[Congressional Record Volume 144, Number 47 (Friday, April 24, 1998)]
[Senate]
[Pages S3589-S3591]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. D'AMATO (for himself and Mr. Shelby):
  S. 1986. A bill to restructure the regulation of the Federal Home 
Loan Bank System; to the Committee on Banking, Housing, and Urban 
Affairs.


      the federal home loan bank system restructuring act of 1998

  Mr. D'AMATO. Mr. President, I rise today to introduce the ``Federal 
Home Loan Bank System Restructuring Act of 1998'' to eliminate the last 
vestiges of a bureaucratic structure which contributed to the downfall 
of the savings and loan industry in the 1980's, and cost American 
taxpayers $125 billion. I am referring to the structural weakness 
inherent in a regulatory system which allows the combination of basic 
safety and soundness oversight with management and governance 
functions. This structural weakness exists today in the Federal Housing 
Finance Board (FHFB) which oversees the Federal Home Loan Bank System. 
Moreover, the FHFB appears to be the only regulatory agency where the 
responsibility for safety and soundness regulation has not been 
separated from management and governance functions.
  I am very pleased that Senator Richard Shelby has joined as a co-
sponsor because he is the Senate's leading proponent of regulatory 
reform and eliminating outdated and unnecessary regulation.
  Mr. President, throughout most of its history, the Federal Home Loan 
Bank System was regulated by the Federal Home Loan Bank Board, the same 
agency responsible for regulating the thrift industry. In 1989, 
Congress passed the Financial Institutions Reform, Recovery and 
Enforcement Act (FIRREA) to abolish the Bank Board and create the 
Federal Housing Finance Board (``FHFB'') to assume responsibility for 
the regulation and supervision of the Federal Home Loan Bank System 
(FHLB System). FIRREA provided the FHFB with the authority to supervise 
the Federal Home Loan Banks (FHLBanks), ensure that the FHLBanks carry 
out their mission of housing finance, ensure the FHLBanks remain 
adequately capitalized and able to raise funds in the capital markets, 
and ensure the FHLBanks operate in a safe and sound manner.
  Safety and soundness regulation became the primary duty of the FHFB 
as a result of the Housing and Community Development Act of 1992. In 
that Act, Congress also recognized problems at the Federal Housing 
Finance Board and specifically identified this structural flaw as a 
serious problem. In search of a solution to this problem and 
information concerning the future of the Federal Home Loan Banks in the 
context of changing markets for housing finance, Congress mandated 
several studies. In the study conducted by the FHFB, the agency itself 
expressed concern about its dual role: ``The roles of regulation and 
governance residing in one entity are not compatible and, indeed, 
represent a long standing, well-understood inherent conflict when 
joined''. [The Report on the Structure and Role of the Federal Home 
Loan Bank System, The Federal Housing Finance Board, submitted to 
Congress on April 28, 1993, page 153.] The FHFB recognized that 
concerns about shareholder dividends and profitability should not be in 
competition with concerns over safety and soundness and the 
availability of housing finance for American taxpayers.
  Mr. President, this bill would eliminate this serious and dangerous 
conflict by transferring functions from the FHFB to the Office of 
Federal Housing Enterprise Oversight (OFHEO) and the Department of 
Housing and Urban Development (HUD). This is the current system of 
regulation designed by Congress for the other two housing-related 
government sponsored enterprises (GSEs)--Fannie Mae and Freddie Mac.
  In addition, consolidating safety and soundness regulation in one 
regulatory is consistent with the core recommendations of GAO and HUD--
that the conflict with the FHFB be resolved through the creation of a 
single housing-related GSE. Even the Chairman of the FHFB, in testimony 
before a House Banking Subcommittee last July, endorsed the GAO's 
recommendation for a single independent safety and soundness regulator 
for the Federal Home Loan Banks, Fannie Mae and Freddie Mac. He 
acknowledged that consolidation will yield more effective regulation.
  Mr. President, consolidating regulation of the housing GSE's is also 
consistent with the Administration's objective of reducing government 
by eliminating unnecessary, duplicative or redundant regulation--an 
objective we all share. By placing FHFB's safety and soundness 
functions with OFHEO, administration costs would be cut and regulatory 
consistencies would be realized as a result of the complementary nature 
of the housing finance roles played by the Federal Home Loan Banks, 
Fannie Mae, and Freddie Mac. Another important public benefit of 
consolidating oversight of the housing missions of these agencies 
within HUD is to enable HUD to more effectively assess and respond to 
the nation's affordable housing needs.

  Mr. President, the legislation would abolish the conflicting dual 
roles of the FHFB, streamline an overburdened bureaucratic process, and 
insure that those entities with the mission of promoting housing 
finance--Fannie Mae, Freddie Mac, and Federal Home Loan Banks--are 
meeting that challenge in the most effective way possible. We owe 
nothing less to the working families most in need of our assistance 
than to insure the system is working for them.
  Mr. President, this bill would address the regulation of the Federal 
Home Loan Bank System by transferring its safety and soundness 
functions to OFHEO and mission oversight to HUD. It does not--and is 
not intended to--address other policy issues pertaining to the future 
role of the Federal Home Loan Banks which remain under consideration by 
the Banking Committee, Improving the level of affordable housing, 
ensuring effective, efficient and objective regulation, cutting the fat 
out of the government, and managing the taxpayers' dollars wisely--that 
is what this bill is all about.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1986

       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

[[Page S3590]]

     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

[[Page S3591]]

     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.
                                 ______