< Back to S. 1100 (110th Congress, 2007–2009)

Text of the Federal Housing Enterprise Regulatory Reform Act of 2007

This bill was introduced on April 12, 2007, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 12, 2007 (Introduced).

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II

110th CONGRESS

1st Session

S. 1100

IN THE SENATE OF THE UNITED STATES

April 12, 2007

(for himself, Mr. Sununu, Mrs. Dole, and Mr. Martinez) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To address the regulation of secondary mortgage market enterprises, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Federal Housing Enterprise Regulatory Reform Act of 2007.

(b)

Table of Contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

TITLE I—REFORM OF REGULATION OF ENTERPRISES

Subtitle A—Improvement of Safety and Soundness Supervision

Sec. 101. Establishment of the Federal Housing Enterprise Regulatory Agency.

Sec. 102. Duties and authorities of Director.

Sec. 103. Federal Housing Enterprise Board.

Sec. 104. Authority to require reports by regulated entities.

Sec. 105. Examiners and accountants; authority to contract for reviews of regulated entities.

Sec. 106. Assessments.

Sec. 107. Regulations and orders.

Sec. 108. Prudential management and operations standards.

Sec. 109. Capital levels and holdings.

Sec. 110. Risk-Based capital test for enterprises.

Sec. 111. Registration of enterprise securities.

Sec. 112. Limit on golden parachutes.

Sec. 113. Reporting of fraudulent loans.

Subtitle B—Improvement of Mission Supervision

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

Sec. 122. Review of enterprise products.

Sec. 123. Monitoring and enforcing compliance with housing goals.

Sec. 124. Assumption by Director of other HUD responsibilities.

Sec. 125. Administrative and judicial enforcement proceedings.

Sec. 126. Conforming loan limits.

Sec. 127. Reporting of mortgage data; housing goals.

Sec. 128. Duty to serve underserved markets.

Sec. 129. Home purchase goal.

Subtitle C—Prompt Corrective Action

Sec. 141. Critical capital levels.

Sec. 142. Capital classifications.

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

Sec. 144. Supervisory actions applicable to significantly undercapitalized regulated entities.

Sec. 145. Authority over critically undercapitalized regulated entities.

Subtitle D—Enforcement Actions

Sec. 151. Cease-and-desist proceedings.

Sec. 152. Temporary cease-and-desist proceedings.

Sec. 153. Removal and prohibition authority.

Sec. 154. Enforcement and jurisdiction.

Sec. 155. Civil money penalties.

Sec. 156. Criminal penalty.

Sec. 157. Notice after separation from service.

Sec. 158. Subpoena authority.

Subtitle E—General Provisions

Sec. 161. Conforming and technical amendments.

Sec. 162. Presidentially appointed directors of enterprises.

Sec. 163. Effective date.

TITLE II—FEDERAL HOME LOAN BANKS

Sec. 201. Directors.

Sec. 202. Definitions.

Sec. 203. Agency oversight of Federal home loan banks.

Sec. 204. Federal Home Loan Bank Finance Facility.

Sec. 205. Exclusion from certain securities reporting requirements.

Sec. 206. Mergers.

Sec. 207. Authority to reduce districts.

Sec. 208. Management of home loan banks.

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND THE FEDERAL HOUSING FINANCE BOARD

Subtitle A—OFHEO

Sec. 301. Abolishment of OFHEO.

Sec. 302. Continuation and coordination of certain regulations.

Sec. 303. Transfer and rights of employees of OFHEO.

Sec. 304. Transfer of property and facilities.

Subtitle B—Federal Housing Finance Board

Sec. 311. Abolishment of the Federal Housing Finance Board.

Sec. 312. Continuation and coordination of certain regulations.

Sec. 313. Transfer and rights of employees of the Federal Housing Finance Board.

Sec. 314. Transfer of property and facilities.

TITLE IV—STUDIES AND REPORTS

Sec. 401. Study and report on Basel II and enterprise debt.

Sec. 402. Affordable housing audits.

Sec. 403. Report on insured depository institution holdings of regulated entity debt and mortgage-backed securities.

Sec. 404. Report on risk-based capital levels.

Sec. 405. Report on resources and allocations.

Sec. 406. Study and report on guarantee fees.

Sec. 407. Report on conforming loan limits.

Sec. 408. Reviews and studies relating to enterprises and related foundations.

Sec. 409. Recommendations.

2.

Definitions

(a)

Federal Safety and Soundness Act Definitions

Section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502) is amended—

(1)

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

(2)

in paragraph (14), by striking Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and inserting Federal Housing Enterprise Regulatory Agency;

(3)

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

(4)

by striking paragraph (15) and inserting the following:

(21)

Regulated entity

The term regulated entity means—

(A)

the Federal National Mortgage Association and any affiliate thereof;

(B)

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

(C)

any Federal Home Loan Bank.

;

(5)

by striking paragraph (13);

(6)

by redesignating paragraph (7) as paragraph (13);

(7)

by redesignating paragraphs (11), (12), and (14) as paragraphs (18) through (20), respectively;

(8)

by striking paragraphs (8) through (10) and inserting the following:

(15)

Low-income

The term low-income means a family income that is less than 50 percent of the area median income, or a family income that is less than 50 percent of the area median income.

(16)

Median income

The term area median income means—

(A)

the median family income for a metropolitan statistical area (as designated under 13 U.S.C. 421), if the family is located in a metropolitan statistical area; or

(B)

the statewide nonmetropolitan median family income, if the family is located outside a metropolitan statistical area.

(17)

Moderate-income

The term moderate-income means an individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 percent and not more than 80 percent of the area median income.

;

(9)

in paragraph (5)—

(A)

by striking (5) and inserting (9); and

(B)

by striking Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and inserting Federal Housing Enterprise Regulatory Agency;

(10)

by redesignating paragraph (6) as paragraph (10);

(11)

by redesignating paragraphs (2) through (4) as paragraphs (5) through (7), respectively;

(12)

by inserting after paragraph (7), as redesignated, the following:

(8)

Default; in danger of default

(A)

Default

The term default means, with respect to a regulated entity, any adjudication or other official determination by any court of competent jurisdiction, or the Agency, pursuant to which a conservator, receiver, limited-life regulated entity, or legal custodian is appointed for a regulated entity.

(B)

In danger of default

The term in danger of default means a regulated entity with respect to which—

(i)

in the opinion of the Agency—

(I)

the regulated entity is not likely to be able to pay the obligations of the regulated entity in the normal course of business; or

(II)

the regulated entity has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and

(ii)

there is no reasonable prospect that the capital of the regulated entity will be replenished.

;

(13)

by inserting after paragraph (1) the following:

(2)

Agency; director

The term—

(A)

Agency means the Federal Housing Enterprise Regulatory Agency established under section 1311; and

(B)

Director means the Director of the Agency, appointed under section 1312;

(3)

Authorizing statutes

The term authorizing statutes means—

(A)

the Federal National Mortgage Association Charter Act;

(B)

the Federal Home Loan Mortgage Corporation Act; and

(C)

the Federal Home Loan Bank Act.

(4)

Board

The term Board means the Federal Housing Enterprise Board established under section 1313A.

;

(14)

by inserting after paragraph (10), as redesignated, the following:

(11)

Entity-affiliated party

The term 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, provided that a member of a Federal Home Loan Bank shall not be deemed to have participated in the affairs of that Bank solely by virtue of being a shareholder of, and obtaining advances from, that Bank;

(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; and

(E)

the Finance Facility.

(12)

Finance facility

The term Finance Facility means the Federal Home Loan Bank Finance Facility established under section 11A of the Federal Home Loan Bank Act.

(13)

Limited-life regulated entity

The term limited-life regulated entity means an entity established by the Agency under section 1367(i) with respect to a Federal Home Loan Bank in default or in danger of default or with respect to an enterprise in default or in danger of default.

;

(15)

in paragraph (25), as so redesignated by this section, by striking 60 each place that term appears and inserting 30; and

(16)

by adding at the end the following:

(26)

Upper- and middle-income

(A)

Upper-income

The term upper-income means a family income that is 120 percent of the area median income or greater.

(B)

Middle-income

The term middle-income means a family income that is not less than 80 percent but less than 120 percent of the area median income, or a median family income that is at least 80 percent and not more than 120 percent.

(27)

Violation

The term violation includes any action (alone or in combination with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.

.

(b)

References in This Act

As used in this Act, unless otherwise specified—

(1)

the term Agency means the Federal Housing Enterprise Regulatory Agency;

(2)

the term Director means the Director of the Agency; and

(3)

the terms enterprise, Finance Facility, regulated entity, and authorizing statutes have the same meanings as in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by this Act.

I

REFORM OF REGULATION OF ENTERPRISES

A

Improvement of Safety and Soundness Supervision

101.

Establishment of the Federal Housing Enterprise Regulatory Agency

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1311 and 1312 and inserting the following:

1311.

Establishment of the Federal Housing Enterprise Regulatory Agency

(a)

Establishment

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

(b)

General Supervisory and Regulatory Authority

(1)

In general

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

(2)

Authority over fannie mae, freddie mac, the federal home loan banks, and the finance facility

The Director shall have general regulatory authority over each regulated entity and the Finance Facility, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 1313, 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 Agency, who shall be the head of the Agency.

(b)

Appointment; Term

(1)

Appointment

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

(2)

Term

The Director shall be appointed for a term of 6 years, unless removed before the end of such term for cause by the President.

(3)

Vacancy

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

(4)

Service after end of term

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

(5)

Transitional provision

Notwithstanding paragraphs (1) and (2), during the period beginning on the effective date of the Federal Housing Enterprise Regulatory Reform Act of 2007, and ending on the date on which the Director is appointed and confirmed, the person serving as the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development on that effective date shall act for all purposes as, and with the full powers of, the Director.

(c)

Deputy Director of the Division of Enterprise Regulation

(1)

In general

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

(2)

Functions

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

(d)

Deputy Director of the Division of Federal Home Loan Bank Regulation

(1)

In general

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

(2)

Functions

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

(e)

Deputy Director for Housing Mission and Goals

(1)

In general

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

(2)

Functions

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

(f)

Acting Director

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

(g)

Limitations

The Director and each of the Deputy Directors may not—

(1)

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

(2)

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

(3)

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

.

102.

Duties and authorities of Director

(a)

In General

Section 1313 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended to read as follows:

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; and

(B)

to ensure that—

(i)

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

(ii)

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

(iii)

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

(iv)

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

(v)

the activities of each regulated entity and the manner in which such regulated entity is operated are consistent with the public interest;

(vi)

each regulated entity remains adequately capitalized, after due consideration of the risk to such regulated entity; and

(vii)

in the case of the Federal Home Loan Banks, they provide funds to community financial institutions for small businesses, small farms, and small agricultural businesses and accept as collateral whole interests in such obligations.

(2)

Scope of authority

The authority of the Director shall include the authority—

(A)

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

(B)

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

(b)

Delegation of Authority

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

(c)

Litigation Authority

(1)

In general

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

(2)

Subject to suit

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

.

(b)

Independence in Congressional Testimony and Recommendations

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

103.

Federal Housing Enterprise Board

(a)

In General

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313 the following:

1313A.

Federal Housing Enterprise Board

(a)

In General

There is established the Federal Housing Enterprise Board, which shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Director under this title.

(b)

Limitations

The Board may not exercise any executive authority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director.

(c)

Composition

The Board shall be comprised of 4 members, of whom—

(1)

1 member shall be the Secretary of the Treasury;

(2)

1 member shall be the Secretary of Housing and Urban Development;

(3)

1 member shall be the Chairman of the Securities and Exchange Commission; and

(4)

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

(d)

Meetings

(1)

In general

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

(2)

Special meetings

Either the Secretary of the Treasury, the Secretary of Housing and Urban Development, or the Chairman of the Securities and Exchange Commission may, upon giving written notice to the Director, require a special meeting of the Board.

(e)

Testimony

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

(1)

the safety and soundness of the regulated entities;

(2)

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

(3)

the overall operational status of the regulated entities;

(4)

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

(5)

operations, resources, and performance of the Agency; and

(6)

such other matters relating to the Agency and its fulfillment of its mission, as the Board determines appropriate.

.

(b)

Annual Report of the Director

Section 1319B(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4521(a)) is amended—

(1)

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

(2)

by striking enterprises each place that term appears and inserting regulated entities;

(3)

in paragraph (3), by striking ; and and inserting a semicolon;

(4)

in paragraph (4), by striking 1994. and inserting 1994; and; and

(5)

by adding at the end the following:

(5)

the assessment of the Board or any of its members with respect to—

(A)

the safety and soundness of the regulated entities;

(B)

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

(C)

the overall operational status of the regulated entities; and

(D)

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

(6)

operations, resources, and performance of the Agency; and

(7)

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

.

104.

Authority to require reports by regulated entities

(a)

In General

Section 1314 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4514) is amended—

(1)

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

(2)

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

(3)

by striking the enterprise and inserting the regulated entity;

(4)

in subsection (a)—

(A)

by striking the subsection heading and all that follows through and operations in paragraph (1) and inserting the following:

(a)

Regular and Special Reports

(1)

Regular reports

The Director may require, by general or specific orders, a regulated entity to submit regular reports, including financial statements determined on a fair value basis, on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate

; and

(B)

in paragraph (2)—

(i)

by inserting , by general or specific orders, after may also require; and

(ii)

by striking whenever and inserting on any of the topics specified in paragraph (1) or any other relevant topics, if; and

(5)

by adding at the end the following:

(c)

Penalties for Failure To Make Reports

(1)

Violations

It shall be a violation of this section for any regulated entity—

(A)

to fail to make, obtain, transmit, or publish any report or information required by the Director under this section, section 309(k) of the Federal National Mortgage Association Charter Act, or section 307(c) of the Federal Home Loan Mortgage Corporation Act, within the period of time specified in such provision of law or otherwise by the Director; or

(B)

to submit or publish any false or misleading report or information under this section.

(2)

Penalties

(A)

Tier 1

(i)

In general

A violation described in paragraph (1) shall be subject to a penalty of not more than $2,000 for each day during which such violation continues, in any case in which—

(I)

the subject regulated entity maintains procedures reasonably adapted to avoid any inadvertent error and the violation was unintentional and a result of such an error; or

(II)

the violation was an inadvertent transmittal or publication of any report which was minimally late.

(ii)

Burden of proof

For purposes of this subparagraph, the regulated entity shall have the burden of proving that the error was inadvertent or that a report was inadvertently transmitted or published late.

(B)

Tier 2

A violation described in paragraph (1) shall be subject to a penalty of not more than $20,000 for each day during which such violation continues or such false or misleading information is not corrected, in any case that is not addressed in subparagraph (A) or (C).

(C)

Tier 3

A violation described in paragraph (1) shall be subject to a penalty of not more than $2,000,000 per day for each day during which such violation continues or such false or misleading information is not corrected, in any case in which the subject regulated entity committed such violation knowingly or with reckless disregard for the accuracy of any such information or report.

(3)

Assessments

Any penalty imposed under this subsection shall be in lieu of a penalty under section 1376, but shall be assessed and collected by the Director in the manner provided in section 1376 for penalties imposed under that section, and any such assessment (including the determination of the amount of the penalty) shall be otherwise subject to the provisions of section 1376.

(4)

Hearing

A regulated entity against which a penalty is assessed under this section shall be afforded an agency hearing if the regulated entity submits a request for a hearing not later than 20 days after the date of the issuance of the notice of assessment. Section 1374 shall apply to any such proceedings.

.

(b)

Conforming Amendment

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking sections 1327 and 1328.

105.

Examiners and accountants; authority to contract for reviews of regulated entities

(a)

In General

Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended—

(1)

in subsection (a), by striking enterprise each place that term appears and inserting regulated entity;

(2)

in subsection (b), by striking an enterprise and inserting a regulated entity;

(3)

in subsection (c), in the second sentence, by inserting before the period to conduct examinations under this section;

(4)

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

(5)

by inserting after subsection (c) the following:

(d)

Inspector General

There shall be within the Agency an Inspector General, who shall be appointed in accordance with section 3(a) of the Inspector General Act of 1978.

.

(b)

Direct Hire Authority To Hire Accountants, Economists, and Examiners

Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following:

(h)

Appointment of Accountants, Economists, and Examiners

(1)

Applicability

This section shall apply with respect to any position of examiner, accountant, economist, and specialist in financial markets and in technology at the Agency, with respect to supervision and regulation of the 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)

Amendments to Inspector General Act

Section 11 of the Inspector General Act of 1978 (5 U.S.C. 11 App.) is amended—

(1)

in paragraph (1), by inserting , the Director of the Federal Housing Enterprises Regulatory Agency after Social Security Administration; and

(2)

in paragraph (2), by inserting , the Federal Housing Enterprises Regulatory Agency after Social Security Administration.

(d)

Authority To Contract for Reviews of Regulated Entities

Section 1319 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended in the section heading, by striking by rating organization.

106.

Assessments

Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Annual Assessments

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

(1)

the expenses of any examinations under section 1317;

(2)

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

(3)

such amounts in excess of actual expenses for any given fiscal year, as deemed necessary by the Director to maintain working capital.

;

(2)

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

(3)

by striking enterprises each place that term appears and inserting regulated entities;

(4)

by striking enterprise each place that term appears, other than in subparagraph (B) of subsection (b)(3), and inserting regulated entity;

(5)

in subsection (b)—

(A)

in paragraph (1)—

(i)

by striking bears to and inserting bear to; and

(ii)

by striking both and inserting all; and

(B)

in paragraph (3)(B)—

(i)

by inserting with respect to an enterprise, before the unpaid principal; and

(ii)

by striking by the enterprise and inserting by an enterprise;

(6)

in subsection (c)—

(A)

by striking The semiannual and inserting the following:

(1)

In general

The semiannual

; and

(B)

by adding at the end the following:

(2)

Adjustments

The Director may adjust the amounts of any semiannual assessments for an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as the Director determines necessary to ensure that the costs of enforcement activities under subtitles B and C for a regulated entity are borne only by that regulated entity.

(3)

Special circumstances

If at any time, as a result of increased costs of regulation of a regulated entity that is not classified (for purposes of subtitle B) as adequately capitalized, or as the result of supervisory or enforcement activities under subtitle B or C for a regulated entity, the amount available from any semiannual payment made by such regulated entity pursuant to subsection (b) is insufficient to cover the costs of the Agency with respect to such entity, the Director may make and collect from such entity an immediate assessment to cover the amount of such deficiency for the semiannual period. If, at the end of any semiannual period during which such an assessment is made, any amount remains from such assessment, such remaining amount shall be deducted from the assessment for such regulated entity for the following semiannual period.

;

(7)

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

(8)

by striking subsections (e) and (f) and inserting the following:

(e)

Remission of Assessment

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

(f)

No Appropriated Funds

Salaries of the Director and other employees of the Agency, and all other expenses thereof, may be paid from assessments collected under this subsection or other sources, and shall not be construed to be Government funds or appropriated monies, or subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or any other authority.

; and

(9)

in subsection (g)—

(A)

by striking the Secretary and each place that term appears; and

(B)

in paragraph (3)—

(i)

by striking (A); and

(ii)

by striking , and (B) and all that follows through the end of the paragraph and inserting a period.

107.

Regulations and orders

Section 1319G of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4526) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Authority

The Director shall issue any regulations, guidelines, directives, or orders necessary to carry out the duties of the Director under this title or the authorizing statutes, and to ensure that the purposes of this title and the authorizing statutes are accomplished.

; and

(2)

by striking subsection (c).

108.

Prudential management and operations standards

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 1313A, as added by this Act, the following new section:

1313B.

Prudential management and operations standards

The Director may establish standards, by regulation, order, or guideline, 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 interest rate risk exposure;

(4)

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

(5)

adequacy and maintenance of liquidity and reserves;

(6)

management of asset and investment portfolio growth;

(7)

investments and acquisitions of assets by a regulated entity, to ensure that they are consistent with the purposes of this title and the authorizing statutes;

(8)

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

(9)

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

.

109.

Capital levels and holdings

Subtitle B of the Federal Housing Enterprises Financial Safety and Soundness 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 Enterprises, Special Enforcement Powers, Limitation on Assets, and Securities Treatment

;

and

(2)

by adding at the end the following:

1369E.

Affordable housing focused portfolios

(a)

Supporting affordable housing

Congress finds that, consistent with the missions of the enterprises, the portfolio holdings of the enterprises should be focused, to the maximum extent possible, on mortgages and mortgage-backed securities that meet the affordable housing goals established for the enterprises pursuant to this Act.

(b)

Authority of the director

The Director shall, by regulation, provide that any mortgages or mortgage-related securities acquired by an enterprise after the date of enactment of this Act shall—

(1)

meet one or more of the housing goals established for the enterprise under this Act; or

(2)

be promptly securitized and sold to third parties.

(c)

Temporary adjustments

The Director may, by order, make temporary adjustments to the standards under subsection (b), if such action would help to mitigate market disruptions in the housing finance system.

.

110.

Risk-Based capital test for enterprises

(a)

Risk-Based Capital Levels

Section 1361 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611) is amended to read as follows:

1361.

Risk-Based capital levels

(a)

In General

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

(b)

No Limitation

Nothing in this section limits the authority of the Director to require other reports or undertakings in furtherance of the responsibilities of the Director under this Act.

.

(b)

Minimum Capital Levels for Regulated Entities

(1)

Enterprises

Section 1362 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4612) is amended—

(A)

in the section heading, by inserting for enterprises after levels; and

(B)

by striking subsection (b) and inserting the following:

(b)

Regulatory Discretion

The Director may, by regulation or order, establish a minimum capital level that is higher than the level specified in subsection (a).

.

(2)

Federal home loan banks

Section 6(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)) is amended by adding at the end the following:

(C)

Authority to alter level

The Director may, by regulation or order, establish a minimum capital level that is higher than the level specified in subparagraph (A).

.

111.

Registration of Enterprise Securities

(a)

Fannie Mae

(1)

Mortgage-backed securities

Section 304(d) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(d)) is amended by striking the fourth sentence and inserting the following: Securities issued by the corporation under this subsection shall not be exempt securities for purposes of the Securities Act of 1933..

(2)

Subordinate obligations

Section 304(e) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719(e)) is amended by striking the fourth sentence and inserting the following: Obligations issued by the corporation under this subsection shall not be exempt securities for purposes of the Securities Act of 1933..

(3)

Securities

Section 311 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723c) is amended—

(A)

in the section heading, by striking association;

(B)

by inserting (a) In General.— after Sec. 311.;

(C)

in the second sentence, by inserting by the Association after issued; and

(D)

by adding at the end the following:

(b)

Treatment of corporation securities

(1)

In general

Any stock, obligations, securities, participations, or other instruments issued or guaranteed by the corporation pursuant to this title shall not be exempt securities for purposes of the Securities Act of 1933.

(2)

Exemption for approved sellers

Notwithstanding any other provision of this title or the Securities Act of 1933, transactions involving the initial disposition by an approved seller of pooled certificates that are acquired by that seller from the corporation upon the initial issuance of the pooled certificates shall be deemed to be transactions by a person other than an issuer, underwriter, or dealer for purposes of the Securities Act of 1933.

(3)

Definitions

For purposes of this subsection, the following definitions shall apply:

(A)

Approved seller

The term approved seller means an institution approved by the corporation to sell mortgage loans to the corporation in exchange for pooled certificates.

(B)

Pooled certificates

The term pooled certificates means single class mortgage-backed securities guaranteed by the corporation that have been issued by the corporation directly to the approved seller in exchange for the mortgage loans underlying such mortgage-backed securities.

(4)

Mortgage related securities

A single class mortgage-backed security guaranteed by the corporation that has been issued by the corporation directly to the approved seller in exchange for the mortgage loans underlying such mortgage-backed securities or directly by the corporation for cash shall be deemed to be a mortgage related security, as defined in section 3(a) of the Securities Exchange Act of 1934.

.

(b)

Freddie Mac

Section 306(g) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(g)) is amended to read as follows:

(g)

Treatment of securities

(1)

In general

Any securities issued or guaranteed by the Corporation shall not be exempt securities for purposes of the Securities Act of 1933.

(2)

Exemption for approved sellers

Notwithstanding any other provision of this title or the Securities Act of 1933, transactions involving the initial disposition by an approved seller of pooled certificates that are acquired by that seller from the Corporation upon the initial issuance of the pooled certificates shall be deemed to be transactions by a person other than an issuer, underwriter, or dealer for purposes of the Securities Act of 1933.

(3)

Definitions

For purposes of this subsection, the following definitions shall apply:

(A)

Approved seller

The term approved seller means an institution approved by the Corporation to sell mortgage loans to the Corporation in exchange for pooled certificates.

(B)

Pooled certificates

The term pooled certificates means single class mortgage-backed securities guaranteed by the Corporation that have been issued by the Corporation directly to the approved seller in exchange for the mortgage loans underlying such mortgage-backed securities.

.

(c)

Limitation on fees

Section 6(b)(2) of the Securities Act of 1933 (15 U.S.C. 77f(b)(2)) is amended by adding at the end the following: Notwithstanding any other provision of this title, no applicant, or group of affiliated applicants that does not include any investment company registered under the Investment Company Act of 1940, filing a registration statement subject to a fee shall be required in any fiscal year with respect to all registration statements filed by such applicant in such fiscal year to pay an aggregate amount in fees to the Commission pursuant to this subsection in an amount that exceeds 5 percent of the target offsetting collection amount for such fiscal year. Fees paid in connection with registration statements relating to business combinations shall not be included in calculating the total fees paid by any such applicant..

(d)

No effect on other law

Nothing in this section or the amendments made by this section shall be construed to affect any exemption from the provisions of the Trust Indenture Act of 1939 provided to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

(e)

Regulations

The Securities and Exchange Commission may issue such regulations as may be necessary or appropriate to carry out this section and the amendments made by this section.

(f)

Effective Date

The amendments made by this section shall become effective 1 year after the date of enactment of this Act.

112.

Limit on golden parachutes

Section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended by adding at the end the following:

(c)

Authority To Regulate or Prohibit Certain Forms of Benefits to Affiliated Parties

(1)

Golden parachutes and indemnification payments

The Agency may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment.

(2)

Factors to be taken into account

The Agency shall prescribe, by regulation, the factors to be considered by the Agency in taking any action pursuant to paragraph (1), which may include such factors as—

(A)

whether there is a reasonable basis to believe that the affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the regulated entity that has had a material effect on the financial condition of the regulated entity;

(B)

whether there is a reasonable basis to believe that the affiliated party is substantially responsible for the insolvency of the regulated entity, the appointment of a conservator or receiver for the regulated entity, or the troubled condition of the regulated entity (as defined in regulations prescribed by the Agency);

(C)

whether there is a reasonable basis to believe that the affiliated party has materially violated any applicable provision of Federal or State law or regulation that has had a material affect on the financial condition of the regulated entity;

(D)

whether the affiliated party was in a position of managerial or fiduciary responsibility; and

(E)

the length of time that the party was affiliated with the regulated entity, and the degree to which—

(i)

the payment reasonably reflects compensation earned over the period of employment; and

(ii)

the compensation involved represents a reasonable payment for services rendered.

(3)

Certain payments prohibited

No regulated entity may prepay the salary or any liability or legal expense of any affiliated party if such payment is made—

(A)

in contemplation of the insolvency of such regulated entity, or after the commission of an act of insolvency; and

(B)

with a view to, or having the result of—

(i)

preventing the proper application of the assets of the regulated entity to creditors; or

(ii)

preferring one creditor over another.

(4)

Golden parachute payment defined

(A)

In general

For purposes of this subsection, the term golden parachute payment means any payment (or any agreement to make any payment) in the nature of compensation by any regulated entity for the benefit of any affiliated party pursuant to an obligation of such regulated entity that—

(i)

is contingent on the termination of such party’s affiliation with the regulated entity; and

(ii)

is received on or after the date on which—

(I)

the regulated entity became insolvent;

(II)

any conservator or receiver is appointed for such regulated entity; or

(III)

the Agency determines that the regulated entity is in a troubled condition (as defined in the regulations of the Agency).

(B)

Certain payments in contemplation of an event

Any payment which would be a golden parachute payment but for the fact that such payment was made before the date referred to in subparagraph (A)(ii) shall be treated as a golden parachute payment if the payment was made in contemplation of the occurrence of an event described in any subclause of such subparagraph.

(C)

Certain payments not included

For purposes of this subsection, the term golden parachute payment shall not include—

(i)

any payment made pursuant to a retirement plan which is qualified (or is intended to be qualified) under section 401 of the Internal Revenue Code of 1986, or other nondiscriminatory benefit plan;

(ii)

any payment made pursuant to a bona fide deferred compensation plan or arrangement which the Board determines, by regulation or order, to be permissible; or

(iii)

any payment made by reason of the death or disability of an affiliated party.

(5)

Other definitions

For purposes of this subsection, the following definitions shall apply:

(A)

Indemnification payment

Subject to paragraph (6), the term indemnification payment means any payment (or any agreement to make any payment) by any regulated entity for the benefit of any person who is or was an affiliated party, to pay or reimburse such person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Agency which results in a final order under which such person—

(i)

is assessed a civil money penalty;

(ii)

is removed or prohibited from participating in conduct of the affairs of the regulated entity; or

(iii)

is required to take any affirmative action to correct certain conditions resulting from violations or practices, by order of the Agency.

(B)

Liability or legal expense

The term liability or legal expense means—

(i)

any legal or other professional expense incurred in connection with any claim, proceeding, or action;

(ii)

the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and

(iii)

the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.

(C)

Payment

The term payment includes—

(i)

any direct or indirect transfer of any funds or any asset; and

(ii)

any segregation of any funds or assets for the purpose of making, or pursuant to an agreement to make, any payment after the date on which such funds or assets are segregated, without regard to whether the obligation to make such payment is contingent on—

(I)

the determination, after such date, of the liability for the payment of such amount; or

(II)

the liquidation, after such date, of the amount of such payment.

(6)

Certain commercial insurance coverage not treated as covered benefit payment

No provision of this subsection shall be construed as prohibiting any regulated entity from purchasing any commercial insurance policy or fidelity bond, except that, subject to any requirement described in paragraph (5)(A)(iii), such insurance policy or bond shall not cover any legal or liability expense of the regulated entity which is described in paragraph (5)(A).

.

113.

Reporting of fraudulent loans

Part 1 of subtitle C of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as amended by this Act, is amended by adding at the end the following:

1379E.

Reporting of fraudulent loans

(a)

Requirement To Report

The Director shall require a regulated entity to submit to the Director a timely report upon discovery by the regulated entity that it has purchased or sold a fraudulent loan or financial instrument, or suspects a possible fraud relating to the purchase or sale of any loan or financial instrument. The Director shall require each regulated entity to establish and maintain procedures designed to discover any such transactions.

(b)

Protection From Liability for Reports

Any regulated entity that makes a report pursuant to subsection (a), and any entity-affiliated party, that makes or requires another to make any such report, shall not be liable to any person under any provision of law or regulation, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement) for such report or for any failure to provide notice of such report to the person who is the subject of such report or any other persons identified in the report.

.

B

Improvement of Mission Supervision

121.

Transfer of program approval and housing goal oversight

Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended—

(1)

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

2

ADDITIONAL AUTHORITIES OF THE DIRECTOR

;

and

(2)

by striking sections 1321 and 1322.

122.

Review of enterprise products

Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended by this Act, is amended by inserting before section 1323 the following:

1321.

Prior approval authority for products

(a)

In General

The Director shall require each enterprise to obtain the approval of the Director for any product of the enterprise before initially offering the product.

(b)

Standard for Approval

In considering any request for approval of a product pursuant to subsection (a), the Director shall make a determination that—

(1)

in the case of a product of the Federal National Mortgage Association, the Director determines that the product is authorized under paragraph (2), (3), (4), or (5) of section 302(b) or section 304 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b), 1719);

(2)

in the case of a product of the Federal Home Loan Mortgage Corporation, the Director determines that the product is authorized under paragraph (1), (4), or (5) of section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a));

(3)

the product is in the public interest;

(4)

the product is consistent with the safety and soundness of the enterprise or the mortgage finance system; and

(5)

the product does not impair the stability or competitiveness of the mortgage finance system.

(c)

Procedure for Approval

(1)

Submission of request

An enterprise shall submit to the Director a written request for approval of a product that describes the product in such form as prescribed by order or regulation of the Director.

(2)

Request for public comment

Immediately upon receipt of a request for approval of a product, as required under paragraph (1), the Director shall publish notice of such request and of the period for public comment pursuant to paragraph (3) regarding the product, and a description of the product proposed by the request. The Director shall give interested parties the opportunity to respond in writing to the proposed product.

(3)

Public comment period

During the 30-day period beginning on the date of publication pursuant to paragraph (2) of a request for approval of a product, the Director shall receive public comments regarding the proposed product.

(4)

Offering of product

(A)

In general

Not later than 30 days after the close of the public comment period described in paragraph (3), the Director shall approve or deny the product, specifying the grounds for such decision in writing.

(B)

Failure to act

If the Director fails to act within the 30-day period described in subparagraph (A), then the enterprise may offer the product.

(d)

Expedited Review

(1)

Determination and notice

If an enterprise determines that any new activity, service, undertaking or offering is excluded from the definition of a product under subsection (f), then the enterprise shall provide written notice to the Director prior to the commencement of such activity, service, undertaking, or offering.

(2)

Director determination of applicable procedure

Immediately upon receipt of any notice pursuant to paragraph (1), the Director shall make a determination under paragraph (3).

(3)

Determination and treatment as a product

If the Director determines that any new activity, service, undertaking, or offering consists of, relates to, or involves a product—

(A)

the Director shall notify the enterprise of the determination;

(B)

the new activity, service, undertaking, or offering described in the notice under paragraph (1) shall be considered a product for the purposes of this section; and

(C)

the enterprise shall withdraw its request or submit a written request for approval of the product pursuant to subsection (c).

(e)

Conditional Approval

The Director may conditionally approve the offering of any product by an enterprise, and may establish terms, conditions, or limitations with respect to such product with which the enterprise must comply in order to offer such product.

(f)

Definition of Product

As used in this section, the term product

(1)

all programs, products, and activities, offered by the enterprise in the marketplace; and

(2)

does not include—

(A)

the automated loan underwriting system of an enterprise in existence as of the date of enactment of the Federal Housing Enterprise Regulatory Reform Act of 2007, including any upgrade to the technology, operating system, or software to operate the underwriting system; or

(B)

any modification to the mortgage terms and conditions or mortgage underwriting criteria relating to the mortgages that are purchased or guaranteed by an enterprise, provided that such modifications do not alter the underlying transaction so as to include services or financing, other than residential mortgage financing, or create significant new exposure to risk for the enterprise or the holder of the mortgage.

(g)

No Limitation

Nothing in this section shall be deemed to restrict—

(1)

the safety and soundness authority of the Director over all new and existing products or activities; or

(2)

the authority of the Director to review all new and existing products or activities to determine that such products or activities are consistent with the statutory mission of an enterprise.

.

123.

Monitoring and enforcing compliance with housing goals

Section 1336(a)(1) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4566(a)(1)) is amended by striking established and all that follows through 1334 and inserting under this subpart.

124.

Assumption by Director of other HUD responsibilities

(a)

In General

Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended—

(1)

by striking Secretary each place that term appears and inserting Director in each of sections 1323, 1324, 1326, 1331, 1332, 1333, 1334, and 1336;

(2)

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

(3)

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

(4)

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

(5)

by striking sections 1337, 1338, and 1349 (12 U.S.C. 4567, 4562 note, 4589).

(b)

Retention of Fair Housing Responsibilities

Section 1325 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4545) is amended in the matter preceding paragraph (1), by inserting of Housing and Urban Development after The Secretary.

125.

Administrative and judicial enforcement proceedings

(a)

Director Authority

Subpart C of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4581 et seq.) is amended by striking Secretary each place that term appears and inserting Director in each of—

(1)

section 1341 (12 U.S.C. 4581);

(2)

section 1342 (12 U.S.C. 4582);

(3)

section 1343 (12 U.S.C. 4583);

(4)

section 1344 (12 U.S.C. 4584);

(5)

section 1345 (12 U.S.C. 4585);

(6)

section 1346 (12 U.S.C. 4586);

(7)

section 1347 (12 U.S.C. 4587); and

(8)

section 1348 (12 U.S.C. 4588).

(b)

Subpoena Enforcement by Director

Section 1348(c) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4588(c)) is amended by inserting may bring an action or before may request.

126.

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 Corporation shall establish and all that follows through the end of the paragraph and inserting the following: Such limitations shall not exceed $417,000 for a mortgage secured by a single-family residence, $533,850 for a mortgage secured by a 2-family residence, $645,300 for a mortgage secured by a 3-family residence, or $801,950 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the effective date under section 163 of the Federal Housing Enterprise Regulatory Reform Act of 2007, subject to the limitations in this paragraph. Such limitation shall be calculated with respect to the total original principal obligation of the mortgage, and not merely with respect to the interest purchased by the enterprise. 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 most recent 12-month or fourth quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the Director of the Federal Housing Enterprise Regulatory Agency (pursuant to section 1321 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541))..

(b)

Freddie Mac

Section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is amended by striking The Corporation shall establish and all that follows through the end of the paragraph and inserting the following: Such limitations shall not exceed $417,000 for a mortgage secured by a single-family residence, $533,850 for a mortgage secured by a 2-family residence, $645,300 for a mortgage secured by a 3-family residence, or $801,950 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the effective date under section 163 of the Federal Housing Enterprise Regulatory Reform Act of 2007, subject to the limitations in this paragraph. Such limitation shall be calculated with respect to the total original principal obligation of the mortgage and not merely with respect to the interest purchased by the enterprise. 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 most recent 12-month or fourth quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the Director of the Federal Housing Enterprise Regulatory Agency (pursuant to section 1321 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541))..

(c)

Housing Price Index

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by this Act, is amended by inserting before section 1323 the following:

1322.

Housing Price Index

(a)

Method of Assessment

The Director shall establish, by regulation, and maintain a method of assessing the national average single-family housing price for use in adjusting the conforming loan limitations of the enterprises.

(b)

Considerations

The Director shall take into consideration the monthly survey of all major lenders conducted by the Agency to determine the national average single-family house price, the Housing Price Index maintained by the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development before the effective date under section 163 of the Federal Housing Enterprise Regulatory Reform Act of 2007, any appropriate housing price indexes of the Bureau of the Census of the Department of Commerce, and any other indexes or measure that the Director considers appropriate.

.

127.

Reporting of mortgage data; housing goals

(a)

Reporting of Mortgage Data

Section 1325 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4546), as so redesignated by this Act, is amended—

(1)

in subsection (a), by striking The Director and inserting Subject to subsection (d), the Director; and

(2)

by adding at the end the following:

(d)

Mortgage Data

The Director shall, by regulation or order, provide that certain information relating to single family mortgage data of the enterprises shall be disclosed to the public in order to make available to the public the same data from the enterprises that is required of insured depository institutions under the Home Mortgage Disclosure Act.

.

(b)

Definitions

Section 1334 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4564), as amended by this Act, is amended by adding at the end the following:

(d)

Definitions

For purposes of this section, the term underserved area means an urban census tract that has—

(1)

an average median family income of less than 80 percent of the area median family income; or

(2)

a minority population of at least 30 percent and a median family income of less than 100 percent of the area family median income.

.

128.

Duty to serve underserved markets

(a)

Establishment and Evaluation of Performance

Section 1335 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4565) is amended—

(1)

in the section heading, by inserting DUTY TO SERVE UNDERSERVED MARKETS AND before OTHER;

(2)

by striking subsection (b);

(3)

in subsection (a)—

(A)

by inserting and to carry out the duty under subsection (a) before , each enterprise shall;

(B)

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

(C)

in paragraph (4), by striking ; and and inserting a period; and

(D)

by striking paragraph (5); and

(4)

by redesignating subsection (a) as subsection (b);

(5)

by inserting before subsection (b) (as so redesignated) the following:

(a)

Duty To Serve Underserved Markets

(1)

Duty

In accordance with the purposes of the enterprises under section 301(3) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716) and section 301(b)(3) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 note) to undertake activities relating to mortgages on housing for very low-, low-, and moderate-income families, involving a reasonable economic return that may be less than the return earned on other activities, each enterprise shall have the duty to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets.

(2)

Underserved markets

To meet its duty under paragraph (1), each enterprise shall lead the industry in developing loan products and flexible underwriting guidelines to facilitate a secondary market—

(A)

for mortgages on manufactured homes for very low-, low-, and moderate-income families;

(B)

to preserve housing affordable to very low-, low-, and moderate-income families, including housing projects subsidized under—

(i)

the project-based and tenant-based rental assistance programs under section 8 of the United States Housing Act of 1937;

(ii)

the program under section 236 of the National Housing Act;

(iii)

the below market interest rate mortgage program under section 221(d)(4) of the National Housing Act;

(iv)

the supportive housing for the elderly program under section 202 of the Housing Act of 1959;

(v)

the supportive housing program for persons with disabilities under section 811 of the Cranston-Gonzalez National Affordable Housing Act; and

(vi)

the rural rental housing program under section 515 of the Housing Act of 1949;

(C)

for mortgages on housing for very low-, low-, and moderate-income families in rural areas, and for mortgages for housing for any other underserved market for very low-, low-, and moderate-income families that the Director identifies as lacking adequate credit through conventional lending sources, which underserved markets may be identified by borrower type, market segment, or geographic area; and

(D)

for mortgages originated through State or local affordable or subsidized housing programs.

; and

(6)

by adding at the end the following new subsection:

(c)

Evaluation and Reporting of Compliance

(1)

Method of evaluation

Not later than 6 months after the effective date of title I of the Federal Housing Enterprise Regulatory Reform Act of 2007, the Director shall establish a method for evaluating whether, and the extent to which, the enterprises have complied with the duty under subsection (a) to serve underserved markets and for rating the extent of such compliance.

(2)

Annual evaluations

Using the method established under paragraph (1), the Director shall, for each year, evaluate such compliance and rate the performance of each enterprise as to the extent of compliance. The Director shall include such evaluation and rating for each enterprise for a year in the report for that year submitted pursuant to section 1319B(a).

(3)

Separate evaluations

In determining whether an enterprise has complied with the duty under subsection (a), the Director shall separately evaluate whether the enterprise has complied with such duty with respect to each of the underserved markets identified in subsection (a), taking into consideration—

(A)

the development of loan products and more flexible underwriting guidelines;

(B)

the extent of outreach to qualified loan sellers in each of such underserved markets; and

(C)

the volume of loans purchased in each of such underserved markets.

.

(b)

Enforcement

Section 1336(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4566(a)) is amended—

(1)

in paragraph (1), by inserting before the period and with the duty under section 1335A of each enterprise with respect to underserved markets; and

(2)

by adding at the end the following:

(4)

Enforcement of duty to provide mortgage credit to underserved markets

Compliance with the duty under section 1335(a) of each enterprise to serve underserved markets (as determined in accordance with section 1335(c)) shall be enforceable under this section to the same extent and under the same provisions that the housing goals established under sections 1332, 1333, and 1334 are enforceable. Such duty shall not be enforceable under any provision of this title (including subpart C), other than this section, or under any provision of the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act, as applicable.

.

129.

Home purchase goal

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—

(1)

by inserting after section 1334 the following:

1334A.

Home purchase goal

(a)

Establishment

(1)

In general

The Director shall establish an annual home purchase goal for the purchase by each enterprise of mortgage financing of owner-occupied single family dwelling units.

(2)

Components

The Director may, by regulation, establish components for the goal established under paragraph (1) to include any or all of the following:

(A)

First-time home buyers.

(B)

Low- and moderate-income home buyers.

(C)

Home buyers in central cities, rural areas, and other underserved areas.

(D)

Home buyers who obtain financing through State or local affordable or subsidized housing programs.

(3)

Other authority

The Director may, by regulation, establish the goal under paragraph (1) with components as percentages of enterprise business, or by such other means as necessary to increase the secondary market financing of mortgages by the enterprises for home purchases, consistent with the missions of the enterprises.

(4)

Enforceability

The components of the goal established by the Director under paragraph (1) shall be enforceable as goals under subpart C.

(b)

Factors To Be Considered

In establishing the home purchase goal for an enterprise under this section, 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 establishment of the goal under this section, such goal shall not be effective or enforceable during the 1-year period beginning on the date of its establishment under subsection (a).

(d)

Implementation During Transition

The Director shall establish, by rule, any requirements necessary to implement the transition provisions under subsection (c), 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

(1)

Authority to address goals

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 missions, of the enterprises and the authorizing statutes, for the purchase of mortgages, if the Director determines, by regulation, that the housing need is greatest.

(2)

Methodology

The Director may issue a regulation which establishes or modifies any goal under this subsection—

(A)

as a percentage of the mortgage purchases of each enterprise;

(B)

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

(C)

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

(b)

Factors To Be Considered

In establishing any additional goals under this section, 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 any such additional 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)

Transition

In order to permit a transition to the establishment of any goal under this section, such goal shall not be effective or enforceable during the 1-year period beginning on the date of its establishment under subsection (a).

;

(2)

in section 1335 (12 U.S.C. 4565(a)), by striking meet the low- and all that follows through 1334 and inserting meet the goals under this subpart;

(3)

in section 1336 (12 U.S.C. 4566), by striking subsections (b) and (c) and inserting the following:

(b)

Notice and Preliminary Determination of Failure To Meet Goals

(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.

(2)

Response period

(A)

In general

During the 30-day period beginning on the date on which an enterprise is provided notice under paragraph (1), the enterprise may submit to the Director any written information that the enterprise considers appropriate for consideration by the Director in finally determining whether such failure has occurred or whether the achievement of such goal was or is feasible.

(B)

Extended period

The Director may extend the period under subparagraph (A) for good cause for not more than 30 additional days.

(C)

Shortened period

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

(D)

Failure to respond

The failure of an enterprise to provide information during the 30-day period under this paragraph (as extended or shortened) shall waive any right of the enterprise to comment on the proposed determination or action of the Director.

(3)

Consideration of information and final determination

(A)

In general

After the expiration of the response period under paragraph (2), or upon receipt of information provided during such period by the enterprise, whichever occurs earlier, the Director shall issue a final determination on—

(i)

whether the enterprise has failed, or there is a substantial probability that the enterprise will fail, to meet the housing goal; and

(ii)

whether (taking into consideration market and economic conditions and the financial condition of the enterprise) the achievement of the housing goal was or is feasible.

(B)

Considerations

In making a final determination under subparagraph (A), the Director shall take into consideration any relevant information submitted by the enterprise during the response period.

(C)

Notice

The Director shall provide written notice, including a response to any information submitted during the response period to the enterprise, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, of—

(i)

each final determination under this paragraph that an enterprise has failed, or that there is a substantial probability that the enterprise will fail, to meet a housing goal;

(ii)

each final determination that the achievement of a housing goal was or is feasible; and

(iii)

the reasons for each such final determination.

(c)

Cease and Desist, 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).

(2)

Housing plan

If the Director requires a housing plan under this subsection, such a plan shall be—

(A)

a feasible plan describing the specific actions the enterprise will take—

(i)

to achieve the goal for the next calendar year; and

(ii)

if the Director determines that there is a substantial probability that the enterprise will fail to meet a goal in the current year, to make such improvements and changes in its operations as are reasonable in the remainder of such year; and

(B)

sufficiently specific to enable the Director to monitor compliance periodically.

(3)

Deadline for submission

The Director shall, by regulation, establish a deadline for an enterprise to comply with any remedial action or submit a housing plan to the Director, which may not be more than 45 days after the enterprise is provided notice. The regulations shall provide that the Director may extend the deadline to the extent that the Director determines necessary. Any extension of the deadline shall be in writing and for a time certain.

(4)

Approval

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 it necessary. The Director shall approve any plan that the Director determines is likely to succeed, and conforms with the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act (as applicable), this title, and any other applicable provision of law.

(5)

Notice of approval and disapproval

The Director shall provide written notice to any enterprise submitting a housing plan of the approval or disapproval of the plan (which shall include the reasons for any disapproval of the plan) and of any extension of the period for approval or disapproval.

(6)

Resubmission

If the initial housing plan submitted by an enterprise under this section is disapproved, the enterprise shall submit an amended plan acceptable to the Director not later than 30 days after such disapproval, or such longer period that the Director determines is in the public interest.

(7)

Additional remedies for failure to meet goals

In addition to ordering a housing plan under this section, issuing a cease and desist order 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, including requesting that the Director exercise appropriate enforcement authority available to the Director under this title to prohibit the enterprise from entering into new activities, to freeze any pending approval of new activities, and to order the enterprise to suspend activities pending its achievement of the goal.

;

(4)

by striking section 1338 (12 U.S.C. 4568);

(5)

by striking from the heading of subpart C of Housing Goals;

(6)

by striking section 1341 (12 U.S.C. 4581) and inserting the following:

1341.

Cease-and-desist proceedings

(a)

Grounds for Issuance

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

(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 1327, 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, subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act, or section 1337 of this title;

(4)

the enterprise has violated any provision of part 2 of this title or any order, rule, or regulation under part 2;

(5)

the enterprise has failed to submit a housing plan or perform its responsibilities under a remedial order that substantially 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).

(b)

Procedure

(1)

Notice of charges

Each notice of charges issued under this section shall contain a statement of the facts constituting the alleged conduct and shall fix a time and place at which a hearing will be held to determine on the record whether an order to cease and desist from such conduct should issue.

(2)

Issuance of order

If the Director finds on the record made at a hearing described in paragraph (1) that any conduct specified in the notice of charges has been established (or the enterprise consents pursuant to section 1342(a)(4)), the Director may issue and serve upon the enterprise an order requiring the enterprise to—

(A)

comply with the goals;

(B)

submit a report under section 1327;

(C)

comply with any provision of part 2 of this title or any order, rule, or regulation under part 2;

(D)

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

(E)

comply with the housing plan in compliance with 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.

(c)

Effective Date

An order under this section shall become effective upon the expiration of the 30-day period beginning on the date of service of the order upon the enterprise (except in the case of an order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided in the order, except to the extent that the order is stayed, modified, terminated, or set aside by action of the Director of or otherwise, as provided in this subpart.

; and

(7)

by striking section 1345 and inserting the following:

1345.

Civil money penalties

(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 1327, 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 part 2 of this title or any order, rule, or regulation under part 2;

(5)

submit a housing plan or perform its responsibilities under a remedial order issued 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 a penalty under this section, as determined by the Director, may not exceed—

(1)

for any failure described in paragraph (1), (5), or (6) of subsection (a), $100,000 for each day that the failure occurs; and

(2)

for any failure described in paragraph (2), (3), or (4) of subsection (a), $50,000 for each day that the failure occurs.

(c)

Procedures

(1)

Establishment

The Director shall establish standards and procedures governing the imposition of civil money penalties under this section. Such standards and procedures—

(A)

shall provide for the Director to notify the enterprise in writing of the determination of the Director to impose the penalty, which shall be made on the record;

(B)

shall provide for the imposition of a penalty only after the enterprise has been given an opportunity for a hearing on the record pursuant to section 1342; and

(C)

may provide for review by the Director of any determination or order, or interlocutory ruling, arising from a hearing.

(2)

Factors in determining amount of penalty

In determining the amount of a penalty under this section, the Director shall give consideration to factors including—

(A)

the gravity of the offense;

(B)

any history of prior offenses;

(C)

ability to pay the penalty;

(D)

injury to the public;

(E)

benefits received;

(F)

deterrence of future violations;

(G)

the length of time that the enterprise should reasonably take to achieve the goal; and

(H)

such other factors as the Director may determine, by regulation, to be appropriate.

(d)

Action To Collect Penalty

If an enterprise fails to comply with an order by the Director imposing a civil money penalty under this section, after the order is no longer subject to review, as provided in sections 1342 and 1343, the Director may request the Attorney General of the United States to bring an action in the United States District Court for the District of Columbia to obtain a monetary judgment against the enterprise, and such other relief as may be available. The monetary judgment may, in the court’s discretion, include the attorneys’ fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the order imposing the penalty shall not be subject to review.

(e)

Settlement by Director

The Director may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.

(f)

Deposit of Penalties

The Director shall deposit any civil money penalties collected under this section into the General Fund of the Treasury.

.

C

Prompt Corrective Action

141.

Critical capital levels

Section 1363 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4613) is amended—

(1)

by redesignating paragraphs (1) through (3) as clauses (i) through (iii), respectively, and indenting appropriately;

(2)

by striking “this subtitle, the critical capital level for each enterprise shall be the sum of—” and inserting the following: “this subtitle, the critical capital level—

(1)

for each enterprise shall be—

(A)

the sum of—

; and

(3)

in paragraph (1)(A)(iii), as so designated by this section, by striking the period at the end and inserting the following: “; or

(B)

such other level as the Director shall establish, by regulation; and

(2)

for each Federal Home Loan Bank, shall be the level that the Director shall establish, by regulation.

.

142.

Capital classifications

Section 1364 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4614) is amended—

(1)

in subsection (a)—

(A)

in paragraph (3)(A)—

(i)

by striking clause (i); and

(ii)

by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively; and

(B)

in paragraph (4)(A), by striking enterprise— and all that follows through (ii) does and inserting enterprise does;

(2)

by striking subsection (b) and inserting the following:

(b)

Discretionary Classification

(1)

Grounds for reclassification

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

(A)

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

(B)

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

(C)

pursuant to section 1371(b), the Director determines that a regulated entity is engaging in an unsafe or unsound practice.

(2)

Reclassification

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

(A)

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

(B)

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

(C)

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

; and

(3)

by striking subsection (d) and inserting the following:

(d)

Restriction on Capital Distributions

(1)

In general

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

(2)

Exception

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

(A)

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

(B)

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

.

143.

Supervisory actions applicable to undercapitalized regulated entities

Section 1365 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4615) is amended—

(1)

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

(2)

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

(3)

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

(4)

in subsection (a)—

(A)

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

(B)

by inserting before paragraph (2), as redesignated, the following:

(1)

Required monitoring

The Director shall—

(A)

closely monitor the condition of any undercapitalized regulated entity;

(B)

closely monitor compliance with the capital restoration plan, restrictions, and requirements imposed on an undercapitalized regulated entity under this section; and

(C)

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

; and

(C)

by adding at the end the following:

(4)

Restriction of asset growth

An undercapitalized regulated entity shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter, unless—

(A)

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

(B)

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

(C)

the ratio of tangible equity to assets of the regulated entity increases during the calendar quarter at a rate sufficient to enable the regulated entity to become adequately capitalized within a reasonable time.

(5)

Prior approval of acquisitions and new activities

An undercapitalized regulated entity shall not, directly or indirectly, acquire any interest in any entity or engage in any new activity, unless—

(A)

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

(B)

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

;

(5)

in subsection (b)—

(A)

in the subsection heading, by striking Discretionary;

(B)

in the matter preceding paragraph (1), by striking may and inserting shall; and

(C)

in paragraph (2)—

(i)

by striking make, in good faith, reasonable efforts necessary to; and

(ii)

by striking the period at the end and inserting in any material respect.; and

(6)

by striking subsection (c) and inserting the following:

(c)

Other Discretionary Safeguards

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

.

144.

Supervisory actions applicable to significantly undercapitalized regulated entities

Section 1366 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4616) is amended—

(1)

in subsection (a)(2), by striking undercapitalized enterprise and inserting undercapitalized;

(2)

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

(3)

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

(4)

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

(5)

in subsection (b)—

(A)

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

(B)

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

(C)

by striking paragraph (6);

(D)

by redesignating paragraph (5) as paragraph (6);

(E)

by inserting after paragraph (4) the following:

(5)

Improvement of management

Take 1 or more of the following actions:

(A)

New election of board

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

(B)

Dismissal of directors or executive officers

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

(C)

Employ qualified executive officers

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

; and

(F)

by adding at the end the following:

(7)

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 other actions specified in this subsection.

; and

(6)

by striking subsection (c) and inserting the following:

(c)

Restriction on Compensation of Executive Officers

A regulated entity that is classified as significantly undercapitalized in accordance with section 1364 may not, without prior written approval by the Director—

(1)

pay any bonus to any executive officer; or

(2)

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

.

145.

Authority over critically undercapitalized regulated entities

(a)

In General

Section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617) is amended to read as follows:

1367.

Authority over critically undercapitalized regulated entities

(a)

Appointment of the Agency as Conservator or Receiver

(1)

In general

Notwithstanding any other provision of Federal or State law, the Director may appoint the Agency as conservator or receiver for a regulated entity in the manner provided under paragraph (2) or (4). All references to the conservator or receiver under this section are references to the Agency acting as conservator or receiver.

(2)

Discretionary 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 a regulated entity.

(3)

Grounds for discretionary appointment of conservator or receiver

The grounds for appointing conservator or receiver for any regulated entity under paragraph (2) are as follows:

(A)

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.

(B)

Unsafe or unsound condition

An unsafe or unsound condition to transact business.

(C)

Cease-and-desist orders

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

(D)

Concealment

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

(E)

Inability to meet obligations

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

(F)

Losses

The regulated entity 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 regulated entity to become adequately capitalized (as defined in section 1364(a)(1)).

(G)

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 regulated entity.

(H)

Consent

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

(I)

Undercapitalization

The regulated entity 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 a regulated entity; or

(II)

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

(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.

(J)

Critical undercapitalization

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

(K)

Money laundering

The Attorney General notifies the Director in writing that the regulated entity 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)

Mandatory receivership

(A)

In general

The Director shall appoint the Agency as receiver for a regulated entity if the Director determines, in writing, that—

(i)

the assets of the regulated entity are, and during the preceding 30 calendar days have been, less than the obligations of the regulated entity to its creditors and others; or

(ii)

the regulated entity is not, and during the preceding 30 calendar days has not been, generally paying the debts of the regulated entity (other than debts that are the subject of a bona fide dispute) as such debts become due.

(B)

Periodic determination required for critically undercapitalized regulated entity

If a regulated entity is critically undercapitalized, the Director shall make a determination, in writing, as to whether the regulated entity meets the criteria specified in clause (i) or (ii) of subparagraph (A)—

(i)

not later than 30 calendar days after the regulated entity initially becomes critically undercapitalized; and

(ii)

at least once during each succeeding 30-calendar day period.

(C)

Determination not required if receivership already in place

Subparagraph (B) does not apply with respect to a regulated entity in any period during which the Agency serves as receiver for the regulated entity.

(D)

Receivership terminates conservatorship

The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this title.

(5)

Judicial review

(A)

In general

If the Agency is appointed conservator or receiver under this section, the regulated entity 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 regulated entity 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.

(6)

Directors not liable for acquiescing in appointment of conservator or receiver

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

(7)

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 regulated entity

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

(i)

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

(ii)

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

(B)

Operate the regulated entity

The Agency may, as conservator or receiver—

(i)

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

(ii)

collect all obligations and money due the regulated entity;

(iii)

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

(iv)

preserve and conserve the assets and property of the regulated entity; and

(v)

provide by contract for assistance in fulfilling any function, activity, action, or duty of the Agency as conservator or receiver.

(C)

Functions of officers, directors, and shareholders of a regulated entity

The Agency may, by regulation or order, provide for the exercise of any function by any stockholder, director, or officer of any regulated entity 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 regulated entity in a sound and solvent condition; and

(ii)

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

(E)

Additional powers as receiver

In any case in which the Agency is acting as receiver, the Agency shall place the regulated entity in liquidation and proceed to realize upon the assets of the regulated entity in such manner as the Agency deems appropriate, including through the sale of assets, the transfer of assets to a limited-life regulated entity established under subsection (i), or the exercise of any other rights or privileges granted to the Agency under this paragraph.

(F)

Organization of new enterprise

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

(G)

Transfer or sale of assets and liabilities

The Agency may, as conservator or receiver, transfer or sell any asset or liability of the regulated entity in default, and may do so without any approval, assignment, or consent with respect to such transfer or sale.

(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 a regulated entity, pay all valid obligations of the regulated entity that are due and payable at the time of the appointment of the Agency as conservator or receiver, in accordance with the prescriptions and limitations of this section.

(I)

Subpoena authority

(i)

In general

(I)

Agency authority

The Agency may, as conservator or receiver, and for purposes of carrying out any power, authority, or duty with respect to a regulated entity (including determining any claim against the regulated entity and determining and realizing upon any asset of any person in the course of collecting money due the regulated entity), 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 under this subparagraph, in the same manner as such provisions apply under that section.

(ii)

Subpoena

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 regulated entity or the Agency.

(K)

Other provisions

(i)

Shareholders and creditors of failed regulated entity

Notwithstanding any other provision of law, the appointment of the Agency as receiver for a regulated entity pursuant to paragraph (2) or (4) of subsection (a) and its succession, by operation of law, to the rights, titles, powers, and privileges described in subsection (b)(2)(A) shall terminate all rights and claims that the stockholders and creditors of the regulated entity may have against the assets or charter of the regulated entity or the Agency arising as a result of their status as stockholders or creditors, except for their right to payment, resolution, or other satisfaction of their claims, as permitted under subsections (b)(9), (c), and (e).

(ii)

Assets of regulated entity

Notwithstanding any other provision of law, for purposes of this section, the charter of a regulated entity shall not be considered an asset of the regulated entity.

(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 regulated entity, shall—

(i)

promptly publish a notice to the creditors of the regulated entity 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 date of publication of such notice; and

(ii)

republish such notice approximately 1 month and 2 months, respectively, after the date of 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 regulated entity—

(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 regulated entity, 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 a regulated entity 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 regulated entity;

(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 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 a regulated entity which is secured by any property or other asset of such regulated entity, 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 regulated entity; 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 regulated entity.

(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 regulated entity 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 regulated entity 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 a regulated entity 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 under this subparagraph, 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 regulated entity 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 on which 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 date of 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 on which 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 that funds are available from the assets of the regulated entity, 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 and executed by an authorized officer or representative of the regulated entity.

(C)

Payment of dividends on claims

The receiver may, in the sole discretion of the receiver, pay from the assets of the regulated entity 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 regulated entity, 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 a regulated entity, the conservator or receiver may, in any judicial action or proceeding to which such regulated entity 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 the 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—

(i)

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

(ii)

shall 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, or upon the charter, of a regulated entity for which the Agency has been appointed 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 or charter of any regulated entity for which the Agency has been appointed receiver; or

(ii)

any claim relating to any act or omission of such regulated entity 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 a regulated entity 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 on which 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 on which 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 limitations 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 regulated entity.

(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 a regulated entity 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 a regulated entity or any member of the public.

(D)

Recordkeeping requirement

After the end of the 6-year period beginning on the date on which the conservatorship or receivership is terminated by the Director, the Agency may destroy any records of such regulated entity 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 entity-affiliated party, or any person determined by the conservator or receiver to be a debtor of the regulated entity, 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 regulated entity, 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 regulated entity, 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 entity-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 conservator or receiver 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 conservator or receiver

(A)

In general

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

(B)

No limitation of power

Nothing in this paragraph shall be construed to limit the power of the conservator or receiver 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 the 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 any person 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 in 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 accordance with the terms of the agreement creating such trust, custodial, or other agency arrangement.

(iii)

Liability of conservator or receiver

The liability of the conservator or 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 with in the regulations of the Director.

(c)

Priority of Expenses and Unsecured Claims

(1)

In general

Unsecured claims against a regulated entity, or the receiver therefor, 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 regulated entity (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, except that the receiver may take any action (including making payments) that does not comply with this subsection, if—

(A)

the Director determines that such action is necessary to maximize the value of the assets of the regulated entity, to maximize the present value return from the sale or other disposition of the assets of the regulated entity, or to minimize the amount of any loss realized upon the sale or other disposition of the assets of the regulated entity assets; and

(B)

all creditors that are similarly situated under paragraph (1) receive not less than the amount provided in subsection (e)(2).

(3)

Definition

As used in this subsection, the term administrative expenses of the receiver includes—

(A)

the actual, necessary costs and expenses incurred by the receiver in preserving the assets of a failed regulated entity or liquidating or otherwise resolving the affairs of a failed regulated entity; and

(B)

any obligations that the receiver determines are necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the regulated entity.

(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 regulated entity may disaffirm or repudiate any contract or lease—

(A)

to which such regulated entity 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 regulated entity.

(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 regulated entity is the lessee

(A)

In general

If the conservator or receiver disaffirms or repudiates a lease under which the regulated entity 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 on which—

(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 regulated entity is the lessor

(A)

In general

If the conservator or receiver repudiates an unexpired written lease of real property of the regulated entity under which the regulated entity 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 subparagraph (A)—

(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 regulated entity 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 subparagraph (A)—

(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 regulated entity 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)

Service contracts

(A)

Services performed before appointment

In the case of any contract for services between any person and any regulated entity 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 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 on which 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 the 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 paragraphs (9) and (10), and notwithstanding any other provision of this title (other than subsection (b)(9)(B) of this section), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—

(i)

any right of that person to cause the termination, liquidation, or acceleration of any qualified financial contract with a regulated entity that arises upon the appointment of the Agency as receiver for such regulated entity at any time after such appointment;

(ii)

any right under any security agreement or arrangement or other credit enhancement relating to one or more qualified financial contracts; or

(iii)

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

(B)

Applicability of other provisions

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

(C)

Certain transfers not avoidable

(i)

In general

Notwithstanding paragraph (11), or any other provision of Federal or State law relating to the avoidance of preferential or fraudulent transfers, the Agency, whether acting as such or as conservator or receiver of a regulated entity, may not avoid any transfer of money or other property in connection with any qualified financial contract with a regulated entity.

(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 a regulated entity if the Agency determines that the transferee had actual intent to hinder, delay, or defraud such regulated entity, the creditors of such regulated entity, or any conservator or receiver appointed for such regulated entity.

(D)

Certain contracts and agreements defined

In this subsection the following definitions shall apply:

(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, resolution, or order to be a qualified financial contract for purposes of this paragraph.

(ii)

Securities contract

The term securities contract

(I)

means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, or any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option;

(II)

does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan, unless the Agency determines by regulation, resolution, or order to include any such agreement within the meaning of such term;

(III)

means any option entered into on a national securities exchange relating to foreign currencies;

(IV)

means the guarantee by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option;

(V)

means any margin loan;

(VI)

means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;

(VII)

means any combination of the agreements or transactions referred to in this clause;

(VIII)

means any option to enter into any agreement or transaction referred to in this clause;

(IX)

means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII); and

(X)

means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.

(iii)

Commodity contract

The term commodity contract means—

(I)

with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;

(II)

with respect to a foreign futures commission merchant, a foreign future;

(III)

with respect to a leverage transaction merchant, a leverage transaction;

(IV)

with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;

(V)

with respect to a commodity options dealer, a commodity option;

(VI)

any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;

(VII)

any combination of the agreements or transactions referred to in this clause;

(VIII)

any option to enter into any agreement or transaction referred to in this clause;

(IX)

a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or

(X)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.

(iv)

Forward contract

The term forward contract means—

(I)

a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date on which the contract is entered into, including a repurchase transaction, reverse repurchase transaction, consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;

(II)

any combination of agreements or transactions referred to in subclauses (I) and (III);

(III)

any option to enter into any agreement or transaction referred to in subclause (I) or (II);

(IV)

a master agreement that provides for an agreement or transaction referred to in subclauses (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or

(V)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.

(v)

Repurchase agreement

The term repurchase agreement (including a reverse repurchase agreement)—

(I)

means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage-related securities (as such term is defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (defined for purposes of this clause as a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development, as determined by regulation or order adopted by the appropriate Federal banking authority), or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as described above, at a date certain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement;

(II)

does not include any repurchase obligation under a 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;

(III)

means any combination of agreements or transactions referred to in subclauses (I) and (IV);

(IV)

means any option to enter into any agreement or transaction referred to in subclause (I) or (III);

(V)

means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and

(VI)

means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.

(vi)

Swap agreement

The term swap agreement means—

(I)

any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange or precious metals agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; or a weather swap, weather derivative, or weather option;

(II)

any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, or option on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;

(III)

any combination of agreements or transactions referred to in this clause;

(IV)

any option to enter into any agreement or transaction referred to in this clause;

(V)

a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and

(VI)

any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.

(vii)

Treatment of master agreement as one agreement

Any master agreement for any contract or agreement described in any preceding clause of this subparagraph (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a single agreement and a single qualified financial contract. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts.

(viii)

Transfer

The term transfer means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the equity of redemption of the regulated entity.

(E)

Certain protections in event of appointment of conservator

Notwithstanding any other provision of this section, any other Federal law, or the law of any State (other than paragraph (10) of this subsection and subsection (b)(9)(B)), 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 a regulated entity in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;

(ii)

any right under any security agreement or arrangement or other credit enhancement relating to 1 or more 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.

(F)

Clarification

No provision of law shall be construed as limiting the right or power of the Agency, or authorizing any court or agency to limit or delay in any manner, the right or power of the Agency to transfer any qualified financial contract in accordance with paragraphs (9) and (10), or to disaffirm or repudiate any such contract in accordance with subsection (d)(1).

(G)

Walkaway clauses not effective

(i)

In general

Notwithstanding the provisions of subparagraphs (A) and (E), and sections 403 and 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause shall be enforceable in a qualified financial contract of a regulated entity in default.

(ii)

Walkaway clause defined

For purposes of this subparagraph, the term walkaway clause means a provision in a qualified financial contract that, after calculation of a value of a party’s position or an amount due to or from 1 of the parties in accordance with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the status of such party as a nondefaulting party.

(9)

Transfer of qualified financial contracts

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

(A)

transfer to 1 person—

(i)

all qualified financial contracts between any person (or any affiliate of such person) and the regulated entity in default;

(ii)

all claims of such person (or any affiliate of such person) against such regulated entity 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 regulated entity);

(iii)

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

(iv)

all property securing, or any other credit enhancement for any contract described in clause (i), or 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

The conservator or receiver shall notify any person that is a party to a contract or transfer by 5:00 p.m. (Eastern Standard Time) on the business day following the date of the appointment of the receiver in the case of a receivership, or the business day following such transfer in the case of a conservatorship, if—

(i)

the conservator or receiver for a regulated entity in default makes any transfer of the assets and liabilities of such regulated entity; and

(ii)

such transfer includes any qualified financial contract.

(B)

Certain rights not enforceable

(i)

Receivership

A person who is a party to a qualified financial contract with a regulated entity may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or under section 403 or 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental to the appointment of a receiver for the regulated entity (or the insolvency or financial condition of the regulated entity for which the receiver has been appointed)—

(I)

until 5:00 p.m. (Eastern Standard Time) on the business day following the date of the appointment of the receiver; or

(II)

after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).

(ii)

Conservatorship

A person who is a party to a qualified financial contract with a regulated entity may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or under section 403 or 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental to the appointment of a conservator for the regulated entity (or the insolvency or financial condition of the regulated entity for which the conservator has been appointed).

(iii)

Notice

For purposes of this paragraph, the conservator or receiver of a regulated entity shall be deemed to have notified a person who is a party to a qualified financial contract with such regulated entity, if the conservator or receiver has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (A).

(C)

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)

Disaffirmance or repudiation of qualified financial contracts

In exercising the rights of disaffirmance or repudiation of a conservator or receiver with respect to any qualified financial contract to which a regulated entity is a party, the conservator or receiver for such institution shall either—

(A)

disaffirm or repudiate all qualified financial contracts between—

(i)

any person or any affiliate of such person; and

(ii)

the regulated entity in default; or

(B)

disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).

(12)

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 regulated entity, except where such an interest is taken in contemplation of the insolvency of the regulated entity, or with the intent to hinder, delay, or defraud the regulated entity or the creditors of such regulated entity.

(13)

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, or the exercise of rights or powers by, a conservator or receiver, the conservator or receiver may enforce any contract, other than a contract for liability insurance for a director or officer, or a contract or a regulated entity bond, entered into by the regulated entity.

(B)

Certain rights not affected

No provision of this paragraph may be construed as impairing or affecting any right of the conservator or receiver to enforce or recover under a liability insurance contract for an officer or director, or regulated entity 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 a regulated entity is a party, or to obtain possession of or exercise control over any property of the regulated entity, or affect any contractual rights of the regulated entity, 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 not—

(I)

apply to a contract for liability insurance for an officer or director;

(II)

apply to the rights of parties to certain qualified financial contracts under subsection (d)(8); and

(III)

be construed as permitting the conservator or receiver to fail to comply with otherwise enforceable provisions of such contracts.

(14)

Savings clause

The meanings of terms used in this subsection are applicable for purposes of this subsection only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934), and the Commodity Exchange Act.

(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 a regulated entity in default or in danger of default, including transactions authorized under subsection (i), this subsection shall govern the rights of the creditors of such regulated entity.

(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 regulated entity for which such receiver is appointed shall be not more than the amount that such claimant would have received if the Agency had liquidated the assets and liabilities of the regulated entity without exercising the authority of the Agency under subsection (i).

(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 a regulated entity may be held personally liable for monetary damages in any civil action described in paragraph (2) brought by, on behalf of, or at the request or direction of the Agency, and prosecuted wholly or partially for the benefit of the Agency—

(A)

acting as conservator or receiver of such regulated entity; or

(B)

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

(2)

Actions addressed

Paragraph (1) applies in any civil action 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.

(3)

No limitation

Nothing in this subsection 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 a regulated entity, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the regulated entity shall include principal losses and appropriate interest.

(i)

Limited-Life Regulated Entities

(1)

Organization

(A)

Purpose

The Agency, as receiver appointed pursuant to subsection (a)—

(i)

may, in the case of a Federal Home Loan Bank, organize a limited-life regulated entity with those powers and attributes of the Federal Home Loan Bank in default or in danger of default as the Director determines necessary, subject to the provisions of this subsection, and the Director shall grant a temporary charter to that limited-life regulated entity, and that limited-life regulated entity shall operate subject to that charter; and

(ii)

shall, in the case of an enterprise, organize a limited-life regulated entity with respect to that enterprise in accordance with this subsection.

(B)

Authorities

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

(i)

assume such liabilities of the regulated entity that is in default or in danger of default as the Agency may, in its discretion, determine to be appropriate, except that the liabilities assumed shall not exceed the amount of assets purchased or transferred from the regulated entity to the limited-life regulated entity;

(ii)

purchase such assets of the regulated entity 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 and establishment

(A)

Transfer of charter

(i)

Fannie mae

If the Agency is appointed as receiver for the Federal National Mortgage Association, the limited-life regulated entity established under this subsection with respect to such enterprise shall, by operation of law and immediately upon its organization—

(I)

succeed to the charter of the Federal National Mortgage Association, as set forth in the Federal National Mortgage Association Charter Act; and

(II)

thereafter operate in accordance with, and subject to, such charter, this Act, and any other provision of law to which the Federal National Mortgage Association is subject, except as otherwise provided in this subsection.

(ii)

Freddie mac

If the Agency is appointed as receiver for the Federal Home Loan Mortgage Corporation, the limited-life regulated entity established under this subsection with respect to such enterprise shall, by operation of law and immediately upon its organization—

(I)

succeed to the charter of the Federal Home Loan Mortgage Corporation, as set forth in the Federal Home Loan Mortgage Corporation Charter Act; and

(II)

thereafter operate in accordance with, and subject to, such charter, this Act, and any other provision of law to which the Federal Home Loan Mortgage Corporation is subject, except as otherwise provided in this subsection.

(B)

Interests in and assets and obligations of regulated entity in default

Notwithstanding subparagraph (A) or any other provision of law—

(i)

a limited-life regulated entity shall assume, acquire, or succeed to the assets or liabilities of a regulated entity only to the extent that such assets or liabilities are transferred by the Agency to the limited-life regulated entity in accordance with, and subject to the restrictions set forth in, paragraph (1)(B);

(ii)

a limited-life regulated entity shall not assume, acquire, or succeed to any obligation that a regulated entity for which a receiver has been appointed may have to any shareholder of the regulated entity that arises as a result of the status of that person as a shareholder of the regulated entity; and

(iii)

no shareholder or creditor of a regulated entity shall have any right or claim against the charter of the regulated entity once the Agency has been appointed receiver for the regulated entity and a limited-life regulated entity succeeds to the charter pursuant to subparagraph (A).

(C)

Limited-life regulated entity treated as being in default for certain purposes

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

(D)

Management

Upon its establishment, a limited-life regulated entity 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.

(E)

Bylaws

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

(3)

Capital stock

(A)

No agency requirement

The Agency is not required to pay capital stock into a limited-life regulated entity or to issue any capital stock on behalf of a limited-life regulated entity established under this subsection.

(B)

Authority

If the Director determines that such action is advisable, the Agency may cause capital stock or other securities of a limited-life regulated entity established with respect to an enterprise to be issued and offered for sale, in such amounts and on such terms and conditions as the Director may determine, in the discretion of the Director.

(4)

Investments

Funds of a limited-life regulated entity 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 tax status

Notwithstanding any other provision of Federal or State law, a limited-life regulated entity, 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)

Winding up

(A)

In general

Subject to subparagraphs (B) and (C), not later than 2 years after the date of its organization, the Agency shall wind up the affairs of a limited-life regulated entity.

(B)

Extension

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

(C)

Termination of status as limited-life regulated entity

(i)

In general

Upon the sale by the Agency of 80 percent or more of the capital stock of a limited-life regulated entity, as defined in clause (iv), to 1 or more persons (other than the Agency)—

(I)

the status of the limited-life regulated entity as such shall terminate; and

(II)

the entity shall cease to be a limited-life regulated entity for purposes of this subsection.

(ii)

Divestiture of remaining stock, if any

(I)

In general

Not later than 1 year after the date on which the status of a limited-life regulated entity is terminated pursuant to clause (i), the Agency shall sell to 1 or more persons (other than the Agency) any remaining capital stock of the former limited-life regulated entity.

(II)

Extension authorized

The Director may extend the period referred to in subclause (I) for not longer than an additional 2 years, if the Director determines that such action would be in the public interest.

(iii)

Savings clause

Notwithstanding any provision of law, other than clause (ii), the Agency shall not be required to sell the capital stock of an enterprise or a limited-life regulated entity established with respect to an enterprise.

(iv)

Applicability

This subparagraph applies only with respect to a limited-life regulated entity that is established with respect to an enterprise.

(7)

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 a regulated entity in default, or in danger of default, to the limited-life regulated entity in accordance with and subject to the restrictions of paragraph (1).

(ii)

Subsequent transfers

At any time after the establishment of a limited-life regulated entity, the Agency, as receiver, may transfer any assets and liabilities of the regulated entity in default, or in danger of default, as the Agency may, in its discretion, determine to be appropriate in accordance with and subject to the restrictions of paragraph (1).

(iii)

Effective without approval

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

(iv)

Equitable treatment of similarly situated creditors

The Agency shall treat all creditors of a regulated entity in default or in danger of default that are similarly situated under subsection (c)(1) in a similar manner in exercising the authority of the Agency under this subsection to transfer any assets or liabilities of the regulated entity to the limited-life regulated entity established with respect to such regulated entity, except that the Agency may take actions (including making payments) that do not comply with this clause, if—

(I)

the Director determines that such actions are necessary to maximize the value of the assets of the regulated entity, to maximize the present value return from the sale or other disposition of the assets of the regulated entity, or to minimize the amount of any loss realized upon the sale or other disposition of the assets of the regulated entity; and

(II)

all creditors that are similarly situated under subsection (c)(1) receive not less than the amount provided in subsection (e)(2).

(v)

Limitation on transfer of liabilities

Notwithstanding any other provision of law, the aggregate amount of liabilities of a regulated entity that are transferred to, or assumed by, a limited-life regulated entity may not exceed the aggregate amount of assets of the regulated entity that are transferred to, or purchased by, the limited-life regulated entity.

(8)

Regulations

The Agency may promulgate such regulations as the Agency determines to be necessary or appropriate to implement this subsection.

(9)

Powers of limited-life regulated entities

(A)

In general

Each limited-life regulated entity created under this subsection shall have all corporate powers of, and be subject to the same provisions of law as, the regulated entity 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 regulated entity;

(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 regulated entity; and

(III)

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

(ii)

the board of directors of a limited-life regulated entity—

(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 regulated entity becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of a regulated entity in default shall be stayed from further proceedings for a period of not longer than 45 days, at the request of the limited-life regulated entity. Such period may be modified upon the consent of all parties.

(10)

No federal status

(A)

Agency status

A limited-life regulated entity 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 regulated entity 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 regulated entity 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 regulated entity in addition to such salary or benefits as are obtained through employment with the Agency or such Federal instrumentality.

(11)

Authority to obtain credit

(A)

In general

A limited-life regulated entity may obtain unsecured credit and issue unsecured debt.

(B)

Inability to obtain credit

If a limited-life regulated entity is unable to obtain unsecured credit or issue unsecured debt, the Director may authorize the obtaining of credit or the issuance of debt by the limited-life regulated entity—

(i)

with priority over any or all of the obligations of the limited-life regulated entity;

(ii)

secured by a lien on property of the limited-life regulated entity that is not otherwise subject to a lien; or

(iii)

secured by a junior lien on property of the limited-life regulated entity that is subject to a lien.

(C)

Limitations

(i)

In general

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

(I)

the limited-life regulated entity is unable to otherwise obtain such credit or issue such debt; and

(II)

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

(12)

Burden of proof

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

(13)

Affect on debts and liens

The reversal or modification on appeal of an authorization under this subsection to obtain credit or issue debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so issued, 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 issuance of such debt, or the granting of such priority or lien, were stayed pending appeal.

(j)

Other Agency Exemptions

(1)

Applicability

The provisions of this subsection shall apply with respect to the Agency in any case in which the Agency is acting as a conservator or a receiver.

(2)

Taxation

The Agency, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation imposed by any State, county, 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.

(3)

Property protection

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.

(4)

Penalties and fines

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.

(k)

Prohibition of Charter Revocation

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

.

(b)

Technical and Conforming Amendments

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—

(1)

in section 1368 (12 U.S.C. 4618)—

(A)

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

(B)

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

(2)

in section 1369C (12 U.S.C. 4622), by striking enterprise each place that term appears and inserting regulated entity;

(3)

in section 1369D (12 U.S.C. 4623)—

(A)

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

(B)

in subsection (a)(1), by striking An enterprise and inserting A regulated entity; and

(4)

by striking sections 1369, 1369A, and 1369B (12 U.S.C. 4619, 4620, and 4621).

D

Enforcement Actions

151.

Cease-and-desist proceedings

Section 1371 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631) is amended—

(1)

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

(a)

Issuance for Unsafe or Unsound Practices and Violations

If, in the opinion of the Director, a regulated entity or any entity-affiliated party is engaging or has engaged, or the Director has reasonable cause to believe that the regulated entity or any entity-affiliated party is about to engage, in an unsafe or unsound practice in conducting the business of the regulated entity or the Finance Facility, or is violating or has violated, or the Director has reasonable cause to believe is about to violate, a law, rule, regulation, or order, or any condition imposed in writing by the Director in connection with the granting of any application or other request by the regulated entity or the Finance Facility or any written agreement entered into with the Director, the Director may issue and serve upon the regulated entity or entity-affiliated party a notice of charges in respect thereof.

(b)

Issuance for Unsatisfactory Rating

If a regulated entity receives, in its most recent report of examination, a less-than-satisfactory rating for credit risk, market risk, operations, or corporate governance, the Director may (if the deficiency is not corrected) deem the regulated entity to be engaging in an unsafe or unsound practice for purposes of subsection (a).

;

(2)

in subsection (c)—

(A)

in paragraph (1), by inserting before the period at the end the following: , unless the party served with a notice of charges shall appear at the hearing personally or by a duly authorized representative, the party shall be deemed to have consented to the issuance of the cease-and-desist order; and

(B)

in paragraph (2)—

(i)

by striking or director and inserting director, or entity-affiliated party; and

(ii)

by inserting or entity-affiliated party before consents;

(3)

in each of subsections (c), (d), and (e)—

(A)

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

(B)

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

(C)

by striking conduct each place that term appears and inserting practice;

(4)

in subsection (d)—

(A)

in the matter preceding paragraph (1)—

(i)

by striking or director and inserting director, or entity-affiliated party;

(ii)

by inserting to require a regulated entity or entity-affiliated party after includes the authority;

(B)

in paragraph (1)—

(i)

by striking to require an executive officer or a director to; and

(ii)

by striking loss and all that follows through person and inserting loss, if;

(iii)

in subparagraph (A), by inserting such entity or party or finance facility before was; and

(iv)

by striking subparagraph (B) and inserting the following:

(B)

the violation or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Director;

;] and

(C)

in paragraph (4), by inserting loan or before asset;

(5)

in subsection (e), by inserting or entity-affiliated party

(A)

before or any executive; and

(B)

before the period at the end; and

(6)

in subsection (f)—

(A)

by striking enterprise and inserting regulated entity, finance facility,; and

(B)

by striking or director and inserting director, or entity-affiliated party.

152.

Temporary cease-and-desist proceedings

Section 1372 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4632) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Grounds for Issuance

(1)

In general

If the Director determines that the actions specified in the notice of charges served upon a regulated entity or any 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 that entity, or is likely to weaken the condition of that entity prior to the completion of the proceedings conducted pursuant to sections 1371 and 1373, the Director may—

(A)

issue a temporary order requiring that regulated entity or entity-affiliated party to cease and desist from any such violation or practice; and

(B)

require that regulated entity or entity-affiliated party to take affirmative action to prevent or remedy such insolvency, dissipation, condition, or prejudice pending completion of such proceedings.

(2)

Additional requirements

An order issued under paragraph (1) may include any requirement authorized under subsection 1371(d).

;

(2)

in subsection (b)—

(A)

by striking or director and inserting director, or entity-affiliated party; and

(B)

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

(3)

in subsection (c), by striking enterprise each place that term appears and inserting regulated entity;

(4)

in subsection (d)—

(A)

by striking or director each place that term appears and inserting director, or entity-affiliated party; and

(B)

by striking An enterprise and inserting A regulated entity; and

(5)

in subsection (e)—

(A)

by striking request the Attorney General of the United States to; and

(B)

by striking or may, under the direction and control of the Attorney General, bring such action.

153.

Removal and prohibition authority

(a)

In General

Part 1 of subtitle C of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.) is amended—

(1)

by redesignating sections 1377 through 1379B (12 U.S.C. 4637–4641) as sections 1379 through 1379D, respectively; and

(2)

by inserting after section 1376 (12 U.S.C. 4636) the following:

1377.

Removal and prohibition authority

(a)

Authority To Issue Order

(1)

In general

The Director may serve upon a party described in paragraph (2), or any officer, director, or management of the Finance Facility a written notice of the intention of the Director to suspend or remove such party from office, or prohibit any further participation by such party, in any manner, in the conduct of the affairs of the regulated entity.

(2)

Applicability

A party described in this paragraph is an entity-affiliated party or any officer, director, or management of the Finance Facility, if the Director determines that—

(A)

that party, officer, or director has, directly or indirectly—

(i)

violated—

(I)

any law or regulation;

(II)

any cease-and-desist order which has become final;

(III)

any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity; or

(IV)

any written agreement between such regulated entity and the Director;

(ii)

engaged or participated in any unsafe or unsound practice in connection with any regulated entity or business institution; or

(iii)

committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty;

(B)

by reason of the violation, practice, or breach described in subparagraph (A)—

(i)

such regulated entity or business institution has suffered or will probably suffer financial loss or other damage; or

(ii)

such party has received financial gain or other benefit; and

(C)

the violation, practice, or breach described in subparagraph (A)—

(i)

involves personal dishonesty on the part of such party; or

(ii)

demonstrates willful or continuing disregard by such party for the safety or soundness of such regulated entity or business institution.

(b)

Suspension Order

(1)

Suspension or prohibition authority

If the Director serves written notice under subsection (a) upon a party subject to that subsection (a), the Director may, by order, suspend or remove such party from office, or prohibit such party from further participation in any manner in the conduct of the affairs of the regulated entity, if the Director—

(A)

determines that such action is necessary for the protection of the regulated entity; and

(B)

serves such party with written notice of the order.

(2)

Effective period

Any order issued under this subsection—

(A)

shall become effective upon service; and

(B)

unless a court issues a stay of such order under subsection (g), shall remain in effect and enforceable until—

(i)

the date on which the Director dismisses the charges contained in the notice served under subsection (a) with respect to such party; or

(ii)

the effective date of an order issued under subsection (b).

(3)

Copy of order

If the Director issues an order under subsection (b) to any party, the Director shall serve a copy of such order on any regulated entity with which such party is affiliated at the time such order is issued.

(c)

Notice, Hearing, and Order

(1)

Notice

A notice under subsection (a) of the intention of the Director to issue an order under this section shall contain a statement of the facts constituting grounds for such action, and shall fix a time and place at which a hearing will be held on such action.

(2)

Timing of hearing

A hearing shall be fixed for a date not earlier than 30 days, nor later than 60 days, after the date of service of notice under subsection (a), unless an earlier or a later date is set by the Director at the request of—

(A)

the party receiving such notice, and good cause is shown; or

(B)

the Attorney General of the United States.

(3)

Consent

Unless the party that is the subject of a notice delivered under subsection (a) appears at the hearing in person or by a duly authorized representative, such party shall be deemed to have consented to the issuance of an order under this section.

(4)

Issuance of order of suspension

The Director may issue an order under this section, as the Director may deem appropriate, if—

(A)

a party is deemed to have consented to the issuance of an order under paragraph (3); or

(B)

upon the record made at the hearing, the Director finds that any of the grounds specified in the notice have been established.

(5)

Effectiveness of order

Any order issued under paragraph (4) shall become effective at the expiration of 30 days after the date of service upon the relevant regulated entity and party (except in the case of an order issued upon consent under paragraph (3), which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Director or a reviewing court.

(d)

Prohibition of Certain Specific Activities

Any person subject to an order issued under this section shall not—

(1)

participate in any manner in the conduct of the affairs of any regulated entity or the Finance Facility;

(2)

solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any regulated entity;

(3)

violate any voting agreement previously approved by the Director; or

(4)

vote for a director, or serve or act as an entity-affiliated party of a regulated entity or as an officer or director of the Finance Facility.

(e)

Industry-Wide Prohibition

(1)

In general

Except as provided in paragraph (2), any person who, pursuant to an order issued under this section, has been removed or suspended from office in a regulated entity or the Finance Facility, or prohibited from participating in the conduct of the affairs of a regulated entity or the Finance Facility, may not, while such order is in effect, continue or commence to hold any office in, or participate in any manner in the conduct of the affairs of, any regulated entity or the Finance Facility.

(2)

Exception if director provides written consent

If, on or after the date on which an order is issued under this section which removes or suspends from office any party, or prohibits such party from participating in the conduct of the affairs of a regulated entity or the Finance Facility, such party receives the written consent of the Director, the order shall, to the extent of such consent, cease to apply to such party with respect to the regulated entity or such Finance Facility described in the written consent. Any such consent shall be publicly disclosed.

(3)

Violation of paragraph (1) treated as violation of order

Any violation of paragraph (1) by any person who is subject to an order issued under subsection (h) shall be treated as a violation of the order.

(f)

Applicability

This section shall only apply to a person who is an individual, unless the Director specifically finds that it should apply to a corporation, firm, or other business entity.

(g)

Stay of Suspension and Prohibition of entity-affiliated Party

Not later than 10 days after the date on which any entity-affiliated party has been suspended from office or prohibited from participation in the conduct of the affairs of a regulated entity under this section, such party may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district in which the headquarters of the regulated entity is located, for a stay of such suspension or prohibition pending the completion of the administrative proceedings pursuant to subsection (c). The court shall have jurisdiction to stay such suspension or prohibition.

(h)

Suspension or Removal of entity-affiliated Party Charged With Felony

(1)

Suspension or prohibition

(A)

In general

Whenever any 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 1 year under Federal or State law, the Director may, if continued service or participation by such party may pose a threat to the regulated entity or impair public confidence in the regulated entity, by written notice served upon such party, suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of any regulated entity.

(B)

Provisions applicable to notice

(i)

Copy

A copy of any notice under subparagraph (A) shall be served upon the relevant regulated entity.

(ii)

Effective period

A suspension or prohibition under subparagraph (A) shall remain in effect until the information, indictment, or complaint referred to in subparagraph (A) is finally disposed of, or until terminated by the Director.

(2)

Removal or prohibition

(A)

In general

If a judgment of conviction or an agreement to enter a pretrial diversion or other similar program is entered against an 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 removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the regulated entity without the prior written consent of the Director.

(B)

Provisions applicable to order

(i)

Copy

A copy of any order under subparagraph (A) shall be served upon the relevant regulated entity, at which time the 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 a party from office or to prohibit further participation in the affairs of a regulated entity pursuant to subsection (a) or (b).

(iii)

Effective period

Unless terminated by the Director, any notice of suspension or order of removal issued under this subsection shall remain effective and outstanding until the completion of any hearing or appeal authorized under paragraph (4).

(3)

Authority of remaining board members

(A)

In general

If at any time, because of the suspension of 1 or more directors pursuant to this section, there shall be on the board of directors of a regulated entity less than a quorum of directors not so suspended, all powers and functions vested in or exercisable by such board shall vest in and be exercisable by the director or directors on the board not so suspended, until such time as there shall be a quorum of the board of directors.

(B)

Appointment of temporary directors

If all of the directors of a regulated entity are suspended pursuant to this section, the Director shall appoint persons to serve temporarily as directors pending the termination of such suspensions, or until such time as those who have been suspended cease to be directors of the regulated entity and their respective successors take office.

(4)

Hearing regarding continued participation

(A)

In general

Not later than 30 days after the date of service of any notice of suspension or order of removal issued pursuant to paragraph (1) or (2), the entity-affiliated party may request in writing an opportunity to appear before the Director to show that the continued service or participation in the conduct of the affairs of the regulated entity by such party does not, or is not likely to, pose a threat to the interests of the regulated entity, or threaten to impair public confidence in the regulated entity.

(B)

Timing and form of hearing

Upon receipt of a request for a hearing under subparagraph (A), the Director shall fix a time (not later than 30 days after the date of receipt of such request, unless extended at the request of such party) and place at which the entity-affiliated party may appear, personally or through counsel, before the Director or 1 or more designated employees of the Director to submit written materials (or, at the discretion of the Director, oral testimony) and oral argument.

(C)

Determination

Not later than 60 days after the date of a hearing under subparagraph (B), the Director shall notify the entity-affiliated party whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the regulated entity will be continued, terminated, or otherwise modified, or whether the order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the regulated entity will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for any adverse decision of the Director.

(5)

Rules

The Director is authorized to prescribe such rules as may be necessary to carry out this subsection.

.

(b)

Conforming Amendments

(1)

Safety and soundness act

Subtitle C of title XIII of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (42 U.S.C. 4501 et seq.) is amended—

(A)

in section 1317(f), by striking section 1379B and inserting section 1379D;

(B)

in section 1373(a)—

(i)

in paragraph (1), by striking or 1376(c) and inserting , 1376(c), or 1377;

(ii)

in paragraph (2), by inserting “or 1377” after ”1371”; and

(iii)

in paragraph (4), by inserting or removal or prohibition after cease and desist; and

(C)

in section 1374(a)—

(i)

by striking or 1376 and inserting , 1376, or 1377; and

(ii)

by striking such section and inserting this title.

(2)

Fannie mae charter act

Section 308(b) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723(b)) is amended in the second sentence, by striking The and inserting Except to the extent that action under section 1377 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 temporarily results in a lesser number, the.

(3)

Freddie mac charter act

Section 303(a)(2)(A) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)(A)) is amended, in the second sentence, by striking The and inserting Except to the extent action under section 1377 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 temporarily results in a lesser number, the.

154.

Enforcement and jurisdiction

(a)

In General

Section 1375 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4635) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Enforcement

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

; and

(2)

in subsection (b)—

(A)

by striking section 1371, 1372, or 1376 or;

(B)

by inserting subtitle C, or section 1313A after subtitle B,; and

(C)

by inserting , standard, after notice each place that term appears.

(b)

Conforming Amendment

Section 1379B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4641) is amended by striking subsection (c) and redesignating subsection (d) as subsection (c).

155.

Civil money penalties

Section 1376 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4636) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

In General

The Director may impose a civil money penalty in accordance with this section on any regulated entity, or any executive offices of a regulated entity or any entity-affiliated party.

;

(2)

by striking subsection (b) and inserting the following:

(b)

Amount of Penalty

(1)

First tier

A regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $10,000 for each day during which a violation continues, if such regulated entity or party—

(A)

violates any provision of this title, the authorizing statutes, or any order, condition, rule, or regulation under this title or any authorizing statute;

(B)

violates any final or temporary order or notice issued pursuant to this title;

(C)

violates any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity;

(D)

violates any written agreement between the regulated entity and the Director; or

(E)

engages in any conduct that the Director determines to be an unsafe or unsound practice.

(2)

Second tier

Notwithstanding paragraph (1), a regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $50,000 for each day during which a violation, practice, or breach continues, if—

(A)

the regulated entity or entity-affiliated party, respectively—

(i)

commits any violation described in any subparagraph of paragraph (1);

(ii)

recklessly engages in an unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii)

breaches any fiduciary duty; and

(B)

the violation, practice, or breach—

(i)

is part of a pattern of misconduct;

(ii)

causes or is likely to cause more than a minimal loss to the regulated entity; or

(iii)

results in pecuniary gain or other benefit to such party.

(3)

Third tier

Notwithstanding paragraphs (1) and (2), any regulated entity or entity-affiliated party shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues, if such regulated entity or entity-affiliated party—

(A)

knowingly—

(i)

commits any violation described in any subparagraph of paragraph (1);

(ii)

engages in any unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii)

breaches any fiduciary duty; and

(B)

knowingly or recklessly causes a substantial loss to the regulated entity or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach.

(4)

Maximum amounts of penalties for any violation described in paragraph (3)

The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in paragraph (3) is—

(A)

in the case of any entity-affiliated party, an amount not to exceed $2,000,000; and

(B)

in the case of any regulated entity, $2,000,000.

;

(3)

in subsection (c)—

(A)

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

(B)

by inserting or entity-affiliated party before in writing; and

(C)

by inserting or entity-affiliated party before has been given;

(4)

in subsection (d)—

(A)

by striking or director each place such term appears and inserting director, or entity-affiliated party;

(B)

by striking an enterprise and inserting a regulated entity;

(C)

by striking the enterprise and inserting the regulated entity;

(D)

by striking request the Attorney General of the United States to;

(E)

by inserting , or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, after District of Columbia;

(F)

by striking , or may, under the direction and control of the Attorney General of the United States, bring such an action; and

(G)

by striking and section 1374; and

(5)

in subsection (g), by striking An enterprise and inserting A regulated entity.

156.

Criminal penalty

(a)

In General

Subtitle C of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as amended by this Act, is amended by adding at the end the following:

1378.

Criminal penalty

Whoever, being subject to an order in effect under section 1377, without the prior written approval of the Director, knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order) in the conduct of the affairs of any regulated entity shall, notwithstanding section 3571 of title 18, be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.

.

(b)

Technical and Conforming Amendments

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—

(1)

in section 1379 (as so designated by this Act)—

(A)

by striking an enterprise and inserting a regulated entity; and

(B)

by striking the enterprise and inserting the regulated entity;

(2)

in section 1379A (as so designated by this Act), by striking an enterprise and inserting a regulated entity;

(3)

in section 1379B(c) (as so designated by this Act), by striking enterprise and inserting regulated entity; and

(4)

in section 1379D (as so designated by this Act), by striking enterprise and inserting regulated entity.

157.

Notice after separation from service

Section 1379 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4637), as so designated by this Act, is amended—

(1)

by striking 2-year and inserting 6-year; and

(2)

by inserting or an entity-affiliated party after enterprise each place that term appears.

158.

Subpoena authority

Section 1379B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4641) is amended—

(1)

in subsection (a)—

(A)

in the matter preceding paragraph (1)—

(i)

by striking administrative;

(ii)

by inserting , examination, or investigation after proceeding;

(iii)

by striking subchapter and inserting title; and

(iv)

by inserting or any designated representative thereof, including any person designated to conduct any hearing under this subtitle after Director; and

(B)

in paragraph (4), by striking issued by the Director;

(2)

in subsection (b), by inserting or in any territory or other place subject to the jurisdiction of the United States after State;

(3)

by striking subsection (c) and inserting the following:

(c)

Enforcement

(1)

In general

The Director, or any party to proceedings under this subtitle, may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district of the United States in any territory in which such proceeding is being conducted, or where the witness resides or carries on business, for enforcement of any subpoena or subpoena duces tecum issued pursuant to this section.

(2)

Power of court

The courts described under paragraph (1) shall have the jurisdiction and power to order and require compliance with any subpoena issued under paragraph (1)

;

(4)

in subsection (d), by inserting enterprise-affiliated party before may allow; and

(5)

by adding at the end the following:

(e)

Penalties

A person shall be guilty of a misdemeanor, and upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than 1 year, or both, if that person willfully fails or refuses, in disobedience of a subpoena issued under subsection (c), to—

(1)

attend court;

(2)

testify in court;

(3)

answer any lawful inquiry; or

(4)

produce books, papers, correspondence, contracts, agreements, or such other records as requested in the subpoena.

.

E

General Provisions

161.

Conforming and technical amendments

(a)

Amendments to 1992 Act

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended by this Act, is amended—

(1)

in section 1315 (12 U.S.C. 4515)—

(A)

in subsection (a)—

(i)

by striking (a) Office Personnel.—The and inserting (a) In General.—Subject to title III of the Federal Housing Enterprise Regulatory Reform Act of 2007, the; and

(ii)

by striking the Office each place that term appears and inserting the Agency;

(B)

in subsection (c), by striking the Office and inserting the Agency;

(C)

in subsection (e), by striking the Office and inserting the Agency;

(D)

by striking subsections (d) and (f); and

(E)

by redesignating subsection (e) as subsection (d);

(2)

in section 1319A (12 U.S.C. 4520)—

(A)

by striking (a) In General.—; and

(B)

by striking subsection (b);

(3)

in section 1364(c) (12 U.S.C. 4614(c)), by striking the last sentence;

(4)

by striking section 1383 (12 U.S.C. 1451 note);

(5)

in each of sections 1319D, 1319E, and 1319F (12 U.S.C. 4523, 4524, 4525) by striking the Office each place that term appears and inserting the Agency; and

(6)

in each of sections 1319B and 1369(a)(3) (12 U.S.C. 4521, 4619(a)(3)), by striking Committee on Banking, Finance and Urban Affairs each place that term appears and inserting Committee on Financial Services.

(b)

Amendments to Fannie Mae Charter Act

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

(1)

in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)), 309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12 U.S.C. 1723a(k)(1)), by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development each place that term appears, and inserting Director of the Federal Housing Enterprise Regulatory Agency;

(2)

in section 309—

(A)

in subsection (m) (12 U.S.C. 1723a(m))—

(i)

in paragraph (1), by striking to the Secretary, in a form determined by the Secretary and inserting to the Director of the Federal Housing Enterprise Regulatory Agency, in a form determined by the Director; and

(ii)

in paragraph (2), by striking to the Secretary, in a form determined by the Secretary and inserting to the Director of the Federal Housing Enterprise Regulatory Agency, in a form determined by the Director;

(B)

in subsection (n) (12 U.S.C. 1723a(n))—

(i)

in paragraph (1), by striking and the Secretary and inserting and the Director of the Federal Housing Enterprise Regulatory Agency; and

(ii)

in paragraph (2), by striking Secretary each place that term appears and inserting Director of the Federal Housing Enterprise Regulatory Agency; and

(C)

in paragraph (3)(B), by striking Secretary and inserting Director of the Federal Housing Enterprise Regulatory Agency.

(c)

Amendments to Freddie Mac Charter Act

The Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.) is amended—

(1)

in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)), 303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12 U.S.C. 1456(c)(1)), by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development each place that term appears, and inserting Director of the Federal Housing Enterprise Regulatory Agency;

(2)

in section 306 (12 U.S.C. 1455)—

(A)

in subsection (c)(2), by inserting the after Secretary of;

(B)

in subsection (i)—

(i)

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

(ii)

by striking section 106 and inserting section 1316; and

(C)

in subsection (j), by striking of substantially and inserting or substantially; and

(3)

in section 307 (12 U.S.C. 1456)—

(A)

in subsection (e)—

(i)

in paragraph (1), by striking to the Secretary, in a form determined by the Secretary and inserting to the Director of the Federal Housing Enterprise Regulatory Agency, in a form determined by the Director; and

(ii)

in paragraph (2), by striking to the Secretary, in a form determined by the Secretary and inserting to the Director of the Federal Housing Enterprise Regulatory Agency, in a form determined by the Director; and

(B)

in subsection (f)—

(i)

in paragraph (1), by striking and the Secretary and inserting and the Director of the Federal Housing Enterprise Regulatory Agency;

(ii)

in paragraph (2), by striking the Secretary each place that term appears and inserting the Director of the Federal Housing Enterprise Regulatory Agency; and

(iii)

in paragraph (3)(B), by striking Secretary and inserting Director of the Federal Housing Enterprise Regulatory Agency.

(d)

Amendment to Title 18, United States Code

Section 1905 of title 18, United States Code, is amended by striking Office of Federal Housing Enterprise Oversight and inserting Federal Housing Enterprise Regulatory Agency.

(e)

Amendment to Flood Disaster Protection Act of 1973

Section 102(f)(3)(A) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and inserting Director of the Federal Housing Enterprise Regulatory Agency.

(f)

Amendment to Department of Housing and Urban Development Act

Section 5 of the Department of Housing and Urban Development Act (42 U.S.C. 3534) is amended by striking subsection (d).

(g)

Amendment to Title 5, United States Code

Section 5313 of title 5, United States Code, is amended by striking the item relating to the Director of the Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development and inserting the following new item:

Director of the Federal Housing Enterprise Regulatory Agency.

.

(h)

Amendment to Sarbanes-Oxley Act

Section 105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)(II)) is amended by inserting and the Director of the Federal Housing Enterprise Regulatory Agency, after Commission,.

(i)

Amendment to Federal Deposit Insurance Act

Section 11(t)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1821(t)(2)(A)) is amended by adding at the end the following:

(vii)

The Federal Housing Enterprise Regulatory Agency.

.

162.

Presidentially appointed directors of enterprises

(a)

Fannie Mae

(1)

In general

Section 308(b) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723(b)) is amended—

(A)

in the first sentence, by striking eighteen persons, five of whom shall be appointed annually by the President of the United States, and the remainder of whom and inserting 13 persons, or such other number that the Director determines appropriate, who;

(B)

in the second sentence, by striking appointed by the President;

(C)

in the third sentence—

(i)

by striking appointed or; and

(ii)

by striking , except that any such appointed member may be removed from office by the President for good cause;

(D)

in the fourth sentence, by striking elective; and

(E)

by striking the fifth sentence.

(2)

Transitional provision

The amendments made by paragraph (1) shall not apply to any appointed position of the board of directors of the Federal National Mortgage Association until the expiration of the annual term for such position during which the effective date under section 163 occurs.

(b)

Freddie Mac

(1)

In general

Section 303(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended—

(A)

in subparagraph (A)—

(i)

in the first sentence, by striking 13 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom and inserting 13 persons, or such other number as the Director determines appropriate, who; and

(ii)

in the second sentence, by striking appointed by the President of the United States;

(B)

in subparagraph (B)—

(i)

by striking such or; and

(ii)

by striking , except that any appointed member may be removed from office by the President for good cause; and

(C)

in subparagraph (C)—

(i)

by striking the first sentence; and

(ii)

by striking elective.

(2)

Transitional provision

The amendments made by paragraph (1) shall not apply to any appointed position of the board of directors of the Federal Home Loan Mortgage Corporation until the expiration of the annual term for such position during which the effective date under section 163 occurs.

163.

Effective date

Except as otherwise specifically provided in this title, this title and the amendments made by this title shall take effect on, and shall apply beginning on, the date of enactment of this Act.

II

FEDERAL HOME LOAN BANKS

201.

Directors

Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is amended—

(1)

by striking subsection (a) and inserting the following:

(a)

Number; Election; Qualifications; Conflicts of Interest

(1)

In general

Subject to paragraphs (2) through (4), the management of each Federal Home Loan Bank shall be vested in a board of 13 directors, or such other number as the Director determines appropriate.

(2)

Board makeup

The board of directors of each Bank shall be comprised of—

(A)

member directors, who shall comprise at least the majority of the members of the board of directors; and

(B)

independent directors, who shall comprise not fewer than 1/3 of the members of the board of directors.

(3)

Selection criteria

(A)

In general

Each member of the board of directors shall be—

(i)

elected by plurality vote of the members, in accordance with procedures established under this section; and

(ii)

a citizen of the United States.

(B)

Independent director criteria

(i)

Public interest

Not fewer than 2 of the independent directors shall be selected from among representatives of organizations having more than a 2-year history of representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections.

(ii)

Conflicts of interest

No independent director may, during the term of service on the board of directors, serve as an officer of any Federal Home Loan Bank or as a director or officer of any member Bank.

(4)

Definitions

For purposes of this section, the following definitions shall apply:

(A)

Independent director

The terms independent director and independent directorship mean a member of the board of directors of a Federal Home Loan Bank who is a bona fide resident of the district in which the Federal Home Loan Bank is located, or the directorship held by such a person, respectively.

(B)

Member director

The terms member director and member directorship mean a member of the board of directors of a Federal Home Loan Bank who is an officer or director of a member institution that is located in the district in which the Federal Home Loan Bank is located, or the directorship held by such a person, respectively.

;

(2)

by striking elective each place that term appears, other than in subsections (d), (e), and (f), and inserting member;

(3)

in subsection (b)—

(A)

by striking the subsection heading and all that follows through Each elective directorship and inserting the following:

(b)

Directorships

(1)

Member directorships

Each member directorship

; and

(B)

by adding at the end the following:

(2)

Independent directorships

(A)

Elections

Each independent director—

(i)

shall be elected by the members entitled to vote, from among eligible persons nominated by the board of directors of the Bank; and

(ii)

shall be filled by a plurality of the votes of the members of the Bank at large, with each member having the number of votes for each such directorship as it has under subsection (b)(1) in an election to fill member directorships.

(B)

Criteria

Nominees shall meet all applicable requirements prescribed in this section.

(C)

Nomination and election procedures

Procedures for nomination and election of independent directors shall be prescribed by the bylaws of each Federal Home Loan Bank, in a manner consistent with the rules and regulations of the Agency.

;

(4)

in subsection (c), by striking the second, third, and fifth sentences;

(5)

in subsection (d)—

(A)

in the first sentence—

(i)

by striking , whether elected or appointed,; and

(ii)

by striking 3 years and inserting 4 years;

(B)

in the second sentence—

(i)

by striking Federal Home Loan Bank System Modernization Act of 1999 and inserting Federal Housing Enterprise Regulatory Reform Act of 2007;

(ii)

by striking 1/3 and inserting 1/4; and

(iii)

by striking or appointed; and

(C)

in the third sentence—

(i)

by striking an elective each place that term appears and inserting a; and

(ii)

by striking in any elective directorship or elective directorships;

(6)

in subsection (f)—

(A)

by striking paragraph (2);

(B)

by striking appointed or each place that term appears; and

(C)

in paragraph (3)—

(i)

by striking (3) Elected bank directors.— and inserting (2) Election process.—; and

(ii)

by striking elective each place that term appears;

(7)

in subsection (i)—

(A)

in paragraph (1), by striking (1) In general.—Subject to paragraph (2), each and inserting Each; and

(B)

by striking paragraph (2); and

(8)

by adding at the end the following:

(l)

Transition Rule

Any member of the board of directors of a Bank elected or appointed in accordance with this section prior to the date of enactment of this subsection may continue to serve as a member of that board of directors for the remainder of the existing term of service.

.

202.

Definitions

Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is amended—

(1)

by striking paragraphs (1), (10), and (11);

(2)

by redesignating paragraphs (2) through (9) as paragraphs (1) through (8), respectively;

(3)

by redesignating paragraphs (12) and (13) as paragraphs (9) and (10), respectively; and

(4)

by adding at the end the following:

(11)

Director

The term Director means the Director of the Federal Housing Enterprise Regulatory Agency.

(12)

Agency

The term Agency means the Federal Housing Enterprise Regulatory Agency, established under section 1311 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

(13)

Finance facility

The term Finance Facility means the Federal Home Loan Bank Finance Facility established under section 11A.

.

203.

Agency oversight of Federal home loan banks

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), other than in provisions of that Act added or amended otherwise by this Act, is amended—

(1)

by striking sections 2A, 2B, and 20 (12 U.S.C. 1422a, 1422b, 1440);

(2)

in section 18 (12 U.S.C. 1438), by striking subsection (b);

(3)

in section 11 (12 U.S.C. 1431)—

(A)

by striking subsections (b) and (c);

(B)

by redesignating subsections (d) through (k) as subsections (c) through (j), respectively;

(C)

in subsection (a)—

(i)

by striking Board each place that term appears and inserting Director; and

(ii)

by striking upon such terms and conditions as the Board may approve; and

(D)

by inserting after subsection (a) the following:

(b)

Issuance of Federal Home Loan Bank Bonds

The Finance Facility may issue consolidated Federal Home Loan Bank debt, which shall be the joint and several obligations of all of the Federal Home Loan Banks, and shall be issued upon such terms and conditions as set by the Finance Facility for the Federal Home Loan Banks.

;

(4)

in section 6 (12 U.S.C. 1426)—

(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;

(5)

in section 10(b) (12 U.S.C. 1430(b))—

(A)

in the subsection heading, by striking Formal Board Resolution and inserting Approval of Director; and

(B)

by striking by formal resolution;

(6)

in section 21(b)(5) (12 U.S.C. 1441(b)(5)), by striking Chairperson of the Federal Housing Finance Board and inserting Director;

(7)

in section 15 (12 U.S.C. 1435), by striking issued with the approval of the Board and inserting issued under section 11(b);

(8)

by striking the Board each place that term appears and inserting the Director;

(9)

by striking The Board each place that term appears and inserting The Director;

(10)

by striking the Finance Board each place that term appears and inserting the Director;

(11)

by striking The Finance Board each place that term appears and inserting The Director; and

(12)

by striking Federal Housing Finance Board each place that term appears and inserting Director.

204.

Federal Home Loan Bank Finance 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 Facility

(a)

Establishment

(1)

In general

The Federal Home Loan Banks shall establish a Federal Home Loan Bank Finance Facility.

(2)

Purposes

The purposes of the Finance Facility are—

(A)

to issue and service the consolidated obligations of the Federal Home Loan Banks in accordance with this Act; and

(B)

to perform all other necessary and proper functions in relation to the issuance and service of such obligations, as fiscal agent on behalf of the Federal Home Loan Banks, and any other functions performed by the Office of Finance on behalf of the Financing Corporation (established under section 21) and the Resolution Funding Corporation (established under section 21B).

(3)

Transfer of functions

(A)

In general

The functions of the Office of Finance of the Federal Home Loan Banks shall be transferred to the Finance Facility on the effective time.

(B)

Organizational meeting

The organizational meeting of the management board of the Finance Facility shall occur as soon as practicable after the date of enactment of the Federal Housing Enterprise Regulatory Reform Act of 2007.

(C)

Interim procedures

Until the effective time, the predecessor office shall continue to operate as if this section had not been enacted.

(D)

References

After the effective time, any reference under any provision of Federal law to the Office of Finance and the Managing Director of the Office of Finance shall be deemed to be references to the Finance Facility and the chief executive officer of the Finance Facility, respectively.

(4)

Succession

(A)

Assets and liabilities

On and after the effective time, the Finance Facility shall, by operation of law and without any further action by the Federal Housing Finance Board, the Director, 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

On and after the effective time, the existing contractual obligations of the Federal Housing Finance Board, solely in its capacity as issuer of consolidated obligations of the Federal Home Loan Banks and the predecessor office shall, by operation of law and without any further action by the Federal Housing Finance Board, the Director, the predecessor office, or any court, become obligations, entitlements, and instruments of the Finance Facility.

(C)

Taxation

The succession to assets, assumption of liabilities, conversion of obligations and instruments, and effectuation of any other transaction by the Finance Facility 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 Finance Facility shall have the power—

(1)

to issue and service Federal Home Loan Bank consolidated notes, consolidated bonds, consolidated debentures, and other consolidated obligations authorized under section 11, as agent for the Federal Home Loan Banks;

(2)

to determine the amount, maturities, rate of interest, terms, and other conditions of Federal Home Loan Bank consolidated obligations;

(3)

to make contracts;

(4)

to determine the terms and conditions under which the Finance Facility may indemnify the members of the management board, as well as officers, employees, and agents of the Finance Facility;

(5)

to determine and implement the methodology for assessments of the Federal Home Loan Banks to fund all of the expenses of the Finance Facility; and

(6)

to exercise such incidental powers not inconsistent with the provisions of this Act as are necessary or advisable to carry out the purposes of the Finance Facility.

(c)

Management of the Finance Facility

(1)

Establishment

The management of the Finance Facility shall be vested in a management board composed of the president of each of the Federal Home Loan Banks, ex officio.

(2)

Duties

The management board of the Finance Facility shall administer the affairs of the Finance Facility in accordance with the provisions of this section.

(3)

Interim appointments

If the office of the president of any Federal Home Loan Bank is vacant, the person serving in such capacity on an acting basis shall serve on the management board of the Finance Facility until replaced by the next person to fill the office of the president of that Federal Home Loan Bank.

(4)

Powers

The management board of the Finance Facility shall exercise such powers as may be necessary or advisable to carry out this section, including the power to—

(A)

set policies for the management and operation of the Finance Facility;

(B)

approve a strategic business plan for the Finance Facility;

(C)

review, adopt, and monitor annual operation and capital budgets of the Finance Facility;

(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 the Securities and Exchange Commission;

(E)

select, employ, determine the compensation for, and assign the duties and functions of the President of the Finance Facility, who shall—

(i)

be the chief executive officer for the Finance Facility and shall direct the implementation of the policies adopted by the management board of the Finance Facility;

(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 Finance Facility;

(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 Finance Facility, who may be removed only by vote of the management board of the Finance Facility.

(5)

Pay

The members of the management board of the Finance Facility shall not receive compensation for their services as members of the management board.

(6)

Quorum requirement

(A)

In general

No business of the Finance Facility may be conducted by the management board unless a quorum of the members of the management board is present in person or by telephone, or through action taken by written consent executed by all of the members of the management board.

(B)

Number

A quorum shall be a majority of the members of the management board.

(C)

Vote required

Action taken by the management board shall be approved by a majority of the members in attendance at any meeting at which a quorum is present, unless the management board adopts procedures requiring a greater voting requirement.

(7)

Appointment of officers and adoption of rules of procedure

The management board of the Finance Facility shall—

(A)

select, from among the members of such board, a Chairperson and a Vice Chairperson; and

(B)

adopt bylaws and other rules of procedure for actions before the management board, including—

(i)

the establishment of 1 or more committees to take action on behalf of the management board; and

(ii)

the delegation of powers of the management board to any committee or officer of the Finance Facility.

(d)

Status

Except to the extent expressly provided in this Act, or in rules or regulations promulgated by the Director, or unless the context clearly indicates otherwise, the Finance Facility shall be accorded the same status as a Federal Home Loan Bank for purposes of any other provision of law (including section 13), other than section 1369F of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

(e)

Definitions

As used in this section—

(1)

the term effective time means the conclusion of the organizational meeting of the management board of the Finance Facility;

(2)

the term Finance Facility includes a corporation, partnership, limited liability company, or joint venture that is jointly owned by the Federal Home Loan Banks;

(3)

the term management board means the management board of the Finance Facility established in accordance with subsection (c); and

(4)

the term predecessor office means the Office of Finance established as a joint office of the Federal Home Loan Banks.

.

205.

Exclusion from certain securities reporting requirements

(a)

In General

The Federal Home Loan Banks shall be exempt from compliance with—

(1)

sections 13(e), 14(a), 14(c), and 17A of the Securities Exchange Act of 1934, and related Commission regulations; and

(2)

section 15 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to transactions in the capital stock of a Federal Home Loan Bank.

(b)

Member Exemption

The members of the Federal Home Loan Bank System shall be exempt from compliance with sections 13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to ownership of or transactions in the capital stock of the Federal Home Loan Banks by such members.

(c)

Exempted and Government Securities

(1)

Capital stock

The capital stock issued by each of the Federal Home Loan Banks under section 6 of the Federal Home Loan Bank Act are—

(A)

exempted securities, within the meaning of section 3(a)(2) of the Securities Act of 1933; and

(B)

exempted securities, within the meaning of section 3(a)(12)(A) of the Securities Exchange Act of 1934.

(2)

Other obligations

The debentures, bonds, and other obligations issued under section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) are—

(A)

exempted securities, within the meaning of section 3(a)(2) of the Securities Act of 1933;

(B)

government securities, within the meaning of section 3(a)(42) of the Securities Exchange Act of 1934; and

(C)

government securities, within the meaning of section 2(a)(16) of the Investment Company Act of 1940.

(3)

Brokers and dealers

A person that effects transactions in the capital stock or other obligations of a Federal Home Loan Bank, for the account of others or for his own account, as applicable, is excluded from the definition of—

(A)

the term government securities broker under section 3(a)(43) of the Securities Exchange Act of 1934; and

(B)

the term government securities dealer under section 3(a)(44) of the Securities Exchange Act of 1934.

(d)

Exemption From Reporting Requirements

The Federal Home Loan Banks shall be exempt from periodic reporting requirements under the securities laws pertaining to the disclosure of—

(1)

related party transactions that occur in the ordinary course of the business of the Banks with members; and

(2)

the unregistered sales of equity securities.

(e)

Tender Offers

Commission rules relating to tender offers shall not apply in connection with transactions in the capital stock of the Federal Home Loan Banks.

(f)

Regulations

(1)

Final rules

Not later than 1 year after the date of enactment of this Act, the Commission shall issue final rules to implement this section and the exemptions provided in this section.

(2)

Considerations

In issuing final regulations under this section, the Commission shall consider the distinctive characteristics of the Federal Home Loan Banks when evaluating—

(A)

the accounting treatment with respect to the payment to the Resolution Funding Corporation;

(B)

the role of the combined financial statements of the Federal Home Loan Banks;

(C)

the accounting classification of redeemable capital stock; and

(D)

the accounting treatment related to the joint and several nature of the obligations of the Banks.

(g)

Definitions

As used in this section—

(1)

the terms Bank, Federal Home Loan Bank, member, and Federal Home Loan Bank System have the same meanings as in section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422);

(2)

the term Commission means the Securities and Exchange Commission; and

(3)

the term securities laws has the same meaning as in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)).

206.

Mergers

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

(1)

by striking Whenever and inserting (a) In General.—Whenever; and

(2)

by adding at the end the following:

(b)

Mergers Authorized

(1)

In general

Any Federal Home Loan Bank may, with the approval of the Director and of the boards of directors of the Banks involved, merge with another Bank.

(2)

Regulations required

The Director shall promulgate regulations establishing the conditions and procedures for the consideration and approval of any voluntary merger described in paragraph (1).

.

207.

Authority to reduce districts

Section 3 of the Federal Home Loan Bank Act (12 U.S.C. 1423) is amended—

(1)

by striking As soon and inserting (a) In General.—As soon; and

(2)

by adding at the end the following:

(b)

Authority to Reduce Districts

Notwithstanding subsection (a), the number of districts may be reduced to a number less than 8—

(1)

pursuant to a voluntary merger between Banks, as approved pursuant to section 26(b); or

(2)

pursuant to a decision by the Director to liquidate a bank pursuant to section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

.

208.

Management of home loan banks

(a)

Board of directors

Section 7(a)(1) of the Federal Home Loan Bank Act (12 U.S.C. 1427(a)(1)) is amended to read as follows:

(1)

In general

Subject to paragraphs (2) through (4), and except to the extent that action under section 1377 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 results in a lesser number, the management of each Federal home loan bank shall be vested in a board of 13 directors, or such other number as the board of directors of each Federal home loan bank determines appropriate.

.

(b)

Apportionment among States; designation of State location

Section 7(c) of the Federal Home Loan Bank Act (12 U.S.C. 1427(c)) is amended to read s follows:

(c)

Apportionment among States; designation of State location

The number of elective directorships designated as representing the members located in each separate State in a bank district shall be determined by the Director, in the approximate ratio of the percentage of the required stock, as determined pursuant to regulation of the Director, of the members located in the State at the end of the calendar year next preceding the date of the election to the total required stock, as so determined, of all members of such bank at the end of such year, except that in the case of each State, such number shall not be less than 1 or 2, as determined by the board of directors of each Federal home loan bank, and shall be not more than 6.

.

III

TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND THE FEDERAL HOUSING FINANCE BOARD

A

OFHEO

301.

Abolishment of OFHEO

(a)

In General

Effective at the end of the 1-year period beginning on the date of enactment of this Act, the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and the positions of the Director and Deputy Director of such Office are abolished.

(b)

Disposition of Affairs

During the 1-year period beginning on the date of enactment of this Act, the Director of the Office of Federal Housing Enterprise Oversight, solely for the purpose of winding up the affairs of the Office of Federal Housing Enterprise Oversight—

(1)

shall manage the employees of such Office and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee under section 303; and

(2)

may take any other action necessary for the purpose of winding up the affairs of the Office.

(c)

Status of Employees Before Transfer

The amendments made by title I and the abolishment of the Office of Federal Housing Enterprise Oversight under subsection (a) of this section may not be construed to affect the status of any employee of such Office as an employee of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee under section 303.

(d)

Use of Property and Services

(1)

Property

The Director may use the property of the Office of Federal Housing Enterprise Oversight to perform functions which have been transferred to the Director 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 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 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—

(i)

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992;

(ii)

the Federal National Mortgage Association Charter Act;

(iii)

the Federal Home Loan Mortgage Corporation Act;

(iv)

or any other provision of law applicable with respect to such Office; and

(B)

existed on the day before the date of abolishment under subsection (a).

(2)

Continuation of suits

No action or other proceeding commenced by or against the Director of the Office of Federal Housing Enterprise Oversight in connection with functions that are transferred to the Director of the Federal Housing Enterprise Regulatory Agency shall abate by reason of the enactment of this Act, except that the Director of the Federal Housing Enterprise Regulatory Agency shall be substituted for the Director of the Office of Federal Housing Enterprise Oversight as a party to any such action or proceeding.

302.

Continuation and coordination of certain regulations

(a)

In General

All regulations, orders, and determinations described in subsection (b) shall remain in effect according to the terms of such regulations, orders, and determinations, and shall be enforceable by or against the Director or the Secretary of Housing and Urban Development, as the case may be, until modified, terminated, set aside, or superseded in accordance with applicable law by the Director or the Secretary, as the case may be, any court of competent jurisdiction, or operation of law.

(b)

Applicability

A regulation, order, or determination is described in this subsection if it—

(1)

was 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 relates to the authority of the Secretary under—

(i)

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992;

(ii)

the Federal National Mortgage Association Charter Act, with respect to the Federal National Mortgage Association; or

(iii)

the Federal Home Loan Mortgage Corporation Act, with respect to the Federal Home Loan Mortgage Corporation; or

(C)

a court of competent jurisdiction, and relates to functions transferred by this Act; and

(2)

is in effect on the effective date of the abolishment under section 301(a).

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 Agency for employment, not later than the effective date of the abolishment under section 301(a), and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.

(b)

Guaranteed Positions

(1)

In general

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.

(2)

No involuntary separation or reduction

An employee transferred under subsection (a) holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee.

(c)

Appointment Authority for Excepted and Senior Executive Service Employees

(1)

In general

In the case of an employee occupying a position 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 position shall be transferred, subject to paragraph (2).

(2)

Decline of transfer

The Director may decline a transfer of authority under paragraph (1) to the extent that such authority relates to—

(A)

a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character; or

(B)

a noncareer position in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code).

(d)

Reorganization

If the Director determines, after the end of the 1-year period beginning on the effective date of the abolishment under section 301(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.

(e)

Employee Benefit Programs

(1)

In general

Any employee of the Office of Federal Housing Enterprise Oversight accepting employment with the 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 Agency or the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development, as applicable, including insurance, to which such employee belongs on the date of the abolishment under section 301(a), if—

(A)

the employee does not elect to give up the benefit or membership in the program; and

(B)

the benefit or program is continued by the Director of the Federal Housing Enterprise Regulatory Agency.

(2)

Cost differential

(A)

In general

The difference in the costs between the benefits which would have been provided by the Office of Federal Housing Enterprise Oversight and those provided by this section shall be paid by the Director.

(B)

Health insurance

If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Director, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season.

304.

Transfer of property and facilities

Upon the effective date of its abolishment under section 301(a), all property of the Office of Federal Housing Enterprise Oversight shall transfer to the Agency.

B

Federal Housing Finance Board

311.

Abolishment of the Federal Housing Finance Board

(a)

In General

Effective at the end of the 1-year period beginning on the date of enactment of this Act, the Federal Housing Finance Board (in this subtitle 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 the 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 313; 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 the Board as an employee 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 313.

(d)

Use of Property and Services

(1)

Property

The Director may use the property of the Board to perform functions which have been transferred to the Director, 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 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 the Federal Home Loan Bank Act, or any other provision of law applicable with respect to the 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 under this Act to the Director shall abate by reason of the enactment of this Act, except that the Director shall be substituted for the Board or any member thereof as a party to any such action or proceeding.

312.

Continuation and coordination of certain regulations

(a)

In General

All regulations, orders, and determinations described under subsection (b) shall remain in effect according to the terms of such regulations, orders, and determinations, and shall be enforceable by or against the Director until modified, terminated, set aside, or superseded in accordance with applicable law by the 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 relates to functions transferred by this Act; and

(2)

is in effect on the effective date of the abolishment under section 311(a).

313.

Transfer and rights of employees of the Federal Housing Finance Board

(a)

Transfer

Each employee of the Board shall be transferred to the Agency for employment, not later than the effective date of the abolishment under section 311(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

(1)

In general

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.

(2)

No involuntary separation or reduction

An employee holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of transfer, except for cause, or, if the employee is a temporary employee, separated in accordance with the terms of the appointment of the employee.

(c)

Appointment Authority for Excepted and Senior Executive Service Employees

(1)

In general

In the case of an employee occupying a position 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 position shall be transferred, subject to paragraph (2).

(2)

Decline of transfer

The Director may decline a transfer of authority under paragraph (1) to the extent that such authority relates to—

(A)

a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character; or

(B)

a noncareer position in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code).

(d)

Reorganization

If the Director determines, after the end of the 1-year period beginning on the effective date of the abolishment under section 311(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee 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 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 Agency or the Board, as applicable, including insurance, to which such employee belongs on the effective date of the abolishment under section 311(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.

(2)

Cost differential

(A)

In general

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.

(B)

Health insurance

If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Director, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season.

314.

Transfer of property and facilities

Upon the effective date of the abolishment under section 311(a), all property of the Board shall transfer to the Agency.

IV

STUDIES AND REPORTS

401.

Study and report on Basel II and enterprise debt

(a)

Study

The Board of Governors of the Federal Reserve System shall conduct a study on the effects on the regulated entities of the new Basel Capital Accord (Basel II), as endorsed by the Group of Ten countries in The International Convergence of Capital Measurement and Capital Standards: a Revised Framework. The study shall examine the debt of the regulated entities and the capital classification on financial institutions that hold such debt.

(b)

Report

The Chairman of the Board of Governors of the Federal Reserve System shall submit a report to Congress on the results of the study required by this section not later than 2 years after the date of enactment of this Act.

402.

Affordable housing audits

The Inspector General of the Agency shall conduct an annual audit of the affordable housing activities, programs, and partnerships of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, to ensure that such activities, programs, and partnerships support the affordable housing missions of those enterprises.

403.

Report on insured depository institution holdings of regulated entity debt and mortgage-backed securities

Not later than 2 years after the date of enactment of this Act, the Director, the Secretary of the Treasury, the Board of Governors of the Federal Reserve System, the Board of Directors of the Federal Deposit Insurance Corporation, and the National Credit Union Administration Board shall jointly submit a report to Congress regarding—

(1)

the extent to which obligations issued or guaranteed by the regulated entities (including mortgage-backed securities) are held by federally insured depository institutions, including such extent by type of institution and such extent relative to the capital of the institution;

(2)

the extent to which the unlimited holdings by federally insured depository institutions of the obligations of the regulated entities could produce systemic risk issues, particularly for the safety and soundness of the banking system in the United States, in the event of default or failure by a regulated entity;

(3)

the effects on the regulated entities, the banking industry, and mortgage markets, if prudent limits on the holdings of the obligations of a regulated entity were placed on federally insured depository institutions; and

(4)

the extent to which alternative investments are available to community depository institutions, and the impact that such alternative investments would have on the safety and soundness and capital levels of such community depository institutions.

404.

Report on risk-based capital levels

(a)

In General

The Director shall submit a report to Congress at the end of each fiscal quarter regarding—

(1)

the risk-based capital levels for the regulated entities under section 1361 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by this Act, including a description of the risk-based capital test under that section 1361 and any assumptions of the Director and factors used by the Director in establishing the test; and

(2)

the minimum and critical capital levels for the regulated entities pursuant to sections 1362 and 1363, respectively, of that Act, as so amended.

(b)

Timing

Each report under this section shall be submitted not later than 60 days after the end of each fiscal quarter.

405.

Report on resources and allocations

The Comptroller General of the United States shall submit a report to Congress annually, on a fiscal year basis, regarding—

(1)

the allocation of resources of the Agency by the Director; and

(2)

the level of assessments collected by the Director for the operation of the Agency.

406.

Study and report on guarantee fees

(a)

Ongoing Study of Fees

The Director shall conduct an ongoing study of fees charged by enterprises for guaranteeing a mortgage.

(b)

Collection of Data

The Director shall, by regulation or order, establish procedures for the collection of data from enterprises for purposes of this subsection, including the format and the process for collection of such data.

(c)

Report to Congress

The Director shall annually submit a report to Congress on the results of the study conducted under subsection (a), based on the aggregated data collected under subsection (a) for the subject year, regarding the amount of such fees and the criteria used by the enterprises to determine such fees.

(d)

Contents of Reports

The reports required under subsection (c) shall identify and analyze—

(1)

the factors considered in determining the amount of the guarantee fees charged;

(2)

the total revenue earned by the enterprises from guarantee fees;

(3)

the total costs incurred by the enterprises for providing guarantees;

(4)

the average guarantee fee charged by the enterprises;

(5)

an analysis of any increase or decrease in guarantee fees from the preceding year;

(6)

a breakdown of the revenue and costs associated with providing guarantees, based on product type and risk classifications; and

(7)

a breakdown of guarantee fees charged based on asset size of the originator and the number of loans sold or transferred to an enterprise.

(e)

Protection of Information

Nothing in this section may be construed to require or authorize the Director to publicly disclose information that is confidential or proprietary.

407.

Report on conforming loan limits

The Comptroller General of the United States shall submit a report to Congress on whether raising the loan limits under section 302(b) of the Federal National Mortgage Association Act (12 U.S.C. 1717(b)) and section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) would promote the availability of affordable housing.

408.

Reviews and studies relating to enterprises and related foundations

(a)

Annual reviews

The Director shall annually conduct a review of the Freddie Mac Foundation and the Office of Corporate Giving of the Federal National Mortgage Corporation (formerly known as the Fannie Mae Foundation), or any successors thereto, to ensure that such entities are not engaged in impermissible lobbying activities.

(b)

Study on lobbying activities To obstruct special examination

The Director shall conduct a study to determine whether any actions or inactions by an OFHEO-designated executive officer of a Government-Sponsored Enterprise, that was an employee of the Government-Sponsored-Enterprise during the period of review of the OFHEO Special Examination of Accounting Policies and Practices of Fannie Mae for the years 1998 through mid-2004 and remains an employee of such Government-Sponsored Enterprise as of the date of enactment of this Act, were intended to obstruct the Special Examination by OFHEO.

(c)

Report

The Director shall submit a report to Congress on the results of the reviews and study required under subsections (a) and (b), not later than 60 days after the date of enactment of this Act, and annually thereafter with respect to the reviews conducted under subsection (a).

409.

Recommendations

Each report submitted pursuant to this title shall include specific recommendations, if any, of appropriate policies, limitations, regulations, legislation, or other actions to deal appropriately and effectively with the issues addressed by such report.