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H.R. 1461 (109th): Federal Housing Finance Reform Act of 2005


The text of the bill below is as of Apr 5, 2005 (Introduced).


I

109th CONGRESS

1st Session

H. R. 1461

IN THE HOUSE OF REPRESENTATIVES

April 5, 2005

(for himself, Mr. Oxley, Mr. Ryun of Kansas, Mr. Hensarling, Mr. Jones of North Carolina, Mr. Davis of Kentucky, Mr. Fitzpatrick of Pennsylvania, and Mr. Shays) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes.

1.

Short title and table of contents

(a)

Short title

This Act may be cited as the Federal Housing Finance Reform Act of 2005.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title and table of contents

Sec. 2. Definitions

Title I—Reform of regulation of enterprises and Federal Home Loan Banks

Subtitle A —Improvement of Safety and Soundness

Sec. 101. Establishment of the Federal Housing Finance Agency

Sec. 102. Duties and authorities of Director

Sec. 103. Housing Finance Oversight Board

Sec. 104. Authority to require reports by regulated entities

Sec. 105. Assessments

Sec. 106. Examiners and accountants

Sec. 107. Prohibition and withholding of executive compensation

Sec. 108. Reviews of regulated entities

Sec. 109. Regulations and orders

Sec. 110. Risk-based capital requirements

Sec. 111. Minimum and critical capital levels

Sec. 112. Review of and authority over enterprise assets and obligations

Sec. 113. Corporate governance of enterprises

Sec. 114. Conforming amendments

Subtitle B—Improvement of Mission Supervision

Sec. 121. Transfer of program and activities approval and housing goal oversight

Sec. 122. Review by director of new programs and activities of enterprises

Sec. 123. Conforming loan limits

Sec. 124. Annual housing report regarding regulated entities

Sec. 125. Establishment of housing goals

Sec. 126. Home purchase goal and additions, modifications, and rescissions to goals

Sec. 127. Other requirements

Sec. 128. Monitoring and enforcing compliance with housing goals

Sec. 129. Enforcement

Sec. 130. Conforming amendments

Subtitle C—Prompt Corrective Action

Sec. 141. Capital classifications

Sec. 142. Supervisory actions applicable to undercapitalized regulated entities

Sec. 143. Supervisory actions applicable to significantly undercapitalized regulated entities

Sec. 144. Authority over critically undercapitalized regulated entities

Sec. 145. Conforming amendments

Subtitle D—Enforcement Actions

Sec. 161. Cease-and-desist proceedings

Sec. 162. Temporary cease-and-desist proceedings

Sec. 163. Enforcement and jurisdiction

Sec. 164. Civil money penalties

Sec. 165. Removal and prohibition authority

Sec. 166. Criminal penalty

Sec. 167. Conforming amendments

Subtitle E—General Provisions

Sec. 181. Presidentially appointed Directors of enterprises

Sec. 182. Report on portfolio operations, safety and soundness, and mission of enterprises

Sec. 183. Conforming and technical amendments

Sec. 184. Effective date

Title II—Federal Home Loan Banks

Sec. 201. Definitions

Sec. 202. Directors

Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan Banks

Sec. 204. Debt issuing facility

Sec. 205. Securities and Exchange Commission disclosure

Sec. 206. Community financial institution members

Title III—Transfer of functions, personnel, and property of Office of Federal Housing Enterprise Oversight and Federal Housing Finance Board

Subtitle A—Office of Federal Housing Enterprise Oversight

Sec. 301. Abolishment of OFHEO

Sec. 302. Continuation and coordination of certain regulations

Sec. 303. Transfer and rights of employees of OFHEO

Sec. 304. Transfer of property and facilities

Subtitle B—Federal Housing Finance Board

Sec. 321. Abolishment of the Federal Housing Finance Board

Sec. 322. Continuation and coordination of certain regulations

Sec. 323. Transfer and rights of employees of the Federal Housing Finance Board

Sec. 324. Transfer of property and facilities

2.

Definitions

Section 1303 of the Housing and Community Development Act of 1992 (12 U.S.C. 4502) is amended—

(1)

by striking an enterprise each place such term appears (except in paragraphs (4), (13)(A), and (18)) and inserting a regulated entity;

(2)

by striking the enterprise each place such term appears (except in paragraphs (4) and (18)) and inserting the regulated entity;

(3)

in paragraph (5), by striking Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and inserting Federal Housing Finance Agency;

(4)

in each of paragraphs (8), (9), (10), and (19), by striking Secretary each place that term appears and inserting Director;

(5)

in paragraph (13), by inserting , with respect to an enterprise, after means;

(6)

by redesignating paragraphs (16) through (19) as paragraphs (19) through (22), respectively;

(7)

by striking paragraphs (14) and (15) and inserting the following new paragraphs:

(17)

Regulated entity

The term regulated entity means—

(A)

the Federal National Mortgage Association and any affiliate thereof;

(B)

the Federal Home Loan Mortgage Corporation and any affiliate thereof; and

(C)

each Federal home loan bank.

(18)

Regulated entity-affiliated party

The term regulated entity-affiliated party means—

(A)

any director, officer, employee, or controlling stockholder of, or agent for, a regulated entity;

(B)

any shareholder, affiliate, consultant, or joint venture partner of a regulated entity, and any other person, as determined by the Director (by regulation or on a case-by-case basis) that participates in the conduct of the affairs of a regulated entity; and

(C)

any independent contractor for a regulated entity (including any attorney, appraiser, or accountant), if—

(i)

the independent contractor knowingly or recklessly participates in—

(I)

any violation of any law or regulation;

(II)

any breach of fiduciary duty; or

(III)

any unsafe or unsound practice; and

(ii)

such violation, breach, or practice caused, or is likely to cause, more than a minimal financial loss to, or a significant adverse effect on, the regulated entity; and

(D)

any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any regulated entity.

;

(8)

by redesignating paragraphs (2) through (13) as paragraphs (5) through (16), respectively; and

(9)

by inserting after paragraph (1) the following new paragraphs:

(2)

Agency

The term Agency means the Federal Housing Finance Agency.

(3)

Authorizing statutes

The term authorizing statutes means—

(A)

the Federal National Mortgage Association Charter Act;

(B)

the Federal Home Loan Mortgage Corporation Act; and

(C)

the Federal Home Loan Bank Act.

(4)

Board

The term Board means the Housing Finance Oversight Board established under section 1313.

.

I

Reform of regulation of enterprises and Federal Home Loan Banks

A

Improvement of safety and soundness

101.

Establishment of the Federal Housing Finance Agency

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

1311.

Establishment of the Federal Housing Finance Agency

(a)

Establishment

There is established the Federal Housing Finance Agency, which shall be an independent agency of the Federal Government.

(b)

General supervisory and regulatory authority

(1)

In General

Each regulated entity shall, to the extent provided in this title, be subject to the supervision and regulation of the Agency.

(2)

Authority over fannie mae and freddie mac, Federal home loan Banks, and Federal Home Loan Bank Finance Corporation

The Director of the Federal Housing Finance Agency shall have general supervisory and regulatory authority over each regulated entity and the Federal Home Loan Bank Finance Corporation, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 1313 of this Act, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out.

(c)

Savings provision

The authority of the Director to take actions under subtitles B and C shall not in any way limit the general supervisory and regulatory authority granted to the Director under subsection (b).

1312.

Director

(a)

Establishment of position

There is established the position of the Director of the Federal Housing Finance Agency, who shall be the head of the Agency.

(b)

Appointment; term

(1)

Appointment

The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of capital markets, including the mortgage securities markets and housing finance.

(2)

Term

The Director shall be appointed for a term of 5 years.

(3)

Vacancy

A vacancy in the position of Director that occurs before the expiration of the term for which a Director was appointed shall be filled in the manner established under paragraph (1), and the Director appointed to fill such vacancy shall be appointed only for the remainder of such term.

(4)

Service after end of term

An individual may serve as the Director after the expiration of the term for which appointed until a successor has been appointed.

(5)

Transitional provision

Notwithstanding paragraphs (1) and (2), the person serving as the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development on the effective date under section 184 of the Federal Housing Finance Reform Act of 2005, shall serve as the Director until a successor has been appointed under paragraph (1).

(c)

Deputy Director of the Division of Enterprise Regulation

(1)

In General

The Agency shall have a Deputy Director of the Division of Enterprise Regulation, who shall be designated by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of mortgage securities markets and housing finance.

(2)

Functions

The Deputy Director of the Division of Enterprise Regulation shall have such functions, powers, and duties with respect to the oversight of the enterprises as the Director shall prescribe.

(d)

Deputy Director of the Division of Federal Home Loan Bank Regulation

(1)

In General

The Agency shall have a Deputy Director of the Division of Federal Home Loan Bank Regulation, who shall be designated by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of the Federal Home Loan Bank System and housing finance.

(2)

Functions

The Deputy Director of the Division of Federal Home Loan Bank Regulation shall have such functions, powers, and duties with respect to the oversight of the Federal home loan banks as the Director shall prescribe.

(e)

Deputy Director for Housing

(1)

In General

The Agency shall have a Deputy Director for Housing, who shall be designated by the Director from among individuals who are citizens of the United States, and have a demonstrated understanding of the housing markets and housing finance.

(2)

Functions

The Deputy Director for Housing shall have such functions, powers, and duties with respect to the oversight of the housing mission and goals of the enterprises as the Director shall prescribe.

(f)

Acting Director

In the event of the death, resignation, sickness, or absence of the Director, the Board shall, by a majority vote, designate either the Deputy Director of the Division of Enterprise Regulation, the Deputy Director of the Division of Federal Home Loan Bank Regulation, or the Deputy Director for Housing, to serve as acting Director until the return of the Director, or the appointment of a successor pursuant to subsection (b).

(g)

Limitations

The Director and each of the Deputy Directors may not—

(1)

have any direct or indirect financial interest in any regulated entity or regulated entity-affiliated party;

(2)

hold any office, position, or employment in any regulated entity or regulated entity-affiliated party; or

(3)

have served as an executive officer or director of any regulated entity, or regulated entity-affiliated party, at any time during the 3-year period ending on the date of appointment of such individual as Director or Deputy Director.

.

102.

Duties and authorities of Director

(a)

In General

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

1313.

Duties and authorities of Director

(a)

Duties

(1)

Principal duties

The principal duties of the Director shall be—

(A)

to oversee the prudential operations of each regulated entity, on a consolidated basis; and

(B)

to ensure that—

(i)

each regulated entity operates in a safe and sound manner, including maintenance of adequate capital and internal controls;

(ii)

the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets (including activities relating to mortgages on housing for low- and moderate- income families involving a reasonable economic return that may be less than the return earned on other activities);

(iii)

each regulated entity complies with this title and the rules, regulations, guidelines, and orders issued under this title and the authorizing statutes; and

(iv)

each regulated entity carries out its statutory mission only through activities that are consistent with this title and the authorizing statutes.

(2)

Scope of authority

The authority of the Director shall include the authority—

(A)

to review and, if warranted based on the principal duties described in paragraph (1), reject any acquisition or transfer of a controlling interest in an enterprise; and

(B)

to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Director in the supervision and regulation of each regulated entity.

(b)

Delegation of authority

The Director may delegate to officers and employees of the Agency any of the functions, powers, or duties of the Director, as the Director considers appropriate.

(c)

Litigation authority

(1)

In General

In enforcing any provision of this title, any regulation or order prescribed under this title, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director’s own name and through the Director’s own attorneys.

(2)

Subject to suit

Except as otherwise provided by law, the Director shall be subject to suit (other than suits on claims for money damages) by a regulated entity or director or officer thereof with respect to any matter under this title or any other applicable provision of law, rule, order, or regulation under this title, in the United States district court for the judicial district in which the regulated entity has its principal place of business, or in the United States District Court for the District of Columbia, and the Director may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.

1313A.

Prudential management and operations standards

(a)

Standards

The Director shall establish standards, by regulation, guideline, or order, for each regulated entity relating to—

(1)

adequacy of internal controls and information systems taking into account the nature and scale of business operations;

(2)

independence and adequacy of internal audit systems;

(3)

management of credit and counterparty risk, including systems to identify concentrations of credit risk and prudential limits to restrict exposure of the regulated entity to a single counterparty or groups of related counterparties;

(4)

management of interest rate risk exposure;

(5)

management of market risk, including standards that provide for systems that accurately measure, monitor, and control market risks and, as warranted, that establish limitations on market risk;

(6)

adequacy and maintenance of liquidity and reserves;

(7)

management of any asset and investment portfolio;

(8)

investments and acquisitions by a regulated entity, to ensure that they are consistent with the purposes of this Act and the Federal National Mortgage Association Charter Act, the Federal Home Loan Mortgage Corporation Act, or the Federal Home Loan Bank Act, as appropriate;

(9)

maintenance of adequate records, in accordance with consistent accounting policies and practices that enable the Director to evaluate the financial condition of the regulated entity;

(10)

issuance of subordinated debt by that particular regulated entity, as the Director considers necessary;

(11)

overall risk management processes, including adequacy of oversight by senior management and the board of directors and of processes and policies to identify, measure, monitor, and control material risks, including reputational risks, and for adequate, well-tested business resumption plans for all major systems with remote site facilities to protect against disruptive events; and

(12)

such other operational and management standards as the Director determines to be appropriate.

(b)

Failure to meet standards

(1)

Plan requirement

(A)

In General

If the Director determines that a regulated entity fails to meet any standard established under subsection (a)—

(i)

if such standard is established by regulation, the Director shall require the regulated entity to submit an acceptable plan to the Director within the time allowed under subparagraph (C); and

(ii)

if such standard is established by guideline, the Director may require the regulated entity to submit a plan described in clause (i).

(B)

Contents

Any plan required under subparagraph (A) shall specify the actions that the regulated entity will take to correct the deficiency. If the regulated entity is undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 1369C.

(C)

Deadlines for submission and review

The Director shall by regulation establish deadlines that—

(i)

provide the regulated entities with reasonable time to submit plans required under subparagraph (A), and generally require a regulated entity to submit a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and

(ii)

require the Director to act on plans expeditiously, and generally not later than 30 days after the plan is submitted.

(2)

Required order upon failure to submit or implement plan

If a regulated entity fails to submit an acceptable plan within the time allowed under paragraph (1)(C), or fails in any material respect to implement a plan accepted by the Director, the following shall apply:

(A)

Required correction of deficiency

The Director shall, by order, require the regulated entity to correct the deficiency.

(B)

Other authority

The Director may, by order, take one or more of the following actions until the deficiency is corrected:

(i)

Prohibit the regulated entity from permitting its average total assets (as such term is defined in section 1316(b)) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar quarter to another.

(ii)

Require the regulated entity—

(I)

in the case of an enterprise, to increase its ratio of core capital to assets.

(II)

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

(iii)

Require the regulated entity to take any other action that the Director determines will better carry out the purposes of subtitle C than any of the actions described in this subparagraph

(3)

Mandatory restrictions

In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if—

(A)

the Director determines that the regulated entity fails to meet any standard prescribed under subsection (a);

(B)

the regulated entity has not corrected the deficiency; and

(C)

during the 18-month period before the date on which the regulated entity first failed to meet the standard, the entity underwent extraordinary growth, as defined by the Director.

(c)

Other enforcement authority not affected

The authority of the Director under this section is in addition to any other authority of the Director.

.

(b)

Independence in congressional testimony and recommendations

Section 111 of Public Law 93–495 (12 U.S.C. 250) is amended by striking the Federal Housing Finance Board and inserting the Director of the Federal Housing Finance Agency.

103.

Housing Finance Oversight Board

(a)

In General

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

1313B.

Housing Finance Oversight Board

(a)

In General

There is established the Housing Finance Oversight Board.

(b)

Duties

The Board shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Director under this title. Except as otherwise provided under this Act, the Board shall not exercise any executive authority.

(c)

Composition

The Board shall be comprised of 5 members, as follows:

(1)

One member shall be the Director, who shall serve as the Chairperson of the Board.

(2)

One member shall be the Secretary of the Treasury or the designee of the Secretary.

(3)

One member shall be the Secretary of Housing and Urban Development or the designee of the Secretary.

(4)

Two members shall be appointed by the President, by and with the advice and consent of the Senate, who shall include—

(A)

one individual who has extensive experience and expertise in the capital markets (including debt markets), the secondary mortgage market, and mortgage-backed securities; and

(B)

one individual who has extensive experience and expertise in mortgage finance (including single family and multifamily housing mortgage finance), development of affordable housing, and economic development and revitalization.

(d)

Full-time members and staff

(1)

Full-time members

The members of the Board pursuant to subsection (c)(4) shall serve on a full-time basis.

(2)

Staff

The Board may appoint and fix the compensation of such staff as the Board considers necessary to carry out the functions of the Board.

(e)

Meetings

(1)

In General

The Board shall meet upon notice by the Director, but in no event shall the Board meet less frequently than once every 3 months.

(2)

Special meetings

Any member of the Board may, upon giving written notice to the Director, require a special meeting of the Board, which shall be convened by the Director within 30 days after such notice.

(f)

Testimony

On an annual basis, the Board shall testify before Congress regarding—

(1)

the safety and soundness of the regulated entities;

(2)

any material deficiencies in the conduct of the operations of the regulated entities;

(3)

the overall operational status of the regulated entities;

(4)

an evaluation of the performance of the regulated entities in carrying out their respective missions;

(5)

operations, resources, and performance of the Agency and the Board; and

(6)

such other matters relating to the Agency, the Board, and the regulated entities, and their fulfillment of their missions, as the Board determines appropriate.

(g)

Costs

Costs of the Board, including staff, shall be paid by the Agency as a cost and expense of the Agency.

.

(b)

Annual report of the Director

Section 1319B(a) of the Housing and Community Development Act of 1992 (12 U.S.C. 4521 (a)) is amended—

(1)

in paragraph (3), by striking and at the end; and

(2)

by striking paragraph (4) and inserting the following new paragraphs:

(4)

an assessment of the Board with respect to—

(A)

the safety and soundness of the regulated entities;

(B)

any material deficiencies in the conduct of the operations of the regulated entities;

(C)

the overall operational status of the regulated entities;

(D)

an evaluation of the performance of the regulated entities in carrying out their missions, including compliance of the enterprises with the housing goals under subpart B of part 2 of this subtitle and compliance of the Federal home loan banks with the community investment and affordable housing programs under subsections (i) and (j) of section 10 of the Federal Home Loan Bank Act;

(E)

an evaluation of the performance of the Agency in fulfilling its duties and responsibilities under law; and

(F)

such other matters relating to the Board and the fulfillment of its duties as the Board considers appropriate;

(5)

operations, resources, and performance of the Agency; and

(6)

such other matters relating to the Agency and its fulfillment of its mission.

.

104.

Authority to require reports by regulated entities

Section 1314 of the Housing and Community Development Act of 1992 (12 U.S.C. 4514) is amended—

(1)

in the section heading, by striking enterprises and inserting regulated entities; and

(2)

in subsection (a)—

(A)

in the subsection heading, by striking Special reports and reports of financial condition and inserting Regular and special reports;

(B)

in paragraph (1)—

(i)

in the paragraph heading, by striking Financial condition and inserting Regular reports; and

(ii)

by striking reports of financial condition and operations and inserting regular reports on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate; and

(C)

in paragraph (2), after submit special reports insert on any of the topics specified in paragraph (1) or such other topics.

105.

Assessments

Section 1316 of the Housing and Community Development Act of 1992 (12 U.S.C. 4516) is amended—

(1)

by striking subsection (a) and inserting the following new subsection:

(a)

Annual assessments

The Director shall establish and collect from the regulated entities annual assessments in an amount not exceeding the amount sufficient to provide for reasonable costs and expenses of the Agency, including—

(1)

the expenses of any examinations under section 1317 of this Act and under section 20 of the Federal Home Loan Bank Act;

(2)

the expenses of obtaining any reviews and credit assessments under section 1319; and

(3)

such amounts in excess of actual expenses for any given year as deemed necessary by the Director to maintain a working capital fund in accordance with subsection (e).

;

(2)

in subsection (b)—

(A)

in the subsection heading, by striking enterprises and inserting regulated entities;

(B)

by realigning paragraph (2) two ems from the left margin, so as to align the left margin of such paragraph with the left margins of paragraph (1);

(C)

in paragraph (1)—

(i)

by striking Each enterprise and inserting Each regulated entity;

(ii)

by striking each enterprise and inserting each regulated entity; and

(iii)

by striking both enterprises and inserting all of the regulated entities; and

(D)

in paragraph (3)——

(i)

in subparagraph (B), by striking subparagraph (A) and inserting clause (i);

(ii)

by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii) and (ii), respectively, and realigning such clauses, as so redesignated, so as to be indented 6 ems from the left margin;

(iii)

by striking the matter that precedes clause (i), as so redesignated, and inserting the following:

(3)

Definition of total assets

For purposes of this section, the term total assets means as follows:

(A)

Enterprises

With respect to an enterprise, the sum of—

; and

(iv)

by adding at the end the following new subparagraph:

(B)

Federal home loan banks

With respect to a Federal home loan bank, the total assets of the Bank, as determined by the Director in accordance with generally accepted accounting principles.

.

(3)

in subsection (c), by inserting after the period at the end the following: The Director may adjust the amounts of any semiannual assessments for an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as necessary in the discretion of the Director, to ensure that the costs of enforcement activities under subtitles B and C for a regulated entity are borne only by that entity.;

(4)

in subsection (d), by striking If and inserting Except with respect to amounts collected pursuant to subsection (a)(3), if; and

(5)

by striking subsections (e) through (g) and inserting the following new subsections:

(e)

Working capital fund

At the end of each year for which an assessment under this section is made, the Director shall remit to each regulated entity any amount of assessment collected from such regulated entity that is attributable to subsection (a)(3) and is in excess of the amount the Director deems necessary to maintain a working capital fund.

(f)

Treatment of assessments

(1)

Deposit

Amounts received by the Director from assessments under this section may be deposited in the manner provided in section 5234 of the Revised Statutes (12 U.S.C. 192) with respect to assessments by the Comptroller of the Currency.

(2)

Not Government funds

The amounts received by the Director from any assessment under this section shall not be construed to be Government or public funds or appropriated money.

(3)

No apportionment of funds

Notwithstanding any other provision of law, the amounts received by the Director from any assessment under this section shall not be subject to apportionment for the purpose of chapter 15 of title 31, United States Code, or under any other authority.

(4)

Use of funds

The Director may use any amounts received by the Director from assessments under this section for compensation of the Director and other employees of the Agency and for all other expenses of the Director and the Agency.

(5)

Availability of oversight Fund amounts

Notwithstanding any other provision of law, any amounts remaining in the Federal Housing Enterprises Oversight Fund established under this section (as in effect before the effective date under section 184 of the Federal Housing Finance Reform Act of 2005), and any amounts remaining from assessments on the Federal Home Loan banks pursuant to section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon such effective date, be treated for purposes of this subsection as amounts received from assessments under this section.

(g)

Budget and financial reports

(1)

Financial operating plans and forecasts

The Director shall provide to the Director of the Office of Management and Budget copies of the Director’s financial operating plans and forecasts as prepared by the Director in the ordinary course of the Agency’s operations, and copies of the quarterly reports of the Agency’s financial condition and results of operations as prepared by the Director in the ordinary course of the Agency’s operations.

(2)

Rule of construction

This subsection may not be construed as implying any obligation on the part of the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to any reports, plans, forecasts, or other information referred to in paragraph (1) or any jurisdiction or oversight over the affairs or operations of the Agency.

(h)

Audit of agency

(1)

In general

The financial transactions of the Agency shall be audited by the Government Accountability Office in accordance with the principles and procedures applicable to commercial corporate transactions and under such rules and regulations as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where accounts of the Agency are normally kept. The representatives of the Government Accountability Office shall have access to all books, accounts, records, reports, files, and all other papers, things, or property belonging to or in use by the Agency pertaining to its financial transactions and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians. All such books, accounts, records, reports, files, papers, and property of the Agency shall remain in possession and custody of the Agency. The Agency shall be audited at least once in every three years.

(2)

Report

A report of each audit conducted under this subsection shall be made by the Comptroller General to the Congress not later than six and one-half months following the close of the last year covered by such audit. The report to the Congress shall set forth the scope of the audit and shall include a statement of assets and liabilities and surplus or deficit; a statement of surplus or deficit analysis; a statement of income and expenses; a statement of sources and application of funds and such comments and information as may be deemed necessary to inform Congress of the financial operations and condition of the Agency, together with such recommendations with respect thereto as the Comptroller General may deem advisable. The report shall also show specifically any program, expenditure, or other financial transaction or undertaking observed in the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law. A copy of each report shall be furnished to the President and to the Agency at the time submitted to the Congress.

(3)

Assistance and costs

For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 5 of title 41, professional services of firms and organizations of certified public accountants, with the concurrence of the Agency, for temporary periods or for special purposes. The Agency shall reimburse the Government Accountability Office for the cost of any such audit as billed therefor by the Comptroller General, and the Government Accountability Office shall deposit the sums so reimbursed into the Treasury as miscellaneous receipts.

.

106.

Examiners and accountants

(a)

Examinations

Section 1317 of the Housing and Community Development Act of 1992 (12 U.S.C. 4517) is amended—

(1)

in subsection (b)—

(A)

by inserting of a regulated entity after under this section; and

(B)

by striking to determine the condition of an enterprise for the purpose of ensuring its financial safety and soundness and inserting or appropriate ; and

(2)

in subsection (c)—

(A)

in the second sentence—

(i)

by striking The and inserting During the 3-year period that begins upon the date of the enactment of the Federal Housing Finance Reform Act of 2005, the; and

(ii)

by inserting to conduct examinations under this section before the period; and

(B)

in the third sentence, by striking from amounts available in the Federal Housing Enterprises Oversight Fund.

(b)

Enhanced authority to hire examiners and accountants

Section 1317 of the Housing and Community Development Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following new subsection:

(g)

Appointment of accountants, economists, and examiners

(1)

Applicability

This section applies with respect to any position of examiner, accountant, and economist at the Agency, with respect to supervision and regulation of the regulated entities, that is in the competitive service.

(2)

Appointment authority

The Director may appoint candidates to any position described in paragraph (1)—

(A)

in accordance with the statutes, rules, and regulations governing appointments in the excepted service; and

(B)

notwithstanding any statutes, rules, and regulations governing appointments in the competitive service.

.

(c)

Repeal

Section 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440) is amended—

(1)

in the section heading, by striking reports and inserting gao audits;

(2)

in the third sentence, by striking the Board and each place such term appears; and

(3)

by striking the first two sentences and inserting the following: The Federal home loan banks shall be subject to examinations by the Director to the extent provided in section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517)..

(d)

Effective date

This section and the amendments made by this section shall take effect on the date of the enactment of this Act.

107.

Prohibition and withholding of executive compensation

(a)

In general

Section 1318 of the Housing and Community Development Act of 1992 (12 U.S.C. 4518) is amended—

(1)

in the section heading, by striking of excessive and inserting and withholding of executive;

(2)

by redesignating subsection (b) as subsection (d); and

(3)

by inserting after subsection (a) the following new subsections:

(b)

Factors

In making any determination under subsection (a), the Director may take into consideration any factors the Director considers relevant, including any wrongdoing on the part of the executive officer, and such wrongdoing shall include any fraudulent act or omission, breach of trust or fiduciary duty, violation of law, rule, regulation, order, or written agreement, and insider abuse with respect to the regulated entity.

(c)

Withholding of compensation

In carrying out subsection (a), the Director may require a regulated entity to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, during the review of the reasonableness and comparability of compensation.

.

(b)

Conforming amendments

(1)

Fannie mae

Section 309(d) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is amended by adding at the end the following new paragraph:

(4)

The corporation shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).

.

(2)

Freddie mac

Section 303(h) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by adding at the end the following new paragraph:

(4)

The Corporation shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).

.

(3)

Federal home loan banks

Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended by adding at the end the following new subsection:

(l)

Director’s approval of compensation

Notwithstanding any other provision of this section, a Federal home loan bank shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).

.

108.

Reviews of regulated entities

Section 1319 of the Housing and Community Development Act of 1992 (12 U.S.C. 4519) is amended—

(1)

by striking the section designation and heading and inserting the following:

1319.

Reviews of regulated entities

; and

(2)

by inserting after any entity the following: that the Director considers appropriate, including an entity.

109.

Regulations and orders

Section 1319G of the Housing and Community Development Act of 1992 (12 U.S.C. 4526) is amended—

(1)

by striking subsection (a) and inserting the following new subsection:

(a)

Authority

The Director shall issue any regulations, guidelines, and orders necessary to carry out the duties of the Director under this title, the Federal National Mortgage Association Charter Act, the Federal Home Loan Mortgage Corporation Act, and the Federal Home Loan Bank Act to ensure that the purposes of this title and such Acts are accomplished.

; and

(2)

by striking subsection (c).

110.

Risk-based capital requirements

(a)

In general

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

1361.

Risk-based capital levels for regulated entities

(a)

In General

(1)

Enterprises

The Director shall, by regulation, establish risk-based capital requirements for the enterprises to ensure that the enterprises operate in a safe and sound manner, maintaining sufficient capital and reserves to support the risks that arise in the operations and management of the enterprises.

(2)

Federal home loan banks

The Director shall establish risk-based capital standards under section 6 of the Federal Home Loan Bank Act for the Federal home loan banks.

(b)

Required registration under the Securities Exchange Act of 1934

(1)

In General

Each regulated entity shall register at least one class of the capital stock of such regulated entity, and maintain such registration with the Securities and Exchange Commission, under the Securities Exchange Act of 1934.

(2)

Enterprises

Each enterprise shall comply with sections 14 and 16 of the Securities Exchange Act of 1934.

(c)

No limitation

Nothing in this section shall limit the authority of the Director to require other reports or undertakings, or take other action, in furtherance of the responsibilities of the Director under this Act.

.

(b)

Federal home loan banks risk-based capital

Section 6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3)) is amended—

(1)

by striking subparagraph (A) and inserting the following new subparagraph:

(A)

Risk-based capital standards

The Director shall, by regulation, establish risk-based capital standards for the Federal home loan banks to ensure that the Federal home loan banks operate in a safe and sound manner, with sufficient permanent capital and reserves to support the risks that arise in the operations and management of the Federal home loans banks.

; and

(2)

in subparagraph (B), by striking (A)(ii) and inserting (A).

111.

Minimum and critical capital levels

(a)

Minimum capital level

Section 1362 of the Housing and Community Development Act of 1992 (12 U.S.C. 4612) is amended—

(1)

in subsection (a), by striking the subsection heading and inserting Enterprises ; and

(2)

by striking subsection (b) and inserting the following new subsections:

(b)

Federal home loan banks

For purposes of this subtitle, the minimum capital level for each Federal home loan bank shall be the minimum capital required to be maintained to comply with the leverage requirement for the bank established under section 6(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)).

(c)

Regulatory discretion to increase level

Notwithstanding subsections (a) and (b), the Director may, by regulations issued under section 1319G(b), establish a minimum capital level that is higher than the level specified in subsection (a) for an enterprise or the level specified in subsection (b) for a Federal home loan bank.

(d)

Authority to require temporary increase

Notwithstanding subsections (a) and (b) and any minimum capital level established pursuant to subsection (c), the Director may, by order, increase the minimum capital level for a regulated entity for such period as the Director may provide if the Director—

(1)

makes any of the determinations specified in subparagraphs (A) through (C) of section 1364(c)(1); or

(2)

determines that the regulated entity has violated any of the prudential management and operations standards established pursuant to section 1313A and, as a result of such violation, is operating in an unsafe and unsound manner.

(e)

Authority to establish additional capital and reserve requirements for particular programs

The Director may, at any time by order or regulation, establish such capital or reserve requirements with respect to any program or activity of a regulated entity as the Director considers appropriate to ensure that the regulated entity operates in a safe and sound manner, with sufficient capital and reserves to support the risks that arise in the operations and management of the regulated entity.

.

(b)

Critical capital levels

(1)

In general

Section 1363 of the Housing and Community Development Act of 1992 (12 U.S.C. 4613) is amended—

(A)

by striking For and inserting (a) Enterprises.—For; and

(B)

by adding at the end the following new subsection:

(b)

Federal home loan banks

(1)

In general

For purposes of this subtitle, the critical capital level for each Federal home loan bank shall be such amount of capital as the Director shall, by regulation require.

(2)

Consideration of other critical capital levels

In establishing the critical capital level under paragraph (1) for the Federal home loan banks, the Director shall take due consideration of the critical capital level established under subsection (a) for the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises.

.

(2)

Regulations

Not later than the expiration of the 120-day period beginning on the effective date under section 184, the Director of the Federal Housing Finance Agency shall issue regulations pursuant to section 1363(b) of the Housing and Community Development Act of 1992 (as added by paragraph (1) of this subsection) establishing the critical capital level under such section.

112.

Review of and authority over enterprise assets and obligations

Subtitle B of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4611 et seq.) is amended—

(1)

by striking the subtitle designation and heading and inserting the following:

B

Required capital levels for regulated entities, special enforcement powers, and reviews of assets and obligations

; and

(2)

by adding at the end the following new section:

1369E.

Reviews of enterprise assets and obligations

(a)

In general

The Director shall conduct, on a periodic basis, a review of the on-balance sheet assets and off-balance sheet obligations of each enterprise.

(b)

Authority to require disposition or acquisition

Pursuant to such a review, the Director may by order require an enterprise, under such terms and conditions as the Director determines to be appropriate, to dispose of or acquire any asset or obligation, if the Director determines that such action is consistent with the safe and sound operation of the enterprise or with the purposes of this Act, the Federal National Mortgage Association Charter Act, or the Federal Home Loan Mortgage Corporation Act.

.

113.

Corporate governance of enterprises

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

1322A

Corporate governance of enterprises

(a)

Board of directors

(1)

Membership

(A)

In general

No person may serve on the board of directors of an enterprise for more than 10 years or past the age of 72, whichever comes first; except that a member of a board of directors may serve his or her full term if he or she has served less than 10 years or is 72 years on the date of his or her election or appointment to the board.

(B)

Waiver

Upon the written request of an enterprise, the Director may waive, in the Director’s sole discretion and for good cause, the limits on the service of a board member under subparagraph (A).

(2)

Independence

A majority of seated members of the board of directors of each enterprise shall be independent board members, as defined under rules set forth by the New York Stock Exchange, as such rules may be amended from time to time.

(3)

Frequency of meetings

To carry out its obligations and duties under applicable laws, rules, regulations, and guidelines, the board of directors of an enterprise shall meet at least eight times a year and not less than once a calendar quarter.

(4)

Non-management board member meetings

The non-management directors of an enterprise shall meet at regularly scheduled executive sessions without management participation.

(5)

Quorums; prohibition on proxies

For the transaction of business, a quorum of the board of directors of an enterprise shall be at least a majority of the seated board of directors and a board member may not vote by proxy.

(6)

Information

The management of an enterprise shall provide a board member of the enterprise with such adequate and appropriate information that a reasonable board member would find important to the fulfillment of his or her fiduciary duties and obligations.

(7)

Annual review

At least annually, the board of directors of each enterprise shall review, with appropriate professional assistance, the requirements of laws, rules, regulations, and guidelines that are applicable to its activities and duties.

(b)

Committees of boards of directors

(1)

Frequency of meetings

Any committee of the board of directors of an enterprise shall meet with sufficient frequency to carry out its obligations and duties under applicable laws, rules, regulations, and guidelines.

(2)

Required committees

Each enterprise shall provide for the establishment, however styled, of the following committees of the board of directors:

(A)

Audit committee.

(B)

Compensation committee.

(C)

Nominating/corporate governance committee.

Such committees shall be in compliance with the charter, independence, composition, expertise, duties, responsibilities, and other requirements set forth under section 10A(m) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m)), with respect to the audit committee, and under rules issued by the New York Stock Exchange, as such rules may be amended from time to time.
(c)

Compensation

(1)

In general

The compensation of board members, executive officers, and employees of an enterprise—

(A)

shall not be in excess of that which is reasonable and appropriate;

(B)

shall be commensurate with the duties and responsibilities of such persons,

(C)

shall be consistent with the long-term goals of the enterprise;

(D)

shall not focus solely on earnings performance, but shall take into account risk management, operational stability and legal and regulatory compliance as well; and

(E)

shall be undertaken in a manner that complies with applicable laws, rules, and regulations.

(2)

Reimbursement

If an enterprise is required to prepare an accounting restatement due to the material noncompliance of the enterprise, as a result of misconduct, with any financial reporting requirement under the securities laws, the chief executive officer and chief financial officer of the enterprise shall reimburse the enterprise as provided under section 304 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7243). This provision does not otherwise limit the authority of the Agency to employ remedies available to it under its enforcement authorities.

(d)

Code of conduct and ethics

(1)

In general

An enterprise shall establish and administer a written code of conduct and ethics that is reasonably designed to assure the ability of board members, executive officers, and employees of the enterprise to discharge their duties and responsibilities, on behalf of the enterprise, in an objective and impartial manner, and that includes standards required under section 406 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7264) and other applicable laws, rules, and regulations.

(2)

Review

Not less than once every three years, an enterprise shall review the adequacy of its code of conduct and ethics for consistency with practices appropriate to the enterprise and make any appropriate revisions to such code.

(e)

Conduct and responsibilities of board of directors

The board of directors of an enterprise shall be responsible for directing the conduct and affairs of the enterprise in furtherance of the safe and sound operation of the enterprise and shall remain reasonably informed of the condition, activities, and operations of the enterprise. The responsibilities of the board of directors shall include having in place adequate policies and procedures to assure its oversight of, among other matters, the following:

(1)

Corporate strategy, major plans of action, risk policy, programs for legal and regulatory compliance and corporate performance, including prudent plans for growth and allocation of adequate resources to manage operations risk.

(2)

Hiring and retention of qualified senior executive officers and succession planning for such senior executive officers.

(3)

Compensation programs of the enterprise.

(4)

Integrity of accounting and financial reporting systems of the enterprise, including independent audits and systems of internal control.

(5)

Process and adequacy of reporting, disclosures, and communications to shareholders, investors, and potential investors.

(6)

Extensions of credit to board members and executive officers.

(7)

Responsiveness of executive officers in providing accurate and timely reports to Federal regulators and in addressing the supervisory concerns of Federal regulators in a timely and appropriate manner.

(f)

Prohibition of extensions of credit

An enterprise may not directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any board member or executive officer of the enterprise, as provided by section 13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(k)).

(g)

Certification of disclosures

The chief executive officer and the chief financial officer of an enterprise shall review each quarterly report and annual report issued by the enterprise and such reports shall include certifications by such officers as required by section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241).

(h)

Change of audit partner

An enterprise may not accept audit services from an external auditing firm if the lead or coordinating audit partner who has primary responsibility for the external audit of the enterprise, or the external audit partner who has responsibility for reviewing the external audit has performed audit services for the enterprise in each of the five previous fiscal years.

(i)

Compliance program

(1)

Requirement

Each enterprise shall establish and maintain a compliance program that is reasonably designed to assure that the enterprise complies with applicable laws, rules, regulations, and internal controls.

(2)

Compliance officer

The compliance program of an enterprise shall be headed by a compliance officer, however styled, who reports directly to the chief executive officer of the enterprise. The compliance officer shall report regularly to the board of directors or an appropriate committee of the board of directors on compliance with and the adequacy of current compliance policies and procedures of the enterprise, and shall recommend any adjustments to such policies and procedures that the compliance officer considers necessary and appropriate.

(j)

Risk management program

(1)

Requirement

Each enterprise shall establish and maintain a risk management program that is reasonably designed to manage the risks of the operations of the enterprise.

(2)

Risk management officer

The risk management program of an enterprise shall be headed by a risk management officer, however styled, who reports directly to the chief executive officer of the enterprise. The risk management officer shall report regularly to the board of directors or an appropriate committee of the board of directors on compliance with and the adequacy of current risk management policies and procedures of the enterprise, and shall recommend any adjustments to such policies and procedures that the risk management officer considers necessary and appropriate.

(k)

Compliance with other laws

(1)

Deregistered or unregistered common stock

If an enterprise deregisters or has not registered its common stock with the Securities and Exchange Commission under the Securities Exchange Act of 1934, the enterprise shall comply or continue to comply with sections 10A(m) and 13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k)) and sections 302, 304, and 406 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7243, 7264), subject to such requirements as provided by subsection (l) of this section.

(2)

Registered common stock

An enterprise that has its common stock registered with the Securities and Exchange Commission shall maintain such registered status, unless it provides 60 days prior written notice to the Director stating its intent to deregister and its understanding that it will remain subject to the requirements of the sections of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, subject to such requirements as provided by subsection (l) of this section.

(l)

Modification of certain provisions

In connection with standards of Federal or State law (including the Revised Model Corporation Act) or New York Stock Exchange rules that are made applicable to an enterprise by section 1710.10 of the Director’s rules (12 C.F.R. 1710.10) and by subsections (a), (b), (g), (i), (j), and (k) of this section, the Director, in the Director’s sole discretion, may modify the standards contained in this section or in part 1710 of the Director’s rules (12 U.S.C. Part 1710) in accordance with section 553 of title 5, United States Code, and upon written notice to the enterprise.

.

114.

Conforming amendments

(a)

1992 Act

Part 1 of subtitle A of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4511 et seq.), as amended by the preceding provisions of this Act, is further amended—

(1)

by striking an enterprise each place such term appears in such part (except in sections 1313(a)(2)(A), 1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) and inserting a regulated entity;

(2)

by striking the enterprise each place such term appears in such part (except in section 1316(b)(3)) and inserting the regulated entity;

(3)

by striking the enterprises each place such term appears in such part (except in sections 1312(c)(2), 1312(e)(2), 1317(g)(1), and 1319B(a)(4)(D)) and inserting the regulated entities;

(4)

by striking each enterprise each place such term appears in such part and inserting each regulated entity;

(5)

by striking Office each place such term appears in such part (except in sections 1312(b)(5), 1315(b), and 1316(g), and subsections (c) and (d) of section 1317) and inserting Agency;

(6)

in section 1315 (12 U.S.C. 4515)—

(A)

in subsection (a)—

(i)

in the subsection heading, by striking Office personnel and inserting In general; and

(ii)

by striking The and inserting Subject to titles III and IV of the Federal Housing Finance Reform Act of 2005, the;

(B)

by striking subsection (d); and

(C)

by redesignating subsections (e) and (f) as subsections (d) and (e), respectively;

(7)

in section 1316(c) (12 U.S.C. 4516(c)), by striking any enterprise and inserting any regulated entity;

(8)

in section 1319A (12 U.S.C. 4520)—

(A)

by striking (a) In general.—Each enterprise and inserting Each regulated entity; and

(B)

by striking subsection (b);

(9)

in section 1319B (12 U.S.C. 4521), by striking Committee on Banking, Finance and Urban Affairs each place such term appears and inserting Committee on Financial Services; and

(10)

in section 1319F (12 U.S.C. 4525), striking all that follows United States Code and inserting , the Agency shall be considered an agency responsible for the regulation or supervision of financial institutions..

(b)

Amendments to fannie mae charter Act

The Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) is amended—

(1)

by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development each place such term appears, and inserting Director of the Federal Housing Finance Agency, in—

(A)

section 303(c)(2) (12 U.S.C. 1718(c)(2));

(B)

section 309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)); and

(C)

section 309(k)(1); and

(2)

in section 309—

(A)

in subsections (d)(3)(A) and (n)(1), by striking Banking, Finance and Urban Affairs each place such term appears and inserting Financial Services; and

(B)

in subsection (n)(1), by inserting the Director of the Federal Housing Finance Agency, after Senate,.

(c)

Amendments to freddie mac Act

The Federal Home Loan Mortgage Corporation Act is amended—

(1)

by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development each place such term appears, and inserting Director of the Federal Housing Finance Agency, in—

(A)

section 303(b)(2) (12 U.S.C. 1452(b)(2));

(B)

section 303(h)(2) (12 U.S.C. 1452(h)(2)); and

(C)

section 307(c)(1) (12 U.S.C. 1456(c)(1));

(2)

in sections 303(h)(1) and 307(f)(1) (12 U.S.C. 1452(h)(1), 1456(f)(1)), by striking Banking, Finance and Urban Affairs each place such term appears and inserting Financial Services;

(3)

in section 306(i) (12 U.S.C. 1455(i))—

(A)

by striking section 1316(c) and inserting section 306(c); and

(B)

by striking section 106 and inserting section 1316; and

(4)

in section 307(f)(1) (12 U.S.C. 1456(f)(1)), by inserting the Director of the Federal Housing Finance Agency, after Senate,.

B

Improvement of mission supervision

121.

Transfer of program and activities approval and housing goal oversight

Part 2 of subtitle A of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is amended—

(1)

by striking the designation and heading for the part and inserting the following:

2

Program and activities approval by Director, corporate governance, and establishment of housing goals

; and

(2)

by striking sections 1321 and 1322.

122.

Review by director of new programs and activities of enterprises

(a)

In General

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

1321.

Review and approval by director of new programs and business activities of enterprises

(a)

Limitation on authority to undertake programs and activities

An enterprise may not undertake any new program, including a pilot program, or any new business activity except in accordance with the procedures set forth in this section and orders and regulations issued under this section.

(b)

New programs

(1)

Prior approval requirement

An enterprise may not commence any new program before it has obtained the approval of the Director, pursuant to this subsection, for the new program.

(2)

Application

The Director shall, by order or regulation, require that an enterprise shall, to obtain a determination by the Director regarding approval of a new program by the enterprise, submit to the Director a written application for the new program in a format as prescribed by the Director.

(3)

Notice

Immediately upon receipt of a complete application for a new program, the Director shall cause to be published in the Federal Register notice of the receipt of such application and of the period for public comment pursuant to paragraph (4) regarding such new program, and a description of the new program proposed by the application.

(4)

Public comment period

During the 30-day period beginning upon publication pursuant to paragraph (3) of a notice regarding such an application, the Director shall receive public comments regarding the new program.

(5)

Determination

Not less than 15 days after the conclusion of the public comment period pursuant to paragraph (4) regarding an application but not more than 30 days after the conclusion of such comment period, the Director shall approve, conditionally approve, or reject such program, in writing.

(6)

Standard for approval

The Director may approve, or conditionally approve, a new program of an enterprise only if the Director determines, taking into consideration any relevant information and comments received during the public comment period, that such new program—

(A)

does not contravene and is not inconsistent with the purposes of this title, the Federal National Mortgage Association Charter Act, or the Federal Home Loan Mortgage Corporation Act, as such purposes are determined taking into consideration the definitions of the terms primary mortgage market and secondary mortgage market pursuant to section 1303;

(B)

is not otherwise inconsistent with the safety and soundness of the enterprise; and

(C)

is in the public interest.

(c)

Business activities

(1)

Authority of director to prohibit activities

The Director shall have authority to prohibit any business activity by an enterprise if the Director determines, in writing, that such activity—

(A)

contravenes or is inconsistent with the purposes of this title, the Federal National Mortgage Association Charter Act, or the Federal Home Loan Mortgage Corporation Act;

(B)

is otherwise inconsistent with the safety and soundness of the enterprise; or

(C)

is not in the public interest.

(2)

Notification of new business activities

An enterprise that undertakes any new business activity shall provide written notice of the activity to the Director and may commence the new business activity only in accordance with paragraph (4).

(3)

Director determination of applicable procedure

(A)

Timing

Immediately upon receipt of any notice under paragraph (2) regarding a new business activity, the Director shall undertake a determination under subparagraph (B) of this paragraph regarding the business activity.

(B)

Determination and treatment as new program

If the Director determines that any new business activity consists of, relates to, or involves any new program—

(i)

the Director shall notify the enterprise of the determination;

(ii)

the new business activity described in the notice shall be considered a new program for purposes of this section; and

(iii)

the Director shall prohibit the enterprise from carrying out the activity except to the extent that approval for the activity is obtained pursuant to subsection (b).

(4)

Commencement

An enterprise may commence a new business activity—

(A)

if the Director issues a written approval regarding such business activity, immediately upon such issuance or at such other time as provided by the Director in such letter; or

(B)

if, during the 30-day period beginning upon receipt by the Director of notice pursuant to paragraph (2) regarding a new business activity, the Director has not issued to the enterprise a written approval or denial of the new business activity, upon the expiration of such 30-day period.

(d)

Approval and conditional approval

The Director may at any time conditionally approve the undertaking of a particular new program or business activity by an enterprise and set forth the terms and conditions that apply to the program or activity with which the enterprise shall comply if it undertakes the new program or activity. Such approval may, in the discretion of the Director, be in the form of a written agreement between the enterprise and the Director and shall be subject to such terms and conditions therein. Such a written agreement or conditional approval shall be enforceable under subtitle C.

(e)

Effect on other authorities

(1)

Examinations

Nothing in this section may be construed to limit, in any manner, any other authority or right the Director may have under other provisions of law to conduct an examination of an enterprise.

(2)

Requests for information

Nothing in this section may be construed to limit the right of the Director at any time to request additional information from an enterprise concerning any business activity.

(3)

No implied right of action

This section shall not create any private right of action against an enterprise or any director or executive officer of an enterprise, or impair any private right of action under other applicable law.

(4)

No limitation

Nothing in this section may be construed to restrict the general supervisory and regulatory authority of the Director over all programs, products, activities, or business operations of any kind.

(f)

Report on programs and business activities

Not later than the expiration of the 180-day period beginning on the effective date under section 184 of the Federal Housing Finance Reform Act of 2005, each enterprise shall submit to the Director a report identifying and describing each program and business activity of the enterprise engaged in or existing as of the submission of the report.

(g)

Regulations

The Director shall by order or regulation issue rules and procedures to implement this section, including in the discretion of the Director, such definitions, interpretations, forms, and other guidances as the Director considers appropriate.

.

(b)

Definitions

Section 1303 of the Housing and Community Development Act of 1992 (12 U.S.C. 4502), as amended by section 2 of this Act, is further amended—

(1)

by redesignating paragraphs (16) through (22) as paragraphs (19) through (25), respectively;

(2)

by inserting after paragraph (15) the following new paragraph:

(18)

New business activity

The term new business activity means, with respect to an enterprise, any business activity of the enterprise that—

(A)

the enterprise was not engaging in on the effective date under section 184 of the Federal Housing Finance Reform Act of 2005; and

(B)

that the enterprise is not authorized, pursuant to the provisions of section 1321(c), to offer, undertake, transact, conduct, or engage in.

;

(3)

by redesignating paragraphs (14) and (15) as paragraphs (16) and (17), respectively;

(4)

by inserting after paragraph (13) the following new paragraph:

(15)

Mortgage markets

The terms primary mortgage market and secondary mortgage market shall have such meanings as the Director shall, by regulation, prescribe consistent with the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act. The Director shall issue such regulations not later than the expiration of the 6-month period beginning on the effective date under section 184 of the Federal Housing Finance Reform Act of 2005.

;

(5)

by redesignating paragraphs (5) through (13) as paragraphs (6) through (14), respectively; and

(6)

by inserting after paragraph (4) the following new paragraph:

(5)

Business activity

The term business activity means, with respect to an enterprise any offering, undertaking, transacting, conducting, or engaging in any conduct or activity by an enterprise, as the Director shall provide.

.

123.

Conforming loan limits

(a)

Fannie mae

Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is amended by striking the 7th and 8th sentences and inserting the following new sentences: Such limitations shall not exceed $359,650 for a mortgage secured by a single-family residence, $460,400 for a mortgage secured by a 2-family residence, $556,500 for a mortgage secured by a 3-family residence, and $694,600 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning with 2006, subject to the limitations in this paragraph. Each adjustment shall be made by adding to or subtracting from each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase or decrease during the 12-month period ending with the previous October in the housing price index maintained by the Director of the Federal Housing Finance Agency (pursuant to section 1322 of the Housing and Community Development Act of 1992 (12 U.S.C. 4541))..

(b)

Freddie mac

Section 305(a)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1454(a)(2)) is amended by striking the 6th and 7th sentences and inserting the following new sentences: Such limitations shall not exceed $359,650 for a mortgage secured by a single-family residence, $460,400 for a mortgage secured by a 2-family residence, $556,500 for a mortgage secured by a 3-family residence, and $694,600 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning with 2006, subject to the limitations in this paragraph. Each adjustment shall be made by adding to or subtracting from each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase or decrease during the 12-month period ending with the previous October in the housing price index maintained by the Director of the Federal Housing Finance Agency (pursuant to section 1322 of the Housing and Community Development Act of 1992 (12 U.S.C. 4541))..

(c)

Housing price index

Subpart A of part 2 of subtitle A of title XIII of the Housing and Community Development Act of 1992 (as amended by the preceding provisions of this Act) is amended by inserting after section 1321 (as added by section 122 of this Act) the following new section:

1322.

Housing price index

(a)

In general

The Director shall establish and maintain a method of assessing the national average 1-family house price for use for adjusting the conforming loan limitations of the enterprises. In establishing such method, the Director shall take into consideration the monthly survey of all major lenders conducted by the Federal Housing Finance Agency to determine the national average 1-family house price, the House Price Index maintained by the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development before the effective date of the Federal Housing Finance Reform Act of 2005, any appropriate house price indexes of the Bureau of the Census of the Department of Commerce, and any other indexes or measures that the Director considers appropriate.

(b)

GAO Audit

(1)

In general

At such times as are required under paragraph (2), the Comptroller General of the United States shall conduct an audit of the methodology established by the Director under subsection (a) to determine whether the methodology established is an accurate and appropriate means of measuring changes to the national average 1-family house price.

(2)

Timing

An audit referred to in paragraph (1) shall be conducted and completed not later than the expiration of the 180-day period that begins upon each of the following dates:

(A)

Establishment

The date upon which such methodology is initially established under subsection (a) in final form by the Director.

(B)

Modification or amendment

Each date upon which any modification or amendment to such methodology is adopted in final form by the Director.

(3)

Report

Within 30 days of the completion of any audit conducted under this subsection, the Comptroller General shall submit a report detailing the results and conclusions of the audit to the Director, the Committee on Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate.

.

124.

Annual housing report regarding regulated entities

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

1324.

Annual housing report regarding regulated entities

(a)

In General

After reviewing and analyzing the reports submitted under section 309(n) of the Federal National Mortgage Association Charter Act, section 307(f) of the Federal Home Loan Mortgage Corporation Act, and section 10(j)(12) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)(12)), the Director shall submit a report, as part of the annual report under section 1328, not later than October 30 of each year, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, on the activities of each regulated entity.

(b)

Contents

The report shall—

(1)

discuss the extent to which—

(A)

each enterprise is achieving the annual housing goals established under subpart B of this part;

(B)

each Federal home loan bank is meeting the contribution requirements under section 10(j)(5) of the Federal Home Loan Bank Act; and

(C)

each regulated entity is achieving the purposes of the regulated entity established by law;

(2)

aggregate and analyze census tract and other relevant data to assess the compliance of each enterprise with the central cities, rural areas, and other underserved areas housing goal and to determine levels of business in central cities, rural areas, underserved areas, low- and moderate-income census tracts, minority census tracts, and other geographical areas deemed appropriate by the Director;

(3)

aggregate and analyze relevant data on income to assess the compliance of each enterprise with the housing goals under subpart B;

(4)

aggregate and analyze data on income, race, and gender by census tract and other relevant classifications, and compare such data with larger demographic, housing, and economic trends;

(5)

examine actions that—

(A)

each enterprise has undertaken or could undertake to promote and expand the annual goals established under subpart B and the purposes of the enterprise established by law; and

(B)

each Federal home loan bank has taken or could undertake to promote and expand the community investment program and affordable housing program of the bank established under section subsections (i) and (j) of section 10 of the Federal Home Loan Bank Act;

(6)

examine the primary and secondary multifamily housing mortgage markets and describe—

(A)

the availability and liquidity of mortgage credit;

(B)

the status of efforts to provide standard credit terms and underwriting guidelines for multifamily housing and to securitize such mortgage products; and

(C)

any factors inhibiting such standardization and securitization;

(7)

examine actions each regulated entity has undertaken and could undertake to promote and expand opportunities for first-time homebuyers;

(8)

describe any actions taken under section 1325(5) with respect to originators found to violate fair lending procedures; and

(9)

discuss and analyze existing conditions and trends, including conditions and trends relating to pricing, in the housing markets and mortgage markets.

(c)

Data collection and reporting

(1)

In general

To assist the Director in analyzing the matters described in subsection (b) and establishing the methodology described in section 1322, the Director shall conduct, on a monthly basis, a survey of mortgage markets in accordance with this subsection.

(2)

Data points

Each monthly survey conducted by the Director under paragraph (1) shall collect data on—

(A)

the characteristics of individual mortgages that are eligible for purchase by the enterprises and the characteristics of individual mortgages that are not eligible for purchase by the enterprises including, in both cases, information concerning—

(i)

the price of the house that secures the mortgage;

(ii)

the loan-to-value ratio of the mortgage, which shall reflect any secondary liens on the relevant property;

(iii)

the terms of the mortgage;

(iv)

the creditworthiness of the borrower or borrowers; and

(v)

whether the mortgage, in the case of a conforming mortgage, was purchased by an enterprise; and

(B)

such other matters as the Director determines to be appropriate.

(3)

Public availability

The Director shall make any data collected by the Director in connection with the conduct of a monthly survey available to the public in a timely manner, provided that the Director may modify the data released to the public to ensure that the data is not released in an identifiable form.

(4)

Definition

For purposes of this subsection, the term ‘identifiable form’ means any representation of information that permits the identity of a borrower to which the information relates to be reasonably inferred by either direct or indirect means.

.

125.

Establishment of housing goals

Section 1331 of the Housing and Community Development Act of 1992 (12 U.S.C. 4561) is amended by striking subsection (a) and inserting the following new subsection:

(a)

In General

The Director shall establish, by regulation, housing goals under this subpart for each enterprise. The housing goals shall include a low- and moderate-income housing goal pursuant to section 1332, a special affordable housing goal pursuant to section 1333, a central cities, rural areas, and other underserved areas housing goal pursuant to section 1334, a home purchase goal under section 1334A, and such other goals as the Director may establish under section 1334B. The Director shall implement this subpart in a manner consistent with section 301(3) of the Federal National Mortgage Association Charter Act and section 301(b)(3) of the Federal Home Loan Mortgage Corporation Act.

.

126.

Home purchase goal and additions, modifications, and rescissions to goals

The Housing and Community Development Act of 1992 is amended by inserting after section 1334 (12 U.S.C. 4564) the following new sections:

1334A.

Home purchase goal

(a)

In General

The Director shall establish an annual home purchase goal for the purchase by each enterprise of mortgages financing the purchase of owner-occupied single family dwelling units. The Director may, by regulation, establish components for such goal to include any or all of the following: first-time homebuyers; low- and moderate-income homebuyers; homebuyers in central cities, rural areas, and other underserved areas; and homebuyers of special affordable housing. The Director may, by regulation, establish the goal with components as percentages of enterprise business or by such other means as necessary to increase the enterprises’ secondary market financing of mortgages for home purchases consistent with the enterprises’ charter missions. The components of the goal established by the Director shall be enforceable as goals. The goal under this section with its components must be established for metropolitan and rural areas for which data is available.

(b)

Factors to be applied

In establishing the home purchase goal under this section for an enterprise, the Director shall consider—

(1)

national housing needs;

(2)

economic, housing, and demographic conditions;

(3)

the performance and effort of the enterprises toward achieving the home purchase goal in previous years;

(4)

the size of the conventional mortgage market serving home purchasers relative to the size of the overall conventional mortgage market;

(5)

the ability of the enterprises to lead the industry in making mortgage credit available for home purchasers; and

(6)

the need to maintain the sound financial condition of the enterprises.

(c)

Transition

In order to permit a transition to the goal established under this section, the Director shall phase in the goal over a period of one year. Such goal shall not be enforceable during the one-year transition period.

(d)

Implementation during transition

The Director shall establish any requirements necessary to implement the transition provisions under this section by notice, after providing the enterprises with an opportunity to review and comment not less than 30 days before the issuance of such notice.

1334B.

Housing goals: additions, modifications, and rescissions

(a)

In General

The Director may, by regulation, establish additional annual housing goals, or modify or rescind existing housing goals, to address national housing needs consistent with the enterprises’ charters for the purchase of mortgages where the Director determines by regulation that the housing need is greatest. The Director may issue a regulation which establishes or modifies any goal under this subsection—

(1)

as a percentage of the mortgage purchases of each enterprise;

(2)

as a dollar amount of each enterprise’s mortgage purchases; or

(3)

by such other means as necessary to increase the enterprises’ secondary market financing of mortgages addressed by the goal.

(b)

Factors to be applied

In establishing, modifying, or rescinding a goal, the Director shall consider—

(1)

national housing needs;

(2)

economic, housing, and demographic conditions;

(3)

the performance and effort of the enterprises toward achieving the need addressed by such goal in previous years;

(4)

the size of the conventional mortgage market serving the need addressed by the goal relative to the size of the overall conventional mortgage market;

(5)

the ability of the enterprises to lead the industry in making mortgage credit available to meet the need addressed by the goal; and

(6)

the need to maintain the sound financial condition of the enterprises.

(c)

Timing

The Director may exercise the authority under this section to issue regulations to establish, modify, or rescind housing goals not more than once per calendar year. Such regulations for a calendar year may establish, or make modifications or rescissions with respect to, more than one annual housing goal, but all such regulations for a calendar year shall be issued concurrently.

(d)

Transition

In order to permit a transition to any goal established under this section, the Director shall phase in such goal over a period of one year. Such goal shall not be enforceable during the one-year transition period.

(e)

Implementation during transition

The Director shall establish any requirements necessary to implement the transition provisions under this section by notice, after providing the enterprises with an opportunity to review and comment not less than 30 days before the issuance of such notice.

.

127.

Other requirements

The first sentence of section 1335(a) of the Housing and Community Development Act of 1992 (12 U.S.C. 4565(a)) is amended by striking low- and all that follows through 1334 and inserting goals under this subpart.

128.

Monitoring and enforcing compliance with housing goals

Section 1336 of the Housing and Community Development Act of 1992 (12 U.S.C. 4566) is amended—

(1)

in subsection (a)(1), by striking established and all that follows through 1334 and inserting under this subpart;

(2)

in subsection (b)—

(A)

in the subsection heading, by inserting Preliminary before Determination;

(B)

by striking paragraph (1) and inserting the following new paragraph:

(1)

Notice

If the Director preliminarily determines that an enterprise has failed, or that there is a substantial probability that an enterprise will fail, to meet any housing goal under this subpart, the Director shall provide written notice to the enterprise of such a preliminary determination, the reasons for such determination, and the information on which the Director based the determination.

;

(C)

in paragraph (2)—

(i)

in subparagraph (A), by inserting finally before determining;

(ii)

by striking subparagraphs (B) and (C) and inserting the following new subparagraph:

(B)

Extension or shortening of period

The Director may—

(i)

extend the period under subparagraph (A) for good cause for not more than 30 additional days; and

(ii)

shorten the period under subparagraph (A) for good cause.

; and

(iii)

by redesignating subparagraph (D) as subparagraph (C); and

(D)

in paragraph (3)—

(i)

in subparagraph (A), by striking determine and inserting issue a final determination of;

(ii)

in subparagraph (B), by inserting final before determinations; and

(iii)

in subparagraph (C)—

(I)

by striking Committee on Banking, Finance and Urban Affairs and inserting Committee on Financial Services; and

(II)

by inserting final before determination each place such term appears; and

(3)

in subsection (c)—

(A)

by striking the subsection designation and heading and all that follows through the end of paragraph (1) and inserting the following:

(c)

Cease and desist orders, civil money penalties, and remedies including housing plans

(1)

Requirement

If the Director finds, pursuant to subsection (b), that there is a substantial probability that an enterprise will fail, or has actually failed, to meet any housing goal under this subpart and that the achievement of the housing goal was or is feasible, the Director may require that the enterprise submit a housing plan under this subsection. If the Director makes such a finding and the enterprise refuses to submit such a plan, submits an unacceptable plan, fails to comply with the plan or the Director finds that the enterprise has failed to meet any housing goal under this subpart, in addition to requiring an enterprise to submit a housing plan, the Director may issue a cease and desist order in accordance with section 1341, impose civil money penalties in accordance with section 1345, or order other remedies as set forth in paragraph (7) of this subsection.

;

(B)

in paragraph (2)—

(i)

by striking Contents.—Each housing plan and inserting Housing plan.—If the Director requires a housing plan under this section, such a plan; and

(ii)

in subparagraph (B), by inserting and changes in its operations after improvements;

(C)

in paragraph (3)—

(i)

by inserting comply with any remedial action or before submit a housing plan; and

(ii)

by striking under subsection (b)(3) that a housing plan is required;

(D)

in paragraph (4), by striking the first two sentences and inserting the following: The Director shall review each submission by an enterprise, including a housing plan submitted under this subsection, and not later than 30 days after submission, approve or disapprove the plan or other action. The Director may extend the period for approval or disapproval for a single additional 30-day period if the Director determines such extension necessary.; and

(E)

by adding at the end the following new paragraph:

(7)

Additional remedies for failure to meet goals

In addition to ordering a housing plan under this section, issuing cease and desist orders under section 1341, and ordering civil money penalties under section 1345, the Director may seek other actions when an enterprise fails to meet a goal, and exercise appropriate enforcement authority available to the Director under this Act to prohibit the enterprise from entering into new programs and new business activities and to order the enterprise to suspend programs and business activities pending its achievement of the goal.

.

129.

Enforcement

(a)

Cease-and-desist proceedings

Section 1341 of the Housing and Community Development Act of 1992 (12 U.S.C. 4581) is amended—

(1)

by striking subsection (a) and inserting the following new subsection:

(a)

Grounds for issuance

The Director may issue and serve a notice of charges under this section upon an enterprise if the Director determines—

(1)

the enterprise has failed to meet any housing goal established under subpart B, following a written notice and determination of such failure in accordance with section 1336;

(2)

the enterprise has failed to submit a report under section 1314, following a notice of such failure, an opportunity for comment by the enterprise, and a final determination by the Director;

(3)

the enterprise has failed to submit the information required under subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act, or subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act;

(4)

the enterprise has violated any provision of this part or any order, rule or regulation under this part;

(5)

the enterprise has failed to submit a housing plan that complies with section 1336(c) within the applicable period; or

(6)

the enterprise has failed to comply with a housing plan under section 1336(c).

;

(2)

in subsection (b)(2), by striking requiring the enterprise to and all that follows through the end of the paragraph and inserting the following:

requiring the enterprise to—

(A)

comply with the goal or goals;

(B)

submit a report under section 1314;

(C)

comply with any provision this part or any order, rule or regulation under such part;

(D)

submit a housing plan in compliance with section 1336(c);

(E)

comply with a housing plan submitted under section 1336(c); or

(F)

provide the information required under subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act or subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act, as applicable.

;

(3)

in subsection (c), by inserting date of the before service of the order; and

(4)

by striking subsection (d).

(b)

Authority of Director to enforce notices and orders

Section 1344 of the Housing and Community Development Act of 1992 (12 U.S.C. 4584) is amended by striking subsection (a) and inserting the following new subsection:

(a)

Enforcement

The Director may, in the discretion of the Director, apply to the United States District Court for the District of Columbia, or the United States district court within the jurisdiction of which the headquarters of the enterprise is located, for the enforcement of any effective and outstanding notice or order issued under section 1341 or 1345, or request that the Attorney General of the United States bring such an action. Such court shall have jurisdiction and power to order and require compliance with such notice or order.

.

(c)

Civil money penalties

Section 1345 of the Housing and Community Development Act of 1992 (12 U.S.C. 4585) is amended—

(1)

by striking subsections (a) and (b) and inserting the following new subsections:

(a)

Authority

The Director may impose a civil money penalty, in accordance with the provisions of this section, on any enterprise that has failed to—

(1)

meet any housing goal established under subpart B, following a written notice and determination of such failure in accordance with section 1336(b);

(2)

submit a report under section 1314, following a notice of such failure, an opportunity for comment by the enterprise, and a final determination by the Director;

(3)

submit the information required under subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act, or subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act;

(4)

comply with any provision of this part or any order, rule or regulation under this part;

(5)

submit a housing plan pursuant to section 1336(c) within the required period; or

(6)

comply with a housing plan for the enterprise under section 1336(c).

(b)

Amount of penalty

The amount of the penalty, as determined by the Director, may not exceed—

(1)

for any failure described in paragraph (1), (5), or (6) of subsection (a), $50,000 for each day that the failure occurs; and

(2)

for any failure described in paragraph (2), (3), or (4) of subsection (a), $20,000 for each day that the failure occurs.

;

(2)

in subsection (c)—

(A)

in paragraph (1)—

(i)

in subparagraph (A), by inserting and after the semicolon at the end;

(ii)

in subparagraph (B), by striking ; and and inserting a period; and

(iii)

by striking subparagraph (C); and

(B)

in paragraph (2), by inserting after the period at the end the following: In determining the penalty under subsection (a)(1), the Director shall give consideration to the length of time the enterprise should reasonably take to achieve the goal.;

(3)

in the first sentence of subsection (d)—

(A)

by striking request the Attorney General of the United States to and inserting , in the discretion of the Director,; and

(B)

by inserting , or request that the Attorney General of the United States bring such an action before the period at the end;

(4)

by striking subsection (f); and

(5)

by redesignating subsection (g) as subsection (f).

(d)

Conforming amendment

The heading for subpart C of part 2 of subtitle A of the Housing and Community Development Act of 1992 is amended to read as follows:

C

Enforcement

.

130.

Conforming amendments

Part 2 of subtitle A of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is amended—

(1)

by striking Secretary each place such term appears in such part and inserting Director;

(2)

in the section heading for section 1323 (12 U.S.C. 4543), by inserting of enterprises before the period at the end;

(3)

in section 1326 (12 U.S.C. 4546)—

(A)

in subsection (a)—

(i)

by striking or the last place it appears; and

(ii)

by inserting , or section 10(j)(12) of the Federal Home Loan Bank Act (12 U.S.C. 1441a) before the period at the end; and

(B)

in subsection (b)—

(i)

by striking or the last place it appears and inserting a comma; and

(ii)

by inserting , or section 10(j)(12) of the Federal Home Loan Bank Act (12 U.S.C. 1441a before the period at the end;

(4)

by striking section 1327 (12 U.S.C. 4547);

(5)

by striking section 1328 (12 U.S.C. 4548);

(6)

in section 1332 (12 U.S.C. 4562), by striking subsection (d);

(7)

in section 1333 (12 U.S.C. 4563), by striking subsection (d);

(8)

in section 1334 (12 U.S.C. 4564), by striking subsection (d);

(9)

by striking sections 1337 and 1338 (12 U.S.C. 4567, 4562 note);

(10)

in sections 1345(c)(1)(A) and 1346(b) (12 U.S.C. 4585(c)(1)(A), 4586(b)), by striking Secretary’s each place such term appears and inserting Director’s; and

(11)

by striking section 1349 (12 U.S.C. 4589).

C

Prompt corrective action

141.

Capital classifications

(a)

In general

Section 1364 of the Housing and Community Development Act of 1992 (12 U.S.C. 4614) is amended—

(1)

in the heading for subsection (a) by striking In general and inserting Enterprises;

(2)

in subsection (c)—

(A)

by striking subsection (b) and inserting subsection (c);

(B)

by striking enterprises and inserting regulated entities; and

(C)

by striking the last sentence;

(3)

by redesignating subsections (c) (as so amended by paragraph (2) of this subsection) and (d) as subsections (d) and (f), respectively;

(4)

by striking subsection (b) and inserting the following new subsections:

(b)

Federal home loan banks

(1)

Establishment and criteria

For purposes of this subtitle, the Director shall, by regulation—

(A)

establish the capital classifications specified under paragraph (2) for the Federal home loan banks;

(B)

establish criteria for each such capital classification based on the amount and types of capital held by a bank and the risk-based, minimum, and critical capital levels for the banks and taking due consideration of the capital classifications established under subsection (a) for the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises; and

(C)

shall classify the Federal home loan banks according to such capital classifications.

(2)

Classifications

The capital classifications specified under this paragraph are—

(A)

adequately capitalized;

(B)

undercapitalized;

(C)

significantly undercapitalized; and

(D)

critically undercapitalized.

(c)

Discretionary classification

(1)

Grounds for reclassification

The Director may reclassify a regulated entity under paragraph (2) if—

(A)

at any time, the Director determines in writing that the regulated entity is engaging in conduct that could result in a rapid depletion of core or total capital or, in the case of an enterprise, that the value of the property subject to mortgages held or securitized by the enterprise has decreased significantly;

(B)

after notice and an opportunity for hearing, the Director determines that the regulated entity is in an unsafe or unsound condition; or

(C)

pursuant to section 1371(b), the Director deems the regulated entity to be engaging in an unsafe or unsound practice.

(2)

Reclassification

In addition to any other action authorized under this title, including the reclassification of a regulated entity for any reason not specified in this subsection, if the Director takes any action described in paragraph (1) the Director may classify a regulated entity—

(A)

as undercapitalized, if the regulated entity is otherwise classified as adequately capitalized;

(B)

as significantly undercapitalized, if the regulated entity is otherwise classified as undercapitalized; and

(C)

as critically undercapitalized, if the regulated entity is otherwise classified as significantly undercapitalized.

; and

(5)

by inserting after subsection (d) (as so redesignated by paragraph (3) of this subsection), the following new subsection:

(e)

Restriction on capital distributions

(1)

In General

A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized.

(2)

Exception

Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition—

(A)

is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and

(B)

will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.

.

(b)

Regulations

Not later than the expiration of the 120-day period beginning on the effective date under section 184, the Director of the Federal Housing Finance Agency shall issue regulations to carry out section 1364(b) of the Housing and Community Development Act of 1992 (as added by paragraph (4) of this subsection), relating to capital classifications for the Federal home loan banks.

142.

Supervisory actions applicable to undercapitalized regulated entities

Section 1365 of the Housing and Community Development Act of 1992 (12 U.S.C. 4615) is amended—

(1)

in the section heading, by striking enterprises and inserting entities;

(2)

in subsection (a)—

(A)

by redesignating paragraphs (1) and (2) as paragraphs (2) and (3), respectively;

(B)

by inserting before paragraph (2) the following paragraph:

(1)

Required monitoring

The Director shall—

(A)

closely monitor the condition of any regulated entity that is classified as undercapitalized;

(B)

closely monitor compliance with the capital restoration plan, restrictions, and requirements imposed under this section; and

(C)

periodically review the plan, restrictions, and requirements applicable to the undercapitalized regulated entity to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

; and

(C)

by inserting at the end the following new paragraphs:

(4)

Restriction of asset growth

A regulated entity that is classified as undercapitalized shall not permit its average total assets (as such term is defined in section 1316(b) during any calendar quarter to exceed its average total assets during the preceding calendar quarter unless—

(A)

the Director has accepted the capital restoration plan of the regulated entity;

(B)

any increase in total assets is consistent with the plan; and

(C)

the ratio of core or total capital to assets for the regulated entity increases during the calendar quarter at a rate sufficient to enable the entity to become adequately capitalized within a reasonable time.

(5)

Prior approval of acquisitions, new programs, and new business activities

A regulated entity that is classified as undercapitalized shall not, directly or indirectly, acquire any interest in any entity or engage in any new program or new business activity unless—

(A)

the Director has accepted the capital restoration plan of the regulated entity, the entity is implementing the plan, and the Director determines that the proposed action is consistent with and will further the achievement of the plan; or

(B)

the Director determines that the proposed action will further the purpose of this section.

;

(3)

in the subsection heading for subsection (b), by striking From undercapitalized to significantly undercapitalized; and

(4)

by striking subsection (c) and inserting the following new subsection:

(c)

Other discretionary safeguards

The Director may take, with respect to a regulated entity that is classified as undercapitalized, any of the actions authorized to be taken under section 1366 with respect to a regulated entity that is classified as significantly undercapitalized, if the Director determines that such actions are necessary to carry out the purpose of this subtitle.

.

143.

Supervisory actions applicable to significantly undercapitalized regulated entities

Section 1366 of the Housing and Community Development Act of 1992 (12 U.S.C. 4616) is amended—

(1)

in the section heading, by striking enterprises and inserting entities;

(2)

in subsection (a)(2)(A), by striking enterprise the last place such term appears;

(3)

in subsection (b)—

(A)

in the subsection heading, by striking Discretionary supervisory actions and inserting Specific actions;

(B)

in the matter preceding paragraph (1), by striking may, at any time, take any and inserting shall carry out this section by taking, at any time, one or more;

(C)

by redesignating paragraphs (5) and (6) as paragraphs (6) and (7), respectively;

(D)

by inserting after paragraph (4) the following new paragraph:

(5)

Improvement of management

Take one or more of the following actions:

(A)

New election of board

Order a new election for the board of directors of the regulated entity.

(B)

Dismissal of Directors or executive officers

Require the regulated entity to dismiss from office any director or executive officer who had held office for more than 180 days immediately before the entity became undercapitalized. Dismissal under this subparagraph shall not be construed to be a removal pursuant to the Director’s enforcement powers provided in section 1377.

(C)

Employ qualified executive officers

Require the regulated entity to employ qualified executive officers (who, if the Director so specifies, shall be subject to approval by the Director).

; and

(E)

by inserting at the end the following new paragraph:

(8)

Other action

Require the regulated entity to take any other action that the Director determines will better carry out the purpose of this section than any of the actions specified in this paragraph.

;

(4)

by redesignating subsection (c) as subsection (d); and

(5)

by inserting after subsection (b) the following new subsection:

(c)

Restriction on compensation of executive officers

A regulated entity that is classified as significantly undercapitalized may not, without prior written approval by the Director—

(1)

pay any bonus to any executive officer; or

(2)

provide compensation to any executive officer at a rate exceeding that officer’s average rate of compensation (excluding bonuses, stock options, and profit sharing) during the 12 calendar months preceding the calendar month in which the regulated entity became undercapitalized.

.

144.

Authority over critically undercapitalized regulated entities

(a)

Enterprises

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

1367.

Authority over critically undercapitalized enterprises

(a)

Appointment of Agency as conservator or receiver

(1)

In General

Notwithstanding any other provision of Federal law, the Director may establish a conservatorship or receivership in the manner provided under paragraph (2).

(2)

Appointment

The Agency may, at the discretion of the Director, be appointed conservator or receiver for the purpose of reorganizing, rehabilitating, or winding up the affairs of an enterprise

(3)

Grounds for appointment

The grounds for appointing a conservator or receiver for any enterprise are as follows:

(A)

Assets insufficient for obligations

The assets of the enterprise are less than the obligations of the enterprise to its creditors and others.

(B)

Substantial dissipation

Substantial dissipation of assets or earnings due to—

(i)

any violation of any provision of Federal or State law; or

(ii)

any unsafe or unsound practice.

(C)

Unsafe or unsound condition

An unsafe or unsound condition to transact business.

(D)

Cease-and-desist orders

Any willful violation of a cease-and-desist order that has become final.

(E)

Concealment

Any concealment of the books, papers, records, or assets of the enterprise, or any refusal to submit the books, papers, records, or affairs of the enterprise, for inspection to any examiner or to any lawful agent of the Director.

(F)

Inability to meet obligations

The enterprise is likely to be unable to pay its obligations or meet the demands of its creditors in the normal course of business.

(G)

Losses

The enterprise has incurred or is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the enterprise to become adequately capitalized (as defined in section 1364(a)(1)).

(H)

Violations of law

Any violation of any law or regulation, or any unsafe or unsound practice or condition that is likely to—

(i)

cause insolvency or substantial dissipation of assets or earnings; or

(ii)

weaken the condition of the enterprise.

(I)

Consent

The enterprise, by resolution of its board of directors or its shareholders or members, consents to the appointment.

(J)

Undercapitalization

The enterprise is undercapitalized or significantly undercapitalized (as defined in section 1364(a)(3)), and—

(i)

has no reasonable prospect of becoming adequately capitalized;

(ii)

fails to become adequately capitalized, as required by—

(I)

section 1365(a)(1) with respect to an undercapitalized enterprise; or

(II)

section 1366(a)(1) with respect to a significantly undercapitalized enterprise;

(iii)

fails to submit a capital restoration plan acceptable to the Agency within the time prescribed under section 1369C; or

(iv)

materially fails to implement a capital restoration plan submitted and accepted under section 1369C.

(K)

Critical undercapitalization

The enterprise is critically undercapitalized, as defined in section 1364(a)(4).

(L)

Money laundering

The Attorney General notifies the Director in writing that the enterprise has been found guilty of a criminal offense under section 1956 or 1957 of title 18, United States Code, or section 5322 or 5324 of title 31, United States Code.

(4)

Judicial review

(A)

In General

If the Agency is appointed conservator or receiver under this section, the enterprise may, within 30 days of such appointment, bring an action in the United States District Court for the judicial district in which the home office of such enterprise is located, or in the United States District Court for the District of Columbia, for an order requiring the Agency to remove itself as conservator or receiver.

(B)

Review

Upon the filing of an action under subparagraph (A), the court shall, upon the merits, dismiss such action or direct the Agency to remove itself as such conservator or receiver.

(5)

Directors not liable for acquiescing in appointment of conservator or receiver

The members of the board of directors of an enterprise shall not be liable to the shareholders or creditors of the enterprise for acquiescing in or consenting in good faith to the appointment of the Agency as conservator or receiver for that enterprise.

(6)

Agency not Subject to any other Federal Agency

When acting as conservator or receiver, the Agency shall not be subject to the direction or supervision of any other agency of the United States or any State in the exercise of the rights, powers, and privileges of the Agency.

(b)

Powers and duties of the Agency as conservator or receiver

(1)

Rulemaking authority of the Agency

The Agency may prescribe such regulations as the Agency determines to be appropriate regarding the conduct of conservatorships or receiverships.

(2)

General powers

(A)

Successor to enterprise

The Agency shall, as conservator or receiver, and by operation of law, immediately succeed to—

(i)

all rights, titles, powers, and privileges of the enterprise, and of any stockholder, officer, or director of such enterprise with respect to the enterprise and the assets of the enterprise; and

(ii)

title to the books, records, and assets of any other legal custodian of such enterprise.

(B)

Operate the enterprise

The Agency may, as conservator or receiver—

(i)

take over the assets of and operate the enterprise with all the powers of the shareholders, the directors, and the officers of the enterprise and conduct all business of the enterprise;

(ii)

collect all obligations and money due the enterprise;

(iii)

perform all functions of the enterprise in the name of the enterprise which are consistent with the appointment as conservator or receiver; and

(iv)

preserve and conserve the assets and property of such enterprise.

(C)

Functions of officers, Directors, and shareholders of an enterprise

The Agency may, by regulation or order, provide for the exercise of any function by any stockholder, director, or officer of any enterprise for which the Agency has been named conservator or receiver.

(D)

Powers as conservator

The Agency may, as conservator, take such action as may be—

(i)

necessary to put the enterprise in a sound and solvent condition; and

(ii)

appropriate to carry on the business of the enterprise and preserve and conserve the assets and property of the enterprise.

(E)

Additional powers as receiver

The Agency may, as receiver, place the enterprise in liquidation and proceed to realize upon the assets of the enterprise, having due regard to the conditions of the housing finance market.

(F)

Organization of new enterprises

The Agency may, as receiver, organize a successor enterprise that will operate pursuant to subsection (i).

(G)

Transfer of assets and liabilities

The Agency may, as conservator or receiver, transfer any asset or liability of the enterprise in default without any approval, assignment, or consent with respect to such transfer.

(H)

Payment of valid obligations

The Agency, as conservator or receiver, shall, to the extent of proceeds realized from the performance of contracts or sale of the assets of an enterprise, pay all valid obligations of the enterprise in accordance with the prescriptions and limitations of this section.

(I)

Subpoena authority

(i)

In General

(I)

In General

The Agency may, as conservator or receiver, and for purposes of carrying out any power, authority, or duty with respect to an enterprise (including determining any claim against the enterprise and determining and realizing upon any asset of any person in the course of collecting money due the enterprise), exercise any power established under section 1348.

(II)

Applicability of law

The provisions of section 1348 shall apply with respect to the exercise of any power exercised under this subparagraph in the same manner as such provisions apply under that section.

(ii)

Authority of Director

A subpoena or subpoena duces tecum may be issued under clause (i) only by, or with the written approval of, the Director, or the designee of the Director.

(iii)

Rule of construction

This subsection shall not be construed to limit any rights that the Agency, in any capacity, might otherwise have under section 1317 or 1379B.

(J)

Incidental powers

The Agency may, as conservator or receiver—

(i)

exercise all powers and authorities specifically granted to conservators or receivers, respectively, under this section, and such incidental powers as shall be necessary to carry out such powers; and

(ii)

take any action authorized by this section, which the Agency determines is in the best interests of the enterprise or the Agency.

(3)

Authority of receiver to determine claims

(A)

In General

The Agency may, as receiver, determine claims in accordance with the requirements of this subsection and any regulations prescribed under paragraph (4).

(B)

Notice requirements

The receiver, in any case involving the liquidation or winding up of the affairs of a closed enterprise, shall—

(i)

promptly publish a notice to the creditors of the enterprise to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and

(ii)

republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).

(C)

Mailing required

The receiver shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the books of the enterprise—

(i)

at the last address of the creditor appearing in such books; or

(ii)

upon discovery of the name and address of a claimant not appearing on the books of the enterprise within 30 days after the discovery of such name and address.

(4)

Rulemaking authority relating to determination of claims

Subject to subsection (c), the Director may prescribe regulations regarding the allowance or disallowance of claims by the receiver and providing for administrative determination of claims and review of such determination.

(5)

Procedures for determination of claims

(A)

Determination period

(i)

In General

Before the end of the 180-day period beginning on the date on which any claim against an enterprise is filed with the Agency as receiver, the Agency shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim.

(ii)

Extension of time

The period described in clause (i) may be extended by a written agreement between the claimant and the Agency.

(iii)

Mailing of notice sufficient

The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears—

(I)

on the books of the enterprise;

(II)

in the claim filed by the claimant; or

(III)

in documents submitted in proof of the claim.

(iv)

Contents of notice of disallowance

If any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—

(I)

a statement of each reason for the disallowance; and

(II)

the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim.

(B)

Allowance of proven claim

The receiver shall allow any claim received on or before the date specified in the notice published under paragraph (3)(B)(i) by the receiver from any claimant which is proved to the satisfaction of the receiver.

(C)

Disallowance of claims filed after end of filing period

Claims filed after the date specified in the notice published under paragraph (3)(B)(i), or the date specified under paragraph (3)(C), shall be disallowed and such disallowance shall be final.

(D)

Authority to disallow claims

(i)

In General

The receiver may disallow any portion of any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of the receiver.

(ii)

Payments to less than fully secured creditors

In the case of a claim of a creditor against an enterprise which is secured by any property or other asset of such enterprise, the receiver—

(I)

may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim against the enterprise; and

(II)

may not make any payment with respect to such unsecured portion of the claim other than in connection with the disposition of all claims of unsecured creditors of the enterprise.

(iii)

Exceptions

No provision of this paragraph shall apply with respect to—

(I)

any extension of credit from any Federal Reserve Bank or the United States Treasury; or

(II)

any security interest in the assets of the enterprise securing any such extension of credit.

(E)

No judicial review of determination pursuant to subparagraph (d)

No court may review the determination of the Agency under subparagraph (D) to disallow a claim.

(F)

Legal effect of filing

(i)

Statute of limitation tolled

For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.

(ii)

No prejudice to other actions

Subject to paragraph (10), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the date of the appointment of the receiver, subject to the determination of claims by the receiver.

(6)

Provision for judicial determination of claims

(A)

In General

The claimant may file suit on a claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the principal place of business of the enterprise is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim), before the end of the 60-day period beginning on the earlier of—

(i)

the end of the period described in paragraph (5)(A)(i) with respect to any claim against an enterprise for which the Agency is receiver; or

(ii)

the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i).

(B)

Statute of limitations

A claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the receiver), and such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim, if the claimant fails, before the end of the 60-day period described under subparagraph (A), to file suit on such claim (or continue an action commenced before the appointment of the receiver).

(7)

Review of claims

(A)

Other review procedures

(i)

In General

The Agency shall establish such alternative dispute resolution processes as may be appropriate for the resolution of claims filed under paragraph (5)(A)(i).

(ii)

Criteria

In establishing alternative dispute resolution processes, the Agency shall strive for procedures which are expeditious, fair, independent, and low cost.

(iii)

Voluntary binding or nonbinding procedures

The Agency may establish both binding and nonbinding processes, which may be conducted by any government or private party. All parties, including the claimant and the Agency, must agree to the use of the process in a particular case.

(B)

Consideration of incentives

The Agency shall seek to develop incentives for claimants to participate in the alternative dispute resolution process.

(8)

Expedited determination of claims

(A)

Establishment required

The Agency shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who—

(i)

allege the existence of legally valid and enforceable or perfected security interests in assets of any enterprise for which the Agency has been appointed receiver; and

(ii)

allege that irreparable injury will occur if the routine claims procedure is followed.

(B)

Determination period

Before the end of the 90-day period beginning on the date any claim is filed in accordance with the procedures established under subparagraph (A), the Director shall—

(i)

determine—

(I)

whether to allow or disallow such claim; or

(II)

whether such claim should be determined pursuant to the procedures established under paragraph (5); and

(ii)

notify the claimant of the determination, and if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining agency review or judicial determination.

(C)

Period for filing or renewing suit

Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the appointment of the receiver, seeking a determination of the rights of the claimant with respect to such security interest after the earlier of—

(i)

the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or

(ii)

the date the Agency denies the claim.

(D)

Statute of limitations

If an action described under subparagraph (C) is not filed, or the motion to renew a previously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed under subparagraph (B), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the receiver), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.

(E)

Legal effect of filing

(i)

Statute of limitation tolled

For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.

(ii)

No prejudice to other actions

Subject to paragraph (10), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action that was filed before the appointment of the receiver, subject to the determination of claims by the receiver.

(9)

Payment of claims

(A)

In General

The receiver may, in the discretion of the receiver, and to the extent funds are available from the assets of the enterprise, pay creditor claims, in such manner and amounts as are authorized under this section, which are—

(i)

allowed by the receiver;

(ii)

approved by the Agency pursuant to a final determination pursuant to paragraph (7) or (8); or

(iii)

determined by the final judgment of any court of competent jurisdiction.

(B)

Agreements against the interest of the Agency

No agreement that tends to diminish or defeat the interest of the Agency in any asset acquired by the Agency as receiver under this section shall be valid against the Agency unless such agreement is in writing.

(C)

Payment of dividends on claims

The receiver may, in the sole discretion of the receiver, pay from the assets of the enterprise dividends on proved claims at any time, and no liability shall attach to the Agency, by reason of any such payment, for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment.

(D)

Rulemaking authority of the Director

The Director may prescribe such rules, including definitions of terms, as the Director deems appropriate to establish a single uniform interest rate for, or to make payments of post-insolvency interest to creditors holding proven claims against the receivership estates of enterprises following satisfaction by the receiver of the principal amount of all creditor claims.

(10)

Suspension of legal actions

(A)

In General

After the appointment of a conservator or receiver for an enterprise, the conservator or receiver may, in any judicial action or proceeding to which such enterprise is or becomes a party, request a stay for a period not to exceed—

(i)

45 days, in the case of any conservator; and

(ii)

90 days, in the case of any receiver.

(B)

Grant of stay by all courts required

Upon receipt of a request by any conservator or receiver under subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties.

(11)

Additional rights and duties

(A)

Prior final adjudication

The Agency shall abide by any final unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Agency as conservator or receiver.

(B)

Rights and remedies of conservator or receiver

In the event of any appealable judgment, the Agency as conservator or receiver shall—

(i)

have all the rights and remedies available to the enterprise (before the appointment of such conservator or receiver) and the Agency, including removal to Federal court and all appellate rights; and

(ii)

not be required to post any bond in order to pursue such remedies.

(C)

No attachment or execution

No attachment or execution may issue by any court upon assets in the possession of the receiver.

(D)

Limitation on judicial review

Except as otherwise provided in this subsection, no court shall have jurisdiction over—

(i)

any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any enterprise for which the Agency has been appointed receiver; or

(ii)

any claim relating to any act or omission of such enterprise or the Agency as receiver.

(E)

Disposition of assets

In exercising any right, power, privilege, or authority as conservator or receiver in connection with any sale or disposition of assets of an enterprise for which the Agency has been appointed conservator or receiver, the Agency shall conduct its operations in a manner which—

(i)

maximizes the net present value return from the sale or disposition of such assets;

(ii)

minimizes the amount of any loss realized in the resolution of cases; and

(iii)

ensures adequate competition and fair and consistent treatment of offerors.

(12)

Statute of limitations for actions brought by conservator or receiver

(A)

In General

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Agency as conservator or receiver shall be—

(i)

in the case of any contract claim, the longer of—

(I)

the 6-year period beginning on the date the claim accrues; or

(II)

the period applicable under State law; and

(ii)

in the case of any tort claim, the longer of—

(I)

the 3-year period beginning on the date the claim accrues; or

(II)

the period applicable under State law.

(B)

Determination of the date on which a claim accrues

For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of—

(i)

the date of the appointment of the Agency as conservator or receiver; or

(ii)

the date on which the cause of action accrues.

(13)

Revival of expired State causes of action

(A)

In General

In the case of any tort claim described under subparagraph (B) for which the statute of limitations applicable under State law with respect to such claim has expired not more than 5 years before the appointment of the Agency as conservator or receiver, the Agency may bring an action as conservator or receiver on such claim without regard to the expiration of the statute of limitation applicable under State law.

(B)

Claims described

A tort claim referred to under subparagraph (A) is a claim arising from fraud, intentional misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the enterprise.

(14)

Accounting and recordkeeping requirements

(A)

In General

The Agency as conservator or receiver shall, consistent with the accounting and reporting practices and procedures established by the Agency, maintain a full accounting of each conservatorship and receivership or other disposition of an enterprise in default.

(B)

Annual accounting or report

With respect to each conservatorship or receivership, the Agency shall make an annual accounting or report available to the Board, the Comptroller General of the United States, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives.

(C)

Availability of reports

Any report prepared under subparagraph (B) shall be made available by the Agency upon request to any shareholder of an enterprise or any member of the public.

(D)

Recordkeeping requirement

After the end of the 6-year period beginning on the date that the conservatorship or receivership is terminated by the Director, the Agency may destroy any records of such enterprise which the Agency, in the discretion of the Agency, determines to be unnecessary unless directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law.

(15)

Fraudulent transfers

(A)

In General

The Agency, as conservator or receiver, may avoid a transfer of any interest of an enterprise-affiliated party, or any person who the conservator or receiver determines is a debtor of the enterprise, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Agency was appointed conservator or receiver, if such party or person voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the enterprise, the Agency, the conservator, or receiver.

(B)

Right of recovery

To the extent a transfer is avoided under subparagraph (A), the conservator or receiver may recover, for the benefit of the enterprise, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from—

(i)

the initial transferee of such transfer or the enterprise-affiliated party or person for whose benefit such transfer was made; or

(ii)

any immediate or mediate transferee of any such initial transferee.

(C)

Rights of transferee or obligee

The conservator or receiver may not recover under subparagraph (B) from—

(i)

any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or

(ii)

any immediate or mediate good faith transferee of such transferee.

(D)

Rights under this paragraph

The rights under this paragraph of the conservator or receiver described under subparagraph (A) shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11, United States Code.

(16)

Attachment of assets and other injunctive relief

Subject to paragraph (17), any court of competent jurisdiction may, at the request of the conservator or receiver, issue an order in accordance with Rule 65 of the Federal Rules of Civil Procedure, including an order placing the assets of any person designated by the Agency or such conservator under the control of the court, and appointing a trustee to hold such assets.

(17)

Standards of proof

Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (16) without regard to the requirement of such rule that the applicant show that the injury, loss, or damage is irreparable and immediate.

(18)

Treatment of claims arising from breach of contracts executed by the receiver or conservator

(A)

In General

Notwithstanding any other provision of this subsection, any final and unappealable judgment for monetary damages entered against a receiver or conservator for the breach of an agreement executed or approved in writing by such receiver or conservator after the date of its appointment, shall be paid as an administrative expense of the receiver or conservator.

(B)

No limitation of power

Nothing in this paragraph shall be construed to limit the power of a receiver or conservator to exercise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement.

(19)

General exceptions

(A)

Limitations

The rights of a conservator or receiver appointed under this section shall be subject to the limitations on the powers of a receiver under sections 402 through 407 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4402 through 4407).

(B)

Mortgages held in trust

(i)

In General

Any mortgage, pool of mortgages, or interest in a pool of mortgages, held in trust, custodial, or agency capacity by an enterprise for the benefit of persons other than the enterprise shall not be available to satisfy the claims of creditors generally.

(ii)

Holding of mortgages

Any mortgage, pool of mortgages, or interest in a pool of mortgages, described under clause (i) shall be held by the conservator or receiver appointed under this section for the beneficial owners of such mortgage, pool of mortgages, or interest in a pool of mortgages in accordance with the terms of the agreement creating such trust, custodial, or other agency arrangement.

(iii)

Liability of receiver

The liability of a receiver appointed under this section for damages shall, in the case of any contingent or unliquidated claim relating to the mortgages held in trust, be estimated in accordance set forth in the regulations of the Director.

(c)

Priority of expenses and unsecured claims

(1)

In General

Unsecured claims against an enterprise, or a receiver, that are proven to the satisfaction of the receiver shall have priority in the following order:

(A)

Administrative expenses of the receiver.

(B)

Any other general or senior liability of the enterprise (which is not a liability described under subparagraph (C) or (D).

(C)

Any obligation subordinated to general creditors (which is not an obligation described under subparagraph (D)).

(D)

Any obligation to shareholders or members arising as a result of their status as shareholder or members.

(2)

Creditors similarly situated

All creditors that are similarly situated under paragraph (1) shall be treated in a similar manner.

(3)

Definition

The term ‘administrative expenses of the receiver’ shall include the actual, necessary costs and expenses incurred by the receiver in preserving the assets of a failed enterprise or liquidating or otherwise resolving the affairs of the failed enterprise. Such expenses shall include obligations that are incurred by the receiver after appointment as receiver that the Director determines are necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the enterprise.

(d)

Provisions relating to contracts entered into before appointment of conservator or receiver

(1)

Authority to repudiate contracts

In addition to any other rights a conservator or receiver may have, the conservator or receiver for any enterprise may disaffirm or repudiate any contract or lease—

(A)

to which such enterprise is a party;

(B)

the performance of which the conservator or receiver, in its sole discretion, determines to be burdensome; and

(C)

the disaffirmance or repudiation of which the conservator or receiver determines, in its sole discretion, will promote the orderly administration of the affairs of the enterprise.

(2)

Timing of repudiation

The conservator or receiver shall determine whether or not to exercise the rights of repudiation under this subsection within a reasonable period following such appointment.

(3)

Claims for damages for repudiation

(A)

In General

Except as otherwise provided under subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or receiver for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—

(i)

limited to actual direct compensatory damages; and

(ii)

determined as of—

(I)

the date of the appointment of the conservator or receiver; or

(II)

in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.

(B)

No liability for other damages

For purposes of subparagraph (A), the term actual direct compensatory damages shall not include—

(i)

punitive or exemplary damages;

(ii)

damages for lost profits or opportunity; or

(iii)

damages for pain and suffering.

(C)

Measure of damages for repudiation of financial contracts

In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—

(i)

deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and

(ii)

paid in accordance with this subsection and subsection (e), except as otherwise specifically provided in this section.

(4)

Leases under which the enterprise is the lessee

(A)

In General

If the conservator or receiver disaffirms or repudiates a lease under which the enterprise was the lessee, the conservator or receiver shall not be liable for any damages (other than damages determined under subparagraph (B)) for the disaffirmance or repudiation of such lease.

(B)

Payments of rent

Notwithstanding subparagraph (A), the lessor under a lease to which that subparagraph applies shall—

(i)

be entitled to the contractual rent accruing before the later of the date—

(I)

the notice of disaffirmance or repudiation is mailed; or

(II)

the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease;

(ii)

have no claim for damages under any acceleration clause or other penalty provision in the lease; and

(iii)

have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment, which shall be paid in accordance with this subsection and subsection (e).

(5)

Leases under which the enterprise is the lessor

(A)

In General

If the conservator or receiver repudiates an unexpired written lease of real property of the enterprise under which the enterprise is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—

(i)

treat the lease as terminated by such repudiation; or

(ii)

remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such repudiation.

(B)

Provisions applicable to lessee remaining in possession

If any lessee under a lease described under subparagraph (A) remains in possession of a leasehold interest under clause (ii) of such subparagraph—

(i)

the lessee—

(I)

shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and

(II)

may offset against any rent payment which accrues after the date of the repudiation of the lease, and any damages which accrue after such date due to the nonperformance of any obligation of the enterprise under the lease after such date; and

(ii)

the conservator or receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II).

(6)

Contracts for the sale of real property

(A)

In General

If the conservator or receiver repudiates any contract for the sale of real property and the purchaser of such real property under such contract is in possession, and is not, as of the date of such repudiation, in default, such purchaser may either—

(i)

treat the contract as terminated by such repudiation; or

(ii)

remain in possession of such real property.

(B)

Provisions applicable to purchaser remaining in possession

If any purchaser of real property under any contract described under subparagraph (A) remains in possession of such property under clause (ii) of such subparagraph—

(i)

the purchaser—

(I)

shall continue to make all payments due under the contract after the date of the repudiation of the contract; and

(II)

may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the enterprise under the contract; and

(ii)

the conservator or receiver shall—

(I)

not be liable to the purchaser for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II);

(II)

deliver title to the purchaser in accordance with the provisions of the contract; and

(III)

have no obligation under the contract other than the performance required under subclause (II).

(C)

Assignment and sale allowed

(i)

In General

No provision of this paragraph shall be construed as limiting the right of the conservator or receiver to assign the contract described under subparagraph (A), and sell the property subject to the contract and the provisions of this paragraph.

(ii)

No liability after assignment and sale

If an assignment and sale described under clause (i) is consummated, the conservator or receiver shall have no further liability under the contract described under subparagraph (A), or with respect to the real property which was the subject of such contract.

(7)

Provisions applicable to service contracts

(A)

Services performed before appointment

In the case of any contract for services between any person and any enterprise for which the Agency has been appointed conservator or receiver, any claim of such person for services performed before the appointment of the conservator or the receiver shall be—

(i)

a claim to be paid in accordance with subsections (b) and (e); and

(ii)

deemed to have arisen as of the date the conservator or receiver was appointed.

(B)

Services performed after appointment and prior to repudiation

If, in the case of any contract for services described under subparagraph (A), the conservator or receiver accepts performance by the other person before the conservator or receiver makes any determination to exercise the right of repudiation of such contract under this section—

(i)

the other party shall be paid under the terms of the contract for the services performed; and

(ii)

the amount of such payment shall be treated as an administrative expense of the conservatorship or receivership.

(C)

Acceptance of performance no bar to subsequent repudiation

The acceptance by any conservator or receiver of services referred to under subparagraph (B) in connection with a contract described in such subparagraph shall not affect the right of the conservator or receiver to repudiate such contract under this section at any time after such performance.

(8)

Certain qualified financial contracts

(A)

Rights of parties to contracts

Subject to paragraph (10) and notwithstanding any other provision of this Act, any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—

(i)

any right to cause the termination or liquidation of any qualified financial contract with an enterprise that arises upon the appointment of the Agency as receiver for such enterprise at any time after such appointment;

(ii)

any right under any security arrangement relating to any contract or agreement described in clause (i); or

(iii)

any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements.

(B)

Applicability of other provisions

Paragraphs (10) and (12) of subsection (b) shall apply in the case of any judicial action or proceeding brought against any receiver referred to under subparagraph (A), or the enterprise for which such receiver was appointed, by any party to a contract or agreement described under subparagraph (A)(i) with such enterprise.

(C)

Certain transfers not avoidable

(i)

In General

Notwithstanding paragraph (11), the Agency, whether acting as such or as conservator or receiver of an enterprise, may not avoid any transfer of money or other property in connection with any qualified financial contract with an enterprise.

(ii)

Exception for certain transfers

Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with an enterprise if the Agency determines that the transferee had actual intent to hinder, delay, or defraud such enterprise, the creditors of such enterprise, or any conservator or receiver appointed for such enterprise.

(D)

Certain contracts and agreements defined

In this subsection:

(i)

Qualified financial contract

The term qualified financial contract means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar agreement that the Agency determines by regulation to be a qualified financial contract for purposes of this paragraph.

(ii)

Securities contract

The term securities contract has the meaning given to such term under section 741 of title 11, United States Code, except that the term security (as used in such section) shall be deemed to include any mortgage loan, any mortgage-related security (as defined in section 3(a)(41) of the Securities Exchange Act of 1934), and any interest in any mortgage loan or mortgage-related security, and does not include any participation in a commercial mortgage loan.

(iii)

Commodity contract

The term commodity contract has the meaning given to such term in section 761 of title 11, United States Code.

(iv)

Forward contract

The term forward contract has the meaning given to such term in section 101 of title 11, United States Code.

(v)

Repurchase agreement

The term repurchase agreement has the meaning given to such term in section 101 of title 11, the United States Code, except that the items (as described in such section) which may be subject to any such agreement shall be deemed to include mortgage-related securities (as such term is defined in section 3(a)(41) of the Securities Exchange Act of 1934), any mortgage loan, and any interest in any mortgage loan and does not include any participation in a commercial mortgage loan unless the Agency determines by regulation, resolution, or order to include any such participation within the meaning of such term.

(vi)

Swap agreement

The term swap agreement

(I)

means any agreement, including the terms and conditions incorporated by reference in any such agreement, which is a rate swap agreement, basis swap, commodity swap, forward rate agreement, interest rate future, interest rate option purchased, forward foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency future, or currency option purchased or any other similar agreement; and

(II)

includes any combination of such agreements and any option to enter into any such agreement.

(vii)

Treatment of master agreement as 1 qualified financial contract

Any master agreement for any agreements described under this subparagraph, together with all supplements to such master agreement, shall be treated as 1 qualified financial contract.

(viii)

Transfer

The term transfer has the meaning given to such term in section 101 of title 11, United States Code.

(E)

Certain protections in event of appointment of conservator

Notwithstanding any other provision of this Act (other than paragraph (12) of this subsection), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—

(i)

any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with an enterprise in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;

(ii)

any right under any security arrangement relating to such qualified financial contracts; or

(iii)

any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts.

(9)

Transfer of qualified financial contracts

In making any transfer of assets or liabilities of an enterprise in default which includes any qualified financial contract, the conservator or receiver for such enterprise shall either—

(A)

transfer to 1 person—

(i)

all qualified financial contracts between—

(I)

any person (or any affiliate of such person); and

(II)

the enterprise in default;

(ii)

all claims of such person (or any affiliate of such person) against such enterprise under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such enterprise);

(iii)

all claims of such enterprise against such person (or any affiliate of such person) under any such contract; and

(iv)

all property securing any claim described in clause (ii) or (iii) under any such contract; or

(B)

transfer none of the financial contracts, claims, or property referred to under subparagraph (A) (with respect to such person and any affiliate of such person).

(10)

Notification of transfer

(A)

In General

If—

(i)

the conservator or receiver for an enterprise in default makes any transfer of the assets and liabilities of such enterprise, and

(ii)

the transfer includes any qualified financial contract,

the conservator or receiver shall use best efforts to notify any person who is a party to any such contract of such transfer by 12 p.m. (noon) (Eastern Standard Time) on the business day following such transfer.
(B)

Business day defined

For purposes of this paragraph, the term business day means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.

(11)

Certain security interests not avoidable

No provision of this subsection shall be construed as permitting the avoidance of any legally enforceable or perfected security interest in any of the assets of any enterprise, except where such an interest is taken in contemplation of the insolvency of the enterprise, or with the intent to hinder, delay, or defraud the enterprise or the creditors of such enterprise.

(12)

Authority to enforce contracts

(A)

In General

Notwithstanding any provision of a contract providing for termination, default, acceleration, or exercise of rights upon, or solely by reason of, insolvency or the appointment of a conservator or receiver, the conservator or receiver may enforce any contract, other than a contract for director’s or officer’s liability or an enterprise bond, entered into by the enterprise.

(B)

Certain rights not affected

No provision of this paragraph may be construed as impairing or affecting any right of the conservator or receiver to enforce or recover under a director’s or officer’s liability insurance contract or enterprise bond under other applicable law.

(C)

Consent requirement

(i)

In General

Except as otherwise provided under this section, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which an enterprise is a party, or to obtain possession of or exercise control over any property of the enterprise, or affect any contractual rights of the enterprise, without the consent of the conservator or receiver, as appropriate, for a period of—

(I)

45 days after the date of appointment of a conservator; or

(II)

90 days after the date of appointment of a receiver.

(ii)

Exceptions

This subparagraph shall—

(I)

not apply to a director’s or officer’s liability insurance contract;

(II)

not apply to the rights of parties to certain qualified financial contracts under subsection (d)(8); and

(III)

not be construed as permitting the conservator or receiver to fail to comply with otherwise enforceable provisions of such contracts.

(e)

Valuation of claims in default

(1)

In General

Notwithstanding any other provision of Federal law or the law of any State, and regardless of the method which the Agency determines to utilize with respect to an enterprise in default or in danger of default, including transactions authorized under subsection (i), this subsection shall govern the rights of the creditors of such enterprise.

(2)

Maximum liability

The maximum liability of the Agency, acting as receiver or in any other capacity, to any person having a claim against the receiver or the enterprise for which such receiver is appointed shall equal the lesser of—

(A)

the amount such claimant would have received if the Agency had liquidated the assets and liabilities of such enterprise without exercising the authority of the Agency under subsection (i) of this section; or

(B)

the amount of proceeds realized from the performance of contracts or sale of the assets of the enterprise.

(f)

Limitation on court action

Except as provided in this section or at the request of the Director, no court may take any action to restrain or affect the exercise of powers or functions of the Agency as a conservator or a receiver.

(g)

Liability of Directors and officers

(1)

In General

A director or officer of an enterprise may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Agency, which action is prosecuted wholly or partially for the benefit of the Agency—

(A)

acting as conservator or receiver of such enterprise, or

(B)

acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such receiver or conservator,

for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law.
(2)

No limitation

Nothing in this paragraph shall impair or affect any right of the Agency under other applicable law.

(h)

Damages

In any proceeding related to any claim against a director, officer, employee, agent, attorney, accountant, appraiser, or any other party employed by or providing services to an enterprise, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the enterprise shall include principal losses and appropriate interest.

(i)

Limited-life enterprise

(1)

Organization

(A)

Purpose

If an enterprise is in default, or if the Agency anticipates that an enterprise will default, the Agency may organize a limited-life enterprise with those powers and attributes of the enterprise in default or in danger of default that the Director determines necessary, subject to the provisions of this subsection. The Director shall grant a temporary charter to the limited-life enterprise, and the limited-life enterprise shall operate subject to that charter.

(B)

Authorities

Upon the creation of a limited-life enterprise under subparagraph (A), the limited-life enterprise may—

(i)

assume such liabilities of the enterprise that is in default or in danger of default as the Agency may, in its discretion, determine to be appropriate, provided that the liabilities assumed shall not exceed the amount of assets of the limited-life enterprise;

(ii)

purchase such assets of the enterprise that is in default, or in danger of default, as the Agency may, in its discretion, determine to be appropriate; and

(iii)

perform any other temporary function which the Agency may, in its discretion, prescribe in accordance with this section.

(2)

Charter

(A)

Conditions

The Agency may grant a temporary charter if the Agency determines that the continued operation of the enterprise in default or in danger of default is in the best interest of the national economy and the housing markets.

(B)

Limited-life enterprise treated as being in default for certain purposes

A limited-life enterprise shall be treated as an enterprise in default at such times and for such purposes as the Agency may, in its discretion, determine.

(C)

Management

A limited-life enterprise, upon the granting of its charter, shall be under the management of a board of directors consisting of not fewer than 5 nor more than 10 members appointed by the Agency.

(D)

Bylaws

The board of directors of a limited-life enterprise shall adopt such bylaws as may be approved by the Agency.

(3)

Capital stock

No capital stock need be paid into a limited-life enterprise by the Agency.

(4)

Investments

Funds of a limited-life enterprise shall be kept on hand in cash, invested in obligations of the United States or obligations guaranteed as to principal and interest by the United States, or deposited with the Agency, or any Federal Reserve bank.

(5)

Exempt status

Notwithstanding any other provision of Federal or State law, the limited-life enterprise, its franchise, property, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority.

(6)

Other exemptions

When acting as a receiver, the following provisions shall apply with respect to the Agency:

(A)

The Agency, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation imposed by any State, country, municipality, or local taxing authority, except that any real property of the Agency shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, notwithstanding the failure of any person to challenge an assessment under State law of the value of such property, and the tax thereon, shall be determined as of the period for which such tax is imposed.

(B)

No property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency.

(C)

The Agency shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due.

(7)

Winding up

(A)

In General

Subject to subparagraph (B), unless Congress authorizes the sale of the capital stock of the limited-life enterprise, not later than 2 years after the date of its organization, the Agency shall wind up the affairs of the limited-life enterprise.

(B)

Extension

The Director may, in the discretion of the Director, extend the status of the limited-life enterprise for 3 additional 1-year periods.

(8)

Transfer of assets and liabilities

(A)

In General

(i)

Transfer of assets and liabilities

The Agency, as receiver, may transfer any assets and liabilities of an enterprise in default, or in danger of default, to the limited-life enterprise in accordance with paragraph (1).

(ii)

Subsequent transfers

At any time after a charter is transferred to a limited-life enterprise, the Agency, as receiver, may transfer any assets and liabilities of such enterprise in default, or in danger in default, as the Agency may, in its discretion, determine to be appropriate in accordance with paragraph (1).

(iii)

Effective without approval

The transfer of any assets or liabilities of an enterprise in default, or in danger of default, transferred to a limited-life enterprise shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.

(9)

Proceeds

To the extent that available proceeds from the limited-life enterprise exceed amounts required to pay obligations, such proceeds may be paid to the enterprise in default, or in danger of default.

(10)

Powers of limited-life enterprises

(A)

In General

Each limited-life enterprise created under this subsection shall have all corporate powers of, and be subject to the same provisions of law as, the enterprise in default or in danger of default to which it relates, except that—

(i)

the Agency may—

(I)

remove the directors of a limited-life enterprise; and

(II)

fix the compensation of members of the board of directors and senior management, as determined by the Agency in its discretion, of a limited-life enterprise;

(ii)

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

(iii)

the board of directors of a limited-life enterprise—

(I)

shall elect a chairperson who may also serve in the position of chief executive officer, except that such person shall not serve either as chairperson or as chief executive officer without the prior approval of the Agency; and

(II)

may appoint a chief executive officer who is not also the chairperson, except that such person shall not serve as chief executive officer without the prior approval of the Agency.

(B)

Stay of judicial action

Any judicial action to which a limited-life enterprise becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of an enterprise in default shall be stayed from further proceedings for a period of up to 45 days at the request of the limited-life enterprise. Such period may be modified upon the consent of all parties.

(11)

No Federal status

(A)

Agency status

A limited-life enterprise is not an agency, establishment, or instrumentality of the United States.

(B)

Employee status

Representatives for purposes of paragraph (1)(B), interim directors, directors, officers, employees, or agents of a limited-life enterprise are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Agency or of any Federal instrumentality who serves at the request of the Agency as a representative for purposes of paragraph (1)(B), interim director, director, officer, employee, or agent of a limited-life enterprise shall not—

(i)

solely by virtue of service in any such capacity lose any existing status as an officer or employee of the United States for purposes of title 5, United States Code, or any other provision of law; or

(ii)

receive any salary or benefits for service in any such capacity with respect to a limited-life enterprise in addition to such salary or benefits as are obtained through employment with the Agency or such Federal instrumentality.

(j)

Prohibition of charter revocation

In no case may a receiver appointed pursuant to this section revoke, annul, or terminate the charter of an enterprise.

(k)

Obtaining credit by a limited-life enterprise

(1)

In General

The limited-life enterprise may obtain unsecured credit and incur unsecured debt in the ordinary course of business.

(2)

Inability to obtain credit

If the limited-life enterprise is unable to obtain unsecured credit the Director may authorize the obtaining of credit or the incurring of debt—

(A)

with priority over any or all administrative expenses;

(B)

secured by a lien on property that is not otherwise subject to a lien; or

(C)

secured by a junior lien on property that is subject to a lien.

(3)

Limitations

(A)

In General

The Director, after notice and a hearing, may authorize the obtaining of credit or the incurring of debt secured by a senior or equal lien on property that is subject to a lien (other than mortgages that collateralize the mortgage-backed securities issued or guaranteed by the enterprise) only if—

(i)

the limited-life enterprise is unable to obtain such credit otherwise; and

(ii)

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

(B)

Burden of proof

In any hearing under this subsection, the Director has the burden of proof on the issue of adequate protection.

(4)

Affect on debts and liens

The reversal or modification on appeal of an authorization under this subsection to obtain credit or incur debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the incurring of such debt, or the granting of such priority or lien, were stayed pending appeal.

.

(b)

Federal home loan banks

Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) is amended—

(1)

by inserting (a) before Whenever;

(2)

in the first sentence, by inserting or pursuant to a determination and notice under section 1368(d) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 that a Federal home loan bank is critically undercapitalized, after such action,; and

(3)

by adding at the end the following new subsection:

(b)

The Director shall, by regulation, provide for the authority, procedures, and conditions in liquidating and reorganizing critically undercapitalized Federal home loan banks pursuant to subsection (a), taking due consideration of the authorities, procedures, and conditions established under section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, with respect to the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises.

.

(c)

Conforming amendments

Subtitle B of title XIII of the Housing and Community Development Act of 1992 is amended by striking sections 1369 (12 U.S.C. 4619), 1369A (12 U.S.C. 4620), and 1369B (12 U.S.C. 4621)

145.

Conforming amendments

Subtitle B of title XIII of the Housing and Community Development Act of 1992 (42 U.S.C. 4611 et seq.), as amended by the preceding provisions of this Act, is further amended—

(1)

in sections 1365 (12 U.S.C. 4615) through 1369D (12 U.S.C. 4623), but not including section 1367 (12 U.S.C. 4617) as added by section 144 of this Act—

(A)

by striking An enterprise each place such term appears and inserting A regulated entity;

(B)

by striking an enterprise each place such term appears and inserting a regulated entity; and

(C)

by striking the enterprise each place such term appears and inserting the regulated entity;

(2)

in section 1366(d) (12 U.S.C. 4616(d)), by striking the enterprises and inserting the regulated entities;

(3)

in section 1368(d) (12 U.S.C. 4618(d)), by striking Committee on Banking, Finance and Urban Affairs and inserting Committee on Financial Services; and

(4)

in section 1369C(c) (12 U.S.C. 4622(c)), by striking any enterprise and inserting any regulated entity.

D

Enforcement actions

161.

Cease-and-desist proceedings

Section 1371 of the Housing and Community Development Act of 1992 (12 U.S.C. 4631) is amended—

(1)

by striking subsections (a) and (b) and inserting the following new subsections:

(a)

Issuance for unsafe or unsound practices and violations of rules or laws

If, in the opinion of the Director, a regulated entity or any regulated entity-affiliated party is engaging or has engaged, or the Director has reasonable cause to believe that the regulated entity or any regulated entity-affiliated party is about to engage, in an unsafe or unsound practice in conducting the business of the regulated entity or is violating or has violated, or the Director has reasonable cause to believe that the regulated entity or any regulated entity-affiliated party is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Director in connection with the granting of any application or other request by the regulated entity or any written agreement entered into with the Director, the Director may issue and serve upon the regulated entity or such party a notice of charges in respect thereof. The Director may not enforce compliance with any housing goal established under subpart B of part 2 of subtitle A of this title, with section 1336 or 1337 of this title, with subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(e), (f)), or with paragraph (5) or (12) of section 10(j) of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)).

(b)

Issuance for unsatisfactory rating

If a regulated entity receives, in its most recent report of examination, a less-than-satisfactory rating for asset quality, management, earnings, or liquidity, the Director may (if the deficiency is not corrected) deem the regulated entity to be engaging in an unsafe or unsound practice for purposes of this subsection.

;

(2)

in subsection (c)(2), by striking or director and inserting director, or regulated entity-affiliated party; and

(3)

in subsection (d)—

(A)

in paragraph (1), by inserting (including reimbursement of compensation under section 1318) after reimbursement;

(B)

in paragraph (6), by striking and at the end;

(C)

by redesignating paragraph (7) as paragraph (8); and

(D)

by inserting after paragraph (6) the following new paragraph:

(7)

to effect an attachment on a regulated entity or regulated entity-affiliated party subject to an order under this section or section 1372; and

.

162.

Temporary cease-and-desist proceedings

Section 1372 of the Housing and Community Development Act of 1992 (12 U.S.C. 4632) is amended—

(1)

by striking subsection (a) and inserting the following new subsection:

(a)

Grounds for issuance

Whenever the Director determines that the violation or threatened violation or the unsafe or unsound practice or practices specified in the notice of charges served upon the regulated entity or any regulated entity-affiliated party pursuant to section 1371(a), or the continuation thereof, is likely to cause insolvency or significant dissipation of assets or earnings of the regulated entity, or is likely to weaken the condition of the regulated entity prior to the completion of the proceedings conducted pursuant to sections 1371 and 1373, the Director may issue a temporary order requiring the regulated entity or such party to cease and desist from any such violation or practice and to take affirmative action to prevent or remedy such insolvency, dissipation, condition, or prejudice pending completion of such proceedings. Such order may include any requirement authorized under subsection 1371(d).

;

(2)

in subsection (b), by striking or director and inserting director, or regulated entity-affiliated party;

(3)

in subsection (d), striking or director and inserting director, or regulated entity-affiliated party; and

(4)

by striking subsection (e) and in inserting the following new subsection:

(e)

Enforcement

In the case of violation or threatened violation of, or failure to obey, a temporary cease-and-desist order issued pursuant to this section, the Director may apply to the United States District Court for the District of Columbia or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, for an injunction to enforce such order, and, if the court determines that there has been such violation or threatened violation or failure to obey, it shall be the duty of the court to issue such injunction. Such an injunction may include an injunction to effect an attachment on a regulated entity or regulated-entity affiliated party.

.

163.

Enforcement and jurisdiction

Section 1375 of the Housing and Community Development Act of 1992 (12 U.S.C. 4635) is amended—

(1)

by striking subsection (a) and inserting the following new subsection:

(a)

Enforcement

The Director may, in the discretion of the Director, apply to the United States District Court for the District of Columbia, or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, for the enforcement of any effective and outstanding notice or order issued under this subtitle or subtitle B, or request that the Attorney General of the United States bring such an action. Such court shall have jurisdiction and power to order and require compliance with such notice or order.

; and

(2)

in subsection (b), by striking or 1376 and inserting 1376, or 1377.

164.

Civil money penalties

Section 1376 of the Housing and Community Development Act of 1992 (12 U.S.C. 4636) is amended—

(1)

in subsection (a)—

(A)

in the matter preceding paragraph (1), by striking or any executive officer or and inserting any executive officer of a regulated entity, any regulated entity-affiliated party, or any; and

(B)

in paragraph (1)—

(i)

by inserting Federal Home Loan Bank Act, after Corporation Act,;

(ii)

by striking or subsection and inserting , subsection; and

(iii)

by inserting , or paragraph (5) or (12) of section 10(j) of the Federal Home Loan Bank Act before the semicolon at the end;

(2)

by striking subsection (b) and inserting the following new subsection:

(b)

Amount of penalty

(1)

First tier

Any regulated entity which, or any regulated entity-affiliated party who—

(A)

violates any provision of this title, the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.), the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.), the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq., or any order, condition, rule, or regulation under any such title or Act, except that the Director may not enforce compliance with any housing goal established under subpart B of part 2 of subtitle A of this title, with section 1336 or 1337 of this title, with subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(e), (f)), or with paragraph (5) or (12) of section 10(j) of the Federal Home Loan Bank Act;

(B)

violates any final or temporary order or notice issued pursuant to this title;

(C)

violates any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity;

(D)

violates any written agreement between the regulated entity and the Director; or

(E)

engages in any conduct the Director determines to be an unsafe or unsound practice,

shall forfeit and pay a civil penalty of not more than $10,000 for each day during which such violation continues.
(2)

Second tier

Notwithstanding paragraph (1)—

(A)

if a regulated entity, or a regulated entity-affiliated party—

(i)

commits any violation described in any subparagraph of paragraph (1);

(ii)

recklessly engages in an unsafe or unsound practice in conducting the affairs of such regulated entity; or

(iii)

breaches any fiduciary duty; and

(B)

the violation, practice, or breach—

(i)

is part of a pattern of misconduct;

(ii)

causes or is likely to cause more than a minimal loss to such regulated entity; or

(iii)

results in pecuniary gain or other benefit to such party,

the regulated entity or regulated entity-affiliated party shall forfeit and pay a civil penalty of not more than $50,000 for each day during which such violation, practice, or breach continues.
(3)

Third tier

Notwithstanding paragraphs (1) and (2), any regulated entity which, or any regulated entity-affiliated party who—

(A)

knowingly—

(i)

commits any violation or engages in any conduct described in any subparagraph of paragraph (1);

(ii)

engages in any unsafe or unsound practice in conducting the affairs of such regulated entity; or

(iii)

breaches any fiduciary duty; and

(B)

knowingly or recklessly causes a substantial loss to such regulated entity or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,

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

Maximum amounts of penalties for any violation described in paragraph (3)

The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in such paragraph is—

(A)

in the case of any person other than a regulated entity, an amount not to exceed $2,000,000; and

(B)

in the case of any regulated entity, $2,000,000.

;

(3)

in subsection (c)(1)(B), by inserting regulated entity-affiliated party, after executive officer,; and

(4)

in subsection (d)—

(A)

by striking or director each place such term appears and inserting director, or regulated entity-affiliated party;

(B)

by striking request the Attorney General of the United States to;

(C)

by inserting , or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, after District of Columbia; and

(D)

by striking , or may, under the direction and control of the Attorney General, bring such an action.

165.

Removal and prohibition authority

(a)

In General

Subtitle C of title XIII of the Housing and Community Development Act of 1992 is amended—

(1)

by redesignating sections 1377, 1378, 1379, 1379A, and 1379B (12 U.S.C. 4637–41) as sections 1379, 1379A, 1379B, 1379C, and 1379D, respectively; and

(2)

by inserting after section 1376 (12 U.S.C. 4636) the following new section:

1377.

Removal and prohibition authority

(a)

Authority to issue order

Whenever the Director determines that—

(1)

any regulated entity-affiliated party has, directly or indirectly—

(A)

violated—

(i)

any law or regulation;

(ii)

any cease-and-desist order which has become final;

(iii)

any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity; or

(iv)

any written agreement between such regulated entity and the Director;

(B)

engaged or participated in any unsafe or unsound practice in connection with any regulated entity; or

(C)

committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty;

(2)

by reason of the violation, practice, or breach described in any subparagraph of paragraph (1)—

(A)

such regulated entity has suffered or will probably suffer financial loss or other damage; or

(B)

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

(3)

such violation, practice, or breach—

(A)

involves personal dishonesty on the part of such party; or

(B)

demonstrates willful or continuing disregard by such party for the safety or soundness of such regulated entity,

the Director may serve upon such party a written notice of the Director’s intention to remove such party from office or to prohibit any further participation by such party, in any manner, in the conduct of the affairs of any regulated entity.
(b)

Suspension order

(1)

Suspension or prohibition authority

If the Director serves written notice under subsection (a) to any regulated entity-affiliated party of the Director’s intention to issue an order under such subsection, the Director may—

(A)

suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of the regulated entity, if the Director—

(i)

determines that such action is necessary for the protection of the regulated entity; and

(ii)

serves such party with written notice of the suspension order; and

(B)

prohibit the regulated entity from releasing to or on behalf of the regulated entity-affiliated party any compensation or other payment of money or other thing of current or potential value in connection with any resignation, removal, retirement, or other termination of employment or office of the party.

(2)

Effective period

Any suspension order issued under this subsection—

(A)

shall become effective upon service; and

(B)

unless a court issues a stay of such order under subsection (g) of this section, shall remain in effect and enforceable until—

(i)

the date the Director dismisses the charges contained in the notice served under subsection (a) with respect to such party; or

(ii)

the effective date of an order issued by the Director to such party under subsection (a).

(3)

Copy of order

If the Director issues a suspension order under this subsection to any regulated entity-affiliated party, the Director shall serve a copy of such order on any regulated entity with which such party is affiliated at the time such order is issued.

(c)

Notice, hearing, and order

A notice of intention to remove a regulated entity-affiliated party from office or to prohibit such party from participating in the conduct of the affairs of a regulated entity shall contain a statement of the facts constituting grounds for such action, and shall fix a time and place at which a hearing will be held on such action. Such hearing shall be fixed for a date not earlier than 30 days nor later than 60 days after the date of service of such notice, unless an earlier or a later date is set by the Director at the request of (1) such party, and for good cause shown, or (2) the Attorney General of the United States. Unless such party shall appear at the hearing in person or by a duly authorized representative, such party shall be deemed to have consented to the issuance of an order of such removal or prohibition. In the event of such consent, or if upon the record made at any such hearing the Director shall find that any of the grounds specified in such notice have been established, the Director may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the regulated entity, as it may deem appropriate, together with an order prohibiting compensation described in subsection (b)(1)(B). Any such order shall become effective at the expiration of 30 days after service upon such regulated entity and such party (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Director or a reviewing court.

(d)

Prohibition of certain specific activities

Any person subject to an order issued under this section shall not—

(1)

participate in any manner in the conduct of the affairs of any regulated entity;

(2)

solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any regulated entity;

(3)

violate any voting agreement previously approved by the Director; or

(4)

vote for a director, or serve or act as a regulated entity-affiliated party.

(e)

Industry-wide prohibition

(1)

In General

Except as provided in paragraph (2), any person who, pursuant to an order issued under this section, has been removed or suspended from office in a regulated entity or prohibited from participating in the conduct of the affairs of a regulated entity may not, while such order is in effect, continue or commence to hold any office in, or participate in any manner in the conduct of the affairs of, any regulated entity.

(2)

Exception if Director provides written consent

If, on or after the date an order is issued under this section which removes or suspends from office any regulated entity-affiliated party or prohibits such party from participating in the conduct of the affairs of a regulated entity, such party receives the written consent of the Director, the order shall, to the extent of such consent, cease to apply to such party with respect to the regulated entity described in the written consent. If the Director grants such a written consent, it shall publicly disclose such consent.

(3)

Violation of paragraph (1) treated as violation of order

Any violation of paragraph (1) by any person who is subject to an order described in such subsection shall be treated as a violation of the order.

(f)

Applicability

This section shall only apply to a person who is an individual, unless the Director specifically finds that it should apply to a corporation, firm, or other business enterprise.

(g)

Stay of suspension and prohibition of regulated entity-affiliated party

Within 10 days after any regulated entity-affiliated party has been suspended from office and/or prohibited from participation in the conduct of the affairs of a regulated entity under this section, such party may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district in which the headquarters of the regulated entity is located, for a stay of such suspension and/or prohibition and any prohibition under subsection (b)(1)(B) pending the completion of the administrative proceedings pursuant to the notice served upon such party under this section, and such court shall have jurisdiction to stay such suspension and/or prohibition.

(h)

Suspension or removal of regulated entity-affiliated party charged with felony

(1)

Suspension or prohibition

(A)

In General

Whenever any regulated entity-affiliated party is charged in any information, indictment, or complaint, with the commission of or participation in a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law, the Director may, if continued service or participation by such party may pose a threat to the regulated entity or impair public confidence in the regulated entity, by written notice served upon such party—

(i)

suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of any regulated entity; and

(ii)

prohibit the regulated entity from releasing to or on behalf of the regulated entity-affiliated party any compensation or other payment of money or other thing of current or potential value in connection with the period of any such suspension or with any resignation, removal, retirement, or other termination of employment or office of the party.

(B)

Provisions applicable to notice

(i)

Copy

A copy of any notice under paragraph (1)(A) shall also be served upon the regulated entity.

(ii)

Effective period

A suspension or prohibition under subparagraph (A) shall remain in effect until the information, indictment, or complaint referred to in such subparagraph is finally disposed of or until terminated by the Director.

(2)

Removal or prohibition

(A)

In General

If a judgment of conviction or an agreement to enter a pretrial diversion or other similar program is entered against a regulated entity-affiliated party in connection with a crime described in paragraph (1)(A), at such time as such judgment is not subject to further appellate review, the Director may, if continued service or participation by such party may pose a threat to the regulated entity or impair public confidence in the regulated entity, issue and serve upon such party an order that—

(i)

removes such party from office or prohibits such party from further participation in any manner in the conduct of the affairs of the regulated entity without the prior written consent of the Director; and

(ii)

prohibits the regulated entity from releasing to or on behalf of the regulated entity-affiliated party any compensation or other payment of money or other thing of current or potential value in connection with the termination of employment or office of the party.

(B)

Provisions applicable to order

(i)

Copy

A copy of any order under paragraph (2)(A) shall also be served upon the regulated entity, whereupon the regulated entity-affiliated party who is subject to the order (if a director or an officer) shall cease to be a director or officer of such regulated entity.

(ii)

Effect of acquittal

A finding of not guilty or other disposition of the charge shall not preclude the Director from instituting proceedings after such finding or disposition to remove such party from office or to prohibit further participation in regulated entity affairs, and to prohibit compensation or other payment of money or other thing of current or potential value in connection with any resignation, removal, retirement, or other termination of employment or office of the party, pursuant to subsections (a), (d), or (e) of this section.

(iii)

Effective period

Any notice of suspension or order of removal issued under this subsection shall remain effective and outstanding until the completion of any hearing or appeal authorized under paragraph (4) unless terminated by the Director.

(3)

Authority of remaining board members

If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors of a regulated entity less than a quorum of directors not so suspended, all powers and functions vested in or exercisable by such board shall vest in and be exercisable by the director or directors on the board not so suspended, until such time as there shall be a quorum of the board of directors. In the event all of the directors of a regulated entity are suspended pursuant to this section, the Director shall appoint persons to serve temporarily as directors in their place and stead pending the termination of such suspensions, or until such time as those who have been suspended cease to be directors of the regulated entity and their respective successors take office.

(4)

Hearing regarding continued participation

Within 30 days from service of any notice of suspension or order of removal issued pursuant to paragraph (1) or (2) of this subsection, the regulated entity-affiliated party concerned may request in writing an opportunity to appear before the Director to show that the continued service to or participation in the conduct of the affairs of the regulated entity by such party does not, or is not likely to, pose a threat to the interests of the regulated entity or threaten to impair public confidence in the regulated entity. Upon receipt of any such request, the Director shall fix a time (not more than 30 days after receipt of such request, unless extended at the request of such party) and place at which such party may appear, personally or through counsel, before one or more members of the Director or designated employees of the Director to submit written materials (or, at the discretion of the Director, oral testimony) and oral argument. Within 60 days of such hearing, the Director shall notify such party whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the regulated entity will be continued, terminated, or otherwise modified, or whether the order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the regulated entity, and prohibiting compensation in connection with termination will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the Director’s decision, if adverse to such party. The Director is authorized to prescribe such rules as may be necessary to effectuate the purposes of this subsection.

(i)

Hearings and judicial review

(1)

Venue and procedure

Any hearing provided for in this section shall be held in the District of Columbia or in the Federal judicial district in which the headquarters of the regulated entity is located, unless the party afforded the hearing consents to another place, and shall be conducted in accordance with the provisions of chapter 5 of title 5, United States Code. After such hearing, and within 90 days after the Director has notified the parties that the case has been submitted to it for final decision, it shall render its decision (which shall include findings of fact upon which its decision is predicated) and shall issue and serve upon each party to the proceeding an order or orders consistent with the provisions of this section. Judicial review of any such order shall be exclusively as provided in this subsection. Unless a petition for review is timely filed in a court of appeals of the United States, as provided in paragraph (2), and thereafter until the record in the proceeding has been filed as so provided, the Director may at any time, upon such notice and in such manner as it shall deem proper, modify, terminate, or set aside any such order. Upon such filing of the record, the Director may modify, terminate, or set aside any such order with permission of the court.

(2)

Review of order

Any party to any proceeding under paragraph (1) may obtain a review of any order served pursuant to paragraph (1) (other than an order issued with the consent of the regulated entity or the regulated entity-affiliated party concerned, or an order issued under subsection (h) of this section) by the filing in the United States Court of Appeals for the District of Columbia Circuit or court of appeals of the United States for the circuit in which the headquarters of the regulated entity is located, within 30 days after the date of service of such order, a written petition praying that the order of the Director be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Director, and thereupon the Director shall file in the court the record in the proceeding, as provided in section 2112 of title 28, United States Code. Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall (except as provided in the last sentence of paragraph (1)) be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Director. Review of such proceedings shall be had as provided in chapter 7 of title 5, United States Code. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided in section 1254 of title 28, United States Code.

(3)

Proceedings not treated as stay

The commencement of proceedings for judicial review under paragraph (2) shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Director.

.

(b)

Conforming amendments

(1)

1992 Act

Section 1317(f) of the Housing and Community Development Act of 1992 (12 U.S.C. 4517(f)) is amended by striking section 1379B and inserting section 1379D.

(2)

Fannie mae charter Act

The second sentence of subsection (b) of section 308 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723(b)) is amended by striking The and inserting Except to the extent that action under section 1377 of the Housing and Community Development Act of 1992 temporarily results in a lesser number, the.

(3)

Freddie mac Act

The second sentence of subparagraph (A) of section 303(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)(A)) is amended by striking The and inserting Except to the extent that action under section 1377 of the Housing and Community Development Act of 1992 temporarily results in a lesser number, the.

166.

Criminal penalty

Subtitle C of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4631 et seq.) is amended by inserting after section 1377 (as added by the preceding provisions of this Act) the following new section:

1378.

Criminal penalty

Whoever, being subject to an order in effect under section 1377, without the prior written approval of the Director, knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order) in the conduct of the affairs of any regulated entity shall, notwithstanding section 3571 of title 18, be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.

.

167.

Conforming amendments

Subtitle C of title XIII of the Housing and Community Development Act of 1992 is amended—

(1)

in section 1372(c)(1) (12 U.S.C. 4632(c)), by striking that enterprise and inserting that regulated entity;

(2)

in section 1379 (12 U.S.C. 4637), as so redesignated by section 165(a)(1) of this Act—

(A)

by inserting , or of a regulated entity-affiliated party, before shall not affect; and

(B)

by striking such director or executive officer each place such term appears and inserting such director, executive officer, or regulated entity-affiliated party;

(3)

in section 1379A (12 U.S.C. 4638), as so redesignated by section 165(a)(1) of this Act, by inserting or against a regulated entity-affiliated party, before or impair;

(4)

by striking An enterprise each place such term appears in such subtitle and inserting A regulated entity;

(5)

by striking an enterprise each place such term appears in such subtitle and inserting a regulated entity;

(6)

by striking the enterprise each place such term appears in such subtitle and inserting the regulated entity; and

(7)

by striking any enterprise each place such term appears in such subtitle and inserting any regulated entity.

E

General provisions

181.

Presidentially appointed Directors of enterprises

(a)

Fannie mae

(1)

In General

Subsection (b) of section 308 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723(b)) is amended—

(A)

in the first sentence, by striking five of whom shall be appointed annually by the President of the United States, and the remainder of whom and inserting who;

(B)

in the second sentence, by striking appointed by the President;

(C)

in the third sentence—

(i)

by striking appointed or; and

(ii)

by striking , except that any such appointed member may be removed from office by the President for good cause;

(D)

in the fourth sentence, by striking elective; and

(E)

by striking the fifth sentence.

(2)

Transitional provision

The amendments made by paragraph (1) shall not apply to any appointed position of the board of directors of the Federal National Mortgage Association until the expiration of the annual term for such position during which the effective date under section 184 occurs.

(b)

Freddie mac

(1)

In General

Paragraph (2) of section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended—

(A)

in subparagraph (A)—

(i)

in the first sentence, by striking 5 of whom shall be appointed annually by the President of the United States and the remainder of whom and inserting who; and

(ii)

in the second sentence, by striking appointed by the President of the United States;

(B)

in subparagraph (B)—

(i)

by striking such or; and

(ii)

by striking , except that any appointed member may be removed from office by the President for good cause; and

(C)

in subparagraph (C)—

(i)

by striking the first sentence; and

(ii)

by striking elective.

(2)

Transitional provision

The amendments made by paragraph (1) shall not apply to any appointed position of the Board of Directors of the Federal Home Loan Mortgage Corporation until the expiration of the annual term for such position during which the effective date under section 184 occurs.

182.

Report on portfolio operations, safety and soundness, and mission of enterprises

Not later than the expiration of the 12-month period beginning on the effective date under section 184, the Director of the Federal Housing Finance Agency shall submit a report to the Congress which shall include—

(1)

a description of the portfolio holdings of the enterprises (as such term is defined in section 1303 of the Housing and Community Development Act of 1992 (12 U.S.C. 4502) in mortgages (including whole loans and mortgage-backed securities), non-mortgages, and other assets;

(2)

a description of the risk implications for the enterprises of such holdings and the consequent risk management undertaken by the enterprises (including the use of derivatives for hedging purposes), compared with off-balance sheet obligations of the enterprises (including mortgage-backed securities guaranteed by the enterprises);

(3)

an analysis of portfolio holdings for safety and soundness purposes;

(4)

an assessment of whether portfolio holdings fulfill the mission purposes of the enterprises under the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act; and

(5)

an analysis of the potential systemic risk implications for the enterprises, the housing and capital markets, and the financial system of portfolio holdings, and whether such holdings should be limited or reduced over time.

183.

Conforming and technical amendments

(a)

Amendment to 1992 Act

Title XIII of the Housing and Community Development Act of 1992 is amended by striking section 1383 (12 U.S.C. 1451 note).

(b)

Amendment to title 18, United States Code

Section 1905 of title 18, United States Code, is amended by striking Office of Federal Housing Enterprise Oversight and inserting Federal Housing Finance Agency .

(c)

Amendments to Flood Disaster Protection Act of 1973

Section 102(f)(3)(A) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and inserting Director of the Federal Housing Finance Agency.

(d)

Amendment to Department of Housing and Urban Development Act

Section 5 of the Department of Housing and Urban Development Act (42 U.S.C. 3534) is amended by striking subsection (d).

(e)

Amendment to title 5, United States Code

Section 5313 of title 5, United States Code, is amended by striking the item relating to the Director of the Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development and inserting the following new item:

Director of the Federal Housing Finance Agency.

.

184.

Effective date

Except as specifically provided otherwise in this title, the amendments made by this title shall take effect on, and shall apply beginning on, the expiration of the 1-year period beginning on the date of the enactment of this Act.

II

Federal Home Loan Banks

201.

Definitions

Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended—

(1)

by striking paragraphs (1) and (10);

(2)

by redesignating paragraphs (2) through (9) as paragraphs (1) through (8), respectively;

(3)

by redesignating paragraphs (11) through (13) as paragraphs (9) through (11), respectively; and

(4)

by adding at the end the following:

(12)

Director

The term Director means the Director of the Federal Housing Finance Agency.

(13)

Agency

The term Agency means the Federal Housing Finance Agency.

.

202.

Directors

(a)

Election

Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Number; election; qualifications; conflicts of interest

(1)

In General

Subject to paragraph (2), and except to the extent that action under section 1377 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 results in a lesser number, the management of each Federal Home Loan Bank shall be vested in a board of 13 directors, or such other number as the Director determines appropriate, each of whom—

(A)

shall be elected by the members; and

(B)

shall be either a bona fide resident of the district in which such bank is located or an officer or director of a member of such bank located in that district.

(2)

Public interest

At least 2 directors elected under paragraph (1) 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 protections.

;

(2)

in subsection (d)—

(A)

in the first sentence, by striking , whether elected or appointed,;

(B)

in the second sentence, by striking or appointed; and

(C)

in the third sentence, by striking an elective each place such term appears and inserting a;

(3)

by striking elective each place such term appears (except in subsection (e)); and

(4)

in subsection (f), by striking appointed or each place that term appears.

(b)

Terms

(1)

In general

Section 7(d) of the Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended—

(A)

in the first sentence, by striking 3 years and inserting 4 years; and

(B)

in the second sentence—

(i)

by striking Federal Home Loan Bank System Modernization Act of 1999 and inserting Federal Housing Finance Reform Act of 2005; and

(ii)

by striking 1/3 and inserting 1/4.

(2)

Savings provision

The amendments made by paragraph (1) shall not apply to the term of office of any director of a Federal home loan bank who is serving as of the effective date of this Act under section 184, including any director elected to fill a vacancy in any such office.

(c)

Compensation

Subsection (i) of section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended to read as follows:

(i)

Directors’ compensation

(1)

In general

Each Federal home loan bank may pay the directors on the board of directors for the bank reasonable compensation for the time required of such directors, and reasonable expenses incurred by such directors, in connection with service on the board of directors, in accordance with resolutions adopted by the board of directors and subject to the approval of the board.

(2)

Annual report by the board

The Director shall include, in the annual report submitted to the Congress pursuant to section 1319B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, information regarding the compensation and expenses paid by the Federal home loan banks to the directors on the boards of directors of the banks.

.

203.

Federal Housing Finance Agency oversight of Federal Home Loan Banks

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), other than in provisions of that Act added or amended otherwise by this Act, is amended—

(1)

by striking sections 2A and 2B (12 U.S.C. 1422a, 1422b);

(2)

in section 6 (12 U.S.C. 1426(b)(1))—

(A)

in subsection (b)(1), in the matter preceding subparagraph (A), by striking Finance Board approval and inserting approval by the Director; and

(B)

in each of subsections (c)(4)(B) and (d)(2), by striking Finance Board regulations each place that term appears and inserting regulations of the Director;

(3)

in section 8 (12 U.S.C. 1428), in the section heading, by striking by the board;

(4)

in section 10(b) (12 U.S.C. 1430), by striking by formal resolution;

(5)

in section 18 (12 U.S.C. 1438), by striking subsection (b);

(6)

in section 21 (12 U.S.C. 1441)—

(A)

in subsection (b)—

(i)

in paragraph (5), by striking Chairperson of the Federal Housing Finance Board and inserting Director; and

(ii)

in the heading for paragraph (8), by striking federal housing finance board and inserting director; and

(B)

in subsection (i), in the heading for paragraph (2), by striking federal housing finance board and inserting director;

(7)

in section 23 (12 U.S.C. 1443), by striking Board of Directors of the Federal Housing Finance Board and inserting Director;

(8)

by striking the Board each place such term appears in such Act (except in subsections (a), (b), and (c) of section 11 (12 U.S.C. 1431), section 15 (12 U.S.C. 1435), section 21(f)(2) (12 U.S.C. 1441(f)(2)), subsections (a), (k)(2)(B)(i), and (n)(6)(C)(ii) of section 21A (12 U.S.C. 1441a), subsections (e)(7), (f)(2)(C), and (k)(7)(B)(ii) of section 21B (12 U.S.C. 1441b), the first two places such term appears in section 22 (12 U.S.C. 1442), and section 25 (12 U.S.C. 1445)) and inserting the Director;

(9)

by striking The Board each place such term appears in such Act (except in sections 7(e) (12 U.S.C. 1427(e)), and 11(b) (12 U.S.C. 1431(b)) and inserting The Director;

(10)

by striking the Board’s each place such term appears in such Act and inserting the Director’s;

(11)

by striking The Board’s each place such term appears in such Act and inserting The Director’s;

(12)

by striking The Finance Board each place such term appears in such Act and inserting The Director;

(13)

by striking the Finance Board each place such term appears in such Act and inserting the Director;

(14)

by striking Federal Housing Finance Board each place such term appears and inserting Director;

(15)

by striking Federal Home Loan Bank Board each place such term appears in such Act (except in section 21A(n)(9)(B) (12 U.S.C.1441a(n)(9)(B)) and inserting Director;

(16)

in section 11(i) (12 U.S.C. 1431(i), by striking the Chairperson of; and

(17)

in section 21(e)(9) (12 U.S.C. 1441(e)(9)), by striking Chairperson of the.

204.

Debt issuing facility

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after section 11 the following:

11A.

Federal Home Loan Bank Finance Corporation

(a)

Establishment

(1)

In General

There is hereby established the Federal Home Loan Bank Finance Corporation, which shall be a jointly owned subsidiary of the Federal Home Loan Banks (in this section referred to as the Corporation).

(2)

Purposes

The purpose of the Corporation shall be—

(A)

to issue and service the consolidated obligations of the Federal Home Loan Banks in accordance with this Act; and

(B)

to perform all other necessary and proper functions in relation to the issuance and service of such obligations, as fiscal agent on behalf of the Federal Home Loan Banks, and any other functions performed by the Office of Finance on behalf of the Financing Corporation (established under section 21) and the Resolution Funding Corporation (established under section 21B).

(3)

Transfer of functions

(A)

In General

The functions of the Office of Finance of the Federal Home Loan Banks, shall be transferred to the Corporation immediately upon the conclusion of the organizational meeting of the board of directors (referred to in this subsection as the effective time) established under subsection (c).

(B)

Organizational meeting

The organizational meeting of the board of directors of the Corporation shall occur as soon as practicable after the date of enactment of the Federal Housing Finance Reform Act of 2005.

(C)

Interim procedures

Until the transfer under subparagraph (A), the Office of Finance established as a joint office of the Federal Home Loan Banks (referred to in this subsection as the predecessor office) shall continue to operate as if this section had not been enacted.

(D)

References

After the transfer under subparagraph (A), any reference under any Federal law to the Office of Finance and the Managing Director of the Office of Finance shall be deemed to be references to the Corporation and the chief executive officer of the Corporation, respectively.

(4)

Succession

(A)

Assets and liabilities

At the transfer under paragraph (3)(A), the Corporation shall, by operation of law and without any further action by the Federal Housing Finance Board, the predecessor office, or any court, succeed to the assets of, and assume all debts, obligations, contracts, and other liabilities of the predecessor office, matured or unmatured, accrued or absolute, contingent or otherwise, and whether or not reflected or reserved against on balance sheets, books of account, or records of the predecessor office.

(B)

Contracts

At the time of the transfer under paragraph (3)(A), the existing contractual obligations of the Federal Housing Finance Board, solely in its capacity as issuer of consolidated obligations of the Federal Home Loan Banks and the predecessor office shall, by operation of law and without any further action by the Federal Housing Finance Board, the predecessor office, or any court, become obligations, entitlements, and instruments of the Corporation.

(C)

Taxation

The succession to assets, assumption of liabilities, conversion of obligations and instruments, and effectuation of any other transaction by the Corporation to carry out this subsection shall not be treated as a taxable event under the laws of any State, or any political subdivision thereof.

(b)

Powers

Subject to the provisions of this Act, and such regulations as the Director may prescribe, the Corporation shall have the power to—

(1)

issue voting capital stock to the Federal Home Loan Banks;

(2)

issue and service Federal Home Loan Bank consolidated notes, consolidated bonds, consolidated debentures and other consolidated obligations under section 11 of this Act on behalf of the Federal Home Loan Banks;

(3)

determine the amount, maturities, rate of interest, terms, and other conditions of Federal Home Loan Bank consolidated obligations;

(4)

adopt, alter, and use a corporate seal;

(5)

make contracts;

(6)

sue and be sued in the corporate capacity of the Corporation, and to complain and defend in any action brought by or against the Corporation in any court of competent jurisdiction;

(7)

determine the terms and conditions under which the Corporation may indemnify its directors, officers, employees, and agents;

(8)

determine and implement the methodology for assessments of the Federal Home Loan Banks to fund all of the expenses of the Corporation; and

(9)

exercise such incidental powers not inconsistent with the provisions of this Act as are necessary or advisable to carry out the purposes of the Corporation.

(c)

Board of Directors

(1)

Establishment

The management of the Corporation shall be vested in a board of directors composed of the president of each of the Federal Home Loan Banks, ex officio.

(2)

Duties

The board of directors shall administer the affairs of the Corporation in accordance with the provisions of this Act.

(3)

Interim appointments

If the president of any Federal Home Loan Bank is vacant, the person serving in such capacity on an acting basis shall serve on the board of directors of the Corporation until replaced by the next person to fill the office of president of the Federal Home Loan Bank.

(4)

Powers

The board of directors shall exercise such powers as may be necessary or advisable to carry out the purposes of this section, including the power to—

(A)

set policies for the management and operation of the Corporation;

(B)

approve a strategic business plan for the Corporation;

(C)

review, adopt and monitor annual operation and capital budgets of the Corporation;

(D)

constitute and perform the duties of an audit committee, which to the extent possible shall operate consistent with—

(i)

the requirements established for the Federal Home Loan Banks; and

(ii)

the requirements pertaining to audit committee reports set forth in the rules of Securities and Exchange Commission;

(E)

select, employ, determine the compensation for, and assign the duties and functions of the president of the Corporation, who shall—

(i)

be the chief executive officer for the Corporation and shall direct the implementation of the policies adopted by the board of directors of the Corporation;

(ii)

serve as a member of the Directorate of the Financing Corporation, under section 21(b)(1)(A); and

(iii)

serve as a member of the Directorate of the Resolution Funding Corporation, under section 21B(c)(1)(A);

(F)

provide for the review and approval of all contracts of the Corporation;

(G)

have the exclusive authority to employ and contract for the services of an independent, external auditor for the annual and quarterly combined financial statements of the Federal Home Loan Banks; and

(H)

select, evaluate, determine the compensation of, and, as appropriate, replace the internal auditor of the Corporation, who may be removed only by vote of the board of directors of the Corporation.

(5)

Pay

The members of the board of directors of the Corporation shall not receive compensation for their services as members of the board of directors.

(6)

Quorum requirement

(A)

In General

No business of the Corporation may be conducted by the board of directors unless a quorum of the members of the board of directors is present in person or by telephone, or through action taken by written consent executed by all of the directors.

(B)

Number

Directors representing a majority of the members of the board of directors shall constitute a quorum.

(C)

Vote required

Action taken by the board of directors shall be approved by a majority of the directors in attendance at any meeting at which a quorum is present, unless the board of directors adopts procedures requiring a greater voting requirement.

(7)

Appointment of officers and adoption of rules of procedure

The board of directors of the Corporation shall—

(A)

select, from among the members of such board, a Chairperson and a Vice Chairperson; and

(B)

adopt by-laws and other rules of procedure for actions before the board of directors, including the establishment of 1 or more committees to take action on behalf of the board of directors, and the delegation of powers of the board of directors to any committee or officer of the Corporation.

(d)

Stock

(1)

Issuance of equal amount to each bank

The Corporation shall issue to each Federal home loan bank one share of voting capital stock, with a par value of $100 per share.

(2)

Restricted transferability

Stock issued under paragraph (1) may be owned and held only by the Federal Home Loan Banks.

(3)

Payment upon issuance

Upon issuance of any share of stock under this subsection to any Federal Home Loan Bank, the bank shall pay to the Corporation the total amount due for such stock.

(4)

Distribution requirement

(A)

In General

The total amount of outstanding stock of the Corporation shall, at all times, be distributed equally among all the Federal Home Loan Banks.

(B)

Procedures

The board of directors of the Corporation shall adopt procedures to implement subparagraph (A).

(e)

Status

Except to the extent expressly provided in this Act, or in rules and regulations promulgated by the Director, or unless the context clearly indicates otherwise, the Corporation shall be accorded the same status as a Federal Home Loan Bank for purposes of any law, including sections 2B and 13 of this Act.

.

205.

Securities and Exchange Commission disclosure

(a)

In General

The Federal Home Loan Banks shall be exempt from compliance with—

(1)

sections 13(e), 14(a), 14(c), and 17A of the Securities Exchange Act of 1934 and related Commission regulations; and

(2)

section 15 of that Act and related Securities and Exchange Commission regulations with respect to transactions in capital stock of the Banks.

(b)

Member exemption

The members of the Federal Home Loan Banks shall be exempt from compliance with sections 13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of 1934 and related Securities and Exchange Commission regulations with respect to their ownership of, or transactions in, capital stock of the Federal Home Loan Banks.

(c)

Exempted and Government securities

(1)

Capital stock

The capital stock issued by each of the Federal Home Loan Banks under section 6 of the Federal Home Loan Bank Act are—

(A)

exempted securities within the meaning of section 3(a)(2) of the Securities Act of 1933; and

(B)

exempted securities within the meaning of section 3(a)(12)(A) of the Securities Exchange Act of 1934.

(2)

Other obligations

The debentures, bonds, and other obligations issued under section 11 of the Federal Home Loan Bank Act are—

(A)

exempted securities within the meaning of section 3(a)(2) of the Securities Act of 1933;

(B)

government securities within the meaning of section 3(a)(42) of the Securities Exchange Act of 1934;

(C)

excluded from the definition of government securities broker within section 3(a)(43) of the Securities Exchange Act of 1934;

(D)

excluded from the definition of government securities dealer within section 3(a)(44) of the Securities Exchange Act of 1934; and

(E)

government securities within the meaning of section 2(a)(16) of the Investment Company Act of 1940.

(d)

Exemption from reporting requirements

The Federal Home Loan Banks shall be exempt from periodic reporting requirements pertaining to—

(1)

the disclosure of related party transactions that occur in the ordinary course of business of the Banks with their members; and

(2)

the disclosure of unregistered sales of equity securities.

(e)

Tender offers

The Securities and Exchange Commission’s rules relating to tender offers shall not apply in connection with transactions in capital stock of the Federal Home Loan Banks.

(f)

Regulations

In issuing final regulations to implement provisions of this section, the Securities and Exchange Commission shall consider the distinctive characteristics of the Federal Home Loan Banks when evaluating the accounting treatment with respect to the payment to REFCORP, the role of the combined financial statements of the twelve Banks, the accounting classification of redeemable capital stock, and the accounting treatment related to the joint and several nature of the obligations of the Banks.

206.

Community financial institution members

(a)

Total asset requirement

Paragraph (12) of section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422(12)), as so redesignated by section 202(2)of this Act, is amended by striking $500,000,000 each place such term appears and inserting $1,000,000,000.

(b)

Use of advances for community development activities

Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended—

(1)

in paragraph (2)(B)—

(A)

by striking and; and

(B)

by inserting , and community development activities before the period at the end; and

(2)

in paragraph (6)—

(A)

by striking and; and

(B)

by inserting and community development activities before shall.

III

Transfer of functions, personnel, and property of Office of Federal Housing Enterprise Oversight and Federal Housing Finance Board

A

Office of Federal Housing Enterprise Oversight

301.

Abolishment of OFHEO

(a)

In General

Effective at the end of the 1-year period beginning on the date of the enactment of this Act, the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and the positions of the Director and Deputy Director of such Office are abolished.

(b)

Disposition of affairs

During the 1-year period beginning on the date of the enactment of this Act, the Director of the Office of Federal Housing Enterprise Oversight shall, solely for the purpose of winding up the affairs of the Office of Federal Housing Enterprise Oversight—

(1)

manage the employees of such Office and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee pursuant to section 303; and

(2)

may take any other action necessary for the purpose of winding up the affairs of the Office.

(c)

Status of employees before transfer

The amendments made by title I and the abolishment of the Office of Federal Housing Enterprise Oversight under subsection (a) of this section may not be construed to affect the status of any employee of such Office as employees of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee pursuant to section 303.

(d)

Use of property and services

(1)

Property

The Director of the Federal Housing Finance Agency may use the property of the Office of Federal Housing Enterprise Oversight to perform functions which have been transferred to the Director of the Federal Housing Finance Agency for such time as is reasonable to facilitate the orderly transfer of functions transferred pursuant to any other provision of this Act or any amendment made by this Act to any other provision of law.

(2)

Agency services

Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, which was providing supporting services to the Office of Federal Housing Enterprise Oversight before the expiration of the period under subsection (a) in connection with functions that are transferred to the Director of the Federal Housing Finance Agency shall—

(A)

continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and

(B)

consult with any such agency to coordinate and facilitate a prompt and reasonable transition.

(e)

Savings provisions

(1)

Existing rights, duties, and obligations not affected

Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Office of Federal Housing Enterprise Oversight, or any other person, which—

(A)

arises under or pursuant to the title XIII of the Housing and Community Development Act of 1992, the Federal National Mortgage Association Charter Act, the Federal Home Loan Mortgage Corporation Act, or any other provision of law applicable with respect to such Office; and

(B)

existed on the day before the abolishment under subsection (a) of this section.

(2)

Continuation of suits

No action or other proceeding commenced by or against the Director of the Office of Federal Housing Enterprise Oversight in connection with functions that are transferred to the Director of the Federal Housing Finance Agency shall abate by reason of the enactment of this Act, except that the Director of the Federal Housing Finance Agency shall be substituted for the Director of the Office of Federal Housing Enterprise Oversight as a party to any such action or proceeding.

302.

Continuation and coordination of certain regulations

All regulations, orders, determinations, and resolutions that—

(1)

were issued, made, prescribed, or allowed to become effective by—

(A)

the Office of Federal Housing Enterprise Oversight;

(B)

the Secretary of Housing and Urban Development and that relate to the Secretary’s authority under—

(i)

title XIII of the Housing and Community Development Act of 1992;

(ii)

under the Federal National Mortgage Association Charter Act, with respect to the Federal National Mortgage Association; or

(iii)

the Federal Home Loan Mortgage Corporation Act; or

(C)

a court of competent jurisdiction and that relate to functions transferred by this Act; and

(2)

are in effect on the date of the abolishment under section 301(a) of this Act,

shall remain in effect according to the terms of such regulations, orders, determinations, and resolutions, and shall be enforceable by or against the Director of the Federal Housing Finance Agency until modified, terminated, set aside, or superseded in accordance with applicable law by such Director, as the case may be, any court of competent jurisdiction, or operation of law.
303.

Transfer and rights of employees of OFHEO

(a)

Transfer

Each employee of the Office of Federal Housing Enterprise Oversight shall be transferred to the Federal Housing Finance Agency for employment no later than the date of the abolishment under section 301(a) of this Act and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.

(b)

Guaranteed positions

Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated or reduced in grade or compensation for 12 months after the date of transfer, except for cause or, if the employee is a temporary employee, separated in accordance with the terms of the appointment.

(c)

Appointment authority for excepted service employees

(1)

In General

In the case of employees occupying positions in the excepted service, any appointment authority established pursuant to law or regulations of the Office of Personnel Management for filling such positions shall be transferred, subject to paragraph (2).

(2)

Decline of transfer

The Director of the Federal Housing Finance Agency may decline a transfer of authority under paragraph (1) (and the employees appointed pursuant thereto) to the extent that such authority relates to positions excepted from the competitive service because of their confidential, policy-making, policy-determining, or policy-advocating character.

(d)

Reorganization

If the Director of the Federal Housing Finance Agency determines, after the end of the 1-year period beginning on the date of the abolishment under section 201(a), that a reorganization of the combined work force is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employees retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.

(e)

Employee benefit programs

Any employee of the Office of Federal Housing Enterprise Oversight accepting employment with the Director of the Federal Housing Finance Agency as a result of a transfer under subsection (a) may retain for 12 months after the date such transfer occurs membership in any employee benefit program of the Federal Housing Finance Agency or the Office of Federal Housing Enterprise Oversight, as applicable, including insurance, to which such employee belongs on the date of the abolishment under section 201(a) if—

(1)

the employee does not elect to give up the benefit or membership in the program; and

(2)

the benefit or program is continued by the Director of the Federal Housing Finance Agency;

The difference in the costs between the benefits which would have been provided by such agency and those provided by this section shall be paid by the Director of the Federal Housing Finance Agency. If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by such Director, the employee shall be permitted to select an alternate Federal health insurance program within 30 days of such election or notice, without regard to any other regularly scheduled open season.
304.

Transfer of property and facilities

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

B

Federal Housing Finance Board

321.

Abolishment of the Federal Housing Finance Board

(a)

In General

Effective at the end of the 1-year period beginning on the date of enactment of this Act, the Federal Housing Finance Board (in this title referred to as the Board) is abolished.

(b)

Disposition of affairs

During the 1-year period beginning on the date of enactment of this Act, the Board, solely for the purpose of winding up the affairs of the Board—

(1)

shall manage the employees of such Board and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee under section 323; and

(2)

may take any other action necessary for the purpose of winding up the affairs of the Board.

(c)

Status of employees before transfer

The amendments made by titles I and II and the abolishment of the Board under subsection (a) may not be construed to affect the status of any employee of such Board as employees of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee under section 403.

(d)

Use of property and services

(1)

Property

The Director of the Federal Housing Finance Agency may use the property of the Board to perform functions which have been transferred to the Director of the Federal Housing Finance Agency for such time as is reasonable to facilitate the orderly transfer of functions transferred under any other provision of this Act or any amendment made by this Act to any other provision of law.

(2)

Agency services

Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, which was providing supporting services to the Board before the expiration of the 1-year period under subsection (a) in connection with functions that are transferred to the Director of the Federal Housing Finance Agency shall—

(A)

continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and

(B)

consult with any such agency to coordinate and facilitate a prompt and reasonable transition.

(e)

Savings provisions

(1)

Existing rights, duties, and obligations not affected

Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, a member of the Board, or any other person, which—

(A)

arises under title XIII of the Housing and Community Development Act of 1992, the Federal National Mortgage Association Charter Act, the Federal Home Loan Mortgage Corporation Act, the Federal Home Loan Bank Act, or any other provision of law applicable with respect to such Board; and

(B)

existed on the day before the effective date of the abolishment under subsection (a).

(2)

Continuation of suits

No action or other proceeding commenced by or against the Board in connection with functions that are transferred to the Director of the Federal Housing Finance Agency shall abate by reason of the enactment of this Act, except that the Director of the Federal Housing Finance Agency shall be substituted for the Board or any member thereof as a party to any such action or proceeding.

322.

Continuation and coordination of certain regulations

(a)

In General

All regulations, orders, and determinations described under subsection (b) shall remain in effect according to the terms of such regulations, orders, determinations, and resolutions, and shall be enforceable by or against the Director of the Federal Housing Finance Agency until modified, terminated, set aside, or superseded in accordance with applicable law by such Director, any court of competent jurisdiction, or operation of law.

(b)

Applicability

A regulation, order, or determination is described under this subsection if it—

(1)

was issued, made, prescribed, or allowed to become effective by—

(A)

the Board; or

(B)

a court of competent jurisdiction and that relate to functions transferred by this Act; and

(2)

is in effect on the effective date of the abolishment under section 321(a).

323.

Transfer and rights of employees of the Federal Housing Finance Board

(a)

Transfer

Each employee of the Board shall be transferred to the Federal Housing Finance Agency for employment not later than the effective date of the abolishment under section 321(a), and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.

(b)

Guaranteed positions

Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer. Each such employee holding a permanent position shall not be involuntarily separated or reduced in grade or compensation for 12 months after the date of transfer, except for cause or, if the employee is a temporary employee, separated in accordance with the terms of the appointment.

(c)

Appointment authority for excepted and Senior Executive Service employees

(1)

In General

In the case of employees occupying positions in the excepted service or the Senior Executive Service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such positions shall be transferred, subject to paragraph (2).

(2)

Decline of transfer

The Director of the Federal Housing Finance Agency may decline a transfer of authority under paragraph (1) to the extent that such authority relates to positions excepted from the competitive service because of their confidential, policymaking, policy-determining, or policy-advocating character, and noncareer positions in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code).

(d)

Reorganization

If the Director of the Federal Housing Finance Agency determines, after the end of the 1-year period beginning on the effective date of the abolishment under section 321(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employees retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.

(e)

Employee benefit programs

(1)

In General

Any employee of the Board accepting employment with the Federal Housing Finance Agency as a result of a transfer under subsection (a) may retain for 12 months after the date on which such transfer occurs membership in any employee benefit program of the Federal Housing Finance Agency or the Board, as applicable, including insurance, to which such employee belongs on the effective date of the abolishment under section 321(a) if—

(A)

the employee does not elect to give up the benefit or membership in the program; and

(B)

the benefit or program is continued by the Director of the Federal Housing Finance Agency.

(2)

Cost differential

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

324.

Transfer of property and facilities

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