[Congressional Record Volume 153, Number 82 (Thursday, May 17, 2007)]
[House]
[Pages H5374-H5418]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               FEDERAL HOUSING FINANCE REFORM ACT OF 2007

  The SPEAKER pro tempore. Pursuant to House Resolution 404 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 1427.

                              {time}  1608


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 1427) to reform the regulation of certain housing-related 
Government-sponsored enterprises, and for other purposes, with Mr. Ross 
in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Massachusetts (Mr. Frank) and the gentleman from 
Alabama (Mr. Bachus) each will control 30 minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as 
I may consume.
  Mr. Chairman, I want to begin by again asking the indulgence of the 
House for my less than usual sartorial splendor, but the cast on my 
left arm would misalign my jacket, and I wouldn't want to wear a suit 
unless I could do it full justice. So I am wearing a sweater that Mr. 
Rogers no longer needs.
  The bill before us today is a version of a bill that came before this 
House in October of 2005 after a lot of work by the former chairman, 
the gentleman from Ohio (Mr. Oxley), and many of us now on the 
committee. That bill passed the House by a vote of 331-90. Many of 
those who voted in opposition, myself included, were motivated to it by 
a specific provision regarding the affordable housing fund that is no 
longer in the bill.
  Mr. Chairman, the bill has two major components. First, it 
significantly increases the strength of the regulator of the two major 
Federal housing government-sponsored enterprises, Fannie Mae and 
Freddie Mac. It also deals with the Federal Home Loan System. That was 
seen as less in need of drastic change. There is, in fact, less change 
there. There will be an amendment regarding that offered by the 
gentleman from Pennsylvania (Mr. Kanjorski), which I strongly support, 
to increase public participation in that system. But this is a bill 
fundamentally about Fannie Mae and Freddie Mac.
  There is general agreement among a wide range of parties that this 
bill, building on the bill that Mr. Oxley brought to the floor, does do 
what needs to be done in creating a strong regulator. There are some 
controversial elements here, but very few deal with the powers of the 
regulator that we have set up. And I am pleased that the Treasury 
Department, Under Secretary Paulson and Under Secretary Steel, has 
agreed. In fact, this is a bill which, with regard to regulation and 
the regulator, is a little bit stronger than the one we passed a few 
years ago. We had some negotiations. They were useful, and we have a 
fully empowered regulator here, independently funded and empowered to 
do whatever needs to be done to deal with any safety and soundness 
issues that arise from Fannie Mae and Freddie Mac.
  The most controversial areas of the bill involve a provision that was 
also in the bill when it last passed, and that is an affordable housing 
fund. A number of people have argued over the years that Fannie Mae and 
Freddie Mac receive from the Federal Government advantages which help 
them borrow money cheaply in the market, and that is true. There is a 
connection between Fannie Mae and Freddie Mac and the Federal 
Government. Those who borrow that money thinking that the Federal 
Government guarantees it are wrong. There is no Federal guarantee 
implicit, explicit, or any other way. But it is the case that the 
market does see these entities in a very favorable light and lends them 
money at a somewhat lower rate than other entities can borrow. The 
reason for its having been set up that way was to try to help housing, 
especially home ownership because these entities buy the mortgages and 
help bring down the cost of mortgages, but they have also been given 
for years goals by the law where they are particularly to help lower 
income housing.
  Now, a number of people have argued over the years that Fannie Mae 
and Freddie Mac's shareholders, and in the past some of their 
executives, received too large a share of those benefits. The argument 
was, with some accuracy, that Fannie Mae and Freddie Mac benefited very 
much and not enough of that reached the public.
  There are two ways you could deal with that. You could reduce the 
benefits that Fannie Mae and Freddie Mac get. Some people have 
advocated that. Alternatively, you could do what this bill does: leave 
the existing situation which provides some benefits to them but 
increase the share of those benefits that go for public purposes. We do 
that in two ways in this bill: First of all, and this does not appear 
to be terribly controversial, Fannie Mae and Freddie Mac have 
statutorily imposed goals. Some people have said these are private 
corporations and you shouldn't tell them what to do. Well, we have been 
doing that for a very long time. They are told that they must, in 
purchasing mortgages in the secondary market, make certain purchases 
that

[[Page H5375]]

help certain goals, low income housing, et cetera. We increase those 
goals. Secretary Jackson at HUD had been critical of them for not doing 
enough. We increase both the mechanism by which they held to those 
goals and the goals themselves.

                              {time}  1615

  But the newly controversial element to this is the Affordable Housing 
Fund. I say newly controversial because an affordable housing fund 
virtually identical to this one, financed through a different formula, 
but essentially the same in the amount of money and in the function, 
was in the bill that passed the House in October of 2005. At that time, 
the Republicans in the House voted for it 209-15. Now Members having 
once had an opinion are not required to hold it forever. But I do note 
that in October of 2005, 209 Republicans voted for the bill that had an 
affordable housing fund. Now that the fund has been, in the minds of 
some, transmogrified into all kinds of things which it is not. In 
economic terms, it very likely reduces the return, not by a huge 
amount, to Fannie and Freddie shareholders. Some have argued that it is 
going to raise the cost of mortgages. But ironically, many of those who 
argued that this will raise the cost of mortgages have supported even 
greater restrictions on Fannie Mae and Freddie Mac, particularly by 
limiting their portfolios, which would have many, many times greater 
impact on Fannie Mae and Freddie Mac's profitability, and therefore, 
their ability to help mortgages, than the Affordable Housing Fund.
  The affordable housing fund takes some of the profit that Fannie and 
Freddie make, arguably a part of what they get from their Federal 
benefits, and said that it will be used for the construction of 
affordable housing. We have a serious crisis in America and a lack of 
affordable housing. We have been dealing with this for years by 
vouchers. Vouchers add to the demand for housing, but an annual voucher 
cannot create new housing, it does not add to the supply. We have a 
mechanism here where, without impinging on the Federal budget, without 
adding a penny to the deficit, in an entirely self-paid way, we take 
some money from Fannie and Freddie which reflects some of the benefit 
they get from their Federal arrangements and we recycle it into 
affordable housing. In the first year, all of that money, maybe $500 
million, will go to Louisiana and Mississippi under this bill to 
replace the severe destruction of housing that has not yet been 
replaced a year and a half after the terrible hurricanes there.
  For the future, the bill says it should be used for affordable 
housing annually, but leads to a later decision by this House and the 
Senate, I say optimistically, hoping we can get a decision from the 
Senate, and then to be signed by the President as to how to further 
distribute it. It creates the concept of an affordable housing fund. 
But we had in our committee various arguments. Some people wanted it to 
go through HUD, some through the State housing agencies. I believe that 
is a decision that we should make collectively, first in our committee, 
and then on the floor.
  But we are not here doing anything other than saying the money will 
be available for a subsequent decision by the House that it will be 
spent. We do say that it has to be spent for housing, for bricks and 
mortar.
  And there are going to be amendments that are going to be offered, 
let me say we tried to put safeguards in here against abuse. There are 
several amendments being offered, the minority whip has one, the 
gentleman from Texas, Mr. McCaul, has one, and some others have 
amendments, that will further tighten the constraints on this fund. I 
intend to argue for the acceptance of several of those amendments, at 
least three, that further tighten up the use of the fund. And I believe 
we will have accomplished that.
  The question then will be, given that Fannie and Freddie get great 
benefits from the Federal Government, given that we have a housing 
shortage and a budget crunch in this country, does it make sense to 
take several hundred million dollars of the profits of Fannie and 
Freddie, which are enhanced by their Federal regulations and rules, and 
make them available for affordable housing? I believe the answer should 
be yes.
  Virtually every entity involved with housing in America, from low-
income housing advocates to the nonprofit and religious groups that 
help build housing, to the home builders and the realtors and the 
mortgage bankers, all support the notion of beginning to get the 
Federal Government back in the business of trying to do some affordable 
housing.
  I hope that we can go forward with the bill. I do note we had 36 
amendments; a couple I believe will be ruled nongermane. Nine or 10 I 
hope will be accepted without any controversy, including about five 
from each party. I did note that many of the others, about 18 of the 
others, are various ways of accomplishing three essential goals, making 
sure that illegal immigrants don't get the housing, either abolishing 
the fund altogether or restricting it.
  I would hope that we could work out among ourselves some kind of 
representational thing so that we don't have to vote on all 18 
amendments, many of which are duplicative of the others. And if we are 
able to work that out, I believe we will be able to get the bill 
through.
  There is an important decision to be made about affordable housing. I 
believe many of the other issues the House previously voted on, I don't 
think there's a lot of controversy. We do have an important, 
legitimate, philosophic discussion about affordable housing. I am 
hoping that between us, we can structure things so we will have a 
couple of strong votes on that and we can send the bill forward.
  Mr. Chairman, I submit the following correspondence:
                                         House of Representatives,


                                  Committee on Ways and Means,

                                   Washington, DC, April 25, 2007.
     Hon. Barney Frank,
     Chairman, Financial Services Committee, Rayburn House Office 
         Building, Washington, DC.
       Dear Barney, I am writing regarding H.R. 1427, the Federal 
     Housing Reform Act of 2007, which was reported to the House 
     by the Committee on Financial Services on Wednesday, March 
     28, 2007.
       As you know, a provision within section 144 of H.R. 1427 
     would provide an exemption for a limited-life enterprise from 
     Federal taxes, an authority which falls within the 
     jurisdiction of the Committee on Ways and Means. The Ways and 
     Means Committee has jurisdiction over all matters concerning 
     taxes and the Internal Revenue Code of 1986.
       In order to expedite this legislation for floor 
     consideration, the Committee will forgo action on this bill, 
     and will not oppose the inclusion of tax provisions within 
     H.R. 1427. This is being done with the understanding that it 
     does not in any way prejudice the Committee or its 
     jurisdictional prerogatives on this or similar legislation in 
     the future.
       I would appreciate your response to this letter, confirming 
     this understanding with respect to H.R. 1427, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the Record.
           Sincerely,
                                                Charles B. Rangel,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                   Washington, DC, April 25, 2007.
     Hon. Charles B. Rangel,
     Chairman, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
       Dear Charlie: Thank you for your letter concerning H.R. 
     1427, the ``Federal Housing Finance Reform Act of 2007''. 
     This bill was ordered reported by the Committee on Financial 
     Services last month. It is my expectation that this bill will 
     be scheduled for floor consideration in the near future.
       I acknowledge your committee's interest in a provision 
     contained in section 144 of the bill which would provide an 
     exemption for a limited-life enterprise from Federal taxes. 
     Such matters concerning Federal taxation fall under the 
     jurisdiction of the Committee on Ways and Means. However, I 
     appreciate your willingness to forego action on H.R. 1427 in 
     order to allow the bill to come to the floor expeditiously. I 
     agree that your decision to forego further action on this 
     bill will not prejudice the Committee on Ways and Means with 
     respect to its jurisdictional prerogatives on this or similar 
     legislation.
       I will include this exchange of correspondence in the 
     committee report and in Congressional Record when this bill 
     is considered by the House. Thank you again for your 
     assistance.
           Sincerely,
                                                     Barney Frank,
                                                         Chairman.

[[Page H5376]]

     
                                  ____
         House of Representatives, Committee on Oversight and 
           Government Reform,
                                   Washington, DC, April 27, 2007.
     Hon. Barney Frank,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Frank: I am writing about H.R. 1427, the 
     Federal Housing Financing Reform Act of 2007, which the 
     Committee on Financial Services ordered reported to the House 
     on March 29, 2007.
       I appreciate your effort to consult with the Committee on 
     Oversight and Government Reform regarding those provisions of 
     H.R. 1427 that fall within the Oversight Committee's 
     jurisdiction. These provisions involve the federal civil 
     service and the Freedom of Information Act.
       In the interest of expediting consideration of H.R. 1427, 
     the Oversight Committee will not request a sequential 
     referral of this bill. I would, however, request your support 
     for the appointment of conferees from the Oversight Committee 
     should H.R. 1427 or a similar Senate bill be considered in 
     conference with the Senate.
       This letter should not be construed as a waiver of the 
     Oversight Committee's legislative jurisdiction over subjects 
     addressed in H.R. 1427 that fall within the jurisdiction of 
     the Oversight Committee.
       Finally, I request that you include our exchange of letters 
     on this matter in the Financial Services Committee Report on 
     H.R. 1427 and in the Congressional Record during 
     consideration of this legislation on the House floor.
       Thank you for your attention to these matters.
           Sincerely,
                                                  Henry A. Waxman,
     Chairman.
                                  ____



                              Committee on Financial Services,

                                   Washington, DC, April 27, 2007.
     Hon. Henry Waxman,
     Chairman, Committee on Oversight and Government Reform, House 
         of Representatives, Washington, DC.
       Dear Chairman Waxman: Thank you for your letter concerning 
     H.R. 1427, the ``Federal Housing Finance Reform Act of 
     2007,'' which the Committee on Financial Services has ordered 
     reported. This bill will be considered by the House shortly.
       I want to confirm our mutual understanding with respect to 
     the consideration of this bill. I acknowledge that portions 
     of the bill as reported fall within the jurisdiction of the 
     Committee on Oversight and Government Reform and I appreciate 
     your cooperation in moving the bill to the House floor 
     expeditiously. I further agree that your decision to not to 
     proceed on this bill will not prejudice the Committee on 
     Oversight and Government Reform with respect to its 
     prerogatives on this or similar legislation. I would support 
     your request for conferees on those provisions within your 
     jurisdiction in the event of a House-Senate conference.
       I will include a copy of this letter and your response in 
     the Congressional Record and in the Committee on Financial 
     Services report on the bill. Thank you again for your 
     assistance.
                                                     Barney Frank,
                                                         Chairman.
                                  ____
                                  


                                   Committee on the Judiciary,

                                     Washington, DC, May 16, 2007.
     Hon. Barney Frank,
     Chairman, Committee on Financial Services, Washington, DC.
       Dear Mr. Chairman: This is to advise you that the Committee 
     on the Judiciary has now had an opportunity to review the 
     provisions in H.R. 1427, the Federal Housing Finance Reform 
     Act of 2007, as approved by your Committee, that fall within 
     our Rule X jurisdiction. I appreciate your consulting with us 
     on those provisions. The Judiciary Committee has no objection 
     to your including them in the bill for consideration on the 
     House floor, and to expedite that consideration is willing to 
     waive sequential referral, with the understanding that we do 
     not thereby waive any future jurisdictional claim over those 
     provisions or their subject matters.
       In the event a House-Senate conference on this or similar 
     legislation is convened, the Judiciary Committee reserves the 
     right to request an appropriate number of conferees to 
     address any concerns with these or similar provisions that 
     may arise in conference.
       Please place this letter into the Congressional Record 
     during consideration of the measure on the House floor. Thank 
     you for the cooperative spirit in which you have worked 
     regarding this matter and others between our committees.
           Sincerely,
                                                John Conyers, Jr.,
                                                         Chairman.

  Mr. Chairman, I reserve the balance of my time.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, first let me thank the chairman of the Financial 
Services Committee, Mr. Frank, for his openness throughout this whole 
process. We have engaged in committee, in both hearings and in markup, 
in quite a long discussion. On most occasions, we came together; there 
was a consensus. And that's good. On other issues in this legislation 
we parted company, we had disagreements. That was the bad. There were 
one or two occasions where we had strong disagreements. Let's first 
talk about the things we agree as a body, both Republicans and 
Democrats.
  I think we all agree that the government-sponsored entities, Fannie 
Mae, Freddie Mac, Federal home loan banks, that they play an important 
role in the American economy, and more importantly and more 
specifically, in homeownership.
  Homeownership in America is at an all-time high. You go to any 
country in the world and homeownership rates come nowhere near what 
they are in America. I think it was the legislation that this Congress, 
many, many years ago, passed in setting up these GSEs that has resulted 
in more affordable housing, readily available opportunities to own a 
home and realize the American Dream.
  Now, in recent years, the growth of our government-sponsored entities 
has been astounding. In fact, let me give you three figures. And if you 
hear nothing else that I say out here today in support of establishing 
a strong independent regulator over these entities, it is this fact: 
Fannie Mae and Freddie Mac, excluding the Federal home loan banks, but 
those two entities hold $3 trillion worth of debt. When you add 
mortgage base security obligations, it is $5.2 trillion. Now, you may 
say well, what is $5.2 trillion? I can't visualize that. And I don't 
know any of us that could get our arms around that. I'm not sure any of 
us appreciate how big that is. But let me compare it to the public debt 
held by the U.S. Treasury. The entire public debt of the U.S. treasure 
is $4.9 billion. In other words, the debt of Fannie Mae and Freddie Mac 
is greater than the debt of the U.S. Treasury. That is an astounding 
number.
  We came together, both in 2005 and again this year, and we said we 
must establish a strong, independent regulator with power to make 
changes and oversight, and if necessary, forbid it to ever be the case 
that these entities became illiquid, to step in and prevent what would 
be, in either occasion, a devastating blow to the U.S. economy.
  In 2005, we brought a bill to the floor and we passed a bill 
establishing a small regulator. Now, the chairman has pointed out that 
this is almost the same bill that we had in 2005, yet many Republicans 
who are going to vote no today voted yes then. That appears to be a 
contradiction. He has pointed that out. The lady from California has 
mentioned 2 years ago I was in support of the bill that came out of 
this floor. I voted to send it to the Senate. They pointed out earlier 
today, in debate on the rule, that the gentleman from Texas (Mr. 
Sessions), he voted for the bill, now he is voting against the bill. 
There are differences.
  Now, the gentleman from Massachusetts says there are no differences. 
If you are voting against the bill today, why did you vote for it 2 
years ago? He asked that question a few minutes ago. Why did we? Why 
did we vote for it 2 years ago and vote against it today? Different 
circumstances.
  Two years ago, I will remind the chairman, the gentleman from 
Massachusetts, the gentlelady from California, the ranking member of 
the subcommittee, the gentleman sitting there from Texas, Mr. Green, 
Mrs. Maloney, who is here, the gentlelady from New York, they have all 
said why in the world are you changing your vote? Well, let me say to 
the entire body, there is a change in circumstances. And let me offer 
this as proof.
  Two years ago, this was ``the same bill.'' The chairman, the 
gentleman from Massachusetts, voted against the bill 2 years ago. The 
gentlelady from California, who says why are you changing your 
position, she voted against the bill 2 years ago. The gentleman from 
Texas voted against the bill. The gentlewoman from New York voted 
against the bill. Let me tell you what some of those circumstances are.
  Let me say this to the gentleman: This bill, in many respects, is 
better than the bill 2 years ago, and we need to pass this bill. And I 
predict, the gentleman from Massachusetts, the gentlelady, the 
subcommittee chair from California, this bill is going to go to the 
Senate. But we do have objections to this bill, and we are going to 
protest those objections by voting against the bill.

[[Page H5377]]

  Two years ago, this is exactly, when you all were in the minority, 
the reason you voted against it. You voted against it. It's not the 
same bill.
  Now, what is it that we find uncomfortable about this bill? It is not 
that we are establishing a strong regulator. It's that we are doing 
things that run contradictory, counter to what we are trying to do here 
today. And what are we trying to do? We are trying to assure the safety 
and the soundness of Fannie Mae and Freddie Mac. We are also trying to 
make them more independent and not beholding on the government. We are 
saying, quote, this implicit guarantee that the government will stand 
behind the GSEs, that we are going to establish an independent 
regulator and we are going to try to move in a direction where they are 
more independent and they function more like a private corporation, 
which was as originally conceived. But then, right in the midst of 
saying that, we established additional costs on Fannie and Freddie. And 
they are opposed to that, they are opposed to the additional costs.
  We say we are going to make them sounder, more independent, more 
stable, and then we put on them an obligation of $3 billion, a cost. We 
say that we are going to take this occasion, the reason for this bill 
is because we are going to establish a strong regulator. We are going 
to do that to make them safer. And yet at the same time you say, we're 
going to increase their costs by $3 billion over the next 5 years.

                              {time}  1630

  We are going to make them pay a part of their profits into a fund.
  Yes, let me say this: There is a problem in our country, a problem of 
the lowest income Americans, and I have said this, I have said this in 
committee, I will say it on the floor of the House; probably the group 
of Americans most in need of shelter are the lowest income Americans. 
And they, and the chairman and I are in agreement on this, are the ones 
who need affordable rental properties. We need to do something about 
that. We need to address that. We have presently 50 or 60 housing 
programs, and part of their responsibility is to address that need.
  Now, what we ought to do before we establish yet another Affordable 
Housing Fund, we ought to see why the 50 or 60 that we have that are 
spending hundreds of billions of dollars, why they are not meeting this 
need, why money is being wasted, why there is still an unacceptable 
amount of fraud. Why don't we clean up and make more effective and 
efficient those housing programs that address those needs, instead of 
turning around and creating yet another housing program?
  Not only do we address a goal that we have 50 or 60 other Federal 
programs which are supposed to address this, but how do we address it? 
First, we talk about how important the financial stability of the GSEs 
are, but yet we say that over the next 5 years we are going to make you 
pay $3 billion, $500 million a year, into yet another Federal housing 
program.
  Then we do something else, because there is a chain reaction. Where 
does this money come from? Well, it comes from middle and low income 
American homeowners that Fannie Mae and Freddie Mac are holding their 
mortgages or mortgage-backed securities. So where do Fannie and Freddie 
get that money? Because they don't print money. Well, they will have to 
get it from only one place, and that is their customers, their clients. 
That is every low and middle income American that takes out a mortgage. 
They will pay into this fund.
  Now, who won't pay into this fund? Upper class Americans, and many 
upper-middle class Americans, they won't. There will be no obligation 
on their part on this $3 billion. In fact, what is the mission of 
Fannie and Freddie? It is to promote affordable housing for low and 
middle income Americans. And yet those are the very Americans that you 
are going to make it not quite as affordable for, because you create a 
$3 billion obligation.
  Mr. Blunt, the gentleman from Missouri, calls it a tax on middle 
class Americans. Now, I would say it is not a tax on all middle class 
Americans, it is a tax on middle class American homeowners, and he has 
said that. But we probably should, in fairness, include the low income 
Americans who will pay into this fund. We probably ought to include 
them.
  Because we are establishing a $3 billion obligation, on behalf of 
American homeowners, low and middle income, we are going to offer an 
amendment to take out what is really an extraneous provision in this 
bill, and that is a bill to create yet another Federal Affordable 
Housing Fund.
  We are going to do a second thing. We are going to offer amendments 
that say if there are benefits to this Affordable Housing Fund, and if 
it does pass, it ought to inure to the benefit of American citizens, 
those who live in America and who are citizens of America. There will 
be four or five amendments to do that.
  We are going to oppose this fund. We are going to lose later tonight 
when the vote is taken. It will move over to the Senate, and, if it 
passes the Senate, there will be another $3 billion Federal housing 
program.
  We are particularly concerned about, because when the FHA bill came 
up 3 weeks after this bill came up and we created in committee a $3 
billion new Federal housing program, we raised FHA fees and we created 
another placeholder in that bill that will move out here, we created 
another Federal housing program to add to the tens of programs we have, 
or maybe it is over 100 programs. I am not sure. I have quit counting.
  But in every bill that we bring out of the Financial Services 
Committee, are we going to establish a new multi-billion dollar plan to 
help low income Americans with affordable housing? And if we do, if we 
do, are we going to raise the cost to low and middle income Americans 
to purchase a home, the cost of that mortgage? Or are we going to 
increase their FHA fees when they do use and utilize FHA, have an FHA-
backed mortgage?
  What we said in committee during this whole subprime situation, and I 
will say the chairman and I tried to address that last year, and I 
really wish we had, we both have seen this coming for a long time. He 
and I are both happy that the regulators have started moving, and we 
will just see if that is enough.
  But with all these problems in subprime lending and a reduction in 
liquidity in the mortgage market, we have said many times people are 
going to need to avail themselves of the FHA. But yet, just like we did 
in this bill, we increase the cost to those homeowners. It simply does 
not make sense.
  Now, the chairman from Massachusetts says, oh, no, we are not 
increasing the cost to those who avail themselves of an FHA mortgage. 
We are not increasing the cost for the tens of millions of Americans 
who depend on Fannie and Freddie to reduce the cost of their mortgage. 
We are not getting it from them. We are getting it from Fannie. We are 
getting it from Freddie. We are getting it from the FHA.
  Where do they get their money? They get it all from the homeowners. 
They don't get it from the Treasury. They get it from the homeowners, 
and these are the people we are going to tax when we pass this bill 
today.
  So we are opposed to this bill. We are protesting the inclusion in 
this bill of yet another Federal housing assistance program, and we are 
taxing low and middle income Americans.
  Now, in fairness to the chairman, a lot of this money will go to 
Louisiana and Mississippi over the first 2 or 3 years. In fact, because 
of that, there were Republicans, particularly 2 years ago, that rushed 
into helping on this bill because a lot of it was going to Katrina. But 
just 3 months ago we passed a massive bill in this House in Katrina 
relief. We agreed on the number it would take and we passed it.
  Yet, here we go again with more money for Katrina, if we need more 
money for Katrina relief, and that relief is going to go into 2009 now, 
we are going to pay for years in the future for people who are 
displaced by that to continue to have shelter. We keep saying, well, 6 
more months. Then we extend it another 6 months and another 6 months. 
And here we go again. Three months ago we passed what we said would 
probably be an amount we pretty much all agreed on, I thought, for 
Katrina relief. But yet here we go again.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 1 minute.

[[Page H5378]]

  Mr. Chairman, I am disappointed frankly at a number of inaccuracies 
in my colleague's statement. In the first place, with regard to 
Katrina, the bill that we passed had zero money for new construction, 
and if he will go back, he apparently forgot, he will see we constantly 
said during the Katrina bill that we intended to provide the new 
housing construction money through this bill.
  His assertion that there is some duplication could not be more wrong. 
We were very clear then. The Katrina bill dealt with vouchers. It had 
one 4,500-unit section with regard to some project vouchers. But 
throughout the Katrina bill, it was clear that it was a two-step 
process. This was the second step. There is zero duplication. Nothing 
in that Katrina bill did any significant increase in housing 
construction.
  Secondly, he notes that I and the gentleman from California and the 
others voted against the bill last time, as I said earlier today, for 
one specific reason. The Rules Committee, over the objection of the 
Committee on Financial Services at that time, injected into the housing 
fund amendments that would have kept the Catholic Church and the 
Methodists and all the other religious organizations that were 
interested in building housing from participating.
  We had one very specific objection. At that time the fund was going 
to be administered directly by Fannie and Freddie. There was a fear 
that they would use it politically. So one specific amendment was put 
in by the Rules Committee, we weren't even allowed to vote on it on the 
floor, and it would have restricted religious groups from 
participating. For that reason only, we voted against the bill. Since 
this does not allow Fannie and Freddie to spend the funds, that is out 
there. That is why we are being perfectly consistent in now voting for 
it.
  The gentleman from Alabama, everything he said about the housing fund 
was in the bill he and 208 other Republicans voted for in 2005. Every 
single thing.
  The gentleman has told me that he is philosophically opposed to the 
Housing Trust Fund. Then why did they all vote for it, those who share 
that opposition, 2 years ago?
  The final thing, the gentleman from Illinois is here. The gentleman 
from Alabama inaccurately said we were raising FHA fees. In fact, the 
FHA under the Bush administration asked us to raise fees. Last year, 
the House passed a bill that would have allowed them to raise fees. The 
gentleman from California and I objected to some of those increases. 
Our bill restricts the FHA's ability to raise fees above what they 
wanted. In fact, what we got was an amendment at that markup from the 
gentleman from Illinois substituting last year's bill that most of the 
Republicans voted for. That would have allowed the FHA to raise fees 
far more than us.
  So I don't understand how the gentleman from Alabama, who voted with 
the gentleman from Illinois to allow the FHA to raise fees further now 
blames us when we passed a bill that would have restricted their 
ability to raise fees above what they wanted. Maybe people got to go 
back and look at what they voted for and look at what they offered. The 
staff will have time. We have time to do that.
  Mr. Chairman, I yield 3 minutes to the gentlewoman from California.
  Ms. WATERS. Mr. Chairman, I rise in support of this legislation, and 
I commend the chairman for the work that he has done, the leadership he 
has provided and the hard work of the Members of this committee to get 
this bill to the floor.
  There are no great issues that separate us on this bill. We have 
worked out all of those issues. We all agree there should be stronger 
oversight. We all agree that we had to get rid of OFHEO, we had to have 
a stronger agency. We were all concerned about the tremendous debt of 
the GSEs. So that is all behind us. There is only one thing that 
separates us, and that is the Housing Trust Fund, and that is 
philosophical.
  We believe that given the housing crisis in America we have a 
responsibility to assist those who cannot afford decent housing, who 
are living on the streets, who are paying much more than 30 percent of 
their income. We believe we have a responsibility to assist them, to 
help them.

                              {time}  1645

  The other side of the aisle does not believe that government should 
play any role in helping the least of these get into public housing.
  The generally accepted definition of affordability is for a household 
to pay no more than 30 percent of its annual income on housing. 
Families who pay more than 30 percent of their income for housing are 
considered cost burdened, and often have difficulty affording 
necessities such as food, clothing, transportation and medical care.
  We are not talking about housing for any one section of this country. 
It is all over this country. In Mr. Boehner's district, the Eighth 
District: 64,759 renter households, including 14,713 extremely low-
income households. Of these extremely poor households, 57 percent are 
paying more than half of their incomes for housing. In the Eighth 
District, there is a deficit of 7,497 units that are affordable and 
available to extremely poor households.
  In Mr. Blunt's district, the Seventh District of Missouri: 76,034 
rental households, including 13,885 extremely low-income households. Of 
these extremely poor households, 57 percent are paying more than half 
of their incomes for housing. In the Seventh District, there is a 
deficit of 7,580 units that are affordable and available to extremely 
poor households.
  But let's not stop there. In Mr. Bachus' district, in the Sixth 
District of Alabama: 55,217 renter households, including 9,525 
extremely low-income households. Of these extremely poor households, 50 
percent are paying more than half of their incomes for housing. In the 
Sixth District, there is a deficit of 4,141 units that are affordable 
and available to extremely poor households.
  I could go on and on. This is about the housing trust fund. I would 
ask my colleagues to support the least of us in America, and reject the 
argument from the other side of the aisle.
  Mr. BACHUS. Mr. Chairman, I yield 5 minutes to the gentlewoman from 
Illinois (Mrs. Biggert).
  Mrs. BIGGERT. Mr. Chairman, I thank the gentleman for yielding. I 
rise to talk about this bill and I will hold the debate on FHA until 
that bill comes to the floor.
  I would like to thank Chairman Frank and Mr. Baker for introducing 
this year's GSE bill to establish a new and stronger regulator for the 
GSEs and the Federal Home Loan Banks.
  Like last year's legislation, this bill aims to give the new 
regulator clear direction about its authority, available tools and 
mission. With this enhanced authority and guidance, the new GSE 
regulator can guide the GSEs to be most effective for homeowners, 
market participants, financial institutions, and taxpayers.
  The overall purpose of the GSE reform bill is to create a strong, 
world-class regulator, and I think in this bill we direct the new 
regulator to review and set portfolio limits, establish minimum capital 
requirements, and review new programs and products.
  However, unlike last year's legislation, I think this year's bill 
introduces a new, extraneous provision that does not permit the new 
regulator to focus solely on these very important duties. This bill 
does not isolate this regulator from political influence, but rather 
establishes a stream of cash that is financed on the backs of the 
American homeowners. Why do I say this? What is the affordable housing 
trust fund; does anyone know? And why would we allow GSE money to be 
diverted to an unknown, non-existent entity? This was not in last 
year's bill.
  Last year's bill permitted Fannie Mae and Freddie Mac to manage an 
affordable housing fund. This year's bill permits the new regulator to 
establish and regulate the fund. I don't think that it is appropriate 
for this new regulator to manage the affordable housing fund.
  The provision establishes a formula to allocate funds to States and 
Indian tribes which would in turn determine which organizations receive 
the funds. The new GSE regulator is tasked with establishing 
regulations to determine the prescription for States to distribute the 
funds. And as stated in

[[Page H5379]]

House Report 110-142, ``This bill provides that funds allocated for the 
affordable housing fund, may be transferred at a later date to a 
national affordable housing trust fund that may be subsequently enacted 
into law.''
  We just don't know what is going to be the amount of money, where it 
is coming from, except if we determine that it is estimated that it 
would extract $3 billion in assessments from Fannie Mae and Freddie Mac 
over a 5-year period. There is no dollar limit as to how large this 
fund can become. Where will this money for the fund ultimately come 
from? It will come from low and middle income Americans seeking to 
purchase a home or refinance an existing mortgage. Hardworking, low 
income and middle income Americans who are trying to have their part of 
the American dream will ultimately be footing the bill for a national 
housing trust fund, the purpose of which has not yet been determined in 
law. Taxing hardworking American homeowners is not the way to fund new 
affordable housing.
  I share the chairman's commitment to increasing the stock of 
affordable housing for low-income Americans, but this fund is the wrong 
way to achieve this objective.
  Therefore, I would urge my colleagues to take a look at the Bachus 
amendment to strike the affordable housing fund section of this bill. I 
think we have a really good bill here. It is similar to last year's 
bill. I know that we have talked about this in the committee, we should 
have hearings and further discussions on the need to build more 
affordable housing in this country, how it can be done and how it can 
be financed, and particularly what this new affordable housing fund 
means.
  So with that, I urge my colleagues to, at this time, not support this 
bill.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 3 minutes to the 
chairman of the Subcommittee on Capital Markets, the gentleman from 
Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Mr. Chairman, I would like to extend my 
congratulations to Chairman Frank and to Ranking Member Bachus, two 
individuals that may sound more in disagreement today than they really 
are.
  I want to talk about, particularly, the passage of this bill, and let 
us understand that since March of 2000, we have had hearings and have 
attempted to get to a new regulator for the government-sponsored 
enterprises of Fannie Mae and Freddie Mac, and ultimately the Federal 
Home Loan Banks. We came very close 2 years ago. We passed it through 
this House. It didn't make it through the other body. We have an 
opportunity in this Congress to accomplish that.
  As a matter of fact, one of the compliments to Mr. Frank is he didn't 
run out there wholesale and create all kinds of new gadgets in this 
bill. Basically, this bill is 99.44 of 100 percent the same as we did 
in 2005.
  What will it accomplish? It is going to get us a world-class 
independent regulator, as the ranking member said, for $4.9 trillion 
worth of securities. I think that is important.
  Here the major opposition that is being discussed is really 
philosophical in nature. I think Maxine Waters was very correct in that 
analysis. We are arguing over $500 million a year, and we are talking 
about an institution that has $4.9 trillion that we have to regulate, 
and know that in the last several years, there were errors and mistakes 
and potentially even fraud committed in these organizations as a result 
of the weakness of our regulators.
  So we went to great lengths in a bipartisan way to have these 
hearings over the last 7 years and to say, let's create a regulator 
that we can all be proud of. But more than being proud of, that we can 
be relatively certain that the securities market and the investments of 
the United States in the real estate area are going to be safe and 
secure, and I think this bill does that.
  Now this little argument that we have over the trust fund, $500 
million a year potentially, if you think about it, it amounts to about 
a day and a half of what we spend in Iraq every damn day. A day and a 
half.
  Now you can argue that we don't need any housing in the United 
States, and I think you can credibly make that argument if you are of 
that philosophical bent. And of course, on this side of the aisle, 
because we probably are closer to the people who do need that housing, 
we can make the argument that there is need. But never in anybody's 
mind should an argument of that minute an amount stop the passage of 
legislation which will allow us to get control and containment over 
$4.9 trillion of American taxpayer money.
  Mr. BACHUS. Mr. Chairman, I thank the gentleman from Pennsylvania for 
his sincerity, and I yield 2 minutes to the gentleman from California 
(Mr. Gary G. Miller).
  Mr. FRANK of Massachusetts. Mr. Speaker, I will yield an additional 2 
minutes to the gentleman from California.
  Mr. BACHUS. I appreciate that. That really is evidence again of the 
bipartisan approach we have had on this committee.
  Mr. FRANK of Massachusetts. Well, it will be if you vote with him.
  Mr. GARY G. MILLER of California. Mr. Chairman, I want to thank the 
chairman and Mr. Bachus for yielding me this time.
  I know this has been an issue that they have been working on for 
years, the same as I have. For the last 3 years, this has been a focus 
for us dealing with this issue that has been impacting and in many ways 
very beneficial to the housing market.
  I commend Chairman Frank and Secretary Paulson for their hard work to 
strike an agreement so we can move this important reform legislation 
forward.
  We must provide for a strong regulator for the GSEs so that investors 
and the markets are assured that these companies are sound and that 
their investments in America's housing markets are safe.
  This bill recognizes that strong regulation provides a means to 
achieve our ultimate goal of expanding supply of affordable mortgage 
credit throughout this Nation.
  The goal in the process we have taken today is to preserve the 
mission while strengthening the authority of the regulator. We have 
been working on this issue for a number of years. Through this lengthy 
legislative process, I have asked my colleagues to be mindful that as 
we addressed deficiencies in GSE supervision, we must not lose sight of 
Congress's original intent that chartered the GSEs. The mission of 
Fannie Mae and Freddie Mac is to provide stability and on ongoing 
assistance to the secondary market for residential mortgages, and to 
promote access to mortgage credit and homeownership throughout the 
United States.
  The bill before us today builds upon the bill that passed the House 
under the leadership of former Chairman Oxley in 2005. That bill passed 
by an overwhelming vote of 331-90. As I was looking back at the Record 
at that point in time, it surprised me that based on the comments made 
by the administration at that time, they are saying that the bill today 
creates a stronger regulator than the one we passed in 2005.
  And I was surprised to read that the bill before us today, the 
administration, unlike the bill passed in 2005, which Treasury opposed 
then because it failed to provide a strong regulator that could protect 
the safety and soundness of the housing financial system, today the 
bill they say ``provides for a fully empowered, independent world-class 
regulator that can deal with any safety and soundness issue that might 
arise.'' I had no idea back at that time they opposed it; but I knew 
they supported it today.
  The affordable housing fund, I vote repeatedly to strike that. I have 
never supported it. I didn't support it when Chairman Oxley put it in 
the original bill. I know many Members on my side oppose this. However, 
I continue to share the view of former Chairman Oxley that a stronger, 
more effective regulator of the housing GSEs is absolutely critical and 
outweighs our philosophical opposition to the fund.
  I voted for that bill then, and I am going to vote for this bill 
tonight. This legislation provides for a strong regulator for the GSEs 
so that investors and the markets are assured that those companies are 
sound and an investment in the American housing markets are safe.
  Improved regulation will provide a means to achieve our ultimate goal 
of expanding the supply of affordable mortgage credit across this 
country.

[[Page H5380]]

GSEs have been at the forefront of creating affordable housing 
opportunities for families, and we must ensure that they are successful 
in the future.
  This bill does something that I am very supportive of, and I worked 
on for 3 or 4 years now. It deals with conforming loan limits in high-
cost areas. If you happen to live in Hawaii, Alaska, Guam or the Virgin 
Islands, you can get a loan for 150 percent of conforming today. But if 
you live in a high-cost area of California or other parts of this 
country, you cannot. If you look at the benefit on the marketplace 
today, especially in California, we are having severe problems in the 
jumbo market area where the foreclosures and defaults are excessive, 
and I believe if the conforming marketplace were there today, we would 
have less problem than we are seeing today.

                              {time}  1700

  The foreclosure rates are out of control. If you look at the jumbo 
market in California, the problem we're facing is that only 18.1 
percent of the jumbo loans that are made are fixed, 30-year loans; 
compared to conforming marketplace, 82 percent are fixed 30-year loans. 
In the jumbo marketplace, 34.9 percent of the jumbo loans are interest-
only ARMs.
  I thank you.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2 minutes to the 
gentlewoman from New York (Mrs. Maloney), the chairwoman of the 
Financial Institutions Subcommittee.
  Mrs. MALONEY of New York. Mr. Chairman, I thank the gentleman for 
yielding and for his strong and creative leadership in the passage of 
this tremendously important bill for American homeowners and for those 
who are in desperate need of affordable housing.
  I wish to be associated with the comments of Mr. Frank and Mr. Gary 
Miller on these conforming loan limits in high income areas such as the 
area I represent in New York City. It's very important for affordable 
housing.
  Keeping with the bipartisan spirit of the Financial Services 
Committee, this bill was reported out with a strong bipartisan vote of 
45-19, and when it passes today, it will completely overhaul and 
strengthen the regulatory oversight of the GSEs, the government-
sponsored enterprises, of Fannie Mae, Freddie Mac and the Federal Home 
Loan Banking System, and it will create a new independent regulator 
with broad powers, similar to those of current banking regulators.
  It also requires Fannie and Freddie to establish an Affordable 
Housing Fund, something that should have been done long ago. It's 
important for affordable housing in our country, and I congratulate the 
leadership of Mr. Frank and Mr. Baker and Mr. Oxley in moving this fund 
forward. Contributions will be based on the average total mortgage 
portfolio which will include all mortgages, whether held for investment 
or securitized. It will be distributed through the States.
  And very importantly, the first year the money will go to the ravaged 
area of Katrina and Rita where people are living without housing. It is 
tremendously important. It is creative and it addresses a desperate 
need in our country.
  In addition to the affordable housing goals that apply to Fannie and 
Freddie, we enhanced the bill in a number of ways, including a 
provision that I sponsored along with Mr. Baker, to encourage the 
creation of home-based child care centers. My Kiddie Mac amendment will 
do that. It will make day care more affordable and available.
  I congratulate everyone. Please vote for this bill.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Let me close by acknowledging the many positive aspects of this bill 
and just reiterate that had it not been for the creation of our new 
Affordable Housing Fund, a new government program, we would have had 
consensus here. But that should not distract from the fact that we do 
need a strong independent regulator, as the gentleman from Pennsylvania 
said.
  Mr. Chairman, with that I yield the balance of my time to the 
gentleman from Texas (Mr. Hensarling).
  Mr. HENSARLING. Mr. Chairman, I thank the ranking member for 
yielding, and I thank him for his leadership on this bill.
  I also wish to thank our chairman who, although I have deep 
philosophical differences with, was certainly fair in his deliberations 
and more than fair in the amendments that he has allowed here this 
evening.
  Indeed, I think that the conflict today comes down to the so-called 
Affordable Housing Fund. Many on this side of the aisle do not feel 
that in this bill, which is supposed to provide a strong regulator for 
Fannie and Freddie, that we need to be expanding big government.
  And regardless of the rhetoric on the other side, according to OMB, 
Federal housing assistance has grown 73.8 percent in the last 10 years. 
Yet, this bill creates another new housing program on top of the 90 
other HUD programs ostensibly designed to make housing more affordable.
  Meanwhile, the Democrat majority earlier this afternoon made housing 
less affordable by imposing the single largest tax increase in American 
history on the American people, threatening the home ownership of 
millions.
  Next, this fund is supposed to be transferred to some shadowy, 
amorphous, ill-defined housing trust fund, which to many of us appears 
nothing less than a new entitlement spending program for the 21st 
century. This is on top of the entitlement spending that threatens to 
bankrupt the next generation, will force them to double their taxes, 
will shatter their dreams of home ownership, and yet we appear to be 
adding yet another entitlement spending program.
  Next, the fund represents a dangerous precedent and another 
surreptitious tax increase. On top of the single largest tax increase 
in American history, now our friends from the other side of the aisle 
are going to impose a home mortgage tax on the American people, using 
the Federal nexus to levy a special tax on Fannie and Freddie, which 
due to their duopoly status in the marketplace they can effectively 
pass on to home buyers in the way of higher mortgage interest so that 
this can be conduited into third party groups.
  This bill ignores the greatest affordable housing program known in 
this country, a good job and a low tax rate. The bill imposes new 
mortgage taxes on Americans and must be rejected.
  Mr. FRANK of Massachusetts. Mr. Chairman, may I inquire how much time 
remains on my side?
  The CHAIRMAN. The gentleman from Massachusetts has 9 minutes 
remaining.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2 minutes to the 
gentleman from North Carolina (Mr. Watt), the Chair of the Oversight 
and Investigations Subcommittee.
  Mr. WATT. Mr. Chairman, I thank the chairman of the committee for 
yielding time.
  I rise in support of the bill. The bill deserves our support for two 
important reasons. First of all, it establishes a strong regulator in 
an area that has cried out for greater regulation, and I think we 
understand that looking back on what has happened at Fannie Mae and 
Freddie Mac over the last several years.
  Second of all, the bill establishes a trust fund that is very similar 
to the housing trust fund for which over 200 of the Republicans voted 
last year. So I really am surprised to find that this year all of the 
sudden there is all of this opposition to the trust fund.
  So I want to spend a minute talking about the trust fund. First of 
all, it is a housing trust fund, and Fannie Mae and Freddie Mac are 
designed to incentivize more housing for middle income and low income 
people. So it's absolutely consistent with the purposes for which they 
were founded.
  Second, the ranking member of our committee made it sound like this 
is going to increase the cost of housing for middle income people and 
low income people. In fact, what we need to focus on is that this money 
will either go to the stockholders of Fannie and Freddie or it will go 
to the purpose for which Fannie and Freddie was originally formed.
  So this is not a choice between raising taxes or not. This is 
fulfilling the purpose of these two entities.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 1\1/2\ minutes to 
the gentleman from New Jersey (Mr. Sires), a member of the committee.
  Mr. SIRES. Mr. Chairman, I first would like to thank Chairman Frank 
for his efforts in bringing this bill to

[[Page H5381]]

the floor today, and it's because of him this bill is supported by the 
Treasury Department and the very government-sponsored entities the bill 
impacts.
  I rise today in strong support of H.R. 1427. It creates a single 
regulator of the three government-sponsored entities. By having one 
regulator, future problems in the housing economy will be prevented by 
providing real and strong oversight of the secondary mortgage market.
  Secondly, this bill creates an Affordable Housing Fund. This fund 
will provide an opportunity for millions of working Americans to afford 
housing that will allow them to raise their families in a safe and 
stable environment. Some will even be able to buy a home because of 
this new fund.
  Hardworking Americans want a safe and stable place to call their own. 
We have the opportunity here today to support the American dream of 
home ownership by passing H.R. 1427. And just as important, we can do 
this with proper oversight.
  I urge all my colleagues to join me in supporting H.R. 1427.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 1\1/2\ minutes to 
the gentleman from New Hampshire (Mr. Hodes), another very able 
freshman member of the committee.
  Mr. HODES. Mr. Chairman, I thank the gentleman for yielding and for 
his tremendous leadership on this committee.
  I rise in support of H.R. 1427. This bill provides an overhaul of the 
government-sponsored entities, and it creates a much-needed, unified 
regulator for all GSEs.
  Now, it was the high-profile accounting scandals at Fannie and 
Freddie in recent years that demanded that Congress restore 
accountability and strengthen oversight in these institutions.
  So this bill creates a strong, independent regulator at Fannie Mae, 
Freddie Mac and the Federal Home Loan Bank System with broad powers 
comparable to those of Federal bank regulators. The bill also creates 
an Affordable Housing Fund to be managed by the new GSE regulator.
  I want to thank Chairman Frank for creating the Energy Efficiency 
Task Force on the Financial Services Committee. I am pleased to serve 
on this task force, chaired by my colleague from Colorado, Mr. 
Perlmutter. The task force is dedicated to greening the financial 
services community, and in connection with H.R. 1427, we included an 
important provision that would incentivize Fannie and Freddie to 
purchase green mortgages. This provision is a great first step toward 
our goal.
  This is a bipartisan bill, and it is widely supported by financial 
institutions, lenders, housing industry participants, housing groups 
and other financial service providers.
  So when I hear the colleagues on the other side of the aisle speaking 
against the unified regulator, they are standing against accountability 
and oversight. And when I hear them speaking against an Affordable 
Housing Fund, they are standing against poor people in this country who 
need our help.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2 minutes to the 
gentlewoman from California (Ms. Lee), an alumni of our committee who 
despite having left us still thinks of us from time to time, and she's 
one of the originators of the notion of an Affordable Housing Trust 
Fund.
  Ms. LEE. Mr. Chairman, let me first of all thank our Chair, 
Congressman Frank, for his leadership and for yielding; also, 
Congresswoman Maxine Waters for her very diligent and hard work in 
crafting this bill.
  The American dream of home ownership is quickly turning into a 
nightmare for many, and this bill really does begin to turn this 
around. And yes, as a former member of the Financial Services 
Committee, I had the opportunity to work with our Chair. This was when 
I was first elected, probably in my first or second term, to really 
craft a housing trust fund, along with our former colleague, now-
Senator, Bernie Sanders, and this bill incorporates and would authorize 
and create a new Affordable Housing Trust Fund.
  For many years, housing has been a big issue for many of us here. 
Many of our districts are unaffordable, and this American dream of home 
ownership is turning into a nightmare.
  This bill, the Federal Housing Reform Act of 2007, will really help 
accomplish the objective of our first national housing trust fund. It 
increases home ownership for extremely low and very low income 
families. It provides for increasing investment in housing in low 
income areas; for increasing and preserving the supply of rental and 
owner-occupied housing for extremely low and very low income families. 
It also increases investments in our public infrastructure and 
development in connection with housing assistance. And it also 
leverages investments from other sources in affordable housing and in 
public infrastructure development.
  I want to commend our colleagues again for engaging with our 5,200 
national, State and local organizations and leaders that worked for 
many, many years to create a national housing trust fund. Just 
yesterday, I met with my board of realtors from Oakland, California.
  I just want to say thank you again to Mr. Frank for making sure that 
this is real.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 1\1/2\ minutes to 
the gentlewoman from Ohio (Ms. Kaptur), another dedicated advocate for 
housing in many capacities.

                              {time}  1715

  Ms. KAPTUR. Thank you very much, Mr. Chairman.
  Mr. Chairman, I want to express deep appreciation to Chairman Frank, 
Ranking Member Bachus and certainly to Congresswoman Maxine Waters of 
California and Carolyn Maloney of New York, who really fashioned a bill 
that deals with the prolonged housing market slump, due in large 
measure to increasing rates of foreclosure.
  The State of Ohio welcomes this measure. We have been particularly 
hard hit. The credit gap in Ohio is estimated between $14 and $21 
billion, as over 200,000 more mortgages will reset at higher rates over 
the next 2 years. We don't need any more vacant units depressing the 
housing market in our region.
  Government-sponsored entities can and should play a major role in 
reversing this trend. This bill does that. I would oppose any 
amendments designed to weaken or eliminate the much-needed National 
Housing Trust Fund. Homeownership is the most important savings account 
that any American family accumulates.
  In passing this legislation, we assure that this Congress understands 
that as well as the necessity of keeping our housing market strong as 
fundamental to bolstering the economy of our entire country and helping 
it grow.
  Chairman Frank, I deeply thank you on behalf of the Governor of Ohio 
and all the people of Ohio who are looking to us for leadership to help 
them hold on to their most important asset, their home.
  Mr. FRANK of Massachusetts. All the people of Ohio are welcome. How 
much time do I have remaining, Mr. Chairman?
  The CHAIRMAN. The gentleman from Massachusetts has 30 seconds 
remaining.
  Mr. FRANK of Massachusetts. Mr. Chairman, I would take it to say that 
we often focus on what we disagree on. Let's be clear.
  We agree on the strongest regulator that you could possibly have and 
still be workable. The gentleman from Louisiana is here, he was one of 
those who started on it; the gentleman from Ohio who has left, Mr. 
Oxley. Many of us worked on this. We will be arguing about the housing 
fund.
  But let's be clear that what this House will be doing overwhelmingly 
is create a strong regulator. As to the affordable housing fund, I 
would just say this, the notion that all of this comes out of the 
mortgages and not out of the shareholders is bad economics. Fannie and 
Freddie do not have monopoly power such that they can pass on every 
cost to the customer and absorb none of it themselves.
  Mr. HOLDEN. Mr. Chairman, I rise in support of H.R. 1427, the Federal 
Housing Finance Reform Act of 2007.
  Appropriate regulation for Fannie Mae, Freddie Mac and the Federal 
Home Loan Banks is crucial to the overall health of housing and 
communities throughout America. I commend both Chairman Frank and GSE 
Subcommittee Chairman Kanjorski for their diligent and thoughtful work 
on this legislation.
  An issue of concern to me and many in my district is the effect of 
the legislation on the

[[Page H5382]]

FHLBank System. Their inclusion in this bill is not due to a perceived 
lack of proper regulation, but from a widely held desire to place the 
three housing GSEs under one ``world-class'' regulator capable of 
monitoring their complex financial information. Despite their similar 
benefit to the housing market and use of complex hedging transactions, 
the GSEs are different, and I believe the new regulator must recognize 
the differences in their business models, products, and missions.
  This legislation recognizes these differences by creating separate 
divisions within the new regulator: one for the FHLBanks, and for 
Fannie Mae and Freddie Mac. In fact, the bill also makes clear that the 
mission of FHLBanks is different, and not only deals with housing 
finance but economic and community development as well.
  In addition to the Affordable Housing Program (AHP), which has 
provided $5 million in funds supporting over 1,000 units of housing in 
my district, the FHLBank of Pittsburgh operates a number of programs 
that support community and economic development.
  Their ``Banking on Business'' (BOB) program helps eligible small 
businesses with start-up and expansion costs. Each dollar in BOB 
funding typically leverages an additional six dollars in financial 
resources to small businesses in the region, thereby creating or 
retaining jobs. Since 2000, FHLBank Pittsburgh has funded more than 
$27.5 million in BOB funding to assist small businesses in their three-
state region, creating or retaining more than 3,821 jobs.
  In my district alone, the FHLBank Pittsburgh has provided over $1.5 
million in BOB financing, supporting 18 small businesses and leveraging 
over $17 million in additional funding. The BOB program works in 
partnership with leading community banks in a number of very important 
efforts. For example, Leesport Bank used BOB to provide $180,000 for 
Hamburg Industries, Inc. to assist in expansion costs. Hamburg 
Industries, Inc. is a manufacturer of brooms, mops and brushes in 
Hamburg, PA. Legacy Bank used BOB to lend $21,000 to Math Inc. to 
assist in start-up costs. Math Inc. is engaged in manufacturing 
countertops, cabinets and architectural millwork for commercial 
applications. Further, First National Community Bank provided $200,000 
in BOB funds to Keystone Potato Products, LLC to assist in start-up 
costs. Keystone Potato Products, LLC. is a dehydrated food producer in 
Hegins, PA.
  The Pittsburgh Bank also operates the Community Lending Program 
(CLP), an $825 million non-competitive revolving loan pool that offers 
loans to member financial institutions for community and economic 
development projects that create housing, improve business districts, 
and strengthen neighborhoods. In my district, CLP has provided over $40 
million for 16 projects. One of these involved Mid-Penn Bank, a leading 
community bank in my district, using the CLP to provide $4.5 million in 
low-cost FHLBank funds for the rehabilitation of Cole Crest: a low 
income elderly, disabled, and family apartment complex in Steelton, PA. 
The funds were provided through Mid-Penn Bank as an alternative to 
traditional bond financing, saving the Dauphin County Housing Authority 
significant costs over the life of the loan.
  As a Member of Congress representing a rural region with community 
and economic development needs, I appreciate the partnership between 
the Federal Home Loan Banks and the community banks of my district. The 
mission of the Federal Home Loan Banks in the area of economic and 
community development is vital, and I applaud the clarification of that 
mission in H.R. 1427.
  I want to add my voice to those in the Congress advocating that the 
new regulator encourage this mission by applying a new emphasis on 
community and economic development to all Federal Home Loan Banks' 
activities. I see this language as fostering a statutory and regulatory 
environment that will support and encourage further development of new 
ways to support economic development, public finance and infrastructure 
in a partnership with Federal Home Loan Banks, their members, and local 
governments that will bring needed help to the small and rural 
communities of my district.
  Mr. CONYERS. Mr. Chairman, I rise in support of passage of H.R. 1427, 
``The Federal Housing Finance Reform Act.''
  I believe this legislation is one of the most cost effective ways to 
provide cities across the country with desperately needed federal 
funding so they can construct, or renovate housing stock for working 
families on public housing waiting lists, homeless veterans, homeless 
Katrina victims, and homeless working families.
  I believe that passage of this legislation is a ``historic'' moment 
in this Congress, and makes me proud to be a member of this body.
  In Detroit, there are thousands of working individuals and families 
living in homeless shelters or staying with friends and extended family 
members because they can not afford the skyrocketing costs of private 
market housing.
  We have a homeless shelter in Detroit where hundreds of veterans live 
each year, and most are working minimum wage jobs, or work in low to 
moderate wage employment.
  It is a moral outrage that soldiers who have fought in wars and 
served their country honorably come home to cities like Detroit, only 
to find out that they can not afford an apartment or a home.
  This bill will help reduce these problems, and provide decent 
affordable housing to more veterans and working families without 
raising taxes.
  It will also help victims of Katrina who are currently living in 
hotels or homeless shelters in other cities to return to the Gulf 
Coast, or remain where they are, because there will be expanded housing 
opportunities due to passage of H.R. 1427.
  Passage of ``The Federal Housing Finance Reform Act'' will provide 
billions of dollars to cash starved cities across the Nation to 
successfully build new affordable housing units for working families by 
utilizing existing non-profit housing developers, public housing 
agencies, and for-profit housing developers.
  Passage of H.R. 1427 will help hundreds of thousands of Americans 
across this Nation who are currently on waiting lists for public 
housing to be able to get out of homeless shelters and into homes or 
apartments, since there will now be more federal funding for affordable 
housing production.
  Passage of ``The Federal Housing Finance Reform Act'' will provide 
$600 million per year to cash starved cities across the Nation and 
could create approximately 8,000 new affordable housing units for 
working families by utilizing existing non-profit housing developers, 
public housing agencies, and for-profit housing developers.
  If America is ever to be a great nation, we must ensure that all 
Americans, as a basic human right, have decent and affordable housing. 
Passage of H.R. 1427 will get our Nation on the road to having a real 
national affordable housing policy; which we currently do not have.
  The United States, the wealthiest country in the world, shamefully 
has one million homeless children, and over 40% of those living in 
homeless shelters are working in jobs. Our current affordable housing 
problem is building more homeless shelters where there is a lack of 
affordable housing.
  I ask this question, Mr. Chairman. How many Members of Congress would 
want to come home after a hard day's work, and sleep in a homeless 
shelter? Probably nobody! We need affordable housing for all now.
  I urge this body to pass H.R. 1427 with all deliberate speed.
  Mr. BACA. Mr. Chairman, I rise to support H.R. 1427 and thank my 
friend, Chairman Frank, for leading the bipartisan effort in the 
Financial Services Committee on this important legislation.
  This bill restores accountability by creating a modern, world-class 
regulator of the GSEs. It will also help us meet the critical shortage 
of affordable housing across the country through the creation of an 
Affordable Housing Fund.
  In addition, Representatives Bean, Neugebauer, Moore and Miller have 
offered an amendment which I support. It clarifies that the new GSE 
regulator does not have the power to reduce the portfolios of Fannie 
Mae and Freddie Mac based on artificial, so-called ``systemic risk.''
  This bill already gives the new regulator the FULL authority to 
supervise the GSE portfolios for safety, soundness and mission. I am 
not convinced that we should give it powers that bank regulators don't 
already have. I'm also not convinced that this amendment would in any 
way weaken the regulator's ability to make sure these companies operate 
safely and soundly.
  It is critical that we do not limit the GSE's ability to provide 
homeownership for low, middle income, and minority families.
  With their help, the GSEs have been able to increase homeownership 
rates across this country to a record level of 68 percent. That's 
impressive, but there is still much work to be done.
  Homeownership rates in our minority communities are still far below 
the national average and nearly 2.2 million American families across 
the country are facing foreclosures.
  This issue has a great deal of personal meaning for me. I grew up in 
a family of 15 children without a lot of money. I have been lucky 
enough to have worked hard and been able to achieve the American dream 
of owning a home.
  Yet the dream of homeownership remains unattainable for millions of 
families. And many other families stand to lose their homes this year.
  The new affordable housing fund created by H.R. 1427 will go far to 
help these families. And the new regulator created by this bill will 
ensure the safety and soundness of the GSEs so that they can continue 
their important mission in underserved communities for many years to 
come.

[[Page H5383]]

  I urge my colleagues to support this bill.
  Mr. ENGEL. Mr. Chairman, I rise today in support of H.R. 1427, the 
Federal Housing Finance Reform Act of 2007. This legislation is many 
years in the making, and its consideration today is timely, given the 
problems we face in the mortgage industry.
  In recent years, we have seen serious problems in the subprime 
mortgage market. Without an effective regulator in the mortgage market, 
these problems will continue to grow, and we will continue to see more 
families losing their home to foreclosure.
  In addition, H.R. 1427 creates an affordable housing fund for low 
income individuals and families. This fund will receive a percentage of 
the investments that Fannie Mae and Freddie Mac hold, totaling 
approximately $500 million a year. This money will help those with low 
incomes purchase a new home.
  The recent problems in the mortgage market have hit those with low 
incomes harder than any other income bracket. This is exactly the group 
of people who will be helped most by this bill. And for the first year, 
the entire reserve fund will be dedicated to those affected by 
Hurricane Katrina in Louisiana and Mississippi. These hurricane 
stricken areas are in desperate need of assistance, and this bill will 
provide at least a portion of what they need.
  Having a strong regulatory body overseeing Fannie Mae, Freddie Mac 
and the Federal Home Loan Banks will give consumers and markets 
confidence that the housing market is safe. When housing lenders 
started going under due to the increased number of foreclosures, 
consumers became increasingly reluctant to invest hundreds of thousands 
of dollars into a new home. If people are confident that a strong 
regulator will be overseeing the GSEs, it will help to increase 
consumer confidence in the housing market.
  This bill is specifically good for my District in the Bronx, Rockland 
County and Westchester County in New York. The price of purchasing a 
home there is staggering, and Fannie Mae and Freddie Mac are limited in 
the amount of money they can loan for a new home. This limitation makes 
it more difficult for people in my District to buy their first home. 
This legislation will help to fix this problem by increasing the limit 
on loans.
  Even though H.R. 1427 will put additional money into low low-income 
housing assistance, I am proud to say that this bill will not add a 
single dollar to the national deficit. The majority in this Congress 
has consistently stuck to the pay-as-you-go rules that we created as 
one of our first acts of the year.
  Madam Chairman, the Federal Housing Finance Reform Act is eight years 
in the making, and it is long overdue. I am happy to support this bill, 
and I urge my colleagues to support it as well. I yield back the 
balance of my time.
  Mr. LOEBSACK. Mr. Chairman, I rise today in support of H.R. 1427, the 
Federal Housing Finance Reform Act of 2007. Specifically, I rise in 
support of Section 139, establishing the Affordable Housing Fund.
  In Congress we often talk about the American dream. Many believe that 
if an individual works hard and plays by the rules they are able to 
provide for their families, and keep a roof over their heads. 
Unfortunately, it isn't always that easy. Access to affordable, safe, 
and clean housing is often difficult to come by. According to the 
National Low Income Housing Coalition, in Iowa the Fair Market Rent for 
a two-bedroom apartment is $594. The estimated average wage for a 
renter is $9.62 per hour, meaning a renter must work 47 hours per week, 
52 weeks a year in order to afford a two-bedroom apartment. If you earn 
the minimum wage, which remains only $5.15 an hour, you would need to 
work 89 hours per week, 52 weeks per year to afford a two-bedroom home 
in Iowa.
  Thankfully, this bill establishes the Affordable Housing Fund which 
provides greater access for our neediest citizens to pursue the 
American dream and raise their families in a safe environment, which 
ultimately leads to greater productivity and a better life for 
themselves and their children.
  I was raised in poverty and know first hand the every-day struggle to 
survive that millions of Americans face on a low or very-low income. 
Not only will this legislation help those individuals find and afford 
adequate housing, it will also encourage investment and infrastructure 
improvements in some of the most underserved areas of our country.
  This term ``underserved'' applies to both low-income urban areas and 
to the many rural areas in our country. Many rural areas of Iowa have 
seen good-paying jobs leave our towns at an astonishing rate, in turn 
devastating our communities. Affordable and accessible housing helps 
keep communities whole.
  In 1949, The U. S. Housing Act established the admirable goal of ``a 
decent home and a suitable living environment for every American 
Family.'' I believe the Federal Housing Finance Reform Act remains true 
to this goal. It is an important step in improving and reviving our 
cities and rural areas. I urge my colleagues to vote yes on this 
legislation.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the amendment in the nature of a substitute 
printed in the bill, modified by the amendment printed in House Report 
110-152, shall be considered as an original bill for the purpose of 
amendment under the 5-minute rule by title, and each title shall be 
considered read.
  No amendment to that amendment shall be in order except those printed 
in the portion of the Congressional Record designated for that purpose 
before the beginning of consideration of the bill and pro forma 
amendments for the purpose of debate. Each amendment so printed may be 
offered only by the Member who caused it to be printed or his designee 
and shall be considered read.
  Mr. FRANK of Massachusetts. Mr. Chairman, I ask unanimous consent 
that the bill be printed in the Record and open to amendment at any 
point.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Massachusetts?
  There was no objection.
  The text of the bill is as follows:

                               H.R. 1427

       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 
     Housing Finance Reform Act of 2007''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Definitions.

  TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN 
                                 BANKS

            Subtitle A--Improvement of Safety and Soundness

Sec. 101. Establishment of the Federal Housing Finance Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Federal Housing Enterprise Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Disclosure of income and charitable contributions by 
              enterprises.
Sec. 106. Assessments.
Sec. 107. Examiners and accountants.
Sec. 108. Prohibition and withholding of executive compensation.
Sec. 109. Reviews of regulated entities.
Sec. 110. Inclusion of minorities and women; diversity in Agency 
              workforce.
Sec. 111. Regulations and orders.
Sec. 112. Non-waiver of privileges.
Sec. 113. Risk-Based capital requirements.
Sec. 114. Minimum and critical capital levels.
Sec. 115. Review of and authority over enterprise assets and 
              liabilities.
Sec. 116. Corporate governance of enterprises.
Sec. 117. Required registration under Securities Exchange Act of 1934.
Sec. 118. Liaison with Financial Institutions Examination Council.
Sec. 119. Guarantee fee study.
Sec. 120. Conforming amendments.

             Subtitle B--Improvement of Mission Supervision

Sec. 131. Transfer of product approval and housing goal oversight.
Sec. 132. Review of enterprise products.
Sec. 133. Conforming loan limits.
Sec. 134. Annual housing report regarding regulated entities.
Sec. 135. Annual reports by regulated entities on affordable housing 
              stock.
Sec. 136. Revision of housing goals.
Sec. 137. Duty to serve underserved markets.
Sec. 138. Monitoring and enforcing compliance with housing goals.
Sec. 139. Affordable Housing Fund.
Sec. 140. Consistency with mission.
Sec. 141. Enforcement.
Sec. 142. Conforming amendments.

                  Subtitle C--Prompt Corrective Action

Sec. 151. Capital classifications.
Sec. 152. Supervisory actions applicable to undercapitalized regulated 
              entities.
Sec. 153. Supervisory actions applicable to significantly 
              undercapitalized regulated entities.
Sec. 154. Authority over critically undercapitalized regulated 
              entities.
Sec. 155. Conforming amendments.

                    Subtitle D--Enforcement Actions

Sec. 161. Cease-and-desist proceedings.
Sec. 162. Temporary cease-and-desist proceedings.
Sec. 163. Prejudgment attachment.
Sec. 164. Enforcement and jurisdiction.
Sec. 165. Civil money penalties.
Sec. 166. Removal and prohibition authority.
Sec. 167. Criminal penalty.
Sec. 168. Subpoena authority.
Sec. 169. Conforming amendments.

                     Subtitle E--General Provisions

Sec. 181. Boards of enterprises.
Sec. 182. Report on portfolio operations, safety and soundness, and 
              mission of enterprises.
Sec. 183. Conforming and technical amendments.
Sec. 184. Study of alternative secondary market systems.

[[Page H5384]]

                   TITLE II--FEDERAL HOME LOAN BANKS

Sec. 201. Definitions.
Sec. 202. Directors.
Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan 
              Banks.
Sec. 204. Joint activities of Banks.
Sec. 205. Sharing of information between Federal Home Loan Banks.
Sec. 206. Reorganization of Banks and voluntary merger.
Sec. 207. Securities and Exchange Commission disclosure.
Sec. 208. Community financial institution members.
Sec. 209. Technical and conforming amendments.
Sec. 210. Study of affordable housing program use for long-term care 
              facilities.
Sec. 211. Effective date.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF 
 FEDERAL HOUSING ENTERPRISE OVERSIGHT, FEDERAL HOUSING FINANCE BOARD, 
            AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

       Subtitle A--Office of Federal Housing Enterprise Oversight

Sec. 301. Abolishment of OFHEO.
Sec. 302. Continuation and coordination of certain regulations.
Sec. 303. Transfer and rights of employees of OFHEO.
Sec. 304. Transfer of property and facilities.

               Subtitle B--Federal Housing Finance Board

Sec. 321. Abolishment of the Federal Housing Finance Board.
Sec. 322. Continuation and coordination of certain regulations.
Sec. 323. Transfer and rights of employees of the Federal Housing 
              Finance Board.
Sec. 324. Transfer of property and facilities.

        Subtitle C--Department of Housing and Urban Development

Sec. 341. Termination of enterprise-related functions.
Sec. 342. Continuation and coordination of certain regulations.
Sec. 343. Transfer and rights of employees of Department of Housing and 
              Urban Development.
Sec. 344. Transfer of appropriations, property, and facilities.

     SEC. 2. DEFINITIONS.

       Section 1303 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4502) is amended--
       (1) in paragraph (7), by striking ``an enterprise'' and 
     inserting ``a regulated entity'';
       (2) by striking ``the enterprise'' each place such term 
     appears (except in paragraphs (4) and (18)) and inserting 
     ``the regulated entity'';
       (3) in paragraph (5), by striking ``Office of Federal 
     Housing Enterprise Oversight of the Department of Housing and 
     Urban Development'' and inserting ``Federal Housing Finance 
     Agency'';
       (4) in each of paragraphs (8), (9), (10), and (19), by 
     striking ``Secretary'' each place that term appears and 
     inserting ``Director'';
       (5) in paragraph (13), by inserting ``, with respect to an 
     enterprise,'' after ``means'';
       (6) by redesignating paragraphs (16) through (19) as 
     paragraphs (20) through (23), respectively;
       (7) by striking paragraphs (14) and (15) and inserting the 
     following new paragraphs:
       ``(18) Regulated entity.--The term `regulated entity' 
     means--
       ``(A) the Federal National Mortgage Association and any 
     affiliate thereof;
       ``(B) the Federal Home Loan Mortgage Corporation and any 
     affiliate thereof; and
       ``(C) each Federal home loan bank.
       ``(19) Regulated entity-affiliated party.--The term 
     `regulated entity-affiliated party' means--
       ``(A) any director, officer, employee, or agent for, a 
     regulated entity, or controlling shareholder of an 
     enterprise;
       ``(B) any shareholder, affiliate, consultant, or joint 
     venture partner of a regulated entity, and any other person, 
     as determined by the Director (by regulation or on a case-by-
     case basis) that participates in the conduct of the affairs 
     of a regulated entity, except that a shareholder of a 
     regulated entity shall not be considered to have participated 
     in the affairs of that regulated entity solely by reason of 
     being a member or customer of the regulated entity;
       ``(C) any independent contractor for a regulated entity 
     (including any attorney, appraiser, or accountant), if--
       ``(i) the independent contractor knowingly or recklessly 
     participates in--

       ``(I) any violation of any law or regulation;
       ``(II) any breach of fiduciary duty; or
       ``(III) any unsafe or unsound practice; and

       ``(ii) such violation, breach, or practice caused, or is 
     likely to cause, more than a minimal financial loss to, or a 
     significant adverse effect on, the regulated entity; and
       ``(D) any not-for-profit corporation that receives its 
     principal funding, on an ongoing basis, from any regulated 
     entity.''.
       (8) by redesignating paragraphs (8) through (13) as 
     paragraphs (12) through (17), respectively; and
       (9) by inserting after paragraph (7) the following new 
     paragraph:
       ``(11) Federal home loan bank.--The term `Federal home loan 
     bank' means a bank established under the authority of the 
     Federal Home Loan Bank Act.'';
       (10) by redesignating paragraphs (2) through (7) as 
     paragraphs (5) through (10), respectively; and
       (11) by inserting after paragraph (1) the following new 
     paragraphs:
       ``(2) Agency.--The term `Agency' means the Federal Housing 
     Finance Agency.
       ``(3) Authorizing statutes.--The term `authorizing 
     statutes' means--
       ``(A) the Federal National Mortgage Association Charter 
     Act;
       ``(B) the Federal Home Loan Mortgage Corporation Act; and
       ``(C) the Federal Home Loan Bank Act.
       ``(4) Board.--The term `Board' means the Federal Housing 
     Enterprise Board established under section 1313B.''.

  TITLE I--REFORM OF REGULATION OF ENTERPRISES AND FEDERAL HOME LOAN 
                                 BANKS

            Subtitle A--Improvement of Safety and Soundness

     SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 
                   AGENCY.

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

     ``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 
                   AGENCY.

       ``(a) Establishment.--There is established the Federal 
     Housing Finance Agency, which shall be an independent agency 
     of the Federal Government.
       ``(b) General Supervisory and Regulatory Authority.--
       ``(1) In general.--Each regulated entity shall, to the 
     extent provided in this title, be subject to the supervision 
     and regulation of the Agency.
       ``(2) Authority over fannie mae, freddie mac, and federal 
     home loan banks.--The Director of the Federal Housing Finance 
     Agency shall have general supervisory and regulatory 
     authority over each regulated entity and shall exercise such 
     general regulatory and supervisory authority, including such 
     duties and authorities set forth under section 1313 of this 
     Act, to ensure that the purposes of this Act, the authorizing 
     statutes, and any other applicable law are carried out. The 
     Director shall have the same supervisory and regulatory 
     authority over any joint office of the Federal home loan 
     banks, including the Office of Finance of the Federal Home 
     Loan Banks, as the Director has over the individual Federal 
     home loan banks.
       ``(c) Savings Provision.--The authority of the Director to 
     take actions under subtitles B and C shall not in any way 
     limit the general supervisory and regulatory authority 
     granted to the Director.

     ``SEC. 1312. DIRECTOR.

       ``(a) Establishment of Position.--There is established the 
     position of the Director of the Federal Housing Finance 
     Agency, who shall be the head of the Agency.
       ``(b) Appointment; Term.--
       ``(1) Appointment.--The Director shall be appointed by the 
     President, by and with the advice and consent of the Senate, 
     from among individuals who are citizens of the United States, 
     have a demonstrated understanding of financial management or 
     oversight, and have a demonstrated understanding of capital 
     markets, including the mortgage securities markets and 
     housing finance.
       ``(2) Term and removal.--The Director shall be appointed 
     for a term of 5 years and may be removed by the President 
     only for cause.
       ``(3) Vacancy.--A vacancy in the position of Director that 
     occurs before the expiration of the term for which a Director 
     was appointed shall be filled in the manner established under 
     paragraph (1), and the Director appointed to fill such 
     vacancy shall be appointed only for the remainder of such 
     term.
       ``(4) Service after end of term.--An individual may serve 
     as the Director after the expiration of the term for which 
     appointed until a successor has been appointed.
       ``(5) Transitional provision.--Notwithstanding paragraphs 
     (1) and (2), the Director of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development shall serve as the Director until a successor has 
     been appointed under paragraph (1).
       ``(c) Deputy Director of the Division of Enterprise 
     Regulation.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     of the Division of Enterprise Regulation, who shall be 
     appointed by the Director from among individuals who are 
     citizens of the United States, and have a demonstrated 
     understanding of financial management or oversight and of 
     mortgage securities markets and housing finance.
       ``(2) Functions.--The Deputy Director of the Division of 
     Enterprise Regulation shall have such functions, powers, and 
     duties with respect to the oversight of the enterprises as 
     the Director shall prescribe.
       ``(d) Deputy Director of the Division of Federal Home Loan 
     Bank Regulation.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     of the Division of Federal Home Loan Bank Regulation, who 
     shall be appointed by the Director from among individuals who 
     are citizens of the United States, have a demonstrated 
     understanding of financial management or oversight and of the 
     Federal Home Loan Bank System and housing finance.
       ``(2) Functions.--The Deputy Director of the Division of 
     Federal Home Loan Bank Regulation shall have such functions, 
     powers, and duties with respect to the oversight of the 
     Federal home loan banks as the Director shall prescribe.
       ``(e) Deputy Director for Housing.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     for Housing, who shall be appointed by the Director from 
     among individuals who are citizens of the United States, and 
     have a demonstrated understanding of the housing markets and 
     housing finance and of community and economic development.

[[Page H5385]]

       ``(2) Functions.--The Deputy Director for Housing shall 
     have such functions, powers, and duties with respect to the 
     oversight of the housing mission and goals of the 
     enterprises, and with respect to oversight of the housing 
     finance and community and economic development mission of the 
     Federal home loan banks, as the Director shall prescribe.
       ``(f) Limitations.--The Director and each of the Deputy 
     Directors may not--
       ``(1) have any direct or indirect financial interest in any 
     regulated entity or regulated entity-affiliated party;
       ``(2) hold any office, position, or employment in any 
     regulated entity or regulated entity-affiliated party; or
       ``(3) have served as an executive officer or director of 
     any regulated entity, or regulated entity-affiliated party, 
     at any time during the 3-year period ending on the date of 
     appointment of such individual as Director or Deputy 
     Director.
       ``(g) Ombudsman.--The Director shall establish the position 
     of the Ombudsman in the Agency. The Director shall provide 
     that the Ombudsman will consider complaints and appeals from 
     any regulated entity and any person that has a business 
     relationship with a regulated entity and shall specify the 
     duties and authority of the Ombudsman.''.
       (b) Appointment of Director.--Notwithstanding any other 
     provision of law or of this Act, the President may, any time 
     after the date of the enactment of this Act, appoint an 
     individual to serve as the Director of the Federal Housing 
     Finance Agency, as such office is established by the 
     amendment made by subsection (a). This subsection shall take 
     effect on the date of the enactment of this Act.

     SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.

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

     ``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

       ``(a) Duties.--
       ``(1) Principal duties.--The principal duties of the 
     Director shall be--
       ``(A) to oversee the operations of each regulated entity 
     and any joint office of the Federal Home Loan Banks; and
       ``(B) to ensure that--
       ``(i) each regulated entity operates in a safe and sound 
     manner, including maintenance of adequate capital and 
     internal controls;
       ``(ii) the operations and activities of each regulated 
     entity foster liquid, efficient, competitive, and resilient 
     national housing finance markets that minimize the cost of 
     housing finance (including activities relating to mortgages 
     on housing for low- and moderate- income families involving a 
     reasonable economic return that may be less than the return 
     earned on other activities);
       ``(iii) each regulated entity complies with this title and 
     the rules, regulations, guidelines, and orders issued under 
     this title and the authorizing statutes; and
       ``(iv) each regulated entity carries out its statutory 
     mission only through activities that are consistent with this 
     title and the authorizing statutes.
       ``(2) Scope of authority.--The authority of the Director 
     shall include the authority--
       ``(A) to review and, if warranted based on the principal 
     duties described in paragraph (1), reject any acquisition or 
     transfer of a controlling interest in an enterprise; and
       ``(B) to exercise such incidental powers as may be 
     necessary or appropriate to fulfill the duties and 
     responsibilities of the Director in the supervision and 
     regulation of each regulated entity.
       ``(b) Delegation of Authority.--The Director may delegate 
     to officers or employees of the Agency, including each of the 
     Deputy Directors, any of the functions, powers, or duties of 
     the Director, as the Director considers appropriate.
       ``(c) Litigation Authority.--
       ``(1) In general.--In enforcing any provision of this 
     title, any regulation or order prescribed under this title, 
     or any other provision of law, rule, regulation, or order, or 
     in any other action, suit, or proceeding to which the 
     Director is a party or in which the Director is interested, 
     and in the administration of conservatorships and 
     receiverships, the Director may act in the Director's own 
     name and through the Director's own attorneys, or request 
     that the Attorney General of the United States act on behalf 
     of the Director.
       ``(2) Consultation with attorney general.--The Director 
     shall provide notice to, and consult with, the Attorney 
     General of the United States before taking an action under 
     paragraph (1) of this subsection or under section 1344(a), 
     1345(d), 1348(c), 1372(e), 1375(a), 1376(d), or 1379D(c), 
     except that, if the Director determines that any delay caused 
     by such prior notice and consultation may adversely affect 
     the safety and soundness responsibilities of the Director 
     under this title, the Director shall notify the Attorney 
     General as soon as reasonably possible after taking such 
     action.
       ``(3) Subject to suit.--Except as otherwise provided by 
     law, the Director shall be subject to suit (other than suits 
     on claims for money damages) by a regulated entity or 
     director or officer thereof with respect to any matter under 
     this title or any other applicable provision of law, rule, 
     order, or regulation under this title, in the United States 
     district court for the judicial district in which the 
     regulated entity has its principal place of business, or in 
     the United States District Court for the District of 
     Columbia, and the Director may be served with process in the 
     manner prescribed by the Federal Rules of Civil Procedure.

     ``SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

       ``(a) Standards.--The Director shall establish standards, 
     by regulation, guideline, or order, for each regulated entity 
     relating to--
       ``(1) adequacy of internal controls and information 
     systems, including information security and privacy policies 
     and practices, taking into account the nature and scale of 
     business operations;
       ``(2) independence and adequacy of internal audit systems;
       ``(3) management of credit and counterparty risk, including 
     systems to identify concentrations of credit risk and 
     prudential limits to restrict exposure of the regulated 
     entity to a single counterparty or groups of related 
     counterparties;
       ``(4) management of interest rate risk exposure;
       ``(5) management of market risk, including standards that 
     provide for systems that accurately measure, monitor, and 
     control market risks and, as warranted, that establish 
     limitations on market risk;
       ``(6) adequacy and maintenance of liquidity and reserves;
       ``(7) management of any asset and investment portfolio;
       ``(8) investments and acquisitions by a regulated entity, 
     to ensure that they are consistent with the purposes of this 
     Act and the authorizing statutes;
       ``(9) maintenance of adequate records, in accordance with 
     consistent accounting policies and practices that enable the 
     Director to evaluate the financial condition of the regulated 
     entity;
       ``(10) issuance of subordinated debt by that particular 
     regulated entity, as the Director considers necessary;
       ``(11) overall risk management processes, including 
     adequacy of oversight by senior management and the board of 
     directors and of processes and policies to identify, measure, 
     monitor, and control material risks, including reputational 
     risks, and for adequate, well-tested business resumption 
     plans for all major systems with remote site facilities to 
     protect against disruptive events; and
       ``(12) such other operational and management standards as 
     the Director determines to be appropriate.
       ``(b) Failure To Meet Standards.--
       ``(1) Plan requirement.--
       ``(A) In general.--If the Director determines that a 
     regulated entity fails to meet any standard established under 
     subsection (a)--
       ``(i) if such standard is established by regulation, the 
     Director shall require the regulated entity to submit an 
     acceptable plan to the Director within the time allowed under 
     subparagraph (C); and
       ``(ii) if such standard is established by guideline, the 
     Director may require the regulated entity to submit a plan 
     described in clause (i).
       ``(B) Contents.--Any plan required under subparagraph (A) 
     shall specify the actions that the regulated entity will take 
     to correct the deficiency. If the regulated entity is 
     undercapitalized, the plan may be a part of the capital 
     restoration plan for the regulated entity under section 
     1369C.
       ``(C) Deadlines for submission and review.--The Director 
     shall by regulation establish deadlines that--
       ``(i) provide the regulated entities with reasonable time 
     to submit plans required under subparagraph (A), and 
     generally require a regulated entity to submit a plan not 
     later than 30 days after the Director determines that the 
     entity fails to meet any standard established under 
     subsection (a); and
       ``(ii) require the Director to act on plans expeditiously, 
     and generally not later than 30 days after the plan is 
     submitted.
       ``(2) Required order upon failure to submit or implement 
     plan.--If a regulated entity fails to submit an acceptable 
     plan within the time allowed under paragraph (1)(C), or fails 
     in any material respect to implement a plan accepted by the 
     Director, the following shall apply:
       ``(A) Required correction of deficiency.--The Director 
     shall, by order, require the regulated entity to correct the 
     deficiency.
       ``(B) Other authority.--The Director may, by order, take 
     one or more of the following actions until the deficiency is 
     corrected:
       ``(i) Prohibit the regulated entity from permitting its 
     average total assets (as such term is defined in section 
     1316(b)) during any calendar quarter to exceed its average 
     total assets during the preceding calendar quarter, or 
     restrict the rate at which the average total assets of the 
     entity may increase from one calendar quarter to another.
       ``(ii) Require the regulated entity--

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

       ``(iii) Require the regulated entity to take any other 
     action that the Director determines will better carry out the 
     purposes of this section than any of the actions described in 
     this subparagraph.
       ``(3) Mandatory restrictions.--In complying with paragraph 
     (2), the Director shall take one or more of the actions 
     described in clauses (i) through (iii) of paragraph (2)(B) 
     if--
       ``(A) the Director determines that the regulated entity 
     fails to meet any standard prescribed under subsection (a);
       ``(B) the regulated entity has not corrected the 
     deficiency; and
       ``(C) during the 18-month period before the date on which 
     the regulated entity first failed to meet the standard, the 
     entity underwent extraordinary growth, as defined by the 
     Director.
       ``(c) Other Enforcement Authority Not Affected.--The 
     authority of the Director under

[[Page H5386]]

     this section is in addition to any other authority of the 
     Director.''.
       (b) Independence in Congressional Testimony and 
     Recommendations.--Section 111 of Public Law 93-495 (12 U.S.C. 
     250) is amended by striking ``the Federal Housing Finance 
     Board'' and inserting ``the Director of the Federal Housing 
     Finance Agency''.

     SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD.

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

     ``SEC. 1313B. FEDERAL HOUSING ENTERPRISE BOARD.

       ``(a) In General.--There is established the Federal Housing 
     Enterprise Board, which shall advise the Director with 
     respect to overall strategies and policies in carrying out 
     the duties of the Director under this title.
       ``(b) Limitations.--The Board may not exercise any 
     executive authority, and the Director may not delegate to the 
     Board any of the functions, powers, or duties of the 
     Director.
       ``(c) Composition.--The Board shall be comprised of 5 
     members, of whom--
       ``(1) one member shall be the Secretary of the Treasury;
       ``(2) one member shall be the Secretary of Housing and 
     Urban Development;
       ``(3) one member shall be the Director, who shall serve as 
     the Chairperson of the Board; and
       ``(4) two members, who shall be appointed by the President, 
     by and with the advise and consent of the Senate, who are 
     experts or experienced in the field of financial services, 
     housing finance, affordable housing, or mortgage lending.

     The members pursuant to paragraph (4) shall be appointed for 
     a term of four years. The Board may not, at any time, have 
     more than three members of the same political party.
       ``(d) Meetings.--
       ``(1) In general.--The Board shall meet upon notice by the 
     Director, but in no event shall the Board meet less 
     frequently than once every 3 months.
       ``(2) Special meetings.--Either the Secretary of the 
     Treasury or the Secretary of Housing and Urban Development 
     may, upon giving written notice to the Director, require a 
     special meeting of the Board.
       ``(e) Testimony.--On an annual basis, the Board shall 
     testify before Congress regarding--
       ``(1) the safety and soundness of the regulated entities;
       ``(2) any material deficiencies in the conduct of the 
     operations of the regulated entities;
       ``(3) the overall operational status of the regulated 
     entities;
       ``(4) an evaluation of the performance of the regulated 
     entities in carrying out their respective missions;
       ``(5) operations, resources, and performance of the Agency; 
     and
       ``(6) such other matters relating to the Agency and its 
     fulfillment of its mission, as the Board determines 
     appropriate.''.
       (b) Annual Report of the Director.--Section 1319B(a) of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 4521 
     (a)) is amended--
       (1) in paragraph (3), by striking ``and'' at the end; and
       (2) by striking paragraph (4) and inserting the following 
     new paragraphs:
       ``(4) an assessment of the Board or any of its members with 
     respect to--
       ``(A) the safety and soundness of the regulated entities;
       ``(B) any material deficiencies in the conduct of the 
     operations of the regulated entities;
       ``(C) the overall operational status of the regulated 
     entities; and
       ``(D) an evaluation of the performance of the regulated 
     entities in carrying out their missions;
       ``(5) operations, resources, and performance of the Agency;
       ``(6) a description of the demographic makeup of the 
     workforce of the Agency and the actions taken pursuant to 
     section 1319A(b) to provide for diversity in the workforce; 
     and
       ``(7) such other matters relating to the Agency and its 
     fulfillment of its mission.''.

     SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES.

       Section 1314 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4514) is amended--
       (1) in the section heading, by striking ``ENTERPRISES'' and 
     inserting ``REGULATED ENTITIES'';
       (2) in subsection (a)--
       (A) in the subsection heading, by striking ``Special 
     Reports and Reports of Financial Condition'' and inserting 
     ``Regular and Special Reports'';
       (B) in paragraph (1)--
       (i) in the paragraph heading, by striking ``Financial 
     condition'' and inserting ``Regular reports''; and
       (ii) by striking ``reports of financial condition and 
     operations'' and inserting ``regular reports on the condition 
     (including financial condition), management, activities, or 
     operations of the regulated entity, as the Director considers 
     appropriate''; and
       (C) in paragraph (2), after ``submit special reports'' 
     insert ``on any of the topics specified in paragraph (1) or 
     such other topics''; and
       (3) by adding at the end the following new subsection:
       ``(c) Reports of Fraudulent Financial Transactions.--
       ``(1) Requirement to report.--The Director shall require a 
     regulated entity to submit to the Director a timely report 
     upon discovery by the regulated entity that it has purchased 
     or sold a fraudulent loan or financial instrument or suspects 
     a possible fraud relating to a purchase or sale of any loan 
     or financial instrument. The Director shall require the 
     regulated entities to establish and maintain procedures 
     designed to discover any such transactions.
       ``(2) Protection from liability for reports.--
       ``(A) In general.--If a regulated entity makes a report 
     pursuant to paragraph (1), or a regulated entity-affiliated 
     party makes, or requires another to make, such a report, and 
     such report is made in a good faith effort to comply with the 
     requirements of paragraph (1), such regulated entity or 
     regulated entity-affiliated party shall not be liable to any 
     person under any law or regulation of the United States, any 
     constitution, law, or regulation of any State or political 
     subdivision of any State, or under any contract or other 
     legally enforceable agreement (including any arbitration 
     agreement), for such report or for any failure to provide 
     notice of such report to the person who is the subject of 
     such report or any other person identified in the report.
       ``(B) Rule of construction.--Subparagraph (A) shall not be 
     construed as creating--
       ``(i) any inference that the term `person', as used in such 
     subparagraph, may be construed more broadly than its ordinary 
     usage so as to include any government or agency of 
     government; or
       ``(ii) any immunity against, or otherwise affecting, any 
     civil or criminal action brought by any government or agency 
     of government to enforce any constitution, law, or regulation 
     of such government or agency.''.

     SEC. 105. DISCLOSURE OF INCOME AND CHARITABLE CONTRIBUTIONS 
                   BY ENTERPRISES.

       Section 1314 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4514), as amended by the preceding 
     provisions of this Act, is further amended by adding at the 
     end the following new subsections:
       ``(d) Disclosure of Charitable Contributions by 
     Enterprises.--
       ``(1) Required disclosure.--The Director shall, by 
     regulation, require each enterprise to submit a report 
     annually, in a format designated by the Director, containing 
     the following information:
       ``(A) Total value.--The total value of contributions made 
     by the enterprise to nonprofit organizations during its 
     previous fiscal year.
       ``(B) Substantial contributions.--If the value of 
     contributions made by the enterprise to any nonprofit 
     organization during its previous fiscal year exceeds the 
     designated amount, the name of that organization and the 
     value of contributions.
       ``(C) Substantial contributions to insider-affiliated 
     charities.--Identification of each contribution whose value 
     exceeds the designated amount that were made by the 
     enterprise during the enterprise's previous fiscal year to 
     any nonprofit organization of which a director, officer, or 
     controlling person of the enterprise, or a spouse thereof, 
     was a director or trustee, the name of such nonprofit 
     organization, and the value of the contribution.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) the term `designated amount' means such amount as may 
     be designated by the Director by regulation, consistent with 
     the public interest and the protection of investors for 
     purposes of this subsection; and
       ``(B) the Director may, by such regulations as the Director 
     deems necessary or appropriate in the public interest, define 
     the terms officer and controlling person.
       ``(3) Public availability.--The Director shall make the 
     information submitted pursuant to this subsection publicly 
     available.
       ``(e) Disclosure of Income.--Each enterprise shall include, 
     in each annual report filed under section 13 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m), the income 
     reported by the issuer to the Internal Revenue Service for 
     the most recent taxable year. Such income shall--
       ``(1) be presented in a prominent location in each such 
     report and in a manner that permits a ready comparison of 
     such income to income otherwise required to be included in 
     such reports under regulations issued under such section; and
       ``(2) be submitted to the Securities and Exchange 
     Commission in a form and manner suitable for entry into the 
     EDGAR system of such Commission for public availability under 
     such system.''.

     SEC. 106. ASSESSMENTS.

       Section 1316 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4516) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Annual Assessments.--The Director shall establish and 
     collect from the regulated entities annual assessments in an 
     amount not exceeding the amount sufficient to provide for 
     reasonable costs and expenses of the Agency, including--
       ``(1) the expenses of any examinations under section 1317 
     of this Act and under section 20 of the Federal Home Loan 
     Bank Act;
       ``(2) the expenses of obtaining any reviews and credit 
     assessments under section 1319;
       ``(3) such amounts in excess of actual expenses for any 
     given year as deemed necessary by the Director to maintain a 
     working capital fund in accordance with subsection (e); and
       ``(4) the wind up of the affairs of the Office of Federal 
     Housing Enterprise Oversight and the Federal Housing Finance 
     Board under title III of the Federal Housing Finance Reform 
     Act of 2007.'';
       (2) in subsection (b)--
       (A) in the subsection heading, by striking ``Enterprises'' 
     and inserting ``Regulated Entities'' ;
       (B) by realigning paragraph (2) two ems from the left 
     margin, so as to align the left margin of

[[Page H5387]]

     such paragraph with the left margins of paragraph (1);
       (C) in paragraph (1)--
       (i) by striking ``Each enterprise'' and inserting ``Each 
     regulated entity'';
       (ii) by striking ``each enterprise'' and inserting ``each 
     regulated entity''; and
       (iii) by striking ``both enterprises'' and inserting ``all 
     of the regulated entities''; and
       (D) in paragraph (3)--
       (i) in subparagraph (B), by striking ``subparagraph (A)'' 
     and inserting ``clause (i)'';
       (ii) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii) and (ii), respectively, and realigning such 
     clauses, as so redesignated, so as to be indented 6 ems from 
     the left margin;
       (iii) by striking the matter that precedes clause (i), as 
     so redesignated, and inserting the following:
       ``(3) Definition of total assets.--For purposes of this 
     section, the term `total assets' means as follows:
       ``(A) Enterprises.--With respect to an enterprise, the sum 
     of--''; and
       (iv) by adding at the end the following new subparagraph:
       ``(B) Federal home loan banks.--With respect to a Federal 
     home loan bank, the total assets of the Bank, as determined 
     by the Director in accordance with generally accepted 
     accounting principles.'';
       (3) by striking subsection (c) and inserting the following 
     new subsection:
       ``(c) Increased Costs of Regulation.--
       ``(1) Increase for inadequate capitalization.--The 
     semiannual payments made pursuant to subsection (b) by any 
     regulated entity that is not classified (for purposes of 
     subtitle B) as adequately capitalized may be increased, as 
     necessary, in the discretion of the Director to pay 
     additional estimated costs of regulation of the regulated 
     entity.
       ``(2) Adjustment for enforcement activities.--The Director 
     may adjust the amounts of any semiannual payments for an 
     assessment under subsection (a) that are to be paid pursuant 
     to subsection (b) by a regulated entity, as necessary in the 
     discretion of the Director, to ensure that the costs of 
     enforcement activities under this Act for a regulated entity 
     are borne only by such regulated entity.
       ``(3) Additional assessment for deficiencies.--If at any 
     time, as a result of increased costs of regulation of a 
     regulated entity that is not classified (for purposes of 
     subtitle B) as adequately capitalized or as the result of 
     supervisory or enforcement activities under this Act for a 
     regulated entity, the amount available from any semiannual 
     payment made by such regulated entity pursuant to subsection 
     (b) is insufficient to cover the costs of the Agency with 
     respect to such entity, the Director may make and collect 
     from such regulated entity an immediate assessment to cover 
     the amount of such deficiency for the semiannual period. If, 
     at the end of any semiannual period during which such an 
     assessment is made, any amount remains from such assessment, 
     such remaining amount shall be deducted from the assessment 
     for such regulated entity for the following semiannual 
     period.'';
       (4) in subsection (d), by striking ``If'' and inserting 
     ``Except with respect to amounts collected pursuant to 
     subsection (a)(3), if''; and
       (5) by striking subsections (e) through (g) and inserting 
     the following new subsections:
       ``(e) Working Capital Fund.--At the end of each year for 
     which an assessment under this section is made, the Director 
     shall remit to each regulated entity any amount of assessment 
     collected from such regulated entity that is attributable to 
     subsection (a)(3) and is in excess of the amount the Director 
     deems necessary to maintain a working capital fund.
       ``(f) Treatment of Assessments.--
       ``(1) Deposit.--Amounts received by the Director from 
     assessments under this section may be deposited by the 
     Director in the manner provided in section 5234 of the 
     Revised Statutes (12 U.S.C. 192) for monies deposited by the 
     Comptroller of the Currency.
       ``(2) Not government funds.--The amounts received by the 
     Director from any assessment under this section shall not be 
     construed to be Government or public funds or appropriated 
     money.
       ``(3) No apportionment of funds.--Notwithstanding any other 
     provision of law, the amounts received by the Director from 
     any assessment under this section shall not be subject to 
     apportionment for the purpose of chapter 15 of title 31, 
     United States Code, or under any other authority.
       ``(4) Use of funds.--The Director may use any amounts 
     received by the Director from assessments under this section 
     for compensation of the Director and other employees of the 
     Agency and for all other expenses of the Director and the 
     Agency.
       ``(5) Availability of oversight fund amounts.--
     Notwithstanding any other provision of law, any amounts 
     remaining in the Federal Housing Enterprises Oversight Fund 
     established under this section (as in effect before the 
     effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2007), and any amounts remaining from 
     assessments on the Federal Home Loan banks pursuant to 
     section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 
     1438(b)), shall, upon such effective date, be treated for 
     purposes of this subsection as amounts received from 
     assessments under this section.
       ``(6) Treasury investments.--
       ``(A) Authority.--The Director may request the Secretary of 
     the Treasury to invest such portions of amount received by 
     the Director from assessments paid under this section that, 
     in the Director's discretion, are not required to meet the 
     current working needs of the Agency.
       ``(B) Government obligations.--Pursuant to a request under 
     subparagraph (A), the Secretary of the Treasury shall invest 
     such amounts in government obligations guaranteed as to 
     principal and interest by the United States with maturities 
     suitable to the needs of Agency and bearing interest at a 
     rate determined by the Secretary of the Treasury taking into 
     consideration current market yields on outstanding marketable 
     obligations of the United States of comparable maturity.
       ``(g) Budget and Financial Management.--
       ``(1) Financial operating plans and forecasts.--The 
     Director shall provide to the Director of the Office of 
     Management and Budget copies of the Director's financial 
     operating plans and forecasts as prepared by the Director in 
     the ordinary course of the Agency's operations, and copies of 
     the quarterly reports of the Agency's financial condition and 
     results of operations as prepared by the Director in the 
     ordinary course of the Agency's operations.
       ``(2) Financial statements.--The Agency shall prepare 
     annually a statement of assets and liabilities and surplus or 
     deficit; a statement of income and expenses; and a statement 
     of sources and application of funds.
       ``(3) Financial management systems.--The Agency shall 
     implement and maintain financial management systems that 
     comply substantially with Federal financial management 
     systems requirements, applicable Federal accounting 
     standards, and that uses a general ledger system that 
     accounts for activity at the transaction level.
       ``(4) Assertion of internal controls.--The Director shall 
     provide to the Comptroller General an assertion as to the 
     effectiveness of the internal controls that apply to 
     financial reporting by the Agency, using the standards 
     established in section 3512(c) of title 31, United States 
     Code.
       ``(5) Rule of construction.--This subsection may not be 
     construed as implying any obligation on the part of the 
     Director to consult with or obtain the consent or approval of 
     the Director of the Office of Management and Budget with 
     respect to any reports, plans, forecasts, or other 
     information referred to in paragraph (1) or any jurisdiction 
     or oversight over the affairs or operations of the Agency.
       ``(h) Audit of Agency.--
       ``(1) In general.--The Comptroller General shall annually 
     audit the financial transactions of the Agency in accordance 
     with the U.S. generally accepted government auditing 
     standards as may be prescribed by the Comptroller General of 
     the United States. The audit shall be conducted at the place 
     or places where accounts of the Agency are normally kept. The 
     representatives of the Government Accountability Office shall 
     have access to the personnel and to all books, accounts, 
     documents, papers, records (including electronic records), 
     reports, files, and all other papers, automated data, things, 
     or property belonging to or under the control of or used or 
     employed by the Agency pertaining to its financial 
     transactions and necessary to facilitate the audit, and such 
     representatives shall be afforded full facilities for 
     verifying transactions with the balances or securities held 
     by depositories, fiscal agents, and custodians. All such 
     books, accounts, documents, records, reports, files, papers, 
     and property of the Agency shall remain in possession and 
     custody of the Agency. The Comptroller General may obtain and 
     duplicate any such books, accounts, documents, records, 
     working papers, automated data and files, or other 
     information relevant to such audit without cost to the 
     Comptroller General and the Comptroller General's right of 
     access to such information shall be enforceable pursuant to 
     section 716(c) of title 31, United States Code.
       ``(2) Report.--The Comptroller General shall submit to the 
     Congress a report of each annual audit conducted under this 
     subsection. The report to the Congress shall set forth the 
     scope of the audit and shall include the statement of assets 
     and liabilities and surplus or deficit, the statement of 
     income and expenses, the statement of sources and application 
     of funds, and such comments and information as may be deemed 
     necessary to inform Congress of the financial operations and 
     condition of the Agency, together with such recommendations 
     with respect thereto as the Comptroller General may deem 
     advisable. A copy of each report shall be furnished to the 
     President and to the Agency at the time submitted to the 
     Congress.
       ``(3) Assistance and costs.--For the purpose of conducting 
     an audit under this subsection, the Comptroller General may, 
     in the discretion of the Comptroller General, employ by 
     contract, without regard to section 5 of title 41, United 
     States Code, professional services of firms and organizations 
     of certified public accountants for temporary periods or for 
     special purposes. Upon the request of the Comptroller 
     General, the Director of the Agency shall transfer to the 
     Government Accountability Office from funds available, the 
     amount requested by the Comptroller General to cover the full 
     costs of any audit and report conducted by the Comptroller 
     General. The Comptroller General shall credit funds 
     transferred to the account established for salaries and 
     expenses of the Government Accountability Office, and such 
     amount shall be available upon receipt and without fiscal 
     year limitation to cover the full costs of the audit and 
     report.''.

     SEC. 107. EXAMINERS AND ACCOUNTANTS.

       (a) Examinations.--Section 1317 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4517) is 
     amended--
       (1) in subsection (a), by adding after the period at the 
     end the following: ``Each examination under this subsection 
     of a regulated entity shall include a review of the 
     procedures required to be established and maintained by the 
     regulated entity pursuant to section 1314(c) (relating to 
     fraudulent financial transactions) and the report regarding 
     each such examination shall describe any problems with such 
     procedures maintained by the regulated entity.'';

[[Page H5388]]

       (2) in subsection (b)--
       (A) by inserting ``of a regulated entity'' after ``under 
     this section''; and
       (B) by striking ``to determine the condition of an 
     enterprise for the purpose of ensuring its financial safety 
     and soundness'' and inserting ``or appropriate''; and
       (3) in subsection (c)--
       (A) in the second sentence, by inserting ``to conduct 
     examinations under this section'' before the period; and
       (B) in the third sentence, by striking ``from amounts 
     available in the Federal Housing Enterprises Oversight 
     Fund''.
       (b) Enhanced Authority To Hire Examiners and Accountants.--
     Section 1317 of the Housing and Community Development Act of 
     1992 (12 U.S.C. 4517) is amended by adding at the end the 
     following new subsection:
       ``(g) Appointment of Accountants, Economists, Specialists, 
     and Examiners.--
       ``(1) Applicability.--This section applies with respect to 
     any position of examiner, accountant, specialist in financial 
     markets, specialist in information technology, and economist 
     at the Agency, with respect to supervision and regulation of 
     the regulated entities, that is in the competitive service.
       ``(2) Appointment authority.--The Director may appoint 
     candidates to any position described in paragraph (1)--
       ``(A) in accordance with the statutes, rules, and 
     regulations governing appointments in the excepted service; 
     and
       ``(B) notwithstanding any statutes, rules, and regulations 
     governing appointments in the competitive service.
       ``(3) Rule of construction.--The appointment of a candidate 
     to a position under the authority of this subsection shall 
     not be considered to cause such position to be converted from 
     the competitive service to the excepted service.''.
       (c) Repeal.--Section 20 of the Federal Home Loan Bank Act 
     (12 U.S.C. 1440) is amended--
       (1) by striking the section heading and inserting the 
     following: ``examinations and gao audits'';
       (2) in the third sentence, by striking ``the Board and'' 
     each place such term appears; and
       (3) by striking the first two sentences and inserting the 
     following: ``The Federal home loan banks shall be subject to 
     examinations by the Director to the extent provided in 
     section 1317 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4517).''.

     SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE 
                   COMPENSATION.

       (a) In General.--Section 1318 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4518) is amended--
       (1) in the section heading, by striking ``OF EXCESSIVE'' 
     and inserting ``AND WITHHOLDING OF EXECUTIVE'';
       (2) by redesignating subsection (b) as subsection (d); and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Factors.--In making any determination under 
     subsection (a), the Director may take into consideration any 
     factors the Director considers relevant, including any 
     wrongdoing on the part of the executive officer, and such 
     wrongdoing shall include any fraudulent act or omission, 
     breach of trust or fiduciary duty, violation of law, rule, 
     regulation, order, or written agreement, and insider abuse 
     with respect to the regulated entity. The approval of an 
     agreement or contract pursuant to section 309(d)(3)(B) of the 
     Federal National Mortgage Association Charter Act (12 U.S.C. 
     1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(h)(2)) shall not 
     preclude the Director from making any subsequent 
     determination under subsection (a).
       ``(c) Withholding of Compensation.--In carrying out 
     subsection (a), the Director may require a regulated entity 
     to withhold any payment, transfer, or disbursement of 
     compensation to an executive officer, or to place such 
     compensation in an escrow account, during the review of the 
     reasonableness and comparability of compensation.''.
       (b) Conforming Amendments.--
       (1) Fannie mae.--Section 309(d) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is 
     amended by adding at the end the following new paragraph:
       ``(4) Notwithstanding any other provision of this section, 
     the corporation shall not transfer, disburse, or pay 
     compensation to any executive officer, or enter into an 
     agreement with such executive officer, without the approval 
     of the Director, for matters being reviewed under section 
     1318 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4518).''.
       (2) Freddie mac.--Section 303(h) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Notwithstanding any other provision of this section, 
     the Corporation shall not transfer, disburse, or pay 
     compensation to any executive officer, or enter into an 
     agreement with such executive officer, without the approval 
     of the Director, for matters being reviewed under section 
     1318 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4518).''.
       (3) Federal home loan banks.--Section 7 of the Federal Home 
     Loan Bank Act (12 U.S.C. 1427) is amended by adding at the 
     end the following new subsection:
       ``(l) Withholding of Compensation.--Notwithstanding any 
     other provision of this section, a Federal home loan bank 
     shall not transfer, disburse, or pay compensation to any 
     executive officer, or enter into an agreement with such 
     executive officer, without the approval of the Director, for 
     matters being reviewed under section 1318 of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4518).''.

     SEC. 109. REVIEWS OF REGULATED ENTITIES.

       Section 1319 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4519) is amended--
       (1) by striking the section designation and heading and 
     inserting the following:

     ``SEC. 1319. REVIEWS OF REGULATED ENTITIES.'';

     and
       (2) by striking ``is a nationally recognized'' and all that 
     follows through ``1934'' and inserting the following: ``the 
     Director considers appropriate, including an entity that is 
     registered under section 15 of the Securities Exchange Act of 
     1934 (15 U.S.C. 78a) as a nationally registered statistical 
     rating organization''.

     SEC. 110. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN 
                   AGENCY WORKFORCE.

       Section 1319A of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4520) is amended--
       (1) in the section heading, by striking ``EQUAL OPPORTUNITY 
     IN SOLICITATION OF CONTRACTS'' and inserting ``MINORITY AND 
     WOMEN INCLUSION; DIVERSITY REQUIREMENTS'';
       (2) in subsection (a), by striking ``(a) In General.--Each 
     enterprise'' and inserting ``(e) Outreach.--Each regulated 
     entity''; and
       (3) by striking subsection (b);
       (4) by inserting before subsection (e), as so redesignated 
     by paragraph (2) of this section, the following new 
     subsections:
       ``(a) Office of Minority and Women Inclusion.--Each 
     regulated entity shall establish an Office of Minority and 
     Women Inclusion, or designate an office of the entity, that 
     shall be responsible for carrying out this section and all 
     matters of the entity relating to diversity in management, 
     employment, and business activities in accordance with such 
     standards and requirements as the Director shall establish.
       ``(b) Inclusion in All Levels of Business Activities.--Each 
     regulated entity shall develop and implement standards and 
     procedures to ensure, to the maximum extent possible, the 
     inclusion and utilization of minorities (as such term is 
     defined in section 1204(c) of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 
     note)) and women, and minority- and women-owned businesses 
     (as such terms are defined in section 21A(r)(4) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)) (including 
     financial institutions, investment banking firms, mortgage 
     banking firms, asset management firms, broker-dealers, 
     financial services firms, underwriters, accountants, brokers, 
     investment consultants, and providers of legal services) in 
     all business and activities of the regulated entity at all 
     levels, including in procurement, insurance, and all types of 
     contracts (including contracts for the issuance or guarantee 
     of any debt, equity, or mortgage-related securities, the 
     management of its mortgage and securities portfolios, the 
     making of its equity investments, the purchase, sale and 
     servicing of single- and multi-family mortgage loans, and the 
     implementation of its affordable housing program and 
     initiatives). The processes established by each regulated 
     entity for review and evaluation for contract proposals and 
     to hire service providers shall include a component that 
     gives consideration to the diversity of the applicant.
       ``(c) Applicability.--This section shall apply to all 
     contracts of a regulated entity for services of any kind, 
     including services that require the services of investment 
     banking, asset management entities, broker-dealers, financial 
     services entities, underwriters, accountants, investment 
     consultants, and providers of legal services.
       ``(d) Inclusion in Annual Reports.--Each regulated entity 
     shall include, in the annual report submitted by the entity 
     to the Director pursuant to section 309(k) of the Federal 
     National Mortgage Association Charter Act (12 U.S.C. 
     1723a(k)), section 307(c) of the Federal Home Loan Mortgage 
     Corporation Act (12 U.S.C. 1456(c)), and section 20 of the 
     Federal Home Loan Bank Act (12 U.S.C. 1440), as applicable, 
     detailed information describing the actions taken by the 
     entity pursuant to this section, which shall include a 
     statement of the total amounts paid by the entity to third 
     party contractors since the last such report and the 
     percentage of such amounts paid to businesses described in 
     subsection (b) of this section.''; and
       (5) by adding at the end the following new subsection:
       ``(f) Diversity in Agency Workforce.--The Agency shall take 
     affirmative steps to seek diversity in its workforce at all 
     levels of the agency consistent with the demographic 
     diversity of the United States, which shall include--
       ``(1) heavily recruiting at historically Black colleges and 
     universities, Hispanic-serving institutions, women's 
     colleges, and colleges that typically serve majority minority 
     populations;
       ``(2) sponsoring and recruiting at job fairs in urban 
     communities, and placing employment advertisements in 
     newspapers and magazines oriented toward women and people of 
     color;
       ``(3) partnering with organizations that are focused on 
     developing opportunities for minorities and women to place 
     talented young minorities and women in industry internships, 
     summer employment, and full-time positions; and
       ``(4) where feasible, partnering with inner-city high 
     schools, girls' high schools, and high schools with majority 
     minority populations to establish or enhance financial 
     literacy programs and provide mentoring.''.

     SEC. 111. REGULATIONS AND ORDERS.

       Section 1319G of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4526) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Authority.--The Director shall issue any regulations, 
     guidelines, and orders necessary to carry out the duties of 
     the Director

[[Page H5389]]

     under this title and each of the authorizing statutes to 
     ensure that the purposes of this title and such statutes are 
     accomplished.'';
       (2) in subsection (b), by inserting ``, this title, or any 
     of the authorizing statutes'' after ``under this section''; 
     and
       (3) by striking subsection (c).

     SEC. 112. NON-WAIVER OF PRIVILEGES.

       Part 1 of subtitle A of title XIII of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4511) is amended 
     by adding at the end the following new section:

     ``SEC. 1319H. PRIVILEGES NOT AFFECTED BY DISCLOSURE.

       ``(a) In General.--The submission by any person of any 
     information to the Agency for any purpose in the course of 
     any supervisory or regulatory process of the Agency shall not 
     be construed as waiving, destroying, or otherwise affecting 
     any privilege such person may claim with respect to such 
     information under Federal or State law as to any person or 
     entity other than the Agency.
       ``(b) Rule of Construction.--No provision of subsection (a) 
     may be construed as implying or establishing that--
       ``(1) any person waives any privilege applicable to 
     information that is submitted or transferred under any 
     circumstance to which subsection (a) does not apply; or
       ``(2) any person would waive any privilege applicable to 
     any information by submitting the information to the Agency, 
     but for this subsection.''.

     SEC. 113. RISK-BASED CAPITAL REQUIREMENTS.

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

     ``SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED 
                   ENTITIES.

       ``(a) In General.--
       ``(1) Enterprises.--The Director shall, by regulation, 
     establish risk-based capital requirements for the enterprises 
     to ensure that the enterprises operate in a safe and sound 
     manner, maintaining sufficient capital and reserves to 
     support the risks that arise in the operations and management 
     of the enterprises.
       ``(2) Federal home loan banks.--The Director shall 
     establish risk-based capital standards under section 6 of the 
     Federal Home Loan Bank Act for the Federal home loan banks.
       ``(b) Confidentiality of Information.--Any person that 
     receives any book, record, or information from the Director 
     or a regulated entity to enable the risk-based capital 
     requirements established under this section to be applied 
     shall--
       ``(1) maintain the confidentiality of the book, record, or 
     information in a manner that is generally consistent with the 
     level of confidentiality established for the material by the 
     Director or the regulated entity; and
       ``(2) be exempt from section 552 of title 5, United States 
     Code, with respect to the book, record, or information.
       ``(c) No Limitation.--Nothing in this section shall limit 
     the authority of the Director to require other reports or 
     undertakings, or take other action, in furtherance of the 
     responsibilities of the Director under this Act.''.
       (b) Federal Home Loan Banks Risk-Based Capital.--Section 
     6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 
     1426(a)(3)) is amended--
       (1) by striking subparagraph (A) and inserting the 
     following new subparagraph:
       ``(A) Risk-based capital standards.--The Director shall, by 
     regulation, establish risk-based capital standards for the 
     Federal home loan banks to ensure that the Federal home loan 
     banks operate in a safe and sound manner, with sufficient 
     permanent capital and reserves to support the risks that 
     arise in the operations and management of the Federal home 
     loans banks.''; and
       (2) in subparagraph (B), by striking ``(A)(ii)'' and 
     inserting ``(A)''.

     SEC. 114. MINIMUM AND CRITICAL CAPITAL LEVELS.

       (a) Minimum Capital Level.--Section 1362 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4612) is 
     amended--
       (1) in subsection (a), by striking ``In General'' and 
     inserting ``Enterprises''; and
       (2) by striking subsection (b) and inserting the following 
     new subsections:
       ``(b) Federal Home Loan Banks.--For purposes of this 
     subtitle, the minimum capital level for each Federal home 
     loan bank shall be the minimum capital required to be 
     maintained to comply with the leverage requirement for the 
     bank established under section 6(a)(2) of the Federal Home 
     Loan Bank Act (12 U.S.C. 1426(a)(2)).
       ``(c) Establishment of Revised Minimum Capital Levels.--
     Notwithstanding subsections (a) and (b) and notwithstanding 
     the capital classifications of the regulated entities, the 
     Director may, by regulations issued under section 1319G, 
     establish a minimum capital level for the enterprises, for 
     the Federal home loan banks, or for both the enterprises and 
     the banks, that is higher than the level specified in 
     subsection (a) for the enterprises or the level specified in 
     subsection (b) for the Federal home loan banks, to the extent 
     needed to ensure that the regulated entities operate in a 
     safe and sound manner.
       ``(d) Authority To Require Temporary Increase.--
     Notwithstanding subsections (a) and (b) and any minimum 
     capital level established pursuant to subsection (c), the 
     Director may, by order, increase the minimum capital level 
     for a regulated entity on a temporary basis for such period 
     as the Director may provide if the Director--
       ``(1) makes any determination specified in subparagraphs 
     (A) through (C) of section 1364(c)(1);
       ``(2) determines that the regulated entity has violated any 
     of the prudential standards established pursuant to section 
     1313A and, as a result of such violation, determines that an 
     unsafe and unsound condition exists; or
       ``(3) determines that an unsafe and unsound condition 
     exists, except that a temporary increase in minimum capital 
     imposed on a regulated entity pursuant to this paragraph 
     shall not remain in place for a period of more than 6 months 
     unless the Director makes a renewed determination of the 
     existence of an unsafe and unsound condition.
       ``(e) Authority To Establish Additional Capital and Reserve 
     Requirements for Particular Programs.--The Director may, at 
     any time by order or regulation, establish such capital or 
     reserve requirements with respect to any program or activity 
     of a regulated entity as the Director considers appropriate 
     to ensure that the regulated entity operates in a safe and 
     sound manner, with sufficient capital and reserves to support 
     the risks that arise in the operations and management of the 
     regulated entity.
       ``(f) Periodic Review.--The Director shall periodically 
     review the amount of core capital maintained by the 
     enterprises, the amount of capital retained by the Federal 
     home loan banks, and the minimum capital levels established 
     for such regulated entities pursuant to this section. The 
     Director shall rescind any temporary minimum capital level 
     increase if the Director determines that the circumstances or 
     facts justifying the temporary increase are no longer 
     present.''.
       (b) Critical Capital Levels.--
       (1) In general.--Section 1363 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4613) is amended--
       (A) by striking ``For'' and inserting ``(a) Enterprises.--
     For''; and
       (B) by adding at the end the following new subsection:
       ``(b) Federal Home Loan Banks.--
       ``(1) In general.--For purposes of this subtitle, the 
     critical capital level for each Federal home loan bank shall 
     be such amount of capital as the Director shall, by 
     regulation require.
       ``(2) Consideration of other critical capital levels.--In 
     establishing the critical capital level under paragraph (1) 
     for the Federal home loan banks, the Director shall take due 
     consideration of the critical capital level established under 
     subsection (a) for the enterprises, with such modifications 
     as the Director determines to be appropriate to reflect the 
     difference in operations between the banks and the 
     enterprises.''.
       (2) Regulations.--Not later than the expiration of the 180-
     day period beginning on the effective date under section 185, 
     the Director of the Federal Housing Finance Agency shall 
     issue regulations pursuant to section 1363(b) of the Housing 
     and Community Development Act of 1992 (as added by paragraph 
     (1) of this subsection) establishing the critical capital 
     level under such section.

     SEC. 115. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND 
                   LIABILITIES.

       (a) In General.--Subtitle B of title XIII of the Housing 
     and Community Development Act of 1992 (12 U.S.C. 4611 et 
     seq.) is amended--
       (1) by striking the subtitle designation and heading and 
     inserting the following:

 ``Subtitle B--Required Capital Levels for Regulated Entities, Special 
      Enforcement Powers, and Reviews of Assets and Liabilities'';

     and
       (2) by adding at the end the following new section:

     ``SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES.

       ``(a) In General.--The Director shall, by regulation, 
     establish standards by which the portfolio holdings, or rate 
     of growth of the portfolio holdings, of the enterprises will 
     be deemed to be consistent with the mission and the safe and 
     sound operations of the enterprises. In developing such 
     standards, the Director shall consider--
       ``(1) the size or growth of the mortgage market;
       ``(2) the need for the portfolio in maintaining liquidity 
     or stability of the secondary mortgage market (including the 
     market for the mortgage-backed securities the enterprises 
     issue);
       ``(3) the need for an inventory of mortgages in connection 
     with securitizations;
       ``(4) the need for the portfolio to directly support the 
     affordable housing mission of the enterprises;
       ``(5) the liquidity needs of the enterprises;
       ``(6) any potential risks posed by the nature of the 
     portfolio holdings; and
       ``(7) any additional factors that the Director determines 
     to be necessary to carry out the purpose under the first 
     sentence of this subsection to establish standards for 
     assessing whether the portfolio holdings are consistent with 
     the mission and safe and sound operations of the enterprises.
       ``(b) Temporary Adjustments.--The Director may, by order, 
     make temporary adjustments to the established standards for 
     an enterprise or both enterprises, such as during times of 
     economic distress or market disruption.
       ``(c) Authority To Require Disposition or Acquisition.--The 
     Director shall monitor the portfolio of each enterprise. 
     Pursuant to subsection (a) and notwithstanding the capital 
     classifications of the enterprises, the Director may, by 
     order, require an enterprise, under such terms and conditions 
     as the Director determines to be appropriate, to dispose of 
     or acquire any asset, if the Director determines that such 
     action is consistent with the purposes of this Act or any of 
     the authorizing statutes.''.
       (b) Regulations.--Not later than the expiration of the 180-
     day period beginning on the effective date under section 185, 
     the Director of the Federal Housing Finance Agency shall 
     issue regulations pursuant to section 1369E(a) of the Housing 
     and Community Development Act of 1992 (as added by subsection 
     (a) of this section) establishing the portfolio holdings 
     standards under such section.

[[Page H5390]]

     SEC. 116. CORPORATE GOVERNANCE OF ENTERPRISES.

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

     ``SEC. 1322A. CORPORATE GOVERNANCE OF ENTERPRISES.

       ``(a) Board of Directors.--
       ``(1) Independence.--A majority of seated members of the 
     board of directors of each enterprise shall be independent 
     board members, as defined under rules set forth by the New 
     York Stock Exchange, as such rules may be amended from time 
     to time.
       ``(2) Frequency of meetings.--To carry out its obligations 
     and duties under applicable laws, rules, regulations, and 
     guidelines, the board of directors of an enterprise shall 
     meet at least eight times a year and not less than once a 
     calendar quarter.
       ``(3) Non-management board member meetings.--The non-
     management directors of an enterprise shall meet at regularly 
     scheduled executive sessions without management 
     participation.
       ``(4) Quorum; prohibition on proxies.--For the transaction 
     of business, a quorum of the board of directors of an 
     enterprise shall be at least a majority of the seated board 
     of directors and a board member may not vote by proxy.
       ``(5) Information.--The management of an enterprise shall 
     provide a board member of the enterprise with such adequate 
     and appropriate information that a reasonable board member 
     would find important to the fulfillment of his or her 
     fiduciary duties and obligations.
       ``(6) Annual review.--At least annually, the board of 
     directors of each enterprise shall review, with appropriate 
     professional assistance, the requirements of laws, rules, 
     regulations, and guidelines that are applicable to its 
     activities and duties.
       ``(b) Committees of Boards of Directors.--
       ``(1) Frequency of meetings.--Any committee of the board of 
     directors of an enterprise shall meet with sufficient 
     frequency to carry out its obligations and duties under 
     applicable laws, rules, regulations, and guidelines.
       ``(2) Required committees.--Each enterprise shall provide 
     for the establishment, however styled, of the following 
     committees of the board of directors:
       ``(A) Audit committee.
       ``(B) Compensation committee.
       ``(C) Nominating/corporate governance committee.
     Such committees shall be in compliance with the charter, 
     independence, composition, expertise, duties, 
     responsibilities, and other requirements set forth under 
     section 10A(m) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78j-1(m)), with respect to the audit committee, and 
     under rules issued by the New York Stock Exchange, as such 
     rules may be amended from time to time.
       ``(c) Compensation.--
       ``(1) In general.--The compensation of board members, 
     executive officers, and employees of an enterprise--
       ``(A) shall not be in excess of that which is reasonable 
     and appropriate;
       ``(B) shall be commensurate with the duties and 
     responsibilities of such persons;
       ``(C) shall be consistent with the long-term goals of the 
     enterprise;
       ``(D) shall not focus solely on earnings performance, but 
     shall take into account risk management, operational 
     stability and legal and regulatory compliance as well; and
       ``(E) shall be undertaken in a manner that complies with 
     applicable laws, rules, and regulations.
       ``(2) Reimbursement.--If an enterprise is required to 
     prepare an accounting restatement due to the material 
     noncompliance of the enterprise, as a result of misconduct, 
     with any financial reporting requirement under the securities 
     laws, the chief executive officer and chief financial officer 
     of the enterprise shall reimburse the enterprise as provided 
     under section 304 of the Sarbanes-Oxley Act of 2002 (15 
     U.S.C. 7243). This provision does not otherwise limit the 
     authority of the Agency to employ remedies available to it 
     under its enforcement authorities.
       ``(d) Code of Conduct and Ethics.--
       ``(1) In general.--An enterprise shall establish and 
     administer a written code of conduct and ethics that is 
     reasonably designed to assure the ability of board members, 
     executive officers, and employees of the enterprise to 
     discharge their duties and responsibilities, on behalf of the 
     enterprise, in an objective and impartial manner, and that 
     includes standards required under section 406 of the 
     Sarbanes-Oxley Act of 2002 (15 U.S.C. 7264) and other 
     applicable laws, rules, and regulations.
       ``(2) Review.--Not less than once every three years, an 
     enterprise shall review the adequacy of its code of conduct 
     and ethics for consistency with practices appropriate to the 
     enterprise and make any appropriate revisions to such code.
       ``(e) Conduct and Responsibilities of Board of Directors.--
     The board of directors of an enterprise shall be responsible 
     for directing the conduct and affairs of the enterprise in 
     furtherance of the safe and sound operation of the enterprise 
     and shall remain reasonably informed of the condition, 
     activities, and operations of the enterprise. The 
     responsibilities of the board of directors shall include 
     having in place adequate policies and procedures to assure 
     its oversight of, among other matters, the following:
       ``(1) Corporate strategy, major plans of action, risk 
     policy, programs for legal and regulatory compliance and 
     corporate performance, including prudent plans for growth and 
     allocation of adequate resources to manage operations risk.
       ``(2) Hiring and retention of qualified executive officers 
     and succession planning for such executive officers.
       ``(3) Compensation programs of the enterprise.
       ``(4) Integrity of accounting and financial reporting 
     systems of the enterprise, including independent audits and 
     systems of internal control.
       ``(5) Process and adequacy of reporting, disclosures, and 
     communications to shareholders, investors, and potential 
     investors.
       ``(6) Extensions of credit to board members and executive 
     officers.
       ``(7) Responsiveness of executive officers in providing 
     accurate and timely reports to Federal regulators and in 
     addressing the supervisory concerns of Federal regulators in 
     a timely and appropriate manner.
       ``(f) Prohibition of Extensions of Credit.--An enterprise 
     may not directly or indirectly, including through any 
     subsidiary, extend or maintain credit, arrange for the 
     extension of credit, or renew an extension of credit, in the 
     form of a personal loan to or for any board member or 
     executive officer of the enterprise, as provided by section 
     13(k) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m(k)).
       ``(g) Certification of Disclosures.--The chief executive 
     officer and the chief financial officer of an enterprise 
     shall review each quarterly report and annual report issued 
     by the enterprise and such reports shall include 
     certifications by such officers as required by section 302 of 
     the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241).
       ``(h) Change of Audit Partner.--An enterprise may not 
     accept audit services from an external auditing firm if the 
     lead or coordinating audit partner who has primary 
     responsibility for the external audit of the enterprise, or 
     the external audit partner who has responsibility for 
     reviewing the external audit has performed audit services for 
     the enterprise in each of the five previous fiscal years.
       ``(i) Compliance Program.--
       ``(1) Requirement.--Each enterprise shall establish and 
     maintain a compliance program that is reasonably designed to 
     assure that the enterprise complies with applicable laws, 
     rules, regulations, and internal controls.
       ``(2) Compliance officer.--The compliance program of an 
     enterprise shall be headed by a compliance officer, however 
     styled, who reports directly to the chief executive officer 
     of the enterprise. The compliance officer shall report 
     regularly to the board of directors or an appropriate 
     committee of the board of directors on compliance with and 
     the adequacy of current compliance policies and procedures of 
     the enterprise, and shall recommend any adjustments to such 
     policies and procedures that the compliance officer considers 
     necessary and appropriate.
       ``(j) Risk Management Program.--
       ``(1) Requirement.--Each enterprise shall establish and 
     maintain a risk management program that is reasonably 
     designed to manage the risks of the operations of the 
     enterprise.
       ``(2) Risk management officer.--The risk management program 
     of an enterprise shall be headed by a risk management 
     officer, however styled, who reports directly to the chief 
     executive officer of the enterprise. The risk management 
     officer shall report regularly to the board of directors or 
     an appropriate committee of the board of directors on 
     compliance with and the adequacy of current risk management 
     policies and procedures of the enterprise, and shall 
     recommend any adjustments to such policies and procedures 
     that the risk management officer considers necessary and 
     appropriate.
       ``(k) Compliance With Other Laws.--
       ``(1) Deregistered or unregistered common stock.--If an 
     enterprise deregisters or has not registered its common stock 
     with the Securities and Exchange Commission under the 
     Securities Exchange Act of 1934, the enterprise shall comply 
     or continue to comply with sections 10A(m) and 13(k) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78j-1(m), 78m(k)) 
     and sections 302, 304, and 406 of the Sarbanes-Oxley Act of 
     2002 (15 U.S.C. 7241, 7243, 7264), subject to such 
     requirements as provided by subsection (l) of this section.
       ``(2) Registered common stock.--An enterprise that has its 
     common stock registered with the Securities and Exchange 
     Commission shall maintain such registered status, unless it 
     provides 60 days prior written notice to the Director stating 
     its intent to deregister and its understanding that it will 
     remain subject to the requirements of the sections of the 
     Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 
     2002, subject to such requirements as provided by subsection 
     (l) of this section.
       ``(l) Other Matters.--The Director may from time to time 
     establish standards, by regulation, order, or guideline, 
     regarding such other corporate governance matters of the 
     enterprises as the Director considers appropriate.
       ``(m) Modification of Standards.--In connection with 
     standards of Federal or State law (including the Revised 
     Model Corporation Act) or New York Stock Exchange rules that 
     are made applicable to an enterprise by section 1710.10 of 
     the Director's rules (12 C.F.R. 1710.10) and by subsections 
     (a), (b), (g), (i), (j), and (k) of this section, the 
     Director, in the Director's sole discretion, may modify the 
     standards contained in this section or in part 1710 of the 
     Director's rules (12 C.F.R. Part 1710) in accordance with 
     section 553 of title 5, United States Code, and upon written 
     notice to the enterprise.''.

     SEC. 117. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE ACT 
                   OF 1934.

       The Housing and Community Development Act of 1992 is 
     amended by adding after section 1322A, as added by the 
     preceding provisions of this Act, the following new section:

     ``SEC. 1322B. REQUIRED REGISTRATION UNDER SECURITIES EXCHANGE 
                   ACT OF 1934.

       ``(a) In General.--Each regulated entity shall register at 
     least one class of the capital stock of such regulated 
     entity, and maintain such registration with the Securities 
     and Exchange Commission, under the Securities Exchange Act of 
     1934.

[[Page H5391]]

       ``(b) Enterprises.--Each enterprise shall comply with 
     sections 14 and 16 of the Securities Exchange Act of 1934.''.

     SEC. 118. LIAISON WITH FINANCIAL INSTITUTIONS EXAMINATION 
                   COUNCIL.

       Section 1007 of the Federal Financial Institutions 
     Examination Council Act of 1978 (12 U.S.C. 3306) is amended--
       (1) in the section heading, by inserting after ``state'' 
     the following: ``and federal housing finance agency''; and
       (2) by inserting after ``financial institutions'' the 
     following: ``, and one representative of the Federal Housing 
     Finance Agency,''.

     SEC. 119. GUARANTEE FEE STUDY.

       (a) In General.--The Director of the Federal Housing 
     Finance Agency, in consultation with the heads of the federal 
     banking agencies, shall, not later than 18 months after the 
     date of the enactment of this Act, submit to the Congress a 
     study concerning the pricing, transparency and reporting of 
     the Federal National Mortgage Association, the Federal Home 
     Loan Mortgage Corporation, and the Federal home loan banks 
     with regard to guarantee fees and concerning analogous 
     practices, transparency and reporting requirements (including 
     advances pricing practices by the Federal Home Loan Banks) of 
     other participants in the business of mortgage purchases and 
     securitization.
       (b) Factors.--The study required by this section shall 
     examine various factors such as credit risk, counterparty 
     risk considerations, economic value considerations, and 
     volume considerations used by the regulated entities (as such 
     term is defined in section 1303 of the Housing and Community 
     Development Act of 1992) included in the study in setting the 
     amount of fees they charge.
       (c) Contents of Report.--The report required under 
     subsection (a) shall identify and analyze--
       (1) the factors used by each enterprise (as such term is 
     defined in section 1303 of the Housing and Community 
     Development Act of 1992) in determining the amount of the 
     guarantee fees it charges;
       (2) the total revenue the enterprises earn from guarantee 
     fees;
       (3) the total costs incurred by the enterprises for 
     providing guarantees;
       (4) the average guarantee fee charged by the enterprises;
       (5) an analysis of how and why the guarantee fees charged 
     differ from such fees charged during the previous year;
       (6) a breakdown of the revenue and costs associated with 
     providing guarantees, based on product type and risk 
     classifications; and
       (7) other relevant information on guarantee fees with other 
     participants in the mortgage and securitization business.
       (d) Protection of Information.--Nothing in this section may 
     be construed to require or authorize the Director of the 
     Federal Housing Finance Agency, in connection with the study 
     mandated by this section, to disclose information of the 
     enterprises or other organization that is confidential or 
     proprietary.
       (e) Effective Date.--This section shall take effect on the 
     date of the enactment of this Act.

     SEC. 120. CONFORMING AMENDMENTS.

       (a) 1992 Act.--Part 1 of subtitle A of title XIII of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 4511 
     et seq.), as amended by the preceding provisions of this Act, 
     is further amended--
       (1) by striking ``an enterprise'' each place such term 
     appears in such part (except in sections 1313(a)(2)(A), 
     1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) and inserting ``a 
     regulated entity'';
       (2) by striking ``the enterprise'' each place such term 
     appears in such part (except in section 1316(b)(3)) and 
     inserting ``the regulated entity'';
       (3) by striking ``the enterprises'' each place such term 
     appears in such part (except in sections 1312(c)(2), and 
     1312(e)(2)) and inserting ``the regulated entities'';
       (4) by striking ``each enterprise'' each place such term 
     appears in such part and inserting ``each regulated entity'';
       (5) by striking ``Office'' each place such term appears in 
     such part (except in sections 1311(b)(2), 1312(b)(5), 
     1315(b), and 1316(a)(4), (g), and (h), 1317(c), and 1319A(a)) 
     and inserting ``Agency'';
       (6) in section 1315 (12 U.S.C. 4515)--
       (A) in subsection (a)--
       (i) in the subsection heading, by striking ``Office 
     Personnel'' and inserting ``In General''; and
       (ii) by striking ``The'' and inserting ``Subject to title 
     III of the Federal Housing Finance Reform Act of 2007, the'';
       (B) by striking subsections (d) and (f); and
       (C) by redesignating subsection (e) as subsection (d);
       (7) in section 1319B (12 U.S.C. 4521), by striking 
     ``Committee on Banking, Finance and Urban Affairs'' each 
     place such term appears and inserting ``Committee on 
     Financial Services''; and
       (8) in section 1319F (12 U.S.C. 4525), striking all that 
     follows ``United States Code'' and inserting ``, the Agency 
     shall be considered an agency responsible for the regulation 
     or supervision of financial institutions.''.
       (b) Amendments to Fannie Mae Charter Act.--The Federal 
     National Mortgage Association Charter Act (12 U.S.C. 1716 et 
     seq.) is amended--
       (1) by striking ``Director of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development'' each place such term appears, and inserting 
     ``Director of the Federal Housing Finance Agency'', in--
       (A) section 303(c)(2) (12 U.S.C. 1718(c)(2));
       (B) section 309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)); and
       (C) section 309(k)(1); and
       (2) in section 309--
       (A) in subsections (d)(3)(A) and (n)(1), by striking 
     ``Banking, Finance and Urban Affairs'' each place such term 
     appears and inserting ``Financial Services''; and
       (B) in subsection (m)--
       (i) in paragraph (1), by striking ``Secretary'' the second 
     place such term appears and inserting ``Director'';
       (ii) in paragraph (2), by striking ``Secretary'' the second 
     place such term appears and inserting ``Director''; and
       (iii) by striking ``Secretary'' each other place such term 
     appears and inserting ``Director of the Federal Housing 
     Finance Agency''; and
       (C) in subsection (n), by striking ``Secretary'' each place 
     such term appears and inserting ``Director of the Federal 
     Housing Finance Agency''.
       (c) Amendments to Freddie Mac Act.--The Federal Home Loan 
     Mortgage Corporation Act is amended--
       (1) by striking ``Director of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development'' each place such term appears, and inserting 
     ``Director of the Federal Housing Finance Agency'', in--
       (A) section 303(b)(2) (12 U.S.C. 1452(b)(2));
       (B) section 303(h)(2) (12 U.S.C. 1452(h)(2)); and
       (C) section 307(c)(1) (12 U.S.C. 1456(c)(1));
       (2) in sections 303(h)(1) and 307(f)(1) (12 U.S.C. 
     1452(h)(1), 1456(f)(1)), by striking ``Banking, Finance and 
     Urban Affairs'' each place such term appears and inserting 
     ``Financial Services'';
       (3) in section 306(i) (12 U.S.C. 1455(i))--
       (A) by striking ``1316(c)'' and inserting ``306(c)''; and
       (B) by striking ``section 106'' and inserting ``section 
     1316''; and
       (4) in section 307 (12 U.S.C. 1456))--
       (A) in subsection (e)--
       (i) in paragraph (1), by striking ``Secretary'' the second 
     place such term appears and inserting ``Director'';
       (ii) in paragraph (2), by striking ``Secretary'' the second 
     place such term appears and inserting ``Director''; and
       (iii) by striking ``Secretary'' each other place such term 
     appears and inserting ``Director of the Federal Housing 
     Finance Agency''; and
       (B) in subsection (f), by striking ``Secretary'' each place 
     such term appears and inserting ``Director of the Federal 
     Housing Finance Agency''.

             Subtitle B--Improvement of Mission Supervision

     SEC. 131. TRANSFER OF PRODUCT APPROVAL AND HOUSING GOAL 
                   OVERSIGHT.

       Part 2 of subtitle A of title XIII of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is 
     amended--
       (1) by striking the designation and heading for the part 
     and inserting the following:

   ``PART 2--PRODUCT APPROVAL BY DIRECTOR, CORPORATE GOVERNANCE, AND 
                   ESTABLISHMENT OF HOUSING GOALS'';

     and
       (2) by striking sections 1321 and 1322.

     SEC. 132. REVIEW OF ENTERPRISE PRODUCTS.

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

     ``SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS OF 
                   ENTERPRISES.

       ``(a) In General.--The Director shall require each 
     enterprise to obtain the approval of the Director for any 
     product of the enterprise before initially offering the 
     product.
       ``(b) Standard for Approval.--In considering any request 
     for approval of a product pursuant to subsection (a), the 
     Director shall make a determination that--
       ``(1) in the case of a product of the Federal National 
     Mortgage Association, the Director determines that the 
     product is authorized under paragraph (2), (3), (4), or (5) 
     of section 302(b) or section 304 of the Federal National 
     Mortgage Association Charter Act, (12 U.S.C. 1717(b), 1719);
       ``(2) in the case of a product of the Federal Home Loan 
     Mortgage Corporation, the Director determines that the 
     product is authorized under paragraph (1), (4), or (5) of 
     section 305(a) of the Federal Home Loan Mortgage Corporation 
     Act (12 U.S.C. 1454(a));
       ``(3) the product is in the public interest;
       ``(4) the product is consistent with the safety and 
     soundness of the enterprise or the mortgage finance system; 
     and
       ``(5) the product does not materially impair the efficiency 
     of the mortgage finance system.
       ``(c) Procedure for Approval.--
       ``(1) Submission of request.--An enterprise shall submit to 
     the Director a written request for approval of a product that 
     describes the product in such form as prescribed by order or 
     regulation of the Director.
       ``(2) Request for public comment.--Immediately upon receipt 
     of a request for approval of a product, as required under 
     paragraph (1), the Director shall publish notice of such 
     request and of the period for public comment pursuant to 
     paragraph (3) regarding the product, and a description of the 
     product proposed by the request. The Director shall give 
     interested parties the opportunity to respond in writing to 
     the proposed product.
       ``(3) Public comment period.--During the 30-day period 
     beginning on the date of publication pursuant to paragraph 
     (2) of a request for approval of a product, the Director 
     shall receive public comments regarding the proposed product.
       ``(4) Offering of product.--
       ``(A) In general.--Not later than 30 days after the close 
     of the public comment period described in paragraph (3), the 
     Director shall approve or deny the product, specifying the 
     grounds for such decision in writing.

[[Page H5392]]

       ``(B) Failure to act.--If the Director fails to act within 
     the 30-day period described in subparagraph (A), the 
     enterprise may offer the product.
       ``(d) Expedited Review.--
       ``(1) Determination and notice.--If an enterprise 
     determines that any new activity, service, undertaking, or 
     offering is not a product, as defined in subsection (f), the 
     enterprise shall provide written notice to the Director prior 
     to the commencement of such activity, service, undertaking, 
     or offering.
       ``(2) Director determination of applicable procedure.--
     Immediately upon receipt of any notice pursuant to paragraph 
     (1), the Director shall make a determination under paragraph 
     (3).
       ``(3) Determination and treatment as product.--If the 
     Director determines that any new activity, service, 
     undertaking, or offering consists of, relates to, or involves 
     a product--
       ``(A) the Director shall notify the enterprise of the 
     determination;
       ``(B) the new activity, service, undertaking, or offering 
     described in the notice under paragraph (1) shall be 
     considered a product for purposes of this section; and
       ``(C) the enterprise shall withdraw its request or submit a 
     written request for approval of the product pursuant to 
     subsection (c).
       ``(e) Conditional Approval.--The Director may conditionally 
     approve the offering of any product by an enterprise, and may 
     establish terms, conditions, or limitations with respect to 
     such product with which the enterprise must comply in order 
     to offer such product.
       ``(f) Definition of Product.--For purposes of this section, 
     the term `product' does not include--
       ``(1) the automated loan underwriting system of an 
     enterprise in existence as of the date of the enactment of 
     the Federal Housing Finance Reform Act of 2007, including any 
     upgrade to the technology, operating system, or software to 
     operate the underwriting system; or
       ``(2) any modification to the mortgage terms and conditions 
     or mortgage underwriting criteria relating to the mortgages 
     that are purchased or guaranteed by an enterprise: Provided, 
     That such modifications do not alter the underlying 
     transaction so as to include services or financing, other 
     than residential mortgage financing, or create significant 
     new exposure to risk for the enterprise or the holder of the 
     mortgage.
       ``(g) No Limitation.--Nothing in this section shall be 
     deemed to restrict--
       ``(1) the safety and soundness authority of the Director 
     over all new and existing products or activities; or
       ``(2) the authority of the Director to review all new and 
     existing products or activities to determine that such 
     products or activities are consistent with the statutory 
     mission of the enterprise.''.
       (b) Conforming Amendments.--
       (1) Fannie mae.--Section 302(b)(6) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1717(b)(6)) is 
     amended--
       (A) by striking ``implement any new program'' and inserting 
     ``initially offer any product'';
       (B) by striking ``section 1303'' and inserting ``section 
     1321(f)''; and
       (C) by striking ``before obtaining the approval of the 
     Secretary under section 1322'' and inserting ``except in 
     accordance with section 1321''.
       (2) Freddie mac.--Section 305(c) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1454(c)) is amended--
       (A) by striking ``implement any new program'' and inserting 
     ``initially offer any product'';
       (B) by striking ``section 1303'' and inserting ``section 
     1321(f)''; and
       (C) by striking ``before obtaining the approval of the 
     Secretary under section 1322'' and inserting ``except in 
     accordance with section 1321''.
       (3) 1992 act.--Section 1303 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4502), as amended by 
     section 2 of this Act, is further amended--
       (A) by striking paragraph (17) (relating to the definition 
     of ``new program'') ; and
       (B) by redesignating paragraphs (18) through (23) as 
     paragraphs (17) through (22), respectively.

     SEC. 133. CONFORMING LOAN LIMITS.

       (a) Fannie Mae.--
       (1) General limit.--Section 302(b)(2) of the Federal 
     National Mortgage Association Charter Act (12 U.S.C. 
     1717(b)(2)) is amended--
       (A) in the 4th sentence, by striking ``the Resolution Trust 
     Corporation,''; and
       (B) by striking the 7th and 8th sentences and inserting the 
     following new sentences: ``For 2007, such limitations shall 
     not exceed $417,000 for a mortgage secured by a single-family 
     residence, $533,850 for a mortgage secured by a 2-family 
     residence, $645,300 for a mortgage secured by a 3-family 
     residence, and $801,950 for a mortgage secured by a 4-family 
     residence, except that such maximum limitations shall be 
     adjusted effective January 1 of each year beginning with 
     2008, subject to the limitations in this paragraph. Each 
     adjustment shall be made by adding to or subtracting from 
     each such amount (as it may have been previously adjusted) a 
     percentage thereof equal to the percentage increase or 
     decrease, during the most recent 12-month or four-quarter 
     period ending before the time of determining such annual 
     adjustment, in the housing price index maintained by the 
     Director of the Federal Housing Finance Agency (pursuant to 
     section 1322 of the Housing and Community Development Act of 
     1992 (12 U.S.C. 4541)).''.
       (2) High-cost area limit.--Section 302(b)(2) of the Federal 
     National Mortgage Association Charter Act is (12 U.S.C. 
     1717(b)(2)) is amended by adding after the period at the end 
     the following: ``Such foregoing limitations shall also be 
     increased with respect to properties of a particular size 
     located in any area for which the median price for such size 
     residence exceeds the foregoing limitation for such size 
     residence, to the lesser of 150 percent of such foregoing 
     limitation for such size residence or the amount that is 
     equal to the median price in such area for such size 
     residence, except that, subject to the order, if any, issued 
     by the Director of the Federal Housing Finance Agency 
     pursuant to section 133(d)(3) of the Federal Housing Finance 
     Reform Act of 2007, such increase shall apply only with 
     respect to mortgages on which are based securities issued and 
     sold by the corporation.''.
       (b) Freddie Mac.--
       (1) General limit.--Section 305(a)(2) of the Federal Home 
     Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is 
     amended--
       (A) in the 3rd sentence, by striking ``the Resolution Trust 
     Corporation,''; and
       (B) by striking the 6th and 7th sentences and inserting the 
     following new sentences: ``For 2007, such limitations shall 
     not exceed $417,000 for a mortgage secured by a single-family 
     residence, $533,850 for a mortgage secured by a 2-family 
     residence, $645,300 for a mortgage secured by a 3-family 
     residence, and $801,950 for a mortgage secured by a 4-family 
     residence, except that such maximum limitations shall be 
     adjusted effective January 1 of each year beginning with 
     2008, subject to the limitations in this paragraph. Each 
     adjustment shall be made by adding to or subtracting from 
     each such amount (as it may have been previously adjusted) a 
     percentage thereof equal to the percentage increase or 
     decrease, during the most recent 12-month or four-quarter 
     period ending before the time of determining such annual 
     adjustment, in the housing price index maintained by the 
     Director of the Federal Housing Finance Agency (pursuant to 
     section 1322 of the Housing and Community Development Act of 
     1992 (12 U.S.C. 4541)).''
       (2) High-cost area limit.--Section 305(a)(2) of the Federal 
     Home Loan Mortgage Corporation Act is amended by adding after 
     the period at the end the following: ``Such foregoing 
     limitations shall also be increased with respect to 
     properties of a particular size located in any area for which 
     the median price for such size residence exceeds the 
     foregoing limitation for such size residence, to the lesser 
     of 150 percent of such foregoing limitation for such size 
     residence or the amount that is equal to the median price in 
     such area for such size residence, except that, subject to 
     the order, if any, issued by the Director of the Federal 
     Housing Finance Agency pursuant to section 133(d)(3) of the 
     Federal Housing Finance Reform Act of 2007, such increase 
     shall apply only with respect to mortgages on which are based 
     securities issued and sold by the Corporation.''.
       (c) Housing Price Index.--Subpart A of part 2 of subtitle A 
     of title XIII of the Housing and Community Development Act of 
     1992 (as amended by the preceding provisions of this Act) is 
     amended by inserting after section 1321 (as added by section 
     132 of this Act) the following new section:

     ``SEC. 1322. HOUSING PRICE INDEX.

       ``(a) In General.--The Director shall establish and 
     maintain a method of assessing the national average 1-family 
     house price for use for adjusting the conforming loan 
     limitations of the enterprises. In establishing such method, 
     the Director shall take into consideration the monthly survey 
     of all major lenders conducted by the Federal Housing Finance 
     Agency to determine the national average 1-family house 
     price, the House Price Index maintained by the Office of 
     Federal Housing Enterprise Oversight of the Department of 
     Housing and Urban Development before the effective date under 
     section 185 of the Federal Housing Finance Reform Act of 
     2007, any appropriate house price indexes of the Bureau of 
     the Census of the Department of Commerce, and any other 
     indexes or measures that the Director considers appropriate.
       ``(b) GAO Audit.--
       ``(1) In general.--At such times as are required under 
     paragraph (2), the Comptroller General of the United States 
     shall conduct an audit of the methodology established by the 
     Director under subsection (a) to determine whether the 
     methodology established is an accurate and appropriate means 
     of measuring changes to the national average 1-family house 
     price.
       ``(2) Timing.--An audit referred to in paragraph (1) shall 
     be conducted and completed not later than the expiration of 
     the 180-day period that begins upon each of the following 
     dates:
       ``(A) Establishment.--The date upon which such methodology 
     is initially established under subsection (a) in final form 
     by the Director.
       ``(B) Modification or amendment.--Each date upon which any 
     modification or amendment to such methodology is adopted in 
     final form by the Director.
       ``(3) Report.--Within 30 days of the completion of any 
     audit conducted under this subsection, the Comptroller 
     General shall submit a report detailing the results and 
     conclusions of the audit to the Director, the Committee on 
     Financial Services of the House of Representatives, and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate.''.
       (d) Conditions on Conforming Loan Limit for High-Cost 
     Areas.--
       (1) Study.--The Director of the Federal Housing Finance 
     Agency shall conduct a study under this subsection during the 
     six-month period beginning on the effective date under 
     section 185 of this Act.
       (2) Issues.--The study under this subsection shall 
     determine--
       (A) the effect that restricting the conforming loan limits 
     for high-cost areas only to mortgages on which are based 
     securities issued and sold by the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation 
     (as provided in the last sentence of section

[[Page H5393]]

     302(b)(2) of the Federal National Mortgage Association 
     Charter Act and the last sentence of section 305(a)(2) of the 
     Federal Home Loan Mortgage Corporation Act, pursuant to the 
     amendments made by subsections (a)(2) and (b)(2) of this 
     section) would have on the cost to borrowers for mortgages on 
     housing in such high-cost areas;
       (B) the effects that such restrictions would have on the 
     availability of mortgages for housing in such high-cost 
     areas; and
       (C) the extent to which the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation 
     will be able to issue and sell securities based on mortgages 
     for housing located in such high-cost areas.
       (3) Determination.--
       (A) In general.--Not later than the expiration of the six-
     month period specified in paragraph (1), the Director of the 
     Federal Housing Finance Agency shall make a determination, 
     based on the results of the study under this subsection, of 
     whether the restriction of conforming loan limits for high-
     cost areas only to mortgages on which are based securities 
     issued and sold by the Federal National Mortgage Association 
     and the Federal Home Loan Mortgage Corporation (as provided 
     in the amendments made by subsections (a)(2) and (b)(2) of 
     this section) will result in an increase in the cost to 
     borrowers for mortgages on housing in such high-cost areas.
       (B) Order.--If such determination is that costs to 
     borrowers on housing in such high-cost areas will be 
     increased by such restrictions, the Director may issue an 
     order terminating such restrictions, in whole or in part.
       (4) Publication.--Not later than the expiration of the six-
     month period specified in paragraph (1), the Director of the 
     Federal Housing Finance Agency shall cause to be published in 
     the Federal Register--
       (A) a report that--
       (i) describes the study under this subsection; and
       (ii) sets forth the conclusions of the study regarding the 
     issues to be determined under paragraph (2); and
       (B) notice of the determination of the Director under 
     paragraph (3); and
       (C) the order of the Director under paragraph (3).
       (5) Definition.--For purposes of this subsection, the term 
     ``conforming loan limits for high-cost areas'' means the 
     dollar amount limitations applicable under the section 
     302(b)(2) of the Federal National Mortgage Association 
     Charter Act and section 305(a)(2) of the Federal Home Loan 
     Mortgage Corporation Act (as amended by subsections (a) and 
     (b) of this section) for areas described in the last sentence 
     of such sections (as so amended).

     SEC. 134. ANNUAL HOUSING REPORT REGARDING REGULATED ENTITIES.

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

     ``SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGULATED 
                   ENTITIES.

       ``(a) In General.--After reviewing and analyzing the 
     reports submitted under section 309(n) of the Federal 
     National Mortgage Association Charter Act, section 307(f) of 
     the Federal Home Loan Mortgage Corporation Act, and section 
     10(j)(11) of the Federal Home Loan Bank Act (12 U.S.C. 
     1430(j)(11)), the Director shall submit a report, not later 
     than October 30 of each year, to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate, on the 
     activities of each regulated entity.
       ``(b) Contents.--The report shall--
       ``(1) discuss the extent to which--
       ``(A) each enterprise is achieving the annual housing goals 
     established under subpart B of this part;
       ``(B) each enterprise is complying with section 1337;
       ``(C) each Federal home loan bank is complying with section 
     10(j) of the Federal Home Loan Bank Act; and
       ``(D) each regulated entity is achieving the purposes of 
     the regulated entity established by law;
       ``(2) aggregate and analyze relevant data on income to 
     assess the compliance by each enterprise with the housing 
     goals established under subpart B;
       ``(3) aggregate and analyze data on income, race, and 
     gender by census tract and other relevant classifications, 
     and compare such data with larger demographic, housing, and 
     economic trends;
       ``(4) examine actions that--
       ``(A) each enterprise has undertaken or could undertake to 
     promote and expand the annual goals established under subpart 
     B and the purposes of the enterprise established by law; and
       ``(B) each Federal home loan bank has taken or could 
     undertake to promote and expand the community investment 
     program and affordable housing program of the bank 
     established under section subsections (i) and (j) of section 
     10 of the Federal Home Loan Bank Act;
       ``(5) examine the primary and secondary multifamily housing 
     mortgage markets and describe--
       ``(A) the availability and liquidity of mortgage credit;
       ``(B) the status of efforts to provide standard credit 
     terms and underwriting guidelines for multifamily housing and 
     to securitize such mortgage products; and
       ``(C) any factors inhibiting such standardization and 
     securitization;
       ``(6) examine actions each regulated entity has undertaken 
     and could undertake to promote and expand opportunities for 
     first-time homebuyers, including the use of alternative 
     credit scoring;
       ``(7) describe any actions taken under section 1325(5) with 
     respect to originators found to violate fair lending 
     procedures;
       ``(8) discuss and analyze existing conditions and trends, 
     including conditions and trends relating to pricing, in the 
     housing markets and mortgage markets; and
       ``(9) identify the extent to which each enterprise is 
     involved in mortgage purchases and secondary market 
     activities involving subprime loans (as identified in 
     accordance with the regulations issued pursuant to section 
     134(b) of the Federal Housing Finance Reform Act of 2007) and 
     compare the characteristics of subprime loans purchased and 
     securitized by the enterprises to other loans purchased and 
     securitized by the enterprises.
       ``(c) Data Collection and Reporting.--
       ``(1) In general.--To assist the Director in analyzing the 
     matters described in subsection (b) and establishing the 
     methodology described in section 1322, the Director shall 
     conduct, on a monthly basis, a survey of mortgage markets in 
     accordance with this subsection.
       ``(2) Data points.--Each monthly survey conducted by the 
     Director under paragraph (1) shall collect data on--
       ``(A) the characteristics of individual mortgages that are 
     eligible for purchase by the enterprises and the 
     characteristics of individual mortgages that are not eligible 
     for purchase by the enterprises including, in both cases, 
     information concerning--
       ``(i) the price of the house that secures the mortgage;
       ``(ii) the loan-to-value ratio of the mortgage, which shall 
     reflect any secondary liens on the relevant property;
       ``(iii) the terms of the mortgage;
       ``(iv) the creditworthiness of the borrower or borrowers; 
     and
       ``(v) whether the mortgage, in the case of a conforming 
     mortgage, was purchased by an enterprise; and
       ``(B) such other matters as the Director determines to be 
     appropriate.
       ``(3) Public availability.--The Director shall make any 
     data collected by the Director in connection with the conduct 
     of a monthly survey available to the public in a timely 
     manner, provided that the Director may modify the data 
     released to the public to ensure that the data is not 
     released in an identifiable form.
       ``(4) Definition.--For purposes of this subsection, the 
     term `identifiable form' means any representation of 
     information that permits the identity of a borrower to which 
     the information relates to be reasonably inferred by either 
     direct or indirect means.''.
       (b) Standards for Subprime Loans.--The Director shall, not 
     later than one year after the effective date under section 
     185, by regulations issued under section 1316G of the Housing 
     and Community Development Act of 1992, establish standards by 
     which mortgages purchased and mortgages purchased and 
     securitized shall be characterized as subprime for the 
     purpose of, and only for the purpose of, complying with the 
     reporting requirement under section 1324(b)(9) of such Act.

     SEC. 135. ANNUAL REPORTS BY REGULATED ENTITIES ON AFFORDABLE 
                   HOUSING STOCK.

       The Housing and Community Development Act of 1992 is 
     amended by inserting after section 1328 (12 U.S.C. 4548) the 
     following new section:

     ``SEC. 1329. ANNUAL REPORTS ON AFFORDABLE HOUSING STOCK.

       ``(a) In General.--To obtain information helpful in 
     applying the formula under section 1337(c)(2) for the 
     affordable housing program under such section and for other 
     appropriate uses, the regulated entities shall conduct, or 
     provide for the conducting of, a study on an annual basis to 
     determine the levels of affordable housing inventory, and the 
     changes in such levels, in communities throughout the United 
     States.
       ``(b) Contents.--The annual study under this section shall 
     determine, for the United States, each State, and each 
     community within each State--
       ``(1) the level of affordable housing inventory, including 
     affordable rental dwelling units and affordable homeownership 
     dwelling units;
       ``(2) any changes to the level of such inventory during the 
     12-month period of the study under this section, including--
       ``(A) any additions to such inventory, disaggregated by the 
     category of such additions (including new construction or 
     housing conversion);
       ``(B) any subtractions from such inventory, disaggregated 
     by the category of such subtractions (including abandonment, 
     demolition, or upgrade to market-rate housing);
       ``(C) the number of new affordable dwelling units placed in 
     service; and
       ``(D) the number of affordable housing dwelling units 
     withdrawn from service;
       ``(3) the types of financing used to build any dwelling 
     units added to such inventory level and the period during 
     which such units are required to remain affordable;
       ``(4) any excess demand for affordable housing, including 
     the number of households on rental housing waiting lists and 
     the tenure of the wait on such lists; and
       ``(5) such other information as the Director may require.
       ``(c) Report.--For each annual study conducted pursuant to 
     this section, the regulated entities shall submit to the 
     Congress, and make publicly available, a report setting forth 
     the findings of the study.
       ``(d) Regulations and Timing.--The Director shall, by 
     regulation, establish requirements for the studies and 
     reports under this section, including deadlines for the 
     submission of such annual reports and standards for 
     determining affordable housing.''.

[[Page H5394]]

     SEC. 136. REVISION OF HOUSING GOALS.

       (a) Housing Goals.--The Housing and Community Development 
     Act of 1992 is amended by striking sections 1331 through 1334 
     (12 U.S.C. 4561-4) and inserting the following new sections:

     ``SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

       ``(a) In General.--The Director shall establish, effective 
     for the first year that begins after the effective date under 
     section 185 of the Federal Housing Finance Reform Act of 2007 
     and each year thereafter, annual housing goals, with respect 
     to the mortgage purchases by the enterprises, as follows:
       ``(1) Single family housing goals.--Three single-family 
     housing goals under section 1332.
       ``(2) Multifamily special affordable housing goals.--A 
     multifamily special affordable housing goal under section 
     1333.
       ``(b) Eliminating Interest Rate Disparities.--
       ``(1) In general.--Upon request by the Director, an 
     enterprise shall provide to the Director, in a form 
     determined by the Director, data the Director may review to 
     determine whether there exist disparities in interest rates 
     charged on mortgages to borrowers who are minorities as 
     compared with comparable mortgages to borrowers of similar 
     creditworthiness who are not minorities.
       ``(2) Remedial actions upon preliminary finding.--Upon a 
     preliminary finding by the Director that a pattern of 
     disparities in interest rates with respect to any lender or 
     lenders exists pursuant to the data provided by an enterprise 
     in paragraph (1), the Director shall--
       ``(A) refer the preliminary finding to the appropriate 
     regulatory or enforcement agency for further review;
       ``(B) require the enterprise to submit additional data with 
     respect to any lender or lenders, as appropriate and to the 
     extent practicable, to the Director who shall submit any such 
     additional data to the regulatory or enforcement agency for 
     appropriate action; and
       ``(C) require the enterprise to undertake remedial actions, 
     as appropriate, pursuant to section 1325(5) (12 U.S.C. 
     4545(5)).
       ``(3) Annual report to congress.--The Director shall submit 
     to the Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate a report describing the actions 
     taken, and being taken, by the Director to carry out this 
     subsection. No such report shall identify any lender or 
     lenders who have not been found to have engaged in 
     discriminatory lending practices pursuant to a final 
     adjudication on the record, and after opportunity for an 
     administrative hearing, in accordance with subchapter II of 
     chapter 5 of title 5, United States Code.
       ``(4) Protection of identity of individuals.--In carrying 
     out this subsection, the Director shall ensure that no 
     property-related or financial information that would enable a 
     borrower to be identified shall be made public.
       ``(c) Timing.--The Director shall establish an annual 
     deadline by which the Director shall establish the annual 
     housing goals under this subpart for each year, taking into 
     consideration the need for the enterprises to reasonably and 
     sufficiently plan their operations and activities in advance, 
     including operations and activities necessary to meet such 
     annual goals.

     ``SEC. 1332. SINGLE-FAMILY HOUSING GOALS.

       ``(a) In General.--The Director shall establish annual 
     goals for the purchase by each enterprise of conventional, 
     conforming, single-family, purchase money mortgages financing 
     owner-occupied and rental housing for each of the following 
     categories of families:
       ``(1) Low-income families.
       ``(2) Families that reside in low-income areas.
       ``(3) Very low-income families.
       ``(b) Refinance Subgoal.--
       ``(1) In general.--The Director shall establish a separate 
     subgoal within each goal under subsection (a)(1) for the 
     purchase by each enterprise of mortgages for low-income 
     families on single family housing given to pay off or prepay 
     an existing loan secured by the same property. The Director 
     shall, for each year, determine whether each enterprise has 
     complied with the subgoal under this subsection in the same 
     manner provided under this section for determining compliance 
     with the housing goals.
       ``(2) Enforcement.--For purposes of section 1336, the 
     subgoal established under paragraph (1) of this subsection 
     shall be considered to be a housing goal established under 
     this section. Such subgoal shall not be enforceable under any 
     other provision of this title (including subpart C of this 
     part) other than section 1336 or under any provision of the 
     Federal National Mortgage Association Charter Act or the 
     Federal Home Loan Mortgage Corporation Act.
       ``(c) Determination of Compliance.--The Director shall 
     determine, for each year that the housing goals under this 
     section are in effect pursuant to section 1331(a), whether 
     each enterprise has complied with the single-family housing 
     goals established under this section for such year. An 
     enterprise shall be considered to be in compliance with such 
     a goal for a year only if, for each of the types of families 
     described in subsection (a), the percentage of the number of 
     conventional, conforming, single-family, owner-occupied or 
     rental, as applicable, purchase money mortgages purchased by 
     each enterprise in such year that serve such families, meets 
     or exceeds the target for the year for such type of family 
     that is established under subsection (d).
       ``(d) Annual Targets.--
       ``(1) In general.--Except as provided in paragraph (2), for 
     each of the types of families described in subsection (a), 
     the target under this subsection for a year shall be the 
     average percentage, for the three years that most recently 
     precede such year and for which information under the Home 
     Mortgage Disclosure Act of 1975 is publicly available, of the 
     number of conventional, conforming, single-family, owner-
     occupied or rental, as applicable, purchase money mortgages 
     originated in such year that serves such type of family, as 
     determined by the Director using the information obtained and 
     determined pursuant to paragraphs (3) and (4).
       ``(2) Authority to increase targets.--
       ``(A) In general.--The Director may, for any year, 
     establish by regulation, for any or all of the types of 
     families described in subsection (a), percentage targets that 
     are higher than the percentages for such year determined 
     pursuant to paragraph (1), to reflect expected changes in 
     market performance related to such information under the Home 
     Mortgage Disclosure Act of 1975.
       ``(B) Factors.--In establishing any targets pursuant to 
     subparagraph (A), the Director shall consider the following 
     factors:
       ``(i) National housing needs.
       ``(ii) Economic, housing, and demographic conditions.
       ``(iii) The performance and effort of the enterprises 
     toward achieving the housing goals under this section in 
     previous years.
       ``(iv) The size of the conventional mortgage market serving 
     each of the types of families described in subsection (a) 
     relative to the size of the overall conventional mortgage 
     market.
       ``(v) The ability of the enterprise to lead the industry in 
     making mortgage credit available.
       ``(vi) The need to maintain the sound financial condition 
     of the enterprises.
       ``(3) HMDA information.--The Director shall annually obtain 
     information submitted in compliance with the Home Mortgage 
     Disclosure Act of 1975 regarding conventional, conforming, 
     single-family, owner-occupied or rental, as applicable, 
     purchase money mortgages originated and purchased for the 
     previous year.
       ``(4) Conforming mortgages.--In determining whether a 
     mortgage is a conforming mortgage for purposes of this 
     paragraph, the Director shall consider the original principal 
     balance of the mortgage loan to be the principal balance as 
     reported in the information referred to in paragraph (3), as 
     rounded to the nearest thousand dollars.
       ``(e) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (c) regarding a compliance of an enterprise 
     for a year with a housing goal established under this section 
     and before any public disclosure thereof, the Director shall 
     provide notice of the determination to the enterprise, which 
     shall include an analysis and comparison, by the Director, of 
     the performance of the enterprise for the year and the 
     targets for the year under subsection (d).
       ``(2) Comment period.--The Director shall provide each 
     enterprise an opportunity to comment on the determination 
     during the 30-day period beginning upon receipt by the 
     enterprise of the notice.
       ``(f) Use of Borrower Income.--In monitoring the 
     performance of each enterprise pursuant to the housing goals 
     under this section and evaluating such performance (for 
     purposes of section 1336), the Director shall consider a 
     mortgagor's income to be such income at the time of 
     origination of the mortgage.
       ``(g) Consideration of Units in Single-Family Rental 
     Housing.--In establishing any goal under this subpart, the 
     Director may take into consideration the number of housing 
     units financed by any mortgage on single-family rental 
     housing purchased by an enterprise

     ``SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

       ``(a) Establishment.--
       ``(1) In general.--The Director shall establish, by 
     regulation, an annual goal for the purchase by each 
     enterprise of each of the following types of mortgages on 
     multifamily housing:
       ``(A) Mortgages that finance dwelling units for low-income 
     families.
       ``(B) Mortgages that finance dwelling units for very low-
     income families.
       ``(C) Mortgages that finance dwelling units assisted by the 
     low-income housing tax credit under section 42 of the 
     Internal Revenue Code of 1986.
       ``(2) Additional requirements for smaller projects.--The 
     Director shall establish, within the goal under this section, 
     additional requirements for the purchase by each enterprise 
     of mortgages described in paragraph (1) for multifamily 
     housing projects of a smaller or limited size, which may be 
     based on the number of dwelling units in the project or the 
     amount of the mortgage, or both, and shall include 
     multifamily housing projects of such smaller sizes as are 
     typical among such projects that serve rural areas.
       ``(3) Factors.--In establishing the goal under this section 
     relating to mortgages on multifamily housing for an 
     enterprise for a year, the Director shall consider--
       ``(A) national multifamily mortgage credit needs;
       ``(B) the performance and effort of the enterprise in 
     making mortgage credit available for multifamily housing in 
     previous years;
       ``(C) the size of the multifamily mortgage market;
       ``(D) the ability of the enterprise to lead the industry in 
     making mortgage credit available, especially for underserved 
     markets, such as for small multifamily projects of 5 to 50 
     units, multifamily properties in need of rehabilitation, and 
     multifamily properties located in rural areas; and
       ``(E) the need to maintain the sound financial condition of 
     the enterprise.
       ``(b) Units Financed by Housing Finance Agency Bonds.--The 
     Director shall give credit toward the achievement of the 
     multifamily special affordable housing goal under this 
     section (for purposes of section 1336) to dwelling units in 
     multifamily housing that otherwise qualifies

[[Page H5395]]

     under such goal and that is financed by tax-exempt or taxable 
     bonds issued by a State or local housing finance agency, but 
     only if such bonds--
       ``(1) are secured by a guarantee of the enterprise; or
       ``(2) are not investment grade and are purchased by the 
     enterprise.
       ``(c) Use of Tenant Income or Rent.--The Director shall 
     monitor the performance of each enterprise in meeting the 
     goals established under this section and shall evaluate such 
     performance (for purposes of section 1336) based on--
       ``(1) the income of the prospective or actual tenants of 
     the property, where such data are available; or
       ``(2) where the data referred to in paragraph (1) are not 
     available, rent levels affordable to low-income and very low-
     income families.
     A rent level shall be considered to be affordable for 
     purposes of this subsection for an income category referred 
     to in this subsection if it does not exceed 30 percent of the 
     maximum income level of such income category, with 
     appropriate adjustments for unit size as measured by the 
     number of bedrooms.
       ``(d) Determination of Compliance.--The Director shall, for 
     each year that the housing goal under this section is in 
     effect pursuant to section 1331(a), determine whether each 
     enterprise has complied with such goal and the additional 
     requirements under subsection (a)(2).

     ``SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

       ``(a) Authority.--An enterprise may petition the Director 
     in writing at any time during a year to reduce the level of 
     any goal for such year established pursuant to this subpart.
       ``(b) Standard for Reduction.--The Director may reduce the 
     level for a goal pursuant to such a petition only if--
       ``(1) market and economic conditions or the financial 
     condition of the enterprise require such action; or
       ``(2) efforts to meet the goal would result in the 
     constraint of liquidity, over-investment in certain market 
     segments, or other consequences contrary to the intent of 
     this subpart, or section 301(3) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1716(3)) or 
     section 301(3) of the Federal Home Loan Mortgage Corporation 
     Act (12 U.S.C. 1451 note), as applicable.
       ``(c) Determination.--The Director shall make a 
     determination regarding any proposed reduction within 30 days 
     of receipt of the petition regarding the reduction. The 
     Director may extend such period for a single additional 15-
     day period, but only if the Director requests additional 
     information from the enterprise. A denial by the Director to 
     reduce the level of any goal under this section may be 
     appealed to the United States District Court for the District 
     of Columbia or the United States district court in the 
     jurisdiction in which the headquarters of an enterprise is 
     located.''.
       (b) Conforming Amendments.--The Housing and Community 
     Development Act of 1992 is amended--
       (1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter 
     preceding paragraph (1), by striking ``low- and moderate-
     income housing goal'' and all that follows through ``section 
     1334'' and inserting ``housing goals established under this 
     subpart''; and
       (2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by 
     striking ``sections 1332, 1333, and 1334,'' and inserting 
     ``this subpart''.
       (c) Definitions.--Section 1303 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4502), as amended by the 
     preceding provisions of this Act, is further amended--
       (1) in paragraph (22) (relating to the definition of ``very 
     low-income''), by striking ``60 percent'' each place such 
     term appears and inserting ``50 percent'';
       (2) by redesignating paragraphs (19) through (22) as 
     paragraphs (23) through (26), respectively;
       (3) by inserting after paragraph (18) the following new 
     paragraph:
       ``(22) Rural area.--The term `rural area' has the meaning 
     given such term in section 520 of the Housing Act of 1949 (42 
     U.S.C. 1490), except that such term includes micropolitan 
     areas and tribal trust lands.''.
       (4) by redesignating paragraphs (13) through (18) as 
     paragraphs (16) through (21), respectively;
       (5) by inserting after paragraph (12) the following new 
     paragraph:
       ``(15) Low-income area.--The term `low income area' means a 
     census tract or block numbering area in which the median 
     income does not exceed 80 percent of the median income for 
     the area in which such census tract or block numbering area 
     is located, and, for the purposes of section 1332(a)(2), 
     shall include families having incomes not greater than 100 
     percent of the area median income who reside in minority 
     census tracts.'';
       (6) by redesignating paragraphs (11) and (12) as paragraphs 
     (13) and (14), respectively;
       (7) by inserting after paragraph (10) the following new 
     paragraph:
       ``(12) Extremely low-income.--The term `extremely low-
     income' means--
       ``(A) in the case of owner-occupied units, income not in 
     excess of 30 percent of the area median income; and
       ``(B) in the case of rental units, income not in excess of 
     30 percent of the area median income, with adjustments for 
     smaller and larger families, as determined by the 
     Secretary.'';
       (8) by redesignating paragraphs (7) through (10) as 
     paragraphs (8) through (11), respectively; and
       (9) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Conforming mortgage.--The term `conforming mortgage' 
     means, with respect to an enterprise, a conventional mortgage 
     having an original principal obligation that does not exceed 
     the dollar limitation, in effect at the time of such 
     origination, under, as applicable--
       ``(A) section 302(b)(2) of the Federal National Mortgage 
     Association Charter Act; or
       ``(B) section 305(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act.''.

     SEC. 137. DUTY TO SERVE UNDERSERVED MARKETS.

       (a) Establishment and Evaluation of Performance.--Section 
     1335 of the Housing and Community Development Act of 1992 (12 
     U.S.C. 4565) is amended--
       (1) in the section heading, by inserting ``DUTY TO SERVE 
     UNDERSERVED MARKETS AND'' before ``OTHER'';
       (2) by striking subsection (b);
       (3) in subsection (a)--
       (A) in the matter preceding paragraph (1), by inserting 
     ``and to carry out the duty under subsection (a) of this 
     section'' before ``, each enterprise shall'';
       (B) in paragraph (3), by inserting ``and'' after the 
     semicolon at the end;
       (C) in paragraph (4), by striking ``; and'' and inserting a 
     period;
       (D) by striking paragraph (5); and
       (E) by redesignating such subsection as subsection (b);
       (4) by inserting before subsection (b) (as so redesignated 
     by paragraph (3)(E) of this subsection) the following new 
     subsection:
       ``(a) Duty To Serve Underserved Markets.--
       ``(1) Duty.--In accordance with the purpose of the 
     enterprises under section 301(3) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1716) and section 
     301(b)(3) of the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1451 note) to undertake activities relating to 
     mortgages on housing for very low-, low-, and moderate-income 
     families involving a reasonable economic return that may be 
     less than the return earned on other activities, each 
     enterprise shall have the duty to increase the liquidity of 
     mortgage investments and improve the distribution of 
     investment capital available for mortgage financing for 
     underserved markets.
       ``(2) Underserved markets.--To meet its duty under 
     paragraph (1), each enterprise shall comply with the 
     following requirements with respect to the following 
     underserved markets:
       ``(A) Manufactured housing.--The enterprise shall lead the 
     industry in developing loan products and flexible 
     underwriting guidelines to facilitate a secondary market for 
     mortgages on manufactured homes for very low-, low-, and 
     moderate-income families.
       ``(B) Affordable housing preservation.--The enterprise 
     shall lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market to preserve housing affordable to very
     low-, low-, and moderate-income families, including housing 
     projects subsidized under--
       ``(i) the project-based and tenant-based rental assistance 
     programs under section 8 of the United States Housing Act of 
     1937;
       ``(ii) the program under section 236 of the National 
     Housing Act;
       ``(iii) the below-market interest rate mortgage program 
     under section 221(d)(4) of the National Housing Act;
       ``(iv) the supportive housing for the elderly program under 
     section 202 of the Housing Act of 1959;
       ``(v) the supportive housing program for persons with 
     disabilities under section 811 of the Cranston-Gonzalez 
     National Affordable Housing Act;
       ``(vi) the programs under title IV of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11361 et seq.), but only 
     permanent supportive housing projects subsidized under such 
     programs; and
       ``(vii) the rural rental housing program under section 515 
     of the Housing Act of 1949.
       ``(C) Rural and other underserved markets.--The enterprise 
     shall lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market for mortgages on housing for very
     low-, low-, and moderate-income families in rural areas, and 
     for mortgages for housing for any other underserved market 
     for very low-, low-, and moderate-income families that the 
     Secretary identifies as lacking adequate credit through 
     conventional lending sources. Such underserved markets may be 
     identified by borrower type, market segment, or geographic 
     area.''; and
       (5) by adding at the end the following new subsection:
       ``(c) Evaluation and Reporting of Compliance.--
       ``(1) In general.--Not later than 6 months after the 
     effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2007, the Director shall establish a 
     manner for evaluating whether, and the extent to which, the 
     enterprises have complied with the duty under subsection (a) 
     to serve underserved markets and for rating the extent of 
     such compliance. Using such method, the Director shall, for 
     each year, evaluate such compliance and rate the performance 
     of each enterprise as to extent of compliance. The Director 
     shall include such evaluation and rating for each enterprise 
     for a year in the report for that year submitted pursuant to 
     section 1319B(a).
       ``(2) Separate evaluations.--In determining whether an 
     enterprise has complied with the duty referred to in 
     paragraph (1), the Director shall separately evaluate whether 
     the enterprise has complied with such duty with respect to 
     each of the underserved markets identified in subsection (a), 
     taking into consideration--
       ``(A) the development of loan products and more flexible 
     underwriting guidelines;
       ``(B) the extent of outreach to qualified loan sellers in 
     each of such underserved markets; and

[[Page H5396]]

       ``(C) the volume of loans purchased in each of such 
     underserved markets.
       ``(3) Manufactured housing market.--In determining whether 
     an enterprise has complied with the duty under subparagraph 
     (A) of subsection (a)(2), the Director may consider loans 
     secured by both real and personal property.''.
       (b) Enforcement.--Subsection (a) of section 1336 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4566(a)) is amended--
       (1) in paragraph (1), by inserting ``and with the duty 
     under section 1335(a) of each enterprise with respect to 
     underserved markets,'' before ``as provided in this 
     section''; and
       (2) by adding at the end of such subsection, as amended by 
     the preceding provisions of this title, the following new 
     paragraph:
       ``(4) Enforcement of duty to provide mortgage credit to 
     underserved markets.--The duty under section 1335(a) of each 
     enterprise to serve underserved markets (as determined in 
     accordance with section 1335(c)) shall be enforceable under 
     this section to the same extent and under the same provisions 
     that the housing goals established under this subpart are 
     enforceable. Such duty shall not be enforceable under any 
     other provision of this title (including subpart C of this 
     part) other than this section or under any provision of the 
     Federal National Mortgage Association Charter Act or the 
     Federal Home Loan Mortgage Corporation Act.''.

     SEC. 138. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING 
                   GOALS.

       (a) Additional Credit for Certain Mortgages.--Section 
     1336(a) of the Housing and Community Development Act of 1992 
     (12 U.S.C. 4566(a)) is amended--
       (1) in paragraph (2), by inserting ``, except as provided 
     in paragraph (4),'' after ``which''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Additional credit.--The Director shall assign more 
     than 125 percent credit toward achievement, under this 
     section, of the housing goals for mortgage purchase 
     activities of the enterprises that comply with the 
     requirements of such goals and support--
       ``(A) housing that meets energy efficiency or other 
     environmental standards that are established by a Federal, 
     State, or local governmental authority with respect to the 
     geographic area where the housing is located or are otherwise 
     widely recognized; or
       ``(B) housing that includes a licensed childcare center.
     The availability of additional credit under this paragraph 
     shall not be used to increase any housing goal, subgoal, or 
     target established under this subpart.''.
       (b) Monitoring and Enforcement.--Section 1336 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4566) is amended--
       (1) in subsection (b)--
       (A) in the subsection heading, by inserting ``Preliminary'' 
     before ``Determination'';
       (B) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Notice.--If the Director preliminarily determines 
     that an enterprise has failed, or that there is a substantial 
     probability that an enterprise will fail, to meet any housing 
     goal established under this subpart, the Director shall 
     provide written notice to the enterprise of such a 
     preliminary determination, the reasons for such 
     determination, and the information on which the Director 
     based the determination.'';
       (C) in paragraph (2)--
       (i) in subparagraph (A), by inserting ``finally'' before 
     ``determining'';
       (ii) by striking subparagraphs (B) and (C) and inserting 
     the following new subparagraph:
       ``(B) Extension or shortening of period.--The Director 
     may--
       ``(i) extend the period under subparagraph (A) for good 
     cause for not more than 30 additional days; and
       ``(ii) shorten the period under subparagraph (A) for good 
     cause.''; and
       (iii) by redesignating subparagraph (D) as subparagraph 
     (C); and
       (D) in paragraph (3)--
       (i) in subparagraph (A), by striking ``determine'' and 
     inserting ``issue a final determination of'';
       (ii) in subparagraph (B), by inserting ``final'' before 
     ``determinations''; and
       (iii) in subparagraph (C)--

       (I) by striking ``Committee on Banking, Finance and Urban 
     Affairs'' and inserting ``Committee on Financial Services''; 
     and
       (II) by inserting ``final'' before ``determination'' each 
     place such term appears; and

       (2) in subsection (c)--
       (A) by striking the subsection designation and heading and 
     all that follows through the end of paragraph (1) and 
     inserting the following:
       ``(c) Cease and Desist Orders, Civil Money Penalties, and 
     Remedies Including Housing Plans.--
       ``(1) Requirement.--If the Director finds, pursuant to 
     subsection (b), that there is a substantial probability that 
     an enterprise will fail, or has actually failed, to meet any 
     housing goal under this subpart and that the achievement of 
     the housing goal was or is feasible, the Director may require 
     that the enterprise submit a housing plan under this 
     subsection. If the Director makes such a finding and the 
     enterprise refuses to submit such a plan, submits an 
     unacceptable plan, fails to comply with the plan or the 
     Director finds that the enterprise has failed to meet any 
     housing goal under this subpart, in addition to requiring an 
     enterprise to submit a housing plan, the Director may issue a 
     cease and desist order in accordance with section 1341, 
     impose civil money penalties in accordance with section 1345, 
     or order other remedies as set forth in paragraph (7) of this 
     subsection.'';
       (B) in paragraph (2)--
       (i) by striking ``Contents.--Each housing plan'' and 
     inserting ``Housing plan.--If the Director requires a housing 
     plan under this section, such a plan''; and
       (ii) in subparagraph (B), by inserting ``and changes in its 
     operations'' after ``improvements'';
       (C) in paragraph (3)--
       (i) by inserting ``comply with any remedial action or'' 
     before ``submit a housing plan''; and
       (ii) by striking ``under subsection (b)(3) that a housing 
     plan is required'';
       (D) in paragraph (4), by striking the first two sentences 
     and inserting the following: ``The Director shall review each 
     submission by an enterprise, including a housing plan 
     submitted under this subsection, and not later than 30 days 
     after submission, approve or disapprove the plan or other 
     action. The Director may extend the period for approval or 
     disapproval for a single additional 30-day period if the 
     Director determines such extension necessary.''; and
       (E) by adding at the end the following new paragraph:
       ``(7) Additional remedies for failure to meet goals.--In 
     addition to ordering a housing plan under this section, 
     issuing cease and desist orders under section 1341, and 
     ordering civil money penalties under section 1345, the 
     Director may seek other actions when an enterprise fails to 
     meet a goal, and exercise appropriate enforcement authority 
     available to the Director under this Act to prohibit the 
     enterprise from initially offering any product (as such term 
     is defined in section 1321(f)) or engaging in any new 
     activities, services, undertakings, and offerings and to 
     order the enterprise to suspend products and activities, 
     services, undertakings, and offerings pending its achievement 
     of the goal.''.

     SEC. 139. AFFORDABLE HOUSING FUND.

       (a) In General.--The Housing and Community Development Act 
     of 1992 is amended by striking sections 1337 and 1338 (12 
     U.S.C. 4562 note) and inserting the following new section:

     ``SEC. 1337. AFFORDABLE HOUSING FUND.

       ``(a) Establishment and Purpose.--The Director, in 
     consultation with the Secretary of Housing and Urban 
     Development, shall establish and manage an affordable housing 
     fund in accordance with this section, which shall be funded 
     with amounts allocated by the enterprises under subsection 
     (b). The purpose of the affordable housing fund shall be to 
     provide formula grants to grantees for use--
       ``(1) to increase homeownership for extremely low-and very 
     low-income families;
       ``(2) to increase investment in housing in low-income 
     areas, and areas designated as qualified census tracts or an 
     area of chronic economic distress pursuant to section 143(j) 
     of the Internal Revenue Code of 1986 (26 U.S.C. 143(j));
       ``(3) to increase and preserve the supply of rental and 
     owner-occupied housing for extremely low- and very low-income 
     families;
       ``(4) to increase investment in public infrastructure 
     development in connection with housing assisted under this 
     section; and
       ``(5) to leverage investments from other sources in 
     affordable housing and in public infrastructure development 
     in connection with housing assisted under this section.
       ``(b) Allocation of Amounts by Enterprises.--
       ``(1) In general.--In accordance with regulations issued by 
     the Director under subsection (m) and subject to paragraph 
     (2) of this subsection and subsection (i)(5), each enterprise 
     shall allocate to the affordable housing fund established 
     under subsection (a), in each of the years 2007 through 2011, 
     an amount equal to 1.2 basis points for each dollar of the 
     average total mortgage portfolio of the enterprise during the 
     preceding year.
       ``(2) Suspension of contributions.--The Director shall 
     temporarily suspend the allocation under paragraph (1) by an 
     enterprise to the affordable housing fund upon a finding by 
     the Director that such allocations--
       ``(A) are contributing, or would contribute, to the 
     financial instability of the enterprise;
       ``(B) are causing, or would cause, the enterprise to be 
     classified as undercapitalized; or
       ``(C) are preventing, or would prevent, the enterprise from 
     successfully completing a capital restoration plan under 
     section 1369C.
       ``(3) 5-year sunset and report.--
       ``(A) Sunset.--The enterprises shall not be required to 
     make allocations to the affordable housing fund in 2012 or in 
     any year thereafter.
       ``(B) Report on program continuance.--Not later than June 
     30, 2011, the Director shall submit to the Committee on 
     Financial Services of the House of Representatives and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate a report making recommendations on whether the program 
     under this section, including the requirement for the 
     enterprises to make allocations to the affordable housing 
     fund, should be extended and on any modifications for the 
     program.
       ``(c) Affordable Housing Needs Formulas.--
       ``(1) Allocation for 2007.--
       ``(A) Allocation percentages for louisiana and 
     mississippi.--For purposes of subsection (d)(1)(A), the 
     allocation percentages for 2007 for the grantees under this 
     section for such year shall be as follows:
       ``(i) The allocation percentage for the Louisiana Housing 
     Finance Agency shall be 75 percent.
       ``(ii) The allocation percentage for the Mississippi 
     Development Authority shall be 25 percent.
       ``(B) Use in disaster areas.--Affordable housing grant 
     amounts for 2007 shall be used only as provided in subsection 
     (g) only for such eligible activities in areas that were 
     subject to a declaration by the President of a major disaster 
     or emergency under the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5121 et seq.) in 
     connection with Hurricane Katrina or Rita of 2005.

[[Page H5397]]

       ``(2) Allocation formula for other years.--The Secretary of 
     Housing and Urban Development shall, by regulation, establish 
     a formula to allocate, among the States (as such term is 
     defined in section 1303) and federally recognized Indian 
     tribes, the amounts provided by the enterprises in each year 
     referred to subsection (b)(1), other than 2007, to the 
     affordable housing fund established under this section. The 
     formula shall be based on the following factors, with respect 
     to each State and tribe:
       ``(A) The ratio of the population of the State or federally 
     recognized Indian tribe to the aggregate population of all 
     the States and tribes.
       ``(B) The percentage of families in the State or federally 
     recognized Indian tribe that pay more than 50 percent of 
     their annual income for housing costs.
       ``(C) The percentage of persons in the State or federally 
     recognized Indian tribe that are members of extremely low- or 
     very low-income families.
       ``(D) The cost of developing or carrying out rehabilitation 
     of housing in the State or for the federally recognized 
     Indian tribe.
       ``(E) The percentage of families in the State or federally 
     recognized Indian tribe that live in substandard housing.
       ``(F) The percentage of housing stock in the State or for 
     the federally recognized Indian tribe that is extremely old 
     housing.
       ``(G) Any other factors that the Secretary determines to be 
     appropriate.
       ``(3) Failure to establish.--If, in any year referred to in 
     subsection (b)(1), other than 2007, the regulations 
     establishing the formula required under paragraph (2) of this 
     subsection have not been issued by the date that the Director 
     determines the amounts described in subsection (d)(1) to be 
     available for affordable housing fund grants in such year, 
     for purposes of such year any amounts for a State (as such 
     term is defined in section 1303 of this Act) that would 
     otherwise be determined under subsection (d) by applying the 
     formula established pursuant to paragraph (2) of this 
     subsection shall be determined instead by applying, for such 
     State, the percentage that is equal to the percentage of the 
     total amounts made available for such year for allocation 
     under subtitle A of title II of the Cranston-Gonzalez 
     National Affordable Housing Act (42 U.S.C. 12741 et seq.) 
     that are allocated in such year, pursuant to such subtitle, 
     to such State (including any insular area or unit of general 
     local government, as such terms are defined in section 104 of 
     such Act (42 U.S.C. 12704), that is treated as a State under 
     section 1303 of this Act) and to participating jurisdictions 
     and other eligible entities within such State.
       ``(d) Allocation of Formula Amount; Grants.--
       ``(1) Formula amount.--For each year referred to in 
     subsection (b)(1), the Director shall determine the formula 
     amount under this section for each grantee, which shall be 
     the amount determined for such grantee--
       ``(A) for 2007, by applying the allocation percentages 
     under subparagraph (A) of subsection (c)(1) to the sum of the 
     total amounts allocated by the enterprises to the affordable 
     housing fund for such year, less any amounts used pursuant to 
     subsection (i)(1); and
       ``(B) for any other year referred to in subsection (b)(1) 
     (other than 2007), by applying the formula established 
     pursuant to paragraph (2) of subsection (c) to the sum of the 
     total amounts allocated by the enterprises to the affordable 
     housing fund for such year and any recaptured amounts 
     available pursuant to subsection (i)(4), less any amounts 
     used pursuant to subsection (i)(1).
       ``(2) Notice.--In each year referred to in subsection 
     (b)(1), not later than 60 days after the date that the 
     Director determines the amounts described in paragraph (1) to 
     be available for affordable housing fund grants to grantees 
     in such year, the Director shall cause to be published in the 
     Federal Register a notice that such amounts shall be so 
     available.
       ``(3) Grant amount.--
       ``(A) In general.--For each year referred to in subsection 
     (b)(1), the Director shall make a grant from amounts in the 
     affordable housing fund to each grantee in an amount that is, 
     except as provided in subparagraph (B), equal to the formula 
     amount under this section for the grantee. A grantee may 
     designate a State housing finance agency, housing and 
     community development entity, tribally designated housing 
     entity (as such term is defined in section 4 of the Native 
     American Housing Assistance and Self-Determination Act of 
     1997 (25 U.S.C. 4103)) or other qualified instrumentality of 
     the grantee to receive such grant amounts.
       ``(B) Reduction for failure to obtain return of misused 
     funds.--If in any year a grantee fails to obtain 
     reimbursement or return of the full amount required under 
     subsection (j)(1)(B) to be reimbursed or returned to the 
     grantee during such year--
       ``(i) except as provided in clause (ii)--

       ``(I) the amount of the grant for the grantee for the 
     succeeding year, as determined pursuant to subparagraph (A), 
     shall be reduced by the amount by which such amounts required 
     to be reimbursed or returned exceed the amount actually 
     reimbursed or returned; and
       ``(II) the amount of the grant for the succeeding year for 
     each other grantee whose grant is not reduced pursuant to 
     subclause (I) shall be increased by the amount determined by 
     applying the formula established pursuant to subsection 
     (c)(2) to the total amount of all reductions for all grantees 
     for such year pursuant to subclause (I); or

       ``(ii) in any case in which such failure to obtain 
     reimbursement or return occurs during a year immediately 
     preceding a year in which grants under this subsection will 
     not be made, the grantee shall pay to the Director for 
     reallocation among the other grantees an amount equal to the 
     amount of the reduction for the grantee that would otherwise 
     apply under clause (i)(I).
       ``(e) Grantee Allocation Plans.--
       ``(1) In general.--For each year that a grantee receives 
     affordable housing fund grant amounts, the grantee shall 
     establish an allocation plan in accordance with this 
     subsection, which shall be a plan for the distribution of 
     such grant amounts of the grantee for such year that--
       ``(A) is based on priority housing needs, as determined by 
     the grantee in accordance with the regulations established 
     under subsection (m)(2)(C);
       ``(B) complies with subsection (f); and
       ``(C) includes performance goals, benchmarks, and 
     timetables for the grantee for the production, preservation, 
     and rehabilitation of affordable rental and homeownership 
     housing with such grant amounts that comply with the 
     requirements established by the Director pursuant to 
     subsection (m)(2)(F).
       ``(2) Establishment.--In establishing an allocation plan, a 
     grantee shall notify the public of the establishment of the 
     plan, provide an opportunity for public comments regarding 
     the plan, consider any public comments received, and make the 
     completed plan available to the public.
       ``(3) Contents.--An allocation plan of a grantee shall set 
     forth the requirements for eligible recipients under 
     subsection (h) to apply to the grantee to receive assistance 
     from affordable housing fund grant amounts, including a 
     requirement that each such application include--
       ``(A) a description of the eligible activities to be 
     conducted using such assistance; and
       ``(B) a certification by the eligible recipient applying 
     for such assistance that any housing units assisted with such 
     assistance will comply with the requirements under this 
     section.
       ``(f) Selection of Activities Funded Using Affordable 
     Housing Fund Grant Amounts.--Affordable housing fund grant 
     amounts of a grantee may be used, or committed for use, only 
     for activities that--
       ``(1) are eligible under subsection (g) for such use;
       ``(2) comply with the applicable allocation plan under 
     subsection (e) of the grantee; and
       ``(3) are selected for funding by the grantee in accordance 
     with the process and criteria for such selection established 
     pursuant to subsection (m)(2)(C).
       ``(g) Eligible Activities.--Affordable housing fund grant 
     amounts of a grantee shall be eligible for use, or for 
     commitment for use, only for assistance for--
       ``(1) the production, preservation, and rehabilitation of 
     rental housing, including housing under the programs 
     identified in section 1335(a)(2)(B), except that such grant 
     amounts may be used for the benefit only of extremely low- 
     and very low-income families;
       ``(2) the production, preservation, and rehabilitation of 
     housing for homeownership, including such forms as 
     downpayment assistance, closing cost assistance, and 
     assistance for interest-rate buy-downs, that--
       ``(A) is available for purchase only for use as a principal 
     residence by families that qualify both as--
       ``(i) extremely low- and very-low income families at the 
     times described in subparagraphs (A) through (C) of section 
     215(b)(2) of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12745(b)(2)); and
       ``(ii) first-time homebuyers, as such term is defined in 
     section 104 of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12704), except that any reference in 
     such section to assistance under title II of such Act shall 
     for purposes of this section be considered to refer to 
     assistance from affordable housing fund grant amounts;
       ``(B) has an initial purchase price that meets the 
     requirements of section 215(b)(1) of the Cranston-Gonzalez 
     National Affordable Housing Act;
       ``(C) is subject to the same resale restrictions 
     established under section 215(b)(3) of the Cranston-Gonzalez 
     National Affordable Housing Act and applicable to the 
     participating jurisdiction that is the State in which such 
     housing is located; and
       ``(D) is made available for purchase only by, or in the 
     case of assistance under this paragraph, is made available 
     only to, homebuyers who have, before purchase, completed a 
     program of counseling with respect to the responsibilities 
     and financial management involved in homeownership that is 
     approved by the Director; and
       ``(3) public infrastructure development activities in 
     connection with housing activities funded under paragraph (1) 
     or (2).
       ``(h) Eligible Recipients.--Affordable housing fund grant 
     amounts of a grantee may be provided only to a recipient that 
     is an organization, agency, or other entity (including a for-
     profit entity, a nonprofit entity, and a faith-based 
     organization) that--
       ``(1) has demonstrated experience and capacity to conduct 
     an eligible activity under (g), as evidenced by its ability 
     to--
       ``(A) own, construct or rehabilitate, manage, and operate 
     an affordable multifamily rental housing development;
       ``(B) design, construct or rehabilitate, and market 
     affordable housing for homeownership;
       ``(C) provide forms of assistance, such as downpayments, 
     closing costs, or interest-rate buy-downs, for purchasers; or
       ``(D) construct related public infrastructure development 
     activities in connection with such housing activities;
       ``(2) demonstrates the ability and financial capacity to 
     undertake, comply, and manage the eligible activity;
       ``(3) demonstrates its familiarly with the requirements of 
     any other Federal, State or local housing program that will 
     be used in conjunction with such grant amounts to ensure 
     compliance with all applicable requirements and regulations 
     of such programs; and

[[Page H5398]]

       ``(4) makes such assurances to the grantee as the Director 
     shall, by regulation, require to ensure that the recipient 
     will comply with the requirements of this section during the 
     entire period that begins upon selection of the recipient to 
     receive such grant amounts and ending upon the conclusion of 
     all activities under subsection (g) that are engaged in by 
     the recipient and funded with such grant amounts.
       ``(i) Limitations on Use.--
       ``(1) Required amount for refcorp.--Of the aggregate amount 
     allocated pursuant to subsection (b) in each year to the 
     affordable housing fund, 25 percent shall be used as provided 
     in section 21B(f)(2)(E) of the Federal Home Loan Bank Act (12 
     U.S.C. 1441b(f)(2)(E)).
       ``(2) Required amount for homeownership activities.--Of the 
     aggregate amount of affordable housing fund grant amounts 
     provided in each year to a grantee, not less than 10 percent 
     shall be used for activities under paragraph (2) of 
     subsection (g).
       ``(3) Maximum amount for public infrastructure development 
     activities in connection with affordable housing 
     activities.--Of the aggregate amount of affordable housing 
     fund grant amounts provided in each year to a grantee, not 
     more than 12.5 percent may be used for activities under 
     paragraph (3) of subsection (g).
       ``(4) Deadline for commitment or use.--Any affordable 
     housing fund grant amounts of a grantee shall be used or 
     committed for use within two years of the date of that such 
     grant amounts are made available to the grantee. The Director 
     shall recapture into the affordable housing fund any such 
     amounts not so used or committed for use and allocate such 
     amounts under subsection (d)(1) in the first year after such 
     recapture.
       ``(5) Use of returns.--The Director shall, by regulation 
     provide that any return on a loan or other investment of any 
     affordable housing fund grant amounts of a grantee shall be 
     treated, for purposes of availability to and use by the 
     grantee, as affordable housing fund grant amounts.
       ``(6) Prohibited uses.--The Director shall--
       ``(A) by regulation, set forth prohibited uses of 
     affordable housing fund grant amounts, which shall include 
     use for--
       ``(i) political activities;
       ``(ii) advocacy;
       ``(iii) lobbying, whether directly or through other 
     parties;
       ``(iv) counseling services;
       ``(v) travel expenses; and
       ``(vi) preparing or providing advice on tax returns;
       ``(B) by regulation, provide that, except as provided in 
     subparagraph (C), affordable housing fund grant amounts of a 
     grantee may not be used for administrative, outreach, or 
     other costs of--
       ``(i) the grantee; or
       ``(ii) any recipient of such grant amounts; and
       ``(C) by regulation, limit the amount of any affordable 
     housing fund grant amounts of the grantee for a year that may 
     be used for administrative costs of the grantee of carrying 
     out the program required under this section to a percentage 
     of such grant amounts of the grantee for such year, which may 
     not exceed 10 percent.
       ``(7) Prohibition of consideration of use for meeting 
     housing goals or duty to serve.--In determining compliance 
     with the housing goals under this subpart and the duty to 
     serve underserved markets under section 1335, the Director 
     may not consider any affordable housing fund grant amounts 
     used under this section for eligible activities under 
     subsection (g). The Director shall give credit toward the 
     achievement of such housing goals and such duty to serve 
     underserved markets to purchases by the enterprises of 
     mortgages for housing that receives funding from affordable 
     housing fund grant amounts, but only to the extent that such 
     purchases by the enterprises are funded other than with such 
     grant amounts.
       ``(j) Accountability of Recipients and Grantees.--
       ``(1) Recipients.--
       ``(A) Tracking of funds.--The Director shall--
       ``(i) require each grantee to develop and maintain a system 
     to ensure that each recipient of assistance from affordable 
     housing fund grant amounts of the grantee uses such amounts 
     in accordance with this section, the regulations issued under 
     this section, and any requirements or conditions under which 
     such amounts were provided; and--
       ``(ii) establish minimum requirements for agreements, 
     between the grantee and recipients, regarding assistance from 
     the affordable housing fund grant amounts of the grantee, 
     which shall include--

       ``(I) appropriate continuing financial and project 
     reporting, record retention, and audit requirements for the 
     duration of the grant to the recipient to ensure compliance 
     with the limitations and requirements of this section and the 
     regulations under this section; and
       ``(II) any other requirements that the Director determines 
     are necessary to ensure appropriate grant administration and 
     compliance.

       ``(B) Misuse of funds.--
       ``(i) Reimbursement requirement.--If any recipient of 
     assistance from affordable housing fund grant amounts of a 
     grantee is determined, in accordance with clause (ii), to 
     have used any such amounts in a manner that is materially in 
     violation of this section, the regulations issued under this 
     section, or any requirements or conditions under which such 
     amounts were provided, the grantee shall require that, within 
     12 months after the determination of such misuse, the 
     recipient shall reimburse the grantee for such misused 
     amounts and return to the grantee any amounts from the 
     affordable housing fund grant amounts of the grantee that 
     remain unused or uncommitted for use. The remedies under this 
     clause are in addition to any other remedies that may be 
     available under law.
       ``(ii) Determination.--A determination is made in 
     accordance with this clause if the determination is--

       ``(I) made by the Director; or
       ``(II)(aa) made by the grantee;
       ``(bb) the grantee provides notification of the 
     determination to the Director for review, in the discretion 
     of the Director, of the determination; and
       ``(cc) the Director does not subsequently reverse the 
     determination.

       ``(2) Grantees.--
       ``(A) Report.--
       ``(i) In general.--The Director shall require each grantee 
     receiving affordable housing fund grant amounts for a year to 
     submit a report, for such year, to the Director that--

       ``(I) describes the activities funded under this section 
     during such year with the affordable housing fund grant 
     amounts of the grantee; and
       ``(II) the manner in which the grantee complied during such 
     year with the allocation plan established pursuant to 
     subsection (e) for the grantee.

       ``(ii) Public availability.--The Director shall make such 
     reports pursuant to this subparagraph publicly available.
       ``(B) Misuse of funds.--If the Director determines, after 
     reasonable notice and opportunity for hearing, that a grantee 
     has failed to comply substantially with any provision of this 
     section and until the Director is satisfied that there is no 
     longer any such failure to comply, the Director shall--
       ``(i) reduce the amount of assistance under this section to 
     the grantee by an amount equal to the amount affordable 
     housing fund grant amounts which were not used in accordance 
     with this section;
       ``(ii) require the grantee to repay the Director an amount 
     equal to the amount of the amount affordable housing fund 
     grant amounts which were not used in accordance with this 
     section;
       ``(iii) limit the availability of assistance under this 
     section to the grantee to activities or recipients not 
     affected by such failure to comply; or
       ``(iv) terminate any assistance under this section to the 
     grantee.
       ``(k) Capital Requirements.--The utilization or commitment 
     of amounts from the affordable housing fund shall not be 
     subject to the risk-based capital requirements established 
     pursuant to section 1361(a).
       ``(l) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Affordable housing fund grant amounts.--The term 
     `affordable housing fund grant amounts' means amounts from 
     the affordable housing fund established under subsection (a) 
     that are provided to a grantee pursuant to subsection (d)(3).
       ``(2) Grantee.--The term `grantee' means--
       ``(A) with respect to 2007, the Louisiana Housing Finance 
     Agency and the Mississippi Development Authority; and
       ``(B) with respect to the years referred to in subsection 
     (b)(1), other than 2007, each State (as such term is defined 
     in section 1303) and each federally recognized Indian tribe.
       ``(3) Recipient.--The term `recipient' means an entity 
     meeting the requirements under subsection (h) that receives 
     assistance from a grantee from affordable housing fund grant 
     amounts of the grantee.
       ``(4) Total mortgage portfolio.--The term `total mortgage 
     portfolio' means, with respect to a year, the sum, for all 
     mortgages outstanding during that year in any form, including 
     whole loans, mortgage-backed securities, participation 
     certificates, or other structured securities backed by 
     mortgages, of the dollar amount of the unpaid outstanding 
     principal balances under such mortgages. Such term includes 
     all such mortgages or securitized obligations, whether 
     retained in portfolio, or sold in any form. The Director is 
     authorized to promulgate rules further defining such term as 
     necessary to implement this section and to address market 
     developments.
       ``(5) Very-low income family.--The term `very low-income 
     family' has the meaning given such term in section 1303, 
     except that such term includes any family that resides in a 
     rural area that has an income that does not exceed the 
     poverty line (as such term is defined in section 673(2) of 
     the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 
     9902(2)), including any revision required by such section) 
     applicable to a family of the size involved.
       ``(m) Regulations.--
       ``(1) In general.--The Director, in consultation with the 
     Secretary of Housing and Urban Development, shall issue 
     regulations to carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) a requirement that the Director ensure that the 
     program of each grantee for use of affordable housing fund 
     grant amounts of the grantee is audited not less than 
     annually to ensure compliance with this section;
       ``(B) authority for the Director to audit, provide for an 
     audit, or otherwise verify a grantee's activities, to ensure 
     compliance with this section;
       ``(C) requirements for a process for application to, and 
     selection by, each grantee for activities meeting the 
     grantee's priority housing needs to be funded with affordable 
     housing fund grant amounts of the grantee, which shall 
     provide for priority in funding to be based upon--
       ``(i) greatest impact;
       ``(ii) geographic diversity;
       ``(iii) ability to obligate amounts and undertake 
     activities so funded in a timely manner;
       ``(iv) in the case of rental housing projects under 
     subsection (g)(1), the extent to which rents for units in the 
     project funded are affordable, especially for extremely low-
     income families;
       ``(v) in the case of rental housing projects under 
     subsection (g)(1), the extent of the duration for which such 
     rents will remain affordable;

[[Page H5399]]

       ``(vi) the extent to which the application makes use of 
     other funding sources; and
       ``(vii) the merits of an applicant's proposed eligible 
     activity;
       ``(D) requirements to ensure that amounts provided to a 
     grantee from the affordable housing fund that are used for 
     rental housing under subsection (g)(1) are used only for the 
     benefit of extremely low- and very-low income families;
       ``(E) limitations on public infrastructure development 
     activities that are eligible pursuant to subsection (g)(3) 
     for funding with affordable housing fund grant amounts and 
     requirements for the connection between such activities and 
     housing activities funded under paragraph (1) or (2) of 
     subsection (g); and
       ``(F) requirements and standards for establishment, by 
     grantees (including the grantees for 2007 pursuant to 
     subsection (l)(2)(A)), of performance goals, benchmarks, and 
     timetables for the production, preservation, and 
     rehabilitation of affordable rental and homeownership housing 
     with affordable housing fund grant amounts.
       ``(n) Enforcement of Requirements on Enterprise.--
     Compliance by the enterprises with the requirements under 
     this section shall be enforceable under subpart C. Any 
     reference in such subpart to this part or to an order, rule, 
     or regulation under this part specifically includes this 
     section and any order, rule, or regulation under this 
     section.
       ``(o) Affordable Housing Trust Fund.--If, after the 
     enactment of this Act, in any year, there is enacted any 
     provision of Federal law establishing an affordable housing 
     trust fund other than under this title for use only for 
     grants to provide affordable rental housing and affordable 
     homeownership opportunities, and the subsequent year is a 
     year referred to in subsection (b)(1), the Director shall in 
     such subsequent year and any remaining years referred to in 
     subsection (b)(1) transfer to such affordable housing trust 
     fund the aggregate amount allocated pursuant to subsection 
     (b) in such year to the affordable housing fund under this 
     section, less any amounts used pursuant to subsection (i)(1). 
     For such subsequent and remaining years, the provisions of 
     subsections (c) and (d) shall not apply. Nothing in this 
     subsection shall be construed to alter the terms and 
     conditions of the affordable housing fund under this section 
     or to extend the life of such fund.''.
       (b) Timely Establishment of Affordable Housing Needs 
     Formula.--
       (1) In general.--The Secretary of Housing and Urban 
     Development shall, not later than the effective date under 
     section 185 of this Act, issue the regulations establishing 
     the affordable housing needs formulas in accordance with the 
     provisions of section 1337(c)(2) of the Housing and Community 
     Development Act of 1992, as such section is amended by 
     subsection (a) of this section.
       (2) Effective date.--This subsection shall take effect on 
     the date of the enactment of this Act.
       (c) REFCORP Payments.--Section 21B(f)(2) of the Federal 
     Home Loan Bank Act (12 U.S.C. 1441b(f)(2)) is amended--
       (1) in subparagraph (E), by striking ``and (D)'' and 
     inserting ``(D), and (E)'';
       (2) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (3) by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Payments by fannie mae and freddie mac.--To the 
     extent that the amounts available pursuant to subparagraphs 
     (A), (B), (C), and (D) are insufficient to cover the amount 
     of interest payments, each enterprise (as such term is 
     defined in section 1303 of the Housing and Community 
     Development Act of 1992 (42 U.S.C. 4502)) shall transfer to 
     the Funding Corporation in each calendar year the amounts 
     allocated for use under this subparagraph pursuant to section 
     1337(i)(1) of such Act.''.
       (d) GAO Report.--The Comptroller General shall conduct a 
     study to determine the effects that the affordable housing 
     fund established under section 1337 of the Housing and 
     Community Development Act of 1992, as added by the amendment 
     made by subsection (a) of this section, will have on the 
     availability and affordability of credit for homebuyers, 
     including the effects on such credit of the requirement under 
     such section 1337(b) that the Federal National Mortgage 
     Association and Federal Home Loan Mortgage Corporation make 
     allocations of amounts to such fund based on the average 
     total mortgage portfolios, and the extent to which the costs 
     of such allocation requirement will be borne by such entities 
     or will be passed on to homebuyers. Not later than the 
     expiration of the 12-month period beginning on the date of 
     the enactment of this Act, the Comptroller General shall 
     submit a report to the Congress setting forth the results and 
     conclusions of such study. This subsection shall take effect 
     on the date of the enactment of this Act.

     SEC. 140. CONSISTENCY WITH MISSION.

       Subpart B of part 2 of subtitle A of title XIII of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 4561 
     et seq.) is amended by adding after section 1337, as added by 
     section 139 of this Act, the following new section:

     ``SEC. 1338. CONSISTENCY WITH MISSION.

       ``This subpart may not be construed to authorize an 
     enterprise to engage in any program or activity that 
     contravenes or is inconsistent with the Federal National 
     Mortgage Association Charter Act or the Federal Home Loan 
     Mortgage Corporation Act.''.

     SEC. 141. ENFORCEMENT.

       (a) Cease-and-Desist Proceedings.--Section 1341 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4581) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Grounds for Issuance.--The Director may issue and 
     serve a notice of charges under this section upon an 
     enterprise if the Director determines--
       ``(1) the enterprise has failed to meet any housing goal 
     established under subpart B, following a written notice and 
     determination of such failure in accordance with section 
     1336;
       ``(2) the enterprise has failed to submit a report under 
     section 1314, following a notice of such failure, an 
     opportunity for comment by the enterprise, and a final 
     determination by the Director;
       ``(3) the enterprise has failed to submit the information 
     required under subsection (m) or (n) of section 309 of the 
     Federal National Mortgage Association Charter Act, or 
     subsection (e) or (f) of section 307 of the Federal Home Loan 
     Mortgage Corporation Act;
       ``(4) the enterprise has violated any provision of this 
     part or any order, rule or regulation under this part;
       ``(5) the enterprise has failed to submit a housing plan 
     that complies with section 1336(c) within the applicable 
     period; or
       ``(6) the enterprise has failed to comply with a housing 
     plan under section 1336(c).'';
       (2) in subsection (b)(2), by striking ``requiring the 
     enterprise to'' and all that follows through the end of the 
     paragraph and inserting the following: ``requiring the 
     enterprise to--
       ``(A) comply with the goal or goals;
       ``(B) submit a report under section 1314;
       ``(C) comply with any provision this part or any order, 
     rule or regulation under such part;
       ``(D) submit a housing plan in compliance with section 
     1336(c);
       ``(E) comply with a housing plan submitted under section 
     1336(c); or
       ``(F) provide the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act, as 
     applicable.'';
       (3) in subsection (c), by inserting ``date of the'' before 
     ``service of the order''; and
       (4) by striking subsection (d).
       (b) Authority of Director To Enforce Notices and Orders.--
     Section 1344 of the Housing and Community Development Act of 
     1992 (12 U.S.C. 4584) is amended by striking subsection (a) 
     and inserting the following new subsection:
       ``(a) Enforcement.--The Director may, in the discretion of 
     the Director, apply to the United States District Court for 
     the District of Columbia, or the United States district court 
     within the jurisdiction of which the headquarters of the 
     enterprise is located, for the enforcement of any effective 
     and outstanding notice or order issued under section 1341 or 
     1345, or request that the Attorney General of the United 
     States bring such an action. Such court shall have 
     jurisdiction and power to order and require compliance with 
     such notice or order.''.
       (c) Civil Money Penalties.--Section 1345 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4585) is 
     amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following new subsections:
       ``(a) Authority.--The Director may impose a civil money 
     penalty, in accordance with the provisions of this section, 
     on any enterprise that has failed to--
       ``(1) meet any housing goal established under subpart B, 
     following a written notice and determination of such failure 
     in accordance with section 1336(b);
       ``(2) submit a report under section 1314, following a 
     notice of such failure, an opportunity for comment by the 
     enterprise, and a final determination by the Director;
       ``(3) submit the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act, or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act;
       ``(4) comply with any provision of this part or any order, 
     rule or regulation under this part;
       ``(5) submit a housing plan pursuant to section 1336(c) 
     within the required period; or
       ``(6) comply with a housing plan for the enterprise under 
     section 1336(c).
       ``(b) Amount of Penalty.--The amount of the penalty, as 
     determined by the Director, may not exceed--
       ``(1) for any failure described in paragraph (1), (5), or 
     (6) of subsection (a), $50,000 for each day that the failure 
     occurs; and
       ``(2) for any failure described in paragraph (2), (3), or 
     (4) of subsection (a), $20,000 for each day that the failure 
     occurs.'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by inserting ``and'' after the 
     semicolon at the end;
       (ii) in subparagraph (B), by striking ``; and'' and 
     inserting a period; and
       (iii) by striking subparagraph (C); and
       (B) in paragraph (2), by inserting after the period at the 
     end the following: ``In determining the penalty under 
     subsection (a)(1), the Director shall give consideration to 
     the length of time the enterprise should reasonably take to 
     achieve the goal.'';
       (3) in the first sentence of subsection (d)--
       (A) by striking ``request the Attorney General of the 
     United States to'' and inserting ``, in the discretion of the 
     Director,''; and
       (B) by inserting ``, or request that the Attorney General 
     of the United States bring such an action'' before the period 
     at the end;
       (4) by striking subsection (f); and
       (5) by redesignating subsection (g) as subsection (f).
       (d) Enforcement of Subpoenas.--Section 1348(c) of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4588(c)) is amended--
       (1) by striking ``request the Attorney General of the 
     United States to'' and inserting ``, in the discretion of the 
     Director,''; and
       (2) by inserting ``or request that the Attorney General of 
     the United States bring such an action,'' after ``District of 
     Columbia,''

[[Page H5400]]

       (e) Conforming Amendment.--The heading for subpart C of 
     part 2 of subtitle A of title XIII of the Housing and 
     Community Development Act of 1992 is amended to read as 
     follows:

                      ``Subpart C--Enforcement''.

     SEC. 142. CONFORMING AMENDMENTS.

       Part 2 of subtitle A of title XIII of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4541 et seq.) is 
     amended--
       (1) by striking ``Secretary'' each place such term appears 
     in such part and inserting ``Director'';
       (2) in the section heading for section 1323 (12 U.S.C. 
     4543), by inserting ``OF ENTERPRISES'' before the period at 
     the end;
       (3) by striking section 1327 (12 U.S.C. 4547);
       (4) by striking section 1328 (12 U.S.C. 4548);
       (5) by redesignating section 1329 (as amended by section 
     135) as section 1327;
       (6) in sections 1345(c)(1)(A), 1346(a), and 1346(b) (12 
     U.S.C. 4585(c)(1)(A), 4586(a), and 4586(b)), by striking 
     ``Secretary's'' each place such term appears and inserting 
     ``Director's''; and
       (7) by striking section 1349 (12 U.S.C. 4589).

                  Subtitle C--Prompt Corrective Action

     SEC. 151. CAPITAL CLASSIFICATIONS.

       (a) In General.--Section 1364 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4614) is amended--
       (1) in the heading for subsection (a), by striking ``In 
     General'' and inserting ``Enterprises''.
       (2) in subsection (c)--
       (A) by striking ``subsection (b)'' and inserting 
     ``subsection (c)'';
       (B) by striking ``enterprises'' and inserting ``regulated 
     entities''; and
       (C) by striking the last sentence;
       (3) by redesignating subsections (c) (as so amended by 
     paragraph (2) of this subsection) and (d) as subsections (d) 
     and (f), respectively;
       (4) by striking subsection (b) and inserting the following 
     new subsections:
       ``(b) Federal Home Loan Banks.--
       ``(1) Establishment and criteria.--For purposes of this 
     subtitle, the Director shall, by regulation--
       ``(A) establish the capital classifications specified under 
     paragraph (2) for the Federal home loan banks;
       ``(B) establish criteria for each such capital 
     classification based on the amount and types of capital held 
     by a bank and the risk-based, minimum, and critical capital 
     levels for the banks and taking due consideration of the 
     capital classifications established under subsection (a) for 
     the enterprises, with such modifications as the Director 
     determines to be appropriate to reflect the difference in 
     operations between the banks and the enterprises; and
       ``(C) shall classify the Federal home loan banks according 
     to such capital classifications.
       ``(2) Classifications.--The capital classifications 
     specified under this paragraph are--
       ``(A) adequately capitalized;
       ``(B) undercapitalized;
       ``(C) significantly undercapitalized; and
       ``(D) critically undercapitalized.
       ``(c) Discretionary Classification.--
       ``(1) Grounds for reclassification.--The Director may 
     reclassify a regulated entity under paragraph (2) if--
       ``(A) at any time, the Director determines in writing that 
     the regulated entity is engaging in conduct that could result 
     in a rapid depletion of core or total capital or, in the case 
     of an enterprise, that the value of the property subject to 
     mortgages held or securitized by the enterprise has decreased 
     significantly;
       ``(B) after notice and an opportunity for hearing, the 
     Director determines that the regulated entity is in an unsafe 
     or unsound condition; or
       ``(C) pursuant to section 1371(b), the Director deems the 
     regulated entity to be engaging in an unsafe or unsound 
     practice.
       ``(2) Reclassification.--In addition to any other action 
     authorized under this title, including the reclassification 
     of a regulated entity for any reason not specified in this 
     subsection, if the Director takes any action described in 
     paragraph (1) the Director may classify a regulated entity--
       ``(A) as undercapitalized, if the regulated entity is 
     otherwise classified as adequately capitalized;
       ``(B) as significantly undercapitalized, if the regulated 
     entity is otherwise classified as undercapitalized; and
       ``(C) as critically undercapitalized, if the regulated 
     entity is otherwise classified as significantly 
     undercapitalized.''; and
       (5) by inserting after subsection (d) (as so redesignated 
     by paragraph (3) of this subsection), the following new 
     subsection:
       ``(e) Restriction on Capital Distributions.--
       ``(1) In general.--A regulated entity shall make no capital 
     distribution if, after making the distribution, the regulated 
     entity would be undercapitalized.
       ``(2) Exception.--Notwithstanding paragraph (1), the 
     Director may permit a regulated entity, to the extent 
     appropriate or applicable, to repurchase, redeem, retire, or 
     otherwise acquire shares or ownership interests if the 
     repurchase, redemption, retirement, or other acquisition--
       ``(A) is made in connection with the issuance of additional 
     shares or obligations of the regulated entity in at least an 
     equivalent amount; and
       ``(B) will reduce the financial obligations of the 
     regulated entity or otherwise improve the financial condition 
     of the entity.''.
       (b) Regulations.--Not later than the expiration of the 180-
     day period beginning on the effective date under section 185, 
     the Director of the Federal Housing Finance Agency shall 
     issue regulations to carry out section 1364(b) of the Housing 
     and Community Development Act of 1992 (as added by paragraph 
     (4) of this subsection), relating to capital classifications 
     for the Federal home loan banks.

     SEC. 152. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED 
                   REGULATED ENTITIES.

       Section 1365 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4615) is amended--
       (1) in the section heading, by striking ``ENTERPRISES'' and 
     inserting ``REGULATED ENTITIES'';
       (2) in subsection (a)--
       (A) by redesignating paragraphs (1) and (2) as paragraphs 
     (2) and (3), respectively;
       (B) by inserting before paragraph (2), as so redesignated 
     by subparagraph (A) of this paragraph, the following 
     paragraph:
       ``(1) Required monitoring.--The Director shall--
       ``(A) closely monitor the condition of any regulated entity 
     that is classified as undercapitalized;
       ``(B) closely monitor compliance with the capital 
     restoration plan, restrictions, and requirements imposed 
     under this section; and
       ``(C) periodically review the plan, restrictions, and 
     requirements applicable to the undercapitalized regulated 
     entity to determine whether the plan, restrictions, and 
     requirements are achieving the purpose of this section.''; 
     and
       (C) by inserting at the end the following new paragraphs:
       ``(4) Restriction of asset growth.--A regulated entity that 
     is classified as undercapitalized shall not permit its 
     average total assets (as such term is defined in section 
     1316(b) during any calendar quarter to exceed its average 
     total assets during the preceding calendar quarter unless--
       ``(A) the Director has accepted the capital restoration 
     plan of the regulated entity;
       ``(B) any increase in total assets is consistent with the 
     plan; and
       ``(C) the ratio of total capital to assets for the 
     regulated entity increases during the calendar quarter at a 
     rate sufficient to enable the entity to become adequately 
     capitalized within a reasonable time.
       ``(5) Prior approval of acquisitions, new products, and new 
     activities.--A regulated entity that is classified as 
     undercapitalized shall not, directly or indirectly, acquire 
     any interest in any entity or initially offer any new product 
     (as such term is defined in section 1321(f)) or engage in any 
     new activity, service, undertaking, or offering unless--
       ``(A) the Director has accepted the capital restoration 
     plan of the regulated entity, the entity is implementing the 
     plan, and the Director determines that the proposed action is 
     consistent with and will further the achievement of the plan; 
     or
       ``(B) the Director determines that the proposed action will 
     further the purpose of this section.'';
       (3) in the subsection heading for subsection (b), by 
     striking ``From Undercapitalized to Significantly 
     Undercapitalized''; and
       (4) by striking subsection (c) and inserting the following 
     new subsection:
       ``(c) Other Discretionary Safeguards.--The Director may 
     take, with respect to a regulated entity that is classified 
     as undercapitalized, any of the actions authorized to be 
     taken under section 1366 with respect to a regulated entity 
     that is classified as significantly undercapitalized, if the 
     Director determines that such actions are necessary to carry 
     out the purpose of this subtitle.''.

     SEC. 153. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY 
                   UNDERCAPITALIZED REGULATED ENTITIES.

       Section 1366 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4616) is amended--
       (1) in the section heading, by striking ``ENTERPRISES'' and 
     inserting ``REGULATED ENTITIES'';
       (2) in subsection (a)(2)(A), by striking ``enterprise'' the 
     last place such term appears;
       (3) in subsection (b)--
       (A) in the subsection heading, by striking ``Discretionary 
     Supervisory Actions'' and inserting ``Specific Actions''.
       (B) in the matter preceding paragraph (1), by striking 
     ``may, at any time, take any'' and inserting ``shall carry 
     out this section by taking, at any time, one or more'';
       (C) by redesignating paragraphs (5) and (6) as paragraphs 
     (6) and (7), respectively;
       (D) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) Improvement of management.--Take one or more of the 
     following actions:
       ``(A) New election of board.--Order a new election for the 
     board of directors of the regulated entity.
       ``(B) Dismissal of directors or executive officers.--
     Require the regulated entity to dismiss from office any 
     director or executive officer who had held office for more 
     than 180 days immediately before the entity became 
     undercapitalized. Dismissal under this subparagraph shall not 
     be construed to be a removal pursuant to the Director's 
     enforcement powers provided in section 1377.
       ``(C) Employ qualified executive officers.--Require the 
     regulated entity to employ qualified executive officers (who, 
     if the Director so specifies, shall be subject to approval by 
     the Director).''; and
       (E) by inserting at the end the following new paragraph:
       ``(8) Other action.--Require the regulated entity to take 
     any other action that the Director determines will better 
     carry out the purpose of this section than any of the actions 
     specified in this paragraph.'';
       (4) by redesignating subsection (c) as subsection (d); and
       (5) by inserting after subsection (b) the following new 
     subsection:

[[Page H5401]]

       ``(c) Restriction on Compensation of Executive Officers.--A 
     regulated entity that is classified as significantly 
     undercapitalized may not, without prior written approval by 
     the Director--
       ``(1) pay any bonus to any executive officer; or
       ``(2) provide compensation to any executive officer at a 
     rate exceeding that officer's average rate of compensation 
     (excluding bonuses, stock options, and profit sharing) during 
     the 12 calendar months preceding the calendar month in which 
     the regulated entity became undercapitalized.''.

     SEC. 154. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED 
                   REGULATED ENTITIES.

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

     ``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED 
                   REGULATED ENTITIES.

       ``(a) Appointment of Agency as Conservator or Receiver.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal or State law, if any of the grounds under paragraph 
     (3) exist, at the discretion of the Director, the Director 
     may establish a conservatorship or receivership, as 
     appropriate, for the purpose of reorganizing, rehabilitating, 
     or winding up the affairs of a regulated entity.
       ``(2) Appointment.--In any conservatorship or receivership 
     established under this section, the Director shall appoint 
     the Agency as conservator or receiver.
       ``(3) Grounds for appointment.--The grounds for appointing 
     a conservator or receiver for a regulated entity are as 
     follows:
       ``(A) Assets insufficient for obligations.--The assets of 
     the regulated entity are less than the obligations of the 
     regulated entity to its creditors and others.
       ``(B) Substantial dissipation.--Substantial dissipation of 
     assets or earnings due to--
       ``(i) any violation of any provision of Federal or State 
     law; or
       ``(ii) any unsafe or unsound practice.
       ``(C) Unsafe or unsound condition.--An unsafe or unsound 
     condition to transact business.
       ``(D) Cease-and-desist orders.--Any willful violation of a 
     cease-and-desist order that has become final.
       ``(E) Concealment.--Any concealment of the books, papers, 
     records, or assets of the regulated entity, or any refusal to 
     submit the books, papers, records, or affairs of the 
     regulated entity, for inspection to any examiner or to any 
     lawful agent of the Director.
       ``(F) Inability to meet obligations.--The regulated entity 
     is likely to be unable to pay its obligations or meet the 
     demands of its creditors in the normal course of business.
       ``(G) Losses.--The regulated entity has incurred or is 
     likely to incur losses that will deplete all or substantially 
     all of its capital, and there is no reasonable prospect for 
     the regulated entity to become adequately capitalized (as 
     defined in section 1364(a)(1)).
       ``(H) Violations of law.--Any violation of any law or 
     regulation, or any unsafe or unsound practice or condition 
     that is likely to--
       ``(i) cause insolvency or substantial dissipation of assets 
     or earnings; or
       ``(ii) weaken the condition of the regulated entity.
       ``(I) Consent.--The regulated entity, by resolution of its 
     board of directors or its shareholders or members, consents 
     to the appointment.
       ``(J) Undercapitalization.--The regulated entity is 
     undercapitalized or significantly undercapitalized (as 
     defined in section 1364(a)(3) or in regulations issued 
     pursuant to section 1364(b), as applicable), and--
       ``(i) has no reasonable prospect of becoming adequately 
     capitalized;
       ``(ii) fails to become adequately capitalized, as required 
     by--

       ``(I) section 1365(a)(1) with respect to an 
     undercapitalized regulated entity; or
       ``(II) section 1366(a)(1) with respect to a significantly 
     undercapitalized regulated entity;

       ``(iii) fails to submit a capital restoration plan 
     acceptable to the Agency within the time prescribed under 
     section 1369C; or
       ``(iv) materially fails to implement a capital restoration 
     plan submitted and accepted under section 1369C.
       ``(K) Critical undercapitalization.--The regulated entity 
     is critically undercapitalized, as defined in section 
     1364(a)(4) or in regulations issued pursuant to section 
     1364(b), as applicable.
       ``(L) Money laundering.--The Attorney General notifies the 
     Director in writing that the regulated entity has been found 
     guilty of a criminal offense under section 1956 or 1957 of 
     title 18, United States Code, or section 5322 or 5324 of 
     title 31, United States Code.
       ``(4) Mandatory receivership.--
       ``(A) In general.--The Director shall appoint the Agency as 
     receiver for a regulated entity if the Director determines, 
     in writing, that--
       ``(i) the assets of the regulated entity are, and during 
     the preceding 30 calendar days have been, less than the 
     obligations of the regulated entity to its creditors and 
     others; or
       ``(ii) the regulated entity is not, and during the 
     preceding 30 calendar days has not been, generally paying the 
     debts of the regulated entity (other than debts that are the 
     subject of a bona fide dispute) as such debts become due.
       ``(B) Periodic determination required for critically under 
     capitalized regulated entity.--If a regulated entity is 
     critically undercapitalized, the Director shall make a 
     determination, in writing, as to whether the regulated entity 
     meets the criteria specified in clause (i) or (ii) of 
     subparagraph (A)--
       ``(i) not later than 30 calendar days after the regulated 
     entity initially becomes critically undercapitalized; and
       ``(ii) at least once during each succeeding 30-calendar day 
     period.
       ``(C) Determination not required if receivership already in 
     place.--Subparagraph (B) shall not apply with respect to a 
     regulated entity in any period during which the Agency serves 
     as receiver for the regulated entity.
       ``(D) Receivership terminates conservatorship.--The 
     appointment under this section of the Agency as receiver of a 
     regulated entity shall immediately terminate any 
     conservatorship established under this title for the 
     regulated entity.
       ``(5) Judicial review.--
       ``(A) In general.--If the Agency is appointed conservator 
     or receiver under this section, the regulated entity may, 
     within 30 days of such appointment, bring an action in the 
     United States District Court for the judicial district in 
     which the principal place of business of such regulated 
     entity is located, or in the United States District Court for 
     the District of Columbia, for an order requiring the Agency 
     to remove itself as conservator or receiver.
       ``(B) Review.--Upon the filing of an action under 
     subparagraph (A), the court shall, upon the merits, dismiss 
     such action or direct the Agency to remove itself as such 
     conservator or receiver.
       ``(6) Directors not liable for acquiescing in appointment 
     of conservator or receiver.--The members of the board of 
     directors of a regulated entity shall not be liable to the 
     shareholders or creditors of the regulated entity for 
     acquiescing in or consenting in good faith to the appointment 
     of the Agency as conservator or receiver for that regulated 
     entity.
       ``(7) Agency not subject to any other federal agency.--When 
     acting as conservator or receiver, the Agency shall not be 
     subject to the direction or supervision of any other agency 
     of the United States or any State in the exercise of the 
     rights, powers, and privileges of the Agency.
       ``(b) Powers and Duties of the Agency as Conservator or 
     Receiver.--
       ``(1) Rulemaking authority of the agency.--The Agency may 
     prescribe such regulations as the Agency determines to be 
     appropriate regarding the conduct of conservatorships or 
     receiverships.
       ``(2) General powers.--
       ``(A) Successor to regulated entity.--The Agency shall, as 
     conservator or receiver, and by operation of law, immediately 
     succeed to--
       ``(i) all rights, titles, powers, and privileges of the 
     regulated entity, and of any stockholder, officer, or 
     director of such regulated entity with respect to the 
     regulated entity and the assets of the regulated entity; and
       ``(ii) title to the books, records, and assets of any other 
     legal custodian of such regulated entity.
       ``(B) Operate the regulated entity.--The Agency may, as 
     conservator or receiver--
       ``(i) take over the assets of and operate the regulated 
     entity with all the powers of the shareholders, the 
     directors, and the officers of the regulated entity and 
     conduct all business of the regulated entity;
       ``(ii) collect all obligations and money due the regulated 
     entity;
       ``(iii) perform all functions of the regulated entity in 
     the name of the regulated entity which are consistent with 
     the appointment as conservator or receiver; and
       ``(iv) preserve and conserve the assets and property of 
     such regulated entity.
       ``(C) Functions of officers, directors, and shareholders of 
     a regulated entity.--The Agency may, by regulation or order, 
     provide for the exercise of any function by any stockholder, 
     director, or officer of any regulated entity for which the 
     Agency has been named conservator or receiver.
       ``(D) Powers as conservator.--The Agency may, as 
     conservator, take such action as may be--
       ``(i) necessary to put the regulated entity in a sound and 
     solvent condition; and
       ``(ii) appropriate to carry on the business of the 
     regulated entity and preserve and conserve the assets and 
     property of the regulated entity, including, if two or more 
     Federal home loan banks have been placed in conservatorship 
     contemporaneously, merging two or more such banks into a 
     single Federal home loan bank.
       ``(E) Additional powers as receiver.--The Agency may, as 
     receiver, place the regulated entity in liquidation and 
     proceed to realize upon the assets of the regulated entity, 
     having due regard to the conditions of the housing finance 
     market.
       ``(F) Organization of new regulated entities.--The Agency 
     may, as receiver, organize a successor regulated entity that 
     will operate pursuant to subsection (i).
       ``(G) Transfer of assets and liabilities.--The Agency may, 
     as conservator or receiver, transfer any asset or liability 
     of the regulated entity in default without any approval, 
     assignment, or consent with respect to such transfer. Any 
     Federal home loan bank may, with the approval of the Agency, 
     acquire the assets of any Bank in conservatorship or 
     receivership, and assume the liabilities of such Bank.
       ``(H) Payment of valid obligations.--The Agency, as 
     conservator or receiver, shall, to the extent of proceeds 
     realized from the performance of contracts or sale of the 
     assets of a regulated entity, pay all valid obligations of 
     the regulated entity in accordance with the prescriptions and 
     limitations of this section.
       ``(I) Subpoena authority.--
       ``(i) In general.--

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

[[Page H5402]]

       ``(II) Applicability of law.--The provisions of section 
     1348 shall apply with respect to the exercise of any power 
     exercised under this subparagraph in the same manner as such 
     provisions apply under that section.

       ``(ii) Authority of director.--A subpoena or subpoena duces 
     tecum may be issued under clause (i) only by, or with the 
     written approval of, the Director, or the designee of the 
     Director.
       ``(iii) Rule of construction.--This subsection shall not be 
     construed to limit any rights that the Agency, in any 
     capacity, might otherwise have under section 1317 or 1379D.
       ``(J) Contracting for services.--The Agency may, as 
     conservator or receiver, provide by contract for the carrying 
     out of any of its functions, activities, actions, or duties 
     as conservator or receiver.
       ``(K) Incidental powers.--The Agency may, as conservator or 
     receiver--
       ``(i) exercise all powers and authorities specifically 
     granted to conservators or receivers, respectively, under 
     this section, and such incidental powers as shall be 
     necessary to carry out such powers; and
       ``(ii) take any action authorized by this section, which 
     the Agency determines is in the best interests of the 
     regulated entity or the Agency.
       ``(3) Authority of receiver to determine claims.--
       ``(A) In general.--The Agency may, as receiver, determine 
     claims in accordance with the requirements of this subsection 
     and any regulations prescribed under paragraph (4).
       ``(B) Notice requirements.--The receiver, in any case 
     involving the liquidation or winding up of the affairs of a 
     closed regulated entity, shall--
       ``(i) promptly publish a notice to the creditors of the 
     regulated entity to present their claims, together with 
     proof, to the receiver by a date specified in the notice 
     which shall be not less than 90 days after the publication of 
     such notice; and
       ``(ii) republish such notice approximately 1 month and 2 
     months, respectively, after the publication under clause (i).
       ``(C) Mailing required.--The receiver shall mail a notice 
     similar to the notice published under subparagraph (B)(i) at 
     the time of such publication to any creditor shown on the 
     books of the regulated entity--
       ``(i) at the last address of the creditor appearing in such 
     books; or
       ``(ii) upon discovery of the name and address of a claimant 
     not appearing on the books of the regulated entity within 30 
     days after the discovery of such name and address.
       ``(4) Rulemaking authority relating to determination of 
     claims.--Subject to subsection (c), the Director may 
     prescribe regulations regarding the allowance or disallowance 
     of claims by the receiver and providing for administrative 
     determination of claims and review of such determination.
       ``(5) Procedures for determination of claims.--
       ``(A) Determination period.--
       ``(i) In general.--Before the end of the 180-day period 
     beginning on the date on which any claim against a regulated 
     entity is filed with the Agency as receiver, the Agency shall 
     determine whether to allow or disallow the claim and shall 
     notify the claimant of any determination with respect to such 
     claim.
       ``(ii) Extension of time.--The period described in clause 
     (i) may be extended by a written agreement between the 
     claimant and the Agency.
       ``(iii) Mailing of notice sufficient.--The notification 
     requirements of clause (i) shall be deemed to be satisfied if 
     the notice of any determination with respect to any claim is 
     mailed to the last address of the claimant which appears--

       ``(I) on the books of the regulated entity;
       ``(II) in the claim filed by the claimant; or
       ``(III) in documents submitted in proof of the claim.

       ``(iv) Contents of notice of disallowance.--If any claim 
     filed under clause (i) is disallowed, the notice to the 
     claimant shall contain--

       ``(I) a statement of each reason for the disallowance; and
       ``(II) the procedures available for obtaining agency review 
     of the determination to disallow the claim or judicial 
     determination of the claim.

       ``(B) Allowance of proven claim.--The receiver shall allow 
     any claim received on or before the date specified in the 
     notice published under paragraph (3)(B)(i), or the date 
     specified in the notice required under paragraph (3)(C), 
     which is proved to the satisfaction of the receiver.
       ``(C) Disallowance of claims filed after end of filing 
     period.--Claims filed after the date specified in the notice 
     published under paragraph (3)(B)(i), or the date specified 
     under paragraph (3)(C), shall be disallowed and such 
     disallowance shall be final.
       ``(D) Authority to disallow claims.--
       ``(i) In general.--The receiver may disallow any portion of 
     any claim by a creditor or claim of security, preference, or 
     priority which is not proved to the satisfaction of the 
     receiver.
       ``(ii) Payments to less than fully secured creditors.--In 
     the case of a claim of a creditor against a regulated entity 
     which is secured by any property or other asset of such 
     regulated entity, the receiver--

       ``(I) may treat the portion of such claim which exceeds an 
     amount equal to the fair market value of such property or 
     other asset as an unsecured claim against the regulated 
     entity; and
       ``(II) may not make any payment with respect to such 
     unsecured portion of the claim other than in connection with 
     the disposition of all claims of unsecured creditors of the 
     regulated entity.

       ``(iii) Exceptions.--No provision of this paragraph shall 
     apply with respect to any extension of credit from any 
     Federal Reserve Bank, Federal home loan bank, or the Treasury 
     of the United States.
       ``(E) No judicial review of determination pursuant to 
     subparagraph (D).--No court may review the determination of 
     the Agency under subparagraph (D) to disallow a claim. This 
     subparagraph shall not affect the authority of a claimant to 
     obtain de novo judicial review of a claim pursuant to 
     paragraph (6).
       ``(F) Legal effect of filing.--
       ``(i) Statute of limitation tolled.--For purposes of any 
     applicable statute of limitations, the filing of a claim with 
     the receiver shall constitute a commencement of an action.
       ``(ii) No prejudice to other actions.--Subject to paragraph 
     (10), the filing of a claim with the receiver shall not 
     prejudice any right of the claimant to continue any action 
     which was filed before the date of the appointment of the 
     receiver, subject to the determination of claims by the 
     receiver.
       ``(6) Provision for judicial determination of claims.--
       ``(A) In general.--The claimant may file suit on a claim 
     (or continue an action commenced before the appointment of 
     the receiver) in the district or territorial court of the 
     United States for the district within which the principal 
     place of business of the regulated entity is located or the 
     United States District Court for the District of Columbia 
     (and such court shall have jurisdiction to hear such claim), 
     before the end of the 60-day period beginning on the earlier 
     of--
       ``(i) the end of the period described in paragraph 
     (5)(A)(i) with respect to any claim against a regulated 
     entity for which the Agency is receiver; or
       ``(ii) the date of any notice of disallowance of such claim 
     pursuant to paragraph (5)(A)(i).
       ``(B) Statute of limitations.--A claim shall be deemed to 
     be disallowed (other than any portion of such claim which was 
     allowed by the receiver), and such disallowance shall be 
     final, and the claimant shall have no further rights or 
     remedies with respect to such claim, if the claimant fails, 
     before the end of the 60-day period described under 
     subparagraph (A), to file suit on such claim (or continue an 
     action commenced before the appointment of the receiver).
       ``(7) Review of claims.--
       ``(A) Other review procedures.--
       ``(i) In general.--The Agency shall establish such 
     alternative dispute resolution processes as may be 
     appropriate for the resolution of claims filed under 
     paragraph (5)(A)(i).
       ``(ii) Criteria.--In establishing alternative dispute 
     resolution processes, the Agency shall strive for procedures 
     which are expeditious, fair, independent, and low cost.
       ``(iii) Voluntary binding or nonbinding procedures.--The 
     Agency may establish both binding and nonbinding processes, 
     which may be conducted by any government or private party. 
     All parties, including the claimant and the Agency, must 
     agree to the use of the process in a particular case.
       ``(B) Consideration of incentives.--The Agency shall seek 
     to develop incentives for claimants to participate in the 
     alternative dispute resolution process.
       ``(8) Expedited determination of claims.--
       ``(A) Establishment required.--The Agency shall establish a 
     procedure for expedited relief outside of the routine claims 
     process established under paragraph (5) for claimants who--
       ``(i) allege the existence of legally valid and enforceable 
     or perfected security interests in assets of any regulated 
     entity for which the Agency has been appointed receiver; and
       ``(ii) allege that irreparable injury will occur if the 
     routine claims procedure is followed.
       ``(B) Determination period.--Before the end of the 90-day 
     period beginning on the date any claim is filed in accordance 
     with the procedures established under subparagraph (A), the 
     Director shall--
       ``(i) determine--

       ``(I) whether to allow or disallow such claim; or
       ``(II) whether such claim should be determined pursuant to 
     the procedures established under paragraph (5); and

       ``(ii) notify the claimant of the determination, and if the 
     claim is disallowed, provide a statement of each reason for 
     the disallowance and the procedure for obtaining agency 
     review or judicial determination.
       ``(C) Period for filing or renewing suit.--Any claimant who 
     files a request for expedited relief shall be permitted to 
     file a suit, or to continue a suit filed before the 
     appointment of the receiver, seeking a determination of the 
     rights of the claimant with respect to such security interest 
     after the earlier of--
       ``(i) the end of the 90-day period beginning on the date of 
     the filing of a request for expedited relief; or
       ``(ii) the date the Agency denies the claim.
       ``(D) Statute of limitations.--If an action described under 
     subparagraph (C) is not filed, or the motion to renew a 
     previously filed suit is not made, before the end of the 30-
     day period beginning on the date on which such action or 
     motion may be filed under subparagraph (B), the claim shall 
     be deemed to be disallowed as of the end of such period 
     (other than any portion of such claim which was allowed by 
     the receiver), such disallowance shall be final, and the 
     claimant shall have no further rights or remedies with 
     respect to such claim.
       ``(E) Legal effect of filing.--
       ``(i) Statute of limitation tolled.--For purposes of any 
     applicable statute of limitations, the filing of a claim with 
     the receiver shall constitute a commencement of an action.
       ``(ii) No prejudice to other actions.--Subject to paragraph 
     (10), the filing of a claim with the receiver shall not 
     prejudice any right of the claimant to continue any action 
     that was filed before the appointment of the receiver, 
     subject to the determination of claims by the receiver.
       ``(9) Payment of claims.--

[[Page H5403]]

       ``(A) In general.--The receiver may, in the discretion of 
     the receiver, and to the extent funds are available from the 
     assets of the regulated entity, pay creditor claims, in such 
     manner and amounts as are authorized under this section, 
     which are--
       ``(i) allowed by the receiver;
       ``(ii) approved by the Agency pursuant to a final 
     determination pursuant to paragraph (7) or (8); or
       ``(iii) determined by the final judgment of any court of 
     competent jurisdiction.
       ``(B) Agreements against the interest of the agency.--No 
     agreement that tends to diminish or defeat the interest of 
     the Agency in any asset acquired by the Agency as receiver 
     under this section shall be valid against the Agency unless 
     such agreement is in writing, and executed by an authorized 
     official of the regulated entity, except that such 
     requirements for qualified financial contracts shall be 
     applied in a manner consistent with reasonable business 
     trading practices in the financial contracts market.
       ``(C) Payment of dividends on claims.--The receiver may, in 
     the sole discretion of the receiver, pay from the assets of 
     the regulated entity dividends on proved claims at any time, 
     and no liability shall attach to the Agency, by reason of any 
     such payment, for failure to pay dividends to a claimant 
     whose claim is not proved at the time of any such payment.
       ``(D) Rulemaking authority of the director.--The Director 
     may prescribe such rules, including definitions of terms, as 
     the Director deems appropriate to establish a single uniform 
     interest rate for, or to make payments of post-insolvency 
     interest to creditors holding proven claims against the 
     receivership estates of regulated entities following 
     satisfaction by the receiver of the principal amount of all 
     creditor claims.
       ``(10) Suspension of legal actions.--
       ``(A) In general.--After the appointment of a conservator 
     or receiver for a regulated entity, the conservator or 
     receiver may, in any judicial action or proceeding to which 
     such regulated entity is or becomes a party, request a stay 
     for a period not to exceed--
       ``(i) 45 days, in the case of any conservator; and
       ``(ii) 90 days, in the case of any receiver.
       ``(B) Grant of stay by all courts required.--Upon receipt 
     of a request by any conservator or receiver under 
     subparagraph (A) for a stay of any judicial action or 
     proceeding in any court with jurisdiction of such action or 
     proceeding, the court shall grant such stay as to all 
     parties.
       ``(11) Additional rights and duties.--
       ``(A) Prior final adjudication.--The Agency shall abide by 
     any final unappealable judgment of any court of competent 
     jurisdiction which was rendered before the appointment of the 
     Agency as conservator or receiver.
       ``(B) Rights and remedies of conservator or receiver.--In 
     the event of any appealable judgment, the Agency as 
     conservator or receiver shall--
       ``(i) have all the rights and remedies available to the 
     regulated entity (before the appointment of such conservator 
     or receiver) and the Agency, including removal to Federal 
     court and all appellate rights; and
       ``(ii) not be required to post any bond in order to pursue 
     such remedies.
       ``(C) No attachment or execution.--No attachment or 
     execution may issue by any court upon assets in the 
     possession of the receiver.
       ``(D) Limitation on judicial review.--Except as otherwise 
     provided in this subsection, no court shall have jurisdiction 
     over--
       ``(i) any claim or action for payment from, or any action 
     seeking a determination of rights with respect to, the assets 
     of any regulated entity for which the Agency has been 
     appointed receiver; or
       ``(ii) any claim relating to any act or omission of such 
     regulated entity or the Agency as receiver.
       ``(E) Disposition of assets.--In exercising any right, 
     power, privilege, or authority as conservator or receiver in 
     connection with any sale or disposition of assets of a 
     regulated entity for which the Agency has been appointed 
     conservator or receiver, the Agency shall conduct its 
     operations in a manner which maintains stability in the 
     housing finance markets and, to the extent consistent with 
     that goal--
       ``(i) maximizes the net present value return from the sale 
     or disposition of such assets;
       ``(ii) minimizes the amount of any loss realized in the 
     resolution of cases; and
       ``(iii) ensures adequate competition and fair and 
     consistent treatment of offerors.
       ``(12) Statute of limitations for actions brought by 
     conservator or receiver.--
       ``(A) In general.--Notwithstanding any provision of any 
     contract, the applicable statute of limitations with regard 
     to any action brought by the Agency as conservator or 
     receiver shall be--
       ``(i) in the case of any contract claim, the longer of--

       ``(I) the 6-year period beginning on the date the claim 
     accrues; or
       ``(II) the period applicable under State law; and

       ``(ii) in the case of any tort claim, the longer of--

       ``(I) the 3-year period beginning on the date the claim 
     accrues; or
       ``(II) the period applicable under State law.

       ``(B) Determination of the date on which a claim accrues.--
     For purposes of subparagraph (A), the date on which the 
     statute of limitations begins to run on any claim described 
     in such subparagraph shall be the later of--
       ``(i) the date of the appointment of the Agency as 
     conservator or receiver; or
       ``(ii) the date on which the cause of action accrues.
       ``(13) Revival of expired state causes of action.--
       ``(A) In general.--In the case of any tort claim described 
     under subparagraph (B) for which the statute of limitations 
     applicable under State law with respect to such claim has 
     expired not more than 5 years before the appointment of the 
     Agency as conservator or receiver, the Agency may bring an 
     action as conservator or receiver on such claim without 
     regard to the expiration of the statute of limitation 
     applicable under State law.
       ``(B) Claims described.--A tort claim referred to under 
     subparagraph (A) is a claim arising from fraud, intentional 
     misconduct resulting in unjust enrichment, or intentional 
     misconduct resulting in substantial loss to the regulated 
     entity.
       ``(14) Accounting and recordkeeping requirements.--
       ``(A) In general.--The Agency as conservator or receiver 
     shall, consistent with the accounting and reporting practices 
     and procedures established by the Agency, maintain a full 
     accounting of each conservatorship and receivership or other 
     disposition of a regulated entity in default.
       ``(B) Annual accounting or report.--With respect to each 
     conservatorship or receivership, the Agency shall make an 
     annual accounting or report available to the Board, the 
     Comptroller General of the United States, the Committee on 
     Banking, Housing, and Urban Affairs of the Senate, and the 
     Committee on Financial Services of the House of 
     Representatives.
       ``(C) Availability of reports.--Any report prepared under 
     subparagraph (B) shall be made available by the Agency upon 
     request to any shareholder of a regulated entity or any 
     member of the public.
       ``(D) Recordkeeping requirement.--After the end of the 6-
     year period beginning on the date that the conservatorship or 
     receivership is terminated by the Director, the Agency may 
     destroy any records of such regulated entity which the 
     Agency, in the discretion of the Agency, determines to be 
     unnecessary unless directed not to do so by a court of 
     competent jurisdiction or governmental agency, or prohibited 
     by law.
       ``(15) Fraudulent transfers.--
       ``(A) In general.--The Agency, as conservator or receiver, 
     may avoid a transfer of any interest of a regulated entity-
     affiliated party, or any person who the conservator or 
     receiver determines is a debtor of the regulated entity, in 
     property, or any obligation incurred by such party or person, 
     that was made within 5 years of the date on which the Agency 
     was appointed conservator or receiver, if such party or 
     person voluntarily or involuntarily made such transfer or 
     incurred such liability with the intent to hinder, delay, or 
     defraud the regulated entity, the Agency, the conservator, or 
     receiver.
       ``(B) Right of recovery.--To the extent a transfer is 
     avoided under subparagraph (A), the conservator or receiver 
     may recover, for the benefit of the regulated entity, the 
     property transferred, or, if a court so orders, the value of 
     such property (at the time of such transfer) from--
       ``(i) the initial transferee of such transfer or the 
     regulated entity-affiliated party or person for whose benefit 
     such transfer was made; or
       ``(ii) any immediate or mediate transferee of any such 
     initial transferee.
       ``(C) Rights of transferee or obligee.--The conservator or 
     receiver may not recover under subparagraph (B) from--
       ``(i) any transferee that takes for value, including 
     satisfaction or securing of a present or antecedent debt, in 
     good faith; or
       ``(ii) any immediate or mediate good faith transferee of 
     such transferee.
       ``(D) Rights under this paragraph.--The rights under this 
     paragraph of the conservator or receiver described under 
     subparagraph (A) shall be superior to any rights of a trustee 
     or any other party (other than any party which is a Federal 
     agency) under title 11, United States Code.
       ``(16) Attachment of assets and other injunctive relief.--
     Subject to paragraph (17), any court of competent 
     jurisdiction may, at the request of the conservator or 
     receiver, issue an order in accordance with Rule 65 of the 
     Federal Rules of Civil Procedure, including an order placing 
     the assets of any person designated by the Agency or such 
     conservator under the control of the court, and appointing a 
     trustee to hold such assets.
       ``(17) Standards of proof.--Rule 65 of the Federal Rules of 
     Civil Procedure shall apply with respect to any proceeding 
     under paragraph (16) without regard to the requirement of 
     such rule that the applicant show that the injury, loss, or 
     damage is irreparable and immediate.
       ``(18) Treatment of claims arising from breach of contracts 
     executed by the receiver or conservator.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subsection, any final and unappealable judgment for 
     monetary damages entered against a receiver or conservator 
     for the breach of an agreement executed or approved in 
     writing by such receiver or conservator after the date of its 
     appointment, shall be paid as an administrative expense of 
     the receiver or conservator.
       ``(B) No limitation of power.--Nothing in this paragraph 
     shall be construed to limit the power of a receiver or 
     conservator to exercise any rights under contract or law, 
     including to terminate, breach, cancel, or otherwise 
     discontinue such agreement.
       ``(19) General exceptions.--
       ``(A) Limitations.--The rights of a conservator or receiver 
     appointed under this section shall be subject to the 
     limitations on the powers of a receiver under sections 402 
     through 407 of the Federal Deposit Insurance Corporation 
     Improvement Act of 1991 (12 U.S.C. 4402 through 4407).
       ``(B) Mortgages held in trust.--
       ``(i) In general.--Any mortgage, pool of mortgages, or 
     interest in a pool of mortgages, held in trust, custodial, or 
     agency capacity by a regulated entity for the benefit of 
     persons other than

[[Page H5404]]

     the regulated entity shall not be available to satisfy the 
     claims of creditors generally.
       ``(ii) Holding of mortgages.--Any mortgage, pool of 
     mortgages, or interest in a pool of mortgages, described 
     under clause (i) shall be held by the conservator or receiver 
     appointed under this section for the beneficial owners of 
     such mortgage, pool of mortgages, or interest in a pool of 
     mortgages in accordance with the terms of the agreement 
     creating such trust, custodial, or other agency arrangement.
       ``(iii) Liability of receiver.--The liability of a receiver 
     appointed under this section for damages shall, in the case 
     of any contingent or unliquidated claim relating to the 
     mortgages held in trust, be estimated in accordance set forth 
     in the regulations of the Director.
       ``(c) Priority of Expenses and Unsecured Claims.--
       ``(1) In general.--Unsecured claims against a regulated 
     entity, or a receiver, that are proven to the satisfaction of 
     the receiver shall have priority in the following order:
       ``(A) Administrative expenses of the receiver.
       ``(B) Any other general or senior liability of the 
     regulated entity and claims of other Federal home loan banks 
     arising from their payment obligations (including joint and 
     several payment obligations).
       ``(C) Any obligation subordinated to general creditors.
       ``(D) Any obligation to shareholders or members arising as 
     a result of their status as shareholder or members.
       ``(2) Creditors similarly situated.--All creditors that are 
     similarly situated under paragraph (1) shall be treated in a 
     similar manner, except that the Agency may make such other 
     payments to creditors necessary to maximize the present value 
     return from the sale or disposition or such regulated 
     entity's assets or to minimize the amount of any loss 
     realized in the resolution of cases so long as all creditors 
     similarly situated receive not less than the amount provided 
     under subsection (e)(2).
       ``(3) Definition.--The term `administrative expenses of the 
     receiver' shall include the actual, necessary costs and 
     expenses incurred by the receiver in preserving the assets of 
     the regulated entity or liquidating or otherwise resolving 
     the affairs of the regulated entity. Such expenses shall 
     include obligations that are incurred by the receiver after 
     appointment as receiver that the Director determines are 
     necessary and appropriate to facilitate the smooth and 
     orderly liquidation or other resolution of the regulated 
     entity.
       ``(d) Provisions Relating to Contracts Entered Into Before 
     Appointment of Conservator or Receiver.--
       ``(1) Authority to repudiate contracts.--In addition to any 
     other rights a conservator or receiver may have, the 
     conservator or receiver for any regulated entity may 
     disaffirm or repudiate any contract or lease--
       ``(A) to which such regulated entity is a party;
       ``(B) the performance of which the conservator or receiver, 
     in its sole discretion, determines to be burdensome; and
       ``(C) the disaffirmance or repudiation of which the 
     conservator or receiver determines, in its sole discretion, 
     will promote the orderly administration of the affairs of the 
     regulated entity.
       ``(2) Timing of repudiation.--The conservator or receiver 
     shall determine whether or not to exercise the rights of 
     repudiation under this subsection within a reasonable period 
     following such appointment.
       ``(3) Claims for damages for repudiation.--
       ``(A) In general.--Except as otherwise provided under 
     subparagraph (C) and paragraphs (4), (5), and (6), the 
     liability of the conservator or receiver for the 
     disaffirmance or repudiation of any contract pursuant to 
     paragraph (1) shall be--
       ``(i) limited to actual direct compensatory damages; and
       ``(ii) determined as of--

       ``(I) the date of the appointment of the conservator or 
     receiver; or
       ``(II) in the case of any contract or agreement referred to 
     in paragraph (8), the date of the disaffirmance or 
     repudiation of such contract or agreement.

       ``(B) No liability for other damages.--For purposes of 
     subparagraph (A), the term `actual direct compensatory 
     damages' shall not include--
       ``(i) punitive or exemplary damages;
       ``(ii) damages for lost profits or opportunity; or
       ``(iii) damages for pain and suffering.
       ``(C) Measure of damages for repudiation of financial 
     contracts.--In the case of any qualified financial contract 
     or agreement to which paragraph (8) applies, compensatory 
     damages shall be--
       ``(i) deemed to include normal and reasonable costs of 
     cover or other reasonable measures of damages utilized in the 
     industries for such contract and agreement claims; and
       ``(ii) paid in accordance with this subsection and 
     subsection (e), except as otherwise specifically provided in 
     this section.
       ``(4) Leases under which the regulated entity is the 
     lessee.--
       ``(A) In general.--If the conservator or receiver 
     disaffirms or repudiates a lease under which the regulated 
     entity was the lessee, the conservator or receiver shall not 
     be liable for any damages (other than damages determined 
     under subparagraph (B)) for the disaffirmance or repudiation 
     of such lease.
       ``(B) Payments of rent.--Notwithstanding subparagraph (A), 
     the lessor under a lease to which that subparagraph applies 
     shall--
       ``(i) be entitled to the contractual rent accruing before 
     the later of the date--

       ``(I) the notice of disaffirmance or repudiation is mailed; 
     or
       ``(II) the disaffirmance or repudiation becomes effective, 
     unless the lessor is in default or breach of the terms of the 
     lease;

       ``(ii) have no claim for damages under any acceleration 
     clause or other penalty provision in the lease; and
       ``(iii) have a claim for any unpaid rent, subject to all 
     appropriate offsets and defenses, due as of the date of the 
     appointment, which shall be paid in accordance with this 
     subsection and subsection (e).
       ``(5) Leases under which the regulated entity is the 
     lessor.--
       ``(A) In general.--If the conservator or receiver 
     repudiates an unexpired written lease of real property of the 
     regulated entity under which the regulated entity is the 
     lessor and the lessee is not, as of the date of such 
     repudiation, in default, the lessee under such lease may 
     either--
       ``(i) treat the lease as terminated by such repudiation; or
       ``(ii) remain in possession of the leasehold interest for 
     the balance of the term of the lease, unless the lessee 
     defaults under the terms of the lease after the date of such 
     repudiation.
       ``(B) Provisions applicable to lessee remaining in 
     possession.--If any lessee under a lease described under 
     subparagraph (A) remains in possession of a leasehold 
     interest under clause (ii) of such subparagraph--
       ``(i) the lessee--

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

       ``(II) may offset against any rent payment which accrues 
     after the date of the repudiation of the lease, and any 
     damages which accrue after such date due to the 
     nonperformance of any obligation of the regulated entity 
     under the lease after such date; and

       ``(ii) the conservator or receiver shall not be liable to 
     the lessee for any damages arising after such date as a 
     result of the repudiation other than the amount of any offset 
     allowed under clause (i)(II).
       ``(6) Contracts for the sale of real property.--
       ``(A) In general.--If the conservator or receiver 
     repudiates any contract for the sale of real property and the 
     purchaser of such real property under such contract is in 
     possession, and is not, as of the date of such repudiation, 
     in default, such purchaser may either--
       ``(i) treat the contract as terminated by such repudiation; 
     or
       ``(ii) remain in possession of such real property.
       ``(B) Provisions applicable to purchaser remaining in 
     possession.--If any purchaser of real property under any 
     contract described under subparagraph (A) remains in 
     possession of such property under clause (ii) of such 
     subparagraph--
       ``(i) the purchaser--

       ``(I) shall continue to make all payments due under the 
     contract after the date of the repudiation of the contract; 
     and
       ``(II) may offset against any such payments any damages 
     which accrue after such date due to the nonperformance (after 
     such date) of any obligation of the regulated entity under 
     the contract; and

       ``(ii) the conservator or receiver shall--

       ``(I) not be liable to the purchaser for any damages 
     arising after such date as a result of the repudiation other 
     than the amount of any offset allowed under clause (i)(II);
       ``(II) deliver title to the purchaser in accordance with 
     the provisions of the contract; and
       ``(III) have no obligation under the contract other than 
     the performance required under subclause (II).

       ``(C) Assignment and sale allowed.--
       ``(i) In general.--No provision of this paragraph shall be 
     construed as limiting the right of the conservator or 
     receiver to assign the contract described under subparagraph 
     (A), and sell the property subject to the contract and the 
     provisions of this paragraph.
       ``(ii) No liability after assignment and sale.--If an 
     assignment and sale described under clause (i) is 
     consummated, the conservator or receiver shall have no 
     further liability under the contract described under 
     subparagraph (A), or with respect to the real property which 
     was the subject of such contract.
       ``(7) Provisions applicable to service contracts.--
       ``(A) Services performed before appointment.--In the case 
     of any contract for services between any person and any 
     regulated entity for which the Agency has been appointed 
     conservator or receiver, any claim of such person for 
     services performed before the appointment of the conservator 
     or the receiver shall be--
       ``(i) a claim to be paid in accordance with subsections (b) 
     and (e); and
       ``(ii) deemed to have arisen as of the date the conservator 
     or receiver was appointed.
       ``(B) Services performed after appointment and prior to 
     repudiation.--If, in the case of any contract for services 
     described under subparagraph (A), the conservator or receiver 
     accepts performance by the other person before the 
     conservator or receiver makes any determination to exercise 
     the right of repudiation of such contract under this 
     section--
       ``(i) the other party shall be paid under the terms of the 
     contract for the services performed; and
       ``(ii) the amount of such payment shall be treated as an 
     administrative expense of the conservatorship or 
     receivership.
       ``(C) Acceptance of performance no bar to subsequent 
     repudiation.--The acceptance by any conservator or receiver 
     of services referred to under subparagraph (B) in connection 
     with a contract described in such subparagraph shall not 
     affect the right of the conservator or receiver to repudiate 
     such contract under this section at any time after such 
     performance.

[[Page H5405]]

       ``(8) Certain qualified financial contracts.--
       ``(A) Rights of parties to contracts.--Subject to 
     paragraphs (9) and (10) and notwithstanding any other 
     provision of this Act, any other Federal law, or the law of 
     any State, no person shall be stayed or prohibited from 
     exercising--
       ``(i) any right such person has to cause the termination, 
     liquidation, or acceleration of any qualified financial 
     contract with a regulated entity that arises upon the 
     appointment of the Agency as receiver for such regulated 
     entity at any time after such appointment;
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement relating to one or 
     more qualified financial contracts described in clause (i); 
     or
       ``(iii) any right to offset or net out any termination 
     value, payment amount, or other transfer obligation arising 
     under or in connection with 1 or more contracts and 
     agreements described in clause (i), including any master 
     agreement for such contracts or agreements.
       ``(B) Applicability of other provisions.--Paragraph (10) of 
     subsection (b) shall apply in the case of any judicial action 
     or proceeding brought against any receiver referred to under 
     subparagraph (A), or the regulated entity for which such 
     receiver was appointed, by any party to a contract or 
     agreement described under subparagraph (A)(i) with such 
     regulated entity.
       ``(C) Certain transfers not avoidable.--
       ``(i) In general.--Notwithstanding paragraph (11) or any 
     other Federal or State laws relating to the avoidance of 
     preferential or fraudulent transfers, the Agency, whether 
     acting as such or as conservator or receiver of a regulated 
     entity, may not avoid any transfer of money or other property 
     in connection with any qualified financial contract with a 
     regulated entity.
       ``(ii) Exception for certain transfers.--Clause (i) shall 
     not apply to any transfer of money or other property in 
     connection with any qualified financial contract with a 
     regulated entity if the Agency determines that the transferee 
     had actual intent to hinder, delay, or defraud such regulated 
     entity, the creditors of such regulated entity, or any 
     conservator or receiver appointed for such regulated entity.
       ``(D) Certain contracts and agreements defined.--In this 
     subsection:
       ``(i) Qualified financial contract.--The term `qualified 
     financial contract' means any securities contract, commodity 
     contract, forward contract, repurchase agreement, swap 
     agreement, and any similar agreement that the Agency 
     determines by regulation, resolution, or order to be a 
     qualified financial contract for purposes of this paragraph.
       ``(ii) Securities contract.--The term `securities 
     contract'--

       ``(I) means a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan, or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit, or mortgage loans or interests 
     therein (including any interest therein or based on the value 
     thereof) or any option on any of the foregoing, including any 
     option to purchase or sell any such security, certificate of 
     deposit, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage loan, interest, group or index, or option;
       ``(II) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan unless the Agency determines by regulation, resolution, 
     or order to include any such agreement within the meaning of 
     such term;
       ``(III) means any option entered into on a national 
     securities exchange relating to foreign currencies;
       ``(IV) means the guarantee by or to any securities clearing 
     agency of any settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, certificates of deposit, or mortgage loans or 
     interests therein (including any interest therein or based on 
     the value thereof) or option on any of the foregoing, 
     including any option to purchase or sell any such security, 
     certificate of deposit, mortgage loan, interest, group or 
     index, or option;
       ``(V) means any margin loan;
       ``(VI) means any other agreement or transaction that is 
     similar to any agreement or transaction referred to in this 
     clause;
       ``(VII) means any combination of the agreements or 
     transactions referred to in this clause;
       ``(VIII) means any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     (IV), (V), (VI), (VII), or (VIII), together with all 
     supplements to any such master agreement, without regard to 
     whether the master agreement provides for an agreement or 
     transaction that is not a securities contract under this 
     clause, except that the master agreement shall be considered 
     to be a securities contract under this clause only with 
     respect to each agreement or transaction under the master 
     agreement that is referred to in subclause (I), (III), (IV), 
     (V), (VI), (VII), or (VIII); and
       ``(X) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this clause, including any guarantee or 
     reimbursement obligation in connection with any agreement or 
     transaction referred to in this clause.

       ``(iii) Commodity contract.--The term `commodity contract' 
     means--

       ``(I) with respect to a futures commission merchant, a 
     contract for the purchase or sale of a commodity for future 
     delivery on, or subject to the rules of, a contract market or 
     board of trade;
       ``(II) with respect to a foreign futures commission 
     merchant, a foreign future;
       ``(III) with respect to a leverage transaction merchant, a 
     leverage transaction;
       ``(IV) with respect to a clearing organization, a contract 
     for the purchase or sale of a commodity for future delivery 
     on, or subject to the rules of, a contract market or board of 
     trade that is cleared by such clearing organization, or 
     commodity option traded on, or subject to the rules of, a 
     contract market or board of trade that is cleared by such 
     clearing organization;
       ``(V) with respect to a commodity options dealer, a 
     commodity option;
       ``(VI) any other agreement or transaction that is similar 
     to any agreement or transaction referred to in this clause;
       ``(VII) any combination of the agreements or transactions 
     referred to in this clause;
       ``(VIII) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), (IV), 
     (V), (VI), (VII), or (VIII), together with all supplements to 
     any such master agreement, without regard to whether the 
     master agreement provides for an agreement or transaction 
     that is not a commodity contract under this clause, except 
     that the master agreement shall be considered to be a 
     commodity contract under this clause only with respect to 
     each agreement or transaction under the master agreement that 
     is referred to in subclause (I), (II), (III), (IV), (V), 
     (VI), (VII), or (VIII); or
       ``(X) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause, including any guarantee or reimbursement 
     obligation in connection with any agreement or transaction 
     referred to in this clause.

       ``(iv) Forward contract.--The term `forward contract' 
     means--

       ``(I) a contract (other than a commodity contract) for the 
     purchase, sale, or transfer of a commodity or any similar 
     good, article, service, right, or interest which is presently 
     or in the future becomes the subject of dealing in the 
     forward contract trade, or product or byproduct thereof, with 
     a maturity date more than 2 days after the date the contract 
     is entered into, including, a repurchase transaction, reverse 
     repurchase transaction, consignment, lease, swap, hedge 
     transaction, deposit, loan, option, allocated transaction, 
     unallocated transaction, or any other similar agreement;
       ``(II) any combination of agreements or transactions 
     referred to in subclauses (I) and (III);
       ``(III) any option to enter into any agreement or 
     transaction referred to in subclause (I) or (II);
       ``(IV) a master agreement that provides for an agreement or 
     transaction referred to in subclauses (I), (II), or (III), 
     together with all supplements to any such master agreement, 
     without regard to whether the master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this clause, except that the master agreement shall be 
     considered to be a forward contract under this clause only 
     with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     or (III); or
       ``(V) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV), including any 
     guarantee or reimbursement obligation in connection with any 
     agreement or transaction referred to in any such subclause.

       ``(v) Repurchase agreement.--The term `repurchase 
     agreement' (which definition also applies to a reverse 
     repurchase agreement)--

       ``(I) means an agreement, including related terms, which 
     provides for the transfer of one or more certificates of 
     deposit, mortgage-related securities (as such term is defined 
     in the Securities Exchange Act of 1934), mortgage loans, 
     interests in mortgage-related securities or mortgage loans, 
     eligible bankers' acceptances, qualified foreign government 
     securities or securities that are direct obligations of, or 
     that are fully guaranteed by, the United States or any agency 
     of the United States against the transfer of funds by the 
     transferee of such certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage loans, or interests with a 
     simultaneous agreement by such transferee to transfer to the 
     transferor thereof certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage loans, or interests as 
     described above, at a date certain not later than 1 year 
     after such transfers or on demand, against the transfer of 
     funds, or any other similar agreement;
       ``(II) does not include any repurchase obligation under a 
     participation in a commercial mortgage loan unless the Agency 
     determines by regulation, resolution, or order to include any 
     such participation within the meaning of such term;
       ``(III) means any combination of agreements or transactions 
     referred to in subclauses (I) and (IV);
       ``(IV) means any option to enter into any agreement or 
     transaction referred to in subclause (I) or (III);
       ``(V) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     or (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     provides for an agreement or transaction that is not a 
     repurchase agreement under this clause, except that the 
     master agreement shall be considered to be a repurchase 
     agreement under this subclause only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subclause (I), (III), or (IV); and
       ``(VI) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V), including 
     any guarantee or reimbursement obligation in connection with 
     any agreement or transaction referred to in any such 
     subclause.


[[Page H5406]]



     For purposes of this clause, the term `qualified foreign 
     government security' means a security that is a direct 
     obligation of, or that is fully guaranteed by, the central 
     government of a member of the Organization for Economic 
     Cooperation and Development (as determined by regulation or 
     order adopted by the appropriate Federal banking authority).
       ``(vi) Swap agreement.--The term `swap agreement' means--

       ``(I) any agreement, including the terms and conditions 
     incorporated by reference in any such agreement, which is an 
     interest rate swap, option, future, or forward agreement, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, and basis swap; a spot, same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, future, or forward 
     agreement; an equity index or equity swap, option, future, or 
     forward agreement; a debt index or debt swap, option, future, 
     or forward agreement; a total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option;
       ``(II) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this clause and 
     that is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference in such agreement) and that is a forward, swap, 
     future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial risk or value;
       ``(III) any combination of agreements or transactions 
     referred to in this clause;
       ``(IV) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(V) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), or 
     (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     contains an agreement or transaction that is not a swap 
     agreement under this clause, except that the master agreement 
     shall be considered to be a swap agreement under this clause 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     (III), or (IV); and
       ``(VI) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

     Such term is applicable for purposes of this subsection only 
     and shall not be construed or applied so as to challenge or 
     affect the characterization, definition, or treatment of any 
     swap agreement under any other statute, regulation, or rule, 
     including the Securities Act of 1933, the Securities Exchange 
     Act of 1934, the Public Utility Holding Company Act of 1935, 
     the Trust Indenture Act of 1939, the Investment Company Act 
     of 1940, the Investment Advisers Act of 1940, the Securities 
     Investor Protection Act of 1970, the Commodity Exchange Act, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000.
       ``(vii) Treatment of master agreement as one agreement.--
     Any master agreement for any contract or agreement described 
     in any preceding clause of this subparagraph (or any master 
     agreement for such master agreement or agreements), together 
     with all supplements to such master agreement, shall be 
     treated as a single agreement and a single qualified 
     financial contract. If a master agreement contains provisions 
     relating to agreements or transactions that are not 
     themselves qualified financial contracts, the master 
     agreement shall be deemed to be a qualified financial 
     contract only with respect to those transactions that are 
     themselves qualified financial contracts.
       ``(viii) Transfer.--The term `transfer' means every mode, 
     direct or indirect, absolute or conditional, voluntary or 
     involuntary, of disposing of or parting with property or with 
     an interest in property, including retention of title as a 
     security interest and foreclosure of the regulated entity's 
     equity of redemption.
       ``(E) Certain protections in event of appointment of 
     conservator.--Notwithstanding any other provision of this Act 
     (other than paragraph (13) of this subsection), any other 
     Federal law, or the law of any State, no person shall be 
     stayed or prohibited from exercising--
       ``(i) any right such person has to cause the termination, 
     liquidation, or acceleration of any qualified financial 
     contract with a regulated entity in a conservatorship based 
     upon a default under such financial contract which is 
     enforceable under applicable noninsolvency law;
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement relating to one or 
     more such qualified financial contracts; or
       ``(iii) any right to offset or net out any termination 
     values, payment amounts, or other transfer obligations 
     arising under or in connection with such qualified financial 
     contracts.
       ``(F) Clarification.--No provision of law shall be 
     construed as limiting the right or power of the Agency, or 
     authorizing any court or agency to limit or delay, in any 
     manner, the right or power of the Agency to transfer any 
     qualified financial contract in accordance with paragraphs 
     (9) and (10) of this subsection or to disaffirm or repudiate 
     any such contract in accordance with subsection (d)(1) of 
     this section.
       ``(G) Walkaway clauses not effective.--
       ``(i) In general.--Notwithstanding the provisions of 
     subparagraphs (A) and (E), and sections 403 and 404 of the 
     Federal Deposit Insurance Corporation Improvement Act of 
     1991, no walkaway clause shall be enforceable in a qualified 
     financial contract of a regulated entity in default.
       ``(ii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means a provision in 
     a qualified financial contract that, after calculation of a 
     value of a party's position or an amount due to or from 1 of 
     the parties in accordance with its terms upon termination, 
     liquidation, or acceleration of the qualified financial 
     contract, either does not create a payment obligation of a 
     party or extinguishes a payment obligation of a party in 
     whole or in part solely because of such party's status as a 
     nondefaulting party.
       ``(9) Transfer of qualified financial contracts.--In making 
     any transfer of assets or liabilities of a regulated entity 
     in default which includes any qualified financial contract, 
     the conservator or receiver for such regulated entity shall 
     either--
       ``(A) transfer to 1 person--
       ``(i) all qualified financial contracts between any person 
     (or any affiliate of such person) and the regulated entity in 
     default;
       ``(ii) all claims of such person (or any affiliate of such 
     person) against such regulated entity under any such contract 
     (other than any claim which, under the terms of any such 
     contract, is subordinated to the claims of general unsecured 
     creditors of such regulated entity);
       ``(iii) all claims of such regulated entity against such 
     person (or any affiliate of such person) under any such 
     contract; and
       ``(iv) all property securing or any other credit 
     enhancement for any contract described in clause (i) or any 
     claim described in clause (ii) or (iii) under any such 
     contract; or
       ``(B) transfer none of the financial contracts, claims, or 
     property referred to under subparagraph (A) (with respect to 
     such person and any affiliate of such person).
       ``(10) Notification of transfer.--
       ``(A) In general.--If--
       ``(i) the conservator or receiver for a regulated entity in 
     default makes any transfer of the assets and liabilities of 
     such regulated entity, and
       ``(ii) the transfer includes any qualified financial 
     contract,

     the conservator or receiver shall notify any person who is a 
     party to any such contract of such transfer by 5:00 p.m. 
     (eastern time) on the business day following the date of the 
     appointment of the receiver in the case of a receivership, or 
     the business day following such transfer in the case of a 
     conservatorship.
       ``(B) Certain rights not enforceable.--
       ``(i) Receivership.--A person who is a party to a qualified 
     financial contract with a regulated entity may not exercise 
     any right that such person has to terminate, liquidate, or 
     net such contract under paragraph (8)(A) of this subsection 
     or section 403 or 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991, solely by reason of or 
     incidental to the appointment of a receiver for the regulated 
     entity (or the insolvency or financial condition of the 
     regulated entity for which the receiver has been appointed)--

       ``(I) until 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver; or
       ``(II) after the person has received notice that the 
     contract has been transferred pursuant to paragraph (9)(A).

       ``(ii) Conservatorship.--A person who is a party to a 
     qualified financial contract with a regulated entity may not 
     exercise any right that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(E) of 
     this subsection or section 403 or 404 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991, solely by 
     reason of or incidental to the appointment of a conservator 
     for the regulated entity (or the insolvency or financial 
     condition of the regulated entity for which the conservator 
     has been appointed).
       ``(iii) Notice.--For purposes of this paragraph, the Agency 
     as receiver or conservator of a regulated entity shall be 
     deemed to have notified a person who is a party to a 
     qualified financial contract with such regulated entity if 
     the Agency has taken steps reasonably calculated to provide 
     notice to such person by the time specified in subparagraph 
     (A).
       ``(C) Business day defined.--For purposes of this 
     paragraph, the term `business day' means any day other than 
     any Saturday, Sunday, or any day on which either the New York 
     Stock Exchange or the Federal Reserve Bank of New York is 
     closed.
       ``(11) Disaffirmance or repudiation of qualified financial 
     contracts.--In exercising the rights of disaffirmance or 
     repudiation of a conservator or receiver with respect to any 
     qualified financial contract to which a regulated entity is a 
     party, the conservator or receiver for such institution shall 
     either--
       ``(A) disaffirm or repudiate all qualified financial 
     contracts between--
       ``(i) any person or any affiliate of such person; and
       ``(ii) the regulated entity in default; or
       ``(B) disaffirm or repudiate none of the qualified 
     financial contracts referred to in subparagraph (A) (with 
     respect to such person or any affiliate of such person).
       ``(12) Certain security interests not avoidable.--No 
     provision of this subsection shall be construed as permitting 
     the avoidance of any legally enforceable or perfected 
     security interest in any of the assets of any regulated 
     entity, except where such an interest is taken in 
     contemplation of the insolvency of the regulated entity, or 
     with the intent to hinder, delay, or defraud the regulated 
     entity or the creditors of such regulated entity.

[[Page H5407]]

       ``(13) Authority to enforce contracts.--
       ``(A) In general.--Notwithstanding any provision of a 
     contract providing for termination, default, acceleration, or 
     exercise of rights upon, or solely by reason of, insolvency 
     or the appointment of a conservator or receiver, the 
     conservator or receiver may enforce any contract or regulated 
     entity bond entered into by the regulated entity.
       ``(B) Certain rights not affected.--No provision of this 
     paragraph may be construed as impairing or affecting any 
     right of the conservator or receiver to enforce or recover 
     under a director's or officer's liability insurance contract 
     or surety bond under other applicable law.
       ``(C) Consent requirement.--
       ``(i) In general.--Except as otherwise provided under this 
     section, no person may exercise any right or power to 
     terminate, accelerate, or declare a default under any 
     contract to which a regulated entity is a party, or to obtain 
     possession of or exercise control over any property of the 
     regulated entity, or affect any contractual rights of the 
     regulated entity, without the consent of the conservator or 
     receiver, as appropriate, for a period of--

       ``(I) 45 days after the date of appointment of a 
     conservator; or
       ``(II) 90 days after the date of appointment of a receiver.

       ``(ii) Exceptions.--This paragraph shall--

       ``(I) not apply to a director's or officer's liability 
     insurance contract;
       ``(II) not apply to the rights of parties to any qualified 
     financial contracts under subsection (d)(8); and
       ``(III) not be construed as permitting the conservator or 
     receiver to fail to comply with otherwise enforceable 
     provisions of such contracts.

       ``(14) Savings clause.--The meanings of terms used in this 
     subsection are applicable for purposes of this subsection 
     only, and shall not be construed or applied so as to 
     challenge or affect the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities laws (as that term is defined in section 3(a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.
       ``(15) Exception for federal reserve and federal home loan 
     banks.--No provision of this subsection shall apply with 
     respect to--
       ``(A) any extension of credit from any Federal home loan 
     bank or Federal Reserve Bank to any regulated entity; or
       ``(B) any security interest in the assets of the regulated 
     entity securing any such extension of credit.
       ``(e) Valuation of Claims in Default.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law or the law of any State, and regardless of the 
     method which the Agency determines to utilize with respect to 
     a regulated entity in default or in danger of default, 
     including transactions authorized under subsection (i), this 
     subsection shall govern the rights of the creditors of such 
     regulated entity.
       ``(2) Maximum liability.--The maximum liability of the 
     Agency, acting as receiver or in any other capacity, to any 
     person having a claim against the receiver or the regulated 
     entity for which such receiver is appointed shall equal the 
     lesser of--
       ``(A) the amount such claimant would have received if the 
     Agency had liquidated the assets and liabilities of such 
     regulated entity without exercising the authority of the 
     Agency under subsection (i) of this section; or
       ``(B) the amount of proceeds realized from the performance 
     of contracts or sale of the assets of the regulated entity.
       ``(f) Limitation on Court Action.--Except as provided in 
     this section or at the request of the Director, no court may 
     take any action to restrain or affect the exercise of powers 
     or functions of the Agency as a conservator or a receiver.
       ``(g) Liability of Directors and Officers.--
       ``(1) In general.--A director or officer of a regulated 
     entity may be held personally liable for monetary damages in 
     any civil action by, on behalf of, or at the request or 
     direction of the Agency, which action is prosecuted wholly or 
     partially for the benefit of the Agency--
       ``(A) acting as conservator or receiver of such regulated 
     entity, or
       ``(B) acting based upon a suit, claim, or cause of action 
     purchased from, assigned by, or otherwise conveyed by such 
     receiver or conservator,

     for gross negligence, including any similar conduct or 
     conduct that demonstrates a greater disregard of a duty of 
     care (than gross negligence) including intentional tortious 
     conduct, as such terms are defined and determined under 
     applicable State law.
       ``(2) No limitation.--Nothing in this paragraph shall 
     impair or affect any right of the Agency under other 
     applicable law.
       ``(h) Damages.--In any proceeding related to any claim 
     against a director, officer, employee, agent, attorney, 
     accountant, appraiser, or any other party employed by or 
     providing services to a regulated entity, recoverable damages 
     determined to result from the improvident or otherwise 
     improper use or investment of any assets of the regulated 
     entity shall include principal losses and appropriate 
     interest.
       ``(i) Limited-Life Regulated Entities.--
       ``(1) Organization.--
       ``(A) Purpose.--If a regulated entity is in default, or if 
     the Agency anticipates that a regulated entity will default, 
     the Agency may organize a limited-life regulated entity with 
     those powers and attributes of the regulated entity in 
     default or in danger of default that the Director determines 
     necessary, subject to the provisions of this subsection. The 
     Director shall grant a temporary charter to the limited-life 
     regulated entity, and the limited-life regulated entity shall 
     operate subject to that charter.
       ``(B) Authorities.--Upon the creation of a limited-life 
     regulated entity under subparagraph (A), the limited-life 
     regulated entity may--
       ``(i) assume such liabilities of the regulated entity that 
     is in default or in danger of default as the Agency may, in 
     its discretion, determine to be appropriate, provided that 
     the liabilities assumed shall not exceed the amount of assets 
     of the limited-life regulated entity;
       ``(ii) purchase such assets of the regulated entity that is 
     in default, or in danger of default, as the Agency may, in 
     its discretion, determine to be appropriate; and
       ``(iii) perform any other temporary function which the 
     Agency may, in its discretion, prescribe in accordance with 
     this section.
       ``(2) Charter.--
       ``(A) Conditions.--The Agency may grant a temporary charter 
     if the Agency determines that the continued operation of the 
     regulated entity in default or in danger of default is in the 
     best interest of the national economy and the housing 
     markets.
       ``(B) Treatment as being in default for certain purposes.--
     A limited-life regulated entity shall be treated as a 
     regulated entity in default at such times and for such 
     purposes as the Agency may, in its discretion, determine.
       ``(C) Management.--A limited-life regulated entity, upon 
     the granting of its charter, shall be under the management of 
     a board of directors consisting of not fewer than 5 nor more 
     than 10 members appointed by the Agency.
       ``(D) Bylaws.--The board of directors of a limited-life 
     regulated entity shall adopt such bylaws as may be approved 
     by the Agency.
       ``(3) Capital stock.--No capital stock need be paid into a 
     limited-life regulated entity by the Agency.
       ``(4) Investments.--Funds of a limited-life regulated 
     entity shall be kept on hand in cash, invested in obligations 
     of the United States or obligations guaranteed as to 
     principal and interest by the United States, or deposited 
     with the Agency, or any Federal Reserve bank.
       ``(5) Exempt status.--Notwithstanding any other provision 
     of Federal or State law, the limited-life regulated entity, 
     its franchise, property, and income shall be exempt from all 
     taxation now or hereafter imposed by the United States, by 
     any territory, dependency, or possession thereof, or by any 
     State, county, municipality, or local taxing authority.
       ``(6) Winding up.--
       ``(A) In general.--Subject to subparagraph (B), unless 
     Congress authorizes the sale of the capital stock of the 
     limited-life regulated entity, not later than 2 years after 
     the date of its organization, the Agency shall wind up the 
     affairs of the limited-life regulated entity.
       ``(B) Extension.--The Director may, in the discretion of 
     the Director, extend the status of the limited-life regulated 
     entity for 3 additional 1-year periods.
       ``(7) Transfer of assets and liabilities.--
       ``(A) In general.--
       ``(i) Transfer of assets and liabilities.--The Agency, as 
     receiver, may transfer any assets and liabilities of a 
     regulated entity in default, or in danger of default, to the 
     limited-life regulated entity in accordance with paragraph 
     (1).
       ``(ii) Subsequent transfers.--At any time after a charter 
     is transferred to a limited-life regulated entity, the 
     Agency, as receiver, may transfer any assets and liabilities 
     of such regulated entity in default, or in danger in default, 
     as the Agency may, in its discretion, determine to be 
     appropriate in accordance with paragraph (1).
       ``(iii) Effective without approval.--The transfer of any 
     assets or liabilities of a regulated entity in default, or in 
     danger of default, transferred to a limited-life regulated 
     entity shall be effective without any further approval under 
     Federal or State law, assignment, or consent with respect 
     thereto.
       ``(8) Proceeds.--To the extent that available proceeds from 
     the limited-life regulated entity exceed amounts required to 
     pay obligations, such proceeds may be paid to the regulated 
     entity in default, or in danger of default.
       ``(9) Powers.--
       ``(A) In general.--Each limited-life regulated entity 
     created under this subsection shall have all corporate powers 
     of, and be subject to the same provisions of law as, the 
     regulated entity in default or in danger of default to which 
     it relates, except that--
       ``(i) the Agency may--

       ``(I) remove the directors of a limited-life regulated 
     entity; and
       ``(II) fix the compensation of members of the board of 
     directors and senior management, as determined by the Agency 
     in its discretion, of a limited-life regulated entity;

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

       ``(I) shall elect a chairperson who may also serve in the 
     position of chief executive officer, except that such person 
     shall not serve either as chairperson or as chief executive 
     officer without the prior approval of the Agency; and
       ``(II) may appoint a chief executive officer who is not 
     also the chairperson, except that such person shall not serve 
     as chief executive officer without the prior approval of the 
     Agency.

       ``(B) Stay of judicial action.--Any judicial action to 
     which a limited-life regulated entity becomes a party by 
     virtue of its acquisition of any assets or assumption of any 
     liabilities of a regulated entity in default shall be stayed 
     from further proceedings for a period of up to 45 days at the 
     request of the limited-life regulated entity. Such period may 
     be modified upon the consent of all parties.
       ``(10) Obtaining of credit and incurring of debt.--

[[Page H5408]]

       ``(A) In general.--The limited-life regulated entity may 
     obtain unsecured credit and incur unsecured debt in the 
     ordinary course of business.
       ``(B) Inability to obtain credit.--If the limited-life 
     regulated entity is unable to obtain unsecured credit the 
     Director may authorize the obtaining of credit or the 
     incurring of debt--
       ``(i) with priority over any or all administrative 
     expenses;
       ``(ii) secured by a lien on property that is not otherwise 
     subject to a lien; or
       ``(iii) secured by a junior lien on property that is 
     subject to a lien.
       ``(C) Limitations.--
       ``(i) In general.--The Director, after notice and a 
     hearing, may authorize the obtaining of credit or the 
     incurring of debt secured by a senior or equal lien on 
     property that is subject to a lien (other than mortgages that 
     collateralize the mortgage-backed securities issued or 
     guaranteed by the regulated entity) only if--

       ``(I) the limited-life regulated entity is unable to obtain 
     such credit otherwise; and
       ``(II) there is adequate protection of the interest of the 
     holder of the lien on the property which such senior or equal 
     lien is proposed to be granted.

       ``(ii) Burden of proof.--In any hearing under this 
     subsection, the Director has the burden of proof on the issue 
     of adequate protection.
       ``(D) Effect on debts and liens.--The reversal or 
     modification on appeal of an authorization under this 
     paragraph to obtain credit or incur debt, or of a grant under 
     this section of a priority or a lien, does not affect the 
     validity of any debt so incurred, or any priority or lien so 
     granted, to an entity that extended such credit in good 
     faith, whether or not such entity knew of the pendency of the 
     appeal, unless such authorization and the incurring of such 
     debt, or the granting of such priority or lien, were stayed 
     pending appeal.
       ``(11) Issuance of preferred debt.--A limited-life 
     regulated entity may, subject to the approval of the Director 
     and subject to such terms and conditions as the Director may 
     prescribe, issue notes, bonds, or other debt obligations of a 
     class to which all other debt obligations of the limited-life 
     regulated entity shall be subordinate in right and payment.
       ``(12) No federal status.--
       ``(A) Agency status.--A limited-life regulated entity is 
     not an agency, establishment, or instrumentality of the 
     United States.
       ``(B) Employee status.--Representatives for purposes of 
     paragraph (1)(B), interim directors, directors, officers, 
     employees, or agents of a limited-life regulated entity are 
     not, solely by virtue of service in any such capacity, 
     officers or employees of the United States. Any employee of 
     the Agency or of any Federal instrumentality who serves at 
     the request of the Agency as a representative for purposes of 
     paragraph (1)(B), interim director, director, officer, 
     employee, or agent of a limited-life regulated entity shall 
     not--
       ``(i) solely by virtue of service in any such capacity lose 
     any existing status as an officer or employee of the United 
     States for purposes of title 5, United States Code, or any 
     other provision of law; or
       ``(ii) receive any salary or benefits for service in any 
     such capacity with respect to a limited-life regulated entity 
     in addition to such salary or benefits as are obtained 
     through employment with the Agency or such Federal 
     instrumentality.
       ``(13) Additional powers.--In addition to any other powers 
     granted under this subsection, a limited-life regulated 
     entity may--
       ``(A) extend a maturity date or change in an interest rate 
     or other term of outstanding securities;
       ``(B) issue securities of the limited-life regulated 
     entity, for cash, for property, for existing securities, or 
     in exchange for claims or interests, or for any other 
     appropriate purposes; and
       ``(C) take any other action not inconsistent with this 
     section.
       ``(j) Other Exemptions.--When acting as a receiver, the 
     following provisions shall apply with respect to the Agency:
       ``(1) Exemption from taxation.--The Agency, including its 
     franchise, its capital, reserves, and surplus, and its 
     income, shall be exempt from all taxation imposed by any 
     State, country, municipality, or local taxing authority, 
     except that any real property of the Agency shall be subject 
     to State, territorial, county, municipal, or local taxation 
     to the same extent according to its value as other real 
     property is taxed, except that, notwithstanding the failure 
     of any person to challenge an assessment under State law of 
     the value of such property, and the tax thereon, shall be 
     determined as of the period for which such tax is imposed.
       ``(2) Exemption from attachment and liens.--No property of 
     the Agency shall be subject to levy, attachment, garnishment, 
     foreclosure, or sale without the consent of the Agency, nor 
     shall any involuntary lien attach to the property of the 
     Agency.
       ``(3) Exemption from penalties and fines.--The Agency shall 
     not be liable for any amounts in the nature of penalties or 
     fines, including those arising from the failure of any person 
     to pay any real property, personal property, probate, or 
     recording tax or any recording or filing fees when due.
       ``(k) Prohibition of Charter Revocation.--In no case may a 
     receiver appointed pursuant to this section revoke, annul, or 
     terminate the charter of a regulated entity.''.
       (b) Conforming Amendments.--
       (1) Housing and community development act of 1992.--
     Subtitle B of title XIII of the Housing and Community 
     Development Act of 1992 is amended by striking sections 1369 
     (12 U.S.C. 4619), 1369A (12 U.S.C. 4620), and 1369B (12 
     U.S.C. 4621).
       (2) Federal home loan banks.--Section 25 of the Federal 
     Home Loan Bank Act (12 U.S.C. 1445) is amended to read as 
     follows:

     ``SEC. 25. SUCCESSION OF FEDERAL HOME LOAN BANKS.

       ``Each Federal Home Loan Bank shall have succession until 
     it is voluntarily merged with another Bank under this Act, or 
     until it is merged, reorganized, rehabilitated, liquidated, 
     or otherwise wound up by the Director in accordance with the 
     provisions of section 1367 of the Housing and Community 
     Development Act of 1992, or by further Act of Congress.''.

     SEC. 155. CONFORMING AMENDMENTS.

       Title XIII of the Housing and Community Development Act of 
     1992, as amended by the preceding provisions of this Act, is 
     further amended--
       (1) in sections 1365 (12 U.S.C. 4615) through 1369D (12 
     U.S.C. 4623), but not including section 1367 (12 U.S.C. 4617) 
     as amended by section 154 of this Act--
       (A) by striking ``An enterprise'' each place such term 
     appears and inserting ``A regulated entity'';
       (B) by striking ``an enterprise'' each place such term 
     appears and inserting ``a regulated entity''; and
       (C) by striking ``the enterprise'' each place such term 
     appears and inserting ``the regulated entity'';
       (2) in section 1366 (12 U.S.C. 4616)--
       (A) in subsection (b)(7), by striking ``section 1369 
     (excluding subsection (a)(1) and (2))'' and inserting 
     ``section 1367''; and
       (B) in subsection (d), by striking ``the enterprises'' and 
     inserting ``the regulated entities'';
       (3) in section 1368(d) (12 U.S.C. 4618(d)), by striking 
     ``Committee on Banking, Finance and Urban Affairs'' and 
     inserting ``Committee on Financial Services'';
       (4) in section 1369C (12 U.S.C. 4622)--
       (A) in subsection (a)(4), by striking ``activities 
     (including existing and new programs)'' and inserting 
     ``activities, services, undertakings, and offerings 
     (including existing and new products (as such term is defined 
     in section 1321(f))''; and
       (B) in subsection (c), by striking ``any enterprise'' and 
     inserting ``any regulated entity''; and
       (5) in subsections (a) and (d) of section 1369D, by 
     striking ``section 1366 or 1367 or action under section 
     1369)'' each place such phrase appears and inserting 
     ``section 1367)''.

                    Subtitle D--Enforcement Actions

     SEC. 161. CEASE-AND-DESIST PROCEEDINGS.

       Section 1371 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4631) is amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following new subsections:
       ``(a) Issuance for Unsafe or Unsound Practices and 
     Violations of Rules or Laws.--If, in the opinion of the 
     Director, a regulated entity or any regulated entity-
     affiliated party is engaging or has engaged, or the Director 
     has reasonable cause to believe that the regulated entity or 
     any regulated entity-affiliated party is about to engage, in 
     an unsafe or unsound practice in conducting the business of 
     the regulated entity or is violating or has violated, or the 
     Director has reasonable cause to believe that the regulated 
     entity or any regulated entity-affiliated party is about to 
     violate, a law, rule, or regulation, or any condition imposed 
     in writing by the Director in connection with the granting of 
     any application or other request by the regulated entity or 
     any written agreement entered into with the Director, the 
     Director may issue and serve upon the regulated entity or 
     such party a notice of charges in respect thereof. The 
     Director may not, pursuant to this section, enforce 
     compliance with any housing goal established under subpart B 
     of part 2 of subtitle A of this title, with section 1336 or 
     1337 of this title, with subsection (m) or (n) of section 309 
     of the Federal National Mortgage Association Charter Act (12 
     U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act (12 
     U.S.C. 1456(e), (f)), or with paragraph (5) of section 10(j) 
     of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)).
       ``(b) Issuance for Unsatisfactory Rating.--If a regulated 
     entity receives, in its most recent report of examination, a 
     less-than-satisfactory rating for asset quality, management, 
     earnings, or liquidity, the Director may (if the deficiency 
     is not corrected) deem the regulated entity to be engaging in 
     an unsafe or unsound practice for purposes of this 
     subsection.'';
       (2) in subsection (c)(2), by striking ``enterprise, 
     executive officer, or director'' and inserting ``regulated 
     entity or regulated entity-affiliated party''; and
       (3) in subsection (d)--
       (A) in the matter preceding paragraph (1), by striking 
     ``enterprise, executive officer, or director'' and inserting 
     ``regulated entity or regulated entity-affiliated party'';
       (B) in paragraph (1)--
       (i) by striking ``an executive officer or a director'' and 
     inserting ``a regulated entity affiliated party''; and
       (ii) by inserting ``(including reimbursement of 
     compensation under section 1318)'' after ``reimbursement'';
       (C) in paragraph (6), by striking ``and'' at the end;
       (D) by redesignating paragraph (7) as paragraph (8); and
       (E) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) to effect an attachment on a regulated entity or 
     regulated entity-affiliated party subject to an order under 
     this section or section 1372; and''.

     SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS.

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

[[Page H5409]]

       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Grounds for Issuance.--Whenever the Director 
     determines that the violation or threatened violation or the 
     unsafe or unsound practice or practices specified in the 
     notice of charges served upon the regulated entity or any 
     regulated entity-affiliated party pursuant to section 
     1371(a), or the continuation thereof, is likely to cause 
     insolvency or significant dissipation of assets or earnings 
     of the regulated entity, or is likely to weaken the condition 
     of the regulated entity prior to the completion of the 
     proceedings conducted pursuant to sections 1371 and 1373, the 
     Director may issue a temporary order requiring the regulated 
     entity or such party to cease and desist from any such 
     violation or practice and to take affirmative action to 
     prevent or remedy such insolvency, dissipation, condition, or 
     prejudice pending completion of such proceedings. Such order 
     may include any requirement authorized under section 
     1371(d).'';
       (2) in subsection (b), by striking ``enterprise, executive 
     officer, or director'' and inserting ``regulated entity or 
     regulated entity-affiliated party'';
       (3) in subsection (d)--
       (A) by striking ``An enterprise, executive officer, or 
     director'' and inserting ``A regulated entity or regulated 
     entity-affiliated party''; and
       (B) by striking ``the enterprise, executive officer, or 
     director'' and inserting ``the regulated entity or regulated 
     entity-affiliated party''; and
       (4) by striking subsection (e) and in inserting the 
     following new subsection:
       ``(e) Enforcement.--In the case of violation or threatened 
     violation of, or failure to obey, a temporary cease-and-
     desist order issued pursuant to this section, the Director 
     may apply to the United States District Court for the 
     District of Columbia or the United States district court 
     within the jurisdiction of which the headquarters of the 
     regulated entity is located, for an injunction to enforce 
     such order, and, if the court determines that there has been 
     such violation or threatened violation or failure to obey, it 
     shall be the duty of the court to issue such injunction.''.

     SEC. 163. PREJUDGMENT ATTACHMENT.

       The Housing and Community Development Act of 1992 is 
     amended by inserting after section 1375 (12 U.S.C. 4635) the 
     following new section:

     ``SEC. 1375A. PREJUDGMENT ATTACHMENT.

       ``(a) In General.--In any action brought pursuant to this 
     title, 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 
     pursuant to this title, the court may, upon application of 
     the Director or Attorney General, as applicable, issue a 
     restraining order that--
       ``(1) prohibits any person subject to the proceeding from 
     withdrawing, transferring, removing, dissipating, or 
     disposing of any funds, assets or other property; and
       ``(2) appoints a person on a temporary basis to administer 
     the restraining order.
       ``(b) Standard.--
       ``(1) Showing.--Rule 65 of the Federal Rules of Civil 
     Procedure shall apply with respect to any proceeding under 
     subsection (a) without regard to the requirement of such rule 
     that the applicant show that the injury, loss, or damage is 
     irreparable and immediate.
       ``(2) 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 protections to a party's right to due 
     process as Rule 65 (as modified with respect to such 
     proceeding by paragraph (1)), the relief sought under 
     subsection (a) may be requested under the laws of such 
     State.''.

     SEC. 164. ENFORCEMENT AND JURISDICTION.

       Section 1375 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4635) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Enforcement.--The Director may, in the discretion of 
     the Director, apply to the United States District Court for 
     the District of Columbia, or the United States district court 
     within the jurisdiction of which the headquarters of the 
     regulated entity is located, for the enforcement of any 
     effective and outstanding notice or order issued under this 
     subtitle or subtitle B, or request that the Attorney General 
     of the United States bring such an action. Such court shall 
     have jurisdiction and power to order and require compliance 
     with such notice or order.''; and
       (2) in subsection (b), by striking ``or 1376'' and 
     inserting ``1376, or 1377''.

     SEC. 165. CIVIL MONEY PENALTIES.

       Section 1376 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4636) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1), by striking ``, 
     or any executive officer or director'' and inserting ``or any 
     regulated-entity affiliated party''; and
       (B) in paragraph (1)--
       (i) by striking ``the Federal National Mortgage Association 
     Charter Act, the Federal Home Loan Mortgage Corporation Act'' 
     and inserting ``any provision of any of the authorizing 
     statutes'';
       (ii) by striking ``or Act'' and inserting ``or statute'';
       (iii) by striking ``or subsection'' and inserting ``, 
     subsection''; and
       (iv) by inserting ``, or paragraph (5) or (12) of section 
     10(j) of the Federal Home Loan Bank Act'' before the 
     semicolon at the end;
       (2) by striking subsection (b) and inserting the following 
     new subsection:
       ``(b) Amount of Penalty.--
       ``(1) First tier.--Any regulated entity which, or any 
     regulated entity-affiliated party who--
       ``(A) violates any provision of this title, any provision 
     of any of the authorizing statutes, or any order, condition, 
     rule, or regulation under any such title or statute, except 
     that the Director may not, pursuant to this section, enforce 
     compliance with any housing goal established under subpart B 
     of part 2 of subtitle A of this title, with section 1336 or 
     1337 of this title, with subsection (m) or (n) of section 309 
     of the Federal National Mortgage Association Charter Act (12 
     U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act (12 
     U.S.C. 1456(e), (f)), or with paragraph (5) or (12) of 
     section 10(j) of the Federal Home Loan Bank Act;
       ``(B) violates any final or temporary order or notice 
     issued pursuant to this title;
       ``(C) violates any condition imposed in writing by the 
     Director in connection with the grant of any application or 
     other request by such regulated entity; or
       ``(D) violates any written agreement between the regulated 
     entity and the Director,
     shall forfeit and pay a civil money penalty of not more than 
     $10,000 for each day during which such violation continues.
       ``(2) Second tier.--Notwithstanding paragraph (1)--
       ``(A) if a regulated entity, or a regulated entity-
     affiliated party--
       ``(i) commits any violation described in any subparagraph 
     of paragraph (1);
       ``(ii) recklessly engages in an unsafe or unsound practice 
     in conducting the affairs of such regulated entity; or
       ``(iii) breaches any fiduciary duty; and
       ``(B) the violation, practice, or breach--
       ``(i) is part of a pattern of misconduct;
       ``(ii) causes or is likely to cause more than a minimal 
     loss to such regulated entity; or
       ``(iii) results in pecuniary gain or other benefit to such 
     party,

     the regulated entity or regulated entity-affiliated party 
     shall forfeit and pay a civil penalty of not more than 
     $50,000 for each day during which such violation, practice, 
     or breach continues.
       ``(3) Third tier.--Notwithstanding paragraphs (1) and (2), 
     any regulated entity which, or any regulated entity-
     affiliated party who--
       ``(A) knowingly--
       ``(i) commits any violation or engages in any conduct 
     described in any subparagraph of paragraph (1);
       ``(ii) engages in any unsafe or unsound practice in 
     conducting the affairs of such regulated entity; or
       ``(iii) breaches any fiduciary duty; and
       ``(B) knowingly or recklessly causes a substantial loss to 
     such regulated entity or a substantial pecuniary gain or 
     other benefit to such party by reason of such violation, 
     practice, or breach,

     shall forfeit and pay a civil penalty in an amount not to 
     exceed the applicable maximum amount determined under 
     paragraph (4) for each day during which such violation, 
     practice, or breach continues.
       ``(4) Maximum amounts of penalties for any violation 
     described in paragraph (3).--The maximum daily amount of any 
     civil penalty which may be assessed pursuant to paragraph (3) 
     for any violation, practice, or breach described in such 
     paragraph is--
       ``(A) in the case of any person other than a regulated 
     entity, an amount not to exceed $2,000,000; and
       ``(B) in the case of any regulated entity, $2,000,000.'';
       (3) in subsection (c)(1)(B), by striking ``enterprise, 
     executive officer, or director'' and inserting ``regulated 
     entity or regulated entity-affiliated party'';
       (4) in subsection (d), by striking the first sentence and 
     inserting the following: ``If a regulated entity or regulated 
     entity-affiliated party fails to comply with an order of the 
     Director imposing a civil money penalty under this section, 
     after the order is no longer subject to review as provided 
     under subsection (c)(1) and section 1374, the Director may, 
     in the discretion of the Director, bring an action in the 
     United States District Court for the District of Columbia, or 
     the United States district court within the jurisdiction of 
     which the headquarters of the regulated entity is located, to 
     obtain a monetary judgment against the regulated entity or 
     regulated entity affiliated party and such other relief as 
     may be available, or request that the Attorney General of the 
     United States bring such an action.''; and
       (5) in subsection (g), by striking ``subsection (b)(3)'' 
     and inserting ``this section, unless authorized by the 
     Director by rule, regulation, or order''.

     SEC. 166. REMOVAL AND PROHIBITION AUTHORITY.

       (a) In General.--Subtitle C of title XIII of the Housing 
     and Community Development Act of 1992 is amended--
       (1) by redesignating sections 1377, 1378, 1379, 1379A, and 
     1379B (12 U.S.C. 4637-41) as sections 1379, 1379A, 1379B, 
     1379C, and 1379D, respectively; and
       (2) by inserting after section 1376 (12 U.S.C. 4636) the 
     following new section:

     ``SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.

       ``(a) Authority To Issue Order.--Whenever the Director 
     determines that--
       ``(1) any regulated entity-affiliated party has, directly 
     or indirectly--
       ``(A) violated--
       ``(i) any law or regulation;
       ``(ii) any cease-and-desist order which has become final;
       ``(iii) any condition imposed in writing by the Director in 
     connection with the grant of any application or other request 
     by such regulated entity; or
       ``(iv) any written agreement between such regulated entity 
     and the Director;

[[Page H5410]]

       ``(B) engaged or participated in any unsafe or unsound 
     practice in connection with any regulated entity; or
       ``(C) committed or engaged in any act, omission, or 
     practice which constitutes a breach of such party's fiduciary 
     duty;
       ``(2) by reason of the violation, practice, or breach 
     described in any subparagraph of paragraph (1)--
       ``(A) such regulated entity has suffered or will probably 
     suffer financial loss or other damage; or
       ``(B) such party has received financial gain or other 
     benefit by reason of such violation, practice, or breach; and
       ``(3) such violation, practice, or breach--
       ``(A) involves personal dishonesty on the part of such 
     party; or
       ``(B) demonstrates willful or continuing disregard by such 
     party for the safety or soundness of such regulated entity, 
     the Director may serve upon such party a written notice of 
     the Director's intention to remove such party from office or 
     to prohibit any further participation by such party, in any 
     manner, in the conduct of the affairs of any regulated 
     entity.
       ``(b) Suspension Order.--
       ``(1) Suspension or prohibition authority.--If the Director 
     serves written notice under subsection (a) to any regulated 
     entity-affiliated party of the Director's intention to issue 
     an order under such subsection, the Director may--
       ``(A) suspend such party from office or prohibit such party 
     from further participation in any manner in the conduct of 
     the affairs of the regulated entity, if the Director--
       ``(i) determines that such action is necessary for the 
     protection of the regulated entity; and
       ``(ii) serves such party with written notice of the 
     suspension order; and
       ``(B) prohibit the regulated entity from releasing to or on 
     behalf of the regulated entity-affiliated party any 
     compensation or other payment of money or other thing of 
     current or potential value in connection with any 
     resignation, removal, retirement, or other termination of 
     employment or office of the party.
       ``(2) Effective period.--Any suspension order issued under 
     this subsection--
       ``(A) shall become effective upon service; and
       ``(B) unless a court issues a stay of such order under 
     subsection (g) of this section, shall remain in effect and 
     enforceable until--
       ``(i) the date the Director dismisses the charges contained 
     in the notice served under subsection (a) with respect to 
     such party; or
       ``(ii) the effective date of an order issued by the 
     Director to such party under subsection (a).
       ``(3) Copy of order.--If the Director issues a suspension 
     order under this subsection to any regulated entity-
     affiliated party, the Director shall serve a copy of such 
     order on any regulated entity with which such party is 
     affiliated at the time such order is issued.
       ``(c) Notice, Hearing, and Order.--A notice of intention to 
     remove a regulated entity-affiliated party from office or to 
     prohibit such party from participating in the conduct of the 
     affairs of a regulated entity shall contain a statement of 
     the facts constituting grounds for such action, and shall fix 
     a time and place at which a hearing will be held on such 
     action. Such hearing shall be fixed for a date not earlier 
     than 30 days nor later than 60 days after the date of service 
     of such notice, unless an earlier or a later date is set by 
     the Director at the request of (1) such party, and for good 
     cause shown, or (2) the Attorney General of the United 
     States. Unless such party shall appear at the hearing in 
     person or by a duly authorized representative, such party 
     shall be deemed to have consented to the issuance of an order 
     of such removal or prohibition. In the event of such consent, 
     or if upon the record made at any such hearing the Director 
     shall find that any of the grounds specified in such notice 
     have been established, the Director may issue such orders of 
     suspension or removal from office, or prohibition from 
     participation in the conduct of the affairs of the regulated 
     entity, as it may deem appropriate, together with an order 
     prohibiting compensation described in subsection (b)(1)(B). 
     Any such order shall become effective at the expiration of 30 
     days after service upon such regulated entity and such party 
     (except in the case of an order issued upon consent, which 
     shall become effective at the time specified therein). Such 
     order shall remain effective and enforceable except to such 
     extent as it is stayed, modified, terminated, or set aside by 
     action of the Director or a reviewing court.
       ``(d) Prohibition of Certain Specific Activities.--Any 
     person subject to an order issued under this section shall 
     not--
       ``(1) participate in any manner in the conduct of the 
     affairs of any regulated entity;
       ``(2) solicit, procure, transfer, attempt to transfer, 
     vote, or attempt to vote any proxy, consent, or authorization 
     with respect to any voting rights in any regulated entity;
       ``(3) violate any voting agreement previously approved by 
     the Director; or
       ``(4) vote for a director, or serve or act as a regulated 
     entity-affiliated party.
       ``(e) Industry-Wide Prohibition.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     person who, pursuant to an order issued under this section, 
     has been removed or suspended from office in a regulated 
     entity or prohibited from participating in the conduct of the 
     affairs of a regulated entity may not, while such order is in 
     effect, continue or commence to hold any office in, or 
     participate in any manner in the conduct of the affairs of, 
     any regulated entity.
       ``(2) Exception if director provides written consent.--If, 
     on or after the date an order is issued under this section 
     which removes or suspends from office any regulated entity-
     affiliated party or prohibits such party from participating 
     in the conduct of the affairs of a regulated entity, such 
     party receives the written consent of the Director, the order 
     shall, to the extent of such consent, cease to apply to such 
     party with respect to the regulated entity described in the 
     written consent. If the Director grants such a written 
     consent, it shall publicly disclose such consent.
       ``(3) Violation of paragraph (1) treated as violation of 
     order.--Any violation of paragraph (1) by any person who is 
     subject to an order described in such subsection shall be 
     treated as a violation of the order.
       ``(f) Applicability.--This section shall only apply to a 
     person who is an individual, unless the Director specifically 
     finds that it should apply to a corporation, firm, or other 
     business enterprise.
       ``(g) Stay of Suspension and Prohibition of Regulated 
     Entity-Affiliated Party.--Within 10 days after any regulated 
     entity-affiliated party has been suspended from office and/or 
     prohibited from participation in the conduct of the affairs 
     of a regulated entity under this section, such party may 
     apply to the United States District Court for the District of 
     Columbia, or the United States district court for the 
     judicial district in which the headquarters of the regulated 
     entity is located, for a stay of such suspension and/or 
     prohibition and any prohibition under subsection (b)(1)(B) 
     pending the completion of the administrative proceedings 
     pursuant to the notice served upon such party under this 
     section, and such court shall have jurisdiction to stay such 
     suspension and/or prohibition.
       ``(h) Suspension or Removal of Regulated Entity-Affiliated 
     Party Charged With Felony.--
       ``(1) Suspension or prohibition.--
       ``(A) In general.--Whenever any regulated entity-affiliated 
     party is charged in any information, indictment, or 
     complaint, with the commission of or participation in a crime 
     involving dishonesty or breach of trust which is punishable 
     by imprisonment for a term exceeding one year under State or 
     Federal law, the Director may, if continued service or 
     participation by such party may pose a threat to the 
     regulated entity or impair public confidence in the regulated 
     entity, by written notice served upon such party--
       ``(i) suspend such party from office or prohibit such party 
     from further participation in any manner in the conduct of 
     the affairs of any regulated entity; and
       ``(ii) prohibit the regulated entity from releasing to or 
     on behalf of the regulated entity-affiliated party any 
     compensation or other payment of money or other thing of 
     current or potential value in connection with the period of 
     any such suspension or with any resignation, removal, 
     retirement, or other termination of employment or office of 
     the party.
       ``(B) Provisions applicable to notice.--
       ``(i) Copy.--A copy of any notice under paragraph (1)(A) 
     shall also be served upon the regulated entity.
       ``(ii) Effective period.--A suspension or prohibition under 
     subparagraph (A) shall remain in effect until the 
     information, indictment, or complaint referred to in such 
     subparagraph is finally disposed of or until terminated by 
     the Director.
       ``(2) Removal or prohibition.--
       ``(A) In general.--If a judgment of conviction or an 
     agreement to enter a pretrial diversion or other similar 
     program is entered against a regulated entity-affiliated 
     party in connection with a crime described in paragraph 
     (1)(A), at such time as such judgment is not subject to 
     further appellate review, the Director may, if continued 
     service or participation by such party may pose a threat to 
     the regulated entity or impair public confidence in the 
     regulated entity, issue and serve upon such party an order 
     that--
       ``(i) removes such party from office or prohibits such 
     party from further participation in any manner in the conduct 
     of the affairs of the regulated entity without the prior 
     written consent of the Director; and
       ``(ii) prohibits the regulated entity from releasing to or 
     on behalf of the regulated entity-affiliated party any 
     compensation or other payment of money or other thing of 
     current or potential value in connection with the termination 
     of employment or office of the party.
       ``(B) Provisions applicable to order.--
       ``(i) Copy.--A copy of any order under paragraph (2)(A) 
     shall also be served upon the regulated entity, whereupon the 
     regulated entity-affiliated party who is subject to the order 
     (if a director or an officer) shall cease to be a director or 
     officer of such regulated entity.
       ``(ii) Effect of acquittal.--A finding of not guilty or 
     other disposition of the charge shall not preclude the 
     Director from instituting proceedings after such finding or 
     disposition to remove such party from office or to prohibit 
     further participation in regulated entity affairs, and to 
     prohibit compensation or other payment of money or other 
     thing of current or potential value in connection with any 
     resignation, removal, retirement, or other termination of 
     employment or office of the party, pursuant to subsections 
     (a), (d), or (e) of this section.
       ``(iii) Effective period.--Any notice of suspension or 
     order of removal issued under this subsection shall remain 
     effective and outstanding until the completion of any hearing 
     or appeal authorized under paragraph (4) unless terminated by 
     the Director.
       ``(3) Authority of remaining board members.--If at any 
     time, because of the suspension of one or more directors 
     pursuant to this section, there shall be on the board of 
     directors of a regulated entity less than a quorum of 
     directors not so suspended, all powers and functions vested 
     in or exercisable by such board shall vest in and be 
     exercisable by the director or directors on the board not so 
     suspended, until such time as there shall be a quorum of the 
     board of directors. In the event all of the directors of a 
     regulated entity are suspended pursuant to this section, the

[[Page H5411]]

     Director shall appoint persons to serve temporarily as 
     directors in their place and stead pending the termination of 
     such suspensions, or until such time as those who have been 
     suspended cease to be directors of the regulated entity and 
     their respective successors take office.
       ``(4) Hearing regarding continued participation.--Within 30 
     days from service of any notice of suspension or order of 
     removal issued pursuant to paragraph (1) or (2) of this 
     subsection, the regulated entity-affiliated party concerned 
     may request in writing an opportunity to appear before the 
     Director to show that the continued service to or 
     participation in the conduct of the affairs of the regulated 
     entity by such party does not, or is not likely to, pose a 
     threat to the interests of the regulated entity or threaten 
     to impair public confidence in the regulated entity. Upon 
     receipt of any such request, the Director shall fix a time 
     (not more than 30 days after receipt of such request, unless 
     extended at the request of such party) and place at which 
     such party may appear, personally or through counsel, before 
     one or more members of the Director or designated employees 
     of the Director to submit written materials (or, at the 
     discretion of the Director, oral testimony) and oral 
     argument. Within 60 days of such hearing, the Director shall 
     notify such party whether the suspension or prohibition from 
     participation in any manner in the conduct of the affairs of 
     the regulated entity will be continued, terminated, or 
     otherwise modified, or whether the order removing such party 
     from office or prohibiting such party from further 
     participation in any manner in the conduct of the affairs of 
     the regulated entity, and prohibiting compensation in 
     connection with termination will be rescinded or otherwise 
     modified. Such notification shall contain a statement of the 
     basis for the Director's decision, if adverse to such party. 
     The Director is authorized to prescribe such rules as may be 
     necessary to effectuate the purposes of this subsection.
       ``(i) Hearings and Judicial Review.--
       ``(1) Venue and procedure.--Any hearing provided for in 
     this section shall be held in the District of Columbia or in 
     the Federal judicial district in which the headquarters of 
     the regulated entity is located, unless the party afforded 
     the hearing consents to another place, and shall be conducted 
     in accordance with the provisions of chapter 5 of title 5, 
     United States Code. After such hearing, and within 90 days 
     after the Director has notified the parties that the case has 
     been submitted to it for final decision, it shall render its 
     decision (which shall include findings of fact upon which its 
     decision is predicated) and shall issue and serve upon each 
     party to the proceeding an order or orders consistent with 
     the provisions of this section. Judicial review of any such 
     order shall be exclusively as provided in this subsection. 
     Unless a petition for review is timely filed in a court of 
     appeals of the United States, as provided in paragraph (2), 
     and thereafter until the record in the proceeding has been 
     filed as so provided, the Director may at any time, upon such 
     notice and in such manner as it shall deem proper, modify, 
     terminate, or set aside any such order. Upon such filing of 
     the record, the Director may modify, terminate, or set aside 
     any such order with permission of the court.
       ``(2) Review of order.--Any party to any proceeding under 
     paragraph (1) may obtain a review of any order served 
     pursuant to paragraph (1) (other than an order issued with 
     the consent of the regulated entity or the regulated entity-
     affiliated party concerned, or an order issued under 
     subsection (h) of this section) by the filing in the United 
     States Court of Appeals for the District of Columbia Circuit 
     or court of appeals of the United States for the circuit in 
     which the headquarters of the regulated entity is located, 
     within 30 days after the date of service of such order, a 
     written petition praying that the order of the Director be 
     modified, terminated, or set aside. A copy of such petition 
     shall be forthwith transmitted by the clerk of the court to 
     the Director, and thereupon the Director shall file in the 
     court the record in the proceeding, as provided in section 
     2112 of title 28, United States Code. Upon the filing of such 
     petition, such court shall have jurisdiction, which upon the 
     filing of the record shall (except as provided in the last 
     sentence of paragraph (1)) be exclusive, to affirm, modify, 
     terminate, or set aside, in whole or in part, the order of 
     the Director. Review of such proceedings shall be had as 
     provided in chapter 7 of title 5, United States Code. The 
     judgment and decree of the court shall be final, except that 
     the same shall be subject to review by the Supreme Court upon 
     certiorari, as provided in section 1254 of title 28, United 
     States Code.
       ``(3) Proceedings not treated as stay.--The commencement of 
     proceedings for judicial review under paragraph (2) shall 
     not, unless specifically ordered by the court, operate as a 
     stay of any order issued by the Director.''.
       (b) Conforming Amendments.--
       (1) 1992 act.--Section 1317(f) of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4517(f)) is amended by 
     striking ``section 1379B'' and inserting ``section 1379D''.
       (2) Fannie mae charter act.--The second sentence of 
     subsection (b) of section 308 of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723(b)) is 
     amended by striking ``The'' and inserting ``Except to the 
     extent that action under section 1377 of the Housing and 
     Community Development Act of 1992 temporarily results in a 
     lesser number, the''.
       (3) Freddie mac act.--The second sentence of subparagraph 
     (A) of section 303(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act (12 U.S.C. 1452(a)(2)(A)) is amended by 
     striking ``The'' and inserting ``Except to the extent that 
     action under section 1377 of the Housing and Community 
     Development Act of 1992 temporarily results in a lesser 
     number, the''.

     SEC. 167. CRIMINAL PENALTY.

       Subtitle C of title XIII of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4631 et seq.) is amended 
     by inserting after section 1377 (as added by the preceding 
     provisions of this Act) the following new section:

     ``SEC. 1378. CRIMINAL PENALTY.

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

     SEC. 168. SUBPOENA AUTHORITY.

       Section 1379D(c) of the Housing and Community Development 
     Act of 1992 (12 U.S.C. 4641(c)), as so redesignated by 
     section 166(a)(1) of this Act, is further amended--
       (1) by striking ``request the Attorney General of the 
     United States to'' and inserting ``, in the discretion of the 
     Director,'';
       (2) by inserting ``or request that the Attorney General of 
     the United States bring such an action,'' after ``District of 
     Columbia,''; and
       (3) by striking ``or may, under the direction and control 
     of the Attorney General, bring such an action''.

     SEC. 169. CONFORMING AMENDMENTS.

       Subtitle C of title XIII of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4631 et seq.), as amended 
     by the preceding provisions of this Act, is amended--
       (1) in section 1372(c)(1) (12 U.S.C. 4632(c)), by striking 
     ``that enterprise'' and inserting ``that regulated entity'';
       (2) in section 1379 (12 U.S.C. 4637), as so redesignated by 
     section 166(a)(1) of this Act--
       (A) by inserting ``, or of a regulated entity-affiliated 
     party,'' before ``shall not affect''; and
       (B) by striking ``such director or executive officer'' each 
     place such term appears and inserting ``such director, 
     executive officer, or regulated entity-affiliated party'';
       (3) in section 1379A (12 U.S.C. 4638), as so redesignated 
     by section 166(a)(1) of this Act, by inserting ``or against a 
     regulated entity-affiliated party,'' before ``or impair'';
       (4) by striking ``An enterprise'' each place such term 
     appears in such subtitle and inserting ``A regulated 
     entity'';
       (5) by striking ``an enterprise'' each place such term 
     appears in such subtitle and inserting ``a regulated 
     entity'';
       (6) by striking ``the enterprise'' each place such term 
     appears in such subtitle and inserting ``the regulated 
     entity''; and
       (7) by striking ``any enterprise'' each place such term 
     appears in such subtitle and inserting ``any regulated 
     entity''.

                     Subtitle E--General Provisions

     SEC. 181. BOARDS OF ENTERPRISES.

       (a) Fannie Mae.--
       (1) In general.--Section 308(b) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723(b)) is 
     amended--
       (A) in the first sentence, by striking ``eighteen persons, 
     five of whom shall be appointed annually by the President of 
     the United States, and the remainder of whom'' and inserting 
     ``13 persons, or such other number that the Director 
     determines appropriate, who'';
       (B) in the second sentence, by striking ``appointed by the 
     President'';
       (C) in the third sentence--
       (i) by striking ``appointed or''; and
       (ii) by striking ``, except that any such appointed member 
     may be removed from office by the President for good cause'';
       (D) in the fourth sentence, by striking ``elective''; and
       (E) by striking the fifth sentence.
       (2) Transitional provision.--The amendments made by 
     paragraph (1) shall not apply to any appointed position of 
     the board of directors of the Federal National Mortgage 
     Association until the expiration of the annual term for such 
     position during which the effective date under Section 185 
     occurs.
       (b) Freddie Mac.--
       (1) In general.--Section 303(a)(2) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``18 persons, 5 of 
     whom shall be appointed annually by the President of the 
     United States and the remainder of whom'' and inserting ``13 
     persons, or such other number as the Director determines 
     appropriate, who''; and
       (ii) in the second sentence, by striking ``appointed by the 
     President of the United States'';
       (B) in subparagraph (B)--
       (i) by striking ``such or''; and
       (ii) by striking ``, except that any appointed member may 
     be removed from office by the President for good cause''; and
       (C) in subparagraph (C)--
       (i) by striking the first sentence; and
       (ii) by striking ``elective''.
       (2) Transitional provision.--The amendments made by 
     paragraph (1) shall not apply to any appointed position of 
     the board of directors of the Federal Home Loan Mortgage 
     Corporation until the expiration of the annual term for such 
     position during which the effective date under Section 185 
     occurs.

     SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY AND 
                   SOUNDNESS, AND MISSION OF ENTERPRISES.

       Not later than the expiration of the 12-month period 
     beginning on the effective date under section 185, the 
     Director of the Federal Housing Finance Agency shall submit a 
     report to the Congress which shall include--
       (1) a description of the portfolio holdings of the 
     enterprises (as such term is defined in section 1303 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4502) in mortgages

[[Page H5412]]

     (including whole loans and mortgage-backed securities), non-
     mortgages, and other assets;
       (2) a description of the risk implications for the 
     enterprises of such holdings and the consequent risk 
     management undertaken by the enterprises (including the use 
     of derivatives for hedging purposes), compared with off-
     balance sheet liabilities of the enterprises (including 
     mortgage-backed securities guaranteed by the enterprises);
       (3) an analysis of portfolio holdings for safety and 
     soundness purposes;
       (4) an assessment of whether portfolio holdings fulfill the 
     mission purposes of the enterprises under the Federal 
     National Mortgage Association Charter Act and the Federal 
     Home Loan Mortgage Corporation Act; and
       (5) an analysis of the potential systemic risk implications 
     for the enterprises, the housing and capital markets, and the 
     financial system of portfolio holdings, and whether such 
     holdings should be limited or reduced over time.

     SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS.

       (a) 1992 Act.--Title XIII of the Housing and Community 
     Development Act of 1992 is amended by striking section 1383 
     (12 U.S.C. 1451 note).
       (b) Title 18, United States Code.--Section 1905 of title 
     18, United States Code, is amended by striking ``Office of 
     Federal Housing Enterprise Oversight'' and inserting 
     ``Federal Housing Finance Agency''.
       (c) Flood Disaster Protection Act of 1973.--Section 
     102(f)(3)(A) of the Flood Disaster Protection Act of 1973 (42 
     U.S.C. 4012a(f)(3)(A)) is amended by striking ``Director of 
     the Office of Federal Housing Enterprise Oversight of the 
     Department of Housing and Urban Development'' and inserting 
     ``Director of the Federal Housing Finance Agency''.
       (d) Department of Housing and Urban Development Act.--
     Section 5 of the Department of Housing and Urban Development 
     Act (42 U.S.C. 3534) is amended by striking subsection (d).
       (e) Title 5, United States Code.--
       (1) Director's pay rate.--Section 5313 of title 5, United 
     States Code, is amended by striking the item relating to the 
     Director of the Office of Federal Housing Enterprise 
     Oversight, Department of Housing and Urban Development and 
     inserting the following new item:
       ``Director of the Federal Housing Finance Agency.''.
       (2) Exclusion from senior executive service.--Section 
     3132(a)(1)(D) of title 5, United States Code, is amended--
       (A) by striking ``the Federal Housing Finance Board,''; and
       (B) by striking ``the Office of Federal Housing Enterprise 
     Oversight of the Department of Housing and Urban 
     Development'' and inserting ``the Federal Housing Finance 
     Agency''.
       (f) Inspector General Act of 1978.--Section 8G(a)(2) of the 
     Inspector General Act of 1978 (5 U.S.C. App.) is amended by 
     striking ``Federal Housing Finance Board'' and inserting 
     ``Federal Housing Finance Agency''.
       (g) Federal Deposit Insurance Act.--Section 11(t)(2)(A) of 
     the Federal Deposit Insurance Act (12 U.S.C.1821(t)(2)(A)) is 
     amended by adding at the end the following new clause:
       ``(vii) The Federal Housing Finance Agency.''.
       (h) 1997 Emergency Supplemental Appropriations Act.--
     Section 10001 of the 1997 Emergency Supplemental 
     Appropriations Act for Recovery From Natural Disasters, and 
     for Overseas Peacekeeping Efforts, Including Those In Bosnia 
     (42 U.S.C. 3548) is amended--
       (1) by striking ``the Government National Mortgage 
     Association, and the Office of Federal Housing Enterprise 
     Oversight'' and inserting ``and the Government National 
     Mortgage Association''; and
       (2) by striking ``, the Government National Mortgage 
     Association, or the Office of Federal Housing Enterprise 
     Oversight'' and inserting ``or the Government National 
     Mortgage Association''.
       (i) National Homeownership Trust Act.--Section 302(b)(4) of 
     the Cranston-Gonzalez National Affordable Housing Act (42 
     U.S.C. 12851(b)(4)) is amended by striking ``the chairperson 
     of the Federal Housing Finance Board'' and inserting ``the 
     Director of the Federal Housing Finance Agency''.

     SEC. 184. STUDY OF ALTERNATIVE SECONDARY MARKET SYSTEMS.

       (a) In General.--The Director of the Federal Housing 
     Finance Agency, in consultation with the Board of Governors 
     of the Federal Reserve System, the Secretary of the Treasury, 
     and the Secretary of Housing and Urban Development, shall 
     conduct a comprehensive study of the effects on financial and 
     housing finance markets of alternatives to the current 
     secondary market system for housing finance, taking into 
     consideration changes in the structure of financial and 
     housing finance markets and institutions since the creation 
     of the Federal National Mortgage Association and the Federal 
     Home Loan Mortgage Corporation.
       (b) Contents.--The study under this section shall--
       (1) include, among the alternatives to the current 
     secondary market system analyzed--
       (A) repeal of the chartering Acts for the Federal National 
     Mortgage Association and the Federal Home Loan Mortgage 
     Corporation;
       (B) establishing bank-like mechanisms for granting new 
     charters for limited purposed mortgage securitization 
     entities;
       (C) permitting the Director of the Federal Housing Finance 
     Agency to grant new charters for limited purpose mortgage 
     securitization entities, which shall include analyzing the 
     terms on which such charters should be granted, including 
     whether such charters should be sold, or whether such 
     charters and the charters for the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation 
     should be taxed or otherwise assessed a monetary price; and
       (D) such other alternatives as the Director considers 
     appropriate;
       (2) examine all of the issues involved in making the 
     transition to a completely private secondary mortgage market 
     system;
       (3) examine the technological advancements the private 
     sector has made in providing liquidity in the secondary 
     mortgage market and how such advancements have affected 
     liquidity in the secondary mortgage market; and
       (4) examine how taxpayers would be impacted by each 
     alternative system, including the complete privatization of 
     the Federal National Mortgage Association and the Federal 
     Home Loan Mortgage Corporation.
       (c) Report.--The Director of the Federal Housing Finance 
     Agency shall submit a report to the Congress on the study not 
     later than the expiration of the 24-month period beginning on 
     the effective date under section 185.

     SEC. 185. EFFECTIVE DATE.

       Except as specifically provided otherwise in this title, 
     this title shall take effect on and the amendments made by 
     this title shall take effect on, and shall apply beginning 
     on, the expiration of the 6-month period beginning on the 
     date of the enactment of this Act.

                   TITLE II--FEDERAL HOME LOAN BANKS

     SEC. 201. DEFINITIONS.

       Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 
     1422) is amended--
       (1) by striking paragraphs (1), (10), and (11);
       (2) by redesignating paragraphs (2) through (9) as 
     paragraphs (1) through (8), respectively;
       (3) by redesignating paragraphs (12) and (13) as paragraphs 
     (9) and (10), respectively; and
       (4) by adding at the end the following:
       ``(11) Director.--The term `Director' means the Director of 
     the Federal Housing Finance Agency.
       ``(12) Agency.--The term `Agency' means the Federal Housing 
     Finance Agency.''.

     SEC. 202. DIRECTORS.

       (a) Election.--Section 7 of the Federal Home Loan Bank Act 
     (12 U.S.C. 1427) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Number; Election; Qualifications; Conflicts of 
     Interest.--
       ``(1) In general.--The management of each Federal Home Loan 
     Bank shall be vested in a board of 13 directors, or such 
     other number as the Director determines appropriate, each of 
     whom shall be a citizen of the United States. All directors 
     of a Bank who are not independent directors pursuant to 
     paragraph (3) shall be elected by the members.
       ``(2) Member directors.--A majority of the directors of 
     each Bank shall be officers or directors of a member of such 
     Bank that is located in the district in which such Bank is 
     located.
       ``(3) Independent directors.--At least two-fifths of the 
     directors of each Bank shall be independent directors, who 
     shall be appointed by the Director of the Federal Housing 
     Finance Agency from a list of individuals recommended by the 
     Federal Housing Enterprise Board, and shall meet the 
     following criteria:
       ``(A) In general.--Each independent director shall be a 
     bona fide resident of the district in which such Bank is 
     located.
       ``(B) Public interest directors.--At least 2 of the 
     independent directors under this paragraph of each Bank 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, 
     community development, economic development, or financial 
     consumer protections.
       ``(C) Other directors.--
       ``(i) Qualifications.--Each independent director that is 
     not a public interest director under subparagraph (B) shall 
     have demonstrated knowledge of, or experience in, financial 
     management, auditing and accounting, risk management 
     practices, derivatives, project development, or 
     organizational management, or such other knowledge or 
     expertise as the Director may provide by regulation.
       ``(ii) Consultation with banks.--In appointing other 
     directors to serve on the board of a Federal home loan bank, 
     the Director of the Federal Housing Finance Agency may 
     consult with each Federal home loan bank about the knowledge, 
     skills, and expertise needed to assist the board in better 
     fulfilling its responsibilities.
       ``(D) Conflicts of interest.--Notwithstanding subsection 
     (f)(2), an independent director under this paragraph of a 
     Bank may not, during such director's term of office, serve as 
     an officer of any Federal Home Loan Bank or as a director or 
     officer of any member of a Bank.
       ``(E) Community demographics.--In appointing independent 
     directors of a Bank pursuant to this paragraph, the Director 
     shall take into consideration the demographic makeup of the 
     community most served by the Affordable Housing Program of 
     the Bank pursuant to section 10(j).'';
       (2) in the first sentence of subsection (b), by striking 
     ``elective directorship'' and inserting ``member directorship 
     established pursuant to subsection (a)(2)'';
       (3) in subsection (c)--
       (A) by striking ``elective'' each place such term appears 
     and inserting ``member'', except--
       (i) in the second sentence, the second place such term 
     appears; and
       (ii) each place such term appears in the fifth sentence; 
     and
       (B) in the second sentence--
       (i) by inserting ``(A) except as provided in clause (B) of 
     this sentence,'' before ``if at any time''; and
       (ii) by inserting before the period at the end the 
     following: ``, and (B) clause (A) of this sentence shall not 
     apply to the directorships of any Federal home loan bank 
     resulting from the merger of any two or more such banks''; 
     and
       (4) by striking ``elective'' each place such term appears 
     (except in subsections (c), (e), and (f)).
       (b) Terms.--

[[Page H5413]]

       (1) In general.--Section 7(d) of the Federal Home Loan Bank 
     Act (12 U.S.C. 1427(d)) is amended--
       (A) in the first sentence, by striking ``3 years'' and 
     inserting ``4 years''; and
       (B) in the second sentence--
       (i) by striking ``Federal Home Loan Bank System 
     Modernization Act of 1999'' and inserting ``Federal Housing 
     Finance Reform Act of 2007''; and
       (ii) by striking ``1/3'' and inserting ``1/4''.
       (2) Savings provision.--The amendments made by paragraph 
     (1) shall not apply to the term of office of any director of 
     a Federal home loan bank who is serving as of the effective 
     date of this title under section 211, including any director 
     elected to fill a vacancy in any such office.
       (c) Continued Service of Independent Directors After 
     Expiration of Term.--Section 7(f)(2) of the Federal Home Loan 
     Bank Act (12 U.S.C. 1427(f)(2)) is amended--
       (1) in the second sentence, by striking ``or the term of 
     such office expires, whichever occurs first'';
       (2) by adding at the end the following new sentence: ``An 
     independent Bank director may continue to serve as a director 
     after the expiration of the term of such director until a 
     successor is appointed.'';
       (3) in the paragraph heading, by striking ``Appointed'' and 
     inserting ``Independent''; and
       (4) by striking ``appointive'' each place such term appears 
     and inserting ``independent''.
       (d) Conforming Amendments.--Section 7(f)(3) of the Federal 
     Home Loan Bank Act (12 U.S.C. 1427(f)(3)) is amended--
       (1) in the paragraph heading, by striking ``Elected'' and 
     inserting ``Member''; and
       (2) by striking ``elective'' each place such term appears 
     in the first and third sentences and inserting ``member''.
       (e) Compensation.--Subsection (i) of section 7 of the 
     Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is amended to 
     read as follows:
       ``(i) Directors' Compensation.--
       ``(1) In general.--Each Federal home loan bank may pay the 
     directors on the board of directors for the bank reasonable 
     and appropriate compensation for the time required of such 
     directors, and reasonable and appropriate expenses incurred 
     by such directors, in connection with service on the board of 
     directors, in accordance with resolutions adopted by the 
     board of directors and subject to the approval of the 
     Director.
       ``(2) Annual report by the board.--The Director shall 
     include, in the annual report submitted to the Congress 
     pursuant to section 1319B of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992, information 
     regarding the compensation and expenses paid by the Federal 
     home loan banks to the directors on the boards of directors 
     of the banks.''.
       (f) Transition Rule.--Any member of the board of directors 
     of a Federal Home Loan Bank serving as of the effective date 
     under section 211 may continue to serve as a member of such 
     board of directors for the remainder of the term of such 
     office as provided in section 7 of the Federal Home Loan Bank 
     Act, as in effect before such effective date.

     SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVERSIGHT OF FEDERAL 
                   HOME LOAN BANKS.

       The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), 
     other than in provisions of that Act added or amended 
     otherwise by this Act, is amended--
       (1) by striking sections 2A and 2B (12 U.S.C. 1422a, 
     1422b);
       (2) in section 6 (12 U.S.C. 1426(b)(1))--
       (A) in subsection (b)(1), in the matter preceding 
     subparagraph (A), by striking ``Finance Board approval'' and 
     inserting ``approval by the Director''; and
       (B) in each of subsections (c)(4)(B) and (d)(2), by 
     striking ``Finance Board regulations'' each place that term 
     appears and inserting ``regulations of the Director'';
       (3) in section 8 (12 U.S.C. 1428), in the section heading, 
     by striking ``by the board'';
       (4) in section 10(b) (12 U.S.C. 1430(b)), by striking ``by 
     formal resolution'';
       (5) in section 10 (12 U.S.C. 1430), by adding at the end 
     the following new subsection:
       ``(k) Monitoring and Enforcing Compliance With Affordable 
     Housing and Community Investment Program Requirements.--The 
     requirements under subsection (i) and (j) that the Banks 
     establish Community Investment and Affordable Housing 
     Programs, respectively, and contribute to the Affordable 
     Housing Program, shall be enforceable by the Director with 
     respect to the Banks in the same manner and to the same 
     extent as the housing goals under subpart B of part 2 of 
     subtitle A of title XIII of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4561 et seq.) are 
     enforceable under section 1336 of such Act with respect to 
     the Federal National Mortgage Association and the Federal 
     Home Loan Mortgage Corporation.'';
       (6) in section 11 (12 U.S.C. 1431)--
       (A) in subsection (b)--
       (i) in the first sentence--

       (I) by striking ``The Board'' and inserting ``The Office of 
     Finance, as agent for the Banks,''; and
       (II) by striking ``the Board'' and inserting ``such 
     Office''; and

       (ii) in the second and fourth sentences, by striking ``the 
     Board'' each place such term appears and inserting ``the 
     Office of Finance'';
       (B) in subsection (c)--
       (i) by striking ``the Board'' the first place such term 
     appears and inserting ``the Office of Finance, as agent for 
     the Banks,''; and
       (ii) by striking ``the Board'' the second place such term 
     appears and inserting ``such Office''; and
       (C) in subsection (f)--
       (i) by striking the two commas after ``permit'' and 
     inserting ``or''; and
       (ii) by striking the comma after ``require'';
       (7) in section 15 (12 U.S.C. 1435), by inserting ``or the 
     Director'' after ``the Board'';
       (8) in section 18 (12 U.S.C. 1438), by striking subsection 
     (b);
       (9) in section 21 (12 U.S.C. 1441)--
       (A) in subsection (b)--
       (i) in paragraph (5), by striking ``Chairperson of the 
     Federal Housing Finance Board'' and inserting ``Director''; 
     and
       (ii) in the heading for paragraph (8), by striking 
     ``federal housing finance board'' and inserting ``director''; 
     and
       (B) in subsection (i), in the heading for paragraph (2), by 
     striking ``Federal housing finance board'' and inserting 
     ``Director'';
       (10) in section 23 (12 U.S.C. 1443), by striking ``Board of 
     Directors of the Federal Housing Finance Board'' and 
     inserting ``Director'';
       (11) by striking ``the Board'' each place such term appears 
     in such Act (except in section 15 (12 U.S.C. 1435), section 
     21(f)(2) (12 U.S.C. 1441(f)(2)), subsections (a), 
     (k)(2)(B)(i), and (n)(6)(C)(ii) of section 21A (12 U.S.C. 
     1441a), subsections (f)(2)(C), and (k)(7)(B)(ii) of section 
     21B (12 U.S.C. 1441b), and the first two places such term 
     appears in section 22 (12 U.S.C. 1442)) and inserting ``the 
     Director'';
       (12) by striking ``The Board'' each place such term appears 
     in such Act (except in sections 7(e) (12 U.S.C. 1427(e)), and 
     11(b) (12 U.S.C. 1431(b)) and inserting ``The Director'';
       (13) by striking ``the Board's'' each place such term 
     appears in such Act and inserting ``the Director's'';
       (14) by striking ``The Board's'' each place such term 
     appears in such Act and inserting ``The Director's'';
       (15) by striking ``the Finance Board'' each place such term 
     appears in such Act and inserting ``the Director'';
       (16) by striking ``Federal Housing Finance Board'' each 
     place such term appears and inserting ``Director'';
       (17) in section 11(i) (12 U.S.C. 1431(i), by striking ``the 
     Chairperson of''; and
       (18) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), by 
     striking ``Chairperson of the''.

     SEC. 204. JOINT ACTIVITIES OF BANKS.

       Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 
     1431) is amended by adding at the end the following new 
     subsection:
       ``(l) Joint Activities.--Subject to the regulation of the 
     Director, any two or more Federal Home Loan Banks may 
     establish a joint office for the purpose of performing 
     functions for, or providing services to, the Banks on a 
     common or collective basis, or may require that the Office of 
     Finance perform such functions or services, but only if the 
     Banks are otherwise authorized to perform such functions or 
     services individually.''.

     SEC. 205. SHARING OF INFORMATION BETWEEN FEDERAL HOME LOAN 
                   BANKS.

       (a) In General.--The Federal Home Loan Bank Act is amended 
     by inserting after section 20 (12 U.S.C. 1440) the following 
     new section:

     ``SEC. 20A. SHARING OF INFORMATION BETWEEN FEDERAL HOME LOAN 
                   BANKS.

       ``(a) Regulatory Authority.--The Director shall prescribe 
     such regulations as may be necessary to ensure that each 
     Federal Home Loan Bank has access to information that the 
     Bank needs to determine the nature and extent of its joint 
     and several liability.
       ``(b) No Waiver of Privilege.--The Director shall not be 
     deemed to have waived any privilege applicable to any 
     information concerning a Federal Home Loan Bank by 
     transferring, or permitting the transfer of, that information 
     to any other Federal Home Loan Bank for the purpose of 
     enabling the recipient to evaluate the nature and extent of 
     its joint and several liability.''.
       (b) Regulations.--The regulations required under the 
     amendment made by subsection (a) shall be issued in final 
     form not later than 6 months after the effective date under 
     section 211 of this Act.

     SEC. 206. REORGANIZATION OF BANKS AND VOLUNTARY MERGER.

       Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 
     1446) is amended--
       (1) by inserting ``(a) Reorganization.--'' before 
     ``Whenever''; and
       (2) by striking ``liquidated or'' each place such phrase 
     appears;
       (3) by striking ``liquidation or''; and
       (4) by adding at the end the following new subsection:
       ``(b) Voluntary Mergers.--Any two or more Banks may, with 
     the approval of the Director, and the approval of the boards 
     of directors of the Banks involved, merge. The Director shall 
     promulgate regulations establishing the conditions and 
     procedures for the consideration and approval of any such 
     voluntary merger, including the procedures for Bank member 
     approval.''.

     SEC. 207. SECURITIES AND EXCHANGE COMMISSION DISCLOSURE.

       (a) In General.--The Federal Home Loan Banks shall be 
     exempt from compliance with--
       (1) sections 13(e), 14(a), 14(c), and 17A of the Securities 
     Exchange Act of 1934 and related Commission regulations; and
       (2) section 15 of that Act and related Securities and 
     Exchange Commission regulations with respect to transactions 
     in capital stock of the Banks.
       (b) Member Exemption.--The members of the Federal Home Loan 
     Banks shall be exempt from compliance with sections 13(d), 
     13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of 
     1934 and related Securities and Exchange Commission 
     regulations with respect to their ownership of, or 
     transactions in, capital stock of the Federal Home Loan 
     Banks.
       (c) Exempted and Government Securities.--
       (1) Capital stock.--The capital stock issued by each of the 
     Federal Home Loan Banks under section 6 of the Federal Home 
     Loan Bank Act are--

[[Page H5414]]

       (A) exempted securities within the meaning of section 
     3(a)(2) of the Securities Act of 1933; and
       (B) ``exempted securities'' within the meaning of section 
     3(a)(12)(A) of the Securities Exchange Act of 1934.
       (2) Other obligations.--The debentures, bonds, and other 
     obligations issued under section 11 of the Federal Home Loan 
     Bank Act are--
       (A) exempted securities within the meaning of section 
     3(a)(2) of the Securities Act of 1933;
       (B) ``government securities'' within the meaning of section 
     3(a)(42) of the Securities Exchange Act of 1934;
       (C) excluded from the definition of ``government securities 
     broker'' within section 3(a)(43) of the Securities Exchange 
     Act of 1934;
       (D) excluded from the definition of ``government securities 
     dealer'' within section 3(a)(44) of the Securities Exchange 
     Act of 1934; and
       (E) ``government securities'' within the meaning of section 
     2(a)(16) of the Investment Company Act of 1940.
       (d) Exemption From Reporting Requirements.--The Federal 
     Home Loan Banks shall be exempt from periodic reporting 
     requirements pertaining to--
       (1) the disclosure of related party transactions that occur 
     in the ordinary course of business of the Banks with their 
     members; and
       (2) the disclosure of unregistered sales of equity 
     securities.
       (e) Tender Offers.--The Securities and Exchange 
     Commission's rules relating to tender offers shall not apply 
     in connection with transactions in capital stock of the 
     Federal Home Loan Banks.
       (f) Regulations.--In issuing any final regulations to 
     implement provisions of this section, the Securities and 
     Exchange Commission shall consider the distinctive 
     characteristics of the Federal Home Loan Banks when 
     evaluating the accounting treatment with respect to the 
     payment to Resolution Funding Corporation, the role of the 
     combined financial statements of the twelve Banks, the 
     accounting classification of redeemable capital stock, and 
     the accounting treatment related to the joint and several 
     nature of the obligations of the Banks.

     SEC. 208. COMMUNITY FINANCIAL INSTITUTION MEMBERS.

       (a) Total Asset Requirement.--Paragraph (10) of section 2 
     of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so 
     redesignated by section 201(3) of this Act, is amended by 
     striking ``$500,000,000'' each place such term appears and 
     inserting ``$1,000,000,000''.
       (b) Use of Advances for Community Development Activities.--
     Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 
     1430(a)) is amended--
       (1) in paragraph (2)(B)--
       (A) by striking ``and''; and
       (B) by inserting ``, and community development activities'' 
     before the period at the end;
       (2) in paragraph (3)(E), by inserting ``or community 
     development activities'' after ``agriculture,''; and
       (3) in paragraph (6)--
       (A) by striking ``and''; and
       (B) by inserting ``, and `community development activities' 
     '' before ``shall''.

     SEC. 209. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Right to Financial Privacy Act of 1978.--Section 
     1113(o) of the Right to Financial Privacy Act of 1978 (12 
     U.S.C. 3413(o)) is amended--
       (1) by striking ``Federal Housing Finance Board'' and 
     inserting ``Federal Housing Finance Agency''; and
       (2) by striking ``Federal Housing Finance Board's'' and 
     inserting ``Federal Housing Finance Agency's''.
       (b) Riegle Community Development and Regulatory Improvement 
     Act of 1994.--Section 117(e) of the Riegle Community 
     Development and Regulatory Improvement Act of 1994 (12 U.S.C. 
     4716(e)) is amended by striking ``Federal Housing Finance 
     Board'' and inserting ``Federal Housing Finance Agency''.
       (c) Title 18, United States Code.--Title 18, United States 
     Code, is amended by striking ``Federal Housing Finance 
     Board'' each place such term appears in each of sections 212, 
     657, 1006, 1014, and inserting ``Federal Housing Finance 
     Agency''.
       (d) MAHRA Act of 1997.--Section 517(b)(4) of the 
     Multifamily Assisted Housing Reform and Affordability Act of 
     1997 (42 U.S.C. 1437f note) is amended by striking ``Federal 
     Housing Finance Board'' and inserting ``Federal Housing 
     Finance Agency''.
       (e) Title 44, United States Code.--Section 3502(5) of title 
     44, United States Code, is amended by striking ``Federal 
     Housing Finance Board'' and inserting ``Federal Housing 
     Finance Agency''.
       (f) Access to Local TV Act of 2000.--Section 
     1004(d)(2)(D)(iii) of the Launching Our Communities' Access 
     to Local Television Act of 2000 (47 U.S.C. 
     1103(d)(2)(D)(iii)) is amended by striking ``Office of 
     Federal Housing Enterprise Oversight, the Federal Housing 
     Finance Board'' and inserting ``Federal Housing Finance 
     Agency''.
       (g) Sarbanes-Oxley Act of 2002.--Section 
     105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 
     U.S.C. 7215(B)(5)(b)(ii)(II)) is amended by inserting ``and 
     the Director of the Federal Housing Finance Agency'' after 
     ``Commission,''.

     SEC. 210. STUDY OF AFFORDABLE HOUSING PROGRAM USE FOR LONG-
                   TERM CARE FACILITIES.

       The Comptroller General shall conduct a study of the use of 
     affordable housing programs of the Federal home loan banks 
     under section 10(j) of the Federal Home Loan Bank Act to 
     determine how and the extent to which such programs are used 
     to assist long-term care facilities for low- and moderate-
     income individuals, and the effectiveness and adequacy of 
     such assistance in meeting the needs of affected communities. 
     The study shall examine the applicability of such use to the 
     affordable housing programs required to be established by the 
     enterprises pursuant to the amendment made by section 139 of 
     this Act. The Comptroller General shall submit a report to 
     the Director of the Federal Housing Finance Agency and the 
     Congress regarding the results of the study not later than 
     the expiration of the 1-year period beginning on the date of 
     the enactment of this Act. This section shall take effect on 
     the date of the enactment of this Act.

     SEC. 211. EFFECTIVE DATE.

       Except as specifically provided otherwise in this title, 
     this title shall take effect on and the amendments made by 
     this title shall take effect on, and shall apply beginning 
     on, the expiration of the 6-month period beginning on the 
     date of the enactment of this Act.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF 
 FEDERAL HOUSING ENTERPRISE OVERSIGHT, FEDERAL HOUSING FINANCE BOARD, 
            AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

       Subtitle A--Office of Federal Housing Enterprise Oversight

     SEC. 301. ABOLISHMENT OF OFHEO.

       (a) In General.--Effective at the end of the 6-month period 
     beginning on the date of the enactment of this Act, the 
     Office of Federal Housing Enterprise Oversight of the 
     Department of Housing and Urban Development and the positions 
     of the Director and Deputy Director of such Office are 
     abolished.
       (b) Disposition of Affairs.--During the 6-month period 
     beginning on the date of the enactment of this Act, the 
     Director of the Office of Federal Housing Enterprise 
     Oversight shall, for the purpose of winding up the affairs of 
     the Office of Federal Housing Enterprise Oversight and in 
     addition to carrying out its other responsibilities under 
     law--
       (1) manage the employees of such Office and provide for the 
     payment of the compensation and benefits of any such employee 
     which accrue before the effective date of the transfer of 
     such employee pursuant to section 303; and
       (2) may take any other action necessary for the purpose of 
     winding up the affairs of the Office.
       (c) Status of Employees Before Transfer.--The amendments 
     made by title I and the abolishment of the Office of Federal 
     Housing Enterprise Oversight under subsection (a) of this 
     section may not be construed to affect the status of any 
     employee of such Office as employees of an agency of the 
     United States for purposes of any other provision of law 
     before the effective date of the transfer of any such 
     employee pursuant to section 303.
       (d) Use of Property and Services.--
       (1) Property.--The Director of the Federal Housing Finance 
     Agency may use the property of the Office of Federal Housing 
     Enterprise Oversight to perform functions which have been 
     transferred to the Director of the Federal Housing Finance 
     Agency for such time as is reasonable to facilitate the 
     orderly transfer of functions transferred pursuant to any 
     other provision of this Act or any amendment made by this Act 
     to any other provision of law.
       (2) Agency services.--Any agency, department, or other 
     instrumentality of the United States, and any successor to 
     any such agency, department, or instrumentality, which was 
     providing supporting services to the Office of Federal 
     Housing Enterprise Oversight before the expiration of the 
     period under subsection (a) in connection with functions that 
     are transferred to the Director of the Federal Housing 
     Finance Agency shall--
       (A) continue to provide such services, on a reimbursable 
     basis, until the transfer of such functions is complete; and
       (B) consult with any such agency to coordinate and 
     facilitate a prompt and reasonable transition.
       (e) Savings Provisions.--
       (1) Existing rights, duties, and obligations not 
     affected.--Subsection (a) shall not affect the validity of 
     any right, duty, or obligation of the United States, the 
     Director of the Office of Federal Housing Enterprise 
     Oversight, or any other person, which--
       (A) arises under or pursuant to the title XIII of the 
     Housing and Community Development Act of 1992, the Federal 
     National Mortgage Association Charter Act, the Federal Home 
     Loan Mortgage Corporation Act, or any other provision of law 
     applicable with respect to such Office; and
       (B) existed on the day before the abolishment under 
     subsection (a) of this section.
       (2) Continuation of suits.--No action or other proceeding 
     commenced by or against the Director of the Office of Federal 
     Housing Enterprise Oversight in connection with functions 
     that are transferred to the Director of the Federal Housing 
     Finance Agency shall abate by reason of the enactment of this 
     Act, except that the Director of the Federal Housing Finance 
     Agency shall be substituted for the Director of the Office of 
     Federal Housing Enterprise Oversight as a party to any such 
     action or proceeding.

     SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN 
                   REGULATIONS.

       All regulations, orders, determinations, and resolutions 
     that--
       (1) were issued, made, prescribed, or allowed to become 
     effective by--
       (A) the Office of Federal Housing Enterprise Oversight; or
       (B) a court of competent jurisdiction and that relate to 
     functions transferred by this subtitle; and
       (2) are in effect on the date of the abolishment under 
     section 301(a) of this Act, shall remain in effect according 
     to the terms of such regulations, orders, determinations, and 
     resolutions,

[[Page H5415]]

     and shall be enforceable by or against the Director of the 
     Federal Housing Finance Agency until modified, terminated, 
     set aside, or superseded in accordance with applicable law by 
     such Director, as the case may be, any court of competent 
     jurisdiction, or operation of law.

     SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

       (a) Transfer.--Each employee of the Office of Federal 
     Housing Enterprise Oversight shall be transferred to the 
     Federal Housing Finance Agency for employment no later than 
     the date of the abolishment under section 301(a) of this Act 
     and such transfer shall be deemed a transfer of function for 
     purposes of section 3503 of title 5, United States Code.
       (b) Guaranteed Positions.--Each employee transferred under 
     subsection (a) shall be guaranteed a position with the same 
     status, tenure, grade, and pay as that held on the day 
     immediately preceding the transfer. Each such employee 
     holding a permanent position shall not be involuntarily 
     separated or reduced in grade or compensation for 12 months 
     after the date of transfer, except for cause or, if the 
     employee is a temporary employee, separated in accordance 
     with the terms of the appointment.
       (c) Appointment Authority for Excepted Service Employees.--
       (1) In general.--In the case of employees occupying 
     positions in the excepted service, any appointment authority 
     established pursuant to law or regulations of the Office of 
     Personnel Management for filling such positions shall be 
     transferred, subject to paragraph (2).
       (2) Decline of transfer.--The Director of the Federal 
     Housing Finance Agency may decline a transfer of authority 
     under paragraph (1) (and the employees appointed pursuant 
     thereto) to the extent that such authority relates to 
     positions excepted from the competitive service because of 
     their confidential, policy-making, policy-determining, or 
     policy-advocating character.
       (d) Reorganization.--If the Director of the Federal Housing 
     Finance Agency determines, after the end of the 1-year period 
     beginning on the date of the abolishment under section 
     301(a), that a reorganization of the combined work force is 
     required, that reorganization shall be deemed a major 
     reorganization for purposes of affording affected employees 
     retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 
     5, United States Code.
       (e) Employee Benefit Programs.--Any employee of the Office 
     of Federal Housing Enterprise Oversight accepting employment 
     with the Director of the Federal Housing Finance Agency as a 
     result of a transfer under subsection (a) may retain for 12 
     months after the date such transfer occurs membership in any 
     employee benefit program of the Federal Housing Finance 
     Agency or the Office of Federal Housing Enterprise Oversight, 
     as applicable, including insurance, to which such employee 
     belongs on the date of the abolishment under section 301(a) 
     if--
       (1) the employee does not elect to give up the benefit or 
     membership in the program; and
       (2) the benefit or program is continued by the Director of 
     the Federal Housing Finance Agency,
     The difference in the costs between the benefits which would 
     have been provided by such agency and those provided by this 
     section shall be paid by the Director of the Federal Housing 
     Finance Agency. If any employee elects to give up membership 
     in a health insurance program or the health insurance program 
     is not continued by such Director, the employee shall be 
     permitted to select an alternate Federal health insurance 
     program within 30 days of such election or notice, without 
     regard to any other regularly scheduled open season.

     SEC. 304. TRANSFER OF PROPERTY AND FACILITIES.

       Upon the abolishment under section 301(a), all property of 
     the Office of Federal Housing Enterprise Oversight shall 
     transfer to the Director of the Federal Housing Finance 
     Agency.

               Subtitle B--Federal Housing Finance Board

     SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.

       (a) In General.--Effective at the end of the 6-month period 
     beginning on the date of enactment of this Act, the Federal 
     Housing Finance Board (in this title referred to as the 
     ``Board'') is abolished.
       (b) Disposition of Affairs.--During the 6-month period 
     beginning on the date of enactment of this Act, the Board, 
     for the purpose of winding up the affairs of the Board and in 
     addition to carrying out its other responsibilities under 
     law--
       (1) shall manage the employees of such Board and provide 
     for the payment of the compensation and benefits of any such 
     employee which accrue before the effective date of the 
     transfer of such employee under section 323; and
       (2) may take any other action necessary for the purpose of 
     winding up the affairs of the Board.
       (c) Status of Employees Before Transfer.--The amendments 
     made by titles I and II and the abolishment of the Board 
     under subsection (a) may not be construed to affect the 
     status of any employee of such Board as employees of an 
     agency of the United States for purposes of any other 
     provision of law before the effective date of the transfer of 
     any such employee under section 323.
       (d) Use of Property and Services.--
       (1) Property.--The Director of the Federal Housing Finance 
     Agency may use the property of the Board to perform functions 
     which have been transferred to the Director of the Federal 
     Housing Finance Agency for such time as is reasonable to 
     facilitate the orderly transfer of functions transferred 
     under any other provision of this Act or any amendment made 
     by this Act to any other provision of law.
       (2) Agency services.--Any agency, department, or other 
     instrumentality of the United States, and any successor to 
     any such agency, department, or instrumentality, which was 
     providing supporting services to the Board before the 
     expiration of the period under subsection (a) in connection 
     with functions that are transferred to the Director of the 
     Federal Housing Finance Agency shall--
       (A) continue to provide such services, on a reimbursable 
     basis, until the transfer of such functions is complete; and
       (B) consult with any such agency to coordinate and 
     facilitate a prompt and reasonable transition.
       (e) Savings Provisions.--
       (1) Existing rights, duties, and obligations not 
     affected.--Subsection (a) shall not affect the validity of 
     any right, duty, or obligation of the United States, a member 
     of the Board, or any other person, which--
       (A) arises under the Federal Home Loan Bank Act or any 
     other provision of law applicable with respect to such Board; 
     and
       (B) existed on the day before the effective date of the 
     abolishment under subsection (a).
       (2) Continuation of suits.--No action or other proceeding 
     commenced by or against the Board in connection with 
     functions that are transferred to the Director of the Federal 
     Housing Finance Agency shall abate by reason of the enactment 
     of this Act, except that the Director of the Federal Housing 
     Finance Agency shall be substituted for the Board or any 
     member thereof as a party to any such action or proceeding.

     SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN 
                   REGULATIONS.

       (a) In General.--All regulations, orders, determinations, 
     and resolutions described under subsection (b) shall remain 
     in effect according to the terms of such regulations, orders, 
     determinations, and resolutions, and shall be enforceable by 
     or against the Director of the Federal Housing Finance Agency 
     until modified, terminated, set aside, or superseded in 
     accordance with applicable law by such Director, any court of 
     competent jurisdiction, or operation of law.
       (b) Applicability.--A regulation, order, determination, or 
     resolution is described under this subsection if it--
       (1) was issued, made, prescribed, or allowed to become 
     effective by--
       (A) the Board; or
       (B) a court of competent jurisdiction and relates to 
     functions transferred by this subtitle; and
       (2) is in effect on the effective date of the abolishment 
     under section 321(a).

     SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL 
                   HOUSING FINANCE BOARD.

       (a) Transfer.--Each employee of the Board shall be 
     transferred to the Federal Housing Finance Agency for 
     employment not later than the effective date of the 
     abolishment under section 321(a), and such transfer shall be 
     deemed a transfer of function for purposes of section 3503 of 
     title 5, United States Code.
       (b) Guaranteed Positions.--Each employee transferred under 
     subsection (a) shall be guaranteed a position with the same 
     status, tenure, grade, and pay as that held on the day 
     immediately preceding the transfer. Each such employee 
     holding a permanent position shall not be involuntarily 
     separated or reduced in grade or compensation for 12 months 
     after the date of transfer, except for cause or, if the 
     employee is a temporary employee, separated in accordance 
     with the terms of the appointment.
       (c) Appointment Authority for Excepted and Senior Executive 
     Service Employees.--
       (1) In general.--In the case of employees occupying 
     positions in the excepted service or the Senior Executive 
     Service, any appointment authority established under law or 
     by regulations of the Office of Personnel Management for 
     filling such positions shall be transferred, subject to 
     paragraph (2).
       (2) Decline of transfer.--The Director of the Federal 
     Housing Finance Agency may decline a transfer of authority 
     under paragraph (1) to the extent that such authority relates 
     to positions excepted from the competitive service because of 
     their confidential, policymaking, policy-determining, or 
     policy-advocating character, and noncareer positions in the 
     Senior Executive Service (within the meaning of section 
     3132(a)(7) of title 5, United States Code).
       (d) Reorganization.--If the Director of the Federal Housing 
     Finance Agency determines, after the end of the 1-year period 
     beginning on the effective date of the abolishment under 
     section 321(a), that a reorganization of the combined 
     workforce is required, that reorganization shall be deemed a 
     major reorganization for purposes of affording affected 
     employees retirement under section 8336(d)(2) or 
     8414(b)(1)(B) of title 5, United States Code.
       (e) Employee Benefit Programs.--
       (1) In general.--Any employee of the Board accepting 
     employment with the Federal Housing Finance Agency as a 
     result of a transfer under subsection (a) may retain for 12 
     months after the date on which such transfer occurs 
     membership in any employee benefit program of the Federal 
     Housing Finance Agency or the Board, as applicable, including 
     insurance, to which such employee belongs on the effective 
     date of the abolishment under section 321(a) if--
       (A) the employee does not elect to give up the benefit or 
     membership in the program; and
       (B) the benefit or program is continued by the Director of 
     the Federal Housing Finance Agency.
       (2) Cost differential.--The difference in the costs between 
     the benefits which would have been provided by the Board and 
     those provided by this section shall be paid by the Director 
     of the Federal Housing Finance Agency. If any employee elects 
     to give up membership in a health insurance program or the 
     health insurance program is not continued by such Director,

[[Page H5416]]

     the employee shall be permitted to select an alternate 
     Federal health insurance program within 30 days after such 
     election or notice, without regard to any other regularly 
     scheduled open season.

     SEC. 324. TRANSFER OF PROPERTY AND FACILITIES.

       Upon the effective date of the abolishment under section 
     321(a), all property of the Board shall transfer to the 
     Director of the Federal Housing Finance Agency.

        Subtitle C--Department of Housing and Urban Development

     SEC. 341. TERMINATION OF ENTERPRISE-RELATED FUNCTIONS.

       (a) Termination Date.--For purposes of this subtitle, the 
     term ``termination date'' means the date that occurs 6 months 
     after the date of the enactment of this Act.
       (b) Determination of Transferred Functions and Employees.--
       (1) In general.--Not later than the expiration of the 3-
     month period beginning on the date of the enactment of this 
     Act, the Secretary, in consultation with the Director of the 
     Office of Federal Housing Enterprise Oversight, shall 
     determine--
       (A) the functions, duties, and activities of the Secretary 
     of Housing and Urban Development regarding oversight or 
     regulation of the enterprises under or pursuant to the 
     authorizing statutes, title XIII of the Housing and Community 
     Development Act of 1992, and any other provisions of law, as 
     in effect before the date of the enactment of this Act, but 
     not including any such functions, duties, and activities of 
     the Director of the Office of Federal Housing Enterprise 
     Oversight of the Department of Housing and Urban Development 
     and such Office; and
       (B) the employees of the Department of Housing and Urban 
     Development necessary to perform such functions, duties, and 
     activities.
       (2) Enterprise-related functions.--For purposes of this 
     subtitle, the term ``enterprise-related functions of the 
     Department'' means the functions, duties, and activities of 
     the Department of Housing and Urban Development determined 
     under paragraph (1)(A).
       (3) Enterprise-related employees.--For purposes of this 
     subtitle, the term ``enterprise-related employees of the 
     Department'' means the employees of the Department of Housing 
     and Urban Development determined under paragraph (1)(B).
       (c) Disposition of Affairs.--During the 6-month period 
     beginning on the date of enactment of this Act, the Secretary 
     of Housing and Urban Development (in this title referred to 
     as the ``Secretary''), for the purpose of winding up the 
     affairs of the Secretary regarding the enterprise-related 
     functions of the Department of Housing and Urban Development 
     (in this title referred to as the ``Department'') and in 
     addition to carrying out the Secretary's other 
     responsibilities under law regarding such functions--
       (1) shall manage the enterprise-related employees of the 
     Department and provide for the payment of the compensation 
     and benefits of any such employee which accrue before the 
     effective date of the transfer of any such employee under 
     section 343; and
       (2) may take any other action necessary for the purpose of 
     winding up the enterprise-related functions of the 
     Department.
       (d) Status of Employees Before Transfer.--The amendments 
     made by titles I and II and the termination of the 
     enterprise-related functions of the Department under 
     subsection (b) may not be construed to affect the status of 
     any employee of the Department as employees of an agency of 
     the United States for purposes of any other provision of law 
     before the effective date of the transfer of any such 
     employee under section 343.
       (e) Use of Property and Services.--
       (1) Property.--The Director of the Federal Housing Finance 
     Agency may use the property of the Secretary to perform 
     functions which have been transferred to the Director of the 
     Federal Housing Finance Agency for such time as is reasonable 
     to facilitate the orderly transfer of functions transferred 
     under any other provision of this Act or any amendment made 
     by this Act to any other provision of law.
       (2) Agency services.--Any agency, department, or other 
     instrumentality of the United States, and any successor to 
     any such agency, department, or instrumentality, which was 
     providing supporting services to the Secretary regarding 
     enterprise-related functions of the Department before the 
     termination date under subsection (a) in connection with such 
     functions that are transferred to the Director of the Federal 
     Housing Finance Agency shall--
       (A) continue to provide such services, on a reimbursable 
     basis, until the transfer of such functions is complete; and
       (B) consult with any such agency to coordinate and 
     facilitate a prompt and reasonable transition.
       (f) Savings Provisions.--
       (1) Existing rights, duties, and obligations not 
     affected.--Subsection (a) shall not affect the validity of 
     any right, duty, or obligation of the United States, the 
     Secretary, or any other person, which--
       (A) arises under the authorizing statutes, title XIII of 
     the Housing and Community Development Act of 1992, or any 
     other provision of law applicable with respect to the 
     Secretary, in connection with the enterprise-related 
     functions of the Department; and
       (B) existed on the day before the termination date under 
     subsection (a).
       (2) Continuation of suits.--No action or other proceeding 
     commenced by or against the Secretary in connection with the 
     enterprise-related functions of the Department shall abate by 
     reason of the enactment of this Act, except that the Director 
     of the Federal Housing Finance Agency shall be substituted 
     for the Secretary or any member thereof as a party to any 
     such action or proceeding.

     SEC. 342. CONTINUATION AND COORDINATION OF CERTAIN 
                   REGULATIONS.

       (a) In General.--All regulations, orders, and 
     determinations described in subsection (b) shall remain in 
     effect according to the terms of such regulations, orders, 
     determinations, and resolutions, and shall be enforceable by 
     or against the Director of the Federal Housing Finance Agency 
     until modified, terminated, set aside, or superseded in 
     accordance with applicable law by such Director, any court of 
     competent jurisdiction, or operation of law.
       (b) Applicability.--A regulation, order, or determination 
     is described under this subsection if it--
       (1) was issued, made, prescribed, or allowed to become 
     effective by--
       (A) the Secretary; or
       (B) a court of competent jurisdiction and that relate to 
     the enterprise-related functions of the Department; and
       (2) is in effect on the termination date under section 
     341(a).

     SEC. 343. TRANSFER AND RIGHTS OF EMPLOYEES OF DEPARTMENT OF 
                   HOUSING AND URBAN DEVELOPMENT.

       (a) Transfer.--
       (1) In general.--Except as provided in paragraph (2), each 
     enterprise-related employee of the Department shall be 
     transferred to the Federal Housing Finance Agency for 
     employment not later than the termination date under section 
     341(a) and such transfer shall be deemed a transfer of 
     function for purposes of section 3503 of title 5, United 
     States Code.
       (2) Authority to decline.--An enterprise-related employee 
     of the Department may, in the discretion of the employee, 
     decline transfer under paragraph (1) to a position in the 
     Federal Housing Finance Agency and shall be guaranteed a 
     position in the Department with the same status, tenure, 
     grade, and pay as that held on the day immediately preceding 
     the date that such declination was made. Each such employee 
     holding a permanent position shall not be involuntarily 
     separated or reduced in grade or compensation for 12 months 
     after the date that the transfer would otherwise have 
     occurred, except for cause or, if the employee is a temporary 
     employee, separated in accordance with the terms of the 
     appointment.
       (b) Guaranteed Positions.--Each enterprise-related employee 
     of the Department transferred under subsection (a) shall be 
     guaranteed a position with the same status, tenure, grade, 
     and pay as that held on the day immediately preceding the 
     transfer. Each such employee holding a permanent position 
     shall not be involuntarily separated or reduced in grade or 
     compensation for 12 months after the date of transfer, except 
     for cause or, if the employee is a temporary employee, 
     separated in accordance with the terms of the appointment.
       (c) Appointment Authority for Excepted and Senior Executive 
     Service Employees.--
       (1) In general.--In the case of employees occupying 
     positions in the excepted service or the Senior Executive 
     Service, any appointment authority established under law or 
     by regulations of the Office of Personnel Management for 
     filling such positions shall be transferred, subject to 
     paragraph (2).
       (2) Decline of transfer.--The Director of the Federal 
     Housing Finance Agency may decline a transfer of authority 
     under paragraph (1) (and the employees appointed pursuant 
     thereto) to the extent that such authority relates to 
     positions excepted from the competitive service because of 
     their confidential, policymaking, policy-determining, or 
     policy-advocating character, and noncareer positions in the 
     Senior Executive Service (within the meaning of section 
     3132(a)(7) of title 5, United States Code).
       (d) Reorganization.--If the Director of the Federal Housing 
     Finance Agency determines, after the end of the 1-year period 
     beginning on the termination date under section 341(a), that 
     a reorganization of the combined workforce is required, that 
     reorganization shall be deemed a major reorganization for 
     purposes of affording affected employees retirement under 
     section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 
     Code.
       (e) Employee Benefit Programs.--
       (1) In general.--Any enterprise-related employee of the 
     Department accepting employment with the Federal Housing 
     Finance Agency as a result of a transfer under subsection (a) 
     may retain for 12 months after the date on which such 
     transfer occurs membership in any employee benefit program of 
     the Federal Housing Finance Agency or the Department, as 
     applicable, including insurance, to which such employee 
     belongs on the termination date under section 341(a) if--
       (A) the employee does not elect to give up the benefit or 
     membership in the program; and
       (B) the benefit or program is continued by the Director of 
     the Federal Housing Finance Agency.
       (2) Cost differential.--The difference in the costs between 
     the benefits which would have been provided by the Department 
     and those provided by this section shall be paid by the 
     Director of the Federal Housing Finance Agency. If any 
     employee elects to give up membership in a health insurance 
     program or the health insurance program is not continued by 
     such Director, the employee shall be permitted to select an 
     alternate Federal health insurance program within 30 days 
     after such election or notice, without regard to any other 
     regularly scheduled open season.

     SEC. 344. TRANSFER OF APPROPRIATIONS, PROPERTY, AND 
                   FACILITIES.

       Upon the termination date under section 341(a), all assets, 
     liabilities, contracts, property, records, and unexpended 
     balances of appropriations, authorizations, allocations, and 
     other

[[Page H5417]]

     funds employed, held, used, arising from, available to, or to 
     be made available to the Department in connection with 
     enterprise-related functions of the Department shall transfer 
     to the Director of the Federal Housing Finance Agency. 
     Unexpended funds transferred by this section shall be used 
     only for the purposes for which the funds were originally 
     authorized and appropriated.

                 Amendment No. 12 Offered by Mr. Bachus

  Mr. BACHUS. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 12 offered by Mr. Bachus:
       Page 94, strike lines 8 and 9.
       Page 98, strike ``helpful'' in line 20 and all that follows 
     through line 22, and insert ``for''.
       Strike line 4 on page 127 and all that follows through line 
     7 on page 156.
       Page 156, lines 11 and 12, strike ``adding after section 
     1337, as added by section 139 of this Act,'' and insert 
     ``striking sections 1337 and 1338 and inserting''.
       Page 156, line 14, strike ``SEC. 1338.'' and insert ``SEC. 
     1337.''.
       Page 261, line 17, strike ``or 1337''.
       Page 268, line 10, strike ``or 1337''.
       Page 318, strike ``The study'' in line 17 and all that 
     follows through ``this Act.'' in line 20.

  Mr. BACHUS. Mr. Chairman, I yield to the gentleman from California 
(Mr. Royce).
  Mr. ROYCE. Before I begin my general statement, if I could, I would 
like to engage Chairman Frank and thank him for agreeing to engage in a 
colloquy on the receivership provision of the legislation.
  Chairman Frank, with your consent, with your consent I would like to 
introduce into the Record a statement that has been agreed to by your 
staff and by my staff, and I look forward to working on these issues 
going forward with you, and I would just yield to you for your 
affirmation.
  Mr. FRANK of Massachusetts. I thank the gentleman. First of all, let 
me say, given that our staffs have worked this out, it would be a good 
thing for neither one of us to mess it up. I have read it over. It does 
correctly reinforce the point this is not creating any new governmental 
involvement. We don't want anyone to misinterpret this.
  This is not to increase regulation, not to increase any kind of 
entitlement or entanglement. I thank the gentleman for this initiative. 
I very much agree this ought to go on the Record as something that is 
universally agreed to in the Congress.
  Mr. ROYCE. Reclaiming my time, Mr. Chairman, I rise today to express 
my opposition to H.R. 1427.
  H.R. 1427 is supposed to be legislation to reform oversight of the 
Nation's 14 housing government-sponsored enterprises. That would be our 
two GSEs, Fannie Mae, Freddie Mac and 12 Federal Home Loan Banks.
  Over the past number of years, I have worked very hard to reform 
legislation of these GSEs. I believe better oversight is needed to 
protect our Nation's housing sector from disruption should one of the 
GSEs face financial difficulty.
  I am disappointed that I will not be able to support the bill 
authored by our committee's chairman. However, to be fair, I do 
acknowledge that the chairman has added a number of positive provisions 
to this year's bill. And I would also like to thank the chairman for 
his willingness to work on improving the section on receivership.
  Improvements aside, I am deeply troubled that legislation intended to 
improve the safety and soundness of the GSEs has become a vehicle to 
redistribute wealth. The Affordable Housing Fund in this bill 
unnecessarily confiscates money from the mortgage market. I adamantly 
oppose the creation of an Affordable Housing Fund today, as I have 
since its inception.
  In 2005, I was the first Member of Congress to offer an amendment in 
a Financial Services Committee to strike the reform from GSE 
legislation. Since then, I have continuously and consistently opposed 
the housing fund in any form, shape or size. As I said over 2 years 
ago, the creation of this fund is an experiment in socialism, and 
anyone supporting its adoption is attempting to countermand the basic 
principles of free markets and limited government.
  With that expression, I will yield back to the ranking member.
  Mr. BACHUS. I thank the gentleman from California.
  Mr. Chairman, I said earlier in the debate, we do not need another 
housing program. If we determine that the 90 some-odd housing programs 
are not being effective in addressing the needs of low-income and 
middle-income Americans, then we need to first reform those programs.
  But, in passing legislation to strengthen the financial stability of 
our GSEs, we do not need at the same time to impose a $3 billion cost 
on them. Those are opposing actions.
  If we are to do it, we certainly don't need to do what we are doing 
in this bill, and that's impose it on those who depend on Freddie and 
Fannie. Those are low- and middle-income American homeowners. In fact, 
regrettably, that's what we do in this fund. While we do a lot of great 
things, we do that.
  Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the 
requisite number of words.
  I appreciate the gentleman for offering this. This is the central 
question we will be debating today, and I realize we are going to be 
debating it in a number of forums, I hope not all 17 that are offered, 
but several.
  There was a legitimate question here. I have to say I do want to 
defend my friend, the gentleman from Alabama, from my friend, the 
gentleman from California, who said that anybody who would support such 
an idea is advocating socialism. I do not think the gentleman from 
Alabama was advocating socialism when he joined 208 other Republicans 
in voting for the Housing Trust Fund 2 years ago. I think that's a 
little bit excessive.
  We have, I think, some economic disputes here. First of all, the 
notion that all of this money, $500 million, roughly 5 percent of the 
profits of the two institutions together, the notion that all of it 
will be passed along to the people who take out the mortgages, the 
banks and everybody else, incorrectly assumes that Fannie Mae and 
Freddie Mac have a degree of pricing power that virtually allows them 
to set prices however they wish.
  In fact, there was a time when they had a very large share of the 
market, and might have had such monopoly power. They no longer do. 
There is economic competition. Fannie Mae and Freddie Mac are not the 
only games in town. The notion that this will all get passed along and 
none of it go to the shareholders is faulty economics.
  In fact, this will come out of the profits of these institutions, and 
it will, I believe, reduce the return of the shareholders. Now, I think 
that's legitimate. These are institutions that receive significant 
benefits because of various Federal laws and the way those laws are 
interpreted by the market.
  We say that they shouldn't keep all of the benefits. By the way, 
those who believe this ought not just to be opposing the Affordable 
Housing Fund. We have long had goals of, affordable housing goals, 
which dictate to Fannie Mae and Freddie Mac that they must buy certain 
kinds of loans rather than others. We have got that to the point where 
they have to give preference to people whose incomes are at 80 percent 
and medium and below. That also impinges upon the profitability of 
Fannie Mae.
  In other words, the argument is that anything that impinges on the 
argument of Fannie and Freddie will automatically be passed along to 
the home buyers. I think that's faulty economics. But if you think 
that's true, then why are you supporting, I would ask the Members on 
the other side, the housing goals.
  Why would Members be voting for the amendment offered by the 
gentleman from New Jersey, which would severely restrict the portfolio? 
Eighty-five percent of the profits of Fannie Mae are being made on the 
portfolio. Now many on the administration and many on the other side 
want to severely restrict the portfolio, reduce it or say they can only 
be used for the lowest income mortgages.
  That amendment, which many on the other side apparently plan to vote 
for, would have a far more serious impact on the profitability of 
Fannie Mae and Freddie Mac than on this housing fund by 8, 10 times as 
much. It is simply inconsistent to argue that you cannot impinge on the 
profitability of Fannie Mae and Freddie Mac without hurting the average 
mortgage buyer, and then

[[Page H5418]]

be for this much more significant impact on the profitability, and the 
economics are the same.
  The argument is no direct pass-through here. The argument is that if 
you impinge on that profitability, they will raise their prices. First 
of all, the answer is, of course, they wish. They wish they had that 
kind of pricing power. I don't think they do.
  To the extent that there is some impact, it will be far more greatly 
achieved if the amendment were to be adopted by the gentleman from New 
Jersey and other efforts to restrict the portfolio.
  The gentleman from Alabama also said we have all these other housing 
programs. No. We do not have enough programs currently being funded 
that build affordable housing for families. We have 202 for the 
elderly. We have 811 for the disabled, both of which the administration 
has tried to cut back.
  We are not building public housing. We have the voucher program. The 
voucher program, on an annual basis, adds to the demand for housing in 
a way that does not increase supply. There is not now a generally 
funded affordable housing construction program for families, for 
working people.
  So the notion, and I would challenge Members who say there is 
duplication, show me which program this duplicates. It doesn't restrict 
it to the elderly and the disabled. It is a general family affordable 
housing program. That's what we think we should get into. It does it 
without taking money from the general Treasury. It pays for itself.
  Finally, people have said, well, how is it going to be spent? We made 
this point very clear.
  In the first year, it will go to Mississippi and Louisiana State 
authorities. Subsequently, none of it will be spent until a second bill 
passes this House and the Senate, and we will collectively decide how 
to spend it. I know there are people who think the Federal Government 
should provide affordable housing. That's the only argument for this 
amendment.
  Mr. PRICE of Georgia. Mr. Chairman, I move to strike the requisite 
number of words, and I yield to my good friend from Alabama.
  Mr. BACHUS. I thank the gentleman from Georgia and I thank the 
chairman.
  I would like to briefly respond to two things that the chairman said. 
But before I do, I would like to acknowledge and thank the chairman. He 
said, in voting against this bill 2 years ago, I was not promoting and 
voting for it, I was not promoting socialism. Let me also acknowledge 
that 2 years ago, when the chairman voted for this bill, he was not 
opposing socialism. So, I think we both acknowledge that I was not 
promoting socialism, and you certainly weren't opposing socialism, nor 
are you today.
  Now, the chairman has said that this isn't going to cost anything. 
It's out of the profits. It's not going to come from homeowners, it's 
not going to come from Fannie Mae, it's not going to come from Freddie 
Mac.
  Mr. FRANK of Massachusetts. Would the gentleman yield?
  Mr. BACHUS. Yes.
  Mr. FRANK of Massachusetts. I said it would come from the 
shareholders. I didn't say it wouldn't come from Fannie Mae or Freddie 
Mac.
  Mr. BACHUS. Oh, it would come from shareholders.
  Mr. FRANK of Massachusetts. Yes.
  Mr. PRICE of Georgia. Reclaiming my time.
  I yield to the gentleman from Alabama.
  Mr. BACHUS. Let me say this, the shareholders, that's the profits of 
the company, and the profits have to be generated somewhere. This idea 
that it doesn't cost anybody anything, and there is not a cost to the 
customers of the corporations, who are homeowners, it would be, indeed, 
a historic moment in this body if we passed legislation that cost 
billions of dollars, but it didn't cost anybody anything.

                              {time}  1730

  It would probably be the first time in the history of this universe. 
And if it does happen, we should pause, because we will have figured 
out basically how to defy the principles of mathematics and economics.
  Third, the chairman mentioned Katrina, and I mentioned Katrina 
earlier in this debate, and let me point out, and I think this is 
probably conclusive evidence of why we do not need to pass a $3 billion 
additional housing fund.
  The chairman correctly said that we passed this bill before, and I 
voted for it and it had money in there for Katrina. Well, this bill 
creates $3 billion, much of which will go to Katrina. Well, it was only 
2 months ago that we appropriated $3 billion for Katrina. That is the 3 
billion that we voted for; and there is no reason to pass legislation, 
which actually passed this body, went to the President and passed 
appropriating $3 billion, and here we come appropriating another $3 
billion.
  So I will continue to say we determined we needed $3 billion when I 
voted for this bill before, and I stand by that. We didn't need $6 
billion, we needed $3 billion. That is why we voted for $3 billion. 
That is why 2 months ago we said this is what it will cost.

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