< Back to H.R. 1657 (104th Congress, 1995–1996)

Text of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995

This bill was introduced on May 17, 1995, in a previous session of Congress, but was not enacted. The text of the bill below is as of May 17, 1995 (Introduced).

Source: GPO

HR 1657 IH

104th CONGRESS

1st Session

H. R. 1657

To restructure and modernize the Federal Home Loan Bank System.

IN THE HOUSE OF REPRESENTATIVES

May 17, 1995

Mr. GONZALEZ (by request) introduced the following bill; which was referred to the Committee on Banking and Financial Services


A BILL

To restructure and modernize the Federal Home Loan Bank System.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Federal Home Loan Bank System Restructuring and Modernization Act of 1995’.

    (b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

      Sec. 1. Short title; table of contents.

TITLE I--AMENDMENT OF FEDERAL HOME LOAN BANK ACT

      Sec. 101. Statement of purpose.

      Sec. 102. Definitions.

      Sec. 103. Federal Housing Finance Board.

      Sec. 104. Powers and duties of the Federal Housing Finance Board.

      Sec. 105. Continuing regulations and policies.

      Sec. 106. Readjustment of Federal Home Loan Bank districts; names.

      Sec. 107. Eligibility for membership.

      Sec. 108. Capital stock.

      Sec. 109. Transitional provisions concerning capital stock.

      Sec. 110. Prompt corrective action.

      Sec. 111. Federal Home Loan Bank directors.

      Sec. 112. Eligibility to secure advances.

      Sec. 113. Advances.

      Sec. 114. Advances to nonmember mortgagees; terms and conditions.

      Sec. 115. Powers and duties of banks.

      Sec. 116. Incorporation of banks; corporate powers; housing project loans.

      Sec. 117. Exemption from taxation; obligations acceptable as credit on debt of home owner.

      Sec. 118. Obligations as lawful investments; liability of United States for obligations issued by banks.

      Sec. 119. Reserves and dividends.

      Sec. 120. Financing Corporation.

      Sec. 121. Obligations of Resolution Funding Corporation.

      Sec. 122. Eligibility to membership in banks.

      Sec. 123. Merger, liquidation or reorganization.

      Sec. 124. General enforcement powers.

TITLE II--EMPLOYEE PROVISIONS

      Sec. 201. Federal Housing Finance Board employees.

TITLE III--CONFORMING AMENDMENTS

      Sec. 301. Amendments to the Federal Credit Union Act.

      Sec. 302. Amendments to the Federal Deposit Insurance Act.

      Sec. 303. Amendment to the Home Owners’ Loan Act.

      Sec. 304. Amendment to the Housing and Urban-Rural Recovery Act of 1983.

      Sec. 305. Amendments to the Right to Financial Privacy Act of 1978.

      Sec. 306. Amendments to the Thrift Institutions Restructuring Act.

      Sec. 307. Amendments to title 18, United States Code.

TITLE I--AMENDMENT OF FEDERAL HOME LOAN BANK ACT

SEC. 101. STATEMENT OF PURPOSE.

    The Federal Home Loan Bank Act is amended by adding after section 1 (12 U.S.C. 1421) the following new section:

‘SEC. 1A. STATEMENT OF PURPOSE.

    ‘The Federal Home Loan Bank System is a profit-making enterprise whose purpose is to support residential mortgage lending (including mortgages on housing for low- and moderate-income families), as well as community development lending, throughout the Nation, safely and soundly, primarily through a program of collateralized advances to System members. The System facilitates such lending by increasing the liquidity and improving the distribution of investment capital available through its member institutions.’.

SEC. 102. DEFINITIONS.

    Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended to read as follows:

‘SEC. 2. DEFINITIONS.

    ‘As used in this Act--

      ‘(1) BANK- The term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under the authority of this Act.

      ‘(2) BANK-AFFILIATED PARTY- The term ‘Bank-affiliated party’ means--

        ‘(A) any director, officer, or employee of, or agent for, a Federal Home Loan Bank;

        ‘(B) any member, consultant, joint venture partner, and any other person as determined by the Board who participates in the conduct of the affairs of a Federal Home Loan Bank; and

        ‘(C) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in--

          ‘(i) any violation of any law or regulation;

          ‘(ii) any breach of fiduciary duty; or

          ‘(iii) any unsafe or unsound practice,

        which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the Federal Home Loan Bank.

      ‘(3) BOARD- The term ‘Board’ means the Federal Housing Finance Board established under section 2A.

      ‘(4) FEDERAL HOME LOAN BANK SYSTEM AND SYSTEM- The term ‘Federal Home Loan Bank System’ or ‘System’ means the Federal Home Loan Banks, including any central office established by the Banks, under the supervision of the Board.

      ‘(5) HOME MORTGAGE- The term ‘home mortgage’ means a mortgage upon real estate, in fee simple, or on a leasehold--(A) under a lease for not less than ninety-nine years which is renewable or (B) under a lease having a period of not less than fifty years to run from the date the mortgage was executed, upon which is located, or which comprises or includes, one or more homes or other dwelling units, all of which may be defined by the Board, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this Act to become members, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

      ‘(6) HOME MORTGAGE LOAN- The term ‘home mortgage loan’ means a loan made by a member upon the security of a home mortgage.

      ‘(7) INSURED DEPOSITORY INSTITUTION- The term ‘insured depository institution’ means--

        ‘(A) an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act), and

        ‘(B) except as used in sections 21A and 21B, an insured credit union (as defined in section 101 of the Federal Credit Union Act).

      ‘(8) MEMBER- The term ‘member’ means any institution which has subscribed for the stock of a Federal Home Loan Bank and has not surrendered all of that stock.

      ‘(9) SAVINGS ASSOCIATION- The term ‘savings association’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act.

      ‘(10) STATE- The term ‘State’ includes the District of Columbia, Guam, Puerto Rico, and the Virgin Islands of the United States.

      ‘(11) TOTAL CAPITAL- The term ‘total capital’ means--

        ‘(A) except as provided in subparagraphs (B) ad (C), total capital that is calculated at least quarterly;

        ‘(B) with respect to a Federal Home Loan Bank, total capital that is calculated on the last day of each month net of all stock to be redeemed under all pending notices of redemption and withdrawal filed under section 6(e) with the Bank and all stock pending retirement by the Bank; and

        ‘(C) with respect to the Federal Home Loan Bank System, total capital that is calculated on the last day of each month net of all stock to be redeemed under all pending notices of redemption and withdrawal filed under section 6(e) with any of the Federal Home Loan Banks and all stock pending retirement by any of the Banks.

      ‘(12) UNPAID PRINCIPAL- The term ‘unpaid principal’, when used in respect of a loan secured by a home mortgage means the principal thereof less the sum of (A) payments made on such principal, and (B) in cases where shares or stock are pledged as security for the loan, the payments made on such shares or stock plus earnings or dividends apportioned or credited thereon.’.

SEC. 103. FEDERAL HOUSING FINANCE BOARD.

    (a) ESTABLISHMENT- Section 2A(a) of the Federal Home Loan Bank Act (12 U.S.C. 1422a(a)) is amended by deleting paragraph (3).

    (b) BOARD MEMBERS- Section 2A(b) of the Federal Home Loan Bank Act (12 U.S.C. 1422(b)) is amended to read as follows:

    ‘(b) Board Members-

      ‘(1) IN GENERAL- The Board shall consist of the following directors:

        ‘(A) The Secretary of the Treasury (or the Secretary of the Treasury’s designee), who shall serve without additional compensation.

        ‘(B) The Secretary of the Department of Housing and Urban Development (or the Secretary of the Department of Housing and Urban Development’s

designee), who shall serve without additional compensation.

        ‘(C) 3 directors appointed by the President, by and with the advice and consent of the Senate--

          ‘(i) from among individuals who are citizens of the United States; and

          ‘(ii) from among individuals--

            ‘(I) with extensive experience or training in housing finance or financial institution safety and soundness regulation, or

            ‘(II) with a commitment to providing specialized housing credit.

      ‘(2) APPOINTED DIRECTORS-

        ‘(A) FULL-TIME DIRECTOR-

          ‘(I) ONE DIRECTOR- 1 of the appointed directors shall serve full-time as a director of the Board.

          ‘(II) CHAIRPERSON- The full-time appointed director shall be designated to serve as the Chairperson of the Board and the Chairperson shall be designated as the chief executive officer, subject to the supervision of the Board.

          ‘(III) ACTING CHAIRPERSON- The Chairperson shall designate another appointed director to serve as Acting Chairperson during the absence or disability of the Chairperson.

        ‘(B) PART-TIME DIRECTORS- 2 of the appointed directors shall serve part-time as directors of the Board and at least 1 of the part-time directors shall be chosen from an organization with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections.

      ‘(3) NOMINATIONS- Nominations pursuant to this subsection shall be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs.’.

    (c) APPOINTED DIRECTORS’ TERMS- Section 2A(c) of the Federal Home Loan Bank Act (12 U.S.C. 1422(c)) is amended to read as follows:

    ‘(c) APPOINTED DIRECTORS’ TERMS-

      ‘(1) IN GENERAL- The appointed directors shall each be appointed for a term of 6 years.

      ‘(2) INITIAL TERM- Notwithstanding paragraph (1), of the directors first appointed after the enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995--

        ‘(i) 1 shall be appointed for a term of 2 years;

        ‘(ii) 1 shall be appointed for a term of 4 years; and

        ‘(iii) 1 shall be appointed for a term of 6 years.’.

    (d) VACANCIES- Section 2A(d) of the Federal Home Loan Bank Act (12 U.S.C. 1422(d)) is amended to read as follows:

    ‘(d) Vacancies-

      ‘(1) IN GENERAL- Any vacancy on the Board shall be filled in the same manner in which the original appointment was made.

      ‘(2) EXPIRATION OF TERM- Any director appointed to fill a vacancy occurring before the expiration of the term for which such director’s predecessor was appointed shall be appointed only for the remainder of such term.

      ‘(3) CONTINUATION OF SERVICE- Each director may continue to serve until a successor has been appointed and qualified.

      ‘(4) QUORUM-

        ‘(A) IN GENERAL- 3 directors shall constitute a quorum of the board of directors of the Federal Housing Finance Board.

        ‘(B) EXCEPTION- If there shall be on the Board less than a quorum, all powers and functions vested in, or exercisable by, the Board shall vest in and be exercisable by the remaining directors, until such time as there shall be a quorum of the Board.’.

    (e) EMPLOYMENT AND OTHER RESTRICTIONS ON DIRECTORS; APPOINTED DIRECTORS COMPENSATION- Section 2A of the Federal Home Loan Bank Act (12 U.S.C. 1422a) is amended by adding after subsection (d) the following new subsections:

    ‘(e) EMPLOYMENT AND OTHER RESTRICTIONS ON DIRECTORS- No director may--

      ‘(1) serve as a director or officer of any Federal Home Loan Bank or any member of any Bank; or

      ‘(2) hold shares of, or any other financial interest in, any member of any Federal Home Loan Bank.

    ‘(f) APPOINTED DIRECTORS COMPENSATION- The Chairperson and the other appointed directors shall be compensated as prescribed in sections 5314 and 5315 of title 5, United States Code, respectively.’.

    (f) TRANSITIONAL PROVISION-

      (1) CONTINUED SERVICE OF FEDERAL HOUSING FINANCE BOARD DIRECTORS- Any Federal Housing Finance Board director serving on the date of enactment of the Federal Home Loan Bank Restructuring and Modernization Act of 1995, whose term has not expired prior to that date, shall remain a director of the Board and shall be deemed to have been appointed under subsection (b).

      (2) TERMS OF APPOINTMENT- The President shall determine the length of the term of any director described in paragraph (1), subject to subsection (c)(2), and shall determine which director described in paragraph (1) shall serve as the full-time director and which shall serve part-time.

SEC. 104. POWERS AND DUTIES OF THE FEDERAL HOUSING FINANCE BOARD.

    (a) POWERS AND DUTIES- Section 2B(a) of the Federal Home Loan Bank Act (12 U.S.C. 1422b(a)) is amended to read as follows:

    ‘(a) POWERS AND DUTIES-

      ‘(1) SAFETY AND SOUNDNESS- The primary duty of the Board shall be to ensure that the Federal Home Loan Banks operate in a safe and sound manner.

      ‘(2) ADDITIONAL POWERS AND DUTIES- The Board also shall have the following powers and duties--

        ‘(A) to supervise the Federal Home Loan Banks and the Federal Home Loan Bank System and to promulgate and enforce such regulations and orders as are necessary from time to time to carry out the provisions of this Act;

        ‘(B) to ensure that the Federal Home Loan Banks carry out their housing finance mission;

        ‘(C) to ensure that the Federal Home Loan Banks and the Federal Home Loan Bank System remain appropriately capitalized and able to raise funds in the capital markets;

        ‘(D) to determine necessary expenditures of the Board under this Act and the manner in which such expenditures shall be incurred, allowed, and paid;

        ‘(E) to use the United States mails in the same manner and under the same conditions as a department or agency of the United States; and

        ‘(F) utilizing the services of the Administrator of the General Services, to purchase, lease, hold or dispose of such real estate for its premises as may be necessary or convenient for it to carry out the purposes of this Act.’.

    (b) AMENDMENTS CONCERNING STAFF- Section 2B(b) of the Federal Home Loan Bank Act (12 U.S.C. 1422b(b)) is amended to read as follows:

    ‘(b) Staff-

      ‘(1) FEDERAL HOUSING FINANCE BOARD STAFF- Subject to title II of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995, the Board may employ, direct, and fix the compensation and number of employees, attorneys, and agents of the Board, except that in no event shall the Board delegate any function to any employee or administrative unit of any bank.

      ‘(2) Compensation-

        ‘(a) EMPLOYEES, ATTORNEYS, AND AGENTS- In directing and fixing the compensation of employees, attorneys, and agents, the Board shall consult with and maintain comparability with the compensation at the Federal bank regulatory agencies.

        ‘(B) OTHER LAWS- Except for the compensation of the directors of the Board, compensation under subparagraph (A) shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States.

      ‘(3) ABOLITION OF THE OFFICE OF FINANCE- The Office of Finance is abolished on the earlier of the date--

        ‘(A) the central office described in section 11(k) is established, or

        ‘(B) 6 months after the Federal Home Loan Bank System Restructuring and Modernization Act of 1995 is enacted.’.

SEC. 105. CONTINUING REGULATIONS AND POLICIES.

    Not later than 270 days after the date of enactment of this Act, the Federal Housing Finance Board shall--

      (a) identify the regulations and policies of the Board that will continue in effect after the enactment of this Act;

      (b) identify the regulations and policies described in subsection (a) that need to be amended to comply with changes made to the Federal Home Loan Bank Act by this Act; and

      (c) publish the information required by subsections (a) and (b) in the Federal Register.

SEC. 106. READJUSTMENT OF FEDERAL HOME LOAN BANK DISTRICTS; NAMES.

    Section 3 of the Federal Home Loan Bank Act (12 U.S.C. 1423) is amended to read as follows:

‘SEC. 3. READJUSTMENT OF FEDERAL HOME LOAN BANK DISTRICTS; NAMES.

    ‘(a) READJUSTMENTS-

      ‘(1) AUTHORITY OF FEDERAL HOME LOAN BANKS- The Federal Home Loan Bank districts and the Federal Home Loan Banks in existence on the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995 may be readjusted (through merger or otherwise) by 2 or more Banks as long as--

        ‘(A) there are never fewer than 1 nor more than 12 districts and Federal Home Loan Banks; and

        ‘(B) the requirements of paragraph (2) are satisfied.

      ‘(2) ADDITIONAL REQUIREMENTS- Any readjustment described in this subsection--

        ‘(A) CONVENIENCE TEST- shall be with due regard to the convenience and customary course of business of the current members and institutions eligible to and likely to subscribe for stock of a Federal Home Loan Bank, and no Federal Home Loan Bank district shall contain a fractional part of any State.

        ‘(B) PRIOR APPROVALS- Must be approved (taking into account, among other things, the convenience test in subparagraph (A)), by--

          ‘(i) the Federal Housing Finance Board;

          ‘(ii) the majority of the board of directors of each participating Bank; and

          ‘(iii) the majority of the votes that all members of each participating Bank may cast with respect to the readjustment.

            ‘(I) VOTES TO BE CAST- Each member may cast a number of votes equal to the number of votes the member may cast in an election under section 7(b).

            ‘(II) MEMBER DEFINED- As used in this subparagraph, ‘member’ means a member of a Federal Home Loan Bank that was a member of such Bank at the end of the calendar year next preceding the vote.

    ‘(b) NAME-

      ‘(1) DISTRICTS- All districts shall be known as Federal Home Loan Bank districts and may be designated by number.

      ‘(2) CITY- The title of each Federal Home Loan Bank shall include the name of the city at which it is established.’.

SEC. 107. ELIGIBILITY FOR MEMBERSHIP.

    (a) ELIGIBILITY CRITERIA- Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as follows:

    ‘(a) Criteria for Eligibility-

      ‘(1) IN GENERAL- Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or any insured depository institution (as defined in section 2), shall be eligible to be a member of a Federal Home Loan Bank if--

        ‘(A) it is duly organized under the laws of any State or of the United States;

        ‘(B) it is subject to inspection and regulation under the banking laws, or under similar laws, of any State or of the United States;

        ‘(C) it makes long-term home mortgage loans, as defined by the Board;

        ‘(D) it maintains at least 10 percent of its total assets in whole first mortgages on improved residential property (based on an average in each calendar quarter);

        ‘(E) its financial condition is such that advances may be safely made to such institution; and

        ‘(F) the character of its management and its home-financing policy are consistent with sound and economical home financing.

      ‘(2) DEFINITION OF WHOLE MORTGAGE- A whole first mortgage on improved residential property for purposes of this subsection does not include either a partial interest in a residential mortgage loan or any security that represents an interest in a residential mortgage loan.

      ‘(3) Transition periods for new institutions and existing members-

        ‘(A) NEW INSTITUTIONS- An institution commencing its initial business operations may become a member of a Federal Home Loan Bank prior to complying with paragraph (1)(D) if it complies with paragraph (1)(D) within one year after the commencement of its operations.

        ‘(B) EXISTING MEMBERS- Paragraph (1)(D) does not apply to an institution that is a member of a Federal Home Loan Bank on the day before the date of enactment of the Federal Home Loan Bank System Supervision and Modernization Act of 1995 until 2 years after the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995.

        ‘(C) REMOVAL- A new institution or an existing member that fails to comply with paragraph (1)(D) within the time period provided by subparagraph (A) or subparagraph (B), respectively, shall be removed from membership by the Board under section (6)(e).

      ‘(4) FAILURE TO MAINTAIN ASSET REQUIREMENT- Except as provided in paragraph (3), any member that fails to maintain compliance with the 10 percent whole first mortgage asset requirement described in paragraph (1)(D)--

        ‘(A) ADVANCES- For 2 consecutive quarters shall not be eligible to obtain advances from its Federal Home Loan Bank until the member meets the 10 percent whole first mortgage asset requirement; and

        ‘(B) REMOVAL OF MEMBER- For 4 consecutive quarters shall be removed from membership by the Board under section 6(e).’.

    (b) MEMBERSHIP BASED ON CONVENIENCE; APPLICATIONS- Section 4(b) of the Federal Home Loan Bank Act (12 U.S.C. 1424(b)) is amended to read as follows:

    ‘(b) Membership Based on Convenience; Applications-

      ‘(1) MEMBERSHIP BASED ON CONVENIENCE- An institution eligible to become a member under this section may become a member only of, and secure advances only from--

        ‘(A) the Federal Home Loan Bank of the district in which the institution’s principal place of business is located, or

        ‘(B) the Bank of a district adjoining the district in which the institution’s principal place of business is located if demanded by convenience and then only if--

          ‘(i) the application for membership is approved by the Bank of the adjoining district; and

          ‘(ii) the Board does not disapprove the application within 30 days after Bank approval is granted under clause (i).

      ‘(2) Applications-

        ‘(A) SUBMISSION- An institution eligible to become a member may submit an application for membership--

          ‘(i) to the Bank in the district in which the principal place of business of the institution is located; or

          ‘(ii) if the institution is seeking to become a member of a Bank of a district adjoining the district in which the institution’s principal place of business is located, to the Bank of the adjoining district and to the Board.

        ‘(B) APPROVAL- Each Federal Home Loan Bank is authorized to approve or disapprove, subject to the requirements of this Act, applications appropriately submitted to the Bank.’.

SEC. 108. CAPITAL STOCK.

    (a) REQUIRED SUBSCRIPTIONS; RETIREMENT OF OVERSUBSCRIPTIONS; LIMITATIONS; CANCELLATION OF OVERSUBSCRIPTIONS; REPORTS AND INFORMATION- Section 6(b) of the Federal Home Loan Bank Act (12 U.S.C. 1426(b)) is amended to read as follows:

    ‘(b) Required Subscriptions; Retirement of Oversubscriptions; Limitations; Cancellation of Oversubscriptions; Reports and Information-

      ‘(1) Required subscriptions-

        ‘(A) In general-

          ‘(i) PERCENTAGE OF TOTAL ASSETS- The minimum stock subscription of each institution that becomes a member shall be an amount equal to a percentage of the subscriber’s total assets.

          ‘(ii) EACH BANK TO SET INDIVIDUAL REQURIEMENTS- The percentage of total assets in clause (i), which shall apply to all members of the same Bank, shall be established individually by each Federal Home Loan Bank based, at a minimum, on the capital standards set by the Board under Section 6(A).

        ‘(B) ADJUSTMENTS- Each Federal Home Loan Bank shall annually, as of the close of the calendar year, adjust, at such time, and in such manner and upon such terms and conditions as the Board may by regulation or otherwise prescribe, the amount of stock required to be held by each member of the Bank so that such member shall have invested in the stock of the Bank at least an amount calculated in the manner provided in subparagraph (A).

        ‘(C) Excess stock-

          ‘(i) RETIREMENT- If a Federal Home Loan Bank finds that the investment of any member in stock

of the Bank is greater than that required under this paragraph, it may, unless prohibited by the Board or by the provisions of paragraph (2), retire the stock of such member in excess of the amount so required.

          ‘(ii) PAYMENT FOR RETIRED STOCK- The retirement of stock under this subparagraph is subject to all of the requirements imposed on the partial redemption of stock under subsection (e), except for the notice requirement contained in subsection (e)(1).

        ‘(D) ENTIRE SHARES- The Board, in its discretion, may, by regulation or otherwise, provide for adjustments in amounts of stock to be issued or retired in order that stock may be issued or retired only in entire shares.

      ‘(2) LIMITATION ON RETIREMENT OF EXCESS SHARES- Notwithstanding any other provision of this subsection, no action shall be taken by any Bank with respect to any member pursuant to paragraph (1) if the effect of the action would be to cause the aggregate outstanding advances made by the Bank to exceed 20 times the amounts paid in by the member for outstanding capital stock, unless the member has established a permissible compensating balance to support the excess advance.

      ‘(3) REPORTS AND INFORMATION- The Board, by regulations or otherwise, may require each member to submit such reports and information as the Board, in its discretion, may determine to be necessary or appropriate for the purposes of this subsection.’.

    (b) PARTIAL STOCK REDEMPTION OR WITHDRAWAL; REMOVAL OF MEMBERS; SURRENDER AND CANCELLATION OF STOCK; STOCK REDEMPTIONS- Section 6(e) of the Federal Home Loan Bank (12 U.S.C. 1426(e)) is amended to read as follows:

    ‘(e) Partial Stock Redemption or Withdrawal; Removal of Members; Surrender and Cancellation of Stock; Stock Redemptions-

      ‘(1) Partial stock redemption and withdrawal of members-

        ‘(A) In general-

          ‘(i) NOTICE OF WITHDRAWAL- Any member may withdraw from membership in a Federal Home Loan Bank, subject to the conditions of this Act, by filing with the Board and the Bank a written notice of intention to withdraw.

          ‘(ii) Notice of partial redemption-

            ‘(I) IN GENERAL- Except as provided in subclause (II), any member may redeem stock in excess of the amount of stock required to be owned by the member under section 6(b)(1), by filing a written notice of a partial redemption.

            ‘(II) EXCEPTION- Stock described in subclause (I) may not be redeemed if, following the redemption, the aggregate outstanding advances to the member would exceed 20 times the amounts paid in by the member for outstanding capital stock and the member has not (or is not permitted to) established a compensating balance to support the excess advances.

          ‘(iii) DATE OF NOTICE- Any notice filed under this paragraph shall be deemed to have been filed on the last day of the month in which the notice is filed.

        ‘(B) Fee for cancellation of notice-

          ‘(i) FEE IMPOSED- If a member cancels a notice filed under subparagraph (A), the member shall pay a fee in an amount established by the Board.

          ‘(ii) FEE AMOUNT- The Board shall set the cancellation fee at an amount determined by the Board to be sufficient to discourage members from filing a notice for the purpose of maintaining a partial redemption option or withdrawal option.

          ‘(iii) CAPITAL ACCOUNT- The fee paid by a member under this subparagraph shall be added to the Bank’s retained earnings account or other capital reserve account.

        ‘(C) PROCESS- For purposes of this subsection, notices of partial redemption and withdrawal shall be processed in the order received.

      ‘(2) Removal of members-

        ‘(A) FEDERAL HOUSING FINANCE BOARD ACTION- The Board may, after hearing, remove any member from membership if such member--

          ‘(i) in the opinion of the Board--

            ‘(I) has failed to comply with any provision of this Act or regulation of the Board prescribed under this Act, including a failure to maintain at least 10 percent of its total assets in whole first mortgages on improved residential property as required under section 4; or

            ‘(II) has a management or home-financing policy of a character inconsistent with sound and economical home financing or with the purposes of this Act; or

          ‘(ii) has been determined to be insolvent, or otherwise subject to the appointment of a conservator, receiving, or other legal custodian, by a State or Federal authority with regulatory and supervisory responsibility for the member.

        ‘(B) Federal home loan bank referral-

          ‘(i) IN GENERAL- A Federal Home Loan Bank may refer a member to the Board for removal if the Bank believes any basis for removal set forth in subparagraph (A) is present.

          ‘(ii) BOARD DECISION- Within 30 days after receiving a referral described in clause (i), the Board shall determine whether to initiate a removal action under subparagraph (A) and shall notify the referring Bank of its decision.

      ‘(3) Liquidation of member’s debts-

        ‘(A) IN GENERAL- When a member’s membership in a Federal Home Loan Bank is terminated by removal, or a member files a notice of withdrawal, the indebtedness of the member to the Federal Home Loan Bank shall be liquidated in an orderly manner as determined by the Federal Home Loan Bank and the liquidation shall be completed no later than the date the member’s stock is to be surrendered and canceled under paragraph (4).

        ‘(B) LIQUIDATION DEEMED PREPAYMENT OF DEBT- Any liquidation described in subparagraph (A) shall be deemed a prepayment of the indebtedness, and shall be subject to any penalties or other fees applicable to such prepayment.

        ‘(C) PROHIBITION ON NEW ADVANCES- New advances may not be made to a member and outstanding advances to a member may not be renewed--

          ‘(i) if the member has filed a notice of withdrawal, unless the notice is canceled and the fee described in paragraph (1)(B) has been paid; or

          ‘(ii) if the Board has determined, after hearing, to remove the member.

        ‘(D) RETURN OF COLLATERAL AND COMPENSATING BALANCES- Upon the liquidation of indebtedness described in subparagraph (A), the member shall be entitled to the return of any of its remaining collateral and compensating balance.

      ‘(4) WITHDRAWALS AND REMOVALS- All of the stock in the Federal Home Loan Bank owned by a member shall be surrendered and canceled--

          ‘(i) in the case of withdrawal, 6 months after the date the member filed the notice of withdrawal, unless the notice has been canceled and the fee described in paragraph (1)(B) has been paid; or

          ‘(ii) in a removal case, upon the completion of the liquidation described in paragraph (3).

        ‘(B) PARTIAL REDEMPTION- The amount of stock in the Federal Home Loan Bank being redeemed by a member in a partial redemption shall be surrendered and canceled 6 months after the date the member filed the notice of partial redemption, unless the notice has been canceled and the fee described in paragraph (1)(B) has been paid.

      ‘(5) Payment for stock redemptions-

        ‘(A) CASH SUBSCRIPTIONS PAID IN TWO INSTALLMENTS- Except as provided in subparagraphs (B) and (C), a member that has surrendered all or part of its capital stock shall receive from the Federal Home Loan Bank a sum equal to the member’s cash paid subscriptions for the capital stock surrendered to be paid in two equal installments as follows--

          ‘(i) upon the surrender and cancellation of the member’s stock; and

          ‘(ii) six months after receiving the payment described in clause (i).

        ‘(B) Extension of time for payment-

          ‘(i) IN GENERAL- Except as provided in subparagraph (C), a member that has surrendered all or part of its capital stock shall receive from the Bank a sum equal to the member’s cash subscription for the capital stock surrendered to be paid in three equal installments as set forth in clause (ii) when--

            ‘(I) pending stock redemptions in the Federal Home Loan Bank exceed 20 percent of the Bank’s current capital, or

            ‘(II) the Board makes a written determination that, for reasons of safety and soundness, the period for payment on redemptions should be extended.

          ‘(ii) THREE INSTALLMENTS- The three equal installment payments referred to in clause (i) shall be made as follows--

            ‘(I) upon the surrender and cancellation of the member’s capital stock;

            ‘(II) six months after receiving the payment described in subclause (I); and

            ‘(III) six months after receiving the payment described in subclause (II).

          ‘(iii) WAIVER REQUEST- In response to a request from the Federal Home Loan Bank, the Board in its discretion may waive an extension of the payment period imposed, or to be imposed, because pending capital redemptions exceed 20 percent of the Bank’s current capital.

        ‘(C) UNDERCAPITALIZATION- If at any time the Board finds that a Federal Home Loan Bank is undercapitalized

or is likely to be undercapitalized for any reason including, losses in or depreciation of the assets held or capital stock redemptions, the Federal Home Loan Bank shall on the order of the Board withhold from the amount to be paid under this paragraph a pro rata share of the amount equal to the additional capital required for the Bank to be adequately capitalized as determined by the Board.’.

    (c) ACQUISITION OF MEMBERSHIP AFTER WITHDRAWAL OR REMOVAL- Section 6(h) of the Federal Home Loan Bank Act (12 U.S.C. 1426(h)) is amended to read as follows:

    ‘(h) ACQUISITION OF MEMBERSHIP AFTER WITHDRAWAL OR REMOVAL- Notwithstanding any other provision of this Act, an institution which withdraws, or is removed, from membership may acquire membership in any Federal Home Loan Bank only after the expiration of a period of 10 years thereafter, except where such withdrawal is a consequence of a transfer of membership on a noninterrupted basis between Banks.’.

SEC. 109. TRANSITIONAL PROVISIONS CONCERNING CAPITAL STOCK.

    (a) Transition for Withdrawal-

      (1) DELAYED EFFECTIVE DATE- Section 6(e) of the Federal Home Loan Bank Act, as amended by this Act, shall become effective 90 days after the date of enactment of this Act.

      (2) Withdrawal by current members-

        (A) NOTICE TO WITHDRAW UNDER OLD SYSTEM- Any institution, other than a Federal savings association, that was a member of a Federal Home Loan Bank on the day before the date of enactment of this Act shall have 90 days after the date of enactment of this Act to file a notice with the Board of its intention to withdraw from membership in a Federal Home Loan Bank under the terms and conditions for withdrawal existing on the day before the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995, including the prohibition on an institution that withdraws from membership acquiring membership in any Bank prior to the expiration of a 10 year period.

        (B) EXCEPTION CONCERNING TERMS AND CONDITIONS OF WITHDRAWAL- A member that files a notice of withdrawal under subparagraph (A) may not cancel the notice after the expiration of the 90 day period described in subparagraph (A).

        (C) NOTICES PENDING ON DATE OF ENACTMENT- The membership withdrawal by a member that has a notice of withdrawal pending on the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995 shall be subject to the terms and conditions for withdrawal existing on the day before the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of

1995, except the member shall not be permitted to cancel the notice of withdrawal after the expiration of the 90 day period described in subparagraph (A).

    (b) Transition for Stock Subscriptions-

      (1) Required stock subscription-

        (A) BOARD REGULATIONS- The Board shall prescribe final regulations establishing the capital standards required under section 6A of the Federal Home Loan Bank Act that become effective no later than 1 year after the date of enactment of this Act.

        (B) BANKS REQUIRED TO ESTABLISH INDIVIDUAL STOCK SUBSCRIPTIONS- Within 30 days after the regulations described in subparagraph (A) become effective, each Federal Home Loan Bank shall establish its stock subscription requirements under section 6(b)(1) of the Federal Home Loan Bank Act and shall submit a plan to the Federal Housing Finance Board specifying how the Bank intends to implement its stock subscription requirements.

        (C) 2 YEAR TRANSITION PERIOD- Beginning 2 years after a Bank first establishes its stock subscription requirement described in subparagraph (B), each member of the Bank shall comply with that requirement.

      (2) EXISTING REQUIREMENTS CONTINUED- Until a Federal Home Loan Bank has established the stock subscription requirements described in paragraph (1)(B), the minimum amount of stock required to be held by a member and the aggregate amount of advances that may be outstanding to a member shall continue to be determined under the statutory provisions in effect on the day before the date of enactment of this Act.

    (c) Transition for Stock or Compensating Balance Requirement-

      (1) INITIAL DETERMINATION- Prior to the time a Bank first establishes its stock subscription requirements under section 6(b)(1) of the Federal Home Loan Bank Act, each Bank shall determine whether members of the Bank wishing to obtain advances that exceed the standard leverage limit will be--

        (A) required to purchase additional stock;

        (B) required to maintain a compensating balance; or

        (C) permitted to elect to purchase additional stock or maintain a compensating balance.

      (2) SUBSEQUENT DETERMINATIONS- Each Bank may change its initial determination under paragraph (1).

      (3) MEMBERS THAT WILL MAINTAIN A COMPENSATING BALANCE-

        (A) 2 YEAR TRANSITION PERIOD-

          (i) IN GENERAL- Beginning 2 years after its Bank first establishes stock subscription requirements under section 6(b)(1) of the Federal Home Loan Bank Act, a member described in clause

(ii) shall comply with the compensating balance requirements or reduce the amount of its outstanding advances to an amount that does not exceed the standard leverage limit.

          (ii) REQUIREMENTS- Clauses (i) applies to a member that--

            (I) is required, or has made a permissible election, to maintain a compensating balance to support advances that exceed the standard leverage limit; and

            (II) on the day the member’s Bank first established its stock subscription requirements under section 6(b)(1) of the Federal Home Loan Bank Act, had outstanding advances that exceeded the standard leverage limit.

        (B) Prohibition on renewing certain advances-

          (i) During the 2-year period described in subparagraph (A), an advance to a member described in clause (ii) shall not be renewed, unless the compensating balance required by section 10(c)(2) of the Federal Home Loan Bank Act is established.

          (ii) MEMBERS SUBJECT TO PROHIBITION- Clause (i) applies when--

            (I) a member is required, or has made a permissible election, to maintain compensating balances to support advances that exceed the standard leverage limit; and

            (II) the aggregate outstanding advances to the member following the renewal would exceed the standard leverage limit.

      (4) STANDARD LEVERAGE LIMIT- For purposes of this subsection, the term ‘standard leverage limit’ means 20 times the amounts paid in by the member for outstanding stock required under section 6(b)(1) of the Federal Home Loan Bank.

SEC. 110. PROMPT CORRECTIVE ACTION.

    The Federal Home Loan Bank Act is amended by adding after section 6 (12 U.S.C. 1426) the following new section:

‘SEC. 6A. PROMPT CORRECTIVE ACTION.

    ‘(a) DEFINITIONS- For purposes of this section--

      ‘(1) Capital categories-

        ‘(A) ADEQUATELY CAPITALIZED- A Federal Home Loan Bank is ‘adequately capitalized’ if it meets the required minimum level for each relevant capital measure.

        ‘(B) UNDERCAPITALIZED- A Federal Home Loan Bank is ‘undercapitalized’ if it fails to meet the required minimum level for any relevant capital measure.

        ‘(C) SIGNIFICANTLY UNDERCAPITAL- IZED- A Federal Home Loan Bank is ‘significantly undercapitalized’ if it is

significantly below the required minimum level for any relevant capital measure.

        ‘(D) CRITICALLY UNDERCAPITALIZED- A Federal Home Loan Bank is ‘critically undercapitalized’ if it fails to meet any level specified under subsection (b)(4)(A).

      ‘(2) Other definitions-

        ‘(A) AVERAGE- The ‘average’ of an accounting item (such as total assets or tangible equity) during a given period means the sum of that item at the close of business on each business day during that period divided by the total number of business days in that period.

        ‘(B) CAPITAL DISTRIBUTIONS- The term ‘capital distribution’ means--

          ‘(i) a distribution of cash or other property by a Federal Home Loan Bank to its members made on account of that membership but not including--

            ‘(I) any dividend consisting only of shares of the Bank or right to purchase such shares; or

            ‘(II) any amount paid on the deposits of a Bank that the Board determines is not a distribution for purposes of this section;

          ‘(ii) a payment by a Bank to repurchase, redeem, retire, or otherwise acquire any of its shares, including any extension of credit to finance an acquisition of those shares; or

          ‘(iii) a transaction that the Board determines, by order or regulation, to be in substance a distribution of capital to the members of the Bank.

        ‘(C) CAPITAL RESTORATION PLAN- The term ‘capital restoration plan’ means a plan submitted under subsection (d)(2).

        ‘(D) COMPENSATION- The term ‘compensation’ includes any payment of money or provision of any other thing of value in consideration of employment.

        ‘(E) RELEVANT CAPITAL MEASURE- The term ‘relevant capital measure’ means the measures described in subsection (b).

        ‘(F) REQURIED MINIMUM LEVEL- The term ‘required minimum level’ means, with respect to each relevant capital measure, the minimum acceptable capital level specified by the Board.

        ‘(G) SENIOR EXECUTIVE OFFICER- The term ‘senior executive officer’ means a person who participates or has authority to participate (other than in the capacity of a director) in major policy functions of the Federal Home Loan Bank, whether or not: the officer has an official title; the title designates the officer

as assistant; or the officer is serving without salary or other compensation.

    ‘(b) CAPITAL STANDARDS-

      ‘(1) RELEVANT CAPITAL MEASURES-

        ‘(A) IN GENERAL- The capital standard prescribed by the Board shall include--

          ‘(i) a leverage limit; and

          ‘(ii) a risk-based capital requirement.

        ‘(B) OTHER CAPITAL MEASURES- The Board may, by regulation establish any additional relevant capital measures to carry out the purpose of this section.

      ‘(2) RISK-BASED CAPITAL REQUIREMENT-

        ‘(A) IN GENERAL- The risk-based capital requirement under paragraph (1) shall be composed of the following components-

          (i) capital for credit risk;

          (ii) capital for interest rate risk; and

          (iii) capital for a source of earnings.

        ‘(B) CAPITAL COMPONENTS-

          ‘(i) CAPITAL FOR CREDIT RISK- Capital required for credit risk shall be no less than the tier 1 risk-based capital required by regulation or guideline issued under section 38 of the Federal Deposit Insurance Act for a well-capitalized insured depository institution.

          ‘(ii) INTEREST RATE RISK- Capital required for interest rate risk shall be based on an interest rate risk stress test that rigorously tests for changes in interest rates, rate volatility, and changes in the shape of the yield curve.

          ‘(iii) CAPITAL FOR A SOURCE OF EARNINGS-

            ‘(I) IN GENERAL- Capital required to provide a source of earnings for the System’s obligations to the Funding Corporation and the Affordable Housing Program shall include an amount at least equal to each Bank’s proportionate share of the System’s yearly obligation under section 21B(f)(2)(C).

            ‘(II) CALCULATION- For purposes of subclause (I), a Bank’s proportionate share of the System’s yearly obligation under section 21B(f)(2)(C) shall be calculated based on the previous year’s actual payment under that section.

      ‘(3) Capital categories generally-

        ‘(A) IN GENERAL- The Board shall, by regulation, specify for each relevant capital measure the levels at which a Federal Home Loan Bank is adequately capitalized, under- capitalized, and significantly undercapitalized.

        ‘(B) MINIMUM LEVERAGE LIMIT FOR ADEQUATELY CAPITALIZED CATEGORY- The level specified by the Board for a Bank to be adequately capitalized shall require total capital in an amount not less than 4 percent of the Bank’s total assets.

      ‘(4) Critical capital-

        ‘(A) Federal housing finance board to specify level-

          ‘(i) LEVERAGE LIMIT- The board shall, by regulation, specify the ratio of total capital to total assets at which a Federal Home Loan Bank is critically undercapitalized.

          ‘(ii) OTHER RELEVANT CAPITAL MEASURES- The Board may, by regulation, specify for one or more other relevant capital measures, the level at which a Bank is critically undercapitalized.

        ‘(B) LEVERAGE LIMIT RANGE- The level specified under subparagraph (A)(i) shall require tangible equity in an amount--

          ‘(i) not less than 2 percent of total assets; and

          ‘(ii) except as provided in clause (i), not more than 65 percent of the required minimum level of capital under the leverage limit.

    ‘(c) Provisions Applicable to All Federal Home Loan Banks-

      ‘(1) CAPITAL DISTRIBUTIONS RESTRICTED- Except as provided in paragraph (2), a Federal Home Loan Bank shall make no capital distribution if, after making the distribution, the Bank would be undercapitalized.

      ‘(2) EXCEPTIONS- Notwithstanding paragraph (1)--

        ‘(A) A Federal Home Loan Bank may redeem a member’s stock under, and subject to the conditions of, section 6(e); and

        ‘(B) The board may permit a Federal Home Loan Bank to repurchase, redeem, retire, or otherwise acquire its shares if the repurchase, redemption, retirement, or other acquisition--

          ‘(i) is made in connection with the issuance of additional shares of the Bank in at least an equivalent amount; and

          ‘(ii) will reduce the Bank’s financial obligations or otherwise improve the Bank’s financial condition.

    ‘(d) Provisions Applicable to Undercapi- talized Federal Home Loan Banks-

      ‘(1) MONITORING REQUIRED- The Board shall--

        ‘(A) closely monitor the condition of any undercapitalized Federal Home Loan Bank;

        ‘(B) closely monitor compliance with capital restoration plans, restrictions, and requirements imposed under this section; and

        ‘(C) periodically review the plan, restrictions, and requirements applicable to any undercapitalized

Bank to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

      ‘(2) Capital restoration plan required-

        ‘(A) IN GENERAL- Any undercapitalized Bank shall submit an acceptable capital restoration plan to the Board within the time allowed by the Board under subparagraph D.

        ‘(B) CONTENTS OF PLAN- The capital restoration plan shall--

          ‘(i) specify--

            ‘(I) the steps the Bank will take to become adequately capitalized;

            ‘(II) the levels of capital to be attained during each year in which the plan will be in effect;

            ‘(III) how the Bank will comply with the restrictions or requirements then in effect under this section; and

            ‘(IV) the types and levels of activities in which the Bank will engage; and

          ‘(ii) contain such other information as the Board may require.

        ‘(C) CRITERIA FOR ACCEPTING PLAN- The Board shall not accept a capital restoration plan unless the Board determines that the plan--

          ‘(i) complies with subparagraph (B);

          ‘(ii) is based on realistic assumptions, and is likely to succeed in restoring the Bank’s capital; and

          ‘(iii) would not appreciably increase the risk (including credit risk, interest-rate risk, and other type of risk) to which the Bank is exposed.

        ‘(D) DEADLINES FOR SUBMISSION AND REVIEW OF PLANS- The Board shall, by regulation, establish deadlines that--

          ‘(i) provide Federal Home Loan Banks with reasonable time to submit capital restoration plans, and generally require a Bank to submit a plan not later than 45 days after the Bank becomes undercapitalized; and

          ‘(ii) require the Board to act on capital restoration plans expeditiously, and generally not later than 60 days after the plan is submitted.

      ‘(3) ASSET GROWTH RESTRICTED- An undercapitalized Federal Home Loan Bank shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter unless--

        ‘(A) the Board has accepted the Bank’s capital restoration plan;

        ‘(B) any increase in total assets is consistent with the plan; and

        ‘(C) the Bank’s ratio of total capital to assets increases during the calendar quarter at a rate sufficient to enable the Bank to become adequately capitalized within a reasonable time.

      ‘(4) PRIOR APPROVAL FOR NEW ACTIVITIES- An undercapitalized Federal Home Loan Bank shall not engage in any new activity unless--

        ‘(A) the Board has accepted the Bank’s capital restoration plan, the Bank is implementing the plan and Board determines that the proposed action is consistent with and will further the achievement of the plan; or

        ‘(B) the Board determines that the proposed action will further the purpose of this section.

      ‘(5) DISCRETIONARY SAFEGUARDS- The Board may, with respect to any undercapitalized Federal Home Loan Bank, take action described in any subparagraph of subsection (e)(2) if the Board determines that those actions are necessary to carry out the purpose of this section.

    ‘(e) Provisions Applicable to Significantly Undercapitalized Federal Home Loan Banks and Undercapitalized Banks That Fail To Submit and Implement Capital Restoration Plans-

      ‘(1) IN GENERAL- This subsection shall apply with respect to any Federal Home Loan Bank that is--

        ‘(A) significantly undercapitalized; or

        ‘(B) undercapitalized and fails--

          ‘(i) to submit an acceptable capital restoration plan within the time allowed by the Board under subsection (d)(2); or

          ‘(ii) in any material respect to implement a plan accepted by the Board.

      ‘(2) SPECIFIC ACTIONS AUTHORIZED- The Board shall carry out this section by taking one or more of the following actions--

        ‘(A) REQUIRED RECAPITALIZATION- Doing one or more of the following--

          ‘(i) Requiring the Federal Home Loan Bank to sell enough shares of the Bank to its members or institutions eligible to become members so that the Bank will be adequately capitalized after the sale.

          ‘(ii) Requiring the Bank to be acquired by, or combine with, one or more Federal Home Loan Banks.

        ‘(B) Restricting interest rates paid-

          ‘(i) IN GENERAL- Restricting the interest rates that the Bank pays on deposits to an amount determined by the Board.

          ‘(ii) RETROACTIVE RESTRICTIONS PROHIBITED- This subparagraph does not authorize the Board to restrict interest rates paid on time deposits made

before (and not renewed or renegotiated after) the Board acted under this subparagraph.

        ‘(C) RESTRICTING ASSET GROWTH- Restricting the Bank’s asset growth more stringently than subsection (d)(3), or requiring the Bank to reduce its total assets.

        ‘(D) RESTRICTING ACTIVITIES- Requiring the Bank to alter, reduce, or terminate any activity that the Board determines poses excessive risk to the Bank.

        ‘(E) IMPROVING MANAGEMENT- Doing one or more of the following:

          ‘(i) NEW ELECTION OF DIRECTORS- Ordering a new election for the Bank’s board of directors.

          ‘(ii) DISMISSING DIRECTORS OR SENIOR EXECUTIVE OFFICERS- Requiring the Bank to dismiss from office any elected director or senior executive officer who had held office for more than 180 days immediately before the Bank became undercapitalized.

          ‘(iii) DISMISSING APPOINTED DIRECTORS- Dismissing from office any appointed director who had held office for more than 180 days immediately before the Bank became undercapitalized.

          ‘(iv) CLARIFICATION OF DISMISSALS- Dismissal under clause (ii) or (iii) shall not be construed to be a removal under section 27A.

          ‘(v) EMPLOYING QUALIFIED SENIOR EXECUTIVE OFFICERS- Requiring the Bank to employ qualified senior executive officers (who, if the Board so specifies, shall be subject to approval by the Board).

        ‘(F) REQUIRING OTHER ACTION- Requiring the Bank to take any other action that the Board determines will better carry out the purpose of this section.

      ‘(3) PRESUMPTION IN FAVOR OF CERTAIN ACTIONS- In complying with paragraph (2), the Board shall take the action described in clause (i) or (ii) of paragraph (2)(A) (relating to requiring the sale of shares or requiring the Federal Home Loan Bank to be acquired by, or combine with, another Federal Home Loan Bank).

      ‘(4) Senior executive officers’ compensation restricted-

        ‘(A) IN GENERAL- The Federal Home Loan Bank shall not do any of the following without the prior written approval of the Board:

          ‘(i) Pay any bonus to any senior executive officer.

          ‘(ii) Provide compensation to any senior executive officer at a rate exceeding that officer’s average rate of compensation (excluding bonuses, and (profit-sharing)) during the 12 calendar months preceding the calendar month in which the Bank became undercapitalized.

        ‘(B) FAILURE TO SUBMIT PLAN- The Board shall not grant any approval under subparagraph (A) with respect to a Bank that has failed to submit an acceptable capital restoration plan.

      ‘(5) DISCRETION TO IMPOSE CERTAIN ADDITIONAL RESTRICTIONS- The Board may impose one or more of the restrictions prescribed by regulation under subsection (h) if the Board determines that those restrictions are necessary to carry out the purpose of this section.

    ‘(f) More Stringent Treatment Based on Other Supervisory Criteria-

      ‘(1) IN GENERAL- If the Board determines (after notice and an opportunity for hearing) that a Federal Home Loan Bank is in an unsafe or unsound condition or, pursuant to section 27A, deems the Bank to be engaging in an unsafe or unsound practice, the Board may--

        ‘(A) if the Bank is adequately capitalized, require the Bank to comply with one or more provisions of subsections (c) and (d) as if the Bank were undercapitalized; or

        ‘(B) if the Bank is undercapitalized, take any one or more actions authorized under subsection (e)(2) as if the Bank were significantly undercapitalized.

      ‘(2) CONTENTS OF PLAN-

        ‘(A) IN GENERAL- Any plan required under paragraph (1) shall specify the steps that the Bank will take to correct the unsafe or unsound condition or practice.

        ‘(B) PLAN NOT REQUIRED- Capital restoration plans shall not be required under paragraph (1)(A).

    ‘(g) PROVISIONS APPLICABLE TO CRITICALLY UNDERCAPITALIZED FEDERAL HOME LOAN BANKS-

      ‘(1) ACTIVITIES RESTRICTED- Any critically undercapitalized Federal Home Loan Bank shall comply with restrictions prescribed by the Board under subsection (h).

      ‘(2) MERGER, LIQUIDATION, REORGANIZATION OR OTHER ACTION REQUIRED-

        ‘(A) IN GENERAL- The Board shall, not later than 90 days after a Federal Home Loan Bank becomes critically undercapitalized--

          ‘(i) combine (by merger or otherwise) the Bank with another Federal Home Loan Bank;

          ‘(ii) liquidate or reorganize the bank; or

          ‘(iii) take such other action as the Board determines would better achieve the purpose of this section, after documenting why the action would better achieve that purpose.

        ‘(B) PERIODIC REDETERMINATION REQUIRED- Any determination by the Board under subparagraph (A)(iii) to take any action with respect to a Bank in lieu of combining the Bank with another Federal Home Loan Bank or reorganizing or liquidating the Bank shall cease to be effective not later than the end of the 90-day period beginning on the date that the determination is

made and the Bank shall be combined, reorganized, or liquidated under subparagraph (A) unless the Board makes a new determination under subparagraph (A)(iii) at the end of the effective period of the prior determination.

    ‘(h) RESTRICTING ACTIVITIES OF CRITICALLY UNDERCAPITALIZED FEDERAL HOME LOAN BANKS- To carry out this section, the Board shall, by regulation or order--

      ‘(1) restrict the activities of any critically undercapitalized Federal Home Loan Bank; and

      ‘(2) at a minimum, prohibit any critically undercapitalized Bank from doing any of the following without the Board’s prior written approval:

        ‘(A) Entering into any material transaction other than in the usual course of business, including any investment, expansion, acquisition, sale of assets, or other similar action.

        ‘(B) Amending the Bank’s bylaws, except to the extent necessary to carry out any other requirement of any law, regulation, or order.

        ‘(C) Making any material change in accounting methods.

        ‘(D) Paying excessive compensation or bonuses.

        ‘(E) Paying interest on new or renewed liabilities at a rate that would increase the bank’s weighted average cost of funds to a level significantly exceeding the prevailing rates of interest on insured deposits in the Bank’s normal market areas.

    ‘(i) Administrative Review of Dismissal Orders-

      ‘(1) TIMELY PETITION REQURIED- A director or senior executive officer dismissed pursuant to an order under subsection (e)(2)(E)(ii) may obtain review of that order by filing a written petition for reinstatement with the Board not later than 10 days after receiving notice of the dismissal.

      ‘(2) Procedure-

        ‘(A) HEARING REQURIED- The Board shall give the petitioner an opportunity to--

          ‘(i) submit written materials in support of the petition; and

          ‘(ii) appear, personally or through counsel, before 1 or more members of the Board or designated employees of the Board.

        ‘(B) DEADLINE FOR HEARING- The Board shall--

          ‘(i) schedule the hearing referred to in subparagraph (A)(ii) promptly after the petition is filed; and

          ‘(ii) hold the hearing not later than 30 days after the petition is filed, unless the petitioner requests that the hearing be held at a later time.

        ‘(C) DEADLINE FOR DECISION- Not later than 60 days after the date of the hearing, the Board shall--

          ‘(i) by order, grant or deny the petition;

          ‘(ii) if the order is adverse to the petitioner, set forth the basis for the order; and

          ‘(iii) notify the petitioner of the order.

      ‘(3) STANDARD FOR REVIEW OF DISMISSAL ORDERS- The petitioner shall bear the burden of proving that the petitioner’s continued employment would materially strengthen the Federal Home Loan Bank’s ability--

        ‘(A) to become adequately capitalized, to the extent that the order is based on the Bank’s failure to submit or implement a capital restoration plan; and

        ‘(B) to correct the unsafe or unsound condition or unsafe or unsound practice, to the extent that the order is based on subsection (f)(1).

    ‘(j) Safeguarding Systemwide Capital-

      ‘(1) Capital restoration plan required-

        ‘(A) IN GENERAL- If for any calendar quarter the total capital of the Federal Home Loan bank System is less than $7 billion, the System shall submit an acceptable capital restoration plan to the Board within the time allowed by regulations prescribed by the Board.

        ‘(B) CONTENTS OF PLAN- The capital restoration plan shall--

          ‘(i) take into account the different levels of capital of each Bank;

          ‘(ii) focusing first on each undercapitalized Bank, specify--

            ‘(I) the steps that will be taken to increase the total capital of any undercapitalized Bank and the System;

            ‘(II) the amount of capital to be raised during each year the plan will be in effect; and

            ‘(III) the types and levels of activities in which any undercapitalized bank and the system will engage; and

          ‘(iii) contain such other information as the Board may require.

      ‘(2) PROHIBITION ON DISTRIBUTING RESERVES- Except as provided in subparagraph (3)(B), if for any calendar quarter the total capital of the Federal Home Loan Bank System is less than $6 billion, no Federal Home Loan bank may distribute any of its reserves.

      ‘(3) Capital distributions restricted-

        ‘(A) IN GENERAL- If for any calendar quarter the total capital of the Federal Home Loan Bank System is less than $5 billion, each Federal Home Loan Bank shall make no capital distribution.

        ‘(B) EXCEPTION- Notwithstanding subparagraph (A)--

          ‘(i) A Federal Home Loan Bank may redeem a member’s stock under, and subject to the conditions of, section 6(e); and

          ‘(ii) The Board may permit a Federal Home Loan Bank to repurchase, redeem, retire, or otherwise acquire its shares if the repurchase, redemption, retirement, or other acquisition--

            ‘(I) is made in connection with the issuance of additional shares of the Bank in at least an equivalent amount; and

            ‘(II) will reduce the Bank’s financial obligations or otherwise improve the Bank’s financial condition.

    ‘(k) Implementation-

      ‘(1) REGULATIONS AND OTHER ACTIONS- The Board shall prescribe such regulations, issue such orders, and take such other actions as are necessary to carry out this section.

      ‘(2) WRITTEN DETERMINATION REQUIRED- Any determination by the Board required under this section shall be written.

    ‘(l) OTHER AUTHORITY NOT AFFECTED- This section does not limit any authority of the Board to take action in addition to (but not in derogation of) that required under this section.

    ‘(m) PURPOSE- The purpose of this section is to ensure that the Federal Home Loan Banks remain appropriately capitalized and able to raise funds in the capital markets and to meet their obligations under this Act.’.

SEC. 111. FEDERAL HOME LOAN BANK DIRECTORS.

    (a) NUMBER; QUALIFICATIONS; CONFLICTS OF INTEREST- Section 7(a) of the Federal Home Loan Bank Act (12 U.S.C. 1427(a)) is amended to read as follows:

    ‘(a) Number; Qualifications; Conflicts of Interest-

      ‘(1) Number-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the management of each Federal Home Loan Bank shall be vested in a board of fourteen directors, eight of whom shall be elected by the members as hereinafter provided in this section and six of whom shall be appointed by the Board, all of whom shall be citizens of the United States and bona fide residents of the district in which such Bank is located.

        ‘(B) Increase in directors-

          ‘(i) ELECTIVE DIRECTORS- Each Federal Home Loan Bank may increase the number of the Bank’s elective directors to a number set by the Bank as long as the number of directors in the case of any district is at least equal to the number of States in such district.

          ‘(ii) INCREASE IN APPOINTED DIRECTORS- If the number of elective directors of a Bank is increased, the Board may increase the number of appointed directors of the Bank to a number not

exceeding three-fourths the number of elective directors.

      ‘(2) QUALIFICATIONS- At least 2 of the Federal Home Loan Bank directors who are appointed by the Board shall be representatives chosen from organizations with more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protection.

      ‘(3) CONFLICTS OF INTEREST- No Federal Home Loan Bank director who is appointed pursuant to this subsection may, during such Bank director’s term of office, serve as an officer of any Federal Home Loan Bank or director or officer of any member of a Bank, or hold shares, or any other financial interest in, any member of a Bank.’.

    (b) TERMS- Section 7(d) of the Federal Home Loan Bank Act (12 U.S.C. 1427(d)) is revised to read as follows:

    ‘(d) Terms-

      ‘(1) In general-

        ‘(A) ELECTED DIRECTORS- The term of each elective directorship that begins after the date of enactment of the Federal Home Loan Bank Restructuring and Modernization Act of 1995 shall be 4 years.

        ‘(B) APPOINTED DIRECTORS- The term of each appointive directorship shall be 4 years.

      ‘(2) TERM LIMITS- If any person has been elected to each of 2 consecutive full terms as an elective director of a Federal Home Loan Bank in any elective directorship or elective directorships and has served for all or part of each of said terms, such person (and any person that is a director, officer or employee of the same member as such person) shall not be eligible for election to an elective directorship of the Bank for a term which begins earlier than 2 years after the expiration of the last expiring of said 2 terms.’.

    (c) CHAIRPERSON AND VICE CHAIRPERSON- Section 7(g) of the Federal Home Loan Bank Act (12 U.S.C. 1427(g)) is amended to read as follows:

    ‘(g) Chairperson and Vice Chairperson-

      ‘(1) DESIGNATION BY BANK DIRECTORS- The board of directors of each Federal Home Loan Bank shall designate--

        ‘(A) one of the directors of the Bank to be chairperson of the Bank; and

        ‘(B) one of the directors of the Bank to be vice chairperson of the Bank.

      ‘(2) Requirements-

        ‘(A) APPOINTED DIRECTOR- Either the chairperson or the vice chairperson of the Bank shall be an appointed director.

        ‘(B) LIMITATION- The President of a Federal Home Loan Bank may not be designated as the chairperson or vice chairperson of the Bank.’.

    (d) COMPENSATION AND EXPENSES OF DIRECTORS- Section 7(i) of the Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended to read as follows:

    ‘(i) COMPENSATION AND EXPENSES OF DIRECTORS- Each Bank may pay its directors reasonable compensation for the time required of them, and their necessary expenses, in the performance of their duties, in accordance with the resolutions adopted by the directors of the Bank.’.

    (e) CONFORMING AMENDMENTS- Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended--

      (1) in subsection (b), by--

        (A) deleting ‘as determined pursuant to regulation of the Board’ and inserting ‘as determined by the Bank’;

        (B) deleting ‘such bank’ each place it appears and inserting ‘such Bank’; and

        (C) deleting ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’;

      (2) in subsection (c), by--

        (A) deleting ‘as determined pursuant to regulation of the Board’ and inserting ‘as determined by the Bank’;

        (B) deleting ‘bank’ each place it appears and inserting ‘Bank’;

        (C) deleting ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’; and

      (3) in subsection (h), by deleting ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’.

SEC. 112. ELIGIBILITY TO SECURE ADVANCES.

    Section 9 of the Federal Home Loan Bank Act (12 U.S.C. 1429) is amended to read as follows:

‘SEC. 9. ELIGIBILITY TO SECURE ADVANCES.

    ‘(a) WRITTEN APPLICATION- Any member of a Federal Home Loan Bank shall be entitled to apply in writing for advances and the application shall be in such form as shall be required by the Federal Home Loan Bank.

    ‘(b) BANK RESPONSE TO APPLICATIONS- A Federal Home Loan Bank may at its discretion deny any application described in subsection (a) or, subject to the requirements of this Act, grant it on such conditions as the Bank may prescribe.’.

SEC. 113. ADVANCES.

    (a) NOTES OF BORROWING MEMBERS; INTEREST RATE; LIEN ON STOCK; LIMITATIONS ON LOANS- Section 10(c) of the Federal Home Loan Bank Act (12 U.S.C. 1430(c)) is amended to read as follows:

    ‘(c) Notes of Borrowing Members; Interest Rate; Lien on Stock; Limitations on Loans-

      ‘(1) NOTES OF BORROWING MEMBER- Advances under subsection (a) shall be made upon the note or obligation of the member secured as provided in this section, bearing such rate of interest as the Federal Home Loan Bank may approve or

determine, and the Bank shall have a lien upon and shall hold the stock of such member and any compensating balances as further collateral security for all indebtedness of the member to the Bank.

      ‘(2) LEVERAGE LIMITATION ON ADVANCES- At no time shall the aggregate outstanding advances made by any Federal Home Loan Bank to any member exceed 20 times the amounts paid in by such member for outstanding capital stock required to be owned by a member under section 6(b)(1), unless--

        ‘(A) in the case of a member that is required, or has made a permissible election, to purchase additional stock to support advances, the member purchases additional stock so that the aggregate outstanding advances made to the member do not exceed 20 times the amounts paid in by the member for outstanding stock; or

        ‘(B) in the case of a member that is required, or has made a permissible election, to maintain a compensating balance to support advances, the member makes and maintains a compensating balance with the Bank with respect to the amount of the advances that exceed 20 times the amounts paid in by the member for outstanding stock required to be owned by the member under section 6(b)(1).

      ‘(3) ADDITIONAL STOCK- Stock purchased to meet the requirements of paragraph (2)(A) is subject to the same terms and conditions applicable to all stock in a Federal Home Loan Bank owned by the member, including the conditions imposed under section 6(e) on partial stock redemptions and withdrawals.

      ‘(4) Compensating balances-

        ‘(A) LEVERAGE LIMIT- The amount of the compensating balance required under paragraph (2)(B) shall be established by the Bank except, in no event may the amount of advances made in reliance on a compensating balance exceed 20 times the compensating balance.

        ‘(B) TERMS AND CONDITIONS- Subject to subparagraph (A), the terms and conditions applicable to compensating balances under this paragraph shall be established by each Bank.’.

    (b) OBLIGATIONS TO REPAY; ADDITIONAL SECURITY: SALE OF ASSETS TO OTHER BANKS- Section 10(d) of the Federal Home Loan Bank Act (12 U.S.C. 1430(d)) is amended to read as follows:

    ‘(d) Obligations To Repay; Additional Security: Sale of Advances to Other Banks-

      ‘(1) REPAYMENT OBLIGATION- The institution applying for an advance shall enter into a primary and unconditional obligation to pay off all advances, together with interest and any unpaid costs and expenses in connection therewith according to the terms under which they were made, in such form as shall meet the requirements of the Federal Home Loan Bank.

      ‘(2) ADDITIONAL SECURITY- The Bank shall reserve the right to require at any time, when deemed necessary for its protection, deposits of additional collateral security or substitutions of security by the borrowing institution, and each borrowing institution shall assign additional or substituted security when and as so required.

      ‘(3) SALE OF ADVANCES- Any Federal Home Loan Bank shall have power to sell to any other Federal Home Loan Bank, with or without recourse, any advance made under the provisions of this Act, or to allow such Bank a participation therein, and any other Federal Home Loan Bank shall have power to purchase such advance or to accept a participation therein, together with an appropriate assignment or security therefore.’.

    (c) COMMUNITY SUPPORT REQUIREMENT- Section 10(g) of the Federal Home Loan Bank Act (12 U.S.C. 1430(g)) is amended to read as follows:

    ‘(g) Community Support Requirement-

      ‘(1) IN GENERAL- Before the end of the 2-year period beginning on August 9, 1989, the Board shall adopt regulations establishing standards of community investment or service for members of Banks to maintain continued access to long-term advances.

      ‘(2) FACTORS TO BE INCLUDED- The regulations promulgated pursuant to paragraph (1) shall take into account factors such as member’s performance under the Community Reinvestment Act of 1977 and the member’s record of lending to first-time homebuyers.

      ‘(3) Community reinvestment act compliance-

        ‘(A) IN GENERAL- In determining whether a member has satisfied the standards established under this subsection, the Board shall rely only on the assessment of a member’s compliance with the Community Reinvestment Act of 1977 made by the member’s appropriate Federal financial supervisory agency, unless the Board is required under subparagraph (b) to conduct an independent assessment.

        ‘(B) INDEPENDENT ASSESSMENT REQUIRED- The board is required to independently assess whether a member has satisfied the standards established under this subsection, including the member’s record of lending to first-time homebuyers, if--

          ‘(i) the member is not subject to the Community Reinvestment Act of 1977; or

          ‘(ii) an assessment has not been prepared by the member’s appropriate Federal financial supervisory agency.

        ‘(C) APPROPRIATE FEDERAL FINANCIAL SUPERVISORY AGENCY- The term ‘appropriate Federal financial supervisory agency’ has the same meaning as in section 803 of the Community Reinvestment Act of 1977.’.

    (d) AFFORDABLE HOUSING PROGRAM APPLICATIONS- Section 10(j)(1) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)(1)) is amended to read as follows:

      ‘(1) In general-

        ‘(A) EACH BANK MUST ESTABLISH PROGRAM- Pursuant to regulations promulgated by the Board, each Bank shall establish an Affordable Housing Program to provide subsidies, including subsidized interest rates on advances, to members to assist the members in financing for low- and moderate-income, owner-occupied, affordable rental housing.

        ‘(B) APPLICATIONS- Each Federal Home Loan Bank is authorized to approve or disapprove, subject to the requirements of this Act, applications by members of the Bank to participate in the Bank’s Affordable Housing Program.’.

    (e) AFFORDABLE HOUSING PROGRAM CONTRIBUTION- Section 10(j)(5) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)(5)) is amended to read as follows:

      ‘(5) CONTRIBUTION TO PROGRAM- Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidies, including subsidized advances, through the Affordable Housing Program:

        ‘(A) Except as provided in subparagraph (B), 10 percent of the preceding year’s net earnings, or such prorated sums as may be required to assure that the aggregate contribution of the Banks shall not be less than $100,000,000 for each such year.

        ‘(B) If the total capital of the Federal Home Loan Bank System for the preceding year is less than $6 billion, 10 percent of the preceding year’s net earnings.’.

    (f) BRANCHES FOR COMMUNITY INVESTMENT AND AFFORDABLE HOUSING PROGRAMS; AND LIMITATIONS ON ADVANCES- Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by adding after subsection (j) the following new subsections:

    ‘(k) Branches for Community Investment and Affordable Housing Programs-

      ‘(1) IN GENERAL- With the prior approval of the Board each Federal Home Loan Bank is authorized to establish 1 or more branches within its Federal Home Loan Bank district for the exclusive purpose of conducting activities related to the Bank’s community investment and affordable housing programs.

      ‘(2) LIMITATION ON ACTIVITIES- Only activities relating to the programs described in subsections (h) and (i) may be conducted at a branch established under paragraph (1).

    ‘(l) Limitations on Advances-

      ‘(1) LIMITATION ON EXTENDED PERIODS- Except as provided in paragraph (2), no new advances to any undercapitalized depository institution by any Federal Home Loan Bank under

this section may be outstanding for more than 60 days in any 120-day period.

      ‘(2) Viability exception-

        ‘(A) IN GENERAL- If the head of the appropriate Federal banking agency certifies in advance in writing to the Federal Home Loan Bank that any depository institution is viable, the limitation contained in paragraph (1) shall not apply during the 60-day period beginning on the date such certification is received.

        ‘(B) EXTENSIONS OF PERIOD- The 60-day period may be extended for additional 60-day periods upon receipt by the Federal Home Loan Bank of additional written certifications under subparagraph (A) with respect to each such additional period.

        ‘(C) AUTHORITY TO ISSUE A CERTIFICATE OF VIABILITY MAY NOT BE DELEGATED- The authority of the head of any agency to issue a written certification of viability under this paragraph may not be delegated to any other person.

      ‘(3) PROHIBITION ON ADVANCES TO CRITICALLY UNDERCAPITALIZED DEPOSITORY INSTITUTIONS- Notwithstanding any other provision of this Act, no new advances may be made to a critically undercapitalized depository institution.

      ‘(4) NO OBLIGATION TO MAKE ADVANCES- A Federal Home Loan Bank shall have no obligation to make, increase, renew, or extend any advance or discount under this Act to any member.

      ‘(5) Definitions-

        ‘(A) APPROPRIATE FEDERAL BANKING AGENCY- The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act and also includes the National Credit Union Administration.

        ‘(B) CRITICALLY UNDERCAPITALIZED- The term ‘critically undercapitalized’ has the same meaning as in section 38 of the Federal Deposit Insurance Act.

        ‘(C) DEPOSITORY INSTITUTION- The term ‘depository institution’ has the same meaning as the term ‘insured depository institution’ in section 2.

        ‘(D) NEW ADVANCE- The term ‘new advance’ includes a renewal or extension of, or an increase in, an outstanding advance.

        ‘(E) UNDERCAPITALIZED DEPOSITORY INSTITUTION- The term ‘undercapitalized depository institution’ means any depository institution which--

          ‘(i) is undercapitalized, as defined in section 38 of the Federal Deposit Insurance Act; or

          ‘(ii) has a composite CAMEL rating of 5 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution.

        ‘(F) VIABLE- A depository institution is ‘viable’ if the appropriate Federal banking agency determines, giving due regard to the economic conditions and circumstances in the market in which the institution operates, that the institution--

          ‘(i) is not critically undercapitalized;

          ‘(ii) is not expected to become critically undercapitalized; and

          ‘(iii) is not expected to be placed in conservatorship or receivership.’.

    (g) ADDITIONAL AMENDMENTS- Section 10 of the Federal Home Loan Bank Act (1430) is amended--

      (1) DELETION OF QUALIFIED THRIFT LENDER STATUS- By deleting the first subparagraph (e) as added by section 714(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 Public Law 101-73.

      (2) REDESIGNATION- By redesignating subsections (g), (h), (i), (j), (k), and (l) as subsections (f), (g), (h), (i), (j), and (k), respectively.

      (3) AFFORDABLE HOUSING PROGRAM CONFORMING AMENDMENTS- In subsection (j)--

        (A) by deleting ‘subsidized advances’ each place it appears and inserting ‘subsidies, including subsidized advances’;

        (B) in paragraph (9)(C), by deleting ‘advances made under this program’ and inserting ‘subsidies, including subsidized advances provided under this program’; and

        (C) by deleting ‘advances’ each place it appears and inserting ‘subsidies’.

      (4) TECHNICAL AMENDMENT- In subsection (a), in the first sentence before paragraph (1), by striking ‘or section 11(g) of this Act’.

SEC. 114. ADVANCES TO NONMEMBER MORTGAGEES; TERMS AND CONDITIONS.

    Section 10B(a) of the Federal Home Loan Bank Act (12 U.S.C. 1430b(a)) is amended to read as follows:

    ‘(a) In General-

      ‘(1) AUTHORITY- Each Federal Home Loan Bank is authorized to make advances to a nonmember mortgagee described in paragraph (2).

      ‘(2) Permissible nonmember mortgagee-

        ‘(A) A State housing finance agency or an Indian housing authority approved under title II of the National Housing Act--

          ‘(i) that is a chartered institution having succession and subject to the inspection and supervision of some governmental agency; and

          ‘(ii) whose principal activity in the mortgage field must consist of lending its own funds; or

        ‘(B) a Community Development Financial Institution--

          ‘(i) that is not an insured depository institution or a subsidiary of an insured depository institution;

          ‘(ii) that, at the time the advance is made, has been certified within the last year as a Community Development Financial Institution under the Community Development Banking and Financial Institutions Act of 1994;

          ‘(iii) that is a chartered institution having succession; and

          ‘(iv) whose principal activity in the mortgage field must consist of lending its own funds.

      ‘(3) SECURITY- Such advances shall not be subject to the other provisions and restrictions of this Act, but shall be made upon the security of mortgages insured under title II of the National Housing Act.

      ‘(4) TERMS AND CONDITIONS- Advances made under the terms of this section shall be at such rates of interest and upon such terms and conditions as shall be determined by the Federal Home Loan Bank, but no advance may be for an amount in excess of 90 percent of the unpaid principal of the mortgage loan given as security.

      ‘(5) DEFINITIONS OF COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION- The term ‘Community Development Financial Institution’ has the same meaning as in section 103 of the Community Development Banking and Financial Institutions Act of 1994.

    ‘(b) EXCEPTION- An advance made to a State housing finance agency or an Indian housing authority for the purpose of facilitating mortgage lending that benefits individuals and families that meet the income requirements set forth in section 142(d) or 143(f) of title 26, United States Code need not be collateralized by a mortgage insured under title II of the National Housing Act or otherwise if--

      ‘(1) such advance otherwise meets the requirements of this subsection; and

      ‘(2) such advance meets the requirements of section 10(a), and any real estate collateral for such loan comprises single family or multifamily residential mortgages.’.

SEC. 115. POWERS AND DUTIES OF BANKS.

    (a) BORROWING MONEY; GENERAL POWERS- Section 11(a) of the Federal Home Loan Bank (12 U.S.C. 1431(a)) is amended to read as follows:

    ‘(a) BORROWING MONEY; GENERAL POWERS- Each Federal Home Loan Bank shall have power, subject to rules and regulations prescribed by the Board to borrow and give security therefor and

to pay interest thereon upon such terms and conditions as the Bank may determine and to do all things necessary for carrying out the provisions of this Act and all things incident thereto.’.

    (b) ISSUANCE OF FEDERAL HOME LOAN BANK BONDS- Section 11(c) of the Federal Home Loan Bank Act (12 U.S.C. 1431(c)) is amended to read as follows:

    ‘(c) ISSUANCE OF FEDERAL HOME LOAN BANK BONDS- The Federal Home Loan Bank System, subject to rules and regulations prescribed by the Board, may issue consolidated Federal Home Loan Bank bonds which shall be the joint and several obligations of all the Federal Home Loan Banks, and shall be secured and be issued upon such terms and conditions as the Banks may determine.’.

    (c) DELAYED EFFECTIVE DATE- The amendment made by subsection (b) shall take effect on the earlier of the date--

      (1) the central office described in section 11(k) of the Federal Home Loan Bank Act is established; or

      (2) 6 months after the enactment of this Act.

    (d) ADDITIONAL OR SUBSTITUTED COLLATERAL ON ADJUSTMENT OF EQUITIES- Section 11(d) of the Federal Home Loan Bank Act (12 U.S.C. 1431(d)) is amended to read as follows:

    ‘(d) ADDITIONAL OR SUBSTITUTED COLLATERAL ON ADJUSTMENT OF EQUITIES- The Board, for safety and soundness reasons, may require any Federal Home Loan Bank to deposit additional collateral or to make substitutions of collateral or to adjust equities between the Federal Home Loan Bank.’.

    (e) ACCEPTANCE OF DEPOSITS; RESTRICTIONS ON TRANSACTION OF BANKING BUSINESS; COLLECTION AND SETTLEMENT OF CHECKS, DRAFTS, ETC.; CHARGES; RULES AND REGULATIONS- Section 11(e) of the Federal Home Loan Bank Act (12 U.S.C. 1431(e)) is amended to read as follows:

    ‘(e) Acceptance of Deposits; Restrictions on Transaction of Banking Business; Collection and Settlement of Checks, Drafts, Etc.; Charges; Rules and Regulations-

      ‘(1) ACCEPTANCE OF DEPOSITS- Subject to rules and regulations prescribed by the Board, each Federal Home Loan Bank shall have power to accept deposits made by members of such Bank or by any other Federal Home Loan Bank or other instrumentality of the United States, upon such terms and conditions as the Bank may determine, but no Federal Home Loan Bank shall transact any banking or other business not incidental to activities authorized by this Act.

      ‘(2) Collection and settlement of checks-

        ‘(A) IN GENERAL- Subject to rules and regulations of the Board, the Federal Home Loan Bank are authorized to be drawees of, and to engage in, or be agents or intermediaries for, or otherwise participate or assist in, the collection and settlement of (including presentment, clearing, and payment of, and remitting for), checks, drafts, or any other negotiable or nonnegotiable items or instruments of payment drawn on or issued by members of any Federal Home Loan Bank or by institutions which are eligible to make

application to become members pursuant to section 4, and to have such incidental powers as the Board shall find necessary for the exercise of any such authorization.

        ‘(B) CHARGES- A Federal Home Loan Bank shall make charges, to be determined by the Bank consistent with the principles set forth in section 11A(c) of the Federal Reserve Act, or utilize the services of, or act as agent for, or be a member of, a Federal Reserve bank, clearinghouse, or any other public or private financial institution or other agency, in the exercise of any powers or functions pursuant to this paragraph.

        ‘(C) Rules and regulations-

          ‘(i) IN GENERAL- (The Board) is authorized, with respect to participation in the collection and settlement of any items by Federal Home Loan Banks, and with respect to the collection and settlement (including payment by the payor institution) of items payable by members, to prescribe rules and regulations regarding the rights, powers, responsibilities, duties, and liabilities, including standards relating thereto, of such Federal Home Loan Banks, associations, or banks and other parties to any such items or their collection and settlement.

          ‘(ii) APPLICATION OF BANKING USAGE AND PRACTICE- In prescribing such rules and regulations, the Board may adopt or apply, in whole or in part, general banking usage and practices, and, in instances or respects in which they would otherwise not be applicable, Federal Reserve regulations and operating letters, the Uniform Commercial Code, and clearinghouse rule.’.

    (f) REDISCOUNT OF NOTES HELD BY OTHER BANKS; PURCHASE OF BONDS OF OTHER BANKS- Section 11(f) of the Federal Home Loan Bank Act (12 U.S.C. 1431(f)) is amended to read as follows:

    ‘(f) Rediscount of Notes Held by Other Banks; Purchase of Bonds of Other Banks-

      ‘(1) IN GENERAL- Each Federal Home Loan Bank is authorized, upon the terms and conditions determined by the Bank, to rediscount the discounted notes of members held by other Federal Home Loan Banks, or to make loans to, or make deposits with, such other Federal Home Loan Banks, or to purchase any bonds issued under this section.

      ‘(2) BOARD AUTHORITY- The Board is authorized to require Federal Home Loan Banks, upon such terms and conditions as the Board may prescribe, to engage in any activity described in paragraph (1).’.

    (g) AUDITS- Section 11(j) of the Federal Home Loan Bank Act (12 U.S.C. 1431(j)) is amended to read as follows:

    ‘(j) Audits-

      ‘(1) GOVERNMENT CAPITAL NOT REQUIRED- Notwithstanding the provisions of the first sentence of section 202 of the Government Corporation Control Act, the audits of the financial transactions of a Federal Home Loan Bank required by that section shall not be limited to periods during which Government capital has been invested therein.

      ‘(2) EXCLUSIONS FROM GOVERNMENT CORPORATION CONTROL ACT- The provisions of the first sentence of subsection (d) of section 303 of the Government Corporation Control Act shall not apply to any Federal Home Loan Bank.

      ‘(3) SELECTION OF EXTERNAL AUDITORS-

        ‘(A) IN GENERAL- The Federal Home Loan Banks shall contract jointly for an annual external audit.

        ‘(B) ROLE OF THE BOARD- Notwithstanding any other provision of law, the Board shall not participate in the audit contracting process under this paragraph, except that the Board may establish requirements for external audit contracts and requirements to assure consistency in financial report.’.

    (h) FISCAL AGENT OF FEDERAL HOME LOAN BANK SYSTEM- Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by adding after subsection (k) the following new subsection:

    ‘(l) FISCAL AGENT OF FEDERAL HOME LOAN BANK SYSTEM-

      ‘(1) IN GENERAL- The Federal Home Loan Bank System shall establish, within 6 months after the date of enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995, a central office that, on behalf of the System, will carry out the issuance of the systems’ consolidated obligations under this section.

      ‘(2) DAY-TO-DAY OPERATIONS- The System may delegate other operational functions to the central office described in subparagraph (A), or to other offices, as the System may agree.’.

    (i) DELETION AND REDESIGNATION- Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by--

      (1) CONSOLIDATED FEDERAL HOME LOAN BANK DEBENTURES- Deleting subsection (b); and

      (2) REDESIGNATION- Redesignating subsections (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) as (b), (c), (d), (e), (f), (g), (h), (i), (j), and (k).

SEC. 116. INCORPORATION OF BANKS; CORPORATE POWERS; HOUSING PROJECT LOANS.

    (a) INCORPORATION AND CORPORATE POWERS- Section 12(a) of the Federal Home Loan Bank Act (12 U.S.C. 1432(a)) is amended to read as follows:

    ‘(a) Incorporation and Corporate Powers-

      ‘(1) Organizational certificate-

        ‘(A) IN GENERAL- In the event that any new Federal Home Loan Bank district and any new Federal Home Loan Bank are created, the directors of the new Federal Home Loan Bank shall, in accordance with such rules and

regulations as the Board may prescribe, make and file with the Board at the earliest practicable date after the establishment of such Bank, an organization certificate which shall contain such information as the Board may require.

        ‘(B) FILING- Upon the making and filing of the organization certificate with the Board, the Bank shall become as of the date of the execution of its organization certificate, a body corporate, and as such and in its name it shall have the powers described in paragraph (2).

      ‘(2) POWERS OF FEDERAL HOME LOAN BANKS- Each Federal Home Loan Bank shall have the following powers--

        ‘(A) to adopt, alter, and use a corporate seal;

        ‘(B) to make contracts;

        ‘(C) to purchase or lease and hold or dispose of such real estate as may be necessary or convenient for the transaction of its business;

        ‘(D) to sue and be sued, to complain, and to defend, in any court of competent jurisdiction, State or Federal;

        ‘(E) to select, employ, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary for the transaction of its business;

        ‘(F) to define the duties of such officers, employees, attorneys, and agents; require bonds of them and fix the penalties thereof; and to dismiss them at pleasure;

        ‘(G) by its board of directors, to prescribe, amend, and repeal by-laws, rules and regulations governing the manner which its affairs may be administered; and

        ‘(H) to exercise the powers granted to it by law.

      ‘(3) OFFICERS AS DIRECTORS- The president of a Federal Home Loan Bank also may be a member of the board of directors thereof, but no other officer, employee, attorney, or agent of such Bank, who receives compensation, may be a member of the board of directors.

      ‘(4) INCIDENTAL POWERS- Each Federal Home Loan Bank shall have all such incidental powers, but inconsistent with the provisions of this Act, as are customary and usual in corporations generally.’.

    (b) TECHNICAL AMENDMENT- Section 12(b) of the Federal Home Loan Bank Act (12 U.S.C. 1432(b)) is amended by deleting ‘Federal home loans banks’ and inserting ‘Federal Home Loan Banks’.

SEC. 117. EXEMPTION FROM TAXATION; OBLIGATIONS ACCEPTABLE AS CREDIT ON DEBT OF HOME OWNER.

    Section 13 of the Federal Home Loan Bank Act (12 U.S.C. 1433) is amended--

      (1) by striking ‘bank’ each place it appears and inserting ‘Federal Home Loan Bank’; and

      (2) by striking ‘except that in any real property of the bank’ and inserting ‘except that any real property’.

SEC. 118. OBLIGATIONS AS LAWFUL INVESTMENTS; LIABILITY OF UNITED STATES FOR OBLIGATIONS ISSUED BY BANKS.

    Section 15 of the Federal Home Loan Bank Act (12 U.S.C. 1435) is amended to read as follows:

‘SEC. 15. OBLIGATIONS AS LAWFUL INVESTMENTS; LIABILITY OF UNITED STATES FOR OBLIGATIONS ISSUED BY BANKS.

    ‘(a) LAWFUL INVESTMENTS- Obligations of the Federal Home Loan Banks issued in compliance with this Act shall be lawful investments, and may be accepted as security, for all fiduciary, trust, and public funds the investment or deposit of which shall be under the authority or control of the United States or any officer or officers thereof.

    ‘(b) FEDERAL RESERVE BANKS AS FISCAL AGENTS- The Federal Reserve banks are authorized to act as depositaries, custodians, and/or fiscal agents for Federal Home Loan Banks in the general performance of their powers under this Act.

    ‘(c) DISCLOSURE REGARDING ABSENCE OF UNITED STATES GUARANTEE- All obligations of Federal Home Loan Banks shall plainly state that such obligations are not obligations of the United States and are not guaranteed by the United States.’.

SEC. 119. RESERVES AND DIVIDENDS.

    (a) RESERVE ACCOUNT; DIVIDENDS; INVESTMENT OF RESERVES- Section 16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended to read as follows:

    ‘(a) Reserve Account; Dividends; Investment of Reserves-

      ‘(1) Reserve account-

        ‘(A) Required reserves-

          ‘(i) IN GENERAL- At the same time it first establishes the capital standards required under section 6A, the Board shall establish a reserve account requirement for each Federal Home Loan Bank.

          ‘(ii) FACTORS CONSIDERED IN ESTABLISHING RESERVE REQUIREMENT- In establishing the reserve account required by subparagraph (A), the Board shall take into account that reserves are integral to a Bank’s capital structure and its safety and soundness, including the ability of a Bank to satisfy its capital requirements, meet its statutory obligations, and manage its business operations.

          ‘(iii) RESERVE COMPLIANCE PLAN- At the same time each Bank submits to the Board its plan specifying how the Bank intends to implement its stock subscription requirements, each Bank shall submit to the Board a plan for complying with the reserve account requirement established under clause (i).

        ‘(B) ADDITIONAL RESERVES- Each Federal Home Loan Bank may carry to a reserve account from time to time such portion of its net earnings as may be determined by its board of directors.

      ‘(2) DIVIDENDS- No dividends shall be paid except out of previously retained earnings or current net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this Act have been provided for, other than charge-offs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 21 of this Act or payments relating to the Funding Corporation Principal Fund under section 21B(e) of this Act.

      ‘(3) INVESTMENT AUTHORITY- The funds of such Federal Home Loan Bank shall be invested, subject to such regulations, restrictions, and limitations as may be prescribed by the Board, in direct obligations of the United States, in obligations, participations, or other instruments of or issued by the Federal National Mortgage Association or the Government National Mortgage Association, in mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or section 306 of the Federal Home Loan Mortgage Corporation Act, and in such securities as fiduciary and trust funds may be invested in under the laws of the State in which the Federal Home Loan Bank is located.’.

    (b) TECHNICAL AMENDMENTS- Section 16(c) of the Federal Home Loan Bank Act (12 U.S.C. 1436(c)) is amended--

      (1) by striking ‘bank’ each place it appears and inserting ‘Federal Home Loan Bank’;

      (2) by striking ‘bank’s’ and inserting ‘Federal Home Loan Bank’s’; and

      (3) in paragraph (1)(C), by striking ‘the first 2 sentences of subsection (a) of this section’ and inserting ‘subsection (a)(1)’.

SEC. 120. FINANCING CORPORATION.

    Section 21(b) of the Federal Home Loan Bank Act (12 U.S.C. 1441(b)) is amended by striking ‘Director of the Office of Finance of Federal Home Loan Banks’ and inserting ‘director of the central office described in section 11(k)’.

SEC. 121. OBLIGATIONS OF RESOLUTION FUNDING CORPORATION.

    (a) PAYMENTS OF THE FEDERAL HOME LOAN BANK SYSTEM- Section 21B(f)(2)(C) of the Federal Home Loan Bank Act (12 U.S.C. 1441b(f)(2)(C)) is amended to read as follows:

        ‘(C) Payments by the federal home loan bank system-

          ‘(i) AMOUNT TO BE PAID- To the extent the amounts available pursuant to

subparagraphs (A) and (B) are insufficient to cover the amount of interest payments, the Federal Home Loan Banks shall pay to the Funding Corporation each calendar year the aggregate amount of $300,000,000.

          ‘(ii) PRO RATA SHARE OF TOTAL SYSTEM CAPITAL- Except as provided in clause (iii), the amount to be paid by each Federal Home Loan Bank under clause (i) shall be determined by--

            ‘(I) dividing the Bank’s required capital by the total of all of the Banks’ required capital; and

            ‘(II) multiplying the percentage obtained under subclause (I) by $300,000,000.

          ‘(iii) BANK ALLOCATION FORMULA- Notwithstanding clause (ii), the amount to be paid by each Federal Home Loan Bank under clause (i) shall be determined by a permanent formula established by the Federal Home Loan Banks if--

            ‘(I) within 60 days after the enactment of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995, the formula established by the Banks is approved by three-fourths of the Banks and by Banks with combined total assets at least equal to three-fourths of the total assets of the System; and

            ‘(II) within 45 days after the formula is approved as described in subclause (I), the Federal Housing Finance Board approves the formula established by the Banks, specifically finding that the formula--

‘(aa) is reasonable and consistent with the objectives of assuring payment of the System’s obligation in clause (i);

‘(bb) is equitable to the Banks and members;

‘(cc) does not create incentives for the Banks or members to engage in conduct inconsistent with the purpose of the System; and

‘(dd) is readily understood and predictable in its impact.

          ‘(iv) DEFINITIONS-

            ‘(I) REQUIRED CAPITAL- For purposes of clause (ii), ‘required capital’ means the greater of the leverage capital requirement or risk-based capital requirement established by the Board for each Bank.

            ‘(II) TOTAL ASSETS- For purposes of clause (iii)(I), the ‘total assets’ of each Bank and the System shall be determined as of the date of introduction of the Federal Home Loan Bank System Restructuring and Modernization Act of 1995.’.

    (b) DELAYED EFFECTIVE DATE- The amendment made by subsection (a) shall take effect beginning with the calendar year following the year the Board prescribes regulations establishing capital requirements under section 6(b).

    (c) CONFORMING AMENDMENTS- Section 21B(c) (12 U.S.C. 1441b(c)) is amended by striking ‘director of the Office of Finance of the Federal Home Loan Banks’ and inserting ‘director of the central office described in section 11(k)’.

SEC. 122. ELIGIBILITY TO MEMBERSHIP IN BANKS.

    Section 24 of the Federal Home Loan Bank Act (12 U.S.C. 1444) is repealed.

SEC. 123. MERGER, LIQUIDATION OR REORGANIZATION.

    Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) is amended to read as follows:

    ‘(a) IN GENERAL- Whenever the Board finds that the efficient and economical accomplishment of the purposes of this Act will be aided by such action, and in accordance with such rules, regulation, and orders as the Board may prescribe--

      ‘(1) MERGERS- Any Federal Home Loan Bank may be required to merge with any other Federal Home Loan Bank; and

      ‘(2) LIQUIDATION OR REORGANIZATION- Any Federal Home Loan Bank may be liquidated or reorganized by the Board, and the Bank’s stock paid off and retired in whole or in part in connection therewith after paying or making provision for the payment of its liabilities.

    ‘(b) ACQUISITION OF ASSETS AND ASSUMPTION OF LIABILITIES- In the case of any liquidation or reorganization described in subsection (a), any other Federal Home Loan Bank may, with the approval of the Board, acquire assets of any such liquidated or reorganized bank and assume liabilities thereof, in whole or in part.’.

SEC. 124. GENERAL ENFORCEMENT POWERS.

    The Federal Home Loan Bank Act is amended by adding after section 27 (12 U.S.C. 1447) the following new section:

‘SEC. 27A. GENERAL ENFORCEMENT POWERS.

    ‘(a) Cease and Desist Procedures-

      ‘(1) GROUNDS FOR ISSUANCE- The Board may issue and serve upon a Federal Home Loan Bank or a Bank-affiliated party a notice of charges if, in the opinion of the Board, the Bank or Bank-affiliated party--

        ‘(A) is engaging or has engaged, or the Board has reasonable cause to believe that the Bank or Bank-affiliated party is about to engage, in an unsafe or unsound practice in conducting the business of the Bank; or

        ‘(B) is violating or has violated, or the Board has reasonable cause to believe that the Bank or Bank-affiliated party is about to violate--

          ‘(i) a law, rule, or regulation;

          ‘(ii) any condition imposed in writing by the Board in connection with the granting of any application or other request by the Bank; or

          ‘(iii) any written agreement entered into with the Board.

      ‘(2) PROCEDURE-

        ‘(A) NOTICE OF CHARGES- Any notice of charges shall contain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist therefrom should issue against the Bank or Bank-affiliated party.

        ‘(B) DATE OF HEARING- Such hearing shall be fixed for a date not earlier than 30 days nor later than 60 days after service of such notice unless an earlier or a later date is set by the Board at the request of any party served.

        ‘(C) FAILURE TO APPEAR CONSTITUTES CONSENT- Unless the party or parties so served appear at the hearing personally or by a duly authorized representative, the party or parties shall be deemed to have consented to the issuance of the cease-and-desist order.

        ‘(D) ISSUANCE OF ORDER- In the event of such consent, or if upon the record made at any such hearing, the Board shall find that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Board may issue and serve upon the Bank or Bank-affiliated party an order requiring the Bank or Bank-affiliated party to cease and desist from any such violation or practice and to take affirmative action to correct the conditions resulting from any such violation or practice.

      ‘(3) AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING FROM VIOLATIONS OR PRACTICES- The authority to issue an order under this subsection and subsection (b) which requires a Federal Home Loan Bank or Bank-affiliated party to take affirmative action to correct or remedy any conditions resulting from any violation or practice with respect to which such order is issued includes the authority to require such Bank or party to--

        ‘(A) make restitution or provide reimbursement, indemnification, or guarantee against loss if--

          ‘(i) the Bank or Bank-affiliated party was unjustly enriched in connection with such violation or practice; or

          ‘(ii) the violation or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Board;

        ‘(B) restrict the growth of the Bank;

        ‘(C) dispose of any loan or asset involved;

        ‘(D) rescind agreements or contracts;

        ‘(E) employ qualified officers or employees (who may be subject to approval by the Board at the direction of the Board); and

        ‘(F) take such other action as the Board determines appropriate.

      ‘(4) AUTHORITY TO LIMIT ACTIVITIES- The authority to issue an order under this subsection or subsection (b) includes the authority to place limitations on the activities or functions of a Bank or any Bank-affiliated party.

      ‘(5) EFFECTIVE DATE- A cease-and-desist order shall become effective at the expiration of 30 days after the service of such order upon the Bank or Bank-affiliated party concerned (except in the case of a cease-and-desist order issued upon consent, which shall become effective at the time specified therein), and shall remain, effective and enforceable as provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or reviewing court.

      ‘(6) STANDARD FOR CERTAIN ORDERS- No authority under this subsection or subsection (b) to prohibit any Bank-affiliated party from withdrawing, transferring, removing, dissipating, or disposing of any funds, assets, or other property may be exercised unless the Board meets the standards of Rule 65 of the Federal rules of Civil Procedure, without regard to the requirement of such rule that the applicant show that the injury, loss or damage is irreparable and immediate.

    ‘(b) Temporary Cease-and-Desist Orders-

      ‘(1) GROUNDS FOR ISSUANCE; SCOPE- Whenever the Board determines that any violation, threatened violation, or unsafe or unsound practice, specified in the notice of charges served upon the Federal Home Loan Bank or Bank-affiliated party under subsection (a)(1), or the continuation thereof, is likely--

        ‘(A) to cause insolvency or significant dissipation of assets or earnings of the Bank, or

        ‘(B) to weaken the condition of the Bank prior to the completion of the proceedings conducted under subsection (a)(2),

      the Board may issue a temporary order requiring the Bank, or any Bank-affiliated party, to cease and desist from any such violation or practice and to take affirmative action to prevent or remedy such insolvency, dissipation, or condition pending completion of such proceedings. Such order may include any requirement authorized under subsection (a)(3).

      ‘(2) EFFECTIVE DATE- An order issued under paragraph (1) shall become effective upon service upon the Federal Home Loan Bank or Bank-affiliated party and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph (4), shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice and shall remain effective until such time as the Board dismisses the charges specified in such notice or until superseded by a cease-and-desist order issued under subsection (a).

      ‘(3) Incomplete or inaccurate records-

        ‘(A) TEMPORARY ORDER- If a notice of charges served under subsection (a)(1) specifies that, on the basis of particular facts and circumstances, the Bank’s books and records are so incomplete or inaccurate that the Board is unable, through the normal supervisory process, to determine the financial condition of that Bank or the details or the purpose of any transaction or transactions that may have a material effect on the financial condition of that Bank, the Board may issue a temporary order requiring--

          ‘(i) the cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or

          ‘(ii) affirmative action to restore such books or records to a complete and accurate state,

until the completion of the proceedings under subsection (a).

        ‘(B) EFFECTIVE PERIOD- Any temporary order issued under subparagraph (A)--

          ‘(i) shall become effective upon service; and

          ‘(ii) unless set aside, limited, or suspended by a court in proceedings under paragraph (4), shall remain in effect and enforceable until the earlier of--

            ‘(I) the completion of the proceeding initiated under subsection (a) in connection with the notice of charges; or

            ‘(II) the date the Board determines, by examination or otherwise, that the Federal Home Loan Bank’s books and records are accurate and reflect the financial condition of the Bank.

      ‘(4) JUDICIAL REVIEW- Within 10 days after the Federal Home Loan Bank or Bank-affiliated party has been served with a temporary cease-and-desist order, the Bank or Bank-affiliated party may apply to the United States district court for the judicial district in which the Bank is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the Bank or Bank-affiliated party under subsection (a)(1), and such court shall have jurisdiction to issue such injunction.

      ‘(5) ENFORCEMENT- In the case of a violation or threatened violation of, or failure to obey, a temporary order issued under, the Board may apply to the United States district court for the judicial district in which the Federal Home Loan Bank is located, or the United States District Court for the District of Columbia for an injunction to enforce such order, and, if the court finds any such violation, threatened violation, or failure to obey, it shall issue such injunction.

    ‘(c) Removal and Prohibition Authority-

      ‘(1) AUTHORITY TO ISSUE ORDER- The Board may serve upon any Bank-affiliated party a written notice of the Board’s intention to remove such party from office or to prohibit any further participation by such party in any manner, in the conduct of the affairs of the Bank whenever the Board determines that--

        ‘(A) such party 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 Board in connection with the grant of any application or other request by the Bank; or

            ‘(IV) any written agreement between the Bank and the Board;

          ‘(ii) engaged or participated in any unsafe or unsound practice in connection with the Bank; 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 any clause of subparagraph (A)--

          ‘(i) the Bank has suffered or will probably suffer financial loss or other damage; or

          ‘(ii) such party has received financial gain or other benefit by reason of such violation, practice, or breach; and

        ‘(C) such violation, practice, or breach--

          ‘(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 the Bank.

      ‘(2) Suspension order-

        ‘(A) SUSPENSION OR PROHIBITION AUTHORIZED- If the Board serves written notice under paragraph (1) to any Bank affiliated-party, the Board may suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of the Federal Home Loan Bank, if the Board--

          ‘(i) determines that such action is necessary for the protection of the Bank; and

          ‘(ii) serves upon such party written notice of the suspension order.

        ‘(B) EFFECTIVE PERIOD- Any suspension order issued under subparagraph (A)--

          ‘(i) shall become effective upon service; and

          ‘(ii) unless a court issues a stay of such order under paragraph (7), shall remain in effect and enforceable until--

            ‘(I) the date the Board dismisses the charges contained in the notice served under paragraph (1) with respect to such party; or

            ‘(II) the effective date of an order issued by the Board to such party under paragraph (1).

        ‘(C) COPY OF ORDER- If the Board issues a suspension order under subparagraph (A) to any Bank-affiliated party, the Board shall serve a copy of such order on any Federal Home Loan Bank with which such party is associated at the time such order is issued.

      ‘(3) Procedure-

        ‘(A) NOTICE- A notice of intention to remove a Bank-affiliated party from office or to prohibit such party from participating in the conduct of the affairs of a Federal Home Loan Bank shall contain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon.

        ‘(B) DATE OF HEARING- Such hearing shall be fixed for a date not earlier than 30 days nor later than 60 days after the date of service of such notice, unless an earlier or a later date is set by the Board at the request of such party and for good cause shown or by the Attorney General of United States.

        ‘(C) FAILURE TO APPEAR DEEMED CONSENT- Unless such party 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 of such removal or prohibition.

        ‘(D) ISSUANCE OF ORDER- In the event of such consent, or if upon the record made at any such hearing, the Board finds that any of the grounds specified in such notice have been established, the Board may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the Federal Home Loan Bank, as the Board may deem appropriate.

      ‘(4) EFFECTIVE DATE- Any such order shall become effective at the expiration of 30 days after service upon the Federal Home Loan Bank and Bank-affiliated party (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or a reviewing court.

      ‘(5) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES- Any person subject to an order issued under this subsection shall not--

        ‘(A) participate in any manner in the conduct of the affairs of any institution or agency specified in paragraph (6)(A);

        ‘(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subparagraph (A);

        ‘(C) violate any voting agreement previously approved by the Board; or

        ‘(D) vote for a director, or serve or act as a Bank-affiliated party.

      ‘(6) INDUSTRYWIDE PROHIBITION-

        ‘(A) IN GENERAL- Except as provided in paragraph (3), any person who, pursuant to an order issued under this subsection, has been removed or suspended from office in a Federal Home Loan Bank or prohibited from participating in the conduct of the affairs of a Federal Home Loan Bank 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--

          ‘(i) any insured depository institution as defined in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2));

          ‘(ii) any institution treated as an insured bank under section 8(b)(3) or 8(b)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3), (b)(4)), or as a savings association under section 8(b)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(8));

          ‘(iii) any insured credit union as defined in section 101(7) of the Federal Credit Union Act (12 U.S.C. 1752);

          ‘(iv) any institution chartered under the Farm Credit Act of 1971;

          ‘(v) the Board any Federal Home Loan Bank;

          ‘(vi) the Federal National Mortgage Association;

          ‘(vii) the Federal Home Loan Mortgage Corporation;

          ‘(viii) the Student Loan Marketing Association;

          ‘(ix) the Government National Mortgage Association; and

          ‘(x) any appropriate Federal depository institutions regulatory agency as defined in section 3(q) of the Federal Deposit Insurance Act.

        ‘(B) EXCEPTION IF AGENCY PROVIDES WRITTEN CONSENT- If, on or after the date an order is issued under this subsection which removes or suspends from office any Bank-affiliated party or prohibits such party from participating in the conduct of the affairs of a Federal Home Loan Bank, such party receives the written consent of--

          ‘(i) the Federal Housing Finance Board, and

          ‘(ii) the appropriate Federal financial institutions regulatory agency of the institution described in paragraph (6)(A) in which such party proposes to hold office or in the conduct of whose affairs such party proposes to participate,

        subparagraph (A) shall, to the extent of such consent, cease to apply to such party with respect to the institution described in such written consent. Any agency that grants such a written consent shall report such action to the Board and publicly disclose such consent.

        ‘(C) VIOLATION OF PARAGRAPH TREATED AS VIOLATION OF ORDER- Any violation of subparagraph (A) by any person who is subject to an order described in such subparagraph shall be treated as a violation of the order.

        ‘(D) APPROPRIATE FEDERAL FINANCIAL INSTITUTIONS REGULATORY AGENCY DEFINED- For purposes of this paragraph, the term ‘appropriate Federal financial institutions regulatory agency’ means--

          ‘(i) the Secretary of Housing and Urban Development and the Office of Federal Housing Enterprise Oversight, in the case of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation;

          ‘(ii) the Secretary of Housing and Urban Development, in the case of the Government National Mortgage Association;

          ‘(iii) the appropriate Federal banking agency as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), in the case of an insured depository institution;

          ‘(iv) the Secretary of the Treasury, in the case of the Student Loan Marketing Association;

          ‘(v) the Farm Credit Administration, in the case of an institution chartered under the Farm Credit Act of 1971; and

          ‘(vi) the National Credit Union Administration Board, in the case of an insured credit union (as defined in section 101(7) of the Federal Credit Union Act (12 U.S.C. 1752(7)).

        ‘(E) CONSULTATION BETWEEN AGENCIES- The agencies described in subparagraph (B) shall consult with each other before providing any written consent authorized by subparagraph (B).

        ‘(F) APPLICABILITY- This paragraph shall only apply to a person which is an individual, unless the Board specifically finds that it should apply to a corporation, firm, or other business enterprise.

      ‘(7) STAY OF SUSPENSION OR PROHIBITION- Within ten days after any Bank-affiliated party has been suspended from office or prohibited from participation in the conduct of the affairs of a Federal Home Loan Bank under paragraph (2), such party may apply to the United States district court for the judicial district in which the Federal Home Loan Bank is located, or the United States District Court for the District of Columbia, for a stay of such suspension or prohibition pending the completion of the administrative proceedings pursuant to the notice served upon such director or executive officer, under paragraph (1), and such court shall have jurisdiction to stay such suspension or prohibition.

    ‘(d) Suspension or Removal of Parties Charged With Felony-

      ‘(1) SUSPENSION- Whenever any Bank-affiliated party is charged in any information, indictment, or complaint with the commission of, or participation in--

        ‘(A) a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law; or

        ‘(B) a criminal violation of section 1956, 1957 or 1960 of title 18, United States Code, or section 5322 of title 31, United States Code,

      the Board may, if continued service or participation by such party may threaten to impair public confidence in the Federal Home Loan Bank, 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 the Bank.

      ‘(2) Provisions applicable to notice-

        ‘(A) COPY- A copy of such notice shall also be served upon the Bank.

        ‘(B) EFFECTIVE PERIOD- A suspension or prohibition under paragraph (1) shall remain in effect until the information, indictment, or complaint is finally disposed of or until terminated by the Board.

      ‘(3) Removal-

        ‘(A) IN GENERAL- If a judgment of conviction or an agreement to enter a pre-trial diversion or other similar program is entered against a Bank-affiliated party, in connection with a crime described in paragraph (1)(A), and at such time as such judgment is not subject to further appellate review, the Board may, if continued service or participation by such party may threaten to impair public confidence in the Federal Home Loan Bank, 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 Bank without the prior written consent of the Board.

        ‘(B) REMOVAL REQUIRED- In the case of a judgment or conviction or agreement against a Bank-affiliated party in connection with a violation described in paragraph (1)(B), the Board shall 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 Bank without the prior written consent of the Board.

      ‘(4) Provisions applicable to order-

        ‘(A) COPY- A copy of any order under paragraph (3) shall also be served upon the Federal Home Loan Bank, whereupon the Bank-affiliated party who is

subject to the order (if a director or an officer) shall cease to be a director or officer of the Bank.

        ‘(B) DISCRETIONARY REMOVAL NOT PRECLUDED- A finding of not guilty or other disposition of the charge shall not preclude the Board from instituting proceedings to remove such party from office or to prohibit further participation in the affairs of the Bank pursuant to subsection (e)(1) or (e)(3).

        ‘(C) EFFECTIVE DATE- Any notice of suspension or order of removal issued under this subsection shall remain effective until the completion of any hearing or appeal authorized under paragraph (5), unless earlier terminated by the Board.

      ‘(5) Vacancies on the board of directors-

        ‘(A) QUORUM- If, at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors of a Federal Home Loan Bank less than a quorum, all powers and functions vested in, or exercisable by, such board shall vest in and be exercisable by the remaining director or directors, until such time as there shall be a quorum of the board of directors.

        ‘(B) ALL DIRECTORS SUSPENDED- In the event all of the directors of the Bank are suspended pursuant to this section, the Board shall appoint temporary directors pending the termination of such suspensions or until such time as the terms of the suspended directors expire and their successors take office.

      ‘(6) HEARING-

        ‘(A) REQUEST FOR HEARING- Within 30 days from service of any notice of suspension or order of removal issued pursuant to paragraph (1), the Bank-affiliated party concerned may request in writing an opportunity to appear before the Board to show that the continued service to or participation in the conduct of the affairs of the Federal Home Loan Bank by such party does not, or is not likely to, threaten to impair public confidence in the Bank.

        ‘(B) TIME AND PLACE OF HEARING- Upon receipt of a request described in subparagraph (A), the Board shall fix a time (not more than 30 days after receipt of such request, unless extended at the request of the Bank-affiliated party) and place at which such party may appear, personally or through counsel, before the Board or designated employees of the Board to submit written materials (or, at the discretion of the Board, oral testimony) and oral argument.

        ‘(C) DECISION OF THE FEDERAL HOUSING FINANCE BOARD-

          ‘(i) IN GENERAL- Within 60 days of such hearing, the Board shall notify the Bank-affiliated party whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the Federal Home Loan Bank 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 Bank will be rescinded or otherwise modified.

          ‘(ii) STATEMENT OF REASONS- Such notification shall contain a statement of the basis for the Board’s decision, if adverse to such party.

      ‘(7) RULEMAKING- The Board is authorized to prescribe such rules and regulations as may be necessary to carry out the purposes of this subsection.

    ‘(e) HEARING AND JUDICIAL REVIEW-

      ‘(1) IN GENERAL- Any hearing provided for in this section (other than the hearing provided for in subsection (d))--

        ‘(A) shall be held in the Federal judicial district or in the territory in which the Federal Home Loan Bank is located unless the party afforded the hearing consents to another place; and

        ‘(B) shall be conducted in accordance with the provisions of chapter 5 of title 5, United States Code (5 U.S.C. 500 et seq.).

      ‘(2) Federal housing financial board’s decision and order-

        ‘(A) IN GENERAL- After such hearing, and within 90 days after the Board has notified the parties that the case has been submitted to the Board for final decision, the Board shall render its decision (which shall include findings of fact upon which the decision is predicated) and shall issue and serve upon each party to the proceeding an order or orders consistent with the provisions of this section.

        ‘(B) REVIEW OF FEDERAL HOUSING FINANCE BOARD’S ORDER- Judicial review of any such order shall be exclusively as provided in paragraph (3). Unless a petition for review is timely filed in a court of appeals of the United States, as hereinafter provided in paragraph (3), and thereafter until the record in the proceeding has been filed as so provided, the Board may at any time, upon such notice and in such manner as it shall deem proper, modify, terminate, or set aside any such order. Upon such filing of the record, the Board may modify, terminate, or set aside any such order with permission of the court.

      ‘(3) Judicial review-

        ‘(A) PETITION FOR REVIEW- 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 Federal Home Loan Bank or Bank-affiliated party concerned, or an order issued under subsection (d)) by the filing in the court of appeals of the United States for the circuit in which the Federal Home Loan Bank is located, or in the United States Court of Appeals for the District of Columbia Circuit, within 30 days after the date of service of such order, a written petition praying that the order of the Board be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Board.

        ‘(B) FILING- Upon receiving a copy of a petition, the Board shall file in the court the record in the proceeding, as provided in section 2112 of title 28, United States Code.

        ‘(C) EXCLUSIVE JURISDICTION- Upon the filing of a petition, such court shall have jurisdiction, which upon the filing of the record by the Board shall (except as provided in the last sentence of paragraph (2)(B)) be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Board. Review of such proceedings shall be governed by chapter 7 of title 5, United States Code.

      ‘(4) SUPREME COURT REVIEW- The judgment and decree of the circuit court referred to in paragraph (3) shall be final, except that the judgment and decree shall be subject to review by the Supreme Court upon certiorari, as provided in section 1254 of title 28, United States Code.

      ‘(5) NO AUTOMATIC STAY- The commencement of proceedings for judicial review under this subsection shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Board.

    ‘(f) JURISDICTION AND ENFORCEMENT-

      ‘(1) APPLICATION FOR ENFORCEMENT- The Board may apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the Federal Home Loan Bank is located, for the enforcement of any effective notice or order issued under this section or section 6A, and such court shall have jurisdiction and power to order and require compliance herewith.

      ‘(2) LIMITATION ON MODIFICATION- Except as otherwise provided in this section or section 6A no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this subsection, or to review, modify, suspend, terminate, or set aside any such notice or order.

    ‘(g) Civil Money Penalty-

      ‘(1) FIRST TIER- A Federal Home Loan Bank which, and any Bank-affiliated party who--

        ‘(A) violates any law or regulation;

        ‘(B) violates any final order or temporary order issued pursuant to subsection (a), (b), (c), or (d), or any final order under section 6A;

        ‘(C) violates any condition imposed in writing by the Board in connection with the grant of any application or other request by a Bank; or

        ‘(D) violates any written agreement between a Bank and the Board,

      shall be forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues.

      ‘(2) SECOND TIER- Notwithstanding paragraph (1), a Federal Home Loan Bank which, and any Bank-affiliated party who,--

        ‘(A)(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 a Bank; or

        ‘(iii) breaches any fiduciary duty; and

        ‘(B) which 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 Bank; or

        ‘(C) results in pecuniary gain or other benefit to such party,

      shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues.

      ‘(3) THIRD TIER- Notwithstanding paragraphs (1) and (2), a Federal Home Loan Bank which, and any Bank-affiliated party who,--

        ‘(A) knowingly--

          ‘(i) commits any violation described in paragraph (1);

          ‘(ii) engages in any unsafe or unsound practice in conducting the affairs of a Bank; or

          ‘(iii) breaches any fiduciary duty; and

        ‘(B) knowingly or recklessly causes a substantial loss to the Bank or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,

      shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues.

      ‘(4) MAXIMUM AMOUNTS OF PENALTIES- The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in such paragraph is--

        ‘(A) in the case of any person other than a Federal Home Loan Bank, an amount not to exceed $1,000,000; and

        ‘(B) in the case of a Federal Home Loan Bank, an amount not to exceed the lesser of--

          ‘(i) $1,000,000, or

          ‘(ii) 1 percent of the total assets of such Bank.

      ‘(5) Assessment-

        ‘(A) WRITTEN NOTICE- Any penalty imposed under this subsection may be assessed and collected by the Board by written notice.

        ‘(B) FINALITY OF ASSESSMENT- If with respect to any assessment under subparagraph (A) a hearing is not timely requested pursuant to paragraph (8), the penalty assessment contained in a written notice shall constitute a final and unappealable order.

      ‘(6) AUTHORITY TO MODIFY OR REMIT PENALTY- The Board may compromise, modify, or remit any penalty which the Board may assess or has already assessed under this subsection.

      ‘(7) MITIGATING FACTORS- In determining the amount of any penalty imposed under this subsection, the Board shall take into account the appropriateness of the penalty with respect to--

        ‘(A) the size of financial resources and good faith of the Federal Home Loan Bank or the other person charged;

        ‘(B) the gravity of the violation;

        ‘(C) the history of previous violations; and

        ‘(D) such other matters as justice may require.

      ‘(8) HEARING- The Federal Home Loan Bank or Bank-affiliated party against whom any penalty is assessed under this subsection shall be afforded a hearing if such Bank or person submits a request for such hearing within 20 days after the issuance of the notice of assessment. A transcript that includes all testimony and other documentary evidence shall be prepared for all hearings commenced pursuant to this subsection.

      ‘(9) Collection-

        ‘(A) REFERRAL- If any Federal Home Loan Bank or Bank-affiliated party fails to pay a penalty that has become final, the Board shall recover the amount assessed by action in the appropriate United States district court.

        ‘(B) APPROPRIATENESS OF PENALTY NOT REVIEWABLE- In any civil action brought under subparagraph (A), the validity and appropriateness of the penalty shall not be subject to review.

      ‘(10) DISBURSEMENT- All penalties collected under authority of this subsection shall be deposited into the General Fund of the Treasury.

      ‘(11) REGULATIONS- The Board shall prescribe regulations establishing such procedures as may be necessary to carry out this subsection.

    ‘(h) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERVICE- The resignation, termination of employment or participation, or separation of a Bank-affiliated party (including a separation caused by the closing of a Federal Home Loan Bank) shall not affect the jurisdiction and authority of the Board to issue any notice and proceed under this section against any such party, if such notice is served before the end of the six-year period beginning on the date such Bank-affiliated party ceased to be such a party with respect to such Bank.

    ‘(i) Prejudgment Attachment-

      ‘(1) IN GENERAL- In any action brought by the Board pursuant to this section, or in actions brought in aid of, or to enforce an order in, any administrative or other civil action for money damages, restitution, or civil money penalties brought by the Board, the court may, upon application of the Board, issue a restraining order that--

        ‘(A) prohibits any person subject to the proceeding from withdrawing, transferring, removing, dissipating, or disposing of any funds, assets or other property; and

        ‘(B) appoints a temporary receiver to administer the restraining order.

      ‘(2) Standard-

        ‘(A) SHOWING- Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (1) without regard to the requirement of such rule that the applicant show that the injury, loss, or damage is irreparable and immediate.

        ‘(B) STATE PROCEEDING- If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of such State provide substantially similar protection to a party’s right to due process as Rule 65 (as modified with respect to such proceeding by subparagraph (B)), the relief sought under paragraph (1) may be requested under the laws of such State.

    ‘(j) CRIMINAL PENALTY- Whoever, being subject to an order in effect under subsection (c) or (d), without the prior written approval of the Board knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order or in subsection (c)(5) in the conduct of the affairs of any institution or agency specified in subsection (c)(6)) shall be fined not more than $1,000,000, imprisoned for not more then 5 years, or both.

    ‘(k) NOTICE OF SERVICE- Any service required or authorized to be made by the Board under this section may be made by registered mail, or in such other manner reasonably calculated to give actual notice as the Board may by regulation or otherwise provide.

    ‘(l) Subpoena Power, Etc-

      ‘(1) POWERS- In the course of or in connection with any administrative proceeding under this section or any

examination or investigation under section 8, the Board or any designated representative of the Board, including any person designated to conduct any hearing under this section, shall have the power--

        ‘(A) to administer oaths and affirmations;

        ‘(B) to take or cause to be taken depositions;

        ‘(C) to issue subpoenas and subpoenas duces tecum;

        ‘(D) to revoke, quash, or modify subpoenas and subpoenas duces tecum issued by the Board; and

        ‘(E) to make rules and regulations with respect to any such proceedings, examinations or investigations.

      ‘(2) JURISDICTION- The attendance of witnesses and the production of documents provided for in this subsection may be required from any place in any State or in any territory or other place subject to the jurisdiction of the United States at any designated place where such proceeding is being conducted.

      ‘(3) ENFORCEMENT- The Board or any party to proceedings under this section may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district or the United States court in any territory in which such proceeding is being conducted, or where the witness resides or carries on business, for enforcement of any subpoena or subpoena duces tecum issued pursuant to this subsection, and such courts shall have jurisdiction and power to order and require compliance therewith.

      ‘(4) Fees and expenses-

        ‘(A) WITNESS- Witnesses subpoenaed under this subsection shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States.

        ‘(B) EXPENSES AND ATTORNEY’S FEES- Any court having jurisdiction of any proceeding instituted under this section by a Federal Home Loan Bank or a director or officer thereof, may allow to any such party such reasonable expenses and attorneys’ fees as it deems just and proper; and such expenses and fees shall be paid by the Bank or from its assets.

      ‘(5) FAILURE TO OBEY SUBPOENA- Any person who willfully shall fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in such person’s power so to do, in obedience to the subpoena of the Board, shall be guilty of a misdemeanor and, upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year or both.

    ‘(m) PUBLIC DISCLOSURE OF FINAL ORDERS AND AGREEMENTS-

      ‘(1) IN GENERAL- The Board shall publish and make available to the public on a semi-annual basis--

        ‘(A) any written agreement or other written statement for which a violation may be enforced by the Board, unless the Board, in its discretion, determines that publication would be contrary to the public interests;

        ‘(B) any final order issued with respect to any administrative enforcement proceeding initiated by the Board under this section or any other provision of law; and

        ‘(C) any modification to or termination of any final order or agreement made public pursuant to this paragraph.

      ‘(2) HEARINGS- All hearings on the record with respect to any notice of charges issued by the Board shall be open to the public, unless the Board, in its discretion, determines that holding an open hearing would be contrary to the public interest.

      ‘(3) REPORTS TO CONGRESS- A written report shall be made part of a determination not to hold a public hearing pursuant to paragraph (2) or not to publish a document pursuant to paragraph (1)(A). All reports prepared under this paragraph, shall be available to Congress on request.

      ‘(4) TRANSCRIPTS OF HEARINGS- A transcript of public hearings shall be made available to the public pursuant to section 552 of title 5, United States Code.

      ‘(5) DELAY OF PUBLICATION UNDER EXCEPTIONAL CIRCUMSTANCES- If the Board makes a determination in writing that the publication of any final order pursuant to paragraph (1)(B) would seriously threaten the safety or soundness of the Federal Home Loan Bank, the Board may delay the publication of such order for a reasonable time.

      ‘(6) DOCUMENTS FILED UNDER SEAL IN PUBLIC ENFORCEMENT HEARINGS- The Board may file any document or part thereof under seal in any administrative enforcement hearing commenced by the Board if disclosure thereof would be contrary to the public interest. A written report shall be made part of any determination to withhold any part of a document from the transcript of the hearing required by paragraph (2).

      ‘(7) RETENTION OF DOCUMENTS- The Board shall keep and maintain a record, for a period of at least 6 years, of all documents described in paragraph (1) and all informal enforcement agreements and other supervisory actions and supporting documents issued with respect to or in connection with any administrative enforcement proceedings initiated by the Board under this section or any other laws.

      ‘(8) DISCLOSURES TO CONGRESS- No provision of this subsection shall be construed to authorize the withholding, or to prohibit the disclosure, of any information to the Congress or any committee or subcommittee thereof.’.

TITLE II--EMPLOYEE PROVISIONS

SEC. 201. FEDERAL HOUSING FINANCE BOARD EMPLOYEES.

    (a) REQUIRED ASSESSMENTS AND DETERMINATIONS- Not later than 270 days after the date of enactment of this Act, the directors of the Federal Housing Finance Board shall--

      (1) assess the functions, powers and duties of the Federal Housing Finance Board, as provided for in this Act;

      (2) determine the number of employees that the Federal Housing Finance Board needs to carry out its functions, powers and duties.

    (b) PERSONNEL ACTIONS BY THE FEDERAL HOUSING FINANCE BOARD- Not later than 1 year after the enactment of this Act, the directors of the Federal Housing Finance Board shall have completed any personnel action necessary to ensure that the Federal Housing Finance Board will be staffed appropriately in light of the functions, powers and duties of the Federal Housing Finance Board.

TITLE III--CONFORMING AMENDMENTS

SEC. 301. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT.

    Section 206(g)(7) of the Federal Credit Union Act (12 U.S.C. 1786(g)(7)) is amended--

      (a) in subparagraph (A)(vi), by striking ‘any Federal home loan bank’ and inserting ‘any Federal Home Loan Bank’; and

      (b) in subparagraph (D)(iv), by striking ‘any Federal home loan bank’ and inserting ‘any Federal Home Loan Bank’.

SEC. 302. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

    (a) AMENDMENT TO SECTION 7- Section 7(a)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)(2)(A)) is amended by striking ‘any Federal home loan bank’ and inserting ‘any Federal Home Loan Bank’.

    (b) AMENDMENTS TO SECTION 8- Section 8(e)(7) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(7)) is amended--

      (1) in subparagraph (A)(vi), by striking ‘any Federal home loan bank’ and inserting ‘any Federal Home Loan Bank’; and

      (2) in subparagraph (D)(iv), by striking ‘any Federal home loan bank’ and inserting ‘any Federal Home Loan Bank’.

SEC. 303. AMENDMENT TO THE HOME OWNERS’ LOAN ACT.

    (a) AMENDMENT TO SECTION 5- Section 5(f) of the Home Owners’ Loan Act (12 U.S.C. 1464(f)) is hereby repealed.

    (b) AMENDMENT TO SECTION 10- Section 10(m)(3)(B) of the Home Owners’ Loan Act (12 U.S.C. 1467a(m)(3)(B)) is amended--

      (1) in clause (i), by striking subclause (III) and redesignating subclause (IV) as subclause (III); and

      (2) by amending clause (ii) to read as follows:

          ‘(ii) ADDITIONAL RESTRICTION EFFECTIVE AFTER THREE YEARS- Beginning 3 years after the date on which the savings association should have become or ceases to be a qualified thrift lender, the saving association shall not retain any investment (including an investment in any subsidiary) or engage, directly or indirectly, in any activity unless that investment or activity would be permissible for the savings association if it were a national bank, and is also permissible for the savings association as a savings association.’.

SEC. 304. AMENDMENT TO THE HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983.

    Section 469 of the Housing and Urban-Rural Recovery Act of 1983 (12 U.S.C. 1701p-1) is amended by striking ‘Federal Home Loan Bank Board’ and inserting ‘Federal Housing Finance Board’.

SEC. 305. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.

    Section 1113 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3413) is amended in subsection (o) by striking ‘any of the Federal home loan banks’ and inserting ‘any of the Federal Home Loan Banks’.

SEC. 306. AMENDMENTS TO THE THRIFT INSTITUTIONS RESTRUCTURING ACT.

    Section 341 of the Thrift Institution Restructuring Act (12 U.S.C. 1701J-3) is amended--

      ‘(1) in subsection (e)(1), by striking ‘Federal Home Loan Bank Board’ and inserting ‘Federal Housing Finance Board’; and

      ‘(2) in subsection (g), by striking ‘Federal Home Loan Bank Board’ and inserting ‘Federal Housing Finance Board’.

SEC. 307. AMENDMENTS TO TITLE 18, UNITED STATES CODE.

    (a) AMENDMENT TO SECTION 657- Section 657 of title 18, United States Code (18 U.S.C. 657) is amended by striking ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’.

    (b) AMENDMENT TO SECTION 1006- Section 1006 of title 18, United States Code (18 U.S.C. 1006) is amended by striking ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’.

    (c) AMENDMENT TO SECTION 1014- Section 1014 of title 18, United States Code (18 U.S.C. 1014) is amended by striking ‘Federal home loan bank’ and inserting ‘Federal Home Loan Bank’.