualified) under section 401 of
the Internal Revenue Code of 1986 or other
nondiscriminatory benefit plan;
``(ii) any payment made pursuant to a bona
fide deferred compensation plan or arrangement
which the Board determines, by regulation or
order, to be permissible; or
``(iii) any payment made by reason of the
death or disability of an affiliated party.
``(5) Other definitions.--For purposes of this subsection--
``(A) Indemnification payment.--Subject to
paragraph (6), the term `indemnification payment' means
any payment (or any agreement to make any payment) by
any enterprise for the benefit of any person who is or
was an affiliated party, to pay or reimburse such
person for any liability or legal expense with regard
to any administrative proceeding or civil action
instituted by the Agency which results in a final order
under which such person--
``(i) is assessed a civil money penalty;
``(ii) is removed or prohibited from
participating in conduct of the affairs of the
enterprise; or
``(iii) is required to take any affirmative
action to correct certain conditions resulting
from violations or practices, by order of the
Agency.
``(B) Liability or legal expense.--The term
`liability or legal expense' means--
``(i) any legal or other professional
expense incurred in connection with any claim,
proceeding, or action;
``(ii) the amount of, and any cost incurred
in connection with, any settlement of any
claim, proceeding, or action; and
``(iii) the amount of, and any cost
incurred in connection with, any judgment or
penalty imposed with respect to any claim,
proceeding, or action.
``(C) Payment.--The term ``payment'' includes--
``(i) any direct or indirect transfer of
any funds or any asset; and
``(ii) any segregation of any funds or
assets for the purpose of making, or pursuant
to an agreement to make, any payment after the
date on which such funds or assets are
segregated, without regard to whether the
obligation to make such payment is contingent
on--
``(I) the determination, after such
date, of the liability for the payment
of such amount; or
``(II) the liquidation, after such
date, of the amount of such payment.
``(6) Certain commercial insurance coverage not treated as
covered benefit payment.--No provision of this subsection shall
be construed as prohibiting any enterprise from purchasing any
commercial insurance policy or fidelity bond, except that,
subject to any requirement described in paragraph (5)(A)(iii),
such insurance policy or bond shall not cover any legal or
liability expense of the enterprise which is described in
paragraph (5)(A).''.
SEC. 112. REPORTING OF FRAUDULENT LOANS.
Subtitle C of part 1 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as amended
by this Act, is amended by adding at the end the following:
``SEC. 1379E. REPORTING OF FRAUDULENT LOANS.
``The Director shall, by regulation, require the regulated entities
to timely report to the Director when the regulated entity discovers it
has purchased or sold a fraudulent loan.''.
Subtitle B--Improvement of Mission Supervision
SEC. 121. TRANSFER OF PROGRAM APPROVAL AND HOUSING GOAL OVERSIGHT.
Part 2 of subtitle A of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking the heading for the part and inserting the
following:
``PART 2--PROGRAM APPROVAL BY THE DIRECTOR AND ESTABLISHMENT OF HOUSING
GOALS'';
and
(2) by striking sections 1321 and 1322.
SEC. 122. REVIEW OF ENTERPRISE PROGRAMS.
Part 1 of subtitle A of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended
by this Act, is amended by adding at the end the following:
``SEC. 1319J. PRIOR APPROVAL AUTHORITY FOR NEW PROGRAMS.
``(a) In General.--The Director shall have authority to review the
appropriateness and permissibility of any enterprise activities to
assure their conformance with the purposes of this title and with the
purposes of the Federal Home Loan Mortgage Corporation Act and the
Federal National Mortgage Association Charter Act, and to protect the
safety and soundness of the enterprises. The Director may require
written applications before an activity is, or before certain types of
activities are, commenced. It may review any activity after an
enterprise has commenced it. The Director may prohibit or limit any
activity that it determines to be inappropriate or impermissible under
this section.
``(b) Notice of New Activity.--An enterprise that commences any
business product or activity under this section shall provide written
notice to the Director of the business product or activity not later
than 30 days prior to the commencement of such business product or
activity.
``(c) No Limitation.--Nothing in this section shall be deemed to
restrict the safety and soundness authority of the Director over all
new and existing programs, products, or activities.''.
SEC. 123. AUTHORITY TO REQUIRE REPORTS BY ENTERPRISES.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1327
and 1328.
SEC. 124. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS.
Section 1336 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4566) is amended--
(1) by striking ``Secretary'' each place that term appears
and inserting ``Director''; and
(2) in subsection (a)(1), by striking ``established'' and
all that follows through ``1334'' and inserting ``under this
subpart''.
SEC. 125. ASSUMPTION BY DIRECTOR OF OTHER HUD RESPONSIBILITIES.
(a) In General.--Part 2 of subtitle A of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541
et seq.) is amended--
(1) by striking ``Secretary'' each place that term appears
and inserting ``Director'' in each of--
(A) sections 1323, 1324, and 1326;
(B) subsections (a), (b), and (c) of section 1331
(12 U.S.C. 4561);
(C) subsections (a), (b), and (c) of section 1332
(12 U.S.C. 4562);
(D) subsections (a), (b), and (c) of section 1333
(12 U.S.C. 4563);
(E) subsections (a), (b), and (c) of section 1334
(12 U.S.C. 4564); and
(F) subsections (a), (b), and (c) of section 1336
(12 U.S.C. 4566);
(2) in section 1332 (12 U.S.C. 4562), by striking
subsection (d);
(3) in section 1333 (12 U.S.C. 4563), by striking
subsection (d);
(4) in section 1334 (12 U.S.C. 4564), by striking
subsection (d);
(5) by striking sections 1337 and 1338 (12 U.S.C. 4567,
4562 note); and
(6) by striking section 1349 (12 U.S.C. 4589).
(b) Retention of Fair Housing Responsibilities.--Section 1325 of
the Federal Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4545) is amended, in the matter preceding paragraph
(1), by inserting ``of Housing and Urban Development'' after ``The
Secretary''.
SEC. 126. ADMINISTRATIVE AND JUDICIAL ENFORCEMENT PROCEEDINGS.
Subpart C of part 2 of subtitle A of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4581
et seq.) is amended by striking ``Secretary'' each place that term
appears and inserting ``Director,'' in each of--
(1) section 1341 (12 U.S.C. 4581);
(2) section 1342 (12 U.S.C. 4582);
(3) section 1343 (12 U.S.C. 4583);
(4) section 1344 (12 U.S.C. 4584);
(5) section 1345 (12 U.S.C. 4585);
(6) section 1346 (12 U.S.C. 4586);
(7) section 1347 (12 U.S.C. 4587); and
(8) section 1348 (12 U.S.C. 4588).
Subtitle C--Prompt Corrective Action
SEC. 141. CAPITAL CLASSIFICATIONS.
Section 1364 of the Federal Housing Enterprises Financial Safety
and Soundness 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 a regulated entity under paragraph (2) if--
``(A) at any time, the Director determines in
writing that a regulated entity 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 regulated entity, or the
value of collateral pledged as security, has decreased
significantly;
``(B) after notice and an opportunity for hearing,
the Director determines that a regulated entity is in
an unsafe or unsound condition; or
``(C) pursuant to section 1371(b), the Director
determines that a regulated entity is engaging in an
unsafe or unsound practice.
``(2) Reclassification.--In addition to any other action
authorized under this title, including the reclassification of
a regulated entity for any reason not specified in this
subsection, if the Director takes any action described in
paragraph (1), the Director may reclassify a regulated entity--
``(A) as `undercapitalized', if the regulated
entity is otherwise classified as adequately
capitalized;
``(B) as `significantly undercapitalized', if the
regulated entity is otherwise classified as
undercapitalized; and
``(C) as `critically undercapitalized', if the
regulated entity is otherwise classified as
significantly undercapitalized.'';
(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.--A regulated entity shall make no capital
distribution if, after making the distribution, the regulated
entity would be undercapitalized.
``(2) Exception.--Notwithstanding paragraph (1), the
Director may permit a regulated entity to repurchase, redeem,
retire, or otherwise acquire shares or ownership interests if
the repurchase, redemption, retirement, or other acquisition--
``(A) is made in connection with the issuance of
additional shares or obligations of the regulated
entity in at least an equivalent amount; and
``(B) will reduce the financial obligations of the
regulated entity or otherwise improve the financial
condition of the regulated entity.''.
SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED REGULATED
ENTITIES.
Section 1365 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4615) is amended--
(1) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(2) by striking ``An enterprise'' each place that term
appears and inserting ``A regulated entity'';
(3) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(4) in subsection (a)--
(A) by redesignating paragraphs (1) and (2) as
paragraphs (2) and (3), respectively;
(B) by inserting before paragraph (2), as
redesignated, the following:
``(1) Required monitoring.--The Director shall--
``(A) closely monitor the condition of any
undercapitalized regulated entity;
``(B) closely monitor compliance with the capital
restoration plan, restrictions, and requirements
imposed on an undercapitalized regulated entity under
this section; and
``(C) periodically review the plan, restrictions,
and requirements applicable to an undercapitalized
regulated entity to determine whether the plan,
restrictions, and requirements are achieving the
purpose of this section.''; and
(C) by adding at the end the following:
``(4) Restriction of asset growth.--An undercapitalized
regulated entity 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 Director has accepted the capital
restoration plan of the regulated entity;
``(B) any increase in total assets is consistent
with the capital restoration plan; and
``(C) the ratio of tangible equity to assets of the
regulated entity 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 new activities.--
An undercapitalized regulated entity shall not, directly or
indirectly, acquire any interest in any entity or engage in any
new activity, unless--
``(A) the Director has accepted the capital
restoration plan of the regulated entity, the regulated
entity is implementing the plan, and the Director
determines that the proposed action is consistent with
and will further the achievement of the plan; or
``(B) the Director determines that the proposed
action will further the purpose of this subtitle.'';
(5) in subsection (b)--
(A) in the subsection heading, by striking
``Discretionary'';
(B) in the matter preceding paragraph (1), by
striking ``may'' and inserting ``shall''; and
(C) in paragraph (2)--
(i) by striking ``make, in good faith,
reasonable efforts necessary to''; and
(ii) by striking the period at the end and
inserting ``in any material respect.''; and
(6) by striking subsection (c) and inserting the following:
``(c) Other Discretionary Safeguards.--The Director may take, with
respect to an undercapitalized regulated entity, any of the actions
authorized to be taken under section 1366 with respect to a
significantly undercapitalized regulated entity, if the Director
determines that such actions are necessary to carry out the purpose of
this subtitle.''.
SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY
UNDERCAPITALIZED REGULATED ENTITIES.
Section 1366 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4616) is amended--
(1) by striking ``the enterprise'' each place that term
appears and inserting ``the regulated entity'';
(2) by striking ``An enterprise'' each place that term
appears and inserting ``A regulated entity'';
(3) by striking ``an enterprise'' each place that term
appears and inserting ``a regulated entity'';
(4) 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 striking paragraph (6);
(D) by redesignating paragraph (5) as paragraph
(6);
(E) by inserting after paragraph (4) the following:
``(5) Improvement of management.--Take 1 or more of the
following actions:
``(A) New election of board.--Order a new election
for the board of directors of the regulated entity.
``(B) Dismissal of directors or executive
officers.--Require the regulated entity to dismiss from
office any director or executive officer who had held
office for more than 180 days immediately before the
date on which the regulated entity became
undercapitalized. Dismissal under this subparagraph
shall not be construed to be a removal pursuant to the
enforcement powers of the Director under section 1377.
``(C) Employ qualified executive officers.--Require
the regulated entity to employ qualified executive
officers (who, if the Director so specifies, shall be
subject to approval by the Director).''; and
(F) by adding at the end the following:
``(8) Other action.--Require the regulated entity to take
any other action that the Director determines will better carry
out the purpose of this section than any of the actions
specified in this paragraph.'';
(5) by redesignating subsection (c) as subsection (d); and
(6) by inserting after subsection (b) the following:
``(c) Restriction on Compensation of Executive Officers.--A
regulated entity that is classified as significantly undercapitalized
in accordance with section 1364 may not, without prior written approval
by the Director--
``(1) pay any bonus to any executive officer; or
``(2) provide compensation to any executive officer at a
rate exceeding the average rate of compensation of that officer
(excluding bonuses, stock options, and profit sharing) during
the 12 calendar months preceding the calendar month in which
the regulated entity became significantly undercapitalized.''.
SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED ENTERPRISES.
(a) In General.--Section 1367 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617) is amended
to read as follows:
``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED ENTERPRISES.
``(a) Appointment of the Agency as Conservator or Receiver.--
``(1) In general.--Notwithstanding any other provision of
Federal law, the Director may establish a conservatorship or
receivership in the manner provided under paragraph (2).
``(2) Appointment.--The Agency may, at the discretion of
the Director, be appointed conservator or receiver for the
purpose of reorganizing, rehabilitating, or winding up the
affairs of an enterprise.
``(3) Grounds for appointing conservator or receiver.--The
grounds for appointing a conservator or receiver for any
enterprise are as follows:
``(A) Assets insufficient for obligations.--The
assets of the enterprise are less than the obligations
of the enterprise to its creditors and others.
``(B) Substantial dissipation.--Substantial
dissipation of assets or earnings due to--
``(i) any violation of any provision of
Federal or State law; or
``(ii) any unsafe or unsound practice.
``(C) Unsafe or unsound condition.--An unsafe or
unsound condition to transact business.
``(D) Cease-and-desist orders.--Any willful
violation of a cease-and-desist order that has become
final.
``(E) Concealment.--Any concealment of the books,
papers, records, or assets of the enterprise, or any
refusal to submit the books, papers, records, or
affairs of the enterprise, for inspection to any
examiner or to any lawful agent of the Director.
``(F) Inability to meet obligations.--The
enterprise is likely to be unable to pay its
obligations or meet the demands of its creditors in the
normal course of business.
``(G) Losses.--The enterprise has incurred or is
likely to incur losses that will deplete all or
substantially all of its capital, and there is no
reasonable prospect for the enterprise to become
adequately capitalized (as defined in section
1364(a)(1)).
``(H) Violations of law.--Any violation of any law
or regulation, or any unsafe or unsound practice or
condition that is likely to--
``(i) cause insolvency or substantial
dissipation of assets or earnings; or
``(ii) weaken the condition of the
enterprise.
``(I) Consent.--The enterprise, by resolution of
its board of directors or its shareholders or members,
consents to the appointment.
``(J) Undercapitalization.--The enterprise is
undercapitalized or significantly undercapitalized (as
defined in section 1364(a)(3)), and--
``(i) has no reasonable prospect of
becoming adequately capitalized;
``(ii) fails to become adequately
capitalized, as required by--
``(I) section 1365(a)(1) with
respect to an undercapitalized
enterprise; or
``(II) section 1366(a)(1) with
respect to a significantly
undercapitalized enterprise;
``(iii) fails to submit a capital
restoration plan acceptable to the Agency
within the time prescribed under section 1369C;
or
``(iv) materially fails to implement a
capital restoration plan submitted and accepted
under section 1369C.
``(K) Critical undercapitalization.--The enterprise
is critically undercapitalized, as defined in section
1364(a)(4).
``(L) Money laundering.--The Attorney General
notifies the Director in writing that the enterprise
has been found guilty of a criminal offense under
section 1956 or 1957 of title 18, United States Code,
or section 5322 or 5324 of title 31, United States
Code.
``(4) Judicial review.--
``(A) In general.--If the Agency is appointed
conservator or receiver under this section, the
enterprise may, within 30 days of such appointment,
bring an action in the United States District Court for
the judicial district in which the home office of such
enterprise is located, or in the United States District
Court for the District of Columbia, for an order
requiring the Agency to remove itself as conservator or
receiver.
``(B) Review.--Upon the filing of an action under
subparagraph (A), the court shall, upon the merits,
dismiss such action or direct the Agency to remove
itself as such conservator or receiver.
``(5) Directors not liable for acquiescing in appointment
of conservator or receiver.--The members of the board of
directors of an enterprise shall not be liable to the
shareholders or creditors of the enterprise for acquiescing in
or consenting in good faith to the appointment of the Agency as
conservator or receiver for that enterprise.
``(6) Agency not subject to any other Federal agency.--When
acting as conservator or receiver, the Agency shall not be
subject to the direction or supervision of any other agency of
the United States or any State in the exercise of the rights,
powers, and privileges of the Agency.
``(b) Powers and Duties of the Agency as Conservator or Receiver.--
``(1) Rulemaking authority of the agency.--The Agency may
prescribe such regulations as the Agency determines to be
appropriate regarding the conduct of conservatorships or
receiverships.
``(2) General powers.--
``(A) Successor to enterprise.--The Agency shall,
as conservator or receiver, and by operation of law,
immediately succeed to--
``(i) all rights, titles, powers, and
privileges of the enterprise, and of any
stockholder, officer, or director of such
enterprise with respect to the enterprise and
the assets of the enterprise; and
``(ii) title to the books, records, and
assets of any other legal custodian of such
enterprise.
``(B) Operate the enterprise.--The Agency may, as
conservator or receiver--
``(i) take over the assets of and operate
the enterprise with all the powers of the
shareholders, the directors, and the officers
of the enterprise and conduct all business of
the enterprise;
``(ii) collect all obligations and money
due the enterprise;
``(iii) perform all functions of the
enterprise in the name of the enterprise which
are consistent with the appointment as
conservator or receiver; and
``(iv) preserve and conserve the assets and
property of such enterprise.
``(C) Functions of officers, directors, and
shareholders of an enterprise.--The Agency may, by
regulation or order, provide for the exercise of any
function by any stockholder, director, or officer of
any enterprise for which the Agency has been named
conservator or receiver.
``(D) Powers as conservator.--The Agency may, as
conservator, take such action as may be--
``(i) necessary to put the enterprise in a
sound and solvent condition; and
``(ii) appropriate to carry on the business
of the enterprise and preserve and conserve the
assets and property of the enterprise.
``(E) Additional powers as receiver.--The Agency
may, as receiver, place the enterprise in liquidation
and proceed to realize upon the assets of the
enterprise, having due regard to the conditions of the
housing finance market.
``(F) Organization of new enterprises.--The Agency
may, as receiver, organize a successor enterprise that
will operate pursuant to subsection (i).
``(G) Transfer of assets and liabilities.--The
Agency may, as conservator or receiver, transfer any
asset or liability of the enterprise in default without
any approval, assignment, or consent with respect to
such transfer.
``(H) Payment of valid obligations.--The Agency, as
conservator or receiver, shall, to the extent of
proceeds realized from the performance of contracts or
sale of the assets of an enterprise, pay all valid
obligations of the enterprise in accordance with the
prescriptions and limitations of this section.
``(I) Subpoena authority.--
``(i) In general.--
``(I) In general.--The Agency may,
as conservator or receiver, and for
purposes of carrying out any power,
authority, or duty with respect to an
enterprise (including determining any
claim against the enterprise and
determining and realizing upon any
asset of any person in the course of
collecting money due the enterprise),
exercise any power established under
section 1348.
``(II) Applicability of law.--The
provisions of section 1348 shall apply
with respect to the exercise of any
power exercised under this subparagraph
in the same manner as such provisions
apply under that section.
``(ii) Authority of director.--A subpoena
or subpoena duces tecum may be issued under
clause (i) only by, or with the written
approval of, the Director, or the designee of
the Director.
``(iii) Rule of construction.--This
subsection shall not be construed to limit any
rights that the Agency, in any capacity, might
otherwise have under section 1317 or 1379B.
``(J) Incidental powers.--The Agency may, as
conservator or receiver--
``(i) exercise all powers and authorities
specifically granted to conservators or
receivers, respectively, under this section,
and such incidental powers as shall be
necessary to carry out such powers; and
``(ii) take any action authorized by this
section, which the Agency determines is in the
best interests of the enterprise or the Agency.
``(3) Authority of receiver to determine claims.--
``(A) In general.--The Agency may, as receiver,
determine claims in accordance with the requirements of
this subsection and any regulations prescribed under
paragraph (4).
``(B) Notice requirements.--The receiver, in any
case involving the liquidation or winding up of the
affairs of a closed enterprise, shall--
``(i) promptly publish a notice to the
creditors of the enterprise to present their
claims, together with proof, to the receiver by
a date specified in the notice which shall be
not less than 90 days after the publication of
such notice; and
``(ii) republish such notice approximately
1 month and 2 months, respectively, after the
publication under clause (i).
``(C) Mailing required.--The receiver shall mail a
notice similar to the notice published under
subparagraph (B)(i) at the time of such publication to
any creditor shown on the books of the enterprise--
``(i) at the last address of the creditor
appearing in such books; or
``(ii) upon discovery of the name and
address of a claimant not appearing on the
books of the enterprise within 30 days after
the discovery of such name and address.
``(4) Rulemaking authority relating to determination of
claims.--Subject to subsection (c), the Director may prescribe
regulations regarding the allowance or disallowance of claims
by the receiver and providing for administrative determination
of claims and review of such determination.
``(5) Procedures for determination of claims.--
``(A) Determination period.--
``(i) In general.--Before the end of the
180-day period beginning on the date on which
any claim against an enterprise is filed with
the Agency as receiver, the Agency shall
determine whether to allow or disallow the
claim and shall notify the claimant of any
determination with respect to such claim.
``(ii) Extension of time.--The period
described in clause (i) may be extended by a
written agreement between the claimant and the
Agency.
``(iii) Mailing of notice sufficient.--The
requirements of clause (i) shall be deemed to
be satisfied if the notice of any determination
with respect to any claim is mailed to the last
address of the claimant which appears--
``(I) on the books of the
enterprise;
``(II) in the claim filed by the
claimant; or
``(III) in documents submitted in
proof of the claim.
``(iv) Contents of notice of
disallowance.--If any claim filed under clause
(i) is disallowed, the notice to the claimant
shall contain--
``(I) a statement of each reason
for the disallowance; and
``(II) the procedures available for
obtaining agency review of the
determination to disallow the claim or
judicial determination of the claim.
``(B) Allowance of proven claim.--The receiver
shall allow any claim received on or before the date
specified in the notice published under paragraph
(3)(B)(i) by the receiver from any claimant which is
proved to the satisfaction of the receiver.
``(C) Disallowance of claims filed after end of
filing period.--Claims filed after the date specified
in the notice published under paragraph (3)(B)(i), or
the date specified under paragraph (3)(C), shall be
disallowed and such disallowance shall be final.
``(D) Authority to disallow claims.--
``(i) In general.--The receiver may
disallow any portion of any claim by a creditor
or claim of security, preference, or priority
which is not proved to the satisfaction of the
receiver.
``(ii) Payments to less than fully secured
creditors.--In the case of a claim of a
creditor against an enterprise which is secured
by any property or other asset of such
enterprise, the receiver may treat the portion
of such claim which exceeds an amount equal to
the fair market value of such property or other
asset as an unsecured claim against the
enterprise.
``(iii) Exceptions.--No provision of this
paragraph shall apply with respect to--
``(I) any extension of credit from
any Federal Reserve Bank or the United
States Treasury; or
``(II) any security interest in the
assets of the enterprise securing any
such extension of credit.
``(E) No judicial review of determination pursuant
to subparagraph (d).--No court may review the
determination of the Agency under subparagraph (D) to
disallow a claim.
``(F) Legal effect of filing.--
``(i) Statute of limitation tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
``(ii) No prejudice to other actions.--
Subject to paragraph (10), the filing of a
claim with the receiver shall not prejudice any
right of the claimant to continue any action
which was filed before the date of the
appointment of the receiver, subject to the
determination of claims by the receiver.
``(6) Provision for judicial determination of claims.--
``(A) In general.--The claimant may file suit on a
claim (or continue an action commenced before the
appointment of the receiver) in the district or
territorial court of the United States for the district
within which the principal place of business of the
enterprise is located or the United States District
Court for the District of Columbia (and such court
shall have jurisdiction to hear such claim), before the
end of the 60-day period beginning on the earlier of--
``(i) the end of the period described in
paragraph (5)(A)(i) with respect to any claim
against an enterprise for which the Agency is
receiver; or
``(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (5)(A)(i).
``(B) Statute of limitations.--A claim shall be
deemed to be disallowed (other than any portion of such
claim which was allowed by the receiver), and such
disallowance shall be final, and the claimant shall
have no further rights or remedies with respect to such
claim, if the claimant fails, before the end of the 60-
day period described under subparagraph (A), to file
suit on such claim (or continue an action commenced
before the appointment of the receiver).
``(7) Review of claims.--
``(A) Other review procedures.--
``(i) In general.--The Agency shall
establish such alternative dispute resolution
processes as may be appropriate for the
resolution of claims filed under paragraph
(5)(A)(i).
``(ii) Criteria.--In establishing
alternative dispute resolution processes, the
Agency shall strive for procedures which are
expeditious, fair, independent, and low cost.
``(iii) Voluntary binding or nonbinding
procedures.--The Agency may establish both
binding and nonbinding processes, which may be
conducted by any government or private party.
All parties, including the claimant and the
Agency, must agree to the use of the process in
a particular case.
``(B) Consideration of incentives.--The Agency
shall seek to develop incentives for claimants to
participate in the alternative dispute resolution
process.
``(8) Expedited determination of claims.--
``(A) Establishment required.--The Agency shall
establish a procedure for expedited relief outside of
the routine claims process established under paragraph
(5) for claimants who--
``(i) allege the existence of legally valid
and enforceable or perfected security interests
in assets of any enterprise for which the
Agency has been appointed receiver; and
``(ii) allege that irreparable injury will
occur if the routine claims procedure is
followed.
``(B) Determination period.--Before the end of the
90-day period beginning on the date any claim is filed
in accordance with the procedures established under
subparagraph (A), the Director shall--
``(i) determine--
``(I) whether to allow or disallow
such claim; or
``(II) whether such claim should be
determined pursuant to the procedures
established under paragraph (5); and
``(ii) notify the claimant of the
determination, and if the claim is disallowed,
provide a statement of each reason for the
disallowance and the procedure for obtaining
agency review or judicial determination.
``(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited relief shall
be permitted to file a suit, or to continue a suit
filed before the appointment of the receiver, seeking a
determination of the rights of the claimant with
respect to such security interest after the earlier
of--
``(i) the end of the 90-day period
beginning on the date of the filing of a
request for expedited relief; or
``(ii) the date the Agency denies the
claim.
``(D) Statute of limitations.--If an action
described under subparagraph (C) is not filed, or the
motion to renew a previously filed suit is not made,
before the end of the 30-day period beginning on the
date on which such action or motion may be filed under
subparagraph (B), the claim shall be deemed to be
disallowed as of the end of such period (other than any
portion of such claim which was allowed by the
receiver), such disallowance shall be final, and the
claimant shall have no further rights or remedies with
respect to such claim.
``(E) Legal effect of filing.--
``(i) Statute of limitation tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
``(ii) No prejudice to other actions.--
Subject to paragraph (10), the filing of a
claim with the receiver shall not prejudice any
right of the claimant to continue any action
that was filed before the appointment of the
receiver, subject to the determination of
claims by the receiver.
``(9) Payment of claims.--
``(A) In general.--The receiver may, in the
discretion of the receiver, and to the extent funds are
available, pay creditor claims, in such manner and
amounts as are authorized under this section, which
are--
``(i) allowed by the receiver;
``(ii) approved by the Agency pursuant to a
final determination pursuant to paragraph (7)
or (8); or
``(iii) determined by the final judgment of
any court of competent jurisdiction.
``(B) Agreements against the interest of the
Agency.--No agreement that tends to diminish or defeat
the interest of the Agency in any asset acquired by the
Agency as receiver under this section shall be valid
against the Agency unless such agreement is in writing.
``(C) Payment of dividends on claims.--The receiver
may, in the sole discretion of the receiver, pay
dividends on proved claims at any time, and no
liability shall attach to the Agency, by reason of any
such payment, for failure to pay dividends to a
claimant whose claim is not proved at the time of any
such payment.
``(C) Rulemaking authority of the director.--The
Director may prescribe such rules, including
definitions of terms, as the Director deems appropriate
to establish a single uniform interest rate for, or to
make payments of post-insolvency interest to creditors
holding proven claims against the receivership estates
of enterprises following satisfaction by the receiver
of the principal amount of all creditor claims.
``(10) Suspension of legal actions.--
``(A) In general.--After the appointment of a
conservator or receiver for an enterprise, the
conservator or receiver may, in any judicial action or
proceeding to which such enterprise is or becomes a
party, request a stay for a period not to exceed--
``(i) 45 days, in the case of any
conservator; and
``(ii) 90 days, in the case of any
receiver.
``(B) Grant of stay by all courts required.--Upon
receipt of a request by any conservator or receiver
under subparagraph (A) for a stay of any judicial
action or proceeding in any court with jurisdiction of
such action or proceeding, the court shall grant such
stay as to all parties.
``(11) Additional rights and duties.--
``(A) Prior final adjudication.--The Agency shall
abide by any final unappealable judgment of any court
of competent jurisdiction which was rendered before the
appointment of the Agency as conservator or receiver.
``(B) Rights and remedies of conservator or
receiver.--In the event of any appealable judgment, the
Agency as conservator or receiver shall--
``(i) have all the rights and remedies
available to the enterprise (before the
appointment of such conservator or receiver)
and the Agency, including removal to Federal
court and all appellate rights; and
``(ii) not be required to post any bond in
order to pursue such remedies.
``(C) No attachment or execution.--No attachment or
execution may issue by any court upon assets in the
possession of the receiver.
``(D) Limitation on judicial review.--Except as
otherwise provided in this subsection, no court shall
have jurisdiction over--
``(i) any claim or action for payment from,
or any action seeking a determination of rights
with respect to, the assets of any enterprise
for which the Agency has been appointed
receiver; or
``(ii) any claim relating to any act or
omission of such enterprise or the Agency as
receiver.
``(E) Disposition of assets.--In exercising any
right, power, privilege, or authority as conservator or
receiver in connection with any sale or disposition of
assets of an enterprise for which the Agency has been
appointed conservator or receiver, the Agency shall
conduct its operations in a manner which--
``(i) maximizes the net present value
return from the sale or disposition of such
assets;
``(ii) minimizes the amount of any loss
realized in the resolution of cases; and
``(iii) ensures adequate competition and
fair and consistent treatment of offerors.
``(12) Statute of limitations for actions brought by
conservator or receiver.--
``(A) In general.--Notwithstanding any provision of
any contract, the applicable statute of limitations
with regard to any action brought by the Agency as
conservator or receiver shall be--
``(i) in the case of any contract claim,
the longer of--
``(I) the 6-year period beginning
on the date the claim accrues; or
``(II) the period applicable under
State law; and
``(ii) in the case of any tort claim, the
longer of--
``(I) the 3-year period beginning
on the date the claim accrues; or
``(II) the period applicable under
State law.
``(B) Determination of the date on which a claim
accrues.--For purposes of subparagraph (A), the date on
which the statute of limitations begins to run on any
claim described in such subparagraph shall be the later
of--
``(i) the date of the appointment of the
Agency as conservator or receiver; or
``(ii) the date on which the cause of
action accrues.
``(13) Revival of expired state causes of action.--
``(i) In general.--In the case of any tort
claim described under clause (ii) for which the
statute of limitations applicable under State
law with respect to such claim has expired not
more than 5 years before the appointment of the
Agency as conservator or receiver, the Agency
may bring an action as conservator or receiver
on such claim without regard to the expiration
of the statute of limitation applicable under
State law.
``(ii) Claims described.--A tort claim
referred to under clause (i) is a claim arising
from fraud, intentional misconduct resulting in
unjust enrichment, or intentional misconduct
resulting in substantial loss to the
enterprise.
``(14) Accounting and recordkeeping requirements.--
``(A) In general.--The Agency as conservator or
receiver shall, consistent with the accounting and
reporting practices and procedures established by the
Agency, maintain a full accounting of each
conservatorship and receivership or other disposition
of an enterprise in default.
``(B) Annual accounting or report.--With respect to
each conservatorship or receivership, the Agency shall
make an annual accounting or report available to the
Board, the Comptroller General of the United States,
the Committee on Banking, Housing, and Urban Affairs of
the Senate, and the Committee on Financial Services of
the House of Representatives.
``(C) Availability of reports.--Any report prepared
under subparagraph (B) shall be made available by the
Agency upon request to any shareholder of an enterprise
or any member of the public.
``(D) Recordkeeping requirement.--After the end of
the 6-year period beginning on the date that the
conservatorship or receivership is terminated by the
Director, the Agency may destroy any records of such
enterprise which the Agency, in the discretion of the
Agency, determines to be unnecessary unless directed
not to do so by a court of competent jurisdiction or
governmental agency, or prohibited by law.
``(15) Fraudulent transfers.--
``(A) In general.--The Agency, as conservator or
receiver, may avoid a transfer of any interest of an
enterprise-affiliated party, or any person who the
conservator or receiver determines is a debtor of the
enterprise, in property, or any obligation incurred by
such party or person, that was made within 5 years of
the date on which the Agency was appointed conservator
or receiver, if such party or person voluntarily or
involuntarily made such transfer or incurred such
liability with the intent to hinder, delay, or defraud
the enterprise, the Agency, the conservator, or
receiver.
``(B) Right of recovery.--To the extent a transfer
is avoided under subparagraph (A), the conservator or
receiver may recover, for the benefit of the
enterprise, the property transferred, or, if a court so
orders, the value of such property (at the time of such
transfer) from--
``(i) the initial transferee of such
transfer or the enterprise-affiliated party or
person for whose benefit such transfer was
made; or
``(ii) any immediate or mediate transferee
of any such initial transferee.
``(C) Rights of transferee or obligee.--The
conservator or receiver may not recover under
subparagraph (B) from--
``(i) any transferee that takes for value,
including satisfaction or securing of a present
or antecedent debt, in good faith; or
``(ii) any immediate or mediate good faith
transferee of such transferee.
``(D) Rights under this paragraph.--The rights
under this paragraph of the conservator or receiver
described under subparagraph (A) shall be superior to
any rights of a trustee or any other party (other than
any party which is a Federal agency) under title 11,
United States Code.
``(16) Attachment of assets and other injunctive relief.--
Subject to paragraph (17), any court of competent jurisdiction
may, at the request of the conservator or receiver, issue an
order in accordance with Rule 65 of the Federal Rules of Civil
Procedure, including an order placing the assets of any person
designated by the Agency or such conservator under the control
of the court, and appointing a trustee to hold such assets.
``(17) Standards of proof.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any proceeding
under paragraph (16) without regard to the requirement of such
rule that the applicant show that the injury, loss, or damage
is irreparable and immediate.
``(18) Treatment of claims arising from breach of contracts
executed by the receiver or conservator.--
``(A) In general.--Notwithstanding any other
provision of this subsection, any final and
unappealable judgment for monetary damages entered
against a receiver or conservator for the breach of an
agreement executed or approved in writing by such
receiver or conservator after the date of its
appointment, shall be paid as an administrative expense
of the receiver or conservator.
``(B) No limitation of power.--Nothing in this
paragraph shall be construed to limit the power of a
receiver or conservator to exercise any rights under
contract or law, including to terminate, breach,
cancel, or otherwise discontinue such agreement.
``(19) General exceptions.--
``(A) Limitations.--The rights of a conservator or
receiver appointed under this section shall be subject
to the limitations on the powers of a receiver under
sections 402 through 407 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4402 through 4407).
``(B) Mortgages held in trust.--
``(i) In general.--Any mortgage, or pool of
mortgages, held in trust, custodial, or agency
capacity by an enterprise shall not be
available to satisfy the claims of creditors
generally.
``(ii) Holding of mortgages.--Any mortgage
or pool of mortgages described under clause (i)
shall be held by the conservator or receiver
appointed under this subsection for the
beneficial owners of such mortgages, under the
terms of the agreement creating such trust,
custodial, or other agency arrangement.
``(iii) Liability of receiver.--The
liability of a receiver appointed under this
section for damages shall, in the case of any
contingent or unliquidated claim relating to
the mortgages held in trust, be estimated in
accordance set forth in the regulations of the
Director.
``(c) Priority of Expenses and Unsecured Claims.--
``(1) In general.--Unsecured claims against an enterprise,
or a receiver, that are proven to the satisfaction of the
receiver shall have priority in the following order:
``(A) Administrative expenses of the receiver.
``(B) Any general or senior liability of the
enterprise (which is not a liability described under
subparagraph (C) or (D).
``(C) Any obligation subordinated to general
creditors (which is not an obligation described under
subparagraph (D)).
``(D) Any obligation to shareholders or members
arising as a result of their status as shareholder or
members.
``(2) Creditors similarly situated.--All creditors that are
similarly situated under paragraph (1) shall be treated in a
similar manner.
``(3) Definition.--The term `administrative expenses of the
receiver' shall include those necessary expenses incurred by
the receiver in liquidating or otherwise resolving the affairs
of a failed enterprise. Such expenses shall include pre-failure
and post-failure obligations that the receiver determines are
necessary and appropriate to facilitate the smooth and orderly
liquidation or other resolution of the enterprise.
``(d) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
``(1) Authority to repudiate contracts.--In addition to any
other rights a conservator or receiver may have, the
conservator or receiver for any enterprise may disaffirm or
repudiate any contract or lease--
``(A) to which such enterprise is a party;
``(B) the performance of which the conservator or
receiver, in its sole discretion, determines to be
burdensome; and
``(C) the disaffirmance or repudiation of which the
conservator or receiver determines, in its sole
discretion, will promote the orderly administration of
the affairs of the enterprise.
``(2) Timing of repudiation.--The conservator or receiver
shall determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable period
following such appointment.
``(3) Claims for damages for repudiation.--
``(A) In general.--Except as otherwise provided
under subparagraph (C) and paragraphs (4), (5), and
(6), the liability of the conservator or receiver for
the disaffirmance or repudiation of any contract
pursuant to paragraph (1) shall be--
``(i) limited to actual direct compensatory
damages; and
``(ii) determined as of--
``(I) the date of the appointment
of the conservator or receiver; or
``(II) in the case of any contract
or agreement referred to in paragraph
(8), the date of the disaffirmance or
repudiation of such contract or
agreement.
``(B) No liability for other damages.--For purposes
of subparagraph (A), the term `actual direct
compensatory damages' shall not include--
``(i) punitive or exemplary damages;
``(ii) damages for lost profits or
opportunity; or
``(iii) damages for pain and suffering.
``(C) Measure of damages for repudiation of
financial contracts.--In the case of any qualified
financial contract or agreement to which paragraph (8)
applies, compensatory damages shall be--
``(i) deemed to include normal and
reasonable costs of cover or other reasonable
measures of damages utilized in the industries
for such contract and agreement claims; and
``(ii) paid in accordance with this
subsection and subsection (f), except as
otherwise specifically provided in this
section.
``(4) Leases under which the enterprise is the lessee.--
``(A) In general.--If the conservator or receiver
disaffirms or repudiates a lease under which the
enterprise was the lessee, the conservator or receiver
shall not be liable for any damages (other than damages
determined under subparagraph (B)) for the
disaffirmance or repudiation of such lease.
``(B) Payments of rent.--Notwithstanding
subparagraph (A), the lessor under a lease to which
that subparagraph applies shall--
``(i) be entitled to the contractual rent
accruing before the later of the date--
``(I) the notice of disaffirmance
or repudiation is mailed; or
``(II) the disaffirmance or
repudiation becomes effective, unless
the lessor is in default or breach of
the terms of the lease;
``(ii) have no claim for damages under any
acceleration clause or other penalty provision
in the lease; and
``(iii) have a claim for any unpaid rent,
subject to all appropriate offsets and
defenses, due as of the date of the
appointment, which shall be paid in accordance
with this subsection and subsection (f).
``(5) Leases under which the enterprise is the lessor.--
``(A) In general.--If the conservator or receiver
repudiates an unexpired written lease of real property
of the enterprise under which the enterprise is the
lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease
may either--
``(i) treat the lease as terminated by such
repudiation; or
``(ii) remain in possession of the
leasehold interest for the balance of the term
of the lease, unless the lessee defaults under
the terms of the lease after the date of such
repudiation.
``(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described
under subparagraph (A) remains in possession of a
leasehold interest under clause (ii) of such
subparagraph--
``(i) the lessee--
``(I) shall continue to pay the
contractual rent pursuant to the terms
of the lease after the date of the
repudiation of such lease; and
``(II) may offset against any rent
payment which accrues after the date of
the repudiation of the lease, and any
damages which accrue after such date
due to the nonperformance of any
obligation of the enterprise under the
lease after such date; and
``(ii) the conservator or receiver shall
not be liable to the lessee for any damages
arising after such date as a result of the
repudiation other than the amount of any offset
allowed under clause (i)(II).
``(6) Contracts for the sale of real property.--
``(A) In general.--If the conservator or receiver
repudiates any contract for the sale of real property
and the purchaser of such real property under such
contract is in possession, and is not, as of the date
of such repudiation, in default, such purchaser may
either--
``(i) treat the contract as terminated by
such repudiation; or
``(ii) remain in possession of such real
property.
``(B) Provisions applicable to purchaser remaining
in possession.--If any purchaser of real property under
any contract described under subparagraph (A) remains
in possession of such property under clause (ii) of
such subparagraph--
``(i) the purchaser--
``(I) shall continue to make all
payments due under the contract after
the date of the repudiation of the
contract; and
``(II) may offset against any such
payments any damages which accrue after
such date due to the nonperformance
(after such date) of any obligation of
the enterprise under the contract; and
``(ii) the conservator or receiver shall--
``(I) not be liable to the
purchaser for any damages arising after
such date as a result of the
repudiation other than the amount of
any offset allowed under clause
(i)(II);
``(II) deliver title to the
purchaser in accordance with the
provisions of the contract; and
``(III) have no obligation under
the contract other than the performance
required under subclause (II).
``(C) Assignment and sale allowed.--
``(i) In general.--No provision of this
paragraph shall be construed as limiting the
right of the conservator or receiver to assign
the contract described under subparagraph (A),
and sell the property subject to the contract
and the provisions of this paragraph.
``(ii) No liability after assignment and
sale.--If an assignment and sale described
under clause (i) is consummated, the
conservator or receiver shall have no further
liability under the contract described under
subparagraph (A), or with respect to the real
property which was the subject of such
contract.
``(7) Provisions applicable to service contracts.--
``(A) Services performed before appointment.--In
the case of any contract for services between any
person and any enterprise for which the Agency has been
appointed conservator or receiver, any claim of such
person for services performed before the appointment of
the conservator or the receiver shall be--
``(i) a claim to be paid in accordance with
subsections (b) and (f); and
``(ii) deemed to have arisen as of the date
the conservator or receiver was appointed.
``(B) Services performed after appointment and
prior to repudiation.--If, in the case of any contract
for services described under subparagraph (A), the
conservator or receiver accepts performance by the
other person before the conservator or receiver makes
any determination to exercise the right of repudiation
of such contract under this section--
``(i) the other party shall be paid under
the terms of the contract for the services
performed; and
``(ii) the amount of such payment shall be
treated as an administrative expense of the
conservatorship or receivership.
``(C) Acceptance of performance no bar to
subsequent repudiation.--The acceptance by any
conservator or receiver of services referred to under
subparagraph (B) in connection with a contract
described in such subparagraph shall not affect the
right of the conservator or receiver to repudiate such
contract under this section at any time after such
performance.
``(8) Certain qualified financial contracts.--
``(A) Rights of parties to contracts.--Subject to
paragraph (10) and notwithstanding any other provision
of this Act, any other Federal law, or the law of any
State, no person shall be stayed or prohibited from
exercising--
``(i) any right to cause the termination or
liquidation of any qualified financial contract
with an enterprise that arises upon the
appointment of the Agency as receiver for such
enterprise at any time after such appointment;
``(ii) any right under any security
arrangement relating to any contract or
agreement described in clause (i); or
``(iii) any right to offset or net out any
termination value, payment amount, or other
transfer obligation arising under or in
connection with 1 or more contracts and
agreements described in clause (i), including
any master agreement for such contracts or
agreements.
``(B) Applicability of other provisions.--
Subsection (b)(12) shall apply in the case of any
judicial action or proceeding brought against any
receiver referred to under subparagraph (A), or the
enterprise for which such receiver was appointed, by
any party to a contract or agreement described under
subparagraph (A)(i) with such enterprise.
``(C) Certain transfers not avoidable.--
``(i) In general.--Notwithstanding
paragraph (11), the Agency, whether acting as
such or as conservator or receiver of an
enterprise, may not avoid any transfer of money
or other property in connection with any
qualified financial contract with an
enterprise.
``(ii) Exception for certain transfers.--
Clause (i) shall not apply to any transfer of
money or other property in connection with any
qualified financial contract with an enterprise
if the Agency determines that the transferee
had actual intent to hinder, delay, or defraud
such enterprise, the creditors of such
enterprise, or any conservator or receiver
appointed for such enterprise.
``(D) Certain contracts and agreements defined.--In
this subsection:
``(i) Qualified financial contract.--The
term `qualified financial contract' means any
securities contract, commodity contract,
forward contract, repurchase agreement, swap
agreement, and any similar agreement that the
Agency determines by regulation to be a
qualified financial contract for purposes of
this paragraph.
``(ii) Securities contract.--The term
`securities contract' has the meaning given to
such term under section 741 of title 11, United
States Code, except that the term `security'
(as used in such section) shall be deemed to
include any mortgage loan, any mortgage-related
security (as defined in section 3(a)(41) of the
Securities Exchange Act of 1934), and any
interest in any mortgage loan or mortgage-
related security, and does not include any
participation in a commercial mortgage loan.
``(iii) Commodity contract.--The term
`commodity contract' has the meaning given to
such term in section 761 of title 11, United
States Code.
``(iv) Forward contract.--The term `forward
contract' has the meaning given to such term in
section 101 of title 11, United States Code.
``(v) Repurchase agreement.--The term
`repurchase agreement' has the meaning given to
such term in section 101 of title 11, the
United States Code, except that the items (as
described in such section) which may be subject
to any such agreement shall be deemed to
include mortgage-related securities (as such
term is defined in section 3(a)(41) of the
Securities Exchange Act of 1934), any mortgage
loan, and any interest in any mortgage loan and
does not include any participation in a
commercial mortgage loan unless the Agency
determines by regulation, resolution, or order
to include any such participation within the
meaning of such term.
``(vi) Swap agreement.--The term `swap
agreement'--
``(I) means any agreement,
including the terms and conditions
incorporated by reference in any such
agreement, which is a rate swap
agreement, basis swap, commodity swap,
forward rate agreement, interest rate
future, interest rate option purchased,
forward foreign exchange agreement,
rate cap agreement, rate floor
agreement, rate collar agreement,
currency swap agreement, cross-currency
rate swap agreement, currency future,
or currency option purchased or any
other similar agreement; and
``(II) includes any combination of
such agreements and any option to enter
into any such agreement.
``(vii) Treatment of master agreement as 1
qualified financial contract.--Any master
agreement for any agreements described under
this subparagraph, together with all
supplements to such master agreement, shall be
treated as 1 qualified financial contract.
``(viii) Transfer.--The term `transfer' has
the meaning given to such term in section 101
of title 11, United States Code.
``(E) Certain protections in event of appointment
of conservator.--Notwithstanding any other provision of
this Act (other than paragraph (12) of this
subsection), any other Federal law, or the law of any
State, no person shall be stayed or prohibited from
exercising--
``(i) any right such person has to cause
the termination, liquidation, or acceleration
of any qualified financial contract with an
enterprise in a conservatorship based upon a
default under such financial contract which is
enforceable under applicable noninsolvency law;
``(ii) any right under any security
arrangement relating to such qualified
financial contracts; or
``(iii) any right to offset or net out any
termination values, payment amounts, or other
transfer obligations arising under or in
connection with such qualified financial
contracts.
``(9) Transfer of qualified financial contracts.--In making
any transfer of assets or liabilities of an enterprise in
default which includes any qualified financial contract, the
conservator or receiver for such enterprise shall either--
``(A) transfer to 1 person--
``(i) all qualified financial contracts
between--
``(I) any person (or any affiliate
of such person); and
``(II) the enterprise in default;
``(ii) all claims of such person (or any
affiliate of such person) against such
enterprise under any such contract (other than
any claim which, under the terms of any such
contract, is subordinated to the claims of
general unsecured creditors of such
enterprise);
``(iii) all claims of such enterprise
against such person (or any affiliate of such
person) under any such contract; and
``(iv) all property securing any claim
described in clause (ii) or (iii) under any
such contract; or
``(B) transfer none of the financial contracts,
claims, or property referred to under subparagraph (A)
(with respect to such person and any affiliate of such
person).
``(10) Notification of transfer.--
``(A) In general.--If--
``(i) the conservator or receiver for an
enterprise in default makes any transfer of the
assets and liabilities of such enterprise;
``(ii) the transfer includes any qualified
financial contract; and
``(iii) the conservator or receiver shall
use best efforts to notify any person who is a
party to any such contract of such transfer by
12 p.m. (noon) (Eastern Standard Time) on the
business day following such transfer.
``(B) Business day defined.--For purposes of this
paragraph, the term `business day' means any day other
than any Saturday, Sunday, or any day on which either
the New York Stock Exchange or the Federal Reserve Bank
of New York is closed.
``(11) Certain security interests not avoidable.--No
provision of this subsection shall be construed as permitting
the avoidance of any legally enforceable or perfected security
interest in any of the assets of any enterprise, except where
such an interest is taken in contemplation of the insolvency of
the enterprise, or with the intent to hinder, delay, or defraud
the enterprise or the creditors of such enterprise.
``(12) Authority to enforce contracts.--
``(A) In general.--Notwithstanding any provision of
a contract providing for termination, default,
acceleration, or exercise of rights upon, or solely by
reason of, insolvency or the appointment of a
conservator or receiver, the conservator or receiver
may enforce any contract, other than a liability
insurance of a director or officer, or a contract or an
enterprise bond, entered into by the enterprise.
``(B) Certain rights not affected.--No provision of
this paragraph may be construed as impairing or
affecting any right of the conservator or receiver to
enforce or recover under a liability insurance contract
of an officer or director, or enterprise bond under
other applicable law.
``(C) Consent requirement.--
``(i) In general.--Except as otherwise
provided under this section, no person may
exercise any right or power to terminate,
accelerate, or declare a default under any
contract to which an enterprise is a party, or
to obtain possession of or exercise control
over any property of the enterprise, or affect
any contractual rights of the enterprise,
without the consent of the conservator or
receiver, as appropriate, for a period of--
``(I) 45 days after the date of
appointment of a conservator; or
``(II) 90 days after the date of
appointment of a receiver.
``(ii) Exceptions.--This subparagraph
shall--
``(I) not apply to the liability
insurance contract of an officer or
director;
``(II) not apply to the rights of
parties to certain qualified financial
contracts under subsection (d)(8); and
``(III) not be construed as
permitting the conservator or receiver
to fail to comply with otherwise
enforceable provisions of such
contracts.
``(e) Valuation of Claims in Default.--
``(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method which the Agency determines to utilize with respect to
an enterprise in default or in danger of default, including
transactions authorized under subsection (i), this subsection
shall govern the rights of the creditors of such enterprise.
``(2) Maximum liability.--The maximum liability of the
Agency, acting as receiver or in any other capacity, to any
person having a claim against the receiver or the enterprise
for which such receiver is appointed shall equal the lesser
of--
``(A) the amount such claimant would have received
if the Agency had liquidated the assets and liabilities
of such enterprise without exercising the authority of
the Agency under subsection (i) of this section; or
``(B) the amount of proceeds realized from the
performance of contracts or sale of the assets of the
enterprise.
``(f) Limitation on Court Action.--Except as provided in this
section, no court may take any action, except at the request of the
Director, by regulation or order, to restrain or affect the exercise of
powers or functions of the Agency as a conservator or a receiver.
``(g) Liability of Directors and Officers.--
``(1) In general.--A director or officer of an enterprise
may be held personally liable for monetary damages in any civil
action by, on behalf of, or at the request or direction of the
Agency, which action is prosecuted wholly or partially for the
benefit of the Agency--
``(A) acting as conservator or receiver of such
enterprise;
``(B) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by such receiver or conservator; or
``(C) for gross negligence, including any similar
conduct or conduct that demonstrates a greater
disregard of a duty of care (than gross negligence)
including intentional tortious conduct, as such terms
are defined and determined under applicable State law.
``(2) No limitation.--Nothing in this paragraph shall
impair or affect any right of the Agency under other applicable
law.
``(h) Damages.--In any proceeding related to any claim against a
director, officer, employee, agent, attorney, accountant, appraiser, or
any other party employed by or providing services to an enterprise,
recoverable damages determined to result from the improvident or
otherwise improper use or investment of any assets of the enterprise
shall include principal losses and appropriate interest.
``(i) Limited-Life Enterprise.--
``(1) Organization.--
``(A) Purpose.--If an enterprise is in default, or
if the Agency anticipates that an enterprise will
default, the Agency may organize a limited-life
enterprise with those powers and attributes of the
enterprise in default or in danger of default that the
Director determines necessary, subject to the
provisions of this subsection. The Director shall grant
a temporary charter to the limited-life enterprise, and
the limited-life enterprise shall operate subject to
that charter.
``(B) Authorities.--Upon the creation of a limited-
life enterprise under subparagraph (A), the limited-
life enterprise may--
``(i) assume such liabilities of the
enterprise that is in default or in danger of
default as the Agency may, in its discretion,
determine to be appropriate, provided that the
liabilities assumed shall not exceed the amount
of assets of the limited-life enterprise;
``(ii) purchase such assets of the
enterprise that is in default, or in danger of
default, as the Agency may, in its discretion,
determine to be appropriate; and
``(iii) perform any other temporary
function which the Agency may, in its
discretion, prescribe in accordance with this
section.
``(2) Charter.--
``(A) Conditions.--The Agency may grant a temporary
charter if the Agency determines that the continued
operation of the enterprise in default or in danger of
default is in the best interest of the national economy
and the housing markets.
``(B) Limited-life enterprise treated as being in
default for certain purposes.--A limited-life
enterprise shall be treated as an enterprise in default
at such times and for such purposes as the Agency may,
in its discretion, determine.
``(C) Management.--A limited-life enterprise, upon
the granting of its charter, shall be under the
management of a board of directors consisting of not
fewer than 5 nor more than 10 members appointed by the
Agency.
``(D) Bylaws.--The board of directors of a limited-
life enterprise shall adopt such bylaws as may be
approved by the Agency.
``(3) Capital stock.--No capital stock need be paid into a
limited-life enterprise by the Agency.
``(4) Investments.--Funds of a limited-life enterprise
shall be kept on hand in cash, invested in obligations of the
United States or obligations guaranteed as to principal and
interest by the United States, or deposited with the Agency, or
any Federal Reserve bank.
``(5) Exempt status.--Notwithstanding any other provision
of Federal or State law, the limited-life enterprise, its
franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by any
territory, dependency, or possession thereof, or by any State,
county, municipality, or local taxing authority.
``(6) Other Exemptions.--When acting as a receiver, the
following provisions shall apply with respect to the Agency:
``(A) The Agency, including its franchise, its
capital, reserves, and surplus, and its income, shall
be exempt from all taxation imposed by any State,
country, municipality, or local taxing authority,
except that any real property of the Agency shall be
subject to State, territorial, county, municipal, or
local taxation to the same extent according to its
value as other real property is taxed, except that,
notwithstanding the failure of any person to challenge
an assessment under State law of the value of such
property, and the tax thereon, shall be determined as
of the period for which such tax is imposed.
``(B) No property of the Agency shall be subject to
levy, attachment, garnishment, foreclosure, or sale
without the consent of the Agency, nor shall any
involuntary lien attach to the property of the Agency.
``(C) The Agency shall not be liable for any
amounts in the nature of penalties or fines, including
those arising from the failure of any person to pay any
real property, personal property, probate, or recording
tax or any recording or filing fees when due.
``(7) Winding up.--
``(A) In general.--Subject to subparagraph (B),
unless Congress authorizes the sale of the capital
stock of the limited-life enterprise, not later than 2
years after the date of its organization, the Agency
shall wind up the affairs of the limited-life
enterprise.
``(B) Extension.--The Director may, in the
discretion of the Director, extend the status of the
limited-life enterprise for 3 additional 1-year
periods.
``(8) Transfer of assets and liabilities.--
``(A) In general.--
``(i) Transfer of assets and liabilities.--
The Agency, as receiver, may transfer any
assets and liabilities of an enterprise in
default, or in danger of default, to the
limited-life enterprise in accordance with
paragraph (1).
``(ii) Subsequent transfers.--At any time
after a charter is transferred to a limited-
life enterprise, the Agency, as receiver, may
transfer any assets and liabilities of such
enterprise in default, or in danger in default,
as the Agency may, in its discretion, determine
to be appropriate in accordance with paragraph
(1).
``(iii) Effective without approval.--The
transfer of any assets or liabilities of an
enterprise in default, or in danger of default,
transferred to a limited-life enterprise shall
be effective without any further approval under
Federal or State law, assignment, or consent
with respect thereto.
``(9) Proceeds.--To the extent that available proceeds from
the limited-life enterprise exceed amounts required to pay
obligations, such proceeds may be paid to the enterprise in
default, or in danger of default.
``(10) Powers of limited-life enterprises.--
``(A) In general.--Each limited-life enterprise
created under this subsection shall have all corporate
powers of, and be subject to the same provisions of law
as, the enterprise in default or in danger of default
to which it relates, except that--
``(i) the Agency may--
``(I) remove the directors of a
limited-life enterprise; and
``(II) fix the compensation of
members of the board of directors and
senior management, as determined by the
Agency in its discretion, of a limited-
life enterprise;
``(ii) the Agency may indemnify the
representatives for purposes of paragraph
(1)(B), and the directors, officers, employees,
and agents of a limited-life enterprise on such
terms as the Agency determines to be
appropriate; and
``(iii) the board of directors of a
limited-life enterprise--
``(I) shall elect a chairperson who
may also serve in the position of chief
executive officer, except that such
person shall not serve either as
chairperson or as chief executive
officer without the prior approval of
the Agency; and
``(II) may appoint a chief
executive officer who is not also the
chairperson, except that such person
shall not serve as chief executive
officer without the prior approval of
the Agency.
``(B) Stay of judicial action.--Any judicial action
to which a limited-life enterprise becomes a party by
virtue of its acquisition of any assets or assumption
of any liabilities of an enterprise in default shall be
stayed from further proceedings for a period of up to
45 days at the request of the limited-life enterprise.
Such period may be modified upon the consent of all
parties.
``(11) No federal status.--
``(A) Agency status.--A limited-life enterprise is
not an agency, establishment, or instrumentality of the
United States.
``(B) Employee status.--Representatives for
purposes of paragraph (1)(B), interim directors,
directors, officers, employees, or agents of a limited-
life enterprise are not, solely by virtue of service in
any such capacity, officers or employees of the United
States. Any employee of the Agency or of any Federal
instrumentality who serves at the request of the Agency
as a representative for purposes of paragraph (1)(B),
interim director, director, officer, employee, or agent
of a limited-life enterprise shall not--
``(i) solely by virtue of service in any
such capacity lose any existing status as an
officer or employee of the United States for
purposes of title 5, United States Code, or any
other provision of law; or
``(ii) receive any salary or benefits for
service in any such capacity with respect to a
limited-life enterprise in addition to such
salary or benefits as are obtained through
employment with the Agency or such Federal
instrumentality.
``(j) Prohibition of Charter Revocation.--In no case may a receiver
appointed pursuant to this section revoke, annul, or terminate the
charter of an enterprise.
``(k) Obtaining Credit by a Limited-Life Enterprise.--
``(1) In general.--The limited-life enterprise may obtain
unsecured credit and incur unsecured debt in the ordinary
course of business.
``(2) Inability to obtain credit.--If the limited-life
enterprise is unable to obtain unsecured credit the Director
may authorize the obtaining of credit or the incurring of
debt--
``(A) with priority over any or all administrative
expenses;
``(B) secured by a lien on property that is not
otherwise subject to a lien; or
``(C) secured by a junior lien on property that is
subject to a lien.
``(3) Limitations.--
``(A) In general.--The Director, after notice and a
hearing, may authorize the obtaining of credit or the
incurring of debt secured by a senior or equal lien on
property that is subject to a lien (other than
mortgages that collateralize the mortgage-backed
securities issued or guaranteed by the enterprise) only
if--
``(i) the limited-life enterprise is unable
to obtain such credit otherwise; and
``(ii) there is adequate protection of the
interest of the holder of the lien on the
property which such senior or equal lien is
proposed to be granted.
``(B) Burden of proof.--In any hearing under this
subsection, the Director has the burden of proof on the
issue of adequate protection.
``(4) Affect on debts and liens.--The reversal or
modification on appeal of an authorization under this
subsection to obtain credit or incur debt, or of a grant under
this section of a priority or a lien, does not affect the
validity of any debt so incurred, or any priority or lien so
granted, to an entity that extended such credit in good faith,
whether or not such entity knew of the pendency of the appeal,
unless such authorization and the incurring of such debt, or
the granting of such priority or lien, were stayed pending
appeal.
(b) Technical and Conforming Amendments.--The Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501
et seq.) is amended--
(1) in section 1368 (12 U.S.C. 4618)--
(A) by striking ``an enterprise'' each place that
term appears and inserting ``a regulated entity''; and
(B) by striking ``the enterprise'' each place that
term appears and inserting ``the regulated entity'';
(2) in section 1369C (12 U.S.C. 4622), by striking
``enterprise'' each place that term appears and inserting
``regulated entity'';
(3) in section 1369D (12 U.S.C. 4623)--
(A) by striking ``an enterprise'' each place that
term appears and inserting ``a regulated entity''; and
(B) in subsection (a)(1), by striking ``An
enterprise'' and inserting ``A regulated entity''; and
(4) by striking sections 1369, 1369A, and 1369B (12 U.S.C.
4619, 4620, and 4621).
Subtitle D--Enforcement Actions
SEC. 151. CEASE-AND-DESIST PROCEEDINGS.
Section 1371 of the Federal Housing Enterprises Financial Safety
and Soundness 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.--If,
in the opinion of the Director, a regulated entity, any enterprise-
affiliated party, or the Federal Home Loan Bank Finance Corporation, is
engaging or has engaged, or the Director has reasonable cause to
believe that the regulated entity, any enterprise-affiliated party, or
the Federal Home Loan Bank Finance Corporation is about to engage, in
an unsafe or unsound practice in conducting the business of the
regulated entity, or is violating or has violated, or the Director has
reasonable cause to believe that the regulated entity, any enterprise-
affiliated party, or the Federal Home Loan Bank Finance Corporation is
about to violate, a law, rule, regulation, or order, or any condition
imposed in writing by the Director in connection with the granting of
any application or other request by the regulated entity or any written
agreement entered into with the Director, the Director may issue and
serve upon the regulated entity, enterprise-affiliated party, or the
Federal Home Loan Bank Finance Corporation a notice of charges in
respect thereof.
``(b) Issuance for Unsatisfactory Rating.--If a regulated entity
receives, in its most recent report of examination, a less-than-
satisfactory rating for credit risk, market risk, operations, or
corporate governance, the Director may (if the deficiency is not
corrected) deem the regulated entity to be engaging in an unsafe or
unsound practice for purposes of subsection (a).'';
(2) in subsection (c)(2)--
(A) by striking ``or director'' and inserting
``director, or enterprise-affiliated party''; and
(B) by inserting ``or enterprise-affiliated party''
before ``consents'';
(3) in subsections (c), (d), and (e)--
(A) by striking ``the enterprise'' each place that
term appears and inserting ``the regulated entity'';
and
(B) by striking ``an enterprise'' each place that
term appears and inserting ``a regulated entity'';
(4) in subsection (d)--
(A) by striking ``or director'' and inserting
``director, or enterprise-affiliated party''; and
(B) in paragraph (1), by striking ``or a director''
and inserting ``, director, or enterprise-affiliated
party'';
(5) in each of subsections (d)(7) and (e), by inserting
``or enterprise-affiliated party'' after ``enterprise'' each
place that term appears; and
(6) in subsection (f), by striking ``or director'' and
inserting ``director, or enterprise-affiliated party''.
SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS.
Section 1372 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4632) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Grounds for Issuance.--
``(1) In general.--If the Director determines that the
actions specified in the notice of charges served upon a
regulated entity, any enterprise-affiliated party, or the
Federal Home Loan Bank Finance Corporation, pursuant to section
1371(a), or the continuation thereof, is likely to cause
insolvency or significant dissipation of assets or earnings of
that entity, or is likely to weaken the condition of that
entity prior to the completion of the proceedings conducted
pursuant to sections 1371 and 1373, the Director may--
``(A) issue a temporary order requiring that entity
to cease and desist from any such violation or
practice; and
``(B) require that entity to take affirmative
action to prevent or remedy such insolvency,
dissipation, condition, or prejudice pending completion
of such proceedings.
``(2) Additional requirements.--An order issued under
paragraph (1) may include any requirement authorized under
subsection 1371(d).'';
(2) in subsection (b)--
(A) by striking ``or director'' and inserting
``director, or enterprise-affiliated party''; and
(B) by striking ``enterprise'' and inserting
``regulated entity'';
(3) in subsection (c), by striking ``enterprise'' and
inserting ``regulated entity'';
(4) in subsection (d)--
(A) by striking ``or director'' and inserting
``director, or enterprise-affiliated party''; and
(B) by striking ``An enterprise'' and inserting ``A
regulated entity''; and
(5) by striking subsection (e) and inserting the following:
``(e) Enforcement.--If a temporary cease-and-desist order is issued
under subsection (a), the Director may apply to the United States
District Court for the District of Columbia, or the United States
district court within the jurisdiction of which the headquarters of the
regulated entity is located, for an injunction to enforce such order,
and, if the court determines that the notice of charges issued under
section 1371(a) are accurate, it shall be the duty of the court to
issue such injunction.''.
SEC. 153. REMOVAL AND PROHIBITION AUTHORITY.
(a) In General.--Subtitle C of part 1 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631
et seq.) is amended--
(1) by redesignating sections 1377 through 1379B (12 U.S.C.
4637-4641) 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.--
``(1) In general.--The Director may serve upon a party
described in paragraph (2), or any officer or director of the
Federal Home Loan Bank Finance Corporation a written notice of
the intention of the Director to suspend or remove such party
from office, or prohibit any further participation by such
party, in any manner, in the conduct of the affairs of the
regulated entity.
``(2) Applicability.--A party described in this paragraph
is an enterprise-affiliated party or any officer or director of
the Federal Home Loan Bank Finance Corporation, if the Director
determines that--
``(A) that party, officer, or director has,
directly or indirectly--
``(i) violated--
``(I) any law or regulation;
``(II) any cease-and-desist order
which has become final;
``(III) any condition imposed in
writing by the Director in connection
with the grant of any application or
other request by such regulated entity;
or
``(IV) any written agreement
between such regulated entity and the
Director;
``(ii) engaged or participated in any
unsafe or unsound practice in connection with
any regulated entity; or
``(iii) committed or engaged in any act,
omission, or practice which constitutes a
breach of such party's fiduciary duty;
``(B) by reason of the violation, practice, or
breach described in subparagraph (A)--
``(i) such regulated entity has suffered or
will probably suffer financial loss or other
damage; or
``(ii) such party has received financial
gain or other benefit; and
``(C) the violation, practice, or breach described
in subparagraph (A)--
``(i) involves personal dishonesty on the
part of such party; or
``(ii) demonstrates willful or continuing
disregard by such party for the safety or
soundness of such regulated entity.
``(b) Suspension Order.--
``(1) Suspension or prohibition authority.--If the Director
serves written notice under subsection (a) upon a party subject
to that subsection (a), the Director may, by order, suspend or
remove such party from office, or prohibit such party from
further participation in any manner in the conduct of the
affairs of the regulated entity, if the Director--
``(A) determines that such action is necessary for
the protection of the regulated entity; and
``(B) serves such party with written notice of the
order.
``(2) Effective period.--Any order issued under this
subsection--
``(A) shall become effective upon service; and
``(B) unless a court issues a stay of such order
under subsection (g), shall remain in effect and
enforceable until--
``(i) the date on which 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 under subsection (b).
``(3) Copy of order.--If the Director issues an order under
subsection (b) to any party, the Director shall serve a copy of
such order on any regulated entity with which such party is
affiliated at the time such order is issued.
``(c) Notice, Hearing, and Order.--
``(1) Notice.--A notice under subsection (a) of the
intention of the Director to issue an order under this section
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.
``(2) Timing of hearing.--A hearing shall be fixed for a
date not earlier than 30 days, nor later than 60 days, after
the date of service of notice under subsection (a), unless an
earlier or a later date is set by the Director at the request
of--
``(A) the party receiving such notice, and good
cause is shown; or
``(B) the Attorney General of the United States.
``(3) Consent.--Unless the party that is the subject of a
notice delivered under subsection (a) appears 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 under
this section.
``(4) Issuance of order of suspension.--The Director may
issue an order under this section, as the Director may deem
appropriate, if--
``(A) a party is deemed to have consented to the
issuance of an order under paragraph (3); or
``(B) upon the record made at the hearing, the
Director finds that any of the grounds specified in the
notice have been established.
``(5) Effectiveness of order.--Any order issued under
paragraph (4) shall become effective at the expiration of 30
days after the date of service upon the relevant regulated
entity and party (except in the case of an order issued upon
consent under paragraph (3), which shall become effective at
the time specified therein). Such order shall remain effective
and enforceable except to such extent as it is stayed,
modified, terminated, or set aside by action of the Director or
a reviewing court.
``(d) Prohibition of Certain Specific Activities.--Any person
subject to an order issued under this section shall not--
``(1) participate in any manner in the conduct of the
affairs of any regulated entity or the Federal Home Loan Bank
Finance Corporation;
``(2) solicit, procure, transfer, attempt to transfer,
vote, or attempt to vote any proxy, consent, or authorization
with respect to any voting rights in any regulated entity;
``(3) violate any voting agreement previously approved by
the Director; or
``(4) vote for a director, or serve or act as an
enterprise-affiliated party of a regulated entity or as an
officer or director of the Federal Home Loan Bank Finance
Corporation.
``(e) Industry-Wide Prohibition.--
``(1) In general.--Except as provided in paragraph (2), any
person who, pursuant to an order issued under this section, has
been removed or suspended from office in a regulated entity or
the Federal Home Loan Bank Finance Corporation, or prohibited
from participating in the conduct of the affairs of a regulated
entity or such Corporation, may not, while such order is in
effect, continue or commence to hold any office in, or
participate in any manner in the conduct of the affairs of, any
regulated entity or such Corporation.
``(2) Exception if director provides written consent.--If,
on or after the date on which an order is issued under this
section which removes or suspends from office any party, or
prohibits such party from participating in the conduct of the
affairs of a regulated entity or the Federal Home Loan Bank
Finance Corporation, such party receives the written consent of
the Director, the order shall, to the extent of such consent,
cease to apply to such party with respect to the regulated
entity or such Corporation described in the written consent.
Any such consent shall be publicly disclosed.
``(3) Violation of paragraph (1) treated as violation of
order.--Any violation of paragraph (1) by any person who is
subject to an order issued under subsection (h) 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 entity.
``(g) Stay of Suspension and Prohibition of Enterprise-Affiliated
Party.--Not later than 10 days after the date on which any enterprise-
affiliated party has been suspended from office or prohibited from
participation in the conduct of the affairs of a regulated entity under
this section, such party may apply to the United States District Court
for the District of Columbia, or the United States district court for
the judicial district in which the headquarters of the regulated entity
is located, for a stay of such suspension or prohibition pending the
completion of the administrative proceedings pursuant to subsection
(c). The 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 1 year under Federal or State law, the
Director may, if continued service or participation by
such party may pose a threat to the regulated entity or
impair public confidence in the regulated entity, by
written notice served upon such party, suspend such
party from office or prohibit such party from further
participation in any manner in the conduct of the
affairs of any regulated entity.
``(B) Provisions applicable to notice.--
``(i) Copy.--A copy of any notice under
subparagraph (A) shall be served upon the
relevant regulated entity.
``(ii) Effective period.--A suspension or
prohibition under subparagraph (A) shall remain
in effect until the information, indictment, or
complaint referred to in subparagraph (A) 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 regulated entity or
impair public confidence in the regulated entity, 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 regulated entity without the prior
written consent of the Director.
``(B) Provisions applicable to order.--
``(i) Copy.--A copy of any order under
subparagraph (A) shall be served upon the
relevant regulated entity, at which time 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
regulated entity.
``(ii) Effect of acquittal.--A finding of
not guilty or other disposition of the charge
shall not preclude the Director from
instituting proceedings after such finding or
disposition to remove a party from office or to
prohibit further participation in the affairs
of a regulated entity pursuant to subsection
(a), (d), or (e).
``(iii) Effective period.--Unless
terminated by the Director, 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).
``(3) Authority of remaining board members.--
``(A) In general.--If at any time, because of the
suspension of 1 or more directors pursuant to this
section, there shall be on the board of directors of a
regulated entity less than a quorum of directors not so
suspended, all powers and functions vested in or
exercisable by such board shall vest in and be
exercisable by the director or directors on the board
not so suspended, until such time as there shall be a
quorum of the board of directors.
``(B) Appointment of temporary directors.--If all
of the directors of a regulated entity are suspended
pursuant to this section, the Director shall appoint
persons to serve temporarily as directors pending the
termination of such suspensions, or until such time as
those who have been suspended cease to be directors of
the regulated entity and their respective successors
take office.
``(4) Hearing regarding continued participation.--
``(A) In general.--Not later than 30 days after the
date of service of any notice of suspension or order of
removal issued pursuant to paragraph (1) or (2), the
enterprise-affiliated party may request in writing an
opportunity to appear before the Director to show that
the continued service or participation in the conduct
of the affairs of the regulated entity by such party
does not, or is not likely to, pose a threat to the
interests of the regulated entity, or threaten to
impair public confidence in the regulated entity.
``(B) Timing and form of hearing.--Upon receipt of
a request for a hearing under subparagraph (A), the
Director shall fix a time (not later than 30 days after
the date of receipt of such request, unless extended at
the request of such party) and place at which the
enterprise-affiliated party may appear, personally or
through counsel, before the Director or 1 or more
designated employees of the Director to submit written
materials (or, at the discretion of the Director, oral
testimony) and oral argument.
``(C) Determination.--Not later than 60 days after
the date of a hearing under subparagraph (B), the
Director shall notify the enterprise-affiliated party
whether the suspension or prohibition from
participation in any manner in the conduct of the
affairs of the regulated entity will be continued,
terminated, or otherwise modified, or whether the order
removing such party from office or prohibiting such
party from further participation in any manner in the
conduct of the affairs of the regulated entity will be
rescinded or otherwise modified. Such notification
shall contain a statement of the basis for any adverse
decision of the Director.
``(5) Rules.--The Director is authorized to prescribe such
rules as may be necessary to carry out this subsection.
``(i) Hearings and Judicial Review.--
``(1) Venue and procedure.--
``(A) In general.--Any hearing under this section
shall be held in the District of Columbia or in the
Federal judicial district in which the headquarters of
the regulated entity is located, unless the party
afforded the hearing consents to another place, and
shall be conducted in accordance with the provisions of
chapter 5 of title 5, United States Code.
``(B) Decision.--After any hearing under this
section, and not later than 90 days after the Director
has notified the parties that the case has been
submitted to it for final decision, the Director shall
render its decision (which shall include findings of
fact upon which the decision of the Director is
predicated) and issue and serve upon each party to the
proceeding an order or orders consistent with the
provisions of this section.
``(C) Judicial review.--Judicial review of any
order issued under subparagraph (B) shall be
exclusively as provided in this subsection.
``(D) Modification of order.--
``(i) In general.--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 with the court, 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.
``(ii) Limitation.--Upon the filing of the
record, the Director may modify, terminate, or
set aside any order under this subsection only
with permission of the court.
``(2) Review of order.--
``(A) In general.--Any party to any proceeding
under paragraph (1) may obtain a review of any order
served pursuant to paragraph (1) (other than an order
issued with the consent of the regulated entity or the
enterprise-affiliated party, or an order issued under
subsection (h)) by the filing in the United States
Court of Appeals for the District of Columbia Circuit,
or the Court of Appeals of the United States for the
circuit in which the headquarters of the relevant
regulated entity is located, within 30 days after the
date of service of such order, a written petition
praying that the order of the Director be modified,
terminated, or set aside.
``(B) Forwarding of petition; filing of record.--A
copy of any petition filed under subparagraph (A) shall
be transmitted by the clerk of the court to the
Director, and the Director shall file in the court the
record in the proceeding, as provided in section 2112
of title 28, United States Code.
``(C) Jurisdiction.--Upon the filing of a petition
under subparagraph (B), the court shall have
jurisdiction, which upon the filing of the record shall
(except as provided under paragraph (1)(D)(ii)) be
exclusive, to affirm, modify, terminate, or set aside,
in whole or in part, the order of the Director.
``(D) Finality of decree.--The judgment and decree
of the court under this paragraph shall be final,
except that it shall be subject to review by the
Supreme Court of the United States, 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 Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4517(f)) is amended by striking ``section 1379B'' and
inserting ``section 1379D''.
(2) Fannie mae charter act.--Section 308(b) of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1723(b))
is amended in the second sentence, by striking ``The'' and
inserting ``Except to the extent that action under section 1377
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 temporarily results in a lesser number,
the''.
(3) Freddie mac charter act.--Section 303(a)(2)(A) of the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1452(a)(2)(A)) is amended, in the second sentence, by striking
``The'' and inserting ``Except to the extent action under
section 1377 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 temporarily results in a
lesser number, the''.
SEC. 154. ENFORCEMENT AND JURISDICTION.
(a) In General.--Section 1375 of the Federal Housing Enterprises
Financial Safety and Soundness 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 regulated entity is located, for the
enforcement of any effective and outstanding notice, order, or subpoena
issued under this title, 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, order, or
subpoena.''; and
(2) in subsection (b), by striking ``or 1376'' and
inserting ``1376, or 1377''.
(b) Conforming Amendment.--Section 1379B of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4641)
is amended by striking subsection (c) and redesignating subsection (d)
as subsection (c).
SEC. 155. CIVIL MONEY PENALTIES.
Section 1376 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4636) is amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by striking ``Any enterprise, or any executive officer or
director of any enterprise'' and inserting ``Any regulated
entity, or any executive officer of a regulated entity or any
enterprise-affiliated party,''; and
(2) by striking subsection (b) and inserting the following:
``(b) Amount of Penalty.--
``(1) First tier.--A regulated entity or enterprise-
affiliated party shall forfeit and pay a civil penalty of not
more than $10,000 for each day during which a violation
continues, if such regulated entity or party--
``(A) violates any provision of this title, the
authorizing statutes, or any order, condition, rule, or
regulation under this title or any authorizing statute;
``(B) violates any final or temporary order or
notice issued pursuant to this title;
``(C) violates any condition imposed in writing by
the Director in connection with the grant of any
application or other request by such regulated entity;
``(D) violates any written agreement between the
regulated entity and the Director; or
``(E) engages in any conduct that the Director
determines to be an unsafe or unsound practice.
``(2) Second tier.--Notwithstanding paragraph (1), a
regulated entity or enterprise-affiliated party shall forfeit
and pay a civil penalty of not more than $50,000 for each day
during which a violation, practice, or breach continues, if--
``(A) the regulated entity or enterprise-affiliated
party, respectively--
``(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
the regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) the violation, practice, or breach--
``(i) is part of a pattern of misconduct;
``(ii) causes or is likely to cause more
than a minimal loss to the regulated entity; or
``(iii) results in pecuniary gain or other
benefit to such party.
``(3) Third tier.--Notwithstanding paragraphs (1) and (2),
any regulated entity or enterprise-affiliated party 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, if such regulated entity or enterprise-affiliated
party--
``(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 the
regulated entity; or
``(iii) breaches any fiduciary duty; and
``(B) knowingly or recklessly causes a substantial
loss to the regulated entity or a substantial pecuniary
gain or other benefit to such party by reason of such
violation, practice, or breach.
``(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 paragraph
(3) is--
``(A) in the case of any enterprise-affiliated
party, an amount not to exceed $2,000,000; and
``(B) in the case of any regulated entity,
$2,000,000.'';
(3) in subsection (c), by striking ``enterprise'' each
place that term appears and inserting ``regulated entity'';
(4) in subsection (d)--
(A) by striking ``or director'' each place such
term appears and inserting ``director, or enterprise-
affiliated party'';
(B) by striking ``an enterprise'' and inserting ``a
regulated entity'';
(C) by striking ``the enterprise'' and inserting
``the regulated entity'';
(D) by striking ``request the Attorney General of
the United States to'';
(E) by inserting ``, or the United States district
court within the jurisdiction of which the headquarters
of the regulated entity is located,'' after ``District
of Columbia'';
(F) by striking ``, or may, under the direction and
control of the Attorney General of the United States,
bring such an action''; and
(G) by striking ``and section 1374''; and
(5) in subsection (g), by striking ``An enterprise'' and
inserting ``A regulated entity''.
SEC. 156. CRIMINAL PENALTY.
(a) In General.--Subtitle C of title XIII of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631
et seq.), as amended by this Act, is amended by adding at the end 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 regulated entity shall,
notwithstanding section 3571 of title 18, be fined not more than
$1,000,000, imprisoned for not more than 5 years, or both.''.
(b) Technical and Conforming Amendments.--The Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501
et seq.) is amended--
(1) in section 1379 (as so designated by this Act)--
(A) by striking ``an enterprise'' and inserting ``a
regulated entity''; and
(B) by striking ``the enterprise'' and inserting
``the regulated entity'';
(2) in section 1379A (as so designated by this Act), by
striking ``an enterprise'' and inserting ``a regulated
entity'';
(3) in section 1379B(c) (as so designated by this Act), by
striking ``enterprise'' and inserting ``regulated entity''; and
(4) in section 1379D (as so designated by this Act), by
striking ``enterprise'' and inserting ``regulated entity''.
SEC. 157. NOTICE AFTER SEPARATION FROM SERVICE.
Section 1379 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4637), as so designated by this
Act, is amended--
(1) by striking ``2-year'' and inserting ``6-year''; and
(2) by inserting ``or an enterprise-affiliated party''
after ``enterprise'' each place that term appears.
Subtitle E--Other Reporting Regarding Regulated Entities
SEC. 161. REPORTING REGARDING REGULATED ENTITIES.
Part 3 of subtitle A of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 is amended--
(1) by striking sections 1351, 1352, and 1353 (Public Law
102-550; 106 Stat. 3969), except that no provisions of law
amended by any such section repealed shall be affected by such
repeal; and
(2) by striking sections 1354, 1355, and 1356 (12 U.S.C.
4601-3) and inserting the following:
``SEC. 1351. REPORTS REGARDING ISSUES AND ACTIVITIES OF REGULATED
ENTITIES.
``(a) Insured Depository Institution Holdings of Enterprise Debt
and Mortgage-Backed Securities.--Not later than 2 years after the date
of enactment of the Federal Housing Enterprise Regulatory Reform Act of
2005, the Director, 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 the Congress
regarding--
``(1) the extent to which obligations issued or guaranteed
by the regulated entities (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 a
regulated entity; and
``(3) the effects on the enterprises, the banking industry,
and mortgage markets, if prudent limits on the holdings of the
obligations of a regulated entity were placed on federally
insured depository institutions.
``(b) Portfolio Operations, Risk Management, and Mission.--
``(1) In general.--Not later than 2 years after the date of
enactment of the Federal Housing Enterprise Regulatory Reform
Act of 2005, the Director shall submit a report to the
Congress--
``(A) describing the holdings of the regulated
entities 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 regulated entities
fulfill the mission purposes of the regulated entities
under the Federal National Mortgage Association Charter
Act, the Federal Home Loan Mortgage Corporation Act,
and the Federal Home Loan Bank Act.
``(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) Debt Issuances.--Not later than 2 years after the date of
enactment of the Federal Housing Enterprise Regulatory Reform Act of
2005, the Director shall submit a report to Congress regarding--
``(1) the extent of outstanding obligations of the
regulated entities and the rate of growth of such obligations;
and
``(2) an analysis as to the appropriate level of debt
issuances of a regulated entity to operate in a safe and sound
manner, comply with its mission, and maintain a certain credit
rating or debt rating.
``(d) Risk-Based Capital Levels.--
``(1) In general.--The Director shall submit a report to
the Congress, at the end of each fiscal quarter, regarding--
``(A) the risk-based capital levels for the
enterprises under section 1361, including a description
of the risk-based capital test under that section and
any assumptions of the Director and factors used by the
Director in establishing the test; and
``(B) the minimum and critical capital levels for
the enterprises pursuant to sections 1362 and 1363,
respectively.
``(2) Timing.--Each report under this subsection shall be
submitted not later than 60 days after the end of each fiscal
quarter.
``(e) Resources and Allocations.--The Comptroller General of the
United States shall submit a report to Congress annually, on a fiscal
year basis, regarding--
``(1) the allocation of resources of the Agency by the
Director; and
``(2) the level of assessments collected by the Director
for the operation of the Agency.
``(f) 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.''.
Subtitle F--General Provisions
SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS.
(a) Amendments to 1992 Act.--The Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as
amended by this Act, is amended--
(1) in section 1315 (12 U.S.C. 4515)--
(A) in subsection (a)--
(i) by striking ``(a) Office Personnel.--
The'' and inserting ``(a) In General.--Subject
to title III of the Federal Enterprise
Regulatory Reform Act of 2005, the''; and
(ii) by striking ``the Office'' each place
that term appears and inserting ``the Agency'';
(B) in subsection (c), by striking ``the Office''
and inserting ``the Agency'';
(C) in subsection (e), by striking ``the Office''
and inserting ``the Agency'';
(D) by striking subsection (d) and redesignating
subsection (e) as subsection (d); and
(E) 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 1364(c) (12 U.S.C. 4614(c)), by striking the
last sentence;
(4) by striking section 1383 (12 U.S.C. 1451 note);
(5) in each of sections 1319D, 1319E, and 1319F (12 U.S.C.
4523, 4524, 4525) by striking ``the Office'' each place that
term appears and inserting ``the Agency''; and
(6) in each of sections 1319B and 1369(a)(3) (12 U.S.C.
4521, 4619(a)(3)), by striking ``Committee on Banking, Finance
and Urban Affairs'' each place such term appears and inserting
``Committee on Financial Services''.
(b) Amendments to Fannie Mae Charter Act.--The Federal National
Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) is amended--
(1) in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)),
309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12
U.S.C. 1723a(k)(1)), by striking ``Director of the Office of
Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development'' each place that term appears,
and inserting ``Director of the Federal Housing Enterprise
Regulatory Agency'';
(2) in section 309--
(A) in subsection (m) (12 U.S.C. 1723a(m))--
(i) in paragraph (1), by striking ``to the
Secretary, in a form determined by the
Secretary'' and inserting ``to the Director of
the Federal Housing Enterprise Regulatory
Agency, in a form determined by the Director'';
and
(ii) in paragraph (2), by striking ``to the
Secretary, in a form determined by the
Secretary'' and inserting ``to the Director of
the Federal Housing Enterprise Regulatory
Agency, in a form determined by the Director'';
(B) in subsection (n) (12 U.S.C. 1723a(n))--
(i) in paragraph (1), by striking ``and the
Secretary'' and inserting ``and the Director of
the Federal Housing Enterprise Regulatory
Agency''; and
(ii) in paragraph (2), by striking
``Secretary'' each place that term appears and
inserting ``Director of the Federal Housing
Enterprise Regulatory Agency''; and
(C) in paragraph (3)(B), by striking ``Secretary''
and inserting ``Director of the Federal Housing
Enterprise Regulatory Agency''.
(c) Amendments to Freddie Mac Act.--The Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.) is amended--
(1) in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)),
303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12
U.S.C. 1456(c)(1)), by striking ``Director of the Office of
Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development'' each place that term appears,
and inserting ``Director of the Federal Housing Enterprise
Regulatory Agency'';
(2) in section 306 (12 U.S.C. 1455)--
(A) in subsection (c)(2), by inserting ``the''
after ``Secretary of'';
(B) in subsection (i)--
(i) by striking ``section 1316(c)'' and
inserting ``section 306(c)''; and
(ii) by striking ``section 106'' and
inserting ``section 1316''; and
(C) in subsection (j), by striking ``of
substantially'' and inserting ``or substantially''; and
(3) in section 307 (12 U.S.C. 1456)--
(A) in subsection (e)--
(i) in paragraph (1), by striking ``to the
Secretary, in a form determined by the
Secretary'' and inserting ``to the Director of
the Federal Housing Enterprise Regulatory
Agency, in a form determined by the Director'';
and
(ii) in paragraph (2), by striking ``to the
Secretary, in a form determined by the
Secretary'' and inserting ``to the Director of
the Federal Housing Enterprise Regulatory
Agency, in a form determined by the Director'';
and
(B) in subsection (f)--
(i) in paragraph (1), by striking ``and the
Secretary'' and inserting ``and the Director of
the Federal Housing Enterprise Regulatory
Agency'';
(ii) in paragraph (2), by striking ``the
Secretary'' each place that term appears and
inserting ``the Director of the Federal Housing
Enterprise Regulatory Agency''; and
(iii) in paragraph (3)(B), by striking
``Secretary'' and inserting ``Director of the
Federal Housing Enterprise Regulatory Agency''.
(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 ``Federal Housing
Enterprise Regulatory Agency''.
(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 Federal Housing
Enterprise Regulatory Agency''.
(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 5313 of
title 5, United States Code, is amended by striking the item relating
to the Director of the Office of Federal Housing Enterprise Oversight,
Department of Housing and Urban Development and inserting the following
new item:
``Director of the Federal Housing Enterprise Regulatory
Agency.''.
SEC. 172. PRESIDENTIALLY APPOINTED DIRECTORS OF ENTERPRISES.
(a) Fannie Mae.--
(1) In general.--Section 308(b) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1723(b)) is
amended--
(A) in the first sentence, by striking ``eighteen
persons, five of whom shall be appointed annually by
the President of the United States, and the remainder
of whom'' and inserting ``13 persons, or such other
number that the Director determines appropriate, who'';
(B) in the second sentence, by striking ``appointed
by the President'';
(C) in the third sentence--
(i) by striking ``appointed or''; and
(ii) by striking ``, except that any such
appointed member may be removed from office by
the President for good cause'';
(D) in the fourth sentence, by striking
``elective''; and
(E) by striking the fifth sentence.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of the
board of directors of the Federal National Mortgage Association
until the expiration of the annual term for such position
during which the effective date under section 173 occurs.
(b) Freddie Mac.--
(1) In general.--Section 303(a)(2) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended--
(A) in subparagraph (A)--
(i) in the first sentence, by striking ``13
persons, 5 of whom shall be appointed annually
by the President of the United States and the
remainder of whom'' and inserting ``13 persons,
or such other number as the Director determines
appropriate, who''; and
(ii) in the second sentence, by striking
``appointed by the President of the United
States'';
(B) in subparagraph (B)--
(i) by striking ``such or''; and
(ii) by striking ``, except that any
appointed member may be removed from office by
the President for good cause''; and
(C) in subparagraph (C)--
(i) by striking the first sentence; and
(ii) by striking ``elective''.
(2) Transitional provision.--The amendments made by
paragraph (1) shall not apply to any appointed position of the
board of directors of the Federal Home Loan Mortgage
Corporation until the expiration of the annual term for such
position during which the effective date under section 173
occurs.
SEC. 173. 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 date of enactment of this Act.
TITLE II--FEDERAL HOME LOAN BANKS
SEC. 201. DIRECTORS.
Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) Number; Appointment and Election; Qualifications; Conflicts
of Interest.--
``(1) In general.--Subject to paragraphs (2) through (4),
and except to the extent that action under section 1377 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 results in a lesser number, the management of each
Federal Home Loan Bank shall be vested in a board of 13
directors, or such other number as the Director determines
appropriate.
``(2) Board makeup.--The board of directors of each Bank
shall be comprised of--
``(A) member directors, who shall comprise at least
the majority of the members of the board of directors;
and
``(B) nonmember directors, who shall comprise not
fewer than \1/3\ of the members of the board of
directors.
``(3) Selection criteria.--
``(A) In general.--Each member of the board of
directors shall be--
``(i) elected by majority vote of the
members, in accordance with procedures
established under this section; and
``(ii) a citizen of the United States.
``(B) Nonmember director criteria.--
``(i) Public interest.--Not fewer than 2 of
the nonmember directors shall be selected from
among representatives of organizations having
more than a 2-year history of representing
consumer or community interests on banking
services, credit needs, housing, or financial
consumer protections.
``(ii) Conflicts of interest.--No nonmember
director may, during the term of service on the
board of directors, serve as an officer of any
Federal Home Loan Bank or as a director or
officer of any member of a Bank.
``(4) Definitions.--For purposes of this section, the
following definitions shall apply:
``(A) Member director.--The terms `member director'
and `member directorship' mean a member of the board of
directors of a Federal Home Loan Bank who is an officer
or director of a member bank that is located in the
district in which the Federal Home Loan Bank is
located.
``(B) Nonmember director.--The terms `nonmember
director' and `nonmember directorship' mean a member of
the board of directors of a Federal Home Loan Bank who
is a bona fide resident of the district in which the
Federal Home Loan Bank is located.'';
(2) by striking ``elective'' each place that term appears
and inserting ``member'', other than in subsections (d) and
(f);
(3) in subsection (b)--
(A) in the first sentence, by striking ``Each
elective directorship'' and inserting the following:
``(b) Directorships.--
``(1) Member directors.--Each member director''; and
(B) by adding at the end the following:
``(2) Nonmember directors.--Each nonmember director shall
be elected by the members entitled to vote, from among eligible
persons nominated by the Board. Nominees shall meet all
applicable requirements prescribed in this section. Procedures
for nomination and election of nonmember directors shall be
prescribed by the bylaws of each Federal Home Loan Bank, in a
manner consistent with the rules and regulations of the Federal
Housing Enterprise Agency.'';
(4) in subsection (d)--
(A) in the first sentence--
(i) by striking ``, whether elected or
appointed,''; and
(ii) by striking ``3 years'' and inserting
4 years''; and
(B) in the second sentence--
(i) by striking ``Federal Home Loan Bank
System Modernization Act of 1999'' and
inserting ``Federal Housing Enterprise
Regulatory Reform Act of 2005'';
(ii) by striking ``\1/3\'' and inserting
``\1/4\''; and
(iii) by striking ``or appointed'';
(5) in subsection (f)--
(A) by striking paragraph (2);
(B) by striking ``appointed or'' each place that
term appears; and
(C) in paragraph (3)--
(i) by striking ``(3) Elected bank
directors.--'' and inserting ``Election
process.--''; and
(ii) by striking ``and such person shall
not continue to act as a Bank director'' and
inserting ``but such person may continue to act
as a Bank director until his or her successor
assumes the vacated office'';
(6) in subsection (i)--
(A) in paragraph (1), by striking ``Subject to
paragraph (2), each'' and inserting ``Each''; and
(B) by striking paragraph (2); and
(7) by adding at the end the following:
``(l) Transition Rule.--Any member of the board of directors of a
Bank elected in accordance with this section prior to the date of
enactment of this subsection may continue to serve as a member of that
board of directors for the remainder of the term of service, and until
his or her successor assumes the vacated office.''.
SEC. 202. DEFINITIONS.
Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is
amended--
(1) by striking paragraph (1);
(2) by redesignating paragraphs (2) through (13) as
paragraphs (1) through (12), respectively; and
(3) by adding at the end the following:
``(13) Director.--The term `Director' means the Director of
the Federal Housing Enterprise Agency.
``(14) Agency.--The term `Agency' means the Federal Housing
Enterprises Supervisory Agency.''.
SEC. 203. AGENCY OVERSIGHT OF FEDERAL HOME LOAN BANKS.
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), other than
in provisions of that Act added or amended otherwise by this Act, is
amended--
(1) by striking sections 2A, 2B, and 20 (12 U.S.C. 1422a,
1422b, 1440);
(2) in section 18 (12 U.S.C. 1438), by striking subsection
(b);
(3) by striking ``the Board'' each place that term appears,
except in sections 15 and 25, and subsections (a), (b), and (c)
of section 11, and inserting ``the Director'';
(4) by striking ``The Board'' each place that term appears
and inserting ``The Director'';
(5) by striking ``the Finance Board'' each place that term
appears and inserting ``the Director'';
(6) by striking ``The Finance Board'' each place that term
appears and inserting ``The Director'';
(7) in section 6 (12 U.S.C. 1426(b)(1))--
(A) in subsection (b)(1), in the matter preceding
subparagraph (A), by striking ``Finance Board
approval'' and inserting ``approval by the Director'';
and
(B) in each of subsections (c)(4)(B) and (d)(2), by
striking ``Finance Board regulations'' each place that
term appears and inserting ``regulations of the
Director'';
(8) by striking ``Federal Housing Finance Board'' each
place that term appears and inserting ``Director'';
(9) by striking ``Federal Home Loan Bank Board'' each place
that term appears and inserting ``Director'';
(10) in section 10 (12 U.S.C. 1430)--
(A) in the heading for subsection (b), by striking
``Formal Board Resolution'' and inserting ``Approval of
Director''; and
(B) in subsection (b), by striking ``by formal
resolution''; and
(11) in section 21(b)(5) (12 U.S.C. 1441(b)(5), by striking
``Chairperson of the Federal Housing Finance Board'' and
inserting ``Director''.
SEC. 204. DEBT ISSUING FACILITY.
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended
by inserting after section 11 the following:
``SEC. 11A. FEDERAL HOME LOAN BANK FINANCE CORPORATION.
``(a) Establishment.--
``(1) In general.--There is established the Federal Home
Loan Bank Finance Corporation (in this section referred to as
the `Corporation'), which shall be a jointly owned subsidiary
of the Federal Home Loan Banks.
``(2) Purposes.--The purposes of the Corporation are--
``(A) to issue and service the consolidated
obligations of the Federal Home Loan Banks in
accordance with this Act; and
``(B) to perform all other necessary and proper
functions in relation to the issuance and service of
such obligations, as fiscal agent on behalf of the
Federal Home Loan Banks, and any other functions
performed by the Office of Finance on behalf of the
Financing Corporation (established under section 21)
and the Resolution Funding Corporation (established
under section 21B).
``(3) Transfer of functions.--
``(A) In general.--The functions of the Office of
Finance of the Federal Home Loan Banks, shall be
transferred to the Corporation immediately upon the
conclusion of the organizational meeting of the board
of directors (referred to in this subsection as the
`effective time') established under subsection (c).
``(B) Organizational meeting.--The organizational
meeting of the board of directors of the Corporation
shall occur as soon as practicable after the date of
enactment of the Federal Enterprise Regulatory Reform
Act of 2005.
``(C) Interim procedures.--Until the effective time
under subparagraph (A), the Office of Finance
established as a joint office of the Federal Home Loan
Banks (referred to in this subsection as the
`predecessor office') shall continue to operate as if
this section had not been enacted.
``(D) References.--After the effective time under
subparagraph (A), any reference under any Federal law
to the Office of Finance and the Managing Director of
the Office of Finance shall be deemed to be references
to the Corporation and the chief executive officer of
the Corporation, respectively.
``(4) Succession.--
``(i) Assets and liabilities.--At the
effective time, the Corporation shall, by
operation of law and without any further action
by the Federal Housing Finance Board, the
predecessor office, or any court, succeed to
the assets of, and assume all debts,
obligations, contracts, and other liabilities
of the predecessor office, matured or
unmatured, accrued or absolute, contingent or
otherwise, and whether or not reflected or
reserved against on balance sheets, books of
account, or records of the predecessor office.
``(ii) Contracts.--At the effective time,
the existing contractual obligations of the
Federal Housing Finance Board, solely in its
capacity as issuer of consolidated obligations
of the Federal Home Loan Banks and the
predecessor office shall, by operation of law
and without any further action by the Federal
Housing Finance Board, the predecessor office,
or any court, become obligations, entitlements,
and instruments of the Corporation.
``(iii) Taxation.--The succession to
assets, assumption of liabilities, conversion
of obligations and instruments, and
effectuation of any other transaction by the
Corporation to carry out this subsection shall
not be treated as a taxable event under the
laws of any State, or any political subdivision
thereof.
``(b) Powers.--Subject to the provisions of this Act, and such
regulations as the Director may prescribe, the Corporation shall have
the power--
``(1) to issue voting capital stock to the Federal Home
Loan Banks;
``(2) to issue and service Federal Home Loan Bank
consolidated notes, consolidated bonds, consolidated debentures
and other consolidated obligations under section 11, on behalf
of the Federal Home Loan Banks;
``(3) to determine the amount, maturities, rate of
interest, terms, and other conditions of Federal Home Loan Bank
consolidated obligations;
``(4) to adopt, alter, and use a corporate seal;
``(5) to make contracts;
``(6) to sue and be sued in the corporate capacity of the
Corporation, and to complain and defend in any action brought
by or against the Corporation in any court of competent
jurisdiction;
``(7) to determine the terms and conditions under which the
Corporation may indemnify its directors, officers, employees,
and agents;
``(8) to determine and implement the methodology for
assessments of the Federal Home Loan Banks to fund all of the
expenses of the Corporation; and
``(9) to exercise such incidental powers not inconsistent
with the provisions of this Act as are necessary or advisable
to carry out the purposes of the Corporation.
``(c) Board of Directors.--
``(1) Establishment.--The management of the Corporation
shall be vested in a board of directors composed of the
president of each of the Federal Home Loan Banks, ex officio.
``(2) Duties.--The board of directors of the Corporation
shall administer the affairs of the Corporation in accordance
with the provisions of this section.
``(3) Interim appointments.--If the office of the president
of any Federal Home Loan Bank is vacant, the person serving in
such capacity on an acting basis shall serve on the board of
directors of the Corporation until replaced by the next person
to fill the office of the president of that Federal Home Loan
Bank.
``(4) Powers.--The board of directors of the Corporation
shall exercise such powers as may be necessary or advisable to
carry out this section, including the power to--
``(A) set policies for the management and operation
of the Corporation;
``(B) approve a strategic business plan for the
Corporation;
``(C) review, adopt and monitor annual operation
and capital budgets of the Corporation;
``(D) constitute and perform the duties of an audit
committee, which to the extent possible shall operate
consistent with--
``(i) the requirements established for the
Federal Home Loan Banks; and
``(ii) the requirements pertaining to audit
committee reports set forth in the rules of
Securities and Exchange Commission;
``(E) select, employ, determine the compensation
for, and assign the duties and functions of the
president of the Corporation, who shall--
``(i) be the chief executive officer for
the Corporation and shall direct the
implementation of the policies adopted by the
board of directors of the Corporation;
``(ii) serve as a member of the Directorate
of the Financing Corporation, under section
21(b)(1)(A) of this Act (12 U.S.C.
1441(b)(1)(A)); and
``(iii) serve as a member of the
Directorate of the Resolution Funding
Corporation, under section 21B(c)(1)(A) of this
Act (12 U.S.C. 1441b(c)(1)(A));
``(F) provide for the review and approval of all
contracts of the Corporation;
``(G) have the exclusive authority to employ and
contract for the services of an independent, external
auditor for the annual and quarterly combined financial
statements of the Federal Home Loan Banks; and
``(H) select, evaluate, determine the compensation
of, and, as appropriate, replace the internal auditor
of the Corporation, who may be removed only by vote of
the board of directors of the Corporation.
``(5) Pay.--The members of the board of directors of the
Corporation shall not receive compensation for their services
as members of the board of directors.
``(6) Quorum requirement.--
``(A) In general.--No business of the Corporation
may be conducted by the board of directors unless a
quorum of the members of the board of directors is
present in person or by telephone, or through action
taken by written consent executed by all of the members
of the board of directors.
``(B) Number.--Directors representing a majority of
the members of the board of directors shall constitute
a quorum.
``(C) Vote required.--Action taken by the board of
directors shall be approved by a majority of the
directors in attendance at any meeting at which a
quorum is present, unless the board of directors adopts
procedures requiring a greater voting requirement.
``(7) Appointment of officers and adoption of rules of
procedure.--The board of directors of the Corporation shall--
``(A) select, from among the members of such board,
a Chairperson and a Vice Chairperson; and
``(B) adopt bylaws and other rules of procedure for
actions before the board of directors, including the
establishment of 1 or more committees to take action on
behalf of the board of directors, and the delegation of
powers of the board of directors to any committee or
officer of the Corporation.
``(d) Stock.--
``(1) Issuance of equal amount to each bank.--The
Corporation shall issue to each Federal Home Loan Bank 1 share
of voting capital stock, with a par value of $100 per share.
``(2) Restricted transferability.--Stock issued under
paragraph (1) may be owned and held only by the Federal Home
Loan Banks.
``(3) Payment upon issuance.--Upon issuance of any share of
stock under this subsection to any Federal Home Loan Bank, the
bank shall pay to the Corporation the total amount due for such
stock.
``(4) Distribution requirement.--
``(A) In general.--The total amount of outstanding
stock of the Corporation shall, at all times, be
distributed equally among all of the Federal Home Loan
Banks.
``(B) Procedures.--The board of directors of the
Corporation shall adopt procedures to implement
subparagraph (A).
``(e) Status.--Except to the extent expressly provided in this
title, or in rules or regulations promulgated by the Director, or
unless the context clearly indicates otherwise, the Corporation shall
be accorded the same status as a Federal Home Loan Bank for purposes of
any other provision of law, including sections 2B and 13 of this
Act.''.
SEC. 205. EXCLUSION FROM CERTAIN SECURITIES REPORTING REQUIREMENTS.
(a) In General.--The Federal Home Loan Banks shall be exempt from
compliance with--
(1) sections 13(e), 14(a), 14(c), and 17A of the Securities
Exchange Act of 1934, and related Commission regulations; and
(2) section 15 of the Securities Exchange Act of 1934, and
related Commission regulations, with respect to transactions in
the capital stock of a Federal Home Loan Bank.
(b) Member Exemption.--The members of the Federal Home Loan Bank
System shall be exempt from compliance with sections 13(d), 13(f),
13(g), 14(d), and 16 of the Securities Exchange Act of 1934, and
related Commission regulations, with respect to ownership of or
transactions in the capital stock of the Federal Home Loan Banks by
such members.
(c) Exempted and Government Securities.--
(1) Capital stock.--The capital stock issued by each of the
Federal Home Loan Banks under section 6 of the Federal Home
Loan Bank Act are--
(A) ``exempted securities'', within the meaning of
section 3(a)(2) of the Securities Act of 1933; and
(B) ``exempted securities'', within the meaning of
section 3(a)(12)(A) of the Securities Exchange Act of
1934.
(2) Other obligations.--The debentures, bonds, and other
obligations issued under section 11 of the Federal Home Loan
Bank Act are--
(A) ``exempted securities'', within the meaning of
section 3(a)(2) of the Securities Act of 1933;
(B) ``government securities'', within the meaning
of section 3(a)(42) of the Securities Exchange Act of
1934; and
(E) ``government securities'' within the meaning of
section 2(a)(16) of the Investment Company Act of 1940.
(3) Brokers and dealers.--A person that effects
transactions in the capital stock or other obligations of a
Federal Home Loan Bank, for the account of others or for his
own account, as applicable--
(A) is excluded from the definition of the term
``government securities broker'' under section 3(a)(43)
of the Securities Exchange Act of 1934; and
(B) is excluded from the definition of ``government
securities dealer'' under section 3(a)(44) of the
Securities Exchange Act of 1934.
(d) Exemption From Reporting Requirements.--The Federal Home Loan
Banks shall be exempt from periodic reporting requirements under the
securities laws pertaining to--
(1) the disclosure of related party transactions that occur
in the ordinary course of the business of the Banks with
members; and
(2) the disclosure of the unregistered sales of equity
securities.
(e) Tender Offers.--Commission rules relating to tender offers
shall not apply in connection with transactions in the capital stock of
the Federal Home Loan Banks.
(f) Regulations.--
(1) Final rules.--Not later than 1 year after the date of
enactment of this Act, the Commission shall issue final rules
to implement this section and the exemptions provided in this
section.
(2) Considerations.--In issuing final regulations under
this section, the Commission shall consider the distinctive
characteristics of the Federal Home Loan Banks when evaluating
the accounting treatment with respect to the payment to the
Resolution Funding Corporation, the role of the combined
financial statements of the Federal Home Loan Banks, the
accounting classification of redeemable capital stock, and the
accounting treatment related to the joint and several nature of
the obligations of the Banks.
(g) Applicability.--The exemptions and exclusions provided for in
this section shall apply in accordance with this section,
notwithstanding any other provision of law, including any provision of
the securities laws.
(h) Definitions.--As used in this section--
(1) the terms ``Bank'', ``Federal Home Loan Bank'',
``member'', and ``Federal Home Loan Bank System'' have the same
meanings as in section 2 of the Federal Home Loan Bank Act (12
U.S.C. 1422);
(2) the term ``Commission'' means the Securities and
Exchange Commission''; and
(3) the term ``securities laws'' has the same meaning as in
section 3(a)(47) of the Securities Exchange Act of 1934.
SEC. 206. LIMITATION ON GOLDEN PARACHUTES.
Section 7(i) of the Federal Home Loan Bank Act (12 U.S.C. 1427) is
amended by adding at the end the following:
``(2) Authority to regulate or prohibit certain forms of
benefits to affiliated parties.--
``(A) Golden parachutes and indemnification
payments.--The Agency may prohibit or limit, by
regulation or order, any golden parachute payment or
indemnification payment.
``(B) Factors to be taken into account.--The Agency
shall prescribe, by regulation, the factors to be
considered by the Agency in taking any action pursuant
to subparagraph (A), which may include such factors
as--
``(i) whether there is a reasonable basis
to believe that the affiliated party has
committed any fraudulent act or omission,
breach of trust or fiduciary duty, or insider
abuse with regard to the Bank that has had a
material affect on the financial condition of
the Bank;
``(ii) whether there is a reasonable basis
to believe that the affiliated party is
substantially responsible for the insolvency of
the Bank, the appointment of a conservator or
receiver for the Bank, or the troubled
condition of the Bank (as defined in
regulations prescribed by the Agency);
``(iii) whether there is a reasonable basis
to believe that the affiliated party has
materially violated any applicable Federal or
State law or regulation that has had a material
affect on the financial condition of the Bank;
``(iv) whether the affiliated party was in
a position of managerial or fiduciary
responsibility; and
``(v) the length of time the party was
affiliated with the Bank, and the degree to
which--
``(I) the payment reasonably
reflects compensation earned over the
period of employment; and
``(II) the compensation involved
represents a reasonable payment for
services rendered.
``(C) Certain payments prohibited.--No Bank may
prepay the salary or any liability or legal expense of
any affiliated party, if such payment is made--
``(i) in contemplation of the insolvency of
such Bank, or after the commission of an act of
insolvency; and
``(ii) with a view to, or has the result
of--
``(I) preventing the proper
application of the assets of the Bank
to creditors; or
``(II) preferring one creditor over
another.
``(D) Golden parachute payment defined.--
``(i) In general.--For purposes of this
paragraph, the term `golden parachute payment'
means any payment (or any agreement to make any
payment) in the nature of compensation by any
Bank for the benefit of any affiliated party,
pursuant to an obligation of such Bank that--
``(I) is contingent on the
termination of such party's affiliation
with the Bank; and
``(II) is received on or after the
date on which--
``(aa) the Bank becomes
insolvent;
``(bb) any conservator or
receiver is appointed for such
institution; or
``(cc) the Agency
determines that the Bank is in
a troubled condition (as
defined in the regulations
prescribed by the Agency).
``(ii) Certain payments in contemplation of
an event.--Any payment which would be a golden
parachute payment but for the fact that such
payment was made before the date referred to in
subclause (II) of clause (i) shall be treated
as a golden parachute payment for purposes of
this paragraph, if the payment was made in
contemplation of the occurrence of an event
described in any provision of such subclause.
``(iii) Certain payments not included.--For
purposes of this paragraph, the term `golden
parachute payment' does not include--
``(I) any payment made pursuant to
a retirement plan which is qualified
(or is intended to be qualified) under
section 401 of the Internal Revenue
Code of 1986, or other
nondiscriminatory benefit plan;
``(II) any payment made pursuant to
a bona fide deferred compensation plan
or arrangement which the Agency
determines, by regulation or order, to
be permissible; or
``(III) any payment made by reason
of the death or disability of an
affiliated party.
``(E) Other definitions.--For purposes of this
paragraph--
``(i) Indemnification payment.--Subject to
subparagraph (F), the term `indemnification
payment' means any payment (or any agreement to
make any payment) by any Bank for the benefit
of any person who is or was an affiliated
party, to pay or reimburse such person for any
liability or legal expense with regard to any
administrative proceeding or civil action
instituted by the Agency which results in a
final order under which such person--
``(I) is assessed a civil money
penalty;
``(II) is removed or prohibited
from participating in conduct of the
affairs of the Bank; or
``(III) is required to take any
affirmative action described in section
2B(a)(5) with respect to such Bank.
``(ii) Liability or legal expense.--The
term `liability or legal expense' means--
``(I) any legal or other
professional expense incurred in
connection with any claim, proceeding,
or action;
``(II) the amount of, and any cost
incurred in connection with, any
settlement of any claim, proceeding, or
action; and
``(III) the amount of, and any cost
incurred in connection with, any
judgment or penalty imposed with
respect to any claim, proceeding, or
action.
``(iii) Payment.--The term `payment'
includes--
``(I) any direct or indirect
transfer of any funds or any asset; and
``(II) any segregation of any funds
or assets for the purpose of making, or
pursuant to an agreement to make, any
payment after the date on which such
funds or assets are segregated, without
regard to whether the obligation to
make such payment is contingent on--
``(aa) the determination,
after such date, of the
liability for the payment of
such amount; or
``(bb) the liquidation,
after such date, of the amount
of such payment.
``(F) Certain commercial insurance coverage not
treated as covered benefit payment.--No provision of
this paragraph shall be construed as prohibiting any
Bank from purchasing any commercial insurance policy or
fidelity bond, except that, subject to any affirmative
action required under section 2B(a)(5), such insurance
policy or bond shall not cover any legal or liability
expense of the Bank which is described in subparagraph
(E)(i).''.
TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND
THE FEDERAL HOUSING FINANCE BOARD
Subtitle A--OFHEO
SEC. 301. ABOLISHMENT OF OFHEO.
(a) In General.--Effective at the end of the 180-day 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 180-day period beginning on
the date of enactment of this Act, the Director of the Office of
Federal Housing Enterprise Oversight, solely for the purpose of winding
up the affairs of the Office of Federal Housing Enterprise Oversight--
(1) shall manage the employees of such Office and provide
for the payment of the compensation and benefits of any such
employee which accrue before the effective date of the transfer
of such employee under section 303; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Office.
(c) Status of Employees Before Transfer.--The amendments made by
title I and the abolishment of the Office of Federal Housing Enterprise
Oversight under subsection (a) of this section may not be construed to
affect the status of any employee of such Office as employees of an
agency of the United States for purposes of any other provision of law
before the effective date of the transfer of any such employee under
section 303.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing
Enterprise Regulatory Agency may use the property of the Office
of Federal Housing Enterprise Oversight to perform functions
which have been transferred to the Director of the Federal
Housing Enterprise Regulatory Agency for such time as is
reasonable to facilitate the orderly transfer of functions
transferred under any other provision of this Act or any
amendment made by this Act to any provision of law.
(2) Agency services.--Any agency, department, or other
instrumentality of the United States, and any successor to any
such agency, department, or instrumentality, which was
providing supporting services to the Office of Federal Housing
Enterprise Oversight before the expiration of the period under
subsection (a) in connection with functions that are
transferred to the Director of the Federal Housing Enterprise
Regulatory Agency shall--
(A) continue to provide such services, on a
reimbursable basis, until the transfer of such
functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of any
right, duty, or obligation of the United States, the Director
of the Office of Federal Housing Enterprise Oversight, or any
other person, which--
(A) arises under title XIII of the Housing and
Community Development Act of 1992, the Federal National
Mortgage Association Charter Act, the Federal Home Loan
Mortgage Corporation Act, or any other provision of law
applicable with respect to such Office; and
(B) existed on the day before the date of
abolishment under subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Director of the Office of Federal
Housing Enterprise Oversight in connection with functions that
are transferred to the Director of the Federal Housing
Enterprise Regulatory Agency shall abate by reason of the
enactment of this Act, except that the Director of the Federal
Housing Enterprise Regulatory Agency shall be substituted for
the Director of the Office of Federal Housing Enterprise
Oversight as a party to any such action or proceeding.
SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN REGULATIONS.
(a) In General.--All regulations, orders, and determinations
described under subsection (b) shall remain in effect according to the
terms of such regulations, orders, determinations, and resolutions, and
shall be enforceable by or against the Director of the Federal Housing
Enterprise Regulatory Agency or the Secretary of Housing and Urban
Development, as the case may be, until modified, terminated, set aside,
or superseded in accordance with applicable law by such Director or
Secretary, as the case may be, any court of competent jurisdiction, or
operation of law.
(b) Applicability.--A regulation, order, or determination is
described under this subsection if they--
(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;
(ii) the Federal National Mortgage
Association Charter Act, with respect to the
Federal National Mortgage Association; or
(iii) the Federal Home Loan Mortgage
Corporation Act, with respect to the Federal
Home Loan Mortgage Corporation; or
(C) a court of competent jurisdiction and that
relate to functions transferred by this Act; and
(2) are in effect on the effective date of the abolishment
under section 301(a).
SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.
(a) Transfer.--Each employee of the Office of Federal Housing
Enterprise Oversight shall be transferred to the Federal Housing
Enterprise Regulatory Agency for employment not later than the
effective date of the abolishment under section 301(a) and such
transfer shall be deemed a transfer of function for purposes of section
3503 of title 5, United States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same status,
tenure, grade, and pay as that held on the day immediately preceding
the transfer. Each such employee holding a permanent position shall not
be involuntarily separated or reduced in grade or compensation for 12
months after the date of transfer, except for cause or, if the employee
is a temporary employee, separated in accordance with the terms of the
appointment.
(c) Appointment Authority for Excepted and Senior Executive Service
Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service or the Senior Executive
Service, any appointment authority established under law or by
regulations of the Office of Personnel Management for filling
such positions shall be transferred, subject to paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Enterprise Regulatory Agency may decline a transfer of
authority under paragraph (1) to the extent that such authority
relates to positions excepted from the competitive service
because of their confidential, policymaking, policy-
determining, or policy-advocating character, and noncareer
positions in the Senior Executive Service (within the meaning
of section 3132(a)(7) of title 5, United States Code).
(d) Reorganization.--If the Director of the Federal Housing
Enterprise Regulatory Agency determines, after the end of the 1-year
period beginning on the effective date of the abolishment under section
301(a), that a reorganization of the combined workforce is required,
that reorganization shall be deemed a major reorganization for purposes
of affording affected employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Office of Federal
Housing Enterprise Oversight accepting employment with the
Federal Housing Enterprise Regulatory Agency as a result of a
transfer under subsection (a) may retain for 12 months after
the date on which such transfer occurs membership in any
employee benefit program of the Director of the Federal Housing
Enterprise Regulatory Agency or the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development, as applicable, including insurance, to which such
employee belongs on the date of the abolishment under section
301(a) if--
(A) the employee does not elect to give up the
benefit or membership in the program; and
(B) the benefit or program is continued by the
Director of the Federal Housing Enterprise Regulatory
Agency.
(2) Cost differential.--The difference in the costs between
the benefits which would have been provided by the Office of
Federal Housing Enterprise Oversight and those provided by this
section shall be paid by the Director of the Federal Housing
Enterprise Regulatory Agency. If any employee elects to give up
membership in a health insurance program or the health
insurance program is not continued by such Director, the
employee shall be permitted to select an alternate Federal
health insurance program within 30 days after such election or
notice, without regard to any other regularly scheduled open
season.
SEC. 304. TRANSFER OF PROPERTY AND FACILITIES.
Upon the effective date of its abolishment under section 301(a),
all property of the Office of Federal Housing Enterprise Oversight of
the Department of Housing and Urban Development shall transfer to the
Director of the Federal Housing Enterprise Regulatory Agency.
Subtitle B--Federal Housing Finance Board
SEC. 311. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.
(a) In General.--Effective at the end of the 1-year period
beginning on the date of enactment of this Act, the Federal Housing
Finance Board (in this title referred to as the ``Board'') is
abolished.
(b) Disposition of Affairs.--During the 1-year period beginning on
the date of enactment of this Act, the Board, solely for the purpose of
winding up the affairs of the Board--
(1) shall manage the employees of such Board and provide
for the payment of the compensation and benefits of any such
employee which accrue before the effective date of the transfer
of such employee under section 403; and
(2) may take any other action necessary for the purpose of
winding up the affairs of the Board.
(c) Status of Employees Before Transfer.--The amendments made by
titles I and II and the abolishment of the Board under subsection (a)
may not be construed to affect the status of any employee of such Board
as employees of an agency of the United States for purposes of any
other provision of law before the effective date of the transfer of any
such employee under section 403.
(d) Use of Property and Services.--
(1) Property.--The Director of the Federal Housing
Enterprise Regulatory Agency may use the property of the Board
to perform functions which have been transferred to the
Director of the Federal Housing Enterprise Regulatory Agency
for such time as is reasonable to facilitate the orderly
transfer of functions transferred 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 Board before the
expiration of the 1-year period under subsection (a) in
connection with functions that are transferred to the Director
of the Federal Housing Enterprise Regulatory Agency shall--
(A) continue to provide such services, on a
reimbursable basis, until the transfer of such
functions is complete; and
(B) consult with any such agency to coordinate and
facilitate a prompt and reasonable transition.
(e) Savings Provisions.--
(1) Existing rights, duties, and obligations not
affected.--Subsection (a) shall not affect the validity of any
right, duty, or obligation of the United States, a member of
the Board, or any other person, which--
(A) arises under title XIII of the Housing and
Community Development Act of 1992, the Federal National
Mortgage Association Charter Act, the Federal Home Loan
Mortgage Corporation Act, the Federal Home Loan Bank
Act, or any other provision of law applicable with
respect to such Board; and
(B) existed on the day before the effective date of
the abolishment under subsection (a).
(2) Continuation of suits.--No action or other proceeding
commenced by or against the Board in connection with functions
that are transferred to the Director of the Federal Housing
Enterprise Regulatory Agency shall abate by reason of the
enactment of this Act, except that the Director of the Federal
Housing Enterprise Regulatory Agency shall be substituted for
the Board or any member thereof as a party to any such action
or proceeding.
SEC. 312. CONTINUATION AND COORDINATION OF CERTAIN REGULATIONS.
(a) In General.--All regulations, orders, and determinations
described under subsection (b) shall remain in effect according to the
terms of such regulations, orders, determinations, and resolutions, and
shall be enforceable by or against the Director of the Federal Housing
Enterprise Regulatory Agency until modified, terminated, set aside, or
superseded in accordance with applicable law by such Director, any
court of competent jurisdiction, or operation of law.
(b) Applicability.--A regulation, order, or determination is
described under this subsection if they--
(1) were issued, made, prescribed, or allowed to become
effective by--
(A) the Board; or
(B) a court of competent jurisdiction and that
relate to functions transferred by this Act; and
(2) are in effect on the effective date of the abolishment
under section 401(a).
SEC. 313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL HOUSING
FINANCE BOARD.
(a) Transfer.--Each employee of the Board shall be transferred to
the Federal Housing Enterprise Regulatory Agency for employment not
later than the effective date of the abolishment under section 401(a),
and such transfer shall be deemed a transfer of function for purposes
of section 3503 of title 5, United States Code.
(b) Guaranteed Positions.--Each employee transferred under
subsection (a) shall be guaranteed a position with the same status,
tenure, grade, and pay as that held on the day immediately preceding
the transfer. Each such employee holding a permanent position shall not
be involuntarily separated or reduced in grade or compensation for 12
months after the date of transfer, except for cause or, if the employee
is a temporary employee, separated in accordance with the terms of the
appointment.
(c) Appointment Authority for Excepted and Senior Executive Service
Employees.--
(1) In general.--In the case of employees occupying
positions in the excepted service or the Senior Executive
Service, any appointment authority established under law or by
regulations of the Office of Personnel Management for filling
such positions shall be transferred, subject to paragraph (2).
(2) Decline of transfer.--The Director of the Federal
Housing Enterprise Regulatory Agency may decline a transfer of
authority under paragraph (1) to the extent that such authority
relates to positions excepted from the competitive service
because of their confidential, policymaking, policy-
determining, or policy-advocating character, and noncareer
positions in the Senior Executive Service (within the meaning
of section 3132(a)(7) of title 5, United States Code).
(d) Reorganization.--If the Director of the Federal Housing
Enterprise Regulatory Agency determines, after the end of the 1-year
period beginning on the effective date of the abolishment under section
401(a), that a reorganization of the combined workforce is required,
that reorganization shall be deemed a major reorganization for purposes
of affording affected employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(e) Employee Benefit Programs.--
(1) In general.--Any employee of the Board accepting
employment with the Federal Housing Enterprise Regulatory
Agency as a result of a transfer under subsection (a) may
retain for 12 months after the date on which such transfer
occurs membership in any employee benefit program of the
Federal Housing Enterprise Regulatory Agency or the Board, as
applicable, including insurance, to which such employee belongs
on the effective 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 Federal Housing Enterprise Regulatory
Agency.
(2) Cost differential.--The difference in the costs between
the benefits which would have been provided by the Board and
those provided by this section shall be paid by the Director of
the Federal Housing Enterprise Regulatory Agency. If any
employee elects to give up membership in a health insurance
program or the health insurance program is not continued by
such Director, the employee shall be permitted to select an
alternate Federal health insurance program within 30 days after
the date of such election or notice, without regard to any
other regularly scheduled open season.
SEC. 314. TRANSFER OF PROPERTY AND FACILITIES.
Upon the effective date of the abolishment under section 401(a),
all property of the Board shall transfer to the Director of the Federal
Housing Enterprise Regulatory Agency.
TITLE IV--MISCELLANEOUS PROVISIONS
SEC. 401. STUDY AND REPORT ON BASEL II AND ENTERPRISE DEBT.
(a) Study.--The Board of Governors of the Federal Reserve System
shall conduct a study the effects of the new Basel Capital Accord
(Basel II), as endorsed by the Group of Ten countries in
''International Convergence of Capital Measurement and Capital
Standards: a Revised Framework'' on the regulated entities, as defined
under this Act. The study shall examine the debt of the regulated
entities and the capital classification on financial institutions that
hold such debt.
(b) Report.--The Chairman of the Board of Governors of the Federal
Reserve System shall submit a report to Congress on the results of the
study required by this section 2 years after the date of enactment of
this Act.
SEC. 402. AFFORDABLE HOUSING REPORTING.
The Inspector General of the Federal Housing Enterprise Regulatory
Agency shall conduct an annual audit of the affordable housing
activities of the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation, programs, and partnerships to ensure
that such activities, programs, and partnerships support the affordable
housing mission of those enterprises.
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