[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1986 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1986

  To restructure the regulation of the Federal Home Loan Bank System.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 24, 1998

Mr. D'Amato (for himself and Mr. Shelby) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To restructure the regulation of 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.

    This Act may be cited as the ``Federal Home Loan Bank System 
Regulatory Restructuring Act of 1998''.

SEC. 2. RESTRUCTURING OF FEDERAL HOME LOAN BANK REGULATOR.

    (a) In General.--The Federal Home Loan Bank Act (12 U.S.C. 1421 et 
seq.) is amended by striking sections 2A and 2B and inserting the 
following:

``SEC. 2A. DUTIES AND POWERS OF THE DIRECTOR.

    ``(a) Duties.--The Director shall--
            ``(1) as a primary duty, ensure that the Federal Home Loan 
        Banks operate in a financially safe and sound manner; and
            ``(2) to the extent consistent with paragraph (1), 
        supervise the Federal Home Loan Banks and ensure that the 
        Federal Home Loan Banks remain adequately capitalized and able 
        to--
                    ``(A) raise funds in the capital markets;
                    ``(B) satisfy their obligations to support 
                affordable housing as required by section 10(j);
                    ``(C) make payments to the Resolution Funding 
                Corporation as required by section 21B(f)(2)(C); and
                    ``(D) pay dividends on bank stock sufficient for 
                such stock to remain a competitive investment for the 
                holders of the stock.
    ``(b) General Powers.--The Director may--
            ``(1) supervise the Federal Home Loan Banks and promulgate 
        and enforce such regulations and orders as are necessary to 
        carry out this Act;
            ``(2) suspend or remove for cause a director, officer, 
        employee, or agent of any Federal Home Loan Bank or joint 
        office, except that--
                    ``(A) the cause of such suspension or removal shall 
                be communicated in writing to such director, officer, 
                employee, or agent and to such Bank or joint office; 
                and
                    ``(B) notwithstanding any other provision of this 
                Act, no officer, employee, or agent of a Bank or joint 
                office shall be a Federal officer or employee under any 
                definition of either term in title 5, United States 
                Code;
            ``(3) determine necessary expenditures of the Director 
        under this Act and the manner in which such expenditures shall 
        be incurred, allowed, and paid;
            ``(4) use the United States mails in the same manner and 
        under the same conditions as a department or agency of the 
        United States;
            ``(5) issue such notice and orders, and, subject to the 
        same terms and conditions, exercise the same powers, rights, 
        and duties to enforce this Act with respect to the Federal Home 
        Loan Banks and their officers and directors, as may be issued 
        or exercised by the OFHEO with respect to Federal housing 
        enterprises under--
                    ``(A) subtitle C of title XIII of the Federal 
                Housing Enterprises Financial Safety and Soundness Act 
                of 1992;
                    ``(B) the Federal National Mortgage Association 
                Charter Act; or
                    ``(C) the Federal Home Loan Mortgage Corporation 
                Act.
    ``(c) Staff.--
            ``(1) In general.--Subject to title IV of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989, the 
        OFHEO may employ, direct, and fix the compensation and number 
        of employees, attorneys, and agents of the OFHEO necessary to 
        carry out its duties under this Act, except that in no event 
        shall the Director delegate any function to any employee or 
        administrative unit of any bank, or joint office of the Federal 
        Home Loan Bank System.
            ``(2) Compensation.--In directing and fixing such 
        compensation, the Director shall consult with and maintain 
        comparability with the compensation at the Federal bank 
        regulatory agencies. Such compensation shall be paid without 
        regard to the provision of other laws applicable to officers or 
        employees of the United States, except that the Director shall 
        receive no additional compensation above that specified by 
        section 5313 of title 5, United States Code.''.
    ``(d) Receipts of the Board.--
            ``(1) Receipts.--Receipts of the Board derived from 
        assessments levied upon the Federal Home Loan Banks and from 
        other sources (other than receipts from the sale of 
        consolidated Federal Home Loan Bank bonds and debentures issued 
        under section 11 of this Act) shall be deposited in the 
        Treasury of the United States.
            ``(2) Salaries.--Salaries of the directors and other 
        employees of the OFHEO, and all other expenses necessary for 
        the Director to carry out the duties of the Director under this 
        Act--
                    ``(A) may be paid from assessments described in 
                paragraph (1), or from other sources; and
                    ``(B) shall not be construed to be Government Funds 
                or appropriated monies, or subject to apportionment for 
                the purposes of chapter 15 of title 31, United States 
                Code, or any other authority.
    ``(e) Annual Report.--The Director shall submit to Congress an 
annual report.''.
    (b) Assessments.--Section 18(b) of the Federal Home Loan Bank Act 
(12 U.S.C. 1438(b)) is amended by striking paragraph (1) and inserting 
the following:
            ``(1) In general.--To the extent provided in advance in 
        appropriations Acts, the Director may impose a semiannual 
        assessment on the Federal Home Loan Banks, the aggregate amount 
        of which shall be sufficient to provide for the payment of the 
        expenses of the Director estimated to be incurred under this 
        Act for the period for which the assessment is made.''.
    (c) Technical and Conforming Amendments.--
            (1) Definitions.--Section 2 of the Federal Home Loan Bank 
        Act (12 U.S.C. 1422) is amended--
                    (A) by striking paragraph (1) and inserting the 
                following: 
            ``(1) OFHEO.--The term `OFHEO' means the Office of Federal 
        Housing Enterprise Oversight, established under section 1311 of 
        the Federal Housing Enterprises Financial Safety and Soundness 
        Act of 1992.'';
                    (B) in paragraph (2)(B), by striking ``Board'' and 
                inserting ``OFHEO'';
                    (C) in paragraph (6), by striking ``Board'', and 
                inserting ``Secretary''; and
                    (D) by striking paragraph (10) and inserting the 
                following:
            ``(10) Director.--The term `Director' means the Director of 
        the OFHEO, appointed under section 1312 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992.''.
            (2) Eligibility.--Section 4(a) of the Federal Home Loan 
        Bank Act (12 U.S.C. 1424(a)) is amended in the last sentence, 
        by striking ``Board'' and inserting ``Secretary''.
            (3) Management of banks.--Section 7 of the Federal Home 
        Loan Bank Act (12 U.S.C. 1427) is amended by striking ``Board'' 
        each place it appears and inserting ``Secretary''.
            (4) Advances to members.--Section 10 of the Federal Home 
        Loan Bank Act (12 U.S.C. 1430) is amended--
                    (A) in each of subsections (a) through (d), by 
                striking ``Board'' each place it appears, and inserting 
                ``Director''; and
                    (B) in each of subsections (e), (g), and (j), by 
                striking ``Board'' each place it appears, and inserting 
                ``Secretary''.
            (5) General powers and duties of banks.--Section 11(i) of 
        the Federal Home Loan Bank Act (12 U.S.C. 1431(i)) is amended 
        by striking ``Chairperson of the Board'' and inserting 
        ``Director''.
            (6) Financing corporation.--Section 21 of the Federal Home 
        Loan Bank Act (12 U.S.C. 1441) is amended--
                    (A) in each of subsections (b)(5) and (e)(9), by 
                striking ``Chairperson of the Federal Housing Finance 
                Board'' and inserting ``Director''; and
                    (B) by striking ``Federal Housing Finance Board'' 
                each place it appears and inserting ``Director''.
            (7) Resolution trust corporation.--Section 21B of the 
        Federal Home Loan Bank Act (12 U.S.C. 1442) is amended by 
        striking ``Federal Housing Finance Board'' each place it 
        appears and inserting ``Director''.
            (8) Member financial information.--Section 22 of the 
        Federal Home Loan Bank Act (12 U.S.C. 1442) is amended--
                    (A) in subsection (a), in the last sentence, by 
                striking ``Board or'' each place it appears and 
                inserting ``Director or''; and 
                    (B) in subsection (b), by striking ``Board'' each 
                place that term appears and inserting ``Director''.
            (9) Forms of bank stock and obligations.--Section 23 of the 
        Federal Home Loan Bank Act (12 U.S.C. 1443) is amended by 
        striking ``Board of Directors of the Federal Housing Finance 
        Board'' and inserting ``Director''.
            (10) Housing opportunity hotline program.--Section 27(a) of 
        the Federal Home Loan Bank Act (12 U.S.C. 1447) is amended--
                    (A) by striking ``Federal Housing Finance Board'' 
                and inserting ``Secretary''; and
                    (B) by striking ``Board'' and inserting 
                ``Secretary''.
            (11) Federal housing enterprise financial safety and 
        soundness act of 1992.--Section 1313 of the Federal Housing 
        Enterprise Financial Safety and Soundness Act of 1992 (12 
        U.S.C. 4513) is amended--
                    (A) in subsection (a), by inserting before the 
                period at the end the following: ``, and that the 
                Federal Home Loan Banks are adequately capitalized and 
                operating safely in accordance with the Federal Home 
                Loan Bank Act (12 U.S.C. 1421 et seq.)''; and
                    (B) in subsection (b)--
                            (i) in paragraph (10), by striking ``and'' 
                        at the end;
                            (ii) in paragraph (11), by striking the 
                        period and inserting ``; and''; and
                            (iii) by adding at the end the following:
            ``(12) the performance of any function or the exercise of 
        any authority assigned to the Director pursuant to the Federal 
        Home Loan Bank Act.''.
            (12) Other references.--Except as otherwise provided in the 
        amendments made by this subsection, any reference in the 
        Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), or any 
        other provision of Federal law, to the Federal Housing Finance 
        Board, shall be construed to refer to the Director of the 
        Office of Federal Housing Enterprise Oversight.
    (d) Effective Date.--The amendments made by this section shall take 
effect 60 days after the date of enactment of this Act.

SEC. 3. TRANSITION PROVISIONS.

    (a) Definitions.--In this section:
            (1) Appropriate agency.--The term ``appropriate agency'' 
        means--
                    (A) with respect to the functions transferred under 
                subsection (b)(1), the Department of Housing and Urban 
                Development; and
                    (B) with respect to the functions transferred under 
                subsection (b)(2), the Office.
            (2) Board.--The term ``Board'' means the Federal Housing 
        Finance Board established under section 22A of the Federal Home 
        Loan Bank Act (as in effect on the day before the effective 
        date of the amendments made by section 2 of this Act).
            (3) Director.--The term ``Director'' means the Director of 
        the Office.
            (4) Function.--The term ``function'' means any duty, 
        obligation, power, authority, responsibility, right, privilege, 
        activity, or program.
            (5) Head of the appropriate agency.--The term ``head of the 
        appropriate agency'' means--
                    (A) with respect to the functions transferred under 
                subsection (b)(1), the Secretary; and
                    (B) with respect to the functions transferred under 
                subsection (b)(2), the Director.
            (6) Office.--The term ``Office'' means the Federal Housing 
        Enterprise Oversight established under section 1311 of the 
        Federal Housing Enterprises Financial Safety and Soundness Act 
        of 1992.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
    (b) Transfer of Functions.--
            (1) Transfer to department of housing and urban 
        development.--Effective 60 days after the date of enactment of 
        this Act there are transferred to the Department of Housing and 
        Urban Development all functions that the Board exercised before 
        the date of enactment of this Act (including all related 
        functions of any officer or employee of the Board) relating to 
        the functions of the Board under the following provisions of 
        the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) (as in 
        effect on the day before the effective date of the amendments 
        made by section 2 of this Act):
                    (A) The last sentence of section 4(a).
                    (B) Section 7.
                    (C) Subsections (e), (g), and (j) of section 10.
                    (D) Section 27(a).
            (2) Transfer to office.--Effective 60 days after the date 
        of enactment of this Act there are transferred to the Office 
        all functions, other than the functions transferred under 
        paragraph (1), that the Board exercised before the date of 
        enactment of this Act (including all related functions of any 
        officer or employee of the Board) under the Federal Home Loan 
        Bank Act (12 U.S.C. 1421 et seq.).
    (b) Disposition of Affairs.--During the 60-day period beginning on 
the date of enactment of this Act, the Chairperson of the Board--
            (1) shall, solely for the purpose of facilitating the 
        orderly implementation of this section--
                    (A) manage the employees of the Board and provide 
                for the payment of the compensation and benefits of any 
                such employee that accrue before the effective date of 
                the transfer of such employee pursuant to subsection 
                (g); and
                    (B) manage any property of the Board and arrange 
                for the transfer thereof to the Office as promptly as 
                practicable; and
            (2) may take any other action necessary for the purpose of 
        facilitating the orderly implementation of this section.
    (c) Treatment of References in Adjustable Rate Mortgage 
Instruments.--
            (1) In general.--For purposes of adjustable rate mortgage 
        instruments that are in effect on the day before the effective 
        date of the amendments made by section 2, any reference in the 
        instrument to the Board shall be construed to be a reference to 
        the Secretary, unless the context of the reference requires 
        otherwise.
            (2) Substitution for indexes.--If any index used to 
        calculate the applicable interest rate on any adjustable rate 
        mortgage instrument is no longer calculated and made available 
        as a direct or indirect result of the enactment of this Act, 
        any index--
                    (A) made available by the Secretary, pursuant to 
                paragraph (3); or
                    (B) determined by the Secretary, pursuant to 
                paragraph (4), to be substantially similar to the index 
                that is no longer calculated or made available, may be 
                substituted by the holder of any such adjustable rate 
                mortgage instrument upon notice to the borrower.
            (3) Agency action required to provide continued 
        availability of indexes.--As soon as practicable after the 
        effective date of the amendments made by section 2, the 
        Secretary shall take such actions as may be necessary to assure 
        that the indexes prepared by the Board and the Federal Home 
        Loan Banks immediately before the effective date of the 
        amendments made by section 2 and used to calculate the interest 
        rate on adjustable rate mortgage instruments continue to be 
        available.
            (4) Requirements relating to substitute indexes.--If any 
        index can no longer be made available pursuant to paragraph 
        (3), an index that is substantially similar to such index may 
        be substituted for such index for purposes of paragraph (2) if 
        the Secretary determines, after notice and opportunity for 
        comment, that--
                    (A) the new index is based upon data substantially 
                similar to that of the original index; and
                    (B) the substitution of the new index will result 
                in an interest rate substantially similar to the rate 
                in effect at the time the original index became 
                unavailable.
    (d) Continuation of Services.--
            (1) In general.--The head of the appropriate agency may use 
        the services of employees and other personnel and the property 
        of the Board, on a reimbursable basis, to perform functions 
        transferred by this section to the appropriate agency, for such 
        time as is reasonable to facilitate the orderly transfer of 
        functions so transferred.
            (2) Agency services.--Any agency, department, or other 
        instrumentality of the United States, and any successor to any 
        such agency, department, or instrumentality, that is providing 
        supporting services to the Board before the effective date of 
        the amendments made by section 2 in connection with functions 
        that are transferred to the head of the appropriate agency 
        under this section, shall--
                    (A) continue to provide such services, on a 
                reimbursable basis, until the transfer of such 
                functions is complete; and
                    (B) consult with the Director to coordinate and 
                facilitate a prompt and reasonable transition.
    (e) Savings Provisions.--
            (1) Existing rights, duties, and obligations not 
        affected.--This section shall not affect the validity of any 
        right, duty, or obligation of the United States, the Board, or 
        any other person, that--
                    (A) arises under or pursuant to the Federal Home 
                Loan Bank Act (12 U.S.C. 1421 et seq.) or any other 
                provision of law applicable with respect to such Board; 
                and
                    (B) exists on the day before the effective date of 
                the amendments made by section 2.
            (2) Continuation of suits.--No action or other proceeding 
        commenced by or against the Board, or any person or entity with 
        respect to any function of the Board that was delegated to such 
        person or entity, shall abate by reason of the enactment of 
        this Act, except that the head of the appropriate agency shall 
        be substituted for the Board or a party to any such action or 
        proceeding.
    (f) Continuation of Orders, Resolutions, Determinations, and 
Regulations.--
            (1) In general.--Except as provided in paragraph (2), all 
        orders, resolutions, determinations, and regulations, shall 
        continue in effect according to the terms of such orders, 
        resolutions, determinations, and regulations and shall be 
        enforceable by or against the head of the appropriate agency 
        until modified, terminated, set aside, or superseded in 
        accordance with applicable law by the head of the appropriate 
        agency by any court of competent jurisdiction, or by operation 
        of law, if such orders, resolutions, determination, and 
        regulations--
                    (A) have been issued, made, prescribed, or allowed 
                to become effective by the Board in the performance of 
                functions that are transferred by this section; and
                    (B) are in effect on the effective date of the 
                amendments made by section 2.
            (2) Exception.--Paragraph (1) does not apply to any order, 
        resolution, determination, or regulation of the Board the 
        authority of which is terminated under this Act or the 
        amendments made by this Act.
    (g) Transfer of Employees.--
            (1) In general.--Not later than 60 days after the date of 
        enactment of this Act, each employee of the Board shall be 
        transferred to the appropriate agency and each such transfer 
        shall be construed to be a transfer of function for the purpose 
        of section 3503 of title 5, United States Code.
            (2) Retention of status, tenure, pay.--Each employee 
        transferred under this subsection shall be guaranteed a 
        position with the same status, tenure, and pay as that held on 
        the day immediately preceding the transfer. Each such employee 
        holding a permanent position shall not be involuntarily 
        separated or reduced in grade or compensation during the 6-
        month period beginning on the date of the transfer, except for 
        cause.
            (3) Appointment authority.--
                    (A) In general.--Subject to subparagraph (B), in 
                the case of any employee transferred under this 
                subsection who occupies a position in the excepted 
                service or the Senior Executive Service, any 
                appointment authority established pursuant to law or 
                regulations of the Office of Personnel Management for 
                filling such a position shall be transferred.
                    (B) Decline.--The head of the appropriate agency 
                may decline a transfer of an employee described in 
                subparagraph (A) to the extent that the authority 
                transferred to the appropriate agency relates to 
                positions excepted from the competitive service because 
                of their confidential, policy-making, policy-
                determining, or policy-advocating character, and 
                noncareer positions in the Senior Executive Service 
                (within the meaning of section 3132(a)(7) of title 5, 
                United States Code).
            (4) Reorganization.--If the head of the appropriate agency 
        determines, after the end of the 1-year period beginning on the 
        date on which the transfer of functions to the appropriate 
        agency under this section is completed, that a reorganization 
        of the combined work-force is required, that reorganization 
        shall be deemed a ``major reorganization'' for purposes of 
        affording affected employees retirement under section 
        8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.
            (5) Employee benefit programs.--
                    (A) In general.--Any employee accepting employment 
                as a result of a transfer under this subsection may 
                retain, during the 1-year period beginning on the date 
                on which that transfer occurs, membership in any 
                employee benefit program of the Board, including 
                insurance, to which such employee belongs on the 
                effective date of the amendments made by section 2 if--
                            (i) the employee does not elect to give up 
                        the benefit or membership in the program; and
                            (ii) the benefit or program is continued by 
                        the head of the appropriate agency, as 
                        applicable.
                    (B) Costs.--The difference in the costs between the 
                benefits that would have been provided by such agency 
                or entity and those provided by this section shall be 
                paid by the head of the appropriate agency, as 
                applicable. If any employee elects to give up 
                membership in a health insurance program or the health 
                insurance program is not continued by the head of the 
                appropriate agency the employee shall be permitted to 
                select an alternate Federal health insurance program 
                within 30 days of such election or notice, without 
                regard to any other regularly scheduled open season.
            (6) Insurance.--Any employee employed by the head of the 
        appropriate agency as a result of a transfer under this 
        subsection may retain membership in any employee benefit 
        program of the Board, including insurance, that such employee 
        has on the day before the effective date of the amendments made 
        by section 2, if the employee does not elect to give up such 
        membership and the benefit or program is continued by the head 
        of the appropriate agency, as applicable.
            (7) Notice.--Each employee transferred under this 
        subsection shall receive notice of the position assignment of 
        that employee not later than 60 days after the effective date 
        of that transfer.
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