[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1657 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 1657

    To restructure and modernize the Federal Home Loan Bank System.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 17, 1995

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

_______________________________________________________________________

                                 A BILL


 
    To restructure and modernize the Federal Home Loan Bank System.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Home Loan 
Bank System Restructuring and Modernization Act of 1995''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
            TITLE I--AMENDMENT OF FEDERAL HOME LOAN BANK ACT

Sec. 101. Statement of purpose.
Sec. 102. Definitions.
Sec. 103. Federal Housing Finance Board.
Sec. 104. Powers and duties of the Federal Housing Finance Board.
Sec. 105. Continuing regulations and policies.
Sec. 106. Readjustment of Federal Home Loan Bank districts; names.
Sec. 107. Eligibility for membership.
Sec. 108. Capital stock.
Sec. 109. Transitional provisions concerning capital stock.
Sec. 110. Prompt corrective action.
Sec. 111. Federal Home Loan Bank directors.
Sec. 112. Eligibility to secure advances.
Sec. 113. Advances.
Sec. 114. Advances to nonmember mortgagees; terms and conditions.
Sec. 115. Powers and duties of banks.
Sec. 116. Incorporation of banks; corporate powers; housing project 
                            loans.
Sec. 117. Exemption from taxation; obligations acceptable as credit on 
                            debt of home owner.
Sec. 118. Obligations as lawful investments; liability of United States 
                            for obligations issued by banks.
Sec. 119. Reserves and dividends.
Sec. 120. Financing Corporation.
Sec. 121. Obligations of Resolution Funding Corporation.
Sec. 122. Eligibility to membership in banks.
Sec. 123. Merger, liquidation or reorganization.
Sec. 124. General enforcement powers.
                     TITLE II--EMPLOYEE PROVISIONS

Sec. 201. Federal Housing Finance Board employees.
                    TITLE III--CONFORMING AMENDMENTS

Sec. 301. Amendments to the Federal Credit Union Act.
Sec. 302. Amendments to the Federal Deposit Insurance Act.
Sec. 303. Amendment to the Home Owners' Loan Act.
Sec. 304. Amendment to the Housing and Urban-Rural Recovery Act of 
                            1983.
Sec. 305. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 306. Amendments to the Thrift Institutions Restructuring Act.
Sec. 307. Amendments to title 18, United States Code.
            TITLE I--AMENDMENT OF FEDERAL HOME LOAN BANK ACT

SEC. 101. STATEMENT OF PURPOSE.

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

``SEC. 1A. STATEMENT OF PURPOSE.

    ``The Federal Home Loan Bank System is a profit-making enterprise 
whose purpose is to support residential mortgage lending (including 
mortgages on housing for low- and moderate-income families), as well as 
community development lending, throughout the Nation, safely and 
soundly, primarily through a program of collateralized advances to 
System members. The System facilitates such lending by increasing the 
liquidity and improving the distribution of investment capital 
available through its member institutions.''.
SEC. 102. DEFINITIONS.

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

``SEC. 2. DEFINITIONS.

    ``As used in this Act--
            ``(1) Bank.--The term `Federal Home Loan Bank' or `Bank' 
        means a bank established under the authority of this Act.
            ``(2) Bank-affiliated party.--The term `Bank-affiliated 
        party' means--
                    ``(A) any director, officer, or employee of, or 
                agent for, a Federal Home Loan Bank;
                    ``(B) any member, consultant, joint venture 
                partner, and any other person as determined by the 
                Board who participates in the conduct of the affairs of 
                a Federal Home Loan Bank; and
                    ``(C) any independent contractor (including any 
                attorney, appraiser, or accountant) who knowingly or 
                recklessly participates in--
                            ``(i) any violation of any law or 
                        regulation;
                            ``(ii) any breach of fiduciary duty; or
                            ``(iii) any unsafe or unsound practice,
                which caused or is likely to cause more than a minimal 
                financial loss to, or a significant adverse effect on, 
                the Federal Home Loan Bank.
            ``(3) Board.--The term `Board' means the Federal Housing 
        Finance Board established under section 2A.
            ``(4) Federal home loan bank system and system.--The term 
        `Federal Home Loan Bank System' or `System' means the Federal 
        Home Loan Banks, including any central office established by 
        the Banks, under the supervision of the Board.
            ``(5) Home mortgage.--The term `home mortgage' means a 
        mortgage upon real estate, in fee simple, or on a leasehold--
        (A) under a lease for not less than ninety-nine years which is 
        renewable or (B) under a lease having a period of not less than 
        fifty years to run from the date the mortgage was executed, 
        upon which is located, or which comprises or includes, one or 
        more homes or other dwelling units, all of which may be defined 
        by the Board, and shall include, in addition to first 
        mortgages, such classes of first liens as are commonly given to 
        secure advances on real estate by institutions authorized under 
        this Act to become members, under the laws of the State in 
        which the real estate is located, together with the credit 
        instruments, if any, secured thereby.
            ``(6) Home mortgage loan.--The term `home mortgage loan' 
        means a loan made by a member upon the security of a home 
        mortgage.
            ``(7) Insured depository institution.--The term `insured 
        depository institution' means--
                    ``(A) an insured depository institution (as defined 
                in section 3 of the Federal Deposit Insurance Act), and
                    ``(B) except as used in sections 21A and 21B, an 
                insured credit union (as defined in section 101 of the 
                Federal Credit Union Act).
            ``(8) Member.--The term `member' means any institution 
        which has subscribed for the stock of a Federal Home Loan Bank 
        and has not surrendered all of that stock.
            ``(9) Savings association.--The term `savings association' 
        has the meaning given to such term in section 3 of the Federal 
        Deposit Insurance Act.
            ``(10) State.--The term `State' includes the District of 
        Columbia, Guam, Puerto Rico, and the Virgin Islands of the 
        United States.
            ``(11) Total capital.--The term `total capital' means--
                    ``(A) except as provided in subparagraphs (B) ad 
                (C), total capital that is calculated at least 
                quarterly;
                    ``(B) with respect to a Federal Home Loan Bank, 
                total capital that is calculated on the last day of 
                each month net of all stock to be redeemed under all 
                pending notices of redemption and withdrawal filed 
                under section 6(e) with the Bank and all stock pending 
                retirement by the Bank; and
                    ``(C) with respect to the Federal Home Loan Bank 
                System, total capital that is calculated on the last 
                day of each month net of all stock to be redeemed under 
                all pending notices of redemption and withdrawal filed 
                under section 6(e) with any of the Federal Home Loan 
                Banks and all stock pending retirement by any of the 
                Banks.
            ``(12) Unpaid principal.--The term `unpaid principal', when 
        used in respect of a loan secured by a home mortgage means the 
        principal thereof less the sum of (A) payments made on such 
        principal, and (B) in cases where shares or stock are pledged 
        as security for the loan, the payments made on such shares or 
        stock plus earnings or dividends apportioned or credited 
        thereon.''.

SEC. 103. FEDERAL HOUSING FINANCE BOARD.

    (a) Establishment.--Section 2A(a) of the Federal Home Loan Bank Act 
(12 U.S.C. 1422a(a)) is amended by deleting paragraph (3).
    (b) Board Members.--Section 2A(b) of the Federal Home Loan Bank Act 
(12 U.S.C. 1422(b)) is amended to read as follows:
    ``(b) Board Members.--
            ``(1) In general.--The Board shall consist of the following 
        directors:
                    ``(A) The Secretary of the Treasury (or the 
                Secretary of the Treasury's designee), who shall serve 
                without additional compensation.
                    ``(B) The Secretary of the Department of Housing 
                and Urban Development (or the Secretary of the 
                Department of Housing and Urban Development's
                 designee), who shall serve without additional 
compensation.
                    ``(C) 3 directors appointed by the President, by 
                and with the advice and consent of the Senate--
                            ``(i) from among individuals who are 
                        citizens of the United States; and
                            ``(ii) from among individuals--
                                    ``(I) with extensive experience or 
                                training in housing finance or 
                                financial institution safety and 
                                soundness regulation, or
                                    ``(II) with a commitment to 
                                providing specialized housing credit.
            ``(2) Appointed directors.--
                    ``(A) Full-time director.--
                            ``(I) One director.--1 of the appointed 
                        directors shall serve full-time as a director 
                        of the Board.
                            ``(II) Chairperson.--The full-time 
                        appointed director shall be designated to serve 
                        as the Chairperson of the Board and the 
                        Chairperson shall be designated as the chief 
                        executive officer, subject to the supervision 
                        of the Board.
                            ``(III) Acting chairperson.--The 
                        Chairperson shall designate another appointed 
                        director to serve as Acting Chairperson during 
                        the absence or disability of the Chairperson.
                    ``(B) Part-time directors.--2 of the appointed 
                directors shall serve part-time as directors of the 
                Board and at least 1 of the part-time directors shall 
                be chosen from an organization with more than a 2-year 
                history of representing consumer or community interests 
                on banking services, credit needs, housing, or 
                financial consumer protections.
            ``(3) Nominations.--Nominations pursuant to this subsection 
        shall be referred in the Senate to the Committee on Banking, 
        Housing, and Urban Affairs.''.
    (c) Appointed Directors' Terms.--Section 2A(c) of the Federal Home 
Loan Bank Act (12 U.S.C. 1422(c)) is amended to read as follows:
    ``(c) Appointed Directors' Terms.--
            ``(1) In general.--The appointed directors shall each be 
        appointed for a term of 6 years.
            ``(2) Initial term.--Notwithstanding paragraph (1), of the 
        directors first appointed after the enactment of the Federal 
        Home Loan Bank System Restructuring and Modernization Act of 
        1995--
                    ``(i) 1 shall be appointed for a term of 2 years;
                    ``(ii) 1 shall be appointed for a term of 4 years; 
                and
                    ``(iii) 1 shall be appointed for a term of 6 
                years.''.
    (d) Vacancies.--Section 2A(d) of the Federal Home Loan Bank Act (12 
U.S.C. 1422(d)) is amended to read as follows:
    ``(d) Vacancies.--
            ``(1) In general.--Any vacancy on the Board shall be filled 
        in the same manner in which the original appointment was made.
            ``(2) Expiration of term.--Any director appointed to fill a 
        vacancy occurring before the expiration of the term for which 
        such director's predecessor was appointed shall be appointed 
        only for the remainder of such term.
            ``(3) Continuation of service.--Each director may continue 
        to serve until a successor has been appointed and qualified.
            ``(4) Quorum.--
                    ``(A) In general.--3 directors shall constitute a 
                quorum of the board of directors of the Federal Housing 
                Finance Board.
                    ``(B) Exception.--If there shall be on the Board 
                less than a quorum, all powers and functions vested in, 
                or exercisable by, the Board shall vest in and be 
                exercisable by the remaining directors, until such time 
                as there shall be a quorum of the Board.''.
    (e) Employment and Other Restrictions on Directors; Appointed 
Directors Compensation.--Section 2A of the Federal Home Loan Bank Act 
(12 U.S.C. 1422a) is amended by adding after subsection (d) the 
following new subsections:
    ``(e) Employment and Other Restrictions on Directors.--No director 
may--
            ``(1) serve as a director or officer of any Federal Home 
        Loan Bank or any member of any Bank; or
            ``(2) hold shares of, or any other financial interest in, 
        any member of any Federal Home Loan Bank.
    ``(f) Appointed Directors Compensation.--The Chairperson and the 
other appointed directors shall be compensated as prescribed in 
sections 5314 and 5315 of title 5, United States Code, respectively.''.
    (f) Transitional Provision.--
            (1) Continued service of federal housing finance board 
        directors.--Any Federal Housing Finance Board director serving 
        on the date of enactment of the Federal Home Loan Bank 
        Restructuring and Modernization Act of 1995, whose term has not 
        expired prior to that date, shall remain a director of the 
        Board and shall be deemed to have been appointed under 
        subsection (b).
            (2) Terms of appointment.--The President shall determine 
        the length of the term of any director described in paragraph 
        (1), subject to subsection (c)(2), and shall determine which 
        director described in paragraph (1) shall serve as the full-
        time director and which shall serve part-time.
SEC. 104. POWERS AND DUTIES OF THE FEDERAL HOUSING FINANCE BOARD.

    (a) Powers and Duties.--Section 2B(a) of the Federal Home Loan Bank 
Act (12 U.S.C. 1422b(a)) is amended to read as follows:
    ``(a) Powers and Duties.--
            ``(1) Safety and soundness.--The primary duty of the Board 
        shall be to ensure that the Federal Home Loan Banks operate in 
        a safe and sound manner.
            ``(2) Additional powers and duties.--The Board also shall 
        have the following powers and duties--
                    ``(A) to supervise the Federal Home Loan Banks and 
                the Federal Home Loan Bank System and to promulgate and 
                enforce such regulations and orders as are necessary 
                from time to time to carry out the provisions of this 
                Act;
                    ``(B) to ensure that the Federal Home Loan Banks 
                carry out their housing finance mission;
                    ``(C) to ensure that the Federal Home Loan Banks 
                and the Federal Home Loan Bank System remain 
                appropriately capitalized and able to raise funds in 
                the capital markets;
                    ``(D) to determine necessary expenditures of the 
                Board under this Act and the manner in which such 
                expenditures shall be incurred, allowed, and paid;
                    ``(E) to use the United States mails in the same 
                manner and under the same conditions as a department or 
                agency of the United States; and
                    ``(F) utilizing the services of the Administrator 
                of the General Services, to purchase, lease, hold or 
                dispose of such real estate for its premises as may be 
                necessary or convenient for it to carry out the 
                purposes of this Act.''.
    (b) Amendments Concerning Staff.--Section 2B(b) of the Federal Home 
Loan Bank Act (12 U.S.C. 1422b(b)) is amended to read as follows:
    ``(b) Staff.--
            ``(1) Federal housing finance board staff.--Subject to 
        title II of the Federal Home Loan Bank System Restructuring and 
        Modernization Act of 1995, the Board may employ, direct, and 
        fix the compensation and number of employees, attorneys, and 
        agents of the Board, except that in no event shall the Board 
        delegate any function to any employee or administrative unit of 
        any bank.
            ``(2) Compensation.--
                    ``(a) Employees, attorneys, and agents.--In 
                directing and fixing the compensation of employees, 
                attorneys, and agents, the Board shall consult with and 
                maintain comparability with the compensation at the 
                Federal bank regulatory agencies.
                    ``(B) Other laws.--Except for the compensation of 
                the directors of the Board, compensation under 
                subparagraph (A) shall be paid without regard to the 
                provisions of other laws applicable to officers or 
                employees of the United States.
            ``(3) Abolition of the office of finance.--The Office of 
        Finance is abolished on the earlier of the date--
                    ``(A) the central office described in section 11(k) 
                is established, or
                    ``(B) 6 months after the Federal Home Loan Bank 
                System Restructuring and Modernization Act of 1995 is 
                enacted.''.

SEC. 105. CONTINUING REGULATIONS AND POLICIES.

    Not later than 270 days after the date of enactment of this Act, 
the Federal Housing Finance Board shall--
            (a) identify the regulations and policies of the Board that 
        will continue in effect after the enactment of this Act;
            (b) identify the regulations and policies described in 
        subsection (a) that need to be amended to comply with changes 
        made to the Federal Home Loan Bank Act by this Act; and
            (c) publish the information required by subsections (a) and 
        (b) in the Federal Register.

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

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

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

    ``(a) Readjustments.--
            ``(1) Authority of federal home loan banks.--The Federal 
        Home Loan Bank districts and the Federal Home Loan Banks in 
        existence on the date of enactment of the Federal Home Loan 
        Bank System Restructuring and Modernization Act of 1995 may be 
        readjusted (through merger or otherwise) by 2 or more Banks as 
        long as--
                    ``(A) there are never fewer than 1 nor more than 12 
                districts and Federal Home Loan Banks; and
                    ``(B) the requirements of paragraph (2) are 
                satisfied.
            ``(2) Additional requirements.--Any readjustment described 
        in this subsection--
                    ``(A) Convenience test.--shall be with due regard 
                to the convenience and customary course of business of 
                the current members and institutions eligible to and 
                likely to subscribe for stock of a Federal Home Loan 
                Bank, and no Federal Home Loan Bank district shall 
                contain a fractional part of any State.
                    ``(B) Prior approvals.--Must be approved (taking 
                into account, among other things, the convenience test 
                in subparagraph (A)), by--
                            ``(i) the Federal Housing Finance Board;
                            ``(ii) the majority of the board of 
                        directors of each participating Bank; and
                            ``(iii) the majority of the votes that all 
                        members of each participating Bank may cast 
                        with respect to the readjustment.
                                    ``(I) Votes to be cast.--Each 
                                member may cast a number of votes equal 
                                to the number of votes the member may 
                                cast in an election under section 7(b).
                                    ``(II) Member defined.--As used in 
                                this subparagraph, ``member'' means a 
                                member of a Federal Home Loan Bank that 
                                was a member of such Bank at the end of 
                                the calendar year next preceding the 
                                vote.
    ``(b) Name.--
            ``(1) Districts.--All districts shall be known as Federal 
        Home Loan Bank districts and may be designated by number.
            ``(2) City.--The title of each Federal Home Loan Bank shall 
        include the name of the city at which it is established.''.

SEC. 107. ELIGIBILITY FOR MEMBERSHIP.

    (a) Eligibility Criteria.--Section 4(a) of the Federal Home Loan 
Bank Act (12 U.S.C. 1424(a)) is amended to read as follows:
    ``(a) Criteria for Eligibility.--
            ``(1) In general.--Any building and loan association, 
        savings and loan association, cooperative bank, homestead 
        association, insurance company, savings bank, or any insured 
        depository institution (as defined in section 2), shall be 
        eligible to be a member of a Federal Home Loan Bank if--
                    ``(A) it is duly organized under the laws of any 
                State or of the United States;
                    ``(B) it is subject to inspection and regulation 
                under the banking laws, or under similar laws, of any 
                State or of the United States;
                    ``(C) it makes long-term home mortgage loans, as 
                defined by the Board;
                    ``(D) it maintains at least 10 percent of its total 
                assets in whole first mortgages on improved residential 
                property (based on an average in each calendar 
                quarter);
                    ``(E) its financial condition is such that advances 
                may be safely made to such institution; and
                    ``(F) the character of its management and its home-
                financing policy are consistent with sound and 
                economical home financing.
            ``(2) Definition of whole mortgage.--A whole first mortgage 
        on improved residential property for purposes of this 
        subsection does not include either a partial interest in a 
        residential mortgage loan or any security that represents an 
        interest in a residential mortgage loan.
            ``(3) Transition periods for new institutions and existing 
        members.--
                    ``(A) New institutions.--An institution commencing 
                its initial business operations may become a member of 
                a Federal Home Loan Bank prior to complying with 
                paragraph (1)(D) if it complies with paragraph (1)(D) 
                within one year after the commencement of its 
                operations.
                    ``(B) Existing members.--Paragraph (1)(D) does not 
                apply to an institution that is a member of a Federal 
                Home Loan Bank on the day before the date of enactment 
                of the Federal Home Loan Bank System Supervision and 
                Modernization Act of 1995 until 2 years after the date 
                of enactment of the Federal Home Loan Bank System 
                Restructuring and Modernization Act of 1995.
                    ``(C) Removal.--A new institution or an existing 
                member that fails to comply with paragraph (1)(D) 
                within the time period provided by subparagraph (A) or 
                subparagraph (B), respectively, shall be removed from 
                membership by the Board under section (6)(e).
            ``(4) Failure to maintain asset requirement.--Except as 
        provided in paragraph (3), any member that fails to maintain 
        compliance with the 10 percent whole first mortgage asset 
        requirement described in paragraph (1)(D)--
                    ``(A) Advances.--For 2 consecutive quarters shall 
                not be eligible to obtain advances from its Federal 
                Home Loan Bank until the member meets the 10 percent 
                whole first mortgage asset requirement; and
                    ``(B) Removal of member.--For 4 consecutive 
                quarters shall be removed from membership by the Board 
                under section 6(e).''.
    (b) Membership Based on Convenience; Applications.--Section 4(b) of 
the Federal Home Loan Bank Act (12 U.S.C. 1424(b)) is amended to read 
as follows:
    ``(b) Membership Based on Convenience; Applications.--
            ``(1) Membership based on convenience.--An institution 
        eligible to become a member under this section may become a 
        member only of, and secure advances only from--
                    ``(A) the Federal Home Loan Bank of the district in 
                which the institution's principal place of business is 
                located, or
                    ``(B) the Bank of a district adjoining the district 
                in which the institution's principal place of business 
                is located if demanded by convenience and then only 
                if--
                            ``(i) the application for membership is 
                        approved by the Bank of the adjoining district; 
                        and
                            ``(ii) the Board does not disapprove the 
                        application within 30 days after Bank approval 
                        is granted under clause (i).
            ``(2) Applications.--
                    ``(A) Submission.--An institution eligible to 
                become a member may submit an application for 
                membership--
                            ``(i) to the Bank in the district in which 
                        the principal place of business of the 
                        institution is located; or
                            ``(ii) if the institution is seeking to 
                        become a member of a Bank of a district 
                        adjoining the district in which the 
                        institution's principal place of business is 
                        located, to the Bank of the adjoining district 
                        and to the Board.
                    ``(B) Approval.--Each Federal Home Loan Bank is 
                authorized to approve or disapprove, subject to the 
                requirements of this Act, applications appropriately 
                submitted to the Bank.''.

SEC. 108. CAPITAL STOCK.

    (a) Required Subscriptions; Retirement of Oversubscriptions; 
Limitations; Cancellation of Oversubscriptions; Reports and 
Information.--Section 6(b) of the Federal Home Loan Bank Act (12 U.S.C. 
1426(b)) is amended to read as follows:
    ``(b) Required Subscriptions; Retirement of Oversubscriptions; 
Limitations; Cancellation of Oversubscriptions; Reports and 
Information.--
            ``(1) Required subscriptions.--
                    ``(A) In general.--
                            ``(i) Percentage of total assets.--The 
                        minimum stock subscription of each institution 
                        that becomes a member shall be an amount equal 
                        to a percentage of the subscriber's total 
                        assets.
                            ``(ii) Each bank to set individual 
                        requriements.--The percentage of total assets 
                        in clause (i), which shall apply to all members 
                        of the same Bank, shall be established 
                        individually by each Federal Home Loan Bank 
                        based, at a minimum, on the capital standards 
                        set by the Board under Section 6(A).
                    ``(B) Adjustments.--Each Federal Home Loan Bank 
                shall annually, as of the close of the calendar year, 
                adjust, at such time, and in such manner and upon such 
                terms and conditions as the Board may by regulation or 
                otherwise prescribe, the amount of stock required to be 
                held by each member of the Bank so that such member 
                shall have invested in the stock of the Bank at least 
                an amount calculated in the manner provided in 
                subparagraph (A).
                    ``(C) Excess stock.--
                            ``(i) Retirement.--If a Federal Home Loan 
                        Bank finds that the investment of any member in 
                        stock
                         of the Bank is greater than that required 
under this paragraph, it may, unless prohibited by the Board or by the 
provisions of paragraph (2), retire the stock of such member in excess 
of the amount so required.
                            ``(ii) Payment for retired stock.--The 
                        retirement of stock under this subparagraph is 
                        subject to all of the requirements imposed on 
                        the partial redemption of stock under 
                        subsection (e), except for the notice 
                        requirement contained in subsection (e)(1).
                    ``(D) Entire shares.--The Board, in its discretion, 
                may, by regulation or otherwise, provide for 
                adjustments in amounts of stock to be issued or retired 
                in order that stock may be issued or retired only in 
                entire shares.
            ``(2) Limitation on retirement of excess shares.--
        Notwithstanding any other provision of this subsection, no 
        action shall be taken by any Bank with respect to any member 
        pursuant to paragraph (1) if the effect of the action would be 
        to cause the aggregate outstanding advances made by the Bank to 
        exceed 20 times the amounts paid in by the member for 
        outstanding capital stock, unless the member has established a 
        permissible compensating balance to support the excess advance.
            ``(3) Reports and information.--The Board, by regulations 
        or otherwise, may require each member to submit such reports 
        and information as the Board, in its discretion, may determine 
        to be necessary or appropriate for the purposes of this 
        subsection.''.
    (b) Partial Stock Redemption or Withdrawal; Removal of Members; 
Surrender and Cancellation of Stock; Stock Redemptions.--Section 6(e) 
of the Federal Home Loan Bank (12 U.S.C. 1426(e)) is amended to read as 
follows:
    ``(e) Partial Stock Redemption or Withdrawal; Removal of Members; 
Surrender and Cancellation of Stock; Stock Redemptions.--
            ``(1) Partial stock redemption and withdrawal of members.--
                    ``(A) In general.--
                            ``(i) Notice of withdrawal.--Any member may 
                        withdraw from membership in a Federal Home Loan 
                        Bank, subject to the conditions of this Act, by 
                        filing with the Board and the Bank a written 
                        notice of intention to withdraw.
                            ``(ii) Notice of partial redemption.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), any member 
                                may redeem stock in excess of the 
                                amount of stock required to be owned by 
                                the member under section 6(b)(1), by 
                                filing a written notice of a partial 
                                redemption.
                                    ``(II) Exception.--Stock described 
                                in subclause (I) may not be redeemed 
                                if, following the redemption, the 
                                aggregate outstanding advances to the 
                                member would exceed 20 times the 
                                amounts paid in by the member for 
                                outstanding capital stock and the 
                                member has not (or is not permitted to) 
                                established a compensating balance to 
                                support the excess advances.
                            ``(iii) Date of notice.--Any notice filed 
                        under this paragraph shall be deemed to have 
                        been filed on the last day of the month in 
                        which the notice is filed.
                    ``(B) Fee for cancellation of notice.--
                            ``(i) Fee imposed.--If a member cancels a 
                        notice filed under subparagraph (A), the member 
                        shall pay a fee in an amount established by the 
                        Board.
                            ``(ii) Fee amount.--The Board shall set the 
                        cancellation fee at an amount determined by the 
                        Board to be sufficient to discourage members 
                        from filing a notice for the purpose of 
                        maintaining a partial redemption option or 
                        withdrawal option.
                            ``(iii) Capital account.--The fee paid by a 
                        member under this subparagraph shall be added 
                        to the Bank's retained earnings account or 
                        other capital reserve account.
                    ``(C) Process.--For purposes of this subsection, 
                notices of partial redemption and withdrawal shall be 
                processed in the order received.
            ``(2) Removal of members.--
                    ``(A) Federal housing finance board action.--The 
                Board may, after hearing, remove any member from 
                membership if such member--
                            ``(i) in the opinion of the Board--
                                    ``(I) has failed to comply with any 
                                provision of this Act or regulation of 
                                the Board prescribed under this Act, 
                                including a failure to maintain at 
                                least 10 percent of its total assets in 
                                whole first mortgages on improved 
                                residential property as required under 
                                section 4; or
                                    ``(II) has a management or home-
                                financing policy of a character 
                                inconsistent with sound and economical 
                                home financing or with the purposes of 
                                this Act; or
                            ``(ii) has been determined to be insolvent, 
                        or otherwise subject to the appointment of a 
                        conservator, receiving, or other legal 
                        custodian, by a State or Federal authority with 
                        regulatory and supervisory responsibility for 
                        the member.
                    ``(B) Federal home loan bank referral.--
                            ``(i) In general.--A Federal Home Loan Bank 
                        may refer a member to the Board for removal if 
                        the Bank believes any basis for removal set 
                        forth in subparagraph (A) is present.
                            ``(ii) Board decision.--Within 30 days 
                        after receiving a referral described in clause 
                        (i), the Board shall determine whether to 
                        initiate a removal action under subparagraph 
                        (A) and shall notify the referring Bank of its 
                        decision.
            ``(3) Liquidation of member's debts.--
                    ``(A) In general.--When a member's membership in a 
                Federal Home Loan Bank is terminated by removal, or a 
                member files a notice of withdrawal, the indebtedness 
                of the member to the Federal Home Loan Bank shall be 
                liquidated in an orderly manner as determined by the 
                Federal Home Loan Bank and the liquidation shall be 
                completed no later than the date the member's stock is 
                to be surrendered and canceled under paragraph (4).
                    ``(B) Liquidation deemed prepayment of debt.--Any 
                liquidation described in subparagraph (A) shall be 
                deemed a prepayment of the indebtedness, and shall be 
                subject to any penalties or other fees applicable to 
                such prepayment.
                    ``(C) Prohibition on new advances.--New advances 
                may not be made to a member and outstanding advances to 
                a member may not be renewed--
                            ``(i) if the member has filed a notice of 
                        withdrawal, unless the notice is canceled and 
                        the fee described in paragraph (1)(B) has been 
                        paid; or
                            ``(ii) if the Board has determined, after 
                        hearing, to remove the member.
                    ``(D) Return of collateral and compensating 
                balances.--Upon the liquidation of indebtedness 
                described in subparagraph (A), the member shall be 
                entitled to the return of any of its remaining 
                collateral and compensating balance.
            ``(4) Withdrawals and removals.--All of the stock in the 
        Federal Home Loan Bank owned by a member shall be surrendered 
        and canceled--
                            ``(i) in the case of withdrawal, 6 months 
                        after the date the member filed the notice of 
                        withdrawal, unless the notice has been canceled 
                        and the fee described in paragraph (1)(B) has 
                        been paid; or
                            ``(ii) in a removal case, upon the 
                        completion of the liquidation described in 
                        paragraph (3).
                    ``(B) Partial redemption.--The amount of stock in 
                the Federal Home Loan Bank being redeemed by a member 
                in a partial redemption shall be surrendered and 
                canceled 6 months after the date the member filed the 
                notice of partial redemption, unless the notice has 
                been canceled and the fee described in paragraph (1)(B) 
                has been paid.
            ``(5) Payment for stock redemptions.--
                    ``(A) Cash subscriptions paid in two 
                installments.--Except as provided in subparagraphs (B) 
                and (C), a member that has surrendered all or part of 
                its capital stock shall receive from the Federal Home 
                Loan Bank a sum equal to the member's cash paid 
                subscriptions for the capital stock surrendered to be 
                paid in two equal installments as follows--
                            ``(i) upon the surrender and cancellation 
                        of the member's stock; and
                            ``(ii) six months after receiving the 
                        payment described in clause (i).
                    ``(B) Extension of time for payment.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), a member that has surrendered 
                        all or part of its capital stock shall receive 
                        from the Bank a sum equal to the member's cash 
                        subscription for the capital stock surrendered 
                        to be paid in three equal installments as set 
                        forth in clause (ii) when--
                                    ``(I) pending stock redemptions in 
                                the Federal Home Loan Bank exceed 20 
                                percent of the Bank's current capital, 
                                or
                                    ``(II) the Board makes a written 
                                determination that, for reasons of 
                                safety and soundness, the period for 
                                payment on redemptions should be 
                                extended.
                            ``(ii) Three installments.--The three equal 
                        installment payments referred to in clause (i) 
                        shall be made as follows--
                                    ``(I) upon the surrender and 
                                cancellation of the member's capital 
                                stock;
                                    ``(II) six months after receiving 
                                the payment described in subclause (I); 
                                and
                                    ``(III) six months after receiving 
                                the payment described in subclause 
                                (II).
                            ``(iii) Waiver Request.--In response to a 
                        request from the Federal Home Loan Bank, the 
                        Board in its discretion may waive an extension 
                        of the payment period imposed, or to be 
                        imposed, because pending capital redemptions 
                        exceed 20 percent of the Bank's current 
                        capital.
                    ``(C) Undercapitalization.--If at any time the 
                Board finds that a Federal Home Loan Bank is 
                undercapitalized
                 or is likely to be undercapitalized for any reason 
including, losses in or depreciation of the assets held or capital 
stock redemptions, the Federal Home Loan Bank shall on the order of the 
Board withhold from the amount to be paid under this paragraph a pro 
rata share of the amount equal to the additional capital required for 
the Bank to be adequately capitalized as determined by the Board.''.
    (c) Acquisition of Membership After Withdrawal or Removal.--Section 
6(h) of the Federal Home Loan Bank Act (12 U.S.C. 1426(h)) is amended 
to read as follows:
    ``(h) Acquisition of Membership After Withdrawal or Removal.--
Notwithstanding any other provision of this Act, an institution which 
withdraws, or is removed, from membership may acquire membership in any 
Federal Home Loan Bank only after the expiration of a period of 10 
years thereafter, except where such withdrawal is a consequence of a 
transfer of membership on a noninterrupted basis between Banks.''.

SEC. 109. TRANSITIONAL PROVISIONS CONCERNING CAPITAL STOCK.

    (a) Transition for Withdrawal.--
            (1) Delayed effective date.--Section 6(e) of the Federal 
        Home Loan Bank Act, as amended by this Act, shall become 
        effective 90 days after the date of enactment of this Act.
            (2) Withdrawal by current members.--
                    (A) Notice to withdraw under old system.--Any 
                institution, other than a Federal savings association, 
                that was a member of a Federal Home Loan Bank on the 
                day before the date of enactment of this Act shall have 
                90 days after the date of enactment of this Act to file 
                a notice with the Board of its intention to withdraw 
                from membership in a Federal Home Loan Bank under the 
                terms and conditions for withdrawal existing on the day 
                before the date of enactment of the Federal Home Loan 
                Bank System Restructuring and Modernization Act of 
                1995, including the prohibition on an institution that 
                withdraws from membership acquiring membership in any 
                Bank prior to the expiration of a 10 year period.
                    (B) Exception concerning terms and conditions of 
                withdrawal.--A member that files a notice of withdrawal 
                under subparagraph (A) may not cancel the notice after 
                the expiration of the 90 day period described in 
                subparagraph (A).
                    (C) Notices pending on date of enactment.--The 
                membership withdrawal by a member that has a notice of 
                withdrawal pending on the date of enactment of the 
                Federal Home Loan Bank System Restructuring and 
                Modernization Act of 1995 shall be subject to the terms 
                and conditions for withdrawal existing on the day 
                before the date of enactment of the Federal Home Loan 
                Bank System Restructuring and Modernization Act of
                 1995, except the member shall not be permitted to 
cancel the notice of withdrawal after the expiration of the 90 day 
period described in subparagraph (A).
    (b) Transition for Stock Subscriptions.--
            (1) Required stock subscription.--
                    (A) Board regulations.--The Board shall prescribe 
                final regulations establishing the capital standards 
                required under section 6A of the Federal Home Loan Bank 
                Act that become effective no later than 1 year after 
                the date of enactment of this Act.
                    (B) Banks required to establish individual stock 
                subscriptions.--Within 30 days after the regulations 
                described in subparagraph (A) become effective, each 
                Federal Home Loan Bank shall establish its stock 
                subscription requirements under section 6(b)(1) of the 
                Federal Home Loan Bank Act and shall submit a plan to 
                the Federal Housing Finance Board specifying how the 
                Bank intends to implement its stock subscription 
                requirements.
                    (C) 2 year transition period.--Beginning 2 years 
                after a Bank first establishes its stock subscription 
                requirement described in subparagraph (B), each member 
                of the Bank shall comply with that requirement.
            (2) Existing requirements continued.--Until a Federal Home 
        Loan Bank has established the stock subscription requirements 
        described in paragraph (1)(B), the minimum amount of stock 
        required to be held by a member and the aggregate amount of 
        advances that may be outstanding to a member shall continue to 
        be determined under the statutory provisions in effect on the 
        day before the date of enactment of this Act.
    (c) Transition for Stock or Compensating Balance Requirement.--
            (1) Initial determination.--Prior to the time a Bank first 
        establishes its stock subscription requirements under section 
        6(b)(1) of the Federal Home Loan Bank Act, each Bank shall 
        determine whether members of the Bank wishing to obtain 
        advances that exceed the standard leverage limit will be--
                    (A) required to purchase additional stock;
                    (B) required to maintain a compensating balance; or
                    (C) permitted to elect to purchase additional stock 
                or maintain a compensating balance.
            (2) Subsequent determinations.--Each Bank may change its 
        initial determination under paragraph (1).
            (3) Members that will maintain a compensating balance.--
                    (A) 2 year transition period.--
                            (i) In general.--Beginning 2 years after 
                        its Bank first establishes stock subscription 
                        requirements under section 6(b)(1) of the 
                        Federal Home Loan Bank Act, a member described 
                        in clause
                         (ii) shall comply with the compensating 
balance requirements or reduce the amount of its outstanding advances 
to an amount that does not exceed the standard leverage limit.
                            (ii) Requirements.--Clauses (i) applies to 
                        a member that--
                                    (I) is required, or has made a 
                                permissible election, to maintain a 
                                compensating balance to support 
                                advances that exceed the standard 
                                leverage limit; and
                                    (II) on the day the member's Bank 
                                first established its stock 
                                subscription requirements under section 
                                6(b)(1) of the Federal Home Loan Bank 
                                Act, had outstanding advances that 
                                exceeded the standard leverage limit.
                    (B) Prohibition on renewing certain advances.--
                            (i) During the 2-year period described in 
                        subparagraph (A), an advance to a member 
                        described in clause (ii) shall not be renewed, 
                        unless the compensating balance required by 
                        section 10(c)(2) of the Federal Home Loan Bank 
                        Act is established.
                            (ii) Members subject to prohibition.--
                        Clause (i) applies when--
                                    (I) a member is required, or has 
                                made a permissible election, to 
                                maintain compensating balances to 
                                support advances that exceed the 
                                standard leverage limit; and
                                    (II) the aggregate outstanding 
                                advances to the member following the 
                                renewal would exceed the standard 
                                leverage limit.
            (4) Standard leverage limit.--For purposes of this 
        subsection, the term ``standard leverage limit'' means 20 times 
        the amounts paid in by the member for outstanding stock 
        required under section 6(b)(1) of the Federal Home Loan Bank.

SEC. 110. PROMPT CORRECTIVE ACTION.

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

``SEC. 6A. PROMPT CORRECTIVE ACTION.

    ``(a) Definitions.--For purposes of this section--
            ``(1) Capital categories.--
                    ``(A) Adequately capitalized.--A Federal Home Loan 
                Bank is `adequately capitalized' if it meets the 
                required minimum level for each relevant capital 
                measure.
                    ``(B) Undercapitalized.--A Federal Home Loan Bank 
                is `undercapitalized' if it fails to meet the required 
                minimum level for any relevant capital measure.
                    ``(C) Significantly undercapital- ized.--A Federal 
                Home Loan Bank is `significantly undercapitalized' if 
                it is
                 significantly below the required minimum level for any 
relevant capital measure.
                    ``(D) Critically undercapitalized.--A Federal Home 
                Loan Bank is `critically undercapitalized' if it fails 
                to meet any level specified under subsection (b)(4)(A).
            ``(2) Other definitions.--
                    ``(A) Average.--The `average' of an accounting item 
                (such as total assets or tangible equity) during a 
                given period means the sum of that item at the close of 
                business on each business day during that period 
                divided by the total number of business days in that 
                period.
                    ``(B) Capital distributions.--The term `capital 
                distribution' means--
                            ``(i) a distribution of cash or other 
                        property by a Federal Home Loan Bank to its 
                        members made on account of that membership but 
                        not including--
                                    ``(I) any dividend consisting only 
                                of shares of the Bank or right to 
                                purchase such shares; or
                                    ``(II) any amount paid on the 
                                deposits of a Bank that the Board 
                                determines is not a distribution for 
                                purposes of this section;
                            ``(ii) a payment by a Bank to repurchase, 
                        redeem, retire, or otherwise acquire any of its 
                        shares, including any extension of credit to 
                        finance an acquisition of those shares; or
                            ``(iii) a transaction that the Board 
                        determines, by order or regulation, to be in 
                        substance a distribution of capital to the 
                        members of the Bank.
                    ``(C) Capital restoration plan.--The term `capital 
                restoration plan' means a plan submitted under 
                subsection (d)(2).
                    ``(D) Compensation.--The term `compensation' 
                includes any payment of money or provision of any other 
                thing of value in consideration of employment.
                    ``(E) Relevant capital measure.--The term `relevant 
                capital measure' means the measures described in 
                subsection (b).
                    ``(F) Requried minimum level.--The term `required 
                minimum level' means, with respect to each relevant 
                capital measure, the minimum acceptable capital level 
                specified by the Board.
                    ``(G) Senior executive officer.--The term `senior 
                executive officer' means a person who participates or 
                has authority to participate (other than in the 
                capacity of a director) in major policy functions of 
                the Federal Home Loan Bank, whether or not: the officer 
                has an official title; the title designates the officer
                  as assistant; or the officer is serving without 
salary or other compensation.
    ``(b) Capital Standards.--
            ``(1) Relevant capital measures.--
                    ``(A) In general.--The capital standard prescribed 
                by the Board shall include--
                            ``(i) a leverage limit; and
                            ``(ii) a risk-based capital requirement.
                    ``(B) Other capital measures.--The Board may, by 
                regulation establish any additional relevant capital 
                measures to carry out the purpose of this section.
            ``(2) Risk-based capital requirement.--
                    ``(A) In general.--The risk-based capital 
                requirement under paragraph (1) shall be composed of 
                the following components.--
                            (i) capital for credit risk;
                            (ii) capital for interest rate risk; and
                            (iii) capital for a source of earnings.
                    ``(B) Capital components.--
                            ``(i) Capital for credit risk.--Capital 
                        required for credit risk shall be no less than 
                        the tier 1 risk-based capital required by 
                        regulation or guideline issued under section 38 
                        of the Federal Deposit Insurance Act for a 
                        well-capitalized insured depository 
                        institution.
                            ``(ii) Interest rate risk.--Capital 
                        required for interest rate risk shall be based 
                        on an interest rate risk stress test that 
                        rigorously tests for changes in interest rates, 
                        rate volatility, and changes in the shape of 
                        the yield curve.
                            ``(iii) Capital for a source of earnings.--
                                    ``(I) In general.--Capital required 
                                to provide a source of earnings for the 
                                System's obligations to the Funding 
                                Corporation and the Affordable Housing 
                                Program shall include an amount at 
                                least equal to each Bank's 
                                proportionate share of the System's 
                                yearly obligation under section 
                                21B(f)(2)(C).
                                    ``(II) Calculation.--For purposes 
                                of subclause (I), a Bank's 
                                proportionate share of the System's 
                                yearly obligation under section 
                                21B(f)(2)(C) shall be calculated based 
                                on the previous year's actual payment 
                                under that section.
            ``(3) Capital categories generally.--
                    ``(A) In general.--The Board shall, by regulation, 
                specify for each relevant capital measure the levels at 
                which a Federal Home Loan Bank is adequately 
                capitalized, under- capitalized, and significantly 
                undercapitalized.
                    ``(B) Minimum leverage limit for adequately 
                capitalized category.--The level specified by the Board 
                for a Bank to be adequately capitalized shall require 
                total capital in an amount not less than 4 percent of 
                the Bank's total assets.
            ``(4) Critical capital.--
                    ``(A) Federal housing finance board to specify 
                level.--
                            ``(i) Leverage limit.--The board shall, by 
                        regulation, specify the ratio of total capital 
                        to total assets at which a Federal Home Loan 
                        Bank is critically undercapitalized.
                            ``(ii) Other relevant capital measures.--
                        The Board may, by regulation, specify for one 
                        or more other relevant capital measures, the 
                        level at which a Bank is critically 
                        undercapitalized.
                    ``(B) Leverage limit range.--The level specified 
                under subparagraph (A)(i) shall require tangible equity 
                in an amount--
                            ``(i) not less than 2 percent of total 
                        assets; and
                            ``(ii) except as provided in clause (i), 
                        not more than 65 percent of the required 
                        minimum level of capital under the leverage 
                        limit.
    ``(c) Provisions Applicable to All Federal Home Loan Banks.--
            ``(1) Capital distributions restricted.--Except as provided 
        in paragraph (2), a Federal Home Loan Bank shall make no 
        capital distribution if, after making the distribution, the 
        Bank would be undercapitalized.
            ``(2) Exceptions.--Notwithstanding paragraph (1)--
                    ``(A) A Federal Home Loan Bank may redeem a 
                member's stock under, and subject to the conditions of, 
                section 6(e); and
                    ``(B) The board may permit a Federal Home Loan Bank 
                to repurchase, redeem, retire, or otherwise acquire its 
                shares if the repurchase, redemption, retirement, or 
                other acquisition--
                            ``(i) is made in connection with the 
                        issuance of additional shares of the Bank in at 
                        least an equivalent amount; and
                            ``(ii) will reduce the Bank's financial 
                        obligations or otherwise improve the Bank's 
                        financial condition.
    ``(d) Provisions Applicable to Undercapi- talized Federal Home Loan 
Banks.--
            ``(1) Monitoring required.--The Board shall--
                    ``(A) closely monitor the condition of any 
                undercapitalized Federal Home Loan Bank;
                    ``(B) closely monitor compliance with capital 
                restoration plans, restrictions, and requirements 
                imposed under this section; and
                    ``(C) periodically review the plan, restrictions, 
                and requirements applicable to any undercapitalized
                 Bank to determine whether the plan, restrictions, and 
requirements are achieving the purpose of this section.
            ``(2) Capital restoration plan required.--
                    ``(A) In general.--Any undercapitalized Bank shall 
                submit an acceptable capital restoration plan to the 
                Board within the time allowed by the Board under 
                subparagraph D.
                    ``(B) Contents of plan.--The capital restoration 
                plan shall--
                            ``(i) specify--
                                    ``(I) the steps the Bank will take 
                                to become adequately capitalized;
                                    ``(II) the levels of capital to be 
                                attained during each year in which the 
                                plan will be in effect;
                                    ``(III) how the Bank will comply 
                                with the restrictions or requirements 
                                then in effect under this section; and
                                    ``(IV) the types and levels of 
                                activities in which the Bank will 
                                engage; and
                            ``(ii) contain such other information as 
                        the Board may require.
                    ``(C) Criteria for accepting plan.--The Board shall 
                not accept a capital restoration plan unless the Board 
                determines that the plan--
                            ``(i) complies with subparagraph (B);
                            ``(ii) is based on realistic assumptions, 
                        and is likely to succeed in restoring the 
                        Bank's capital; and
                            ``(iii) would not appreciably increase the 
                        risk (including credit risk, interest-rate 
                        risk, and other type of risk) to which the Bank 
                        is exposed.
                    ``(D) Deadlines for submission and review of 
                plans.--The Board shall, by regulation, establish 
                deadlines that--
                            ``(i) provide Federal Home Loan Banks with 
                        reasonable time to submit capital restoration 
                        plans, and generally require a Bank to submit a 
                        plan not later than 45 days after the Bank 
                        becomes undercapitalized; and
                            ``(ii) require the Board to act on capital 
                        restoration plans expeditiously, and generally 
                        not later than 60 days after the plan is 
                        submitted.
            ``(3) Asset growth restricted.--An undercapitalized Federal 
        Home Loan Bank shall not permit its average total assets during 
        any calendar quarter to exceed its average total assets during 
        the preceding calendar quarter unless--
                    ``(A) the Board has accepted the Bank's capital 
                restoration plan;
                    ``(B) any increase in total assets is consistent 
                with the plan; and
                    ``(C) the Bank's ratio of total capital to assets 
                increases during the calendar quarter at a rate 
                sufficient to enable the Bank to become adequately 
                capitalized within a reasonable time.
            ``(4) Prior approval for new activities.--An 
        undercapitalized Federal Home Loan Bank shall not engage in any 
        new activity unless--
                    ``(A) the Board has accepted the Bank's capital 
                restoration plan, the Bank is implementing the plan and 
                Board determines that the proposed action is consistent 
                with and will further the achievement of the plan; or
                    ``(B) the Board determines that the proposed action 
                will further the purpose of this section.
            ``(5) Discretionary safeguards.--The Board may, with 
        respect to any undercapitalized Federal Home Loan Bank, take 
        action described in any subparagraph of subsection (e)(2) if 
        the Board determines that those actions are necessary to carry 
        out the purpose of this section.
    ``(e) Provisions Applicable to Significantly Undercapitalized 
Federal Home Loan Banks and Undercapitalized Banks That Fail To Submit 
and Implement Capital Restoration Plans.--
            ``(1) In general.--This subsection shall apply with respect 
        to any Federal Home Loan Bank that is--
                    ``(A) significantly undercapitalized; or
                    ``(B) undercapitalized and fails--
                            ``(i) to submit an acceptable capital 
                        restoration plan within the time allowed by the 
                        Board under subsection (d)(2); or
                            ``(ii) in any material respect to implement 
                        a plan accepted by the Board.
            ``(2) Specific actions authorized.--The Board shall carry 
        out this section by taking one or more of the following 
        actions--
                    ``(A) Required recapitalization.--Doing one or more 
                of the following--
                            ``(i) Requiring the Federal Home Loan Bank 
                        to sell enough shares of the Bank to its 
                        members or institutions eligible to become 
                        members so that the Bank will be adequately 
                        capitalized after the sale.
                            ``(ii) Requiring the Bank to be acquired 
                        by, or combine with, one or more Federal Home 
                        Loan Banks.
                    ``(B) Restricting interest rates paid.--
                            ``(i) In general.--Restricting the interest 
                        rates that the Bank pays on deposits to an 
                        amount determined by the Board.
                            ``(ii) Retroactive restrictions 
                        prohibited.--This subparagraph does not 
                        authorize the Board to restrict interest rates 
                        paid on time deposits made
                         before (and not renewed or renegotiated after) 
the Board acted under this subparagraph.
                    ``(C) Restricting asset growth.--Restricting the 
                Bank's asset growth more stringently than subsection 
                (d)(3), or requiring the Bank to reduce its total 
                assets.
                    ``(D) Restricting activities.--Requiring the Bank 
                to alter, reduce, or terminate any activity that the 
                Board determines poses excessive risk to the Bank.
                    ``(E) Improving management.--Doing one or more of 
                the following:
                            ``(i) New election of directors.--Ordering 
                        a new election for the Bank's board of 
                        directors.
                            ``(ii) Dismissing directors or senior 
                        executive officers.--Requiring the Bank to 
                        dismiss from office any elected director or 
                        senior executive officer who had held office 
                        for more than 180 days immediately before the 
                        Bank became undercapitalized.
                            ``(iii) Dismissing appointed directors.--
                        Dismissing from office any appointed director 
                        who had held office for more than 180 days 
                        immediately before the Bank became 
                        undercapitalized.
                            ``(iv) Clarification of dismissals.--
                        Dismissal under clause (ii) or (iii) shall not 
                        be construed to be a removal under section 27A.
                            ``(v)  Employing qualified senior executive 
                        officers.--Requiring the Bank to employ 
                        qualified senior executive officers (who, if 
                        the Board so specifies, shall be subject to 
                        approval by the Board).
                    ``(F) Requiring other action.--Requiring the Bank 
                to take any other action that the Board determines will 
                better carry out the purpose of this section.
            ``(3) Presumption in favor of certain actions.--In 
        complying with paragraph (2), the Board shall take the action 
        described in clause (i) or (ii) of paragraph (2)(A) (relating 
        to requiring the sale of shares or requiring the Federal Home 
        Loan Bank to be acquired by, or combine with, another Federal 
        Home Loan Bank).
            ``(4) Senior executive officers' compensation restricted.--
                    ``(A) In general.--The Federal Home Loan Bank shall 
                not do any of the following without the prior written 
                approval of the Board:
                            ``(i) Pay any bonus to any senior executive 
                        officer.
                            ``(ii) Provide compensation to any senior 
                        executive officer at a rate exceeding that 
                        officer's average rate of compensation 
                        (excluding bonuses, and (profit-sharing)) 
                        during the 12 calendar months preceding the 
                        calendar month in which the Bank became 
                        undercapitalized.
                    ``(B) Failure to submit plan.--The Board shall not 
                grant any approval under subparagraph (A) with respect 
                to a Bank that has failed to submit an acceptable 
                capital restoration plan.
            ``(5) Discretion to impose certain additional 
        restrictions.--The Board may impose one or more of the 
        restrictions prescribed by regulation under subsection (h) if 
        the Board determines that those restrictions are necessary to 
        carry out the purpose of this section.
    ``(f) More Stringent Treatment Based on Other Supervisory 
Criteria.--
            ``(1) In general.--If the Board determines (after notice 
        and an opportunity for hearing) that a Federal Home Loan Bank 
        is in an unsafe or unsound condition or, pursuant to section 
        27A, deems the Bank to be engaging in an unsafe or unsound 
        practice, the Board may--
                    ``(A) if the Bank is adequately capitalized, 
                require the Bank to comply with one or more provisions 
                of subsections (c) and (d) as if the Bank were 
                undercapitalized; or
                    ``(B) if the Bank is undercapitalized, take any one 
                or more actions authorized under subsection (e)(2) as 
                if the Bank were significantly undercapitalized.
            ``(2) Contents of plan.--
                    ``(A) In general.--Any plan required under 
                paragraph (1) shall specify the steps that the Bank 
                will take to correct the unsafe or unsound condition or 
                practice.
                    ``(B) Plan not required.--Capital restoration plans 
                shall not be required under paragraph (1)(A).
    ``(g) Provisions Applicable to Critically Undercapitalized Federal 
Home Loan Banks.--
            ``(1) Activities restricted.--Any critically 
        undercapitalized Federal Home Loan Bank shall comply with 
        restrictions prescribed by the Board under subsection (h).
            ``(2) Merger, liquidation, reorganization or other action 
        required.--
                    ``(A) In general.--The Board shall, not later than 
                90 days after a Federal Home Loan Bank becomes 
                critically undercapitalized--
                            ``(i) combine (by merger or otherwise) the 
                        Bank with another Federal Home Loan Bank;
                            ``(ii) liquidate or reorganize the bank; or
                            ``(iii) take such other action as the Board 
                        determines would better achieve the purpose of 
                        this section, after documenting why the action 
                        would better achieve that purpose.
                    ``(B) Periodic redetermination required.--Any 
                determination by the Board under subparagraph (A)(iii) 
                to take any action with respect to a Bank in lieu of 
                combining the Bank with another Federal Home Loan Bank 
                or reorganizing or liquidating the Bank shall cease to 
                be effective not later than the end of the 90-day 
                period beginning on the date that the determination is
                 made and the Bank shall be combined, reorganized, or 
liquidated under subparagraph (A) unless the Board makes a new 
determination under subparagraph (A)(iii) at the end of the effective 
period of the prior determination.
    ``(h) Restricting Activities of Critically Undercapitalized Federal 
Home Loan Banks.--To carry out this section, the Board shall, by 
regulation or order--
            ``(1) restrict the activities of any critically 
        undercapitalized Federal Home Loan Bank; and
            ``(2) at a minimum, prohibit any critically 
        undercapitalized Bank from doing any of the following without 
        the Board's prior written approval:
                    ``(A) Entering into any material transaction other 
                than in the usual course of business, including any 
                investment, expansion, acquisition, sale of assets, or 
                other similar action.
                    ``(B) Amending the Bank's bylaws, except to the 
                extent necessary to carry out any other requirement of 
                any law, regulation, or order.
                    ``(C) Making any material change in accounting 
                methods.
                    ``(D) Paying excessive compensation or bonuses.
                    ``(E) Paying interest on new or renewed liabilities 
                at a rate that would increase the bank's weighted 
                average cost of funds to a level significantly 
                exceeding the prevailing rates of interest on insured 
                deposits in the Bank's normal market areas.
    ``(i) Administrative Review of Dismissal Orders.--
            ``(1) Timely petition requried.--A director or senior 
        executive officer dismissed pursuant to an order under 
        subsection (e)(2)(E)(ii) may obtain review of that order by 
        filing a written petition for reinstatement with the Board not 
        later than 10 days after receiving notice of the dismissal.
            ``(2) Procedure.--
                    ``(A) Hearing requried.--The Board shall give the 
                petitioner an opportunity to--
                            ``(i) submit written materials in support 
                        of the petition; and
                            ``(ii) appear, personally or through 
                        counsel, before 1 or more members of the Board 
                        or designated employees of the Board.
                    ``(B) Deadline for hearing.--The Board shall--
                            ``(i) schedule the hearing referred to in 
                        subparagraph (A)(ii) promptly after the 
                        petition is filed; and
                            ``(ii) hold the hearing not later than 30 
                        days after the petition is filed, unless the 
                        petitioner requests that the hearing be held at 
                        a later time.
                    ``(C) Deadline for decision.--Not later than 60 
                days after the date of the hearing, the Board shall--
                            ``(i) by order, grant or deny the petition;
                            ``(ii) if the order is adverse to the 
                        petitioner, set forth the basis for the order; 
                        and
                            ``(iii) notify the petitioner of the order.
            ``(3) Standard for review of dismissal orders.--The 
        petitioner shall bear the burden of proving that the 
        petitioner's continued employment would materially strengthen 
        the Federal Home Loan Bank's ability--
                    ``(A) to become adequately capitalized, to the 
                extent that the order is based on the Bank's failure to 
                submit or implement a capital restoration plan; and
                    ``(B) to correct the unsafe or unsound condition or 
                unsafe or unsound practice, to the extent that the 
                order is based on subsection (f)(1).
    ``(j) Safeguarding Systemwide Capital.--
            ``(1) Capital restoration plan required.--
                    ``(A) In general.--If for any calendar quarter the 
                total capital of the Federal Home Loan bank System is 
                less than $7 billion, the System shall submit an 
                acceptable capital restoration plan to the Board within 
                the time allowed by regulations prescribed by the 
                Board.
                    ``(B) Contents of plan.--The capital restoration 
                plan shall--
                            ``(i) take into account the different 
                        levels of capital of each Bank;
                            ``(ii) focusing first on each 
                        undercapitalized Bank, specify--
                                    ``(I) the steps that will be taken 
                                to increase the total capital of any 
                                undercapitalized Bank and the System;
                                    ``(II) the amount of capital to be 
                                raised during each year the plan will 
                                be in effect; and
                                    ``(III) the types and levels of 
                                activities in which any 
                                undercapitalized bank and the system 
                                will engage; and
                            ``(iii) contain such other information as 
                        the Board may require.
            ``(2) Prohibition on distributing reserves.--Except as 
        provided in subparagraph (3)(B), if for any calendar quarter 
        the total capital of the Federal Home Loan Bank System is less 
        than $6 billion, no Federal Home Loan bank may distribute any 
        of its reserves.
            ``(3) Capital distributions restricted.--
                    ``(A) In general.--If for any calendar quarter the 
                total capital of the Federal Home Loan Bank System is 
                less than $5 billion, each Federal Home Loan Bank shall 
                make no capital distribution.
                    ``(B) Exception.--Notwithstanding subparagraph 
                (A)--
                            ``(i) A Federal Home Loan Bank may redeem a 
                        member's stock under, and subject to the 
                        conditions of, section 6(e); and
                            ``(ii) The Board may permit a Federal Home 
                        Loan Bank to repurchase, redeem, retire, or 
                        otherwise acquire its shares if the repurchase, 
                        redemption, retirement, or other acquisition--
                                    ``(I) is made in connection with 
                                the issuance of additional shares of 
                                the Bank in at least an equivalent 
                                amount; and
                                    ``(II) will reduce the Bank's 
                                financial obligations or otherwise 
                                improve the Bank's financial condition.
    ``(k) Implementation.--
            ``(1) Regulations and other actions.--The Board shall 
        prescribe such regulations, issue such orders, and take such 
        other actions as are necessary to carry out this section.
            ``(2) Written determination required.--Any determination by 
        the Board required under this section shall be written.
    ``(l) Other Authority Not Affected.--This section does not limit 
any authority of the Board to take action in addition to (but not in 
derogation of) that required under this section.
    ``(m) Purpose.--The purpose of this section is to ensure that the 
Federal Home Loan Banks remain appropriately capitalized and able to 
raise funds in the capital markets and to meet their obligations under 
this Act.''.

SEC. 111. FEDERAL HOME LOAN BANK DIRECTORS.

    (a) Number; Qualifications; Conflicts of Interest.--Section 7(a) of 
the Federal Home Loan Bank Act (12 U.S.C. 1427(a)) is amended to read 
as follows:
    ``(a) Number; Qualifications; Conflicts of Interest.--
            ``(1) Number.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the management of each Federal Home 
                Loan Bank shall be vested in a board of fourteen 
                directors, eight of whom shall be elected by the 
                members as hereinafter provided in this section and six 
                of whom shall be appointed by the Board, all of whom 
                shall be citizens of the United States and bona fide 
                residents of the district in which such Bank is 
                located.
                    ``(B) Increase in directors.--
                            ``(i) Elective directors.--Each Federal 
                        Home Loan Bank may increase the number of the 
                        Bank's elective directors to a number set by 
                        the Bank as long as the number of directors in 
                        the case of any district is at least equal to 
                        the number of States in such district.
                            ``(ii) Increase in appointed directors.--If 
                        the number of elective directors of a Bank is 
                        increased, the Board may increase the number of 
                        appointed directors of the Bank to a number not
                         exceeding three-fourths the number of elective 
directors.
            ``(2) Qualifications.--At least 2 of the Federal Home Loan 
        Bank directors who are appointed by the Board shall be 
        representatives chosen from organizations with more than a 2-
        year history of representing consumer or community interests on 
        banking services, credit needs, housing, or financial consumer 
        protection.
            ``(3) Conflicts of interest.--No Federal Home Loan Bank 
        director who is appointed pursuant to this subsection may, 
        during such Bank director's term of office, serve as an officer 
        of any Federal Home Loan Bank or director or officer of any 
        member of a Bank, or hold shares, or any other financial 
        interest in, any member of a Bank.''.
    (b) Terms.--Section 7(d) of the Federal Home Loan Bank Act (12 
U.S.C. 1427(d)) is revised to read as follows:
    ``(d) Terms.--
            ``(1) In general.--
                    ``(A) Elected directors.--The term of each elective 
                directorship that begins after the date of enactment of 
                the Federal Home Loan Bank Restructuring and 
                Modernization Act of 1995 shall be 4 years.
                    ``(B) Appointed directors.--The term of each 
                appointive directorship shall be 4 years.
            ``(2) Term limits.--If any person has been elected to each 
        of 2 consecutive full terms as an elective director of a 
        Federal Home Loan Bank in any elective directorship or elective 
        directorships and has served for all or part of each of said 
        terms, such person (and any person that is a director, officer 
        or employee of the same member as such person) shall not be 
        eligible for election to an elective directorship of the Bank 
        for a term which begins earlier than 2 years after the 
        expiration of the last expiring of said 2 terms.''.
    (c) Chairperson and Vice Chairperson.--Section 7(g) of the Federal 
Home Loan Bank Act (12 U.S.C. 1427(g)) is amended to read as follows:
    ``(g) Chairperson and Vice Chairperson.--
            ``(1) Designation by bank directors.--The board of 
        directors of each Federal Home Loan Bank shall designate--
                    ``(A) one of the directors of the Bank to be 
                chairperson of the Bank; and
                    ``(B) one of the directors of the Bank to be vice 
                chairperson of the Bank.
            ``(2) Requirements.--
                    ``(A) Appointed director.--Either the chairperson 
                or the vice chairperson of the Bank shall be an 
                appointed director.
                    ``(B) Limitation.--The President of a Federal Home 
                Loan Bank may not be designated as the chairperson or 
                vice chairperson of the Bank.''.
    (d) Compensation and Expenses of Directors.--Section 7(i) of the 
Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended to read as 
follows:
    ``(i) Compensation and Expenses of Directors.--Each Bank may pay 
its directors reasonable compensation for the time required of them, 
and their necessary expenses, in the performance of their duties, in 
accordance with the resolutions adopted by the directors of the 
Bank.''.
    (e) Conforming Amendments.--Section 7 of the Federal Home Loan Bank 
Act (12 U.S.C. 1427) is amended--
            (1) in subsection (b), by--
                    (A) deleting ``as determined pursuant to regulation 
                of the Board'' and inserting ``as determined by the 
                Bank'';
                    (B) deleting ``such bank'' each place it appears 
                and inserting ``such Bank''; and
                    (C) deleting ``Federal home loan bank'' and 
                inserting ``Federal Home Loan Bank'';
            (2) in subsection (c), by--
                    (A) deleting ``as determined pursuant to regulation 
                of the Board'' and inserting ``as determined by the 
                Bank'';
                    (B) deleting ``bank'' each place it appears and 
                inserting ``Bank'';
                    (C) deleting ``Federal home loan bank'' and 
                inserting ``Federal Home Loan Bank''; and
            (3) in subsection (h), by deleting ``Federal home loan 
        bank'' and inserting ``Federal Home Loan Bank''.

SEC. 112. ELIGIBILITY TO SECURE ADVANCES.

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

``SEC. 9. ELIGIBILITY TO SECURE ADVANCES.

    ``(a) Written Application.--Any member of a Federal Home Loan Bank 
shall be entitled to apply in writing for advances and the application 
shall be in such form as shall be required by the Federal Home Loan 
Bank.
    ``(b) Bank Response to Applications.--A Federal Home Loan Bank may 
at its discretion deny any application described in subsection (a) or, 
subject to the requirements of this Act, grant it on such conditions as 
the Bank may prescribe.''.

SEC. 113. ADVANCES.

    (a) Notes of Borrowing Members; Interest Rate; Lien on Stock; 
Limitations on Loans.--Section 10(c) of the Federal Home Loan Bank Act 
(12 U.S.C. 1430(c)) is amended to read as follows:
    ``(c) Notes of Borrowing Members; Interest Rate; Lien on Stock; 
Limitations on Loans.--
            ``(1) Notes of borrowing member.--Advances under subsection 
        (a) shall be made upon the note or obligation of the member 
        secured as provided in this section, bearing such rate of 
        interest as the Federal Home Loan Bank may approve or
         determine, and the Bank shall have a lien upon and shall hold 
the stock of such member and any compensating balances as further 
collateral security for all indebtedness of the member to the Bank.
            ``(2) Leverage limitation on advances.--At no time shall 
        the aggregate outstanding advances made by any Federal Home 
        Loan Bank to any member exceed 20 times the amounts paid in by 
        such member for outstanding capital stock required to be owned 
        by a member under section 6(b)(1), unless--
                    ``(A) in the case of a member that is required, or 
                has made a permissible election, to purchase additional 
                stock to support advances, the member purchases 
                additional stock so that the aggregate outstanding 
                advances made to the member do not exceed 20 times the 
                amounts paid in by the member for outstanding stock; or
                    ``(B) in the case of a member that is required, or 
                has made a permissible election, to maintain a 
                compensating balance to support advances, the member 
                makes and maintains a compensating balance with the 
                Bank with respect to the amount of the advances that 
                exceed 20 times the amounts paid in by the member for 
                outstanding stock required to be owned by the member 
                under section 6(b)(1).
            ``(3) Additional stock.--Stock purchased to meet the 
        requirements of paragraph (2)(A) is subject to the same terms 
        and conditions applicable to all stock in a Federal Home Loan 
        Bank owned by the member, including the conditions imposed 
        under section 6(e) on partial stock redemptions and 
        withdrawals.
            ``(4) Compensating balances.--
                    ``(A) Leverage limit.--The amount of the 
                compensating balance required under paragraph (2)(B) 
                shall be established by the Bank except, in no event 
                may the amount of advances made in reliance on a 
                compensating balance exceed 20 times the compensating 
                balance.
                    ``(B) Terms and conditions.--Subject to 
                subparagraph (A), the terms and conditions applicable 
                to compensating balances under this paragraph shall be 
                established by each Bank.''.
    (b) Obligations To Repay; Additional Security: Sale of Assets to 
Other Banks.--Section 10(d) of the Federal Home Loan Bank Act (12 
U.S.C. 1430(d)) is amended to read as follows:
    ``(d) Obligations To Repay; Additional Security: Sale of Advances 
to Other Banks.--
            ``(1) Repayment obligation.--The institution applying for 
        an advance shall enter into a primary and unconditional 
        obligation to pay off all advances, together with interest and 
        any unpaid costs and expenses in connection therewith according 
        to the terms under which they were made, in such form as shall 
        meet the requirements of the Federal Home Loan Bank.
            ``(2) Additional security.--The Bank shall reserve the 
        right to require at any time, when deemed necessary for its 
        protection, deposits of additional collateral security or 
        substitutions of security by the borrowing institution, and 
        each borrowing institution shall assign additional or 
        substituted security when and as so required.
            ``(3) Sale of advances.--Any Federal Home Loan Bank shall 
        have power to sell to any other Federal Home Loan Bank, with or 
        without recourse, any advance made under the provisions of this 
        Act, or to allow such Bank a participation therein, and any 
        other Federal Home Loan Bank shall have power to purchase such 
        advance or to accept a participation therein, together with an 
        appropriate assignment or security therefore.''.
    (c) Community Support Requirement.--Section 10(g) of the Federal 
Home Loan Bank Act (12 U.S.C. 1430(g)) is amended to read as follows:
    ``(g) Community Support Requirement.--
            ``(1) In general.--Before the end of the 2-year period 
        beginning on August 9, 1989, the Board shall adopt regulations 
        establishing standards of community investment or service for 
        members of Banks to maintain continued access to long-term 
        advances.
            ``(2) Factors to be included.--The regulations promulgated 
        pursuant to paragraph (1) shall take into account factors such 
        as member's performance under the Community Reinvestment Act of 
        1977 and the member's record of lending to first-time 
        homebuyers.
            ``(3) Community reinvestment act compliance.--
                    ``(A) In general.--In determining whether a member 
                has satisfied the standards established under this 
                subsection, the Board shall rely only on the assessment 
                of a member's compliance with the Community 
                Reinvestment Act of 1977 made by the member's 
                appropriate Federal financial supervisory agency, 
                unless the Board is required under subparagraph (b) to 
                conduct an independent assessment.
                    ``(B) Independent assessment required.--The board 
                is required to independently assess whether a member 
                has satisfied the standards established under this 
                subsection, including the member's record of lending to 
                first-time homebuyers, if--
                            ``(i) the member is not subject to the 
                        Community Reinvestment Act of 1977; or
                            ``(ii) an assessment has not been prepared 
                        by the member's appropriate Federal financial 
                        supervisory agency.
                    ``(C) Appropriate federal financial supervisory 
                agency.--The term ``appropriate Federal financial 
                supervisory agency'' has the same meaning as in section 
                803 of the Community Reinvestment Act of 1977.''.
    (d) Affordable Housing Program Applications.--Section 10(j)(1) of 
the Federal Home Loan Bank Act (12 U.S.C. 1430(j)(1)) is amended to 
read as follows:
            ``(1) In general.--
                    ``(A) Each bank must establish program.--Pursuant 
                to regulations promulgated by the Board, each Bank 
                shall establish an Affordable Housing Program to 
                provide subsidies, including subsidized interest rates 
                on advances, to members to assist the members in 
                financing for low- and moderate-income, owner-occupied, 
                affordable rental housing.
                    ``(B) Applications.--Each Federal Home Loan Bank is 
                authorized to approve or disapprove, subject to the 
                requirements of this Act, applications by members of 
                the Bank to participate in the Bank's Affordable 
                Housing Program.''.
    (e) Affordable Housing Program Contribution.--Section 10(j)(5) of 
the Federal Home Loan Bank Act (12 U.S.C. 1430(j)(5)) is amended to 
read as follows:
            ``(5) Contribution to program.--Each Bank shall annually 
        contribute the percentage of its annual net earnings prescribed 
        in the following subparagraphs to support subsidies, including 
        subsidized advances, through the Affordable Housing Program:
                    ``(A) Except as provided in subparagraph (B), 10 
                percent of the preceding year's net earnings, or such 
                prorated sums as may be required to assure that the 
                aggregate contribution of the Banks shall not be less 
                than $100,000,000 for each such year.
                    ``(B) If the total capital of the Federal Home Loan 
                Bank System for the preceding year is less than $6 
                billion, 10 percent of the preceding year's net 
                earnings.''.
    (f) Branches for Community Investment and Affordable Housing 
Programs; and Limitations on Advances.--Section 10 of the Federal Home 
Loan Bank Act (12 U.S.C. 1430) is amended by adding after subsection 
(j) the following new subsections:
    ``(k) Branches for Community Investment and Affordable Housing 
Programs.--
            ``(1) In general.--With the prior approval of the Board 
        each Federal Home Loan Bank is authorized to establish 1 or 
        more branches within its Federal Home Loan Bank district for 
        the exclusive purpose of conducting activities related to the 
        Bank's community investment and affordable housing programs.
            ``(2) Limitation on activities.--Only activities relating 
        to the programs described in subsections (h) and (i) may be 
        conducted at a branch established under paragraph (1).
    ``(l) Limitations on Advances.--
            ``(1) Limitation on extended periods.--Except as provided 
        in paragraph (2), no new advances to any undercapitalized 
        depository institution by any Federal Home Loan Bank under
         this section may be outstanding for more than 60 days in any 
120-day period.
            ``(2) Viability exception.--
                    ``(A) In general.--If the head of the appropriate 
                Federal banking agency certifies in advance in writing 
                to the Federal Home Loan Bank that any depository 
                institution is viable, the limitation contained in 
                paragraph (1) shall not apply during the 60-day period 
                beginning on the date such certification is received.
                    ``(B) Extensions of period.--The 60-day period may 
                be extended for additional 60-day periods upon receipt 
                by the Federal Home Loan Bank of additional written 
                certifications under subparagraph (A) with respect to 
                each such additional period.
                    ``(C) Authority to issue a certificate of viability 
                may not be delegated.--The authority of the head of any 
                agency to issue a written certification of viability 
                under this paragraph may not be delegated to any other 
                person.
            ``(3) Prohibition on advances to critically 
        undercapitalized depository institutions.--Notwithstanding any 
        other provision of this Act, no new advances may be made to a 
        critically undercapitalized depository institution.
            ``(4) No obligation to make advances.--A Federal Home Loan 
        Bank shall have no obligation to make, increase, renew, or 
        extend any advance or discount under this Act to any member.
            ``(5) Definitions.--
                    ``(A) Appropriate federal banking agency.--The term 
                `appropriate Federal banking agency' has the same 
                meaning as in section 3 of the Federal Deposit 
                Insurance Act and also includes the National Credit 
                Union Administration.
                    ``(B) Critically undercapitalized.--The term 
                `critically undercapitalized' has the same meaning as 
                in section 38 of the Federal Deposit Insurance Act.
                    ``(C) Depository institution.--The term `depository 
                institution' has the same meaning as the term `insured 
                depository institution' in section 2.
                    ``(D) New Advance.--The term `new advance' includes 
                a renewal or extension of, or an increase in, an 
                outstanding advance.
                    ``(E) Undercapitalized depository institution.--The 
                term `undercapitalized depository institution' means 
                any depository institution which--
                            ``(i) is undercapitalized, as defined in 
                        section 38 of the Federal Deposit Insurance 
                        Act; or
                            ``(ii) has a composite CAMEL rating of 5 
                        under the Uniform Financial Institutions Rating 
                        System (or an equivalent rating by any such 
                        agency under a comparable rating system) as of 
                        the most recent examination of such 
                        institution.
                    ``(F) Viable.--A depository institution is `viable' 
                if the appropriate Federal banking agency determines, 
                giving due regard to the economic conditions and 
                circumstances in the market in which the institution 
                operates, that the institution--
                            ``(i) is not critically undercapitalized;
                            ``(ii) is not expected to become critically 
                        undercapitalized; and
                            ``(iii) is not expected to be placed in 
                        conservatorship or receivership.''.
    (g) Additional Amendments.--Section 10 of the Federal Home Loan 
Bank Act (1430) is amended--
            (1) Deletion of Qualified Thrift Lender Status.--By 
        deleting the first subparagraph (e) as added by section 714(b) 
        of the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 Public Law 101-73.
            (2) Redesignation.--By redesignating subsections (g), (h), 
        (i), (j), (k), and (l) as subsections (f), (g), (h), (i), (j), 
        and (k), respectively.
            (3) Affordable housing program conforming amendments.--In 
        subsection (j)--
                    (A) by deleting ``subsidized advances'' each place 
                it appears and inserting ``subsidies, including 
                subsidized advances'';
                    (B) in paragraph (9)(C), by deleting ``advances 
                made under this program'' and inserting ``subsidies, 
                including subsidized advances provided under this 
                program''; and
                    (C) by deleting ``advances'' each place it appears 
                and inserting ``subsidies''.
            (4) Technical amendment.--In subsection (a), in the first 
        sentence before paragraph (1), by striking ``or section 11(g) 
        of this Act''.

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

    Section 10B(a) of the Federal Home Loan Bank Act (12 U.S.C. 
1430b(a)) is amended to read as follows:
    ``(a) In General.--
            ``(1) Authority.--Each Federal Home Loan Bank is authorized 
        to make advances to a nonmember mortgagee described in 
        paragraph (2).
            ``(2) Permissible nonmember mortgagee.--
                    ``(A) A State housing finance agency or an Indian 
                housing authority approved under title II of the 
                National Housing Act--
                            ``(i) that is a chartered institution 
                        having succession and subject to the inspection 
                        and supervision of some governmental agency; 
                        and
                            ``(ii) whose principal activity in the 
                        mortgage field must consist of lending its own 
                        funds; or
                    ``(B) a Community Development Financial 
                Institution--
                            ``(i) that is not an insured depository 
                        institution or a subsidiary of an insured 
                        depository institution;
                            ``(ii) that, at the time the advance is 
                        made, has been certified within the last year 
                        as a Community Development Financial 
                        Institution under the Community Development 
                        Banking and Financial Institutions Act of 1994;
                            ``(iii) that is a chartered institution 
                        having succession; and
                            ``(iv) whose principal activity in the 
                        mortgage field must consist of lending its own 
                        funds.
            ``(3) Security.--Such advances shall not be subject to the 
        other provisions and restrictions of this Act, but shall be 
        made upon the security of mortgages insured under title II of 
        the National Housing Act.
            ``(4) Terms and conditions.--Advances made under the terms 
        of this section shall be at such rates of interest and upon 
        such terms and conditions as shall be determined by the Federal 
        Home Loan Bank, but no advance may be for an amount in excess 
        of 90 percent of the unpaid principal of the mortgage loan 
        given as security.
            ``(5) Definitions of community development financial 
        institution.--The term `Community Development Financial 
        Institution' has the same meaning as in section 103 of the 
        Community Development Banking and Financial Institutions Act of 
        1994.
    ``(b) Exception.--An advance made to a State housing finance agency 
or an Indian housing authority for the purpose of facilitating mortgage 
lending that benefits individuals and families that meet the income 
requirements set forth in section 142(d) or 143(f) of title 26, United 
States Code need not be collateralized by a mortgage insured under 
title II of the National Housing Act or otherwise if--
            ``(1) such advance otherwise meets the requirements of this 
        subsection; and
            ``(2) such advance meets the requirements of section 10(a), 
        and any real estate collateral for such loan comprises single 
        family or multifamily residential mortgages.''.

SEC. 115. POWERS AND DUTIES OF BANKS.

    (a) Borrowing Money; General Powers.--Section 11(a) of the Federal 
Home Loan Bank (12 U.S.C. 1431(a)) is amended to read as follows:
    ``(a) Borrowing Money; General Powers.--Each Federal Home Loan Bank 
shall have power, subject to rules and regulations prescribed by the 
Board to borrow and give security therefor and
 to pay interest thereon upon such terms and conditions as the Bank may 
determine and to do all things necessary for carrying out the 
provisions of this Act and all things incident thereto.''.
  (b) Issuance of Federal Home Loan Bank Bonds.--Section 11(c) of the 
Federal Home Loan Bank Act (12 U.S.C. 1431(c)) is amended to read as 
follows:
    ``(c) Issuance of Federal Home Loan Bank Bonds.--The Federal Home 
Loan Bank System, subject to rules and regulations prescribed by the 
Board, may issue consolidated Federal Home Loan Bank bonds which shall 
be the joint and several obligations of all the Federal Home Loan 
Banks, and shall be secured and be issued upon such terms and 
conditions as the Banks may determine.''.
    (c) Delayed Effective Date.--The amendment made by subsection (b) 
shall take effect on the earlier of the date--
            (1) the central office described in section 11(k) of the 
        Federal Home Loan Bank Act is established; or
            (2) 6 months after the enactment of this Act.
    (d) Additional or Substituted Collateral on Adjustment of 
Equities.--Section 11(d) of the Federal Home Loan Bank Act (12 U.S.C. 
1431(d)) is amended to read as follows:
    ``(d) Additional or Substituted Collateral on Adjustment of 
Equities.--The Board, for safety and soundness reasons, may require any 
Federal Home Loan Bank to deposit additional collateral or to make 
substitutions of collateral or to adjust equities between the Federal 
Home Loan Bank.''.
    (e) Acceptance of Deposits; Restrictions on Transaction of Banking 
Business; Collection and Settlement of Checks, Drafts, Etc.; Charges; 
Rules and Regulations.--Section 11(e) of the Federal Home Loan Bank Act 
(12 U.S.C. 1431(e)) is amended to read as follows:
    ``(e) Acceptance of Deposits; Restrictions on Transaction of 
Banking Business; Collection and Settlement of Checks, Drafts, Etc.; 
Charges; Rules and Regulations.--
            ``(1) Acceptance of deposits.--Subject to rules and 
        regulations prescribed by the Board, each Federal Home Loan 
        Bank shall have power to accept deposits made by members of 
        such Bank or by any other Federal Home Loan Bank or other 
        instrumentality of the United States, upon such terms and 
        conditions as the Bank may determine, but no Federal Home Loan 
        Bank shall transact any banking or other business not 
        incidental to activities authorized by this Act.
            ``(2) Collection and settlement of checks.--
                    ``(A) In general.--Subject to rules and regulations 
                of the Board, the Federal Home Loan Bank are authorized 
                to be drawees of, and to engage in, or be agents or 
                intermediaries for, or otherwise participate or assist 
                in, the collection and settlement of (including 
                presentment, clearing, and payment of, and remitting 
                for), checks, drafts, or any other negotiable or 
                nonnegotiable items or instruments of payment drawn on 
                or issued by members of any Federal Home Loan Bank or 
                by institutions which are eligible to make
                 application to become members pursuant to section 4, 
and to have such incidental powers as the Board shall find necessary 
for the exercise of any such authorization.
                    ``(B) Charges.--A Federal Home Loan Bank shall make 
                charges, to be determined by the Bank consistent with 
                the principles set forth in section 11A(c) of the 
                Federal Reserve Act, or utilize the services of, or act 
                as agent for, or be a member of, a Federal Reserve 
                bank, clearinghouse, or any other public or private 
                financial institution or other agency, in the exercise 
                of any powers or functions pursuant to this paragraph.
                    ``(C) Rules and regulations.--
                            ``(i) In general.--(The Board) is 
                        authorized, with respect to participation in 
                        the collection and settlement of any items by 
                        Federal Home Loan Banks, and with respect to 
                        the collection and settlement (including 
                        payment by the payor institution) of items 
                        payable by members, to prescribe rules and 
                        regulations regarding the rights, powers, 
                        responsibilities, duties, and liabilities, 
                        including standards relating thereto, of such 
                        Federal Home Loan Banks, associations, or banks 
                        and other parties to any such items or their 
                        collection and settlement.
                            ``(ii) Application of banking usage and 
                        practice.--In prescribing such rules and 
                        regulations, the Board may adopt or apply, in 
                        whole or in part, general banking usage and 
                        practices, and, in instances or respects in 
                        which they would otherwise not be applicable, 
                        Federal Reserve regulations and operating 
                        letters, the Uniform Commercial Code, and 
                        clearinghouse rule.''.
    (f) Rediscount of Notes Held By Other Banks; Purchase of Bonds of 
Other Banks.--Section 11(f) of the Federal Home Loan Bank Act (12 
U.S.C. 1431(f)) is amended to read as follows:
    ``(f) Rediscount of Notes Held by Other Banks; Purchase of Bonds of 
Other Banks.--
            ``(1) In general.--Each Federal Home Loan Bank is 
        authorized, upon the terms and conditions determined by the 
        Bank, to rediscount the discounted notes of members held by 
        other Federal Home Loan Banks, or to make loans to, or make 
        deposits with, such other Federal Home Loan Banks, or to 
        purchase any bonds issued under this section.
            ``(2) Board authority.--The Board is authorized to require 
        Federal Home Loan Banks, upon such terms and conditions as the 
        Board may prescribe, to engage in any activity described in 
        paragraph (1).''.
    (g) Audits.--Section 11(j) of the Federal Home Loan Bank Act (12 
U.S.C. 1431(j)) is amended to read as follows:
    ``(j) Audits.--
            ``(1) Government capital not required.--Notwithstanding the 
        provisions of the first sentence of section 202 of the 
        Government Corporation Control Act, the audits of the financial 
        transactions of a Federal Home Loan Bank required by that 
        section shall not be limited to periods during which Government 
        capital has been invested therein.
            ``(2) Exclusions from government corporation control act.--
        The provisions of the first sentence of subsection (d) of 
        section 303 of the Government Corporation Control Act shall not 
        apply to any Federal Home Loan Bank.
            ``(3) Selection of external auditors.--
                    ``(A) In general.--The Federal Home Loan Banks 
                shall contract jointly for an annual external audit.
                    ``(B) Role of the board.--Notwithstanding any other 
                provision of law, the Board shall not participate in 
                the audit contracting process under this paragraph, 
                except that the Board may establish requirements for 
                external audit contracts and requirements to assure 
                consistency in financial report.''.
    (h) Fiscal Agent of Federal Home Loan Bank System.--Section 11 of 
the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by adding 
after subsection (k) the following new subsection:
    ``(l) Fiscal Agent of Federal Home Loan Bank System.--
            ``(1) In general.--The Federal Home Loan Bank System shall 
        establish, within 6 months after the date of enactment of the 
        Federal Home Loan Bank System Restructuring and Modernization 
        Act of 1995, a central office that, on behalf of the System, 
        will carry out the issuance of the systems' consolidated 
        obligations under this section.
            ``(2) Day-to-day operations.--The System may delegate other 
        operational functions to the central office described in 
        subparagraph (A), or to other offices, as the System may 
        agree.''.
    (i) Deletion and Redesignation.--Section 11 of the Federal Home 
Loan Bank Act (12 U.S.C. 1431) is amended by--
            (1) Consolidated federal home loan bank debentures.--
        Deleting subsection (b); and
            (2) Redesignation.--Redesignating subsections (c), (d), 
        (e), (f), (g), (h), (i), (j), (k), and (l) as (b), (c), (d), 
        (e), (f), (g), (h), (i), (j), and (k).

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

    (a) Incorporation and Corporate Powers.--Section 12(a) of the 
Federal Home Loan Bank Act (12 U.S.C. 1432(a)) is amended to read as 
follows:
    ``(a) Incorporation and Corporate Powers.--
            ``(1) Organizational certificate.--
                    ``(A) In general.--In the event that any new 
                Federal Home Loan Bank district and any new Federal 
                Home Loan Bank are created, the directors of the new 
                Federal Home Loan Bank shall, in accordance with such 
                rules and
                 regulations as the Board may prescribe, make and file 
with the Board at the earliest practicable date after the establishment 
of such Bank, an organization certificate which shall contain such 
information as the Board may require.
                    ``(B) Filing.--Upon the making and filing of the 
                organization certificate with the Board, the Bank shall 
                become as of the date of the execution of its 
                organization certificate, a body corporate, and as such 
                and in its name it shall have the powers described in 
                paragraph (2).
            ``(2) Powers of federal home loan banks.--Each Federal Home 
        Loan Bank shall have the following powers--
                    ``(A) to adopt, alter, and use a corporate seal;
                    ``(B) to make contracts;
                    ``(C) to purchase or lease and hold or dispose of 
                such real estate as may be necessary or convenient for 
                the transaction of its business;
                    ``(D) to sue and be sued, to complain, and to 
                defend, in any court of competent jurisdiction, State 
                or Federal;
                    ``(E) to select, employ, and fix the compensation 
                of such officers, employees, attorneys, and agents as 
                shall be necessary for the transaction of its business;
                    ``(F) to define the duties of such officers, 
                employees, attorneys, and agents; require bonds of them 
                and fix the penalties thereof; and to dismiss them at 
                pleasure;
                    ``(G) by its board of directors, to prescribe, 
                amend, and repeal by-laws, rules and regulations 
                governing the manner which its affairs may be 
                administered; and
                    ``(H) to exercise the powers granted to it by law.
            ``(3) Officers as directors.--The president of a Federal 
        Home Loan Bank also may be a member of the board of directors 
        thereof, but no other officer, employee, attorney, or agent of 
        such Bank, who receives compensation, may be a member of the 
        board of directors.
            ``(4) Incidental powers.--Each Federal Home Loan Bank shall 
        have all such incidental powers, but inconsistent with the 
        provisions of this Act, as are customary and usual in 
        corporations generally.''.
    (b) Technical Amendment.--Section 12(b) of the Federal Home Loan 
Bank Act (12 U.S.C. 1432(b)) is amended by deleting ``Federal home 
loans banks'' and inserting ``Federal Home Loan Banks''.

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

    Section 13 of the Federal Home Loan Bank Act (12 U.S.C. 1433) is 
amended--
            (1) by striking ``bank'' each place it appears and 
        inserting ``Federal Home Loan Bank''; and
            (2) by striking ``except that in any real property of the 
        bank'' and inserting ``except that any real property''.

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

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

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

    ``(a) Lawful Investments.--Obligations of the Federal Home Loan 
Banks issued in compliance with this Act shall be lawful investments, 
and may be accepted as security, for all fiduciary, trust, and public 
funds the investment or deposit of which shall be under the authority 
or control of the United States or any officer or officers thereof.
    ``(b) Federal Reserve Banks as Fiscal Agents.--The Federal Reserve 
banks are authorized to act as depositaries, custodians, and/or fiscal 
agents for Federal Home Loan Banks in the general performance of their 
powers under this Act.
    ``(c) Disclosure Regarding Absence of United States Guarantee.--All 
obligations of Federal Home Loan Banks shall plainly state that such 
obligations are not obligations of the United States and are not 
guaranteed by the United States.''.
SEC. 119. RESERVES AND DIVIDENDS.

    (a) Reserve Account; Dividends; Investment of Reserves.--Section 
16(a) of the Federal Home Loan Bank Act (12 U.S.C. 1436(a)) is amended 
to read as follows:
    ``(a) Reserve Account; Dividends; Investment of Reserves.--
            ``(1) Reserve account.--
                    ``(A) Required reserves.--
                            ``(i) In General.--At the same time it 
                        first establishes the capital standards 
                        required under section 6A, the Board shall 
                        establish a reserve account requirement for 
                        each Federal Home Loan Bank.
                            ``(ii) Factors considered in establishing 
                        reserve requirement.--In establishing the 
                        reserve account required by subparagraph (A), 
                        the Board shall take into account that reserves 
                        are integral to a Bank's capital structure and 
                        its safety and soundness, including the ability 
                        of a Bank to satisfy its capital requirements, 
                        meet its statutory obligations, and manage its 
                        business operations.
                            ``(iii) Reserve compliance plan.--At the 
                        same time each Bank submits to the Board its 
                        plan specifying how the Bank intends to 
                        implement its stock subscription requirements, 
                        each Bank shall submit to the Board a plan for 
                        complying with the reserve account requirement 
                        established under clause (i).
                    ``(B) Additional reserves.--Each Federal Home Loan 
                Bank may carry to a reserve account from time to time 
                such portion of its net earnings as may be determined 
                by its board of directors.
            ``(2) Dividends.--No dividends shall be paid except out of 
        previously retained earnings or current net earnings remaining 
        after reductions for all reserves, chargeoffs, purchases of 
        capital certificates of the Financing Corporation, and payments 
        relating to the Funding Corporation required under this Act 
        have been provided for, other than charge-offs or expenses 
        incurred by a Bank in connection with the purchase of capital 
        stock of the Financing Corporation under section 21 of this Act 
        or payments relating to the Funding Corporation Principal Fund 
        under section 21B(e) of this Act.
            ``(3) Investment authority.--The funds of such Federal Home 
        Loan Bank shall be invested, subject to such regulations, 
        restrictions, and limitations as may be prescribed by the 
        Board, in direct obligations of the United States, in 
        obligations, participations, or other instruments of or issued 
        by the Federal National Mortgage Association or the Government 
        National Mortgage Association, in mortgages, obligations, or 
        other securities which are or ever have been sold by the 
        Federal Home Loan Mortgage Corporation pursuant to section 305 
        or section 306 of the Federal Home Loan Mortgage Corporation 
        Act, and in such securities as fiduciary and trust funds may be 
        invested in under the laws of the State in which the Federal 
        Home Loan Bank is located.''.
    (b) Technical Amendments.--Section 16(c) of the Federal Home Loan 
Bank Act (12 U.S.C. 1436(c)) is amended--
            (1) by striking ``bank'' each place it appears and 
        inserting ``Federal Home Loan Bank'';
            (2) by striking ``bank's'' and inserting ``Federal Home 
        Loan Bank's''; and
            (3) in paragraph (1)(C), by striking ``the first 2 
        sentences of subsection (a) of this section'' and inserting 
        ``subsection (a)(1)''.

SEC. 120. FINANCING CORPORATION.

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

SEC. 121. OBLIGATIONS OF RESOLUTION FUNDING CORPORATION.

    (a) Payments of the Federal Home Loan Bank System.--Section 
21B(f)(2)(C) of the Federal Home Loan Bank Act (12 U.S.C. 
1441b(f)(2)(C)) is amended to read as follows:
                    ``(C) Payments by the federal home loan bank 
                system.--
                            ``(i) Amount to be paid.--To the extent the 
                        amounts available pursuant to
                         subparagraphs (A) and (B) are insufficient to 
cover the amount of interest payments, the Federal Home Loan Banks 
shall pay to the Funding Corporation each calendar year the aggregate 
amount of $300,000,000.
                            ``(ii) Pro rata share of total system 
                        capital.--Except as provided in clause (iii), 
                        the amount to be paid by each Federal Home Loan 
                        Bank under clause (i) shall be determined by--
                                    ``(I) dividing the Bank's required 
                                capital by the total of all of the 
                                Banks' required capital; and
                                    ``(II) multiplying the percentage 
                                obtained under subclause (I) by 
                                $300,000,000.
                            ``(iii) Bank allocation formula.--
                        Notwithstanding clause (ii), the amount to be 
                        paid by each Federal Home Loan Bank under 
                        clause (i) shall be determined by a permanent 
                        formula established by the Federal Home Loan 
                        Banks if--
                                    ``(I) within 60 days after the 
                                enactment of the Federal Home Loan Bank 
                                System Restructuring and Modernization 
                                Act of 1995, the formula established by 
                                the Banks is approved by three-fourths 
                                of the Banks and by Banks with combined 
                                total assets at least equal to three-
                                fourths of the total assets of the 
                                System; and
                                    ``(II) within 45 days after the 
                                formula is approved as described in 
                                subclause (I), the Federal Housing 
                                Finance Board approves the formula 
                                established by the Banks, specifically 
                                finding that the formula--
                                            ``(aa) is reasonable and 
                                        consistent with the objectives 
                                        of assuring payment of the 
                                        System's obligation in clause 
                                        (i);
                                            ``(bb) is equitable to the 
                                        Banks and members;
                                            ``(cc) does not create 
                                        incentives for the Banks or 
                                        members to engage in conduct 
                                        inconsistent with the purpose 
                                        of the System; and
                                            ``(dd) is readily 
                                        understood and predictable in 
                                        its impact.
                            ``(iv) Definitions.--
                                    ``(I) Required capital.--For 
                                purposes of clause (ii), `required 
                                capital' means the greater of the 
                                leverage capital requirement or risk-
                                based capital requirement established 
                                by the Board for each Bank.
                                    ``(II) Total assets.--For purposes 
                                of clause (iii)(I), the `total assets' 
                                of each Bank and the System shall be 
                                determined as of the date of 
                                introduction of the Federal Home Loan 
                                Bank System Restructuring and 
                                Modernization Act of 1995.''.
    (b) Delayed Effective Date.--The amendment made by subsection (a) 
shall take effect beginning with the calendar year following the year 
the Board prescribes regulations establishing capital requirements 
under section 6(b).
    (c) Conforming Amendments.--Section 21B(c) (12 U.S.C. 1441b(c)) is 
amended by striking ``director of the Office of Finance of the Federal 
Home Loan Banks'' and inserting ``director of the central office 
described in section 11(k)''.

SEC. 122. ELIGIBILITY TO MEMBERSHIP IN BANKS.

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

SEC. 123. MERGER, LIQUIDATION OR REORGANIZATION.

    Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) is 
amended to read as follows:
    ``(a) In General.--Whenever the Board finds that the efficient and 
economical accomplishment of the purposes of this Act will be aided by 
such action, and in accordance with such rules, regulation, and orders 
as the Board may prescribe--
            ``(1) Mergers.--Any Federal Home Loan Bank may be required 
        to merge with any other Federal Home Loan Bank; and
            ``(2) Liquidation or reorganization.--Any Federal Home Loan 
        Bank may be liquidated or reorganized by the Board, and the 
        Bank's stock paid off and retired in whole or in part in 
        connection therewith after paying or making provision for the 
        payment of its liabilities.
    ``(b) Acquisition of Assets and Assumption of Liabilities.--In the 
case of any liquidation or reorganization described in subsection (a), 
any other Federal Home Loan Bank may, with the approval of the Board, 
acquire assets of any such liquidated or reorganized bank and assume 
liabilities thereof, in whole or in part.''.

SEC. 124. GENERAL ENFORCEMENT POWERS.

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

``SEC. 27A. GENERAL ENFORCEMENT POWERS.

    ``(a) Cease and Desist Procedures.--
            ``(1) Grounds for issuance.--The Board may issue and serve 
        upon a Federal Home Loan Bank or a Bank-affiliated party a 
        notice of charges if, in the opinion of the Board, the Bank or 
        Bank-affiliated party--
                    ``(A) is engaging or has engaged, or the Board has 
                reasonable cause to believe that the Bank or Bank-
                affiliated party is about to engage, in an unsafe or 
                unsound practice in conducting the business of the 
                Bank; or
                    ``(B) is violating or has violated, or the Board 
                has reasonable cause to believe that the Bank or Bank-
                affiliated party is about to violate--
                            ``(i) a law, rule, or regulation;
                            ``(ii) any condition imposed in writing by 
                        the Board in connection with the granting of 
                        any application or other request by the Bank; 
                        or
                            ``(iii) any written agreement entered into 
                        with the Board.
            ``(2) Procedure.--
                    ``(A) Notice of charges.--Any notice of charges 
                shall contain a statement of the facts constituting the 
                alleged violation or violations or the unsafe or 
                unsound practice or practices, and shall fix a time and 
                place at which a hearing will be held to determine 
                whether an order to cease and desist therefrom should 
                issue against the Bank or Bank-affiliated party.
                    ``(B) Date of hearing.--Such hearing shall be fixed 
                for a date not earlier than 30 days nor later than 60 
                days after service of such notice unless an earlier or 
                a later date is set by the Board at the request of any 
                party served.
                    ``(C) Failure to appear constitutes consent.--
                Unless the party or parties so served appear at the 
                hearing personally or by a duly authorized 
                representative, the party or parties shall be deemed to 
                have consented to the issuance of the cease-and-desist 
                order.
                    ``(D) Issuance of order.--In the event of such 
                consent, or if upon the record made at any such 
                hearing, the Board shall find that any violation or 
                unsafe or unsound practice specified in the notice of 
                charges has been established, the Board may issue and 
                serve upon the Bank or Bank-affiliated party an order 
                requiring the Bank or Bank-affiliated party to cease 
                and desist from any such violation or practice and to 
                take affirmative action to correct the conditions 
                resulting from any such violation or practice.
            ``(3) Affirmative action to correct conditions resulting 
        from violations or practices.--The authority to issue an order 
        under this subsection and subsection (b) which requires a 
        Federal Home Loan Bank or Bank-affiliated party to take 
        affirmative action to correct or remedy any conditions 
        resulting from any violation or practice with respect to which 
        such order is issued includes the authority to require such 
        Bank or party to--
                    ``(A) make restitution or provide reimbursement, 
                indemnification, or guarantee against loss if--
                            ``(i) the Bank or Bank-affiliated party was 
                        unjustly enriched in connection with such 
                        violation or practice; or
                            ``(ii) the violation or practice involved a 
                        reckless disregard for the law or any 
                        applicable regulations or prior order of the 
                        Board;
                    ``(B) restrict the growth of the Bank;
                    ``(C) dispose of any loan or asset involved;
                    ``(D) rescind agreements or contracts;
                    ``(E) employ qualified officers or employees (who 
                may be subject to approval by the Board at the 
                direction of the Board); and
                    ``(F) take such other action as the Board 
                determines appropriate.
            ``(4) Authority to limit activities.--The authority to 
        issue an order under this subsection or subsection (b) includes 
        the authority to place limitations on the activities or 
        functions of a Bank or any Bank-affiliated party.
            ``(5) Effective date.--A cease-and-desist order shall 
        become effective at the expiration of 30 days after the service 
        of such order upon the Bank or Bank-affiliated party concerned 
        (except in the case of a cease-and-desist order issued upon 
        consent, which shall become effective at the time specified 
        therein), and shall remain, effective and enforceable as 
        provided therein, except to such extent as it is stayed, 
        modified, terminated, or set aside by action of the Board or 
        reviewing court.
            ``(6) Standard for certain orders.--No authority under this 
        subsection or subsection (b) to prohibit any Bank-affiliated 
        party from withdrawing, transferring, removing, dissipating, or 
        disposing of any funds, assets, or other property may be 
        exercised unless the Board meets the standards of Rule 65 of 
        the Federal rules of Civil Procedure, without regard to the 
        requirement of such rule that the applicant show that the 
        injury, loss or damage is irreparable and immediate.
    ``(b) Temporary Cease-and-Desist Orders.--
            ``(1) Grounds for issuance; scope.--Whenever the Board 
        determines that any violation, threatened violation, or unsafe 
        or unsound practice, specified in the notice of charges served 
        upon the Federal Home Loan Bank or Bank-affiliated party under 
        subsection (a)(1), or the continuation thereof, is likely--
                    ``(A) to cause insolvency or significant 
                dissipation of assets or earnings of the Bank, or
                    ``(B) to weaken the condition of the Bank prior to 
                the completion of the proceedings conducted under 
                subsection (a)(2),
        the Board may issue a temporary order requiring the Bank, or 
        any Bank-affiliated party, to cease and desist from any such 
        violation or practice and to take affirmative action to prevent 
        or remedy such insolvency, dissipation, or condition pending 
        completion of such proceedings. Such order may include any 
        requirement authorized under subsection (a)(3).
            ``(2) Effective date.--An order issued under paragraph (1) 
        shall become effective upon service upon the Federal Home Loan 
        Bank or Bank-affiliated party and, unless set aside, limited, 
        or suspended by a court in proceedings authorized by paragraph 
        (4), shall remain effective and enforceable pending the 
        completion of the administrative proceedings pursuant to such 
        notice and shall remain effective until such time as the Board 
        dismisses the charges specified in such notice or until 
        superseded by a cease-and-desist order issued under subsection 
        (a).
            ``(3) Incomplete or inaccurate records.--
                    ``(A) Temporary order.--If a notice of charges 
                served under subsection (a)(1) specifies that, on the 
                basis of particular facts and circumstances, the Bank's 
                books and records are so incomplete or inaccurate that 
                the Board is unable, through the normal supervisory 
                process, to determine the financial condition of that 
                Bank or the details or the purpose of any transaction 
                or transactions that may have a material effect on the 
                financial condition of that Bank, the Board may issue a 
                temporary order requiring--
                            ``(i) the cessation of any activity or 
                        practice which gave rise, whether in whole or 
                        in part, to the incomplete or inaccurate state 
                        of the books or records; or
                            ``(ii) affirmative action to restore such 
                        books or records to a complete and accurate 
                        state,
                         until the completion of the proceedings under 
subsection (a).
                    ``(B) Effective period.--Any temporary order issued 
                under subparagraph (A)--
                            ``(i) shall become effective upon service; 
                        and
                            ``(ii) unless set aside, limited, or 
                        suspended by a court in proceedings under 
                        paragraph (4), shall remain in effect and 
                        enforceable until the earlier of--
                                    ``(I) the completion of the 
                                proceeding initiated under subsection 
                                (a) in connection with the notice of 
                                charges; or
                                    ``(II) the date the Board 
                                determines, by examination or 
                                otherwise, that the Federal Home Loan 
                                Bank's books and records are accurate 
                                and reflect the financial condition of 
                                the Bank.
            ``(4) Judicial review.--Within 10 days after the Federal 
        Home Loan Bank or Bank-affiliated party has been served with a 
        temporary cease-and-desist order, the Bank or Bank-affiliated 
        party may apply to the United States district court for the 
        judicial district in which the Bank is located, or the United 
        States District Court for the District of Columbia, for an 
        injunction setting aside, limiting, or suspending the 
        enforcement, operation, or effectiveness of such order pending 
        the completion of the administrative proceedings pursuant to 
        the notice of charges served upon the Bank or Bank-affiliated 
        party under subsection (a)(1), and such court shall have 
        jurisdiction to issue such injunction.
            ``(5) Enforcement.--In the case of a violation or 
        threatened violation of, or failure to obey, a temporary order 
        issued under, the Board may apply to the United States district 
        court for the judicial district in which the Federal Home Loan 
        Bank is located, or the United States District Court for the 
        District of Columbia for an injunction to enforce such order, 
        and, if the court finds any such violation, threatened 
        violation, or failure to obey, it shall issue such injunction.
    ``(c) Removal and Prohibition Authority.--
            ``(1) Authority to issue order.--The Board may serve upon 
        any Bank-affiliated party a written notice of the Board's 
        intention to remove such party from office or to prohibit any 
        further participation by such party in any manner, in the 
        conduct of the affairs of the Bank whenever the Board 
        determines that--
                    ``(A) such party has directly or indirectly--
                            ``(i) violated--
                                    ``(I) any law or regulation;
                                    ``(II) any cease-and-desist order 
                                which has become final;
                                    ``(III) any condition imposed in 
                                writing by the Board in connection with 
                                the grant of any application or other 
                                request by the Bank; or
                                    ``(IV) any written agreement 
                                between the Bank and the Board;
                            ``(ii) engaged or participated in any 
                        unsafe or unsound practice in connection with 
                        the Bank; or
                            ``(iii) committed or engaged in any act, 
                        omission, or practice which constitutes a 
                        breach of such party's fiduciary duty;
                    ``(B) by reason of the violation, practice, or 
                breach described in any clause of subparagraph (A)--
                            ``(i) the Bank has suffered or will 
                        probably suffer financial loss or other damage; 
                        or
                            ``(ii) such party has received financial 
                        gain or other benefit by reason of such 
                        violation, practice, or breach; and
                    ``(C) such violation, practice, or breach--
                            ``(i) involves personal dishonesty on the 
                        part of such party; or
                            ``(ii) demonstrates willful or continuing 
                        disregard by such party for the safety or 
                        soundness of the Bank.
            ``(2) Suspension order.--
                    ``(A) Suspension or prohibition authorized.--If the 
                Board serves written notice under paragraph (1) to any 
                Bank affiliated-party, the Board may suspend such party 
                from office or prohibit such party from further 
                participation in any manner in the conduct of the 
                affairs of the Federal Home Loan Bank, if the Board--
                            ``(i) determines that such action is 
                        necessary for the protection of the Bank; and
                            ``(ii) serves upon such party written 
                        notice of the suspension order.
                    ``(B) Effective period.--Any suspension order 
                issued under subparagraph (A)--
                            ``(i) shall become effective upon service; 
                        and
                            ``(ii) unless a court issues a stay of such 
                        order under paragraph (7), shall remain in 
                        effect and enforceable until--
                                    ``(I) the date the Board dismisses 
                                the charges contained in the notice 
                                served under paragraph (1) with respect 
                                to such party; or
                                    ``(II) the effective date of an 
                                order issued by the Board to such party 
                                under paragraph (1).
                    ``(C) Copy of order.--If the Board issues a 
                suspension order under subparagraph (A) to any Bank-
                affiliated party, the Board shall serve a copy of such 
                order on any Federal Home Loan Bank with which such 
                party is associated at the time such order is issued.
            ``(3) Procedure.--
                    ``(A) Notice.--A notice of intention to remove a 
                Bank-affiliated party from office or to prohibit such 
                party from participating in the conduct of the affairs 
                of a Federal Home Loan Bank shall contain a statement 
                of the facts constituting grounds therefor, and shall 
                fix a time and place at which a hearing will be held 
                thereon.
                    ``(B) Date of hearing.--Such hearing shall be fixed 
                for a date not earlier than 30 days nor later than 60 
                days after the date of service of such notice, unless 
                an earlier or a later date is set by the Board at the 
                request of such party and for good cause shown or by 
                the Attorney General of United States.
                    ``(C) Failure to appear deemed consent.--Unless 
                such party appears at the hearing in person or by a 
                duly authorized representative, such party shall be 
                deemed to have consented to the issuance of an order of 
                such removal or prohibition.
                    ``(D) Issuance of order.--In the event of such 
                consent, or if upon the record made at any such 
                hearing, the Board finds that any of the grounds 
                specified in such notice have been established, the 
                Board may issue such orders of suspension or removal 
                from office, or prohibition from participation in the 
                conduct of the affairs of the Federal Home Loan Bank, 
                as the Board may deem appropriate.
            ``(4) Effective date.--Any such order shall become 
        effective at the expiration of 30 days after service upon the 
        Federal Home Loan Bank and Bank-affiliated party (except in the 
        case of an order issued upon consent, which shall become 
        effective at the time specified therein). Such order shall 
        remain effective and enforceable except to such extent as it is 
        stayed, modified, terminated, or set aside by action of the 
        Board or a reviewing court.
            ``(5) Prohibition of certain specific activities.--Any 
        person subject to an order issued under this subsection shall 
        not--
                    ``(A) participate in any manner in the conduct of 
                the affairs of any institution or agency specified in 
                paragraph (6)(A);
                    ``(B) solicit, procure, transfer, attempt to 
                transfer, vote, or attempt to vote any proxy, consent, 
                or authorization with respect to any voting rights in 
                any institution described in subparagraph (A);
                    ``(C) violate any voting agreement previously 
                approved by the Board; or
                    ``(D) vote for a director, or serve or act as a 
                Bank-affiliated party.
            ``(6) Industrywide prohibition.--
                    ``(A) In general.--Except as provided in paragraph 
                (3), any person who, pursuant to an order issued under 
                this subsection, has been removed or suspended from 
                office in a Federal Home Loan Bank or prohibited from 
                participating in the conduct of the affairs of a 
                Federal Home Loan Bank may not, while such order is in 
                effect, continue or commence to hold any office in, or 
                participate in any manner in the conduct of the affairs 
                of--
                            ``(i) any insured depository institution as 
                        defined in section 3(c)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813(c)(2));
                            ``(ii) any institution treated as an 
                        insured bank under section 8(b)(3) or 8(b)(4) 
                        of the Federal Deposit Insurance Act (12 U.S.C. 
                        1818(b)(3), (b)(4)), or as a savings 
                        association under section 8(b)(8) of the 
                        Federal Deposit Insurance Act (12 U.S.C. 
                        1818(b)(8));
                            ``(iii) any insured credit union as defined 
                        in section 101(7) of the Federal Credit Union 
                        Act (12 U.S.C. 1752);
                            ``(iv) any institution chartered under the 
                        Farm Credit Act of 1971;
                            ``(v) the Board any Federal Home Loan Bank;
                            ``(vi) the Federal National Mortgage 
                        Association;
                            ``(vii) the Federal Home Loan Mortgage 
                        Corporation;
                            ``(viii) the Student Loan Marketing 
                        Association;
                            ``(ix) the Government National Mortgage 
                        Association; and
                            ``(x) any appropriate Federal depository 
                        institutions regulatory agency as defined in 
                        section 3(q) of the Federal Deposit Insurance 
                        Act.
                    ``(B) Exception if agency provides written 
                consent.--If, on or after the date an order is issued 
                under this subsection which removes or suspends from 
                office any Bank-affiliated party or prohibits such 
                party from participating in the conduct of the affairs 
                of a Federal Home Loan Bank, such party receives the 
                written consent of--
                            ``(i) the Federal Housing Finance Board, 
                        and
                            ``(ii) the appropriate Federal financial 
                        institutions regulatory agency of the 
                        institution described in paragraph (6)(A) in 
                        which such party proposes to hold office or in 
                        the conduct of whose affairs such party 
                        proposes to participate,
                subparagraph (A) shall, to the extent of such consent, 
                cease to apply to such party with respect to the 
                institution described in such written consent. Any 
                agency that grants such a written consent shall report 
                such action to the Board and publicly disclose such 
                consent.
                    ``(C) Violation of paragraph treated as violation 
                of order.--Any violation of subparagraph (A) by any 
                person who is subject to an order described in such 
                subparagraph shall be treated as a violation of the 
                order.
                    ``(D) Appropriate federal financial institutions 
                regulatory agency defined.--For purposes of this 
                paragraph, the term `appropriate Federal financial 
                institutions regulatory agency' means--
                            ``(i) the Secretary of Housing and Urban 
                        Development and the Office of Federal Housing 
                        Enterprise Oversight, in the case of the 
                        Federal National Mortgage Association and the 
                        Federal Home Loan Mortgage Corporation;
                            ``(ii) the Secretary of Housing and Urban 
                        Development, in the case of the Government 
                        National Mortgage Association;
                            ``(iii) the appropriate Federal banking 
                        agency as defined in section 3(q) of the 
                        Federal Deposit Insurance Act (12 U.S.C. 
                        1813(q)), in the case of an insured depository 
                        institution;
                            ``(iv) the Secretary of the Treasury, in 
                        the case of the Student Loan Marketing 
                        Association;
                            ``(v) the Farm Credit Administration, in 
                        the case of an institution chartered under the 
                        Farm Credit Act of 1971; and
                            ``(vi) the National Credit Union 
                        Administration Board, in the case of an insured 
                        credit union (as defined in section 101(7) of 
                        the Federal Credit Union Act (12 U.S.C. 
                        1752(7)).
                    ``(E) Consultation between agencies.--The agencies 
                described in subparagraph (B) shall consult with each 
                other before providing any written consent authorized 
                by subparagraph (B).
                    ``(F) Applicability.--This paragraph shall only 
                apply to a person which is an individual, unless the 
                Board specifically finds that it should apply to a 
                corporation, firm, or other business enterprise.
            ``(7) Stay of suspension or prohibition.--Within ten days 
        after any Bank-affiliated party has been suspended from office 
        or prohibited from participation in the conduct of the affairs 
        of a Federal Home Loan Bank under paragraph (2), such party may 
        apply to the United States district court for the judicial 
        district in which the Federal Home Loan Bank is located, or the 
        United States District Court for the District of Columbia, for 
        a stay of such suspension or prohibition pending the completion 
        of the administrative proceedings pursuant to the notice served 
        upon such director or executive officer, under paragraph (1), 
        and such court shall have jurisdiction to stay such suspension 
        or prohibition.
    ``(d) Suspension or Removal of Parties Charged With Felony.--
            ``(1) Suspension.--Whenever any Bank-affiliated party is 
        charged in any information, indictment, or complaint with the 
        commission of, or participation in--
                    ``(A) a crime involving dishonesty or breach of 
                trust which is punishable by imprisonment for a term 
                exceeding one year under State or Federal law; or
                    ``(B) a criminal violation of section 1956, 1957 or 
                1960 of title 18, United States Code, or section 5322 
                of title 31, United States Code,
        the Board may, if continued service or participation by such 
        party may threaten to impair public confidence in the Federal 
        Home Loan Bank, by written notice served upon such party, 
        suspend such party from office or prohibit such party from 
        further participation in any manner in the conduct of the 
        affairs of the Bank.
            ``(2) Provisions applicable to notice.--
                    ``(A) Copy.--A copy of such notice shall also be 
                served upon the Bank.
                    ``(B) Effective period.--A suspension or 
                prohibition under paragraph (1) shall remain in effect 
                until the information, indictment, or complaint is 
                finally disposed of or until terminated by the Board.
            ``(3) Removal.--
                    ``(A) In general.--If a judgment of conviction or 
                an agreement to enter a pre-trial diversion or other 
                similar program is entered against a Bank-affiliated 
                party, in connection with a crime described in 
                paragraph (1)(A), and at such time as such judgment is 
                not subject to further appellate review, the Board may, 
                if continued service or participation by such party may 
                threaten to impair public confidence in the Federal 
                Home Loan Bank, issue and serve upon such party an 
                order removing such party from office or prohibiting 
                such party from further participation in any manner in 
                the conduct of the affairs of the Bank without the 
                prior written consent of the Board.
                    ``(B) Removal required.--In the case of a judgment 
                or conviction or agreement against a Bank-affiliated 
                party in connection with a violation described in 
                paragraph (1)(B), the Board shall issue and serve upon 
                such party an order removing such party from office or 
                prohibiting such party from further participation in 
                any manner in the conduct of the affairs of the Bank 
                without the prior written consent of the Board.
            ``(4) Provisions applicable to order.--
                    ``(A) Copy.--A copy of any order under paragraph 
                (3) shall also be served upon the Federal Home Loan 
                Bank, whereupon the Bank-affiliated party who is
                 subject to the order (if a director or an officer) 
shall cease to be a director or officer of the Bank.
                    ``(B) Discretionary removal not precluded.--A 
                finding of not guilty or other disposition of the 
                charge shall not preclude the Board from instituting 
                proceedings to remove such party from office or to 
                prohibit further participation in the affairs of the 
                Bank pursuant to subsection (e)(1) or (e)(3).
                    ``(C) Effective date.--Any notice of suspension or 
                order of removal issued under this subsection shall 
                remain effective until the completion of any hearing or 
                appeal authorized under paragraph (5), unless earlier 
                terminated by the Board.
            ``(5) Vacancies on the board of directors.--
                    ``(A) Quorum.--If, at any time, because of the 
                suspension of one or more directors pursuant to this 
                section, there shall be on the board of directors of a 
                Federal Home Loan Bank less than a quorum, all powers 
                and functions vested in, or exercisable by, such board 
                shall vest in and be exercisable by the remaining 
                director or directors, until such time as there shall 
                be a quorum of the board of directors.
                    ``(B) All directors suspended.--In the event all of 
                the directors of the Bank are suspended pursuant to 
                this section, the Board shall appoint temporary 
                directors pending the termination of such suspensions 
                or until such time as the terms of the suspended 
                directors expire and their successors take office.
          ``(6) Hearing.--
                    ``(A) Request for hearing.--Within 30 days from 
                service of any notice of suspension or order of removal 
                issued pursuant to paragraph (1), the Bank-affiliated 
                party concerned may request in writing an opportunity 
                to appear before the Board to show that the continued 
                service to or participation in the conduct of the 
                affairs of the Federal Home Loan Bank by such party 
                does not, or is not likely to, threaten to impair 
                public confidence in the Bank.
                    ``(B) Time and place of hearing.--Upon receipt of a 
                request described in subparagraph (A), the Board shall 
                fix a time (not more than 30 days after receipt of such 
                request, unless extended at the request of the Bank-
                affiliated party) and place at which such party may 
                appear, personally or through counsel, before the Board 
                or designated employees of the Board to submit written 
                materials (or, at the discretion of the Board, oral 
                testimony) and oral argument.
                    ``(C) Decision of the federal housing finance 
                board.--
                            ``(i) In general.--Within 60 days of such 
                        hearing, the Board shall notify the Bank-
                        affiliated party whether the suspension or 
                        prohibition from participation in any manner in 
                        the conduct of the affairs of the Federal Home 
                        Loan Bank will be continued, terminated, or 
                        otherwise modified, or whether the order 
                        removing such party from office or prohibiting 
                        such party from further participation in any 
                        manner in the conduct of the affairs of the 
                        Bank will be rescinded or otherwise modified.
                            ``(ii) Statement of reasons.--Such 
                        notification shall contain a statement of the 
                        basis for the Board's decision, if adverse to 
                        such party.
            ``(7) Rulemaking.--The Board is authorized to prescribe 
        such rules and regulations as may be necessary to carry out the 
        purposes of this subsection.
    ``(e) Hearing and Judicial Review.--
            ``(1) In general.--Any hearing provided for in this section 
        (other than the hearing provided for in subsection (d))--
                    ``(A) shall be held in the Federal judicial 
                district or in the territory in which the Federal Home 
                Loan Bank is located unless the party afforded the 
                hearing consents to another place; and
                    ``(B) shall be conducted in accordance with the 
                provisions of chapter 5 of title 5, United States Code 
                (5 U.S.C. 500 et seq.).
            ``(2) Federal housing financial board's decision and 
        order.--
                    ``(A) In general.--After such hearing, and within 
                90 days after the Board has notified the parties that 
                the case has been submitted to the Board for final 
                decision, the Board shall render its decision (which 
                shall include findings of fact upon which the decision 
                is predicated) and shall issue and serve upon each 
                party to the proceeding an order or orders consistent 
                with the provisions of this section.
                    ``(B) Review of federal housing finance board's 
                order.--Judicial review of any such order shall be 
                exclusively as provided in paragraph (3). Unless a 
                petition for review is timely filed in a court of 
                appeals of the United States, as hereinafter provided 
                in paragraph (3), and thereafter until the record in 
                the proceeding has been filed as so provided, the Board 
                may at any time, upon such notice and in such manner as 
                it shall deem proper, modify, terminate, or set aside 
                any such order. Upon such filing of the record, the 
                Board may modify, terminate, or set aside any such 
                order with permission of the court.
            ``(3) Judicial review.--
                    ``(A) Petition for review.--Any party to any 
                proceeding under paragraph (1) may obtain a review of 
                any order served pursuant to paragraph (1) (other than 
                an order issued with the consent of the Federal Home 
                Loan Bank or Bank-affiliated party concerned, or an 
                order issued under subsection (d)) by the filing in the 
                court of appeals of the United States for the circuit 
                in which the Federal Home Loan Bank is located, or in 
                the United States Court of Appeals for the District of 
                Columbia Circuit, within 30 days after the date of 
                service of such order, a written petition praying that 
                the order of the Board be modified, terminated, or set 
                aside. A copy of such petition shall be forthwith 
                transmitted by the clerk of the court to the Board.
                    ``(B) Filing.--Upon receiving a copy of a petition, 
                the Board shall file in the court the record in the 
                proceeding, as provided in section 2112 of title 28, 
                United States Code.
                    ``(C) Exclusive jurisdiction.--Upon the filing of a 
                petition, such court shall have jurisdiction, which 
                upon the filing of the record by the Board shall 
                (except as provided in the last sentence of paragraph 
                (2)(B)) be exclusive, to affirm, modify, terminate, or 
                set aside, in whole or in part, the order of the Board. 
                Review of such proceedings shall be governed by chapter 
                7 of title 5, United States Code.
            ``(4) Supreme court review.--The judgment and decree of the 
        circuit court referred to in paragraph (3) shall be final, 
        except that the judgment and decree shall be subject to review 
        by the Supreme Court upon certiorari, as provided in section 
        1254 of title 28, United States Code.
            ``(5) No automatic stay.--The commencement of proceedings 
        for judicial review under this subsection shall not, unless 
        specifically ordered by the court, operate as a stay of any 
        order issued by the Board.
    ``(f) Jurisdiction and Enforcement.--
            ``(1) Application for enforcement.--The Board may apply to 
        the United States district court, or the United States court of 
        any territory, within the jurisdiction of which the Federal 
        Home Loan Bank is located, for the enforcement of any effective 
        notice or order issued under this section or section 6A, and 
        such court shall have jurisdiction and power to order and 
        require compliance herewith.
            ``(2) Limitation on modification.--Except as otherwise 
        provided in this section or section 6A no court shall have 
        jurisdiction to affect by injunction or otherwise the issuance 
        or enforcement of any notice or order under this subsection, or 
        to review, modify, suspend, terminate, or set aside any such 
        notice or order.
    ``(g) Civil Money Penalty.--
            ``(1) First tier.--A Federal Home Loan Bank which, and any 
        Bank-affiliated party who--
                    ``(A) violates any law or regulation;
                    ``(B) violates any final order or temporary order 
                issued pursuant to subsection (a), (b), (c), or (d), or 
                any final order under section 6A;
                    ``(C) violates any condition imposed in writing by 
                the Board in connection with the grant of any 
                application or other request by a Bank; or
                    ``(D) violates any written agreement between a Bank 
                and the Board,
        shall be forfeit and pay a civil penalty of not more than 
        $5,000 for each day during which such violation continues.
            ``(2) Second tier.--Notwithstanding paragraph (1), a 
        Federal Home Loan Bank which, and any Bank-affiliated party 
        who,--
                    ``(A)(i) commits any violation described in any 
                subparagraph of paragraph (1);
                    ``(ii) recklessly engages in an unsafe or unsound 
                practice in conducting the affairs of a Bank; or
                    ``(iii) breaches any fiduciary duty; and
                    ``(B) which violation, practice, or breach--
                            ``(i) is part of a pattern of misconduct;
                            ``(ii) causes or is likely to cause more 
                        than a minimal loss to the Bank; or
                    ``(C) results in pecuniary gain or other benefit to 
                such party,
        shall forfeit and pay a civil penalty of not more than $25,000 
        for each day during which such violation, practice, or breach 
        continues.
            ``(3) Third tier.--Notwithstanding paragraphs (1) and (2), 
        a Federal Home Loan Bank which, and any Bank-affiliated party 
        who,--
                    ``(A) knowingly--
                            ``(i) commits any violation described in 
                        paragraph (1);
                            ``(ii) engages in any unsafe or unsound 
                        practice in conducting the affairs of a Bank; 
                        or
                            ``(iii) breaches any fiduciary duty; and
                    ``(B) knowingly or recklessly causes a substantial 
                loss to the Bank or a substantial pecuniary gain or 
                other benefit to such party by reason of such 
                violation, practice, or breach,
        shall forfeit and pay a civil penalty in an amount not to 
        exceed the applicable maximum amount determined under paragraph 
        (4) for each day during which such violation, practice, or 
        breach continues.
            ``(4) Maximum amounts of penalties.--The maximum daily 
        amount of any civil penalty which may be assessed pursuant to 
        paragraph (3) for any violation, practice, or breach described 
        in such paragraph is--
                    ``(A) in the case of any person other than a 
                Federal Home Loan Bank, an amount not to exceed 
                $1,000,000; and
                    ``(B) in the case of a Federal Home Loan Bank, an 
                amount not to exceed the lesser of--
                            ``(i) $1,000,000, or
                            ``(ii) 1 percent of the total assets of 
                        such Bank.
            ``(5) Assessment.--
                    ``(A) Written notice.--Any penalty imposed under 
                this subsection may be assessed and collected by the 
                Board by written notice.
                    ``(B) Finality of assessment.--If with respect to 
                any assessment under subparagraph (A) a hearing is not 
                timely requested pursuant to paragraph (8), the penalty 
                assessment contained in a written notice shall 
                constitute a final and unappealable order.
            ``(6) Authority to modify or remit penalty.--The Board may 
        compromise, modify, or remit any penalty which the Board may 
        assess or has already assessed under this subsection.
            ``(7) Mitigating factors.--In determining the amount of any 
        penalty imposed under this subsection, the Board shall take 
        into account the appropriateness of the penalty with respect 
        to--
                    ``(A) the size of financial resources and good 
                faith of the Federal Home Loan Bank or the other person 
                charged;
                    ``(B) the gravity of the violation;
                    ``(C) the history of previous violations; and
                    ``(D) such other matters as justice may require.
            ``(8) Hearing.--The Federal Home Loan Bank or Bank-
        affiliated party against whom any penalty is assessed under 
        this subsection shall be afforded a hearing if such Bank or 
        person submits a request for such hearing within 20 days after 
        the issuance of the notice of assessment. A transcript that 
        includes all testimony and other documentary evidence shall be 
        prepared for all hearings commenced pursuant to this 
        subsection.
            ``(9) Collection.--
                    ``(A) Referral.--If any Federal Home Loan Bank or 
                Bank-affiliated party fails to pay a penalty that has 
                become final, the Board shall recover the amount 
                assessed by action in the appropriate United States 
                district court.
                    ``(B) Appropriateness of penalty not reviewable.--
                In any civil action brought under subparagraph (A), the 
                validity and appropriateness of the penalty shall not 
                be subject to review.
            ``(10) Disbursement.--All penalties collected under 
        authority of this subsection shall be deposited into the 
        General Fund of the Treasury.
            ``(11) Regulations.--The Board shall prescribe regulations 
        establishing such procedures as may be necessary to carry out 
        this subsection.
    ``(h) Notice Under This Section After Separation From Service.--The 
resignation, termination of employment or participation, or separation 
of a Bank-affiliated party (including a separation caused by the 
closing of a Federal Home Loan Bank) shall not affect the jurisdiction 
and authority of the Board to issue any notice and proceed under this 
section against any such party, if such notice is served before the end 
of the six-year period beginning on the date such Bank-affiliated party 
ceased to be such a party with respect to such Bank.
    ``(i) Prejudgment Attachment.--
            ``(1) In general.--In any action brought by the Board 
        pursuant to this section, or in actions brought in aid of, or 
        to enforce an order in, any administrative or other civil 
        action for money damages, restitution, or civil money penalties 
        brought by the Board, the court may, upon application of the 
        Board, issue a restraining order that--
                    ``(A) prohibits any person subject to the 
                proceeding from withdrawing, transferring, removing, 
                dissipating, or disposing of any funds, assets or other 
                property; and
                    ``(B) appoints a temporary receiver to administer 
                the restraining order.
            ``(2) Standard.--
                    ``(A) Showing.--Rule 65 of the Federal Rules of 
                Civil Procedure shall apply with respect to any 
                proceeding under paragraph (1) without regard to the 
                requirement of such rule that the applicant show that 
                the injury, loss, or damage is irreparable and 
                immediate.
                    ``(B) State proceeding.--If, in the case of any 
                proceeding in a State court, the court determines that 
                rules of civil procedure available under the laws of 
                such State provide substantially similar protection to 
                a party's right to due process as Rule 65 (as modified 
                with respect to such proceeding by subparagraph (B)), 
                the relief sought under paragraph (1) may be requested 
                under the laws of such State.
    ``(j) Criminal Penalty.--Whoever, being subject to an order in 
effect under subsection (c) or (d), without the prior written approval 
of the Board knowingly participates, directly or indirectly, in any 
manner (including by engaging in an activity specifically prohibited in 
such an order or in subsection (c)(5) in the conduct of the affairs of 
any institution or agency specified in subsection (c)(6)) shall be 
fined not more than $1,000,000, imprisoned for not more then 5 years, 
or both.
    ``(k) Notice of Service.--Any service required or authorized to be 
made by the Board under this section may be made by registered mail, or 
in such other manner reasonably calculated to give actual notice as the 
Board may by regulation or otherwise provide.
    ``(l) Subpoena Power, Etc.--
            ``(1) Powers.--In the course of or in connection with any 
        administrative proceeding under this section or any
         examination or investigation under section 8, the Board or any 
designated representative of the Board, including any person designated 
to conduct any hearing under this section, shall have the power--
                    ``(A) to administer oaths and affirmations;
                    ``(B) to take or cause to be taken depositions;
                    ``(C) to issue subpoenas and subpoenas duces tecum;
                    ``(D) to revoke, quash, or modify subpoenas and 
                subpoenas duces tecum issued by the Board; and
                    ``(E) to make rules and regulations with respect to 
                any such proceedings, examinations or investigations.
            ``(2) Jurisdiction.--The attendance of witnesses and the 
        production of documents provided for in this subsection may be 
        required from any place in any State or in any territory or 
        other place subject to the jurisdiction of the United States at 
        any designated place where such proceeding is being conducted.
            ``(3) Enforcement.--The Board or any party to proceedings 
        under this section may apply to the United States District 
        Court for the District of Columbia, or the United States 
        district court for the judicial district or the United States 
        court in any territory in which such proceeding is being 
        conducted, or where the witness resides or carries on business, 
        for enforcement of any subpoena or subpoena duces tecum issued 
        pursuant to this subsection, and such courts shall have 
        jurisdiction and power to order and require compliance 
        therewith.
            ``(4) Fees and expenses.--
                    ``(A) Witness.--Witnesses subpoenaed under this 
                subsection shall be paid the same fees and mileage that 
                are paid witnesses in the district courts of the United 
                States.
                    ``(B) Expenses and attorney's fees.--Any court 
                having jurisdiction of any proceeding instituted under 
                this section by a Federal Home Loan Bank or a director 
                or officer thereof, may allow to any such party such 
                reasonable expenses and attorneys' fees as it deems 
                just and proper; and such expenses and fees shall be 
                paid by the Bank or from its assets.
            ``(5) Failure to obey subpoena.--Any person who willfully 
        shall fail or refuse to attend and testify or to answer any 
        lawful inquiry or to produce books, papers, correspondence, 
        memoranda, contracts, agreements, or other records, if in such 
        person's power so to do, in obedience to the subpoena of the 
        Board, shall be guilty of a misdemeanor and, upon conviction, 
        shall be subject to a fine of not more than $1,000 or to 
        imprisonment for a term of not more than one year or both.
    ``(m) Public Disclosure of Final Orders and Agreements.--
            ``(1) In general.--The Board shall publish and make 
        available to the public on a semi-annual basis--
                    ``(A) any written agreement or other written 
                statement for which a violation may be enforced by the 
                Board, unless the Board, in its discretion, determines 
                that publication would be contrary to the public 
                interests;
                    ``(B) any final order issued with respect to any 
                administrative enforcement proceeding initiated by the 
                Board under this section or any other provision of law; 
                and
                    ``(C) any modification to or termination of any 
                final order or agreement made public pursuant to this 
                paragraph.
            ``(2) Hearings.--All hearings on the record with respect to 
        any notice of charges issued by the Board shall be open to the 
        public, unless the Board, in its discretion, determines that 
        holding an open hearing would be contrary to the public 
        interest.
            ``(3) Reports to congress.--A written report shall be made 
        part of a determination not to hold a public hearing pursuant 
        to paragraph (2) or not to publish a document pursuant to 
        paragraph (1)(A). All reports prepared under this paragraph, 
        shall be available to Congress on request.
            ``(4) Transcripts of hearings.--A transcript of public 
        hearings shall be made available to the public pursuant to 
        section 552 of title 5, United States Code.
            ``(5) Delay of publication under exceptional 
        circumstances.--If the Board makes a determination in writing 
        that the publication of any final order pursuant to paragraph 
        (1)(B) would seriously threaten the safety or soundness of the 
        Federal Home Loan Bank, the Board may delay the publication of 
        such order for a reasonable time.
            ``(6) Documents filed under seal in public enforcement 
        hearings.--The Board may file any document or part thereof 
        under seal in any administrative enforcement hearing commenced 
        by the Board if disclosure thereof would be contrary to the 
        public interest. A written report shall be made part of any 
        determination to withhold any part of a document from the 
        transcript of the hearing required by paragraph (2).
            ``(7) Retention of documents.--The Board shall keep and 
        maintain a record, for a period of at least 6 years, of all 
        documents described in paragraph (1) and all informal 
        enforcement agreements and other supervisory actions and 
        supporting documents issued with respect to or in connection 
        with any administrative enforcement proceedings initiated by 
        the Board under this section or any other laws.
            ``(8) Disclosures to congress.--No provision of this 
        subsection shall be construed to authorize the withholding, or 
        to prohibit the disclosure, of any information to the Congress 
        or any committee or subcommittee thereof.''.

                     TITLE II--EMPLOYEE PROVISIONS

SEC. 201. FEDERAL HOUSING FINANCE BOARD EMPLOYEES.

    (a) Required Assessments and Determinations.--Not later than 270 
days after the date of enactment of this Act, the directors of the 
Federal Housing Finance Board shall--
            (1) assess the functions, powers and duties of the Federal 
        Housing Finance Board, as provided for in this Act;
            (2) determine the number of employees that the Federal 
        Housing Finance Board needs to carry out its functions, powers 
        and duties.
    (b) Personnel Actions by the Federal Housing Finance Board.--Not 
later than 1 year after the enactment of this Act, the directors of the 
Federal Housing Finance Board shall have completed any personnel action 
necessary to ensure that the Federal Housing Finance Board will be 
staffed appropriately in light of the functions, powers and duties of 
the Federal Housing Finance Board.

                    TITLE III--CONFORMING AMENDMENTS

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

    Section 206(g)(7) of the Federal Credit Union Act (12 U.S.C. 
1786(g)(7)) is amended--
            (a) in subparagraph (A)(vi), by striking ``any Federal home 
        loan bank'' and inserting ``any Federal Home Loan Bank''; and
            (b) in subparagraph (D)(iv), by striking ``any Federal home 
        loan bank'' and inserting ``any Federal Home Loan Bank''.

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

    (a) Amendment to Section 7.--Section 7(a)(2)(A) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(a)(2)(A)) is amended by striking 
``any Federal home loan bank'' and inserting ``any Federal Home Loan 
Bank''.
    (b) Amendments to Section 8.--Section 8(e)(7) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(e)(7)) is amended--
            (1) in subparagraph (A)(vi), by striking ``any Federal home 
        loan bank'' and inserting ``any Federal Home Loan Bank''; and
            (2) in subparagraph (D)(iv), by striking ``any Federal home 
        loan bank'' and inserting ``any Federal Home Loan Bank''.

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

    (a) Amendment to Section 5.--Section 5(f) of the Home Owners' Loan 
Act (12 U.S.C. 1464(f)) is hereby repealed.
    (b) Amendment to Section 10.--Section 10(m)(3)(B) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(m)(3)(B)) is amended--
            (1) in clause (i), by striking subclause (III) and 
        redesignating subclause (IV) as subclause (III); and
            (2) by amending clause (ii) to read as follows:
                            ``(ii) Additional restriction effective 
                        after three years.--Beginning 3 years after the 
                        date on which the savings association should 
                        have become or ceases to be a qualified thrift 
                        lender, the saving association shall not retain 
                        any investment (including an investment in any 
                        subsidiary) or engage, directly or indirectly, 
                        in any activity unless that investment or 
                        activity would be permissible for the savings 
                        association if it were a national bank, and is 
                        also permissible for the savings association as 
                        a savings association.''.

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

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

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

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

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

    Section 341 of the Thrift Institution Restructuring Act (12 U.S.C. 
1701J-3) is amended--
            ``(1) in subsection (e)(1), by striking ``Federal Home Loan 
        Bank Board'' and inserting ``Federal Housing Finance Board''; 
        and
            ``(2) in subsection (g), by striking ``Federal Home Loan 
        Bank Board'' and inserting ``Federal Housing Finance Board''.

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

    (a) Amendment to Section 657.--Section 657 of title 18, United 
States Code (18 U.S.C. 657) is amended by striking ``Federal home loan 
bank'' and inserting ``Federal Home Loan Bank''.
    (b) Amendment to Section 1006.--Section 1006 of title 18, United 
States Code (18 U.S.C. 1006) is amended by striking ``Federal home loan 
bank'' and inserting ``Federal Home Loan Bank''.
    (c) Amendment to Section 1014.--Section 1014 of title 18, United 
States Code (18 U.S.C. 1014) is amended by striking ``Federal home loan 
bank'' and inserting ``Federal Home Loan Bank''.
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