[Congressional Record (Bound Edition), Volume 151 (2005), Part 17]
[House]
[Pages 23804-23870]
[From the U.S. Government Publishing Office, www.gpo.gov]




               FEDERAL HOUSING FINANCE REFORM ACT OF 2005

  The SPEAKER pro tempore. Pursuant to House Resolution 509 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. 1461.

                              {time}  1243


                     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. 1461) to reform the regulation of certain housing-related 
Government-sponsored enterprises, and for other purposes, with Mr. 
Simpson 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.
  Under the rule, the gentleman from Ohio (Mr. Oxley) and the gentleman 
from Massachusetts (Mr. Frank) each will control 30 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).
  Mr. OXLEY. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, today the House will consider H.R. 1461, the Federal 
Housing Finance Reform Act of 2005. This legislation creates a world-
class regulator for the housing Government-Sponsored Enterprises, or 
GSEs, Fannie Mae, Freddie Mac, and the Federal home loan banks.
  Last May, the Committee on Financial Services overwhelmingly approved 
H.R. 1461 by a vote of 65 to 5.
  We have worked a long time on GSE regulatory reform. Since the 106th 
Congress, we have had over 20 hearings and received testimony from more 
than 100 witnesses on GSE-related matters. Capital Markets Subcommittee 
Chairman Baker has worked hard on these issues for many, many years. He 
should be commended for his many efforts.
  I also want to thank Housing Subcommittee Chairman Ney for taking a 
leadership role in developing the housing goals and Affordable Housing 
Fund sections of the bill, as well as our ranking member, Mr. Frank, 
for his constructive input on many of the bill's key provisions.
  The GSEs are among the largest financial institutions, with $2.5 
trillion in assets. Fannie Mae and Freddie Mac own or guarantee nearly 
half of the residential mortgage market. Eight thousand banks, thrifts, 
and credit unions have $550 billion in loans from the 12 Federal home 
loan banks. For decades the GSEs have served the housing finance system 
well.
  We have heard from some that Congress should be cautious in creating 
a GSE regulator and mindful not to harm the housing market. However, we 
are here today largely because we have learned over the past 2 years 
about multiple accounting violations and widespread corporate 
mismanagement by the GSEs, resulting in billion-dollar earnings 
restatements.

                              {time}  1245

  This has brought to light the fact that current GSE regulators lack 
many of the supervisory and enforcement powers bank regulators 
currently have. H.R. 1461 will remedy this troublesome situation by 
consolidating GSE regulation and providing all of the tools needed to 
oversee these huge, complex institutions.
  It is time for a new GSE regulator who can prevent problems from 
developing and take swift action if the problems arise, thus ensuring 
that the housing market and financial system remains strong. Some 
believe that the GSEs should be more tightly controlled. Federal 
Reserve Chairman Greenspan has called for a mandatory reduction in 
their $1.5 trillion in mortgage portfolio holdings.

[[Page 23805]]

  He is concerned about the systemic risk posed by the GSEs, based on 
investor perception that GSE debtholders are backed by the Federal 
Government. I do not take this concern lightly, nor the potential for 
any taxpayer financial liability.
  Today OFHEO can reduce a GSE's portfolio only if the company is 
already seriously undercapitalized. H.R. 1461 gives a new regulator 
broad discretionary authority to require portfolio adjustments 
depending on the circumstances at the time, even if the GSE meets 
minimum capital standards.
  Such action must be consistent with the GSE's safe and sound 
operations or mission, relying on the regulator's expertise. H.R. 1461 
strikes the right balance by fully empowering the GSE regulator, while 
at the same time allowing the GSEs to pursue their mission in the 
housing market.
  Specifically, the bill merges OFHEO, FHFB, and part of HUD into a new 
independent regulatory agency, the Federal Housing Finance Agency, to 
oversee the GSEs. It is funded by annual assessments on the GSEs, not 
subject to the congressional appropriations process. The agency is 
headed by a director appointed by the President and confirmed by the 
Senate for a 5-year term.
  There are three deputy directors for divisions of enterprise 
regulation, Federal Home Loan bank regulation, and housing. A housing 
finance oversight board advises the agency on overall strategies and 
policies, but has no executive authority. The board is comprised of the 
Secretaries of the Treasury and HUD, two appointed members and the 
director as chairman.
  The agency's director is authorized to determine minimum and risk-
based capital standards, review and adjust portfolio holdings, approve 
new programs and business activities, establish credential management 
and operation standards, take prompt corrective and enforcement 
actions, put a critically undercapitalized GSE into receivership, 
require corporate governance improvements, and hire examination and 
accounting experts.
  H.R. 1461 also greatly expands the affordable housing role of Fannie 
and Freddie. By charter, they must assist in providing mortgages for 
low- and moderate-income families. The bill includes new single-family 
and multi-family housing goals, duty to serve lower income markets and 
a new affordable housing fund with contributions from the enterprises.
  The bill establishes a fund to finance construction of houses for 
underserved people. It is modeled after the successful Affordable 
Housing Program of the Federal Home Loan Bank system. Fannie Mae and 
Freddie Mac will manage programs funded by a percentage of their after-
tax earnings, initially 3.5 percent, then 5 percent, or $450 to $650 
million annually combined.
  In comparison, CBO estimated that in 2003, GSE status provided Fannie 
Mae and Freddie Mac a $20 billion Federal subsidy, one-third of which 
was retained by stockholders and management, not passed through to 
borrowers.
  Twenty-five percent of the GSEs' contributions will go to the 
Treasury Department to help pay off REFCorp, that is the old S&L bonds, 
with the remainder going to the fund. Funds will be awarded through a 
competitive, transparent application process to for-profit builders, 
State, and local housing agencies and nonprofit organizations.
  This should result in Fannie and Freddie leading the market rather 
than lagging behind private sector lenders as HUD has found in 
promoting affordable housing for underserved communities. Moreover, a 
greater amount of the GSE subsidy will go where Congress intended.
  I intend to offer a manager's amendment that includes a number of 
important changes to the fund, which I will specify at that time.
  Mr. Chairman, H.R. 1461 is of great importance to the safety and 
soundness of the housing mission of the GSEs, as well as to the 
stability of this Nation's housing and financial system. I urge Members 
to support its passage.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself as much time 
as I may consume.
  Mr. Chairman, I agree with a great deal of what the gentleman from 
Ohio (Mr. Oxley) has said, as I agree with a great deal of what is in 
the bill. In the nature of parliamentary debate, we will be focusing on 
some specific points where I disagree, but I do not want that to 
obscure the fact that there is a great deal of agreement.
  Mr. Chairman, I yield 4\1/2\ minutes to the gentlewoman from 
California (Ms. Waters) who as ranking member of the minority on the 
Housing Subcommittee has had a major role in shaping our position and 
in the impact of the affordable housing front.
  Ms. WATERS. Mr. Chairman, I would like to thank the gentleman from 
Massachusetts (Mr. Frank) for yielding me the time and for the job he 
has done to shape this legislation.
  I would like to thank the gentleman from Ohio (Mr. Oxley) for the 
tremendous cooperation and the leadership that has been shown that 
helped to get bipartisan support for this legislation. When it left our 
committee, it was a good bill. It was a bill that even some people who 
had not wanted to support it went along with, because in the final 
analysis, it was going to bring about reform of the GSEs.
  Now, some of us know that there is a need for reform with the GSEs. 
We are concerned. We do not want them carrying debt that is not shown, 
that we do not understand, because we do not want these humongous 
general services enterprises to somehow get in trouble and we have to 
bail them out the way we did with the S&Ls.
  So despite the fact that we think there was an effort by some on the 
opposite side of the aisle to basically deal with the some of the 
arguments of the banks and savings and loans about the GSEs being too 
big, getting too retail, basically taking over their markets, we 
support reform; and we voted for the bill because we support reform.
  Because of the vision of the gentleman from Massachusetts (Mr. 
Frank), we were able to do something for working people and for poor 
people by creating this very, very special arrangement that could be 
used for the production and preservation of low-income affordable 
housing, this kind of set aside.
  It would be the after-tax profit from these GSEs that will be used to 
produce low-income housing. And so despite the fact that for years 
there has been kind of a confrontation between the GSEs and the banks 
and S&Ls about market share and all of that, we thought it made good 
sense to make sure that the GSEs were not too big, carrying too much 
debt. So this reform is good.
  But what is absolutely mind-boggling about what has happened, from 
the time the bill left committee until the time it has reached the 
floor today, is this politicizing of the fund by some of those on the 
opposite side of the aisle who never supported this fund for low- and 
moderate-income housing to begin with.
  What did they do? After the bill left committee, they decided that 
they were going to try to put some unconstitutional boundaries on 
nonprofits, and I guess profit-making organizations alike, that would 
not allow them to participate in the production of low- and moderate-
income housing no matter what the need, no matter what the crisis, if, 
in fact, they exercised their constitutional rights to assist people 
and lead people in doing voter registration.
  That is so unbelievable because, number one, it is unconstitutional. 
It is absolutely unconstitutional. This government has shown that it 
indeed supports reaching out to the citizens of this country to 
encourage them to be involved in voting and participating in this 
democracy. We have the Motor Voter Act, which says motor vehicle 
departments all over the country, when people register their vehicles, 
encourage them to vote; give them voter regulation slips; do whatever 
you can to get them involved in the political process. We are on record 
with doing that.
  And now to have those Members from the opposite side of the aisle say 
that

[[Page 23806]]

you cannot produce low-income housing if you exercise your 
constitutional right by helping people to get registered to vote is 
absolutely mind-boggling. And let me tell you what is even more mind-
boggling about this. We know that we have gone through some terrible, 
terrible times recently here in this country, down in Florida, where 
there were databases that were developed of people supposedly who had 
been incarcerated and committed felonies that were supposedly not 
allowed to vote. But it turned out to be fraudulent databases.
  We have had attempts to stop people and discourage them from voting 
by having uniformed officers question them when they come into the 
polling place. I would think that they would not want to continue with 
that kind of reputation.
  I will not vote for this bill no matter how much it is needed, as 
long as the constitutional rights are violated.
  Mr. OXLEY. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from 
Texas (Mr. Hensarling).
  Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding me 
the time. I thank the gentleman for his great leadership on this bill, 
H.R. 1461. This has clearly been a long, long time in the making. It 
has taken unbelievable negotiation, incredible legislation, incredible 
patience from our chairman. I want to congratulate the gentleman from 
Louisiana (Mr. Baker), as well, for his steadfast work, his incredible 
leadership in bringing this bill to the floor, something, frankly, that 
has been in the making for well over a decade.
  I think it would be good, Mr. Chairman, to remind people why we are 
here in the first place. For a lot of Americans they do not quite 
understand what the GSEs are, Fannie and Freddie. Admittedly they play 
a very critical role in our housing market, in helping produce what we 
now enjoy, the highest rate of homeownership in the history of America.
  But at the same time, we have given them a very special charter. We 
have given them unique government-granted benefits that we do not grant 
their competitors, and we give them these benefits so that they can 
create liquidity in the secondary mortgage market and help create the 
American Dream for so many people.
  But, unfortunately, there have been abuses, a number of abuses. We 
have now seen in recent years the largest financial restatement in 
history, dwarfing the financial restatements that we saw at Enron and 
WorldCom.
  Now, when we saw all of these accounting irregularities earlier on 
with the Enrons and WorldComs of the world, Congress was outraged. And 
Congress rightly answered with critical legislation, Sarbanes-Oxley, to 
address these types of corporate abuses.
  But all of a sudden, there seems to have been a deafening silence 
when we see Fannie and Freddie engaged in activities that with respect 
to the financial restatements rival those that I have described. And so 
these people play an incredible role in our marketplace, but we have 
given them incredible powers as well, and there must be increased 
accountability.
  So I think that this legislation takes a very significant step 
forward in bringing about a significant regulator for these 
enterprises, because we know that we have been warned by the Chairman 
of our Federal Reserve that particularly with respect to the portfolio 
holdings of their own mortgage-backed securities that this represents a 
systemic risk to our economy.
  This is not something that we can leave unregulated and unabated. And 
I think this legislation takes a very good step forward. I hope in 
conference with the other body that we can came up with something that 
will help address this. I am also concerned about their mission creep.
  Again, when we see them engaging in activities like airplane leasing 
and activities related to loan originations, and the list goes on, if 
they are going to receive government-granted benefits, we need to 
ensure that they use their charter to provide this liquidity in the 
secondary-mortgage market.
  Now we know that there is a debate over the affordable housing fund. 
Again, I would ask my colleagues from the other side of the aisle, if 
we want to create more affordable housing, why do we not go directly to 
the people who need it? Why do we not simply increase that section 8 
voucher?

                              {time}  1300

  Are we trying to have affordable housing, or are we trying to have 
affordable lobbyists and lawyers? I think we should have affordable 
housing and support the manager's amendment.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 30 seconds 
to welcome the conversion of the gentleman from Texas to an increased 
section 8 voucher program. We on our side have several times offered 
amendments to do that in the appropriations bill. I did not remember 
him as a supporter. But conversion is a great thing, and I celebrate 
it, and I look forward to the gentleman from Texas voting with us the 
next time we move to increase the section 8 voucher program. But it 
does not solve all of the problems.
  Mr. Chairman, I yield 3 minutes to the gentlewoman from California 
(Ms. Lee), someone who has been very hardworking, both on voter 
registration and on housing.
  Ms. LEE. Mr. Chairman, I want to thank the gentleman for yielding me 
time.
  I want to thank Chairman Oxley and Ranking Member Frank for their 
leadership and their really tireless efforts on this bipartisan bill 
that we reported out of committee. It is really tragic that it has 
unraveled and that the spirit of bipartisanship has been totally 
eroded.
  Sadly, Mr. Chairman, the bill that I supported, like all of us 
supported, coming out of the committee, a product that struck a fair 
balance, a fair balance between regulatory oversight and the GSEs' 
housing mission and goals, would be turned on its head and gutted by 
the undemocratic provisions of the manager's amendment that would be 
offered today.
  It is rare that this House considers housing bills, given our 
enormous housing crisis in our country. It is shameful, especially 
given those left homeless by Katrina, that our bipartisan efforts to 
support increased home ownership and wealth building through the 
creation of an affordable housing trust fund have fallen victim to the 
rights wing's ongoing assault on democracy and programs designed to 
help the poor, the elderly, the disabled, the communities of color, and 
our underserved community.
  Mr. Chairman, once again we have found ourselves in a situation where 
some of the Republicans giveth, and then they taketh away. They give us 
a vote on a housing bill, but then they ensure that it will be undercut 
by an extremist provision inserted into the manager's amendment at the 
bidding of right-wing ideologues. Then, just to ensure that these 
provisions prevail, the Republicans deny a fair vote on the Frank 
amendment to strike it.
  The nonprofit gag provision is not only extreme and undemocratic, it 
is possibly unconstitutional. It would gag nonpartisan speech and civic 
engagement and participation in our most fundamental of democratic 
activities.
  Let us be clear about the exact consequences of this outrageous gag 
provision. It prohibits nonprofits that build affordable housing from 
engaging in nonpartisan voter registration. It prohibits nonprofits 
from engaging in nonpartisan get-out-to-vote efforts. It prohibits 
nonprofits from engaging in nonpartisan election activities period.
  What does that mean? For example, it means a preacher whose church 
received affordable housing funds would be prohibited from calling on 
his parishioners to vote or even identify voting locations. It means 
that residents of a building constructed with affordable housing funds 
will not be able to host a debate or an election watch party if their 
housing units are affiliated with the supportive housing program.
  These measures are unconscionable. They hurt the very people we are 
trying to help, the poor, the low-income communities, the elderly, the 
disabled and our underserved communities.
  Mr. Chairman, it is a testament to just how far right this House has 
tilted

[[Page 23807]]

that the gentleman from Massachusetts and Democrats have been denied a 
fair vote. That is all we ask for is a fair vote on this critical issue 
that goes to the core of our democracy and has such dire consequences 
for our communities. This is un-American. It is shameful. And I am left 
with no choice but to reject the extreme provisions of this amendment.
  Mr. OXLEY. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Ohio (Ms. Pryce).
  Ms. PRYCE of Ohio. Mr. Chairman, I would like to congratulate the 
chairman and Mr. Baker and Mr. Frank and Mr. Ney and the many Members 
who have worked so hard on this issue for years now.
  This is a strong bill that creates a world-class regulator for Fannie 
Mae, Freddie Mac and the Federal home loan bank at a time when one is 
much needed.
  I rise today, Mr. Chairman, because I am concerned about specific 
provisions in the manager's amendment which could have unintended 
consequences on members of our senior population and the ability of 
nonprofits to work together to serve low-income communities. 
Specifically, Mr. Chairman, I would like to receive some assurance from 
you that you will work with me on these issues as we move toward a 
final bill in conference. And first I would like to work to clarify 
language in the amendment so it does not disqualify nonprofits from 
participating in the Affordable Housing Fund if they transport their 
own senior housing residents to the polls. That is with the 
understanding that many of these seniors have no other option to get to 
the polls but for their own nursing home's transportation facilities.
  Mr. OXLEY. Mr. Chairman, will the gentlewoman yield?
  Ms. PRYCE of Ohio. I yield to the gentleman from Ohio.
  Mr. OXLEY. I look forward to working with the gentlewoman on that 
issue.
  Ms. PRYCE of Ohio. I thank you very much, Mr. Chairman.
  Secondly, I would like to see clarification that the intention of the 
language in the manager's amendment pertaining to ``overlapping board 
membership'' was not to disallow single individuals from serving on the 
board of two organizations. Rather, the language was sought to 
disqualify affiliated organizations from participating in the fund 
where clear control of one organization is maintained by another which 
is participating in election activities.
  Mr. OXLEY. I look forward to clarifying this language with the help 
of the gentlewoman from Ohio.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 1 minute. I 
would be glad to yield the gentlewoman from Ohio further time to point 
out the weaknesses in the manager's amendment. I share her appreciation 
of the extremely excessive language there. I think she is more 
optimistic than I about some of these little tweaks, but I do 
appreciate her understanding of its problems.
  There are further problems, and there are other ways that we will get 
at it, but I welcome the gentlewoman's expression of disagreement with 
the extreme sweep of the manager's amendment.
  Ms. PRYCE of Ohio. I am not in need of any further time, and I thank 
the chairman for his understanding of these issues.
  Mr. FRANK of Massachusetts. When the gentlewoman says she is not in 
need of further time, I think she is being very kind to her colleagues 
in the Republican Study Committee. She is being very kind to our 
colleagues who miswrote this amendment.
  The only thing that I would differ with the gentlewoman is she said 
there are unintended consequences. No, to her they are unintended. To 
the people who think poor people vote too much, they were intended. But 
we can work together to fix it.
  Mr. Chairman, I yield 3 minutes to the gentleman from Pennsylvania 
(Mr. Kanjorski), the ranking member of the subcommittee of jurisdiction 
here, who has been one of the major architects of what we believe is 
mostly a very good piece of legislation.
  Mr. KANJORSKI. Mr. Chairman, the Committee on Financial Services has 
studied the need to reform the regulation of housing Government-
Sponsored Enterprises for nearly 6 years.
  Since convening our first government hearing on GSE reform in March 
2000, we have examined these matters extensively. As the ranking 
Democratic member on the subcommittee of jurisdiction, I have also had 
the opportunity to participate in more than 20 hearings and to hear 
scores of witnesses.
  The legislation to address these matters that the Committee on 
Financial Services ultimately reported earlier this year was a very, 
very good piece of legislation. It would, as long as I have advocated, 
created a strong, world-class, independent regulatory for housing GSEs. 
The bill also received the overwhelming backing of my colleagues on the 
committee, passing by a vote of 65 to 5.
  While I still believe this base legislative package is a good bill, I 
am concerned about some of the amendments that we will debate today. 
For example, the manager's amendment that we will shortly consider will 
add a number of new provisions that will severely restrict the ability 
of faith-based groups to participate in the new Affordable Housing Fund 
created by this bill and to participate in our democracy.
  These changes are controversial, unconstitutional, and immoral. These 
revisions which were not previously debated in committee, which have 
generated considerable disagreement, deserve close scrutiny. Because 
the rule does not allow a clean vote to remove these troubling 
provisions from the legislation, I must regretfully oppose this bill on 
final passage.
  Beyond the concerns I have with the manager's amendment, I have 
concerns about those amendments which would alter the delicate balance 
we crafted in committee to create a strong, world-class, and 
independent safety and soundness regulator for GSEs. These amendments, 
which I will oppose, would remove the Treasury line of credit for the 
GSEs, impose capital standards based on competition rather than risk, 
create arbitrary limitations on GSE portfolios for reasons other than 
safety and soundness, and alter provisions of the bill that will help 
middle-income families purchase homes in high-cost areas.
  Still, there are also a number of good amendments which I will 
support, including my own amendment to restore the Presidential and 
regulatory board appointment systems for the GSEs.
  I hope all of my colleagues will support this target amendment to 
retain an independent public voice on Government-Sponsored Enterprise 
boards. This amendment also has the support of the National Association 
of Home Builders and the National Association of Realtors.
  In closing, Mr. Chairman, while this bill has many admirable aspects, 
the process by which we have brought it to the floor is flawed. As a 
result, I will oppose this bill at the end of the day, but hope to work 
to improve the legislation as it moves on in the process.
  Mr. BAKER. Mr. Chairman, I yield 2 minutes to the gentleman from New 
Jersey (Mr. Garrett), who was an instrumental participant in the 
construction of the reform legislation under consideration.
  Mr. GARRETT of New Jersey. Mr. Chairman, I rise today to compliment 
both Chairman Baker and Chairman Oxley for their work in order to put 
together a bill that the main purpose which is to regulate and 
strengthen the regulation of Fannie Mae and Freddie Mac.
  If anyone here questions the need for additional remedies such as 
regulations, all we have to do is look at a brief history going back a 
couple of years of these two entities.
  Back in January of 2003, Freddie Mac issued a press release and 
stated it will issue an unaudited statement of earnings for the year 
2002 and restate accounting results for prior years.
  November of the next year, November 2003, Freddie issues a 
restatement of past accounting results for the year 2000, 2001, 2002, 
and revises its net earnings upwards by $4.4 billion that they were off 
in their records.

[[Page 23808]]

  September of 2004, OFHEO makes public a report highly critical of 
accounting methods of Fannie Mae. November of 2004, Fannie announces 
that it is unable again to file a third-quarter earning statement 
because its auditor, KPMG, refused to sign off on the accounting 
results.
  December of 2004, the Securities and Exchange Commission, the SEC, 
issues a statement supporting OFHEO's report and orders Fannie to 
restate its financial results. Again, in December of 2004, the Fannie 
CEO Franklin Raines and CFO Tim Howard have to resign from those 
entities.
  Finally, in June of 2005, after 3 years, finally Freddie issues its 
first audited annual report since the year 2002. And now we are here in 
October, and we look back about a week or so ago, and press reports are 
out again suggesting that investigators have uncovered again new 
accounting violations of Fannie Mae, possibly including overvalued 
assets, underreported credit losses, and misused tax credits.
  Mr. Chairman, if there was ever a need of entities that need 
additional regulation, it is Fannie Mae and Freddie Mac. If there are 
ever two entities that need to be limited in their size, it is these 
two entities. If there were every two entities that need not grow, it 
is these two entities. I applaud the chairmen for their work to 
regulate them.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 3 minutes to the 
gentleman from Georgia (Mr. Lewis). Since this is a bill which in its 
form in the manager's amendment would interfere with voter registration 
efforts, there can be no more appropriate speaker on our side than the 
gentleman from Georgia, who, 40 years ago and more, literally risked 
his life to advance the rights of people to vote. And I do not think he 
will be deterred any more today than he was by Bull Connor.
  Mr. LEWIS of Georgia. Mr. Chairman, I want to thank my friend and my 
colleague from Massachusetts for yielding me time.
  Today we should be doing one thing, providing housing for people who 
need it. I must tell you, Mr. Chairman, I am deeply disturbed that we 
would add language to this bill to prohibit nonprofit organizations and 
groups, churches, synagogues, mosques, from engaging in civic 
participation, activity like nonpartisan voter regulation and get-out-
the-vote drives. That is wrong. That is dead wrong.
  The right to vote, the right to participate in the democratic process 
in our country is almost sacred. The churches, the synagogues, 
religious institutions, nonprofits have a long history of being 
involved in efforts to get people to participate, to register and to 
vote.

                              {time}  1315

  Many faith-based groups will be prohibited from providing housing to 
people who desperately need it, simply because part of their moral 
mission is to encourage people to vote, to become participants in a 
democratic process. This provision would stifle people and 
organizations from engaging in their civic responsibilities.
  These groups are engaging in lawful, nonpartisan, civic activity, and 
I cannot believe that in 2005, this is not 1964, this is not 1965, this 
is not the OEO. This is not going back to the Nixon administration. 
What are we saying to the people around the world, telling the people 
in Iraq they can register, they can vote, they can participate, but we 
are saying here in America that our own people, nonprofit, churches, 
synagogues, faith-based groups cannot engage in nonpartisan voter 
registration and voter turnout? What kind of example are we sending for 
an emerging democracy?
  Voter identification, voter registration and get-out-the-vote 
activities are fundamental activities protected by the first amendment, 
the cornerstone of our democracy.
  To strengthen our democracy, we need to increase voter registration 
and increase voter turnout. We must promote these activities, not 
discourage them or penalize people for engaging in them.
  This provision will take us back to the dark past. This is 
undemocratic and unconstitutional. In my estimation, it is dead wrong. 
We can do better, much better.
  Mr. BAKER. Mr. Chairman, I yield myself such time as I may consume.
  I think it important to realize how we came to this point with just 
the briefest of look-backs over historical performance of the three 
enterprises that will be subject to the new regulatory standards.
  In May of 1996, both HUD and the Treasury agencies issued reports to 
the committee which were suggestive of reforms which ought to be 
considered and adopted by the Congress, to which the then-acting Vice 
President for Corporate Relations at Fannie Mae made the following 
professional comment: ``This is the work of economic pencil brains who 
wouldn't recognize something that works for ordinary home buyers if it 
bit them in their erasers.''
  To which the CBO responded to the criticisms: Not only do the 
managements of Fannie Mae and Freddie Mac have a fiduciary 
responsibility to defend shareholder interest, but their own financial 
interests and compensation are closely linked to the continued flow of 
subsidies to the enterprises.
  How prescient were those observations of the CBO in 1996. It required 
almost a decade longer before it was discovered that earnings 
manipulations not only had led to significant restatements, they had 
triggered another consequence.
  Bonuses paid by the corporations to management at Fannie Mae were 
tied directly to earnings per share, and there were categories of 
earnings that triggered highest, moderate and lowest bonuses that could 
be paid. Apparently in a given year, the earnings per share target was 
hit to one-thousandths of a cent accuracy, I was later told by 
mathematical probability it just happened, that triggered the payment 
of $65 million in bonuses in a single year. Over the period of 2001 to 
2003, the period of time for which financials have still not been 
certified, total bonuses paid amounted to $154.3 million. These bonuses 
are in addition to base salaries and other benefits, and represent 
money provided by the American taxpayers through guarantees of 
obligations that the agencies are able to use in the business world to 
yield profits for shareholders and evidently profits for themselves.
  Further examination of the ability of the regulator to intervene even 
in the matter of the unwarranted bonuses was later proven in court to 
be insufficient to bar payment of the bonuses until criminal illegality 
is proved. That matter is still under examination at the moment.
  The bill, however, is important for other reasons to taxpayers. This 
enterprise will stand between the agencies who issue debt and engage in 
housing activities and significant potential losses to taxpayers should 
either of the enterprises ever be found under significant financial 
duress.
  The regulator historically has been impaired. It is the only 
financial regulator in the United States which must come to the 
Congress for its funding. All other regulators are funded by 
assessments on the regulated entities. We fixed that problem. All other 
regulators have the ability to reach inside the organization of a 
financial enterprise and adjust its capital requirements. That is money 
put in the sock drawer for a rainy day. In case something goes bad, you 
need to have capital.
  For the OFHEO-regulated enterprises, you had to come to the Congress 
and pass an act of Congress to adjust the capital. If any other 
financial enterprise were to get into financial duress and be unwound 
in the marketplace, that process is called receivership. Not so for 
Fannie Mae and Freddie Mac. There are special provisions that allow the 
Congress to intervene in protection of their financial interest. This 
bill remedies that problem.
  There are a host of other matters that the 360 pages of the bill 
address, but probably the most important is a tool used by regulators 
today in financial enterprises known as prompt corrective action. That 
means if a regulator sees an activity that could lead

[[Page 23809]]

to injury of shareholders and taxpayers, it can intercede at a very 
early time and require a cessation of those activities or simply 
prohibit them from doing it again. We provide for prompt corrective 
action.
  What we enable with the passage of this bill is the creation of an 
independently funded regulator, with all the tools a modern financial 
regulator should have to oversee vastly complex financial enterprises 
to protect the American taxpayer from unwarranted losses.
  Besides the criticism leveled at the bill today relative to 
affordable housing, there is another issue which I feel appropriate to 
address, and that is relative to the growth constraints on the 
investment portfolios of the two enterprises.
  They have, in the aggregate, $1.6 trillion invested in the two 
portfolios. Under the prudential management and operations standards of 
the bill, the director of the new enterprise shall examine counterparty 
risks; management of interest rate risks; adequacy and maintenance of 
liquidity and reserves; management of asset and investment portfolios; 
investments and acquisitions; overall risk management processes; and, 
if we did not cover it in that list, such other operational and 
management standards as the director determines to be appropriate. That 
translates into, if you do not see it on our list, Mr. Director, go do 
it anyway, because we are giving you the authority.
  Finally, as to the ability to establish how the portfolio should be 
reduced and to what level, Secretary Snow testified before our 
committee he could not tell us how to do it or to what level they 
should be adjusted, but he did go on to say it should be the subject of 
professional examination and recommendation.
  Finally, on page 273 of the bill, we read: ``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,'' is 
the director's obligation to engage in professional study, make 
recommendations to the Congress if congressional action is needed, or 
otherwise act in the best interest of the United States taxpayer.
  Finally, with regard to the concerns over the affordable housing 
disposition, it should be pointed out these funds are not available 
today. This is a new fund. If people are engaged in assistance as a 
charitable activity in affording housing to low-income individuals and 
registering people to vote, this bill will not preclude that activity 
from going forward. What it merely says is that in an instance where we 
have limited funds available, estimated to be perhaps $500 million 
spread across the entire country, that those funds first and foremost 
should be utilized to help people in true need of housing, not 
political activism.
  If one is engaged in political activism and building houses as of 
today's date, you can continue to do it. If you wish to be engaged in 
this fund going forward, you will have to make a policy decision, do I 
wish to continue political activism, or do I really want to help people 
get in homes?
  Mr. Chairman, I represent to the House this is a fair bill, fair 
compromise and responsible action on the part of this House, and I urge 
Members to support its adoption.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 15 seconds 
to say the gentleman from Louisiana has phrased that conundrum for 
groups exactly correctly.
  I agree with the Roman Catholic Church of the United States that they 
should not have to make that choice, and the Episcopal Church and the 
Baptist. That is exactly what the Catholic Church says: We have been 
doing housing; do not make us choose.
  Mr. Chairman, I yield for the purpose of making a unanimous consent 
request to the gentlewoman from California (Ms. Zoe Lofgren).
  Ms. ZOE LOFGREN of California. Mr. Chairman, I thank the gentleman 
for yielding.
  Mr. Chairman, I am concerned about two provisions in this bill, 
raising the conforming loan limit and the attempt to limit the ability 
of American citizens to engage in our democratic process currently 
contained in the manager's amendment offered by Mr. Oxley.
  Mr. Chairman, in my district, the median price for a home in Santa 
Clara County is $715,000, yes I said $715,000. The current conforming 
loan limit is $359,650, about 50 percent of what the median home price 
is. Mr. Chairman, there are simply not enough homes at or near the 
conforming loan limit to meet the needs of my constituents.
  As a result of this shortage of homes priced near the conforming loan 
limit, many first-time homebuyers are either forced into taking out 
jumbo loans or are more likely simply priced out of the market 
altogether.
  Some argue that the conforming loan limit will not make a meaningful 
cost difference for homebuyers. Currently there is a .25 percent to .40 
percent difference between interest rates on a conforming loan versus a 
jumbo loan. In today's market that difference can be as much as $135.00 
per month. That matters to hardworking families.
  I remind my Republican colleagues that this administration, in 
testimony before the House Financial Services Committee spoke in favor 
of raising the conforming loan limit.
  Part of Mr. Oxley's amendment is simply un-American. Mr. Oxley seeks 
to prohibit nonprofit organizations from engaging in nonpartisan, I 
repeat nonpartisan, voter registration efforts and get out the vote 
drives in the 12-month period prior to applying for funds made 
available through the Affordable Housing Fund. If that wasn't bad 
enough, the amendment further prohibits nonprofits that receive grant 
funds from subsequently engaging in these important activities.
  This Congress should be about promoting the values and the processes 
of democratic government, not trying to limit or suppress them. What 
are you afraid of, more Americans exercising their right to participate 
in their government?
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 5 minutes to the 
gentleman from California (Mr. Baca), one of our most energetic members 
on the committee, fully familiar with the need for housing in 
particular.
  Mr. BACA. Mr. Chairman, I thank the gentleman from Massachusetts for 
the time.
  I think we have put together a good bill. It was a bipartisan bill. 
It addressed a lot of the concerns that a lot of us had about 
affordable housing for minorities, low-income individuals who have an 
opportunity to obtain a home, but with the poison pill that has been 
put in in its final package, it makes the bill very difficult to 
support.
  All of us believe that affordable homes should be available for 
individuals. This does strengthen regulatory oversight on Freddie Mac, 
Fannie Mae and the Federal home loan banks. I think that is positive, 
and it presents an opportunity for many individuals, especially in my 
area, San Bernardino County, the Inland Empire, where we have a lot of 
growth in the area. We have people that are moving from Orange County, 
L.A., San Diego. They are looking at buying affordable homes. This bill 
would give many individuals, low income, an opportunity to do that, 
especially when the average cost of a home in L.A. is $475,000, and in 
San Bernardino it is $352,000. Many individuals cannot afford to buy a 
home.
  Now that they have that first opportunity, I know what it is like 
because I came from a family of 15, and I know for the very first time 
when we were able to buy a home. Had we not bought a home, I would not 
have had stability in my roots in the immediate area. That is why 
provisions of this bill are great.
  What I do not like about the bill is a poison pill that has been put 
on there, which I believe it is unconstitutional and restrictions aimed 
at suppressing the civil rights engaged in by poor minorities for 
voting. We believe that every person should have the right to vote and 
to participate, and we say that that does not preclude them, and you 
have to put a priority whether it is for affordable housing or whether 
you will be involved in engaging, encouraging individuals.
  America has always encouraged individuals to participate in our 
American democracy, and that is the democracy of voting. We have our 
veterans who have fought for this country and are now fighting in Iraq, 
are fighting for

[[Page 23810]]

the freedoms that we enjoy today. One of those freedoms is the right to 
get out and vote, to allow every individual to participate and vote, 
not to restrict individuals, but to allow them to vote.
  This would restrict these individuals who are getting funded for the 
housing to say you are not going to participate in this American 
democracy by registering individuals to vote. We should allow them. It 
is part of democracy. This is anti-civil rights, especially when we 
just have Rosa Parks who just died and fought hard for civil rights. We 
have Alice Paul who fought for the suffrage of women and others to 
encourage to make sure that women had the right to vote.
  Now what we are saying is, minorities, you are voting in higher 
numbers; we are not going to include you in part of that process 
because if you do, and if you get involved in part of that process, we 
are going to cut out your funding. I believe this is not fair. That is 
why the National Council of La Raza, NAACP, NALEO, LULAC, Puerto Rican 
Association, faith-based initiatives are all opposing the restriction 
of this anti-poison pill that has been put into this bill.
  I hope we can make a correction in the Senate and do justice for 
every individual. We talk about Leave No Child Behind. Now we are 
saying leave every individual who wants to participate from low-income 
minority families behind because we do not want them to participate in 
our American democracy.
  This is about America. We are proud Americans, and we should allow 
every American to participate. We should not deny one organization from 
going to them and asking them to participate in that process. What we 
are doing is saying, you will not be involved in that process, you will 
not be involved in that process. No, that is unfair. It is un-American.
  As an American and a Member who served in the Armed Forces, which we 
fought for many individuals, we have that responsibility, Mr. Chairman. 
We have the responsibility to make sure that every American has that 
right.
  Let us not go backwards. Let us go forward. Together we can make a 
difference.
  Mr. Chairman, I rise in support of H.R. 1461 to strengthen the 
regulatory oversight of Fannie Mae, Freddie Mac, and the Federal Home 
Loan Banks.
  I comment my colleagues on the Financial Services Committee for their 
bipartisan approach and hard work in drafting this important bill.
  This bill keeps the Government Sponsored Enterprises (GSEs) safe, 
sound and focused on their mission while preserving their mission to 
support financing for low- and moderate- income housing.
  Also, this bill includes provisions that will increase housing 
opportunities for low income families by: establishing a specific 
requirement for GSEs to serve underserved areas, enhancing the GSEs 
affordable housing goals and increasing loan limits for high cost 
areas.
  This bill includes an affordable housing fund that will increase 
affordable housing for low income communities.
  This fund is particularly important to me because of its potential to 
increase affordable housing for many hard-working families in my 
district. Housing costs in Southern California have skyrocketed. Many 
families have moved to the San Bernardino area where housing is 
considered less expensive. But even here, we have seen home prices rise 
quickly, and I am concerned that many working couples cannot afford a 
home.
  Last week, the Los Angeles Times reported that the median price paid 
for a Southern California home was $475,000 in September, up 16.1 
percent from a year earlier. In San Bernardino County, the median price 
has risen 32.8 percent in the past year to $352,000.
  This issue has great meaning to me personally. I grew up in a family 
with 15 children without a lot of money. I have been fortunate enough 
to have worked hard and been able to achieve the American dream of 
owning a home. But I know that this dream remains unattainable for 
millions of families.
  Hispanic families especially face difficulties buying a home as their 
incomes on average are lower, and they might not have the same access 
to or understanding of financial institutions. I hope the Affordable 
Housing Fund will increase rental and homeownership opportunities for 
these and other working class families.
  As a Catholic, I have learned of our obligation to serve the poor. I 
am proud of the work that Catholic Charities and other faith-based 
groups engage in. Their mission to help those in need includes 
providing shelter and also helping citizens fully participate in 
America's political process.
  While I support the bill for its merits, I am strongly opposed to the 
restrictions added after it passed the committee that place severe 
restrictions on nonprofit entities and faith based groups applying for 
affordable housing grants.
  The language inserted would undermine and severely limit the fund by 
excluding nonprofits involved in non-partisan voter registration 
efforts.
  Republicans are trying to prevent church groups and other respected 
non-profit organizations from providing important services. They are 
engaged in yet another backdoor scheme to sneak in unconstitutional 
restrictions aimed at suppressing the civic engagement of working class 
and minority families.
  These non-partisan community groups often serve as the main point of 
contact and, in many cases, are the only local groups addressing the 
social, civic, and educational needs of the people they serve. Yet 
Conservative Republicans want to force these trusted organizations to 
choose between providing civic education and affordable housing.
  Why? Why do Republicans want to deny low income and minority voters 
participation in the political process? What do they fear? Do they fear 
democracy?
  During the presidential campaign, Republican leaders made aggressive 
efforts to woo Black and Hispanic voters who have historically 
supported Democrats. Now Republicans are determined to deny affordable 
housing to these same minority groups. Is this payback?
  I hope that we would all agree our country is stronger if more 
Americans register to vote and show up at the polls, whichever party or 
candidate they support. We need to encourage participation in our great 
democracy not limit it. I want to mention an American hero, Alice Paul, 
who made our country better, fairer, more Democratic by leading the 
struggle for women's rights--including the right to vote.
  By the way, she was a Republican, but she was committed to promoting 
political participation.
  So we should encourage community organizations to help register 
voters and praise them for doing so, not penalize them or prevent them.
  The restrictions added by Republicans serve no other purpose than to 
reduce access to voting by low income people, and I urge my colleagues 
to vote against the restrictions.
  If however, they pass, I am committed to working with my colleagues 
to strip away these horrible provisions as the bill goes through the 
Conference Committee Process.
  Mr. BAKER. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Delaware (Mr. Castle), who is a long-term co-contributor 
to the preparation of the legislation before us.

                              {time}  1330

  Mr. CASTLE. Mr. Chairman, I thank Chairman Baker for yielding me this 
time; and to call me a co-contributor, when one considers all the 
effort he has put into this, is a vast overstatement. I have never 
seen, during the time I have been here, which is a number of years now, 
a legislator work so hard on a particular issue; and I congratulate 
Chairman Baker for getting it this far.
  And I would like to thank the ranking member. The gentleman from 
Massachusetts (Mr. Frank) has been extremely helpful. I do not know 
where this is going to come out in the end because of the discussion 
and dispute over the affordable housing fund. But, basically, I think 
the underlying bill is a heck of a sound bill. I would like to credit 
both sides.
  We do not have a lot of legislation on this floor which is really 
done with the best interests of America at heart without any 
consideration for politics, Republican or Democrat; and I think this is 
one piece of legislation that does this.
  I doubt there are those, other than the gentleman from Massachusetts 
(Mr. Frank) and the gentleman from Louisiana (Mr. Baker), and maybe 
three or four other people in Congress, a few on the outside, who can 
really describe all that this means in terms of the GSEs.
  When you are dealing with Fannie Mae and Freddie Mac and the Home 
Loan banks, virtually any mortgage out there is in some way touching on 
them. They have vast investments.

[[Page 23811]]

They have vast sums of dollars that they are handling on a regular 
basis. If there are any organizations that need close scrutiny and 
regulation in this country, to me it is these GSEs. That is what this 
bill does.
  I am not critical of those who have been doing the regulation before, 
but the bottom line is there were some problems. We do need the most 
sophisticated kind of regulation that we can have, because they are 
participating in some of the most sophisticated kinds of investments 
that one can make. We are dealing with a housing market; and while I 
hope there will not be a bubble or anything of that nature, there are 
problems potentially in that area that we will have to deal with, and 
we want to make sure that they are closely monitored so they will not 
contribute to that particular problem.
  I appreciate the affordable housing fund. I am sorry there is a 
dispute over it. I think the concept of the affordable housing fund 
makes a heck of a lot of sense as well.
  I would strongly recommend this legislation. I hope it will pass in 
the House and we can achieve this as final legislation that the 
President can sign and all of us can take a great deal of pride in 
doing something that is constructive for America.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as 
I may consume.
  First, let me say that I am glad that the gentleman from Louisiana 
(Mr. Baker) indicated the status of the gentleman from Delaware (Mr. 
Castle), because I would not have wanted him to have been an 
unindicated co-contributor. I think that was very helpful.
  Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from New York 
(Mr. Meeks), a very active member of the Committee on Financial 
Services who is very aware of the need for housing.
  Mr. MEEKS of New York. Mr. Chairman, as a member of the Committee on 
Financial Services, I am shocked and disappointed in the result of what 
up until now has been a true bipartisan policy-making effort.
  We in this committee this past May passed a bill, H.R. 1461, by a 
vote of 65-5. There was true bipartisanship. In fact, just yesterday I 
was talking about how the committee was working collectively together 
and there was really bipartisanship and we would come up with a bill 
that we could agree upon. How wrong, how wrong I am.
  Unfortunately, the Republican Study Committee got involved and has 
pushed for an unjust and unnecessary amendment that restricts 
nonprofits that do not have housing as their primary purpose or engage 
in nonpartisan voter registration or education programs from receiving 
funds and grants. Just look at it. I look at my district. My 
predecessor at Allen AME is known for developing public-private housing 
that is affordable to people, and they would not be able to 
participate. Look at what would be left out with this ridiculous 
amendment.
  Furthermore, if you read this amendment, it clearly states in its 
language that the restrictions for not-for-profits are not the same 
restrictions as for-profits. I wonder if for-profits can engage in 
whatever they want to and still be able to participate in these 
fundings, but not-for-profits would not.
  It seems to me there is a lot of talk, talk about democracy; but we 
truly do not want democracy. We are trying to lock out a whole group of 
people from having the opportunity to vote. When we look at the numbers 
of people who come out to vote, the numbers are far less than the 
percentages any place else. We should be doing everything in our power 
to encourage people to come out to vote.
  I wonder why the Republicans are doing this. For if they feel so 
strong and righteous about their manager's amendment, they surely would 
have allowed the Frank amendment which would have stripped this 
destructive language before a vote. They did not do this because they 
are afraid their own Republican Members that support the CDCs and 
faith-based affordable housing programs would vote in favor of the 
Frank amendment. There is no democracy for the Republican Caucus. This 
was an excellent bill that the radical right wing of the Republican 
Caucus has destroyed.
  Mr. BAKER. Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2\1/2\ minutes to 
the gentleman from Massachusetts (Mr. Lynch), who has worked in the 
building trades and knows this issue very well.
  Mr. LYNCH. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I rise in opposition to the measure before us today. 
Specifically, I stand in this House to condemn the language in this 
bill which would prohibit faith-based organizations, our churches, my 
church, our temples and synagogues and mosques, from helping the 
homeless by providing housing for the thousands of families in this 
country who are either homeless or in shelters or forced to live in 
substandard housing.
  Under the express terms of this manager's amendment, nonprofit groups 
that engage in voter participation activities will be prohibited from 
applying for a grant under the affordable housing fund. I am frustrated 
as well with the whole process here because my friend and colleague 
from Massachusetts (Mr. Frank) was denied the opportunity to offer an 
amendment to strike these egregious provisions.
  In this day and age when we are beset by major crises such hurricanes 
Katrina and Rita and Wilma, which have destroyed literally hundreds of 
thousands of homes across the southern part of this country, it is no 
time to shackle the hands of our nonprofit, faith-based organizations 
from doing what Americans have always taken pride in, and that is 
helping their neighbor.
  While like most Members I deeply respect the separation of church and 
State in matters of worship and the freedom to practice religion 
without government influence, there has always been in this country a 
recognition, at least until now, that we have faith-based institutions; 
and when they have sought to provide basic assistance, such as food for 
the hungry and health care for the sick and elderly and housing for the 
homeless, free of any effort to persuade or proselytize, they are in 
the business of solely reducing suffering, and we have recognized the 
goodness in that.
  That would end today if the manager's amendment succeeds. We would 
have a departure in this country from that long tradition, and for 
those reasons I oppose this bill.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2\1/2\ minutes to 
the gentleman from New York (Mr. Crowley), one of the most active 
members of the committee and very familiar with needs for housing.
  Mr. CROWLEY. Mr. Chairman, I rise to tell my colleagues of the good 
bipartisan bill that was crafted by the Financial Services Committee, 
by Chairman Oxley and by ranking member Barney Frank.
  The members of that committee crafted a bill that passed the 
committee on a vote of 65-5 that would finally create a tough new 
regulator for the Federal housing GSEs and the Federal Home Loan Banks, 
something that was needed after some accounting missteps at the GSEs.
  At the same time, this bill also created a massive new Federal 
housing trust fund, using a percentage of the profits of these housing 
GSEs to ensure a new stock of affordable housing in every section of 
this country and providing millions of families the opportunity of 
attaining the American dream of homeownership. But that is not the bill 
that is before us under this manager's amendment.
  This bill went before the Committee on Rules where it was hijacked by 
the extremist wing of the Republican Party that holds a grip over the 
House of Representatives. They added language to ban churches and other 
houses of worship the ability to tap into these funds if they take part 
in any type of nonpartisan voter activity, such as helping register 
people to vote or taking people to the polls.
  What this bill really is is an utter disregard for our Constitution. 
This is not a gray area. This is a limitation on free speech. I am 
amazed that the same

[[Page 23812]]

people who champion legislation by the gentleman from North Carolina 
(Mr. Jones) known as the Houses of Worship Free Speech Restoration Act, 
which would allow churches and other houses of worship to discuss 
politics and endorse candidates from the pulpit without losing their 
tax-exempt status, will now be the same people who are stripping their 
churches from any of this funding to help their congregations.
  This bill could be the greatest housing construction legislation ever 
passed by Congress and will help people in every district in America 
and benefit almost every church and house of worship in our country, 
but the far right wing is opposed to it. They are hypocritically 
opposed to it and so stuck in ideology that they refuse to debate this 
bill for the issue it is.
  Like scared children, they tuck the provisions into the manager's 
amendment and refuse any opportunity in the rule to strike it because 
they know they cannot win.
  We are a religious country and we have many members of the cloth in 
Congress, most of whom, I point out, are Democrats, and the far right 
knows that their anti-religious language cannot pass on the merits. 
That is why I regretfully ask all members of faith and all Members who 
respect the independence of religion and the pulpit to oppose the 
manager's amendment.
  As the gentleman from Massachusetts (Mr. Frank) has stated, if the 
manager's amendment is defeated, all of the good sections will be 
restored, such as targeting this aid to the hurricane-ravaged areas, in 
the motion to recommit.
  Mr. Chairman, stand up for your constituents, stand up for the 
American dream of homeownership, stand up for people of faith, and 
stand up to the far right wing extremists who are hijacking this bill 
for their own purposes.
  Mr. OXLEY. Mr. Chairman, I yield 2 minutes to the gentleman from Ohio 
(Mr. Ney), the chairman of the housing subcommittee.
  Mr. NEY. Mr. Chairman, I rise today in support of the bill. As 
chairman of the Subcommittee on Housing and Community Opportunity, I 
have had a keen interest in the strength of the mortgage market. The 
mortgage market has single-handedly kept the economy afloat during 
these difficult economic times.
  Passage of this bill sends an important signal that we understand the 
importance of GSEs and the secondary-mortgage markets in maintaining a 
stable economy.
  More importantly, I want to comment on the issues of affordable 
housing and the effect of the affordable housing fund, which is a great 
fund to have, and we have worked with the minority on this issue and 
the gentleman from Ohio (Mr. Oxley) and his staff and our staff. I 
believe that we will have a profound impact on the country with the 
fund.
  As Members know, it is very difficult to achieve the delicate balance 
between meeting public policy goals and ensuring a free market business 
climate. The creation of the government-sponsored enterprises was one 
such feat that provides an invaluable public service of creating and 
maintaining a secondary market for the mortgage markets. As a result, 
our homeownership rates and our access to capital are the best in the 
world.
  On the other hand, I also understand that because these financial 
institutions are creatures of the Federal Government, we also have a 
responsibility to ensure they achieve a public-policy purpose. 
Homeownership rates among minority families are increasing, but we can 
obviously do much better than the current average of 50 percent for 
African Americans, Hispanic urban and rural communities, just to name a 
few. We have to ensure that these communities that have not been full 
participants in the pursuit of the American Dream can be reached.
  Fannie Mae and Freddie Mac own or guarantee nearly half of this 
country's residential mortgage market. The legislation we are 
considering today would markedly improve GSE performance of their 
housing mission. The Committee on Financial Services approved major 
sections on new single-family and multi-family housing goals; the duty 
to serve lower income markets, and I stress duty to serve them; and a 
new affordable housing fund with contributions from the enterprises.
  Of course, there are other parts of this bill that are good, and I 
give credit to the gentleman from Ohio (Mr. Oxley) and the gentleman 
from Louisiana (Mr. Baker) in strengthening oversight.
  Today, I just wanted to speak freely on the actual housing fund. I 
urge my colleagues to support this legislation.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2\1/2\ minutes to 
the gentleman from New Jersey (Mr. Pascrell) to speak regarding a very 
important provision of the bill as it now exists.
  Mr. PASCRELL. Mr. Chairman, I first of all commend the chairman and 
the ranking member for putting a great bipartisan bill together 
concerning government-sponsored enterprises.
  In addition to establishing a very strong, independent regulator, the 
legislation will also create a sorely needed affordable housing fund.
  The housing fund will help people with low incomes who face the 
greatest difficulty in finding housing that is available and 
affordable; but as we put forward this new housing fund, I do not think 
the manager's amendment is a very good one. We should never force 
nonprofits to choose between providing affordable housing and 
encouraging full participation in the American Dream.
  The housing trust fund will provide a much-needed stimulus to our 
American economy, but it is not only low-income Americans who suffer 
from lack of affordable housing. I would ask the gentleman to please be 
cognizant of what I am saying. I know my district and the area within 
my district. A recent study has found that 4.8 million working 
families, many of them middle-income, have faced critical housing needs 
in recent years, spending more than half of their income on rent or 
living in substandard housing.
  To help struggling middle-class families, it is essential that we 
preserve section 123 of this bill, which raises the conforming loan 
limit by up to 50 percent for certain high-cost housing areas. Without 
raising that limit, the benefits of the GSE housing subsidies are not 
distributed evenly or fairly across geographical lines.
  In 2003, Fannie Mae and Freddie Mac purchased 35 percent of all 
mortgages originated nationwide. In several high-cost housing areas, 
these institutions were able to purchase fewer than 30 percent of the 
new mortgages. In my area, a large portion of real estate transactions 
take place over the conforming loan limit.
  In my own district, my own area, Bergen, Passaic, and Essex counties, 
the median price of housing is 125 percent above the existing loan 
limit, one of the highest rates in the country.

                              {time}  1345

  This is an unfair limit. It prevents many middle-class families in 
New Jersey from being able to own a home in the State.
  At a time, Mr. Chairman, when wages are stagnant, energy prices 
soaring, college tuition skyrocketing, we are well aware of just how 
much these hardworking families are being squeezed financially. This is 
common sense. This is not Democrat or Republican. This is common sense 
that we help middle-class folks out to purchase the homes. And I am not 
going to talk personally to the gentleman from New Jersey, but on this 
he is dead wrong.
  Mr. OXLEY. Mr. Chairman, I yield 1 minute to the gentleman from 
California (Mr. Gary G. Miller).
  Mr. GARY G. MILLER of California. Mr. Chairman, Chairman Oxley and 
Ranking Member Frank have worked very hard to come up with a very good 
bill. The goal is to make sure we find liquidity in the secondary 
marketplace so people in this country have a home. The more liquidity 
we have in the marketplace, the more stability we have in the 
marketplace, the better it is for the Nation and the overall vibrant 
housing market.
  GSEs have been at the forefront of creating affordable housing 
opportunity throughout our Nation for

[[Page 23813]]

American families. There is an amendment that is coming up later that 
guts something we tried to do in this bill, and that is to make sure 
that GSEs can adequately provide loans in the markets throughout this 
country. And people who happen to live in certain areas that are 
considered high-cost areas, such as California; New York; 
Massachusetts, Mr. Frank's State, currently are not able to acquire 
Freddie and Fannie loans because the housing market has grown so much 
and the costs have grown so much that they have exceeded the limits 
that GSEs can lend in. And it is a shame that if people live in Hawaii, 
Guam, and places like that, they can still get a Freddie and Fannie 
loan, yet in California they cannot. And what we have done through this 
bill, thanks to Chairman Oxley, is provide for those needs and turned 
out a very good bill.
  I strongly urge my colleagues to support this bill.
  I rise in strong support of H.R. 1461, the Federal Housing Finance 
Reform Act of 2005.
  I commend Chairman Oxley and Ranking Member Frank for their tireless 
efforts to produce a balanced bill, that ensures that the housing GSEs 
are adequately regulated without disrupting our nation's strong and 
vibrant housing markets.
  Government Sponsored Enterprises (GSEs) have been at the forefront of 
creating affordable housing opportunities for American families.
  In my district, for example, Fannie Mae has created employer-assisted 
housing programs for the City of Brea Police Department to allow police 
officers to live in the communities they serve.
  They have helped to finance affordable housing initiatives in 
Anaheim, California.
  Across the district, they have been able to offer innovative programs 
to allow those with blemished credit to afford the dream of 
homeownership, to help seniors convert the equity in their homes into 
cash to help them meet their needs, and to help families and 
individuals with special needs become homeowners.
  All of this, in partnership with lenders, is intended to meet the 
ever-growing needs of our communities.
  As we have addressed deficiencies in GSE supervision, we worked hard 
to ensure H.R. 1461 does not lose sight of Congress' original goal in 
chartering GSEs.
  The mission of Fannie Mae and Freddie Mac is to provide stability and 
on-going assistance to the secondary market for residential mortgages, 
and to promote access to mortgage credit and homeownership in the 
United States.
  While we make these regulatory reforms, we are also unwavering in our 
commitment to help Americans achieve the dream of homeownership.
  H.R. 1461 seeks to improve regulation of the GSEs while continuing to 
ensure the accessibility of mortgage funds at the lowest cost.
  While there is no question that regulatory changes must be made to 
ensure the safety and soundness of the secondary mortgage market, H.R. 
1461 recognizes that strong regulation provides a means to achieve our 
ultimate goal of expanding the supply of affordable mortgage credit 
across this nation.
  For generations, the goal of owning a home has been the bedrock of 
our economy and a fundamental part of the American Dream.
  The bill we consider today is about homeownership in this country.
  Homeownership benefits our communities and national economy. Indeed, 
it is the key to promoting long-term economic stability for our 
citizens and nation. That is why this bill is so important.
  H.R. 1461 provides 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.


                          Loan Limit Language

  I am especially grateful that the bill includes language that 
recognizes that housing costs differ widely throughout the country.
  While GSEs are chartered to operate in every district across the 
country, their effectiveness in certain areas has been seriously 
hindered because high housing prices have caused fewer and fewer 
mortgages to fall within the conforming loan limit.
  Those who live in high-cost areas of the country should be able to 
participate in federal efforts to provide affordable housing 
opportunities.
  This is a simple issue of fairness. It is unacceptable for the 
federal government to tell my constituents that federal programs exist 
to increase homeownership in America, but they cannot qualify simply 
because of where they happen to live and work.
  The language in the bill increases loan limits in high cost areas to 
the median home price of the area, not to exceed the limit for Alaska, 
Hawaii, Guam, and the Virgin Islands (150 percent of national loan 
limit). This does not impact the portfolios of the GSEs as all loans 
made in high-cost areas must be securitized.
  By adjusting conforming loan limits in high-cost areas, we can create 
nearly 250,000 new homeowners at no cost to taxpayers.
  I urge my colleagues to support this important provision and reject 
efforts to remove it during the amendment process.
  Mr. OXLEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Connecticut (Mr. Shays).
  Mr. SHAYS. Mr. Chairman, I thank the gentleman for yielding me this 
time. And I particularly want to thank the gentleman from Louisiana 
(Mr. Baker) for his efforts for years in this area and for the 
gentleman from Ohio's (Mr. Oxley) work and the gentleman from 
Massachusetts' (Mr. Frank) work as well.
  When Enron was collapsing and Sarbanes-Oxley was created, the 
gentleman from Louisiana (Mr. Baker) said to me, But you know what? 
Fannie Mae and Freddie Mac do not even come under these laws because 
they do not come under the 1933 Securities Act and the 1934 Securities 
Exchange Act.
  So we thought let us try to get them under it. And I cannot tell the 
Members the grief that ensued after that. All of a sudden Fannie Mae 
and Freddie Mac considered us enemies because we wanted them to play by 
the same rules that everyone else had to play by. And through the work 
of the gentleman from Louisiana (Mr. Baker) and others, Fannie Mae was 
forced to come under, voluntarily as they said, the 1934 act. And when 
they did that, all of a sudden all this information about all of their 
problems started to come out because information was being provided to 
us. This action we are taking today is in response to the information 
that we have learned about Fannie Mae and Freddie Mac.
  I am grateful that the new administrations of these agencies are no 
longer arrogant like the previous ones. I am grateful that we are 
starting to say that they should have to play by the same rules as 
everyone else. And because of that, the taxpayers will be protected, 
and the investors will be protected.
  There are parts of this law that I would like strengthened, but this 
is a good act. It deserves our support. And, again, I thank our 
chairman for moving forward, as he always does, in a bipartisan way and 
for listening to the wisdom of the gentleman from Louisiana (Mr. 
Baker).
  I rise in strong support of this legislation and appreciate Chairman 
Oxley and Chairman Baker's efforts. Fannie Mae and Freddie Mac play a 
vital role in our housing finance market, yet for far too long these 
companies have been playing by their own set of rules. During this time 
we've witnessed massive earning restatements, accounting 
irregularities, frequent challenges to their regulator's judgment and 
authority, and a cookie jar reserve. These were all part of a culture 
of arrogance at the GSEs, and were enabled by a weak and ineffective 
regulator. With this legislation, we are beginning to correct this very 
serious situation.
  How serious is the issue of GSE oversight? What's at stake if one or 
both companies fail? Fannie Mae and Freddie Mac have $1.6 trillion in 
combined assets; $1.4 trillion in retained mortgages in portfolio; $1.5 
trillion in outstanding debt; and $1.5 trillion in notional 
derivatives. In addition, outstanding mortgage-backed securities 
guaranteed by Fannie and Freddie, but held by third parties, total $1.7 
trillion. Mr. Chairman, in the absence of a world-class regulator to 
oversee these institutions, we are truly playing Russian roulette.
  Creating a new regulator is not about punishing the GSEs--it is in 
fact vital to the safety and soundness of our Nation's housing market. 
Both investors and taxpayers have a right to know the financial 
condition of the GSEs and they deserve a strong, independent regulator 
that has the resources to oversee their operations.
  There has been and will continue to be vigorous debate about this 
legislation. I want to address a few key issues surrounding this 
legislation, and share my thoughts on what I hope is ultimately 
included in the bill that is sent to the President.
  Currently, Fannie Mae and Freddie Mac are the only two publicly-
traded companies in the

[[Page 23814]]

Fortune 500 that are exempt from regulation by the SEC. The only reason 
Fannie Mae and Freddie Mac were forced to reveal their accounting 
errors is because in July 2002, under pressure from Congress and the 
Administration, the two companies finally agreed to comply with certain 
reporting requirements of the Securities Exchange Act of 1934. Fannie 
Mae followed through and registered in 2003, but failed to file a 
report in the third quarter of 2004, and is now in the process of 
restating those reports it did file. Freddie Mac simply never lived up 
to the agreement.
  I believe all publicly traded firms should play by the same set of 
rules, and am pleased this legislation codifies the 2002 agreement. 
This legislation should go even further by requiring Fannie Mae and 
Freddie Mac to comply fully with the Securities Act of 1933 and the 
Securities Exchange Act of 1934.
  Regarding the powers of the new regulator, due to the enormity of the 
GSEs' holdings, it seems to me we should go even further in empowering 
this new office. Economic experts, most notably Federal Reserve Board 
Chairman Alan Greenspan, have warned this Congress that the tremendous 
concentration of mortgage assets at Fannie Mae and Freddie Mac coupled 
with the dangers associated with interest rate risk may pose a systemic 
risk, not only to the U.S. capital markets, but indeed the global 
financial system. Later today, I intend to support an amendment to 
empower the regulator to reduce Fannie and Freddie's mortgage assets if 
it determines these assets pose a systemic risk. I oppose placing 
statutory or hard caps on the GSEs' portfolios, but consistent with the 
Treasury Department's recommendation, it is prudent we provide the new 
regulator with the authority to consider systemic risk.
  Finally, regarding the affordable housing fund, despite my concern 
that creating this fund will only deepen the perception the GSEs are 
backed by the Federal government, those concerns are outweighed by the 
pressing need for more affordable housing in Connecticut and around the 
country. Year after year, we vigorously debate the amount of Federal 
funds to allocate for public housing, Section 8 and other housing 
programs, and it is my strong conviction that we must creatively 
address the affordable housing crisis. It seems to me this fund is a 
worthy solution.
  Non-profit organizations and social service providers in Connecticut 
do an amazing job and are continually finding ways to do more with 
less. But the needs are tremendous, and families continue to struggle 
to find housing where they can safely raise their children and still 
afford to feed them too. It's time we empowered housing organizations 
with additional resources to build more affordable units, including in 
the Gulf Coast region devastated by Hurricanes Katrina and Rita.
  Mr. Chairman, while there is more work to be done before Congress 
sends this legislation to the President, I support what we have before 
us today and encourage my colleagues to do so as well.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself the balance 
of my time.
  Mr. Chairman, I have noticed a certain level of discomfort on some of 
my friends on the Republican side and some of my not so good friends on 
the Republican side. So I want to be very generous and ease their 
discomfort.
  There are people who are not happy with everything in the manager's 
amendment. A lot of what is in the manager's amendment a lot of us 
like, the preference for the gulf areas, some of the restrictions on 
what people do with the use of funds.
  There are three small provisions in the manager's amendment that are 
controversial. The one that says no faith-based groups can go in there, 
the principal purpose; and the one that says nonpartisan voter 
registration and nonpartisan get out the vote are not possible.
  So I want to tell people this: If the manager's amendment is 
defeated, I will offer as the recommittal motion the exact manager's 
amendment minus those three specifics. So if they like the manager's 
amendment but do not want to keep the Catholic Church out of affordable 
housing, do not want to have the problem that the gentlewoman from Ohio 
(Ms. Pryce) mentioned where they cannot take old people to the polls, 
and do not want to restrict nonpartisan voter registration, if the 
manager's amendment is defeated, everything except those three things 
that were in the manager's amendment will be in the recommit.
  And as proof of that, I have given a copy of what the recommit would 
then be over to the Republican side. They can look it up, as Casey 
Stengel used to say. They will be able to see that they can then 
carefully and in good conscience vote against the manager's amendment 
and then vote for the recommit because it will be their amendment; so 
they will get permission to vote for the recommit, and they will get 
everything in the manager's amendment except the one thing that keeps 
out faith-based, restricting it to people whose primary purpose is 
here, and the nonpartisan restriction on voter registration. All the 
other restrictions and everything else will be in it. So do not worry. 
I am making their life easier.
  Mr. OXLEY. Mr. Chairman, I yield myself such time as I may consume.
  This has been an excellent debate, and we appreciate the efforts on 
both sides of the aisle for this legislation.
  Mr. Chairman, this is historic legislation, the first time that any 
Congress has reached a stage where we are debating a major reform 
effort for the GSEs. It is a long time coming. The gentleman from 
Louisiana (Mr. Baker) has toiled in the vineyards for all of these 
years, and we have finally reached a situation where we can finally 
pass legislation that will improve the regulatory structure of the 
GSEs, ultimately make them stronger and more accountable, provide 
affordable housing funds through the GSEs throughout the country and 
particularly related to the hurricane-affected areas.
  This is well balanced. It makes a lot of sense, something that we 
have been working on for a long time. And I know a lot of the debate 
has been about one particular part of the manager's amendment that I 
will be offering next, but at the end of the day, when this bill comes 
up for final passage, most Members will support it because it makes 
good sense from a regulatory standpoint, it makes good sense from an 
affordable housing standpoint.

                                         House of Representatives,


                              Committee on Financial Services,

                               Washington, DC, September 14, 2005.
     Hon. F. James Sensenbrenner, Jr.,
     Chairman, Committee on the Judiciary, Rayburn House Office 
         Building, Washington, DC.
       Dear Mr. Chairman: On July 14, 2005, the Committee on 
     Financial Services filed its report on H.R. 1461, ``Federal 
     Housing Finance Reform Act of 2005.'' The bill was then 
     sequentially referred to the Committee on the Judiciary until 
     September 16, 2005. I am writing to confirm our mutual 
     understanding with respect to the further consideration of 
     H.R. 1461.
       I am pleased that our staffs have been working together 
     during this period and have reached an agreement on an 
     amendment regarding independent litigation authority (copy 
     attached). I agree that I will request the Rules Committee 
     make this amendment in order as part of a manager's amendment 
     during consideration of the bill, and to consult with your 
     Committee in providing an explanation of its contents. It is 
     my understanding that with this commitment, no further action 
     by the Judiciary Committee on this bill will be required and 
     the time period for the sequential referral will thereby 
     lapse. It is also understood that this procedure is without 
     prejudice to the jurisdictional interests of the Judiciary 
     Committee on this or similar legislation. I will also support 
     the request of the Judiciary Committee for an appropriate 
     appointment of conferees should H.R. 1461 or a similar Senate 
     bill be considered in conference. I will also include this 
     exchange of letters in the Congressional Record during 
     consideration of the bill.
       Thank you for your cooperation and your attention to this 
     important matter.
           Yours truly,
                                                 Michael G. Oxley,
     Chairman.
                                  ____

                                         House of Representatives,


                                   Committee on the Judiciary,

                               Washington, DC, September 14, 2005.
     Hon. Michael G. Oxley,
     Chairman, House Committee on Financial Services, Rayburn 
         House Office Building, Washington DC.
       Dear Chairman Oxley: This letter responds to your recent 
     letter concerning H.R. 1461, the ``Federal Housing Finance 
     Reform Act of 2005,'' which was ordered reported to the House 
     by the Committee on Financial Services on July 14, 2005 and 
     sequentially referred to the Committee on the Judiciary.
       As you know the Committee on the Judiciary has jurisdiction 
     over matters concerning independent litigation, bankruptcy 
     laws, civil judicial matters, and other subject matter 
     contained in the bill. I am pleased to acknowledge the 
     agreement between our Committees to address changes that you 
     will include in a manager's amendment to the bill

[[Page 23815]]

     concerning independent litigating authority. In order to 
     expedite this legislation for floor consideration, the 
     Judiciary Committee agrees to forgo action on this bill based 
     on the agreement reached by our Committees and with the 
     understanding that no other provisions affecting the 
     jurisdiction of the Judiciary Committee are included in the 
     amendment to H.R. 1461. The Judiciary Committee takes this 
     action with the understanding that it in no way prejudices 
     the Committee with respect to the appointment of conferees or 
     its jurisdictional prerogatives on this or similar 
     legislation. I also request that you include this exchange of 
     letters in the Congressional Record during floor 
     consideration of this bill.
       Thank you for your attention to this matter and for the 
     cooperation of your staff.
           Sincerely,
                                      F. James Sensenbrenner, Jr.,
     Chairman.
                                  ____

                                         House of Representatives,


                                  Committee on Ways and Means,

                                 Washington, DC, October 25, 2005.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Oxley: I am writing with respect to H.R. 
     1461, the ``Federal Housing Finance Reform Act of 2005,'' 
     which was reported to the House by the Committee on Financial 
     Services on Thursday, July 14, 2005.
       As you know, the Committee on Ways and Means has 
     jurisdiction over matters concerning taxes and the Internal 
     Revenue Code of 1986. A provision in Section 144 of H.R. 1461 
     would provide an exemption for a limited-life enterprise from 
     Federal taxes, and thus falls within the jurisdiction of the 
     Committee on Ways and Means. However, in order to expedite 
     this legislation for floor consideration, the Committee will 
     forgo action on this bill. This is being done with the 
     understanding that it does not in any way prejudice the 
     Committee with respect to the appointment of conferees or its 
     jurisdictional prerogatives on this or similar legislation.
       I would appreciate your response to this letter, confirming 
     this understanding with respect to H.R. 1461, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the Congressional Record during floor 
     consideration.
           Best regards,
                                                      Bill Thomas,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                 Washington, DC, October 26, 2005.
     Hon. William M. Thomas,
     Chairman, Committee on Ways and Means, House of 
         Representatives, Longworth House Office Building, 
         Washington, DC.
       Dear Chairman Thomas: Thank you for your letter concerning 
     H.R. 1461, the ``Federal Housing Finance Reform Act of 
     2005''. This bill was reported by the Committee on Financial 
     Services on July 14, 2005. 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 
     exclusive jurisdiction of the Committee on Ways and Means. 
     However, I appreciate your willingness to forego action on 
     H.R. 1461 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 would support your request for 
     conferees on those provisions within your jurisdiction should 
     this bill be the subject of a House-Senate conference.
       I will include this exchange of correspondence in the 
     Congressional Record when this bill is considered by the 
     House. Thank you again for your assistance.
           Yours truly,
                                                 Michael G. Oxley,
                                                         Chairman.

  Mr. WEINER. Mr. Chairman, despite the divisiveness of the term 
``faith-based,'' most Americans are united in their support of 
religious organizations. Across the country, these organizations do 
great work, feeding the hungry, caring for the sick, and in many cases 
providing affordable housing to those most in need.
  That's why it's surprising that the Republicans are using an 
otherwise worthy effort to reform Government Sponsored Enterprises like 
Fannie Mae and Freddie Mac to throw a wrench in the relationship 
between government and the religious community. The Affordable Housing 
Fund created by the bill will commit 5 percent of Fannie and Freddie 
profits toward a grant program to build, maintain, and rehabilitate 
housing for low-income families. Yet language passed in the Managers 
Amendment stops that money from flowing to faith-based organizations. 
That amounts to $500 million a year that Republicans don't believe 
should go to organizations like Catholic Charities.
  Today in Brooklyn and Queens alone Catholic Charities operates 3,000 
units of affordable housing including 2,090 units for senior citizens, 
480 units of family housing and 377 units of supportive housing for 
formerly homeless individuals. But the Church, the largest non-profit 
provider of low income housing in Brooklyn and Queens, will be shut out 
of the new program.
  Faith should never be used to divide an electorate or play a 
political game. I believe that is exactly what Republicans have done in 
order to take the teeth out of a program designed to help those most in 
need.
  We should all embrace the principle of Tikkun Olam which says that 
those who have a little more, should do a little more. That is exactly 
what the Affordable Housing Fund would have allowed faith-based 
organizations to do in partnership with the Federal Government until 
Republicans inserted their limiting provisions.
  In the words of the Most Rev. Nicholas DiMarzio, Bishop of Brooklyn, 
in a letter to the Speaker dated October 3, ``There are ample ways to 
write safeguards into the legislation to prevent the diversion of 
affordable housing funds to uses other than what they are intended 
without requiring recipients to forego their constitutionally protected 
rights as a condition for participating in Affordable Housing Fund 
programs.''
  I include the Bishop's letter for the Record.

                                  Department of Social Development


                                              and World Peace,

                                  Washington, DC, October 3, 2005.
     Hon. J. Dennis Hastert,
     Speaker, House of Representatives,
     Washington, DC.
       Dear Mr. Speaker: I write as Chairman of the Domestic 
     Policy Committee of the United States Conference of Catholic 
     Bishops (USCCB) to urge you to retain the Affordable Housing 
     Fund as part of the Federal Housing Finance Reform Act of 
     2005 (H.R. 1461) and bring the bill to a vote forthwith. The 
     Catholic Bishops have historically urged the federal 
     government to help meet our nation's promise of a decent home 
     for every American family, especially those families with 
     extremely low incomes.
       As I noted in my June 10 letter to the House of 
     Representatives, the Catholic Community--through our 
     Charities agencies, dioceses, and parishes--serves tens of 
     thousands of men, women, and children who struggle to 
     maintain adequate housing. Besides sheltering homeless people 
     who turn to us for help, we have built, and continue to 
     maintain, thousands of affordable housing units. All of these 
     experiences have demonstrated to us how inadequate, 
     substandard housing hurts human life, undermines families, 
     destroys communities, and weakens the social fabric of our 
     nation. Despite our efforts--and the efforts of so many 
     others--there just is not enough affordable housing 
     available.
       Proposals that would limit eligible recipients to 
     organizations that have as their primary purpose the 
     provision of affordable housing would effectively prevent 
     Catholic dioceses, parishes and Catholic Charities agencies 
     from participating in Affordable Housing Fund programs. 
     Similarly, proposals that would prohibit recipients from 
     engaging in voter registration and lobbying activities with 
     their own funds during the period they are utilizing 
     affordable housing funds would force Catholic agencies to 
     choose between participating in Affordable Housing Fund 
     programs or engaging in constitutionally protected voter 
     registration and lobbying activities with their own funds. I 
     urge you to oppose inclusion of these kinds of unnecessary 
     limitations and prohibitions in H.R. 1461 as it moves to the 
     House floor for a vote. There are ample ways to write 
     safeguards into the legislation to prevent the diversion of 
     affordable housing funds to uses other than what they are 
     intended without requiring recipients to forego their 
     constitutionally protected rights as a condition for 
     participating in Affordable Housing Fund programs.
       The Bishops' statement, Putting Children and Families 
     First, notes: ``Many families cannot find or afford decent 
     housing, or must spend so much of their income for shelter 
     that they forego other necessities, such as food and 
     medicine.... [The Catholic bishops] support housing policies 
     which seek to preserve and increase the supply of affordable 
     housing and help families pay for it.'' We must put in place 
     a sustainable source of funds to build affordable housing and 
     this new fund would do that.
       As I said in my June letter, this legislation presents 
     Congress with a genuine opportunity to make the shelter needs 
     of extremely low-income families a national priority. I 
     believe that such families who need housing the most should 
     be targeted to receive these limited funds.
       With every best wish, I am,
           Sincerely,
     Most Rev. Nicholas

[[Page 23816]]

     DiMarzio, PhD, DD
       Bishop of Brooklyn, Chairman, Domestic Policy Committee, 
     United States Conference of Catholic Bishops.

  Ms. KILPATRICK of Michigan. Mr. Chairman, it is with some reluctance 
I rise now in opposition to H.R. 1461, the Federal Housing Finance 
Reform Act. In its amended form, the legislation no longer puts the 
best interest of our Nation at heart, but instead holds a precious 
resource hostage for the sake of partisan politics.
  The provision restricting non-profit organizations, and their 
affiliates, from using their own funds to engage in non-partisan voter 
registration or get-out-the-vote activities if they want to apply for 
the much-needed affordable housing funds is entirely inappropriate. 
Election activities promoting good citizenship conducted by unbiased, 
non-profit organizations should be encouraged, not restricted. To add 
insult to injury, the new provision imposes a new burden of requiring 
these groups to list housing assistance as their ``primary purpose'' if 
they want to apply for funds. The effect of this constraint will be to 
reduce the diversity of assistance that will be available.
  With such a growing need for affordable housing, and for competent 
groups capable of connecting people with the already scarce resources, 
I cannot imagine why my colleagues would want to handicap these 
organizations from providing assistance to our Nation's most vulnerable 
populations.
  It is for these reasons I cannot support this otherwise sound and 
reasonable measure to improve the regulation of our Nation's largest 
source of mortgages. I urge my colleagues to vote ``no'' on H.R. 1461.
  Mr. NADLER. Mr. Chairman, I rise in opposition to this legislation.
  I support increasing oversight of Fannie Mae and Freddie Mac. It is a 
worthwhile goal, one that the recent scandals at these institutions and 
on Wall Street illustrate is sorely needed. And I support the creation 
of a budget-neutral Affordable Housing Fund. Indeed, that this kind of 
program should be created, given the proclivity of this Republican 
House of gutting programs for the poor, is nothing short of miraculous.
  However, I cannot support a program whose benefits come at the 
expense of the rights of nonprofit organizations. The provision in 
question would disqualify any nonprofit group that engages in voter 
participation activities, such as voter registration and get-out-the-
vote efforts, from applying for a grant under the Affordable Housing 
Fund. This would apply even if the activities are non-partisan and even 
if they are paid for with non-federal monies. This provision would have 
a chilling effect on the Constitutional speech and association rights 
of all nonprofits.
  How can the Republicans, in good faith, claim to work with us on the 
reauthorization of the Voting Rights Act, and turn around and tie the 
hands of those groups who are trying to incorporate the disenfranchised 
into the democratic process? What's worse, this provision is entirely 
superfluous. Nonprofits are already prohibited from using federal funds 
to lobby. However, they are free to engage in lobbying and nonpartisan 
voter registration with non-federal dollars. This bill is a slap in the 
face to those groups who need this money most. What's more, this 
restriction only applies to non-profit organizations, not any for-
profit entities seeking grants from the Fund.
  This bill also essentially bars non-profits whose mission extends 
beyond the provision of affordable housing. Many organizations develop 
and manage effective affordable housing programs alongside programs 
that provide food, closing, counseling, and other health and social 
services. Those who claim to work on behalf of the faith-based 
community should take a close look at this bill, and should watch this 
vote closely. By voting aye you are barring church groups from 
affordable housing funds if their primary mission goes beyond 
affordable housing.
  This is a typical piece of Republican legislation. Once again, my 
friends from across the aisle have poisoned legislation that would 
otherwise have received bipartisan support by picking on those who can 
least afford to defend themselves. I encourage my colleagues to join me 
in opposing this bill, and supporting the motion to recommit. We can 
and should do better.
  Mr. FOSSELLA. Mr. Chairman as we consider H.R. 1461, the Federal 
Housing Finance Reform Act, I would like to urge my colleagues to 
support the inclusion of a provision to provide an increase in 
Conforming Loan Limits for high cost Metropolitan Service Areas, MSAs.
  Since 1980, the price of homeownership in New York has increased by 
492 percent, and continues to escalate in the current housing market. 
With drastically higher prices than other parts of the country, 
homeownership in the area has limited access for lower and middle 
income New Yorkers.
  The GSE's chartered mission is to expand homeownership for low to 
middle income Americans, and this should apply to Americans regardless 
of the geographic region in which they reside. In working towards 
achieving this mission, Fannie Mae and Freddie Mac are restricted in 
their ability to participate in these high cost areas because 
significantly fewer mortgages fall within the conforming loan limit.
  The current loan limit is set at $359,650. The median price of a home 
in the New York area, however, is $435,200--considerably higher even 
for entry level home prices. While the current loan limit has been 
raised to the lesser of 150 percent of the statutory limit or the 
median home price in Alaska, Hawaii, Guam and the Virgin Islands, high 
cost metropolitan areas like New York City have been left out.
  Language included in HR 1461 would increase loan limits in high cost 
areas to the maximum of the area's median home purchase price, capped 
at 150 percent of the current limit. Raising these limits will help 
lower to middle income residents in high cost areas like Staten Island 
gain access to the lower interest mortgage rates Fannie and Freddie are 
able to provide--mortgage rates that, compared to jumbo loans, can save 
my constituents as much as $135 a month.
  Fannie and Freddie are able to provide lower interest rates to 
homebuyers and expand homeownership through the contributions of the 
American taxpayer. It is time the taxpayers in high cost areas like New 
York City realize the benefits of their contributions through access to 
lower interest mortgages. The current disparity is undeniable.
  I urge my colleagues to support the Conforming Loan Limits language 
and vote no on attempts to remove it from the Federal Housing Finance 
Reform Act.
  Mr. RAHALL. Mr. Chairman, today, the House of Representatives voted 
on H.R. 1461, the GSE Federal Housing Finance Reform Act of 2005. This 
bill will not only substantially overhaul the safety and soundness of 
the housing government-sponsored enterprises, but it will also 
establish an Affordable Housing Fund.
  I voted in favor of this legislation, but with some reservation.
  The Affordable Housing Fund provides funds to grantees to build 
housing that is affordable to low income families. This is an important 
goal, and while I support the bill and the establishment of the 
Affordable Housing Fund, I do not support the inclusion of language 
that blocks non-profit organizations from non-partisan activities that 
encourage citizens to participate in our democratic process. This is 
why I voted against the manager's amendment to H.R. 1461 earlier today.
  The amendment included language that will prohibit grantees from 
using even their own funds to encourage citizens to exercise their 
right to vote and would retroactively penalize organizations that have 
done so in the past. This language would restrict non-profits who 
engage in first amendment political activity, with their own funds, 
from receiving Affordable Housing Fund grants. In short, it will have a 
chilling effect on the free speech rights of non-profit organizations.
  By keeping funding out of the hands of non-profit and faith-based 
organizations that are associated with any kind of voter registration 
activities and exempting for-profit companies from the same 
restrictions, I ask, what legitimate governmental interest is there in 
preventing nonpartisan voter participation activities? Political 
participation is a foundation of our Constitution.
  I hope that when H.R. 1461 reaches Conference, a bi-partisan effort 
will come together to strike this language from an otherwise worthy 
piece of legislation. I will continue to protect our citizens' ability 
to register to vote and have a voice in the political process.
  Mrs. MALONEY. Mr. Chairman, when this bill left the Financial 
Services Committee on a 65 to 5 vote, I felt we were on the way to a 
great accomplishment. I was truly impressed with the hard work that 
Chairman Oxley, Ranking Member Frank, Congressman Baker, and others had 
done to bring the GSEs into this century.
  It is no less than tragic that the majority leadership and the 
administration have deep sixed this bipartisan legislation.
  The bill creates the sort of regulator that the GSEs have long lacked 
and that they demonstrably need, without destroying their housing 
mission.
  I was particularly excited by the Affordable Housing Fund provided by 
this bill. The Fund is a critical and long-overdue step toward 
addressing the very real housing crisis that confronts low-income 
families.

[[Page 23817]]

  It would be the first concrete step the Congress has taken in support 
of housing in this administration.
  We know that without Federal assistance, housing for low-income 
families does not get built or made available. Yet each year this 
administration has cut its support for housing. In this bill, we found 
a bipartisan way to support housing using a new funding source.
  The GSEs were chartered by the Federal government for the purpose of 
providing housing to more Americans, and they enjoy a benefit as a 
result of their Federal charter. Thus, it is uniquely appropriate that 
they plow a percentage of their profits--up to 5 percent--back into the 
low-income end of the housing market.
  This would be $500 million or more annually. That is serious money.
  We built on success: the Fund is modelled after the successful 
Affordable Housing Program of the Federal Home Loan Bank Program.
  We wanted all players involved. Funds would be awarded through a 
competitive process to for profit builders, State housing 
organizations, and non-profits.
  We put in place safeguards to prevent abuse. The funds must be used 
for low-income housing. They may not be used to lobby or to conduct 
partisan political activities. Recipients who misuse funds will not be 
allowed to participate again.
  This bill is the best thing that has come along for housing in a very 
long time.
  Therefore it is particularly tragic that the majority has injected a 
poison pill into the bipartisan bill that left our Committee: the 
provision that prevents any nonprofit recipient of a housing grant from 
conducting nonpartisan voter registration or get-out-the-vote 
activities.
  This is an outrageously bad provision that imposes unconstitutional 
restrictions on promoting the most fundamental of our civil liberties: 
the right to vote.
  It is profoundly disturbing that the majority and the administration 
are willing to use any tool available to kill this bill and prevent the 
Housing Fund from becoming a reality.
  I urge my colleagues on both sides of the aisle to repudiate these 
provisions that strike at faith based organizations and the fundamental 
right to vote.
  I cannot in good conscience vote for this bill with this provision in 
it. Even the promise of housing money comes at too high a price when we 
must compromise the principles on which this Nation is built.
  Ms. PELOSI. Mr. Chairman, I thank the gentlemen from the Financial 
Services Committee, Mr. Frank and Mr. Oxley for working in a bipartisan 
way to build broad support for the GSE reform bill they bring to the 
Floor today. This bill was reported from the Committee by a vote of 65-
5.
  But today that spirit of working together for common sense reforms 
and for the good of the people seems to have vanished.
  The first order of business will be to consider a manager's amendment 
that will eviscerate a provision of the bill that is central to the 
broad support it enjoys--the Affordable Housing program funded through 
a small percentage of the profits of Fannie Mae and Freddie Mac. If 
enacted, it will be the first affordable housing resource created 
without using Federal dollars since Congress established the Federal 
Home Loan Banks Affordable Housing Program in 1989.
  Mr. Chairman, for too long many of America's low-income families have 
struggled to find affordable, safe, decent housing. Budget cuts and 
rising development costs mean that fewer units are built under existing 
programs each year. We are losing more affordable housing than we are 
building. Therefore it is vital that a new dedicated funding stream for 
affordable housing be created.
  Unfortunately, my Republican conservative colleagues hijacked this 
bill in an effort to strip away the bipartisan housing fund. When they 
were not able to completely get rid of it, they limited its use by 
blocking nonprofit organizations and faith-based groups, who engage in 
vote registration with their own funds, from even applying for grants 
to build affordable housing. There are no similar restrictions on 
``for-profit'' organizations.
  This is not fair. As Catholic Charities has pointed out, 
``Encouraging citizens to exercise their right to vote is an integral 
part of the Catholic Church's religious and moral mission and 
reinforces individual responsibility for the common good . . . Catholic 
Charities agencies should not be forced to choose between affordable 
housing funds and fulfillment of their religious mission.''
  It is unacceptable to force a poisoned choice on these entities: to 
help fill critical housing needs or to exercise their basic civic 
responsibilities. Most importantly, it is an unacceptable barrier to 
Americans' right to vote.
  Our democracy depends on protecting the right of every American 
citizen to vote--and to register to vote--in every election. As the 
Supreme Court noted: ``No right is more precious in a free country than 
that of having a voice in the election of those who make the law, under 
which, as good citizens, we must live.''
  We dare not, we must not create barriers on the right to vote and 
undermine 40 years of progress. It is a chilling precedent and a path 
we should refuse to walk. No church, no religious order, no faith-based 
group or non-profit organization should face the prospect of being 
deemed ineligible for money to help low-income, elderly, or disabled 
individuals find affordable homes simply because they offer a full 
range of services, including counseling, clothing, mentoring, and--
yes--helping people fulfill their right to participate in their 
government.
  Mr. Chairman, today we honor the life of Rosa Parks. We must use the 
opportunity in this bill to recommit ourselves to the ideals of 
equality and opportunity that are both our hope and our future. We must 
defeat this cynical, political strategy to divide us once again. I urge 
my colleagues to support our effort to strip these mean-spirited 
restrictions from the bill.
  Mr. GUTIERREZ. Mr. Chairman, I am very proud of the committee print 
of H.R. 1461, legislation designed to improve the regulatory structure 
of the Government Sponsored Enterprises, GSEs. I am pleased that two 
amendments I offered at markup are part of the bill. One of my 
amendments preserves the minority component of the single family 
housing goals relating to underserved areas, with a major improvement 
in its implementation. My other amendment provides protection from 
liability for a GSE that makes reports to its regulator concerning 
transactions involving fraudulent loans or financial instruments. This 
provision was modeled after the protection from potential liability for 
such reports that banking institutions currently have under the Bank 
Secrecy Act.
  H.R. 1461 also contains a much-needed expansion of Fannie and 
Freddie's affordable housing goals. The legislation directs each 
company to establish and manage an affordable housing fund to promote 
affordable housing and assist victims of Hurricane Katrina. The GSEs 
would devote 3.5 percent of after tax profits to the fund beginning in 
2006, which increases to 5 percent annually beginning in 2007.
  In 1989, in the FIRREA legislation, we created a similar Affordable 
Housing Program in the Federal Home Loan Bank System. The AHP requires 
the FHLBs to devote 10 percent of each year's net profits as grants for 
affordable housing projects sponsored by their member financial 
institutions. The AHP's success can be measured by the fact that today 
it constitutes the largest private source of funding for affordable 
housing and community development projects.
  In my hometown of Chicago, the Federal Home Loan Bank of Chicago's 
AHP plays a key role in local efforts to address the housing needs of 
low- and moderate-income families by providing financial assistance for 
rental and owner-occupied housing, assisted living facilities, senior 
housing developments, homeless shelters and group homes.
  In 2004 alone, the Chicago FHLB awarded $32.1 million of subsidies to 
109 projects in Illinois and Wisconsin, and another 15 projects in 
other States. As a result, 5,680 housing units were created or 
rehabilitated, of which 58 percent were for very low-income households. 
Another $10.4 million was funded in downpayment assistance to help 
2,278 families buy their first home in Illinois or Wisconsin.
  While these figures are impressive, numbers do not quite tell the 
whole story. Let me describe one AHP project in the Humboldt Park/West 
Town area of Chicago to provide a better sense of the impact these 
programs can have in their local communities.
  Joly Hernandez and Jose Rodriguez, with their children Imani and 
Albert, lived in Chicago's Humboldt Park/West Town community. Like 
many, they wanted a larger apartment, but could not afford the higher 
rent due the dramatic rise in the cost of housing in the area. In the 
1990s, with increased recognition of Humboldt Park as an attractive, 
artist-friendly neighborhood and historic district, property values 
soared, and affordable rental housing was lost to speculators and 
developers of expensive luxury condos and single-family homes.
  In 1994, Bickerdike Redevelopment Corporation, BRC, a nonprofit, 
community-based affordable housing developer and property manager began 
the arduous task of planning the Harold Washington Unity Cooperative to 
address the loss of affordable housing in the Humboldt Park/West Town 
area. Despite the increase of new construction and housing renovation 
in the area, a few pockets remained

[[Page 23818]]

undeveloped. BRC knew that if the vacant land and neglected buildings 
were not immediately claimed for affordable housing, more long-time 
residents would be displaced.
  A project was planned to develop 87 housing units in 18 buildings 
over 10 sites in a formerly blighted four-block area bordered by Kedzie 
Avenue, Albany Avenue, Chicago Avenue and Ohio Street. All 87 units in 
the Cooperative will remain affordable to households earning 50 percent 
or less of the area median income for at least 15 years.
  The total cost of the project was almost $14 million. The Chicago 
FHLB, working through Bank One, which sponsored the project's 
application, provided an AHP grant of $500,000. In addition, the 
project received financing from CDBG funds through the City of Chicago, 
Trust Funds from the Illinois Housing and Development Agency, Federal 
Low Income Housing Tax Credits, Illinois State Tax Credits, an 
Empowerment Zone grant, a Tax Increment Financing, TIF, loan and first 
mortgage financing.
  Ten years after its original conception, the Harold Washington Unity 
Cooperative stands as an enviable display of community pride, 
determination and opportunity.
  Because of the hard work and dedication of BRC, Joly, Jose and their 
two children now live in a new home in their old neighborhood. They 
also belong to the Bickerdike Residents Council and feel a strong sense 
of community and camaraderie with their neighbors.
  Extending this program to Fannie and Freddie is long overdue, has 
overwhelming bipartisan support, and I look forward to similar success 
stories once this legislation is implemented.
  Those of us on the Committee have worked very hard to ensure that the 
fund can only be used for affordable housing purposes. It cannot be 
used for political advocacy or lobbying either by the receiving entity 
or a third party affiliated with them. It cannot be used for counseling 
services or tax preparation or travel expenses, administrative costs or 
anything that is outside of the GSE charter. It can only be used for 
affordable housing purposes. But apparently that was not enough for a 
small minority of radical conservative members, who insisted on 
inserting a provision restricting non-partisan civic activities by non-
profits. This language would prohibit non-profit organizations (as well 
as any affiliate of the non-profit) from using their own funds to 
engage in non-partisan voter registration or get-out-the-vote 
activities. Profit earning entities are not similarly restricted.
  Low-income housing groups and faith-based groups would be forced to 
choose between obtaining funding for low-income housing and using other 
funds to engage in non-partisan voter registration and get-out-the-vote 
activities. This provision is likely unconstitutional.
  The manager's amendment also contains language that would require 
that a faith-based or social welfare non-profit entity applying for a 
grant must have as its sole ``primary purpose'' the provision of 
affordable housing. This restriction is particularly problematic for 
social welfare and faith-based groups, which have a broader mission 
than exclusively affordable housing.
  These provisions are not only offensive substantively, but I have a 
real procedural problem with the way these provisions are being 
inserted in the bill. They are a part of the manager's amendment, which 
also contains important provisions that were worked out on a bipartisan 
basis, and provisions designed to help hurricane victims. The Rules 
Committee has unconscionably denied us an opportunity to vote to strike 
these offensive provisions on a stand alone basis. They did this 
because they knew we would win such a vote and they needed to bow to a 
tiny minority of conservatives who apparently have little regard for 
the Constitution.
  Regretfully, I must oppose H.R. 1461 due to the inclusion of these 
provisions and the fact that we were not even allowed an opportunity to 
vote to strike it. I sincerely hope that these provisions are stripped 
in conference and, if that is the case, I look forward to 
enthusiastically supporting the conference report so that this 
otherwise excellent legislation can become law.
  Mr. PAUL. Mr. Chairman, H.R. 1461 fails to address the core problems 
with the Government Sponsored Enterprises, GSEs. Furthermore, since 
this legislation creates new government programs that will further 
artificially increase the demand for housing, H.R. 1461 increases the 
economic damage that will occur when the housing bubble bursts. The 
main problem with the GSEs is the special privileges the Federal 
Government gives the GSEs. According to the Congressional Budget 
Office, the housing-related GSEs received almost 20 billion dollars 
worth of indirect federal subsidies in fiscal year 2004 alone.
  One of the major privileges the Federal Government grants to the GSEs 
is a line of credit from the United States Treasury. According to some 
estimates, the line of credit may be worth over two billion dollars. 
GSEs also benefit from an explicit grant of legal authority given to 
the Federal Reserve to purchase the debt of the GSEs. GSEs are the only 
institutions besides the United States Treasury granted explicit 
statutory authority to monetize their debt through the Federal Reserve. 
This provision gives the GSEs a source of liquidity unavailable to 
their competitors.
  This implicit promise by the government to bail out the GSEs in times 
of economic difficulty helps the GSEs attract investors who are willing 
to settle for lower yields than they would demand in the absence of the 
subsidy. Thus, the line of credit distorts the allocation of capital. 
More importantly, the line of credit is a promise on behalf of the 
government to engage in a massive unconstitutional and immoral income 
transfer from working Americans to holders of GSE debt. This is why I 
am offering an amendment to cut off this line of credit. I hope my 
colleagues join me in protecting taxpayers from having to bail out 
Fannie Mae and Freddie Mac when the housing bubble bursts.
  The connection between the GSEs and the government helps isolate the 
GSEs' managements from market discipline. This isolation from market 
discipline is the root cause of the mismanagement occurring at Fannie 
and Freddie. After all, if investors did not believe that the Federal 
Government would bail out Fannie and Freddie if the GSEs faced 
financial crises, then investors would have forced the GSEs to provide 
assurances that the GSEs are following accepted management and 
accounting practices before investors would consider Fannie and Freddie 
to be good investments.
  Federal Reserve Chairman Alan Greenspan has expressed concern that 
the government subsidies provided to the GSEs makes investors 
underestimate the risk of investing in Fannie Mae and Freddie Mac. 
Although he has endorsed many of the regulatory ``solutions'' being 
considered here today, Chairman Greenspan has implicitly admitted the 
subsidies are the true source of the problems with Fannie and Freddie.
  Mr. Chairman, H.R. 1461 compounds these problems by further 
insulating the GSEs from market discipline. By creating a ``world-
class'' regulator, Congress would send a signal to investors that 
investors need not concern themselves with investigating the financial 
health and stability of Fannie and Freddie since a ``world-class'' 
regulator is performing that function.
  However, one of the forgotten lessons of the financial scandals of a 
few years ago is that the market is superior at discovering and 
punishing fraud and other misbehavior than are government regulators. 
After all, the market discovered, and began to punish, the accounting 
irregularities of Enron before the government regulators did.
  Concerns have been raised about the new regulator's independence from 
the Treasury Department. This is more than a bureaucratic ``turf 
battle'' as there are legitimate worries that isolating the regulator 
from Treasury oversight may lead to regulatory capture. Regulatory 
capture occurs when regulators serve the interests of the businesses 
they are supposed to be regulating instead of the public interest. 
While H.R. 1461 does have some provisions that claim to minimize the 
risk of regulatory capture, regulatory capture is always a threat where 
regulators have significant control over the operations of an industry. 
After all, the industry obviously has a greater incentive than any 
other stakeholder to influence the behavior of the regulator.
  The flip side of regulatory capture is that mangers and owners of 
highly subsidized and regulated industries are more concerned with 
pleasing the regulators than with pleasing consumers or investors, 
since the industries know that investors will believe all is well if 
the regulator is happy. Thus, the regulator and the regulated industry 
may form a symbiosis where each looks out for the other's interests 
while ignoring the concerns of investors.
  Furthermore, my colleagues should consider the constitutionality of 
an ``independent regulator.'' The Founders provided for three branches 
of government--an executive, a judiciary, and a legislature. Each 
branch was created as sovereign in its sphere, and there were to be 
clear lines of accountability for each branch. However, independent 
regulators do not fit comfortably within the three branches; nor are 
they totally accountable to any branch. Regulators at these independent 
agencies often make judicial-like decisions, but they are not part of 
the judiciary. They often make rules, similar to the ones regarding 
capital requirements, that have the force of law, but independent 
regulators are not legislative. And, of course, independent regulators

[[Page 23819]]

enforce the laws in the same way, as do other parts of the executive 
branch; yet independent regulators lack the day-to-day accountability 
to the executive that provides a check on other regulators.
  Thus, these independent regulators have a concentration of powers of 
all three branches and lack direct accountability to any of the 
democratically chosen branches of government. This flies in the face of 
the Founders' opposition to concentrations of power and government 
bureaucracies that lack accountability. These concerns are especially 
relevant considering the remarkable degree of power and autonomy this 
bill gives to the regulator. For example, in the scheme established by 
H.R. 1461 the regulator's budget is not subject to appropriations. This 
removes a powerful mechanism for holding the regulator accountable to 
Congress. While the regulator is accountable to a board of directors, 
this board may conduct all deliberations in private because it is not 
subject to the sunshine act.
  Ironically, by transferring the risk of widespread mortgage defaults 
to the taxpayers through government subsidies and convincing investors 
that all is well because a ``world-class'' regulator is ensuring the 
GSEs' soundness, the government increases the likelihood of a painful 
crash in the housing market. This is because the special privileges of 
Fannie and Freddie have distorted the housing market by allowing Fannie 
and Freddie to attract capital they could not attract under pure market 
conditions. As a result, capital is diverted from its most productive 
uses into housing. This reduces the efficacy of the entire market and 
thus reduces the standard of living of all Americans.
  Despite the long-term damage to the economy inflicted by the 
government's interference in the housing market, the government's 
policy of diverting capital into housing creates a short-term boom in 
housing. Like all artificially created bubbles, the boom in housing 
prices cannot last forever. When housing prices fall, homeowners will 
experience difficulty as their equity is wiped out. Furthermore, the 
holders of the mortgage debt will also have a loss. These losses will 
be greater than they would have been had government policy not actively 
encouraged over-investment in housing.
  H.R. 1461 further distorts the housing market by artificially 
inflating the demand for housing through the creation of a national 
housing trust fund. This fund further diverts capital to housing that, 
absent government intervention, would be put to a use more closely 
matching the demands of consumers. Thus, this new housing program will 
reduce efficacy and create yet another unconstitutional redistribution 
program.
  Perhaps the Federal Reserve can stave off the day of reckoning by 
purchasing the GSEs' debt and pumping liquidity into the housing 
market, but this cannot hold off the inevitable drop in the housing 
market forever. In fact, postponing the necessary and painful market 
corrections will only deepen the inevitable fall. The more people are 
invested in the market, the greater the effects across the economy when 
the bubble bursts.
  Instead of addressing government polices encouraging the 
misallocation of resources to the housing market, H.R. 1461 further 
introduces distortion into the housing market by expanding the 
authority of Federal regulators to approve the introduction of new 
products by the GSEs. Such regulation inevitability delays the 
introduction of new innovations to the market, or even prevents some 
potentially valuable products from making it to the market. Of course, 
these new regulations are justified in part by the GSEs' government 
subsidies. We once again see how one bad intervention in the market 
(the GSEs' government subsidies) leads to another (the new 
regulations).
  In conclusion, H.R. 1461 compounds the problems with the GSEs and may 
increases the damage that will be inflicted by a bursting of the 
housing bubble. This is because this bill creates a new unaccountable 
regulator and introduces further distortions into the housing market 
via increased regulatory power. H.R. 1461 also violates the 
Constitution by creating yet another unaccountable regulator with 
quasi-executive, judicial, and legislative powers. Instead of expanding 
unconstitutional and market distorting government bureaucracies, 
Congress should act to remove taxpayer support from the housing GSEs 
before the bubble bursts and taxpayers are once again forced to bailout 
investors who were misled by foolish government interference in the 
market.
  Ms. KILPATRICK of Michigan. Mr. Chairman, it is with some reluctance 
I rise now in opposition to H.R. 1461, the Federal Housing Finance 
Reform Act. In its amended form, the legislation no longer puts the 
best interest of our Nation at heart, but instead holds a precious 
resource hostage for the sake of partisan politics.
  The provision restricting non-profit organizations, and their 
affiliates, from using their own funds to engage in non-partisan voter 
registration or get-out-the-vote activities if they want to apply for 
the much-needed affordable housing funds is entirely inappropriate. The 
inaptness is compounded by the fact that the language still allows for-
profit institutions to engage in voter advocacy, even conducted in a 
partisan, biased manner. If the threat of misuse of these funds is so 
apparent as to warrant this amendment, why would we only restrict 
charitable organizations and not those whose fundamental goal is to 
swell business profits?
  It is extremely apparent that the leadership's priorities are 
backwards. Congress should be encouraging election activities promoting 
good citizenship conducted by unbiased, non-profit organizations, not 
restricting the types of aid these groups are allowed to provide. To 
add insult to injury, the new provision imposes a new burden of 
requiring these groups to list housing assistance as their ``primary 
purpose'' if they want to apply for funds. The effect of this 
constraint will be to reduce the diversity of assistance that will be 
available.
  With such a growing need for affordable housing, and for competent 
groups capable of connecting people with the already scarce resources, 
I cannot imagine why my colleagues would want to handicap these 
organizations from providing assistance to our Nation's most vulnerable 
populations. It is for these reasons I cannot support this otherwise 
sound and reasonable measure to improve the regulation of our Nation's 
largest source of mortgages. I urge my colleagues to vote no on H.R. 
1461.
  Mr. GREEN of Wisconsin. Mr. Chairman, I supported Chairman Oxley's 
Manager's Amendment to H.R. 1461, the Federal Housing Finance Reform 
Act of 2005, because it maintains progress on several key issues 
Congress has been working on this session. I was pleased to see that 
the manager's amendment gave the victims of Hurricane Katrina priority 
in receiving grants from the Affordable Housing Fund for the first two 
years after its inception. I continue to urge my colleagues to look for 
ways to ease the burden of recovery that currently rests on the 
taxpayers. I also support the sunset provision of this amendment so 
that a future Congress can revisit this issue and again evaluate the 
needs of affordable housing recipients. Finally, I would like to 
express my full support for the ability of non-profit organizations to 
compete for the funds created by H.R. 1461.
  I agree that there must be full oversight of the groups receiving 
grants from the Affordable Trust Fund, and that no dollars from the 
fund may be used for lobbying, travel, or election activities. However, 
I do have concerns that some of the language included in the manager's 
amendment was overly broad. Some have argued that the amendment may 
prohibit groups like Catholic Charities, Lutheran Services in America, 
and Habitat for Humanity from receiving Affordable Trust Fund grants. I 
would strongly urge House conferees to revisit and narrow the language 
included in this amendment so that these organizations, along with 
other well-meaning non-profit groups, can access the funds and grow 
their affordable housing programs.
  Mr. UDALL of Colorado. Mr. Chairman, I rise in support of the 
``Federal Housing Finance Reform Act.'' This legislation not only 
addresses key components to ensure the stability of mortgage lenders 
Fannie Mae and Freddie Mac but it does a great deal more to expand 
homeownership opportunities for millions of American families.
  I am pleased this legislation creates a new and single regulator in 
the Federal Housing Finance Agency which has expanded strength, 
including full receivership powers in the event of a financial crisis 
and independent litigating authority. As these companies have a public 
mission they must comply with high standards and accountability on 
their activities.
  As the price of housing continues to rise, especially in high cost 
communities, many families find the opportunity of homeownership 
elusive. I am pleased this legislation will allow Freddie Mac and 
Fannie Mae to loan up to the median average of homes in areas of high 
cost. This provision will help middle class families in Colorado towns 
such as Minturn, Basalt and Frisco to receive needed resources so they 
can purchase a home.
  I am also pleased the legislation includes an affordable housing 
fund. This fund would require these mortgage lenders to allocate a 
portion of their profits for purposes such as down payment assistance 
and closing costs for low income first time homebuyers.
  While this bill has many strong elements it is important to note a 
significant shortcoming. I am outraged by provisions which subverts 
activities of nonprofit, charitable, faith based organizations and 
their affiliates. I find troubling that these groups would not be 
considered for funding from the affordable housing

[[Page 23820]]

fund if they use their own funds to participate in political activities 
such as non partisan voter registration drives and get out the vote 
activities. This is especially troubling as the Federal Government 
continues to spend time and resources expanding voting opportunities 
with the Help America Vote Act and the National Voter Registration Act.
  I hope the Senate and conference committee will reject such language 
to ensure that groups and organizations are not penalized for 
participation in the political process.
  In spite of deficiencies the bill is worth supporting because it is 
important to strengthen regulations and operations of Fannie Mae and 
Freddie Mac. By doing so we continue to provide and further expand the 
American dream of homeownership to millions of Americans and their 
families.
  Ms. VELAZQUEZ. Mr. Chairman, I rise today to register my opposition 
to H.R. 1461 the Federal Housing Finance Reform Act, due to recently 
add provisions that restrict non-profit organizations from receiving 
affordable housing funds if they engage in nonpartisan voter 
registration activities.
  On May 25, 2005, the Financial Services Committee reported the GSE 
bill with strong bipartisan support. I supported moving the bill 
because it took necessary steps toward expanding homeownership for 
American families.
  However, in an effort to bring the bill to the floor, Republicans 
altered the language that created an affordable housing trust fund. 
Under the Republican language, controversial limitations were included 
to restrict the receipt of the funds by nonprofit organizations. 
Specifically, the language prohibits nonprofit organizations, including 
religious groups, from applying for and receiving grants if they engage 
in, or maintain an affiliation with any organization that engages in, 
nonpartisan voter registration within the 12 months preceding the 
application or during the duration of the grant.
  This restrictive language has never been debated by the Financial 
Services Committee, despite the fact that its implications warrant 
careful study. For instance, the provisions raise significant 
constitutional questions because they place restrictions on the First 
Amendment right to affiliate. They also directly contradict current 
voter registration laws by discouraging civic participation in the 
democratic process.
  Moreover, I am extremely concerned that this language will exempt 
qualified non-profit groups from providing much needed affordable 
housing services across the country. The Financial Services Committee 
had taken great strides in this bill to increase homeownership through 
the creation of an affordable housing trust fund. Yet, this language 
throws our bipartisan efforts aside, the impact of which will be felt 
by the low income, elderly and disabled.
  As the Federal Housing Finance Reform Act moves forward through the 
legislative process, I hope that the Senate and conference committee 
recognize the harmful effects of these restrictions on non-profit 
organizations and remove the language that jeopardizes our democratic 
form of government.
  Mr. HENSARLING. Mr. Chairman, I first want to thank the gentleman 
from Ohio (Mr. Oxley) and the gentleman from Louisiana (Mr. Baker) for 
their leadership in getting this bill, H.R. 1461, to the House floor. 
Reforming the regulatory structure for the housing GSEs has clearly 
been a long time in the making.
  I am going to vote for this legislation, and I encourage my 
colleagues to do the same. I believe that we must act as a body to move 
this process forward, and work with the Senate to draft a bill that 
President Bush can sign into law. We are all aware of the economic 
damage that took place in the wake of other corporate accounting 
scandals, be it Enron, WorldCom or Tyco. It is important to remember 
that in terms of assets, Enron was only about one-sixteenth the size 
that Fannie Mae is today. WorldCom and Tyco were about one-tenth the 
size of Fannie in terms of assets. These facts cannot be ignored. 
Legislation is long overdue.
  However, I continue to have many concerns about certain provisions in 
H.R. 1461 that I believe could do more harm than good to our housing 
markets. Primarily, I am concerned that H.R. 1461 does not go far 
enough to protect our financial markets from the systemic risk posed by 
the giant portfolio holdings of Fannie Mae and Freddie Mac.
  Federal Reserve Chairman Alan Greenspan has warned us that without 
the needed restrictions on the size of Fannie and Freddie's portfolios, 
our ability to preserve safe and sound financial markets is 
significantly put at risk. H.R. 1461 would not give the new regulator 
the necessary tools to appropriately limit the size of the portfolios 
of these two institutions. The combined retained portfolios of these 
two companies now exceed $1.6 trillion, up from $136 billion in 1990. 
Portfolios of this size do nothing to promote liquidity in the 
secondary market. Unfortunately, H.R. 1461 will do nothing to protect 
American taxpayers from having to bail these institutions out should 
they fail.
  I am also concerned about what is commonly referred to as ``mission 
creep'' of these two entities. Congress has given Fannie Mae and 
Freddie Mac very special charters, unique government-granted benefits 
that we do not grant their competitors. These benefits exist so that 
they can create liquidity in the secondary mortgage market and help 
create the American Dream for middle and low income families. In recent 
years, these entities have been clearly engaging in areas outside of 
this charter, including airplane leasing, purchasing tobacco bonds, and 
providing international consulting. H.R. 1461 does not provide the 
necessary bright line between the activities in which Fannie Mae and 
Freddie Mac can and cannot engage. While Congress prohibits Fannie and 
Freddie from originating loans, we clearly need a better definition of 
loan origination and what separates the primary market from the 
secondary market. Not only would a bright line provide clarity, it 
would enhance competition in the primary market and prevent these 
taxpayer-backed institutions from engaging in activities outside of the 
scope of their charters.
  Further, I have concerns about raising the conforming loan limits for 
Fannie Mae and Freddie Mac, as H.R. 1461 does. Raising these limits 
will do nothing to help Fannie and Freddie meet their affordable 
housing goals. The conforming loan limits were originally established 
to ensure that Fannie Mae and Freddie Mac are focused on increasing the 
availability of housing for middle and low income Americans. These 
limits are necessary to prevent Fannie and Freddie from competing with 
private sector lenders, who already meet the demand for larger home 
loans. Raising the conforming loan limits is a clear extension of 
Fannie and Freddie's charters. That is not the purpose of this 
legislation.
  Mr. Chairman, the Chairman of the Financial Services Committee worked 
diligently and in good faith with myself and many of my colleagues who 
had serious concerns about the creation of an affordable housing fund 
for both Fannie Mae and Freddie Mac in H.R. 1461. I applaud him for his 
willingness to include language in this bill that seeks to prevent 
affordable housing fund monies from being abused for political 
purposes. However, it is my hope that as this bill moves toward 
conference with the Senate, we take a serious look at the need to 
create another housing fund of this nature, especially one that has the 
potential to be abused for political purposes.
  Our housing finance system is driven by the creation of jobs, 
supported by sound economic policy. Under the policies of this 
administration and this Republican Congress, this system has never 
worked better, and we now have achieved the highest rate of 
homeownership in the entire history of the United States of America. 
Mr. Chairman, the truth is there is no greater housing program than the 
American free enterprise system.
  Mr. OXLEY. Mr. Chairman, I yield back the balance of my time.
  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 shall be considered as an original bill for the 
purpose of amendment under the 5-minute rule and shall be considered 
read.
  The text of the amendment in the nature of a substitute is as 
follows:

                               H.R. 1461

       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 2005''.
       (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. Housing Finance Oversight Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Disclosure of 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. Regulations and orders.

[[Page 23821]]

Sec. 111. Risk-based capital requirements.
Sec. 112. Minimum and critical capital levels.
Sec. 113. Review of and authority over enterprise assets and 
              liabilities.
Sec. 114. Corporate governance of enterprises.
Sec. 115. Required registration under Securities Exchange Act of 1934.
Sec. 116. Financial Institutions Examination Council.
Sec. 117. Guarantee fee study.
Sec. 118. Conforming amendments.

             Subtitle B--Improvement of Mission Supervision

Sec. 121. Transfer of program and activities approval and housing goal 
              oversight.
Sec. 122. Review by Director of new programs and activities of 
              enterprises.
Sec. 123. Conforming loan limits.
Sec. 124. Annual housing report regarding regulated entities.
Sec. 125. Revision of housing goals.
Sec. 126. Duty to serve underserved markets.
Sec. 127. Monitoring and enforcing compliance with housing goals.
Sec. 128. Affordable housing fund.
Sec. 129. Consistency with mission.
Sec. 130. Enforcement.
Sec. 131. Conforming amendments.

                  Subtitle C--Prompt Corrective Action

Sec. 141. Capital classifications.
Sec. 142. Supervisory actions applicable to undercapitalized regulated 
              entities.
Sec. 143. Supervisory actions applicable to significantly 
              undercapitalized regulated entities.
Sec. 144. Authority over critically undercapitalized regulated 
              entities.
Sec. 145. 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. Presidentially appointed directors 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.
Sec. 185. Effective date.

                   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.
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 controlling 
     stockholder of, or agent for, a regulated entity;
       ``(B) any shareholder, affiliate, consultant, or joint 
     venture partner of a regulated entity, and any other person, 
     as determined by the Director (by regulation or on a case-by-
     case basis) that participates in the conduct of the affairs 
     of a regulated entity;
       ``(C) any independent contractor for a regulated entity 
     (including any attorney, appraiser, or accountant); 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 Housing Finance 
     Oversight 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 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.
       ``(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

[[Page 23822]]

     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, 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.
       ``(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 
     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.''.
       (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
       ``(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.
       ``(2) Subject to suit.--Except as otherwise provided by 
     law, the Director shall be subject to suit (other than suits 
     on claims for money damages) by a regulated entity 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 
     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

[[Page 23823]]

     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 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. HOUSING FINANCE OVERSIGHT 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. HOUSING FINANCE OVERSIGHT BOARD.

       ``(a) In General.--There is established the Housing Finance 
     Oversight Board.
       ``(b) Duties.--
       ``(1) In general.--The Board shall advise the Director with 
     respect to overall strategies and policies in carrying out 
     the duties of the Director under this title, at the request 
     of the Director and at the initiative of the Board, and shall 
     carry out such functions as otherwise provided by law.
       ``(2) Limitation.--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, as follows:
       ``(1) One member shall be the Director, who shall serve as 
     the Chairperson of the Board.
       ``(2) One member shall be the Secretary of the Treasury or 
     the designee of the Secretary.
       ``(3) One member shall be the Secretary of Housing and 
     Urban Development or the designee of the Secretary.
       ``(4) Two members shall be appointed by the President, by 
     and with the advice and consent of the Senate, who shall 
     include--
       ``(A) one individual who has extensive experience and 
     expertise in the capital markets (including debt markets), 
     the secondary mortgage market, and mortgage-backed 
     securities; and
       ``(B) one individual who has extensive experience and 
     expertise in mortgage finance (including single family and 
     multifamily housing mortgage finance), development of 
     affordable housing, and economic development and 
     revitalization.
       ``(d) Terms and Vacancies.--
       ``(1) Terms.--Each member of the Board pursuant to 
     paragraph (4) shall be appointed for a term of 3 years, and 
     may be removed by the President only for cause.
       ``(2) Vacancies.--A member of the Board appointed to fill a 
     vacancy occurring before the expiration of the term for which 
     the member's predecessor was appointed shall be appointed 
     only for the remainder of that term. A member of the Board 
     may serve after the expiration of the member's term until a 
     successor has been appointed.
       ``(e) Prohibition of Additional Compensation.--
     Notwithstanding any other provision of law, members of Board 
     pursuant to paragraphs (1), (2), and (3) shall not receive 
     additional compensation by reason of service on the Board.
       ``(f) Limitations.--Each member of the Board may not--
       ``(1) have any direct or indirect financial interest in any 
     regulated entity or regulated entity-affiliated party; or
       ``(2) hold any office, position, or employment in any 
     regulated entity or regulated entity-affiliated party.
       ``(g) Full-Time Members and Staff.--
       ``(1) Full-time members.--The members of the Board pursuant 
     to subsection (c)(4) shall serve on a full-time basis.
       ``(2) Staff.--The staff of the Board shall be appointed 
     subject to the provisions of title 5, United States Code, 
     governing appointments in the competitive service, and shall 
     be paid in accordance with the provisions of chapter 51 and 
     subchapter III of chapter 53 of that title relating to 
     classification and General Schedule pay rates, except that 
     each member of the Board pursuant to paragraph (4) may 
     appoint one staff member without regard to the such 
     provisions governing appointments in the competitive service 
     and such staff members may be paid by the Board without 
     regard to the such provisions relating to classification and 
     General Schedule pay rates.
       ``(h) 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.--Any member of the Board may, upon 
     giving written notice to the Director, require a special 
     meeting of the Board, which shall be convened by the Director 
     within 30 days after such notice.
       ``(i) 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 the Board; and
       ``(6) such other matters relating to the Agency, the Board, 
     and the regulated entities, and their fulfillment of their 
     missions, as the Board determines appropriate.
       ``(j) Costs.--Costs of the Board, including staff, shall be 
     paid by the Agency as a cost and expense of the Agency.
       ``(k) Exemption.--Notwithstanding any other provision of 
     law, the provisions of section 552b of title 5, United States 
     Code, shall not apply to the Board.''.
       (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 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;
       ``(D) an evaluation of the performance of the regulated 
     entities in carrying out their missions, including compliance 
     of the enterprises with the housing goals under subpart B of 
     part 2 of this subtitle and compliance of the Federal home 
     loan banks with the community investment and affordable 
     housing programs under subsections (i) and (j) of section 10 
     of the Federal Home Loan Bank Act;
       ``(E) an evaluation of the performance of the Agency in 
     fulfilling its duties and responsibilities under law; and
       ``(F) such other matters relating to the Board and the 
     fulfillment of its duties as the Board considers appropriate;
       ``(5) operations, resources, and performance of the Agency; 
     and
       ``(6) 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-afffiliated 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

[[Page 23824]]

     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 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 subsection:
       ``(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.''.

     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; and
       ``(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).'';
       (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 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 assessments 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 subtitle B and C 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 captitalized or as the result of 
     supervisory or enforcement activities under subtitle B or C 
     for a regulated entity, the amount available from any 
     semiannual payment made by such regulated entity pursuant to 
     subsection (b) is insufficient to cover the costs of the 
     Agency with respect to such entity, the Director may make and 
     collect from such 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 2005), 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.
       ``(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.

[[Page 23825]]

       ``(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 depositaries, 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.'';
       (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 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.''.
       (c) Repeal.--Section 20 of the Federal Home Loan Bank Act 
     (12 U.S.C. 1440) is amended--
       (1) in the section heading, by striking ``REPORTS'' and 
     inserting ``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 inserting after ``any entity'' the following: ``that 
     the Director considers appropriate, including an entity''.

     SEC. 110. 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 under this title and each of the authorizing 
     statutes to ensure that the purposes of this title and such 
     Acts 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. 111. 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

[[Page 23826]]

     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. 112. 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(b), 
     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 for such period as the Director may 
     provide if the Director--
       ``(1) makes any of the determinations specified in 
     subparagraphs (A) through (C) of section 1364(c)(1); or
       ``(2) determines that the regulated entity has violated any 
     of the prudential management and operations standards 
     established pursuant to section 1313A and, as a result of 
     such violation, is operating in an unsafe and unsound manner.
       ``(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 may, by regulations issued under section 1319G(b), 
     adjust the minimum capital levels as necessary, based on the 
     Director's review.''.
       (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. 113. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND 
                   LIABILITIES.

       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 conduct, on a 
     periodic basis, a review of the on-balance sheet and off-
     balance sheet assets and liabilities of each enterprise.
       ``(b) Authority to Require Disposition or Acquisition.--
     Pursuant to such a review 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 or liability, if the Director determines 
     that such action is consistent with the safe and sound 
     operation of the enterprise or with the purposes of this Act 
     or any of the authorizing statutes.''.

     SEC. 114. 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

[[Page 23827]]

     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 U.S.C. Part 1710) in accordance with 
     section 553 of title 5, United States Code, and upon written 
     notice to the enterprise.''.

     SEC. 115. 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.
       ``(b) Enterprises.--Each enterprise shall comply with 
     sections 14 and 16 of the Securities Exchange Act of 1934.''.

     SEC. 116. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.

       The Federal Financial Institutions Examination Council Act 
     of 1978 is amended--
       (1) in section 1003 (12 U.S.C. 3302)--
       (A) in paragraph (1), by inserting ``Director of the 
     Federal Housing Finance Agency,'' after ``Supervision,''; and
       (B) in paragraph (3), by striking ``or a credit union;'' 
     and inserting ``a credit union, or a regulated entity (as 
     such term is defined in section 1303 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4502)).'';
       (2) in section 1004 (12 U.S.C. 3303)--
       (A) in paragraph (4), by inserting a semicolon at the end;
       (B) by redesignating paragraph (5) as paragraph (6); and
       (C) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) the Director of the Federal Housing Finance Agency; 
     and''; and
       (3) in section 1006(d) (12 U.S.C. 3305(d)), by striking 
     ``and employees of the Federal Housing Finance Board''.

     SEC. 117. GUARANTEE FEE STUDY.

       (a) In General.--The Comptroller General of the United 
     States, in consultation with the heads of the federal banking 
     agencies and the Director of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development, shall, not later than one year 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.

[[Page 23828]]

       (d) Protection of Information.--Nothing in this section may 
     be construed to require or authorize the Government 
     Accounting Office, in connection with the study mandated by 
     this section, to disclose information of the enterprises or 
     other organization that is confidential or proprietary.

     SEC. 118. 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), 
     1312(e)(2), and 1319B(a)(4)(D)) 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 1312(b)(5), 1315(b), and 
     1316(g), and section 1317(c)) 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 titles 
     III and IV of the Federal Housing Finance Reform Act of 2005, 
     the'';
       (B) by striking subsections (d) and (f); and
       (C) by redesignating subsection (e) as subsection (d);
       (7) in section 1319A (12 U.S.C. 4520)--
       (A) by striking ``(a) In General.--Each enterprise'' and 
     inserting ``Each regulated entity''; and
       (B) by striking subsection (b);
       (8) 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
       (9) 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. 121. TRANSFER OF PROGRAM AND ACTIVITIES 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--PROGRAM AND ACTIVITIES APPROVAL BY DIRECTOR, CORPORATE 
         GOVERNANCE, AND ESTABLISHMENT OF HOUSING GOALS''; and

       (2) by striking sections 1321 and 1322.

     SEC. 122. REVIEW BY DIRECTOR OF NEW PROGRAMS AND ACTIVITIES 
                   OF ENTERPRISES.

       (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. REVIEW AND APPROVAL BY DIRECTOR OF NEW PROGRAMS 
                   AND BUSINESS ACTIVITIES OF ENTERPRISES.

       ``(a) Limitation on Authority to Undertake Programs and 
     Activities.--An enterprise may not undertake any new program, 
     including a pilot program, or any new business activity 
     except in accordance with the procedures set forth in this 
     section and orders and regulations issued under this section.
       ``(b) New Programs.--
       ``(1) Prior approval requirement.--An enterprise may not 
     commence any new program before it has obtained the approval 
     of the Director, pursuant to this subsection, for the new 
     program.
       ``(2) Application.--The Director shall, by order or 
     regulation, require that an enterprise shall, to obtain a 
     determination by the Director regarding approval of a new 
     program by the enterprise, submit to the Director a written 
     application for the new program in a format as prescribed by 
     the Director.
       ``(3) Notice.--Immediately upon receipt of a complete 
     application for a new program, the Director shall cause to be 
     published in the Federal Register notice of the receipt of 
     such application and of the period for public comment 
     pursuant to paragraph (4) regarding such new program, and a 
     description of the new program proposed by the application.
       ``(4) Public comment period.--During the 30-day period 
     beginning upon publication pursuant to paragraph (3) of a 
     notice regarding such an application, the Director shall 
     receive public comments regarding the new program.
       ``(5) Determination.--Not less than 15 days after the 
     conclusion of the public comment period pursuant to paragraph 
     (4) regarding an application but not more than 30 days after 
     the conclusion of such comment period, the Director shall 
     approve, conditionally approve, or reject such program, in 
     writing.
       ``(6) Standard for approval.--The Director may approve, or 
     conditionally approve, a new program of an enterprise only if 
     the Director determines, taking into consideration any 
     relevant information and comments received during the public 
     comment period, that such new program--
       ``(A) does not contravene and is not inconsistent with the 
     purposes of this title, the Federal National Mortgage 
     Association Charter Act, or the Federal Home Loan Mortgage 
     Corporation Act, as such purposes are determined taking into 
     consideration the definitions of the terms `mortgage loan 
     origination' and `secondary mortgage market' pursuant to 
     section 1303;
       ``(B) is not otherwise inconsistent with the safety and 
     soundness of the enterprise; and
       ``(C) is in the public interest.
       ``(7) Limitation.--The Director, in implementing this 
     subsection, may not prevent an enterprise from continuing to 
     offer the automated loan underwriting system in existence on 
     the date of the enactment of the Federal Housing Finance 
     Reform Act of 2005 or continuing to engage in counseling and 
     education activities.
       ``(c) New Business Activities.--
       ``(1) Authority of director to prohibit new business 
     activities.--The Director shall have authority to prohibit 
     any new business activity by an enterprise if the Director 
     determines, in writing, that such activity--
       ``(A) contravenes or is inconsistent with the purposes of 
     this title, the Federal National Mortgage Association Charter 
     Act, or the Federal Home Loan Mortgage Corporation Act;
       ``(B) is otherwise inconsistent with the safety and 
     soundness of the enterprise; or
       ``(C) is not in the public interest.
       ``(2) Notification of new business activities.--An 
     enterprise that undertakes any new business activity shall 
     provide written notice of the activity to the Director and 
     may commence the new business activity only in accordance 
     with paragraph (4).
       ``(3) Director determination of applicable procedure.--
       ``(A) Timing.--Immediately upon receipt of any notice under 
     paragraph (2) regarding a new business activity, the Director 
     shall undertake a determination under subparagraph (B) of 
     this paragraph regarding the new business activity.
       ``(B) Determination and treatment as new program.--If the 
     Director determines that any new business activity consists 
     of, relates to, or involves any new program--
       ``(i) the Director shall notify the enterprise of the 
     determination;
       ``(ii) the new business activity described in the notice 
     shall be considered a new program for purposes of this 
     section; and

[[Page 23829]]

       ``(iii) the Director shall prohibit the enterprise from 
     carrying out the activity except to the extent that approval 
     for the activity is obtained pursuant to subsection (b).
       ``(4) Commencement.--An enterprise may commence a new 
     business activity--
       ``(A) if the Director issues a written approval regarding 
     such new business activity, immediately upon such issuance or 
     at such other time as provided by the Director in such 
     letter; or
       ``(B) if, during the 30-day period beginning upon receipt 
     by the Director of notice pursuant to paragraph (2) regarding 
     a new business activity, the Director has not issued to the 
     enterprise a written approval or denial of the new business 
     activity, upon the expiration of such 30-day period.
       ``(d) Approval and Conditional Approval.--The Director may 
     at any time conditionally approve the undertaking of a 
     particular new program or new business activity by an 
     enterprise and set forth the terms and conditions that apply 
     to the program or activity with which the enterprise shall 
     comply if it undertakes the new program or activity. Such 
     approval may, in the discretion of the Director, be in the 
     form of a written agreement between the enterprise and the 
     Director and shall be subject to such terms and conditions 
     therein. Such a written agreement or conditional approval 
     shall be enforceable under subtitle C.
       ``(e) Determination and Treatment of Activity as New 
     Business Activity.--If the Director determines that any 
     activity of an enterprise consists of, relates to, or 
     involves any new business activity--
       ``(1) the Director shall notify the enterprise of the 
     determination;
       ``(2) such activity shall be considered a new business 
     activity for purposes of this section; and
       ``(3) the Director shall prohibit the enterprise from 
     carrying out the activity except to the extent that approval 
     for the activity is obtained pursuant to subsection (c).
       ``(f) Effect on Other Authorities.--
       ``(1) Examinations.--Nothing in this section may be 
     construed to limit, in any manner, any other authority or 
     right the Director may have under other provisions of law to 
     conduct an examination of an enterprise.
       ``(2) Requests for information.--Nothing in this section 
     may be construed to limit the right of the Director at any 
     time to request additional information from an enterprise 
     concerning any business activity.
       ``(3) No implied right of action.--This section shall not 
     create any private right of action against an enterprise or 
     any director or executive officer of an enterprise, or impair 
     any private right of action under other applicable law.
       ``(4) No limitation.--Nothing in this section may be 
     construed to restrict the general supervisory and regulatory 
     authority of the Director over all programs, products, 
     activities, or business operations of any kind.
       ``(g) Report on Programs and Business Activities.--Not 
     later than the expiration of the 180-day period beginning on 
     the effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2005, each enterprise shall submit to 
     the Director a report identifying and describing each program 
     and business activity of the enterprise engaged in or 
     existing as of the submission of the report.
       ``(h) Regulations.--The Director shall by order or 
     regulation issue rules and procedures to implement this 
     section, including in the discretion of the Director, such 
     definitions, interpretations, forms, and other guidances as 
     the Director considers appropriate.''.
       (b) Definitions.--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--
       (1) by redesignating paragraphs (17) through (23) as 
     paragraphs (20) through (26), respectively;
       (2) by inserting after paragraph (16) the following new 
     paragraph:
       ``(19) New business activity.--The term `new business 
     activity' means, with respect to an enterprise, a business 
     activity that--
       ``(A) is materially changed or materially different from 
     any of the business activities that the enterprise was 
     engaging in on the effective date under section 185 of the 
     Federal Housing Finance Reform Act of 2005; and
       ``(B) the enterprise has not previously obtained 
     authorization, pursuant to the provisions of section 1321(c), 
     to offer, undertake, transact, conduct, or engage in.'';
       (3) by redesignating paragraphs (15) and (16) as paragraphs 
     (17) and (18), respectively;
       (4) by inserting after paragraph (14) the following new 
     paragraph:
       ``(16) Mortgage markets.--The terms `mortgage loan 
     origination' and `secondary mortgage market' shall have such 
     meanings as the Director shall, by regulation, prescribe 
     consistent with the Federal National Mortgage Association 
     Charter Act and the Federal Home Loan Mortgage Corporation 
     Act. The Director shall issue such regulations not later than 
     the expiration of the 12-month period beginning on the 
     effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2005, and the Director shall review 
     such regulations on a periodic basis.'';
       (5) by redesignating paragraphs (5) through (14) as 
     paragraphs (6) through (15), respectively; and
       (6) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) Business activity.--The term `business activity' 
     means, with respect to an enterprise, any offering, 
     undertaking, transacting, conducting, or engaging in any 
     conduct, activity, or product by the enterprise, as the 
     Director shall provide.''.
       (c) 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 ``new program (as such term is'' and 
     inserting ``new program or new business activity (as such 
     terms are''; and
       (B) 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 ``new program (as such term is'' and 
     inserting ``new program or new business activity (as such 
     terms are''; and
       (B) by striking ``before obtaining the approval of the 
     Secretary under section 1322'' and inserting ``except in 
     accordance with section 1321''.

     SEC. 123. 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 by striking the 7th and 8th sentences 
     and inserting the following new sentences: ``Such limitations 
     shall not exceed $359,650 for a mortgage secured by a single-
     family residence, $460,400 for a mortgage secured by a 2-
     family residence, $556,500 for a mortgage secured by a 3-
     family residence, and $691,600 for a mortgage secured by a 4-
     family residence, except that such maximum limitations shall 
     be adjusted effective January 1 of each year beginning after 
     the effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2005, 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 fourth-quarter period ending before the time of 
     determining such annual adjustment, in the housing price 
     index maintained by the Director of the Federal Housing 
     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 123(d)(3) of the Federal Housing Finance 
     Reform Act of 2005, 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 by striking the 6th and 7th sentences and inserting 
     the following new sentences: ``Such limitations shall not 
     exceed $359,650 for a mortgage secured by a single-family 
     residence, $460,400 for a mortgage secured by a 2-family 
     residence, $556,500 for a mortgage secured by a 3-family 
     residence, and $691,600 for a mortgage secured by a 4-family 
     residence, except that such maximum limitations shall be 
     adjusted effective January 1 of each year beginning after the 
     effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2005, 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 fourth-quarter period ending before the time of 
     determining such annual adjustment, in the housing price 
     index maintained by the Director of the Federal Housing 
     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 123(d)(3) of the 
     Federal Housing Finance Reform Act of 2005, 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 
     122 of this Act) the following new section:

[[Page 23830]]



     ``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 
     2005, 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 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).
       (e) Regular Adjustment of Conforming Loan Limits.--
       (1) Adjustment for year intervening before effective 
     date.--Notwithstanding 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 this section, the maximum dollar amount 
     limitations in such sections shall be adjusted on the 
     effective date under section 185 of this Act, and the 
     limitations as so adjusted shall be immediately effective, so 
     that the limitations under such sections applicable to the 
     year in which such effective date occurs are equal to the 
     limitations in effect under such sections immediately before 
     such effective date.
       (2) Further adjustments.--After such effective date, the 
     dollar amount limitations as adjusted pursuant to paragraph 
     (1) shall be considered ``such amount (as it may have been 
     previously adjusted'' for purposes of 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.

     SEC. 124. 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;
       ``(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 
     124(b) of the Federal Housing Finance Reform Act of 2005) 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;

[[Page 23831]]

       ``(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. 125. 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 2005 
     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.--In establishing and implementing the 
     housing goals under this subpart, the Director shall require 
     the enterprises to disclose appropriate information to allow 
     the Director to assess if there are any disparities in 
     interest rates charged on mortgages to borrowers who are 
     minorities as compared with borrowers of similar 
     creditworthiness who are not minorities, as evidenced in 
     reports pursuant to the Home Mortgage Disclosure Act of 1975.
       ``(2) Report and remedy.--Upon a finding by the Director, 
     pursuant to the information provided by an enterprise in 
     paragraph (1), that a pattern of disparities in interest 
     rates exists, the Director shall--
       ``(A) 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 detailing 
     the disparities; and
       ``(B) require the enterprise to take such action as the 
     Director deems appropriate pursuant to this Act to remedy the 
     interest rate disparities identified.
       ``(3) Protection of identity.--In carrying out this 
     subsection, the Director shall ensure that no information is 
     made public that would reasonably allow identification, 
     directly or indirectly, of an individual borrower.
       ``(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 an annual 
     goal for the purchase by each enterprise of conventional, 
     conforming, single-family, owner-occupied, purchase money 
     mortgages financing 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) Determination of Compliance.--The Director shall 
     determine, for each year that the housing goal under this 
     section is in effect pursuant to section 1331(a), whether 
     each enterprise has complied with the single-family housing 
     goal 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--
       ``(1) for each of the types of families described in 
     subsection (a), the percentage of the number of conventional, 
     conforming, single-family, owner-occupied, purchase money 
     mortgages purchased by each enterprise in such year that 
     serve such families, meets or exceeds
       ``(2) the target for the year for such type of family that 
     is established under subsection (c).
       ``(c) 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, 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 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, 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.
       ``(d) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (b) regarding a compliance of an enterprise 
     for a year with the 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 (c).
       ``(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.
       ``(e) 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.

     ``SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE 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 very low-
     income families.
       ``(B) 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, 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 full 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 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--
       ``(1) such bonds are secured by a guarantee of the 
     enterprise; or

[[Page 23832]]

       ``(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 (26), by striking ``60 percent'' each 
     place such term appears and inserting ``50 percent'';
       (2) by redesignating paragraphs (23) through (26) as 
     paragraphs (27) through (30), respectively;
       (3) by inserting after paragraph (22) the following new 
     paragraph:
       ``(26) Rural areas.--The term `rural areas' means any areas 
     that are non-metropolitan areas (as such term is defined by 
     the Director of the Office of Management and Budget), 
     including micropolitan areas and tribal trust lands.''.
       (4) by redesignating paragraphs (14) through (22) as 
     paragraphs (17) through (25), respectively; and
       (5) by inserting after paragraph (13) the following new 
     paragraph:
       ``(16) 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 (12) and (13) as paragraphs 
     (14) and (15), respectively;
       (7) by inserting after paragraph (11) the following new 
     paragraph:
       ``(13) 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 (8) through (11) as 
     paragraphs (9) through (12), respectively; and
       (9) by inserting after paragraph (7) the following new 
     paragraph:
       ``(8) 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. 126. 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; and
       ``(vi) 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 2005, 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
       ``(C) the volume of loans purchased in each of such 
     underserved markets.''.

[[Page 23833]]

       (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 1335A 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 sections 1332, 1333, 
     and 1334 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. 127. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING 
                   GOALS.

       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 entering into new programs and new business 
     activities and to order the enterprise to suspend programs 
     and business activities pending its achievement of the 
     goal.''.

     SEC. 128. 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.--Each enterprise shall 
     establish and manage an affordable housing fund in accordance 
     with this section. The purpose of the affordable housing fund 
     shall be--
       ``(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; and
       ``(4) to increase investment in economic and community 
     development in economically underserved areas.
       ``(b) Allocation of Amounts by Enterprises.--
       ``(1) In general.--In accordance with regulations issued by 
     the Director under subsection (l) and subject to paragraph 
     (2) of this subsection, each enterprise shall allocate to the 
     affordable housing fund established under subsection (a) by 
     the enterprise, in each year beginning after the effective 
     date under section 185 of the Federal Housing Finance Reform 
     Act of 2005, 5 percent of the after-tax income of the 
     enterprise for the preceding year.
       ``(2) Limitation.--An enterprise shall not be required to 
     make an allocation for a year to the affordable housing fund 
     of the enterprise established under subsection (a) unless--
       ``(A) the enterprise is classified by the Director at the 
     time of such allocation as adequately capitalized; and
       ``(B) the enterprise generated after-tax income for the 
     preceding year.
       ``(3) Determination of after-tax income.--For purposes of 
     this section, the term `after-tax income' means, with respect 
     to an enterprise for a year, the amount reported by the 
     enterprise for such year in the enterprise's annual report 
     for such year that is filed with the Securities and Exchange 
     Commission, except that for any year in which no such filing 
     is made by an enterprise or such filing is not timely made, 
     such term means the amount determined by the Director based 
     on the income tax return filings of the enterprise.
       ``(c) Selection of Activities Funded Using Affordable 
     Housing Fund Amounts.--Amounts from the affordable housing 
     fund of the enterprise may be used, or committed for use, 
     only for activities that--
       ``(1) are eligible under subsection (d) for such use; and
       ``(2) are selected for funding by the enterprise in 
     accordance with the process and criteria for such selection 
     established pursuant to subsection (l)(2)(C).
       ``(d) Eligible Activities.--Amounts from the affordable 
     housing fund of an enterprise 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 amounts 
     provided from the Fund 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 the affordable housing fund of the 
     enterprise;
       ``(B) has an initial purchase price that meets the 
     requirements of section 215(b)(1) of the Cranston-Gonzalez 
     National Affordable Housing Act; and
       ``(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
       ``(3) leveraged grants under subsection (e).
       ``(e) Leveraged Grants.--
       ``(1) In general.--Pursuant to regulations issued by the 
     Director, each enterprise shall carry out a program under 
     this subsection to make leveraged grants from amounts in the 
     affordable housing fund of the enterprise, subject to the 
     requirements under this subsection.

[[Page 23834]]

       ``(2) Eligible purposes.--Amounts from the affordable 
     housing fund of an enterprise may be used only for leveraged 
     grants under paragraph (4) for--
       ``(A) the development, preservation, rehabilitation, or 
     purchase of affordable housing that meets underserved needs 
     for affordable housing;
       ``(B) community or economic development activities in 
     economically underserved areas; or
       ``(C) a combination of the activities identified in 
     subparagraphs (A) and (B).
       ``(3) Eligible sponsors.--A leveraged grant under this 
     subsection may be made only on behalf of a sponsor that meets 
     such requirements as the Director shall establish for 
     experience and success in carrying out the types of 
     activities proposed under the application of the sponsor, 
     such as the following entities:
       ``(A) A low-income housing fund.
       ``(B) A housing finance agency of a State or unit of 
     general local government.
       ``(C) A non-profit organization having as one of its 
     principal purposes the development or management of 
     affordable housing.
       ``(D) A community development financial institution.
       ``(E) A national non-profit housing intermediary.
       ``(F) A community development corporation.
       ``(G) A community development entity.
       ``(4) Eligible uses.--Amounts from the affordable housing 
     fund of an enterprise may be used under this subsection only 
     for the following types of leveraged grants:
       ``(A) To provide loan loss reserves.
       ``(B) To capitalize a revolving loan fund.
       ``(C) To provide equity capitalization of an affordable 
     housing fund.
       ``(D) To provide equity capitalization of a community 
     development or economic development fund.
       ``(E) For risk sharing loans.
       ``(F) For the funding of a specific, detailed investment 
     plan that identifies the specific types of uses and the 
     expected timeframes with respect to such uses.
       ``(5) Applications.--The Director shall provide, in the 
     application process established pursuant to subsection 
     (l)(2)(C), for eligible sponsors under paragraph (3) of this 
     subsection to submit applications to an enterprise for 
     leveraged grants pursuant to this subsection, which shall 
     include a detailed description of--
       ``(A) the types of affordable housing or community or 
     economic development activities for which the leveraged grant 
     is made;
       ``(B) the type of eligible leveraged grants under paragraph 
     (4) to be made in the project;
       ``(C) the types, sources, and amounts of other funding for 
     the project;
       ``(D) and the expected time frame of the leveraged grant 
     under this subsection.
       ``(6) Limitations.--The Director shall by regulation--
       ``(A) ensure that leveraged grants pursuant to this 
     subsection are designed to alleviate need for affordable 
     housing in underserved markets identified in section 1335(a) 
     having the greatest need for such housing or to address 
     community and economic development needs in economically 
     underserved areas having the greatest need; and
       ``(B) ensure that any returns from leveraged grants under 
     this subsection accrue to the affordable housing fund of the 
     enterprise and are available for use only as provided under 
     this section.
       ``(f) Limitations on Use.--
       ``(1) Amounts for homeownership.--Of any amounts allocated 
     pursuant to subsection (b) in each year to the affordable 
     housing fund of an enterprise, not less than 10 percent shall 
     be used for activities under paragraph (2) of subsection (d).
       ``(2) Amounts for leveraged grants.--Of any amounts 
     allocated pursuant to subsection (b) in each year to the 
     affordable housing fund of an enterprise, not more than 12.5 
     percent shall be used for leveraged grants under subsection 
     (e).
       ``(3) Deadline for commitment or use.--Any amounts 
     allocated to the affordable housing fund of an enterprise 
     shall be used or committed for use within two years of the 
     date of such allocation.
       ``(4) Use of returns.--Any return on investment of any 
     amounts allocated pursuant to subsection (b) to the 
     affordable housing fund of an enterprise shall be available 
     for use by the enterprise only for eligible activities under 
     subsection (d).
       ``(5) Administrative costs.--The Director shall, by 
     regulation--
       ``(A) provide that, except as provided in subparagraph (B), 
     amounts allocated to the affordable housing fund of an 
     enterprise may not be used for administrative, outreach, or 
     other costs of--
       ``(i) the enterprise; or
       ``(ii) any recipient of amounts from the affordable housing 
     fund; and
       ``(B) limit the amount of any such contributions that may 
     be used for administrative costs of the enterprise of 
     maintaining the affordable housing fund and carrying out the 
     program under this section.
       ``(6) Prohibition of consideration of use for meeting 
     housing goals.--In determining compliance with the housing 
     goals under this subpart, the Director may not consider 
     amounts used under this section for eligible activities under 
     subsection (d). The Director shall give credit toward the 
     achievement of such housing goals to purchases of mortgages 
     for housing that receives funding under this section, but 
     only to the extent that such purchases are funded other than 
     under this section.
       ``(7) Prohibition of certain subgrants.--The Director 
     shall, by regulation, ensure that amounts from the affordable 
     housing fund of an enterprise awarded under this section to a 
     national non-profit housing intermediary are not used for the 
     purpose of distributing subgrants to other non-profit 
     entities.
       ``(g) Consistency of Use With Housing Needs.--
       ``(1) Quarterly reports.--The Director shall require each 
     enterprise to submit a report, on a quarterly basis, to the 
     Director and the affordable housing board established under 
     subsection (j) describing the activities funded under this 
     section during such quarter with amounts from the affordable 
     housing fund of the enterprise established under this 
     section. The Director shall make such reports publicly 
     available. The affordable housing board shall review each 
     report by an enterprise to determine the consistency of such 
     activities funded with the criteria for selection of such 
     activities established pursuant to subsection (l)(2)(C).
       ``(2) Replenishment.--If the affordable housing board 
     determines that an activity funded by an enterprise with 
     amounts from the affordable housing fund of the enterprise is 
     not consistent with the criteria established pursuant to 
     subsection (l)(2)(C), the board shall notify the Director and 
     the Director shall require the enterprise to allocate to such 
     affordable housing fund (in addition to amounts allocated in 
     compliance with subsection (b)) an amount equal to the sum of 
     the amounts from the affordable housing fund used and further 
     committed for use for such activity.
       ``(h) Capital Requirements.--The utilization or commitment 
     of amounts from the affordable housing fund of an enterprise 
     shall not be subject to the risk-based capital requirements 
     established pursuant to section 1361(a).
       ``(i) Reporting Requirement.--Each enterprise shall 
     include, in the report required under section 309(m) of the 
     Federal National Mortgage Association Charter Act or section 
     307(f) of the Federal Home Loan Mortgage Corporation Act, as 
     applicable, a description of the actions taken by the 
     enterprise to utilize or commit amounts allocated under this 
     section to the affordable housing fund of the enterprise 
     established under this section.
       ``(j) Affordable Housing Board.--
       ``(1) Appointment.--The Director shall appoint an 
     affordable housing board of 7, 9, or 11 persons, who shall 
     include--
       ``(A) the Director, or the Director's designee;
       ``(B) the Secretary of Housing and Urban Development, or 
     the Secretary's designee;
       ``(C) the Secretary of Agriculture, or the Secretary's 
     designee;
       ``(D) 2 persons from for-profit organizations or businesses 
     actively involved in providing or promoting affordable 
     housing for extremely low- and very low-income households; 
     and
       ``(E) 2 persons from nonprofit organizations actively 
     involved in providing or promoting affordable housing for 
     extremely low- and very low-income households.
       ``(2) Terms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term of each member of the affordable housing board 
     appointed pursuant to paragraph (1) (but not including 
     members appointed pursuant to subparagraphs (A), (B), and 
     (C)) shall be 3 years.
       ``(B) Initial appointees.--The Director shall appoint the 
     initial members of the affordable housing board not later 
     than the expiration of the 60-day period beginning on the 
     date of the enactment of this Act. As designated by the 
     Director at the time of appointment, of the members of the 
     affordable housing board first appointed pursuant to 
     paragraph (1) (but not including members appointed pursuant 
     to subparagraphs (A), (B), and (C))--
       ``(i) in the case of a board having 7 members--

       ``(I) one shall be appointed for a term of one year; and
       ``(II) one shall be appointed for a term of two years;

       ``(ii) in the case of a board having 9 members--

       ``(I) two shall be appointed for a term of one year; and
       ``(II) two shall be appointed for a term of two years; and

       ``(iii) in the case of a board having 11 members--

       ``(I) two shall be appointed for a term of one year; and
       ``(II) three shall be appointed for a term of two years;

       ``(3) Duties.--The affordable housing board shall meet not 
     less than quarterly--
       ``(A) to determine extremely low- and very low-income 
     housing needs;
       ``(B) to advise the Director with respect to--
       ``(i) establishment of the selection criteria under 
     subsection (l)(2)(C) that provide for appropriate use of 
     amounts from the affordable housing funds of the enterprises 
     to meet such needs; and
       ``(ii) operation of, and changes to, the program under this 
     section appropriate to meet such needs; and
       ``(C) to review the reports submitted by the enterprises 
     pursuant to subsection (g)(1) to determine whether the 
     activities funded using amounts from the affordable housing 
     funds of the enterprises comply with the regulations issued 
     pursuant to subsection (l)(2)(C) and inform the Director of 
     such determinations, for purposes of subsection (g)(2).
       ``(4) Expenses and per diem.--Members of the board shall 
     receive travel expenses, including per diem in lieu of 
     subsistence, in accordance with sections 5702 and 5703 of 
     title 5, United States Code.

[[Page 23835]]

       ``(5) Advisory committee.--The board shall be considered an 
     advisory committee for purposes of the Federal Advisory 
     Committee Act (5 U.S.C. App.).
       ``(6) Duration.-- The board shall have continued existence 
     until terminated by law.
       ``(k) Definition.--For purposes of this section, the term 
     `economically underserved area' means an area that 
     predominantly includes census tracts for which--
       ``(1) at least 20 percent of the population is below 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; or
       ``(2) median family income does not exceed the greater of--
       ``(A) 80 percent of the median family income for the 
     metropolitan statistical area in which such census tracts are 
     located; or
       ``(B) 80 percent of the median family income for the State 
     in which such census tracts are located.
       ``(l) Regulations.--
       ``(1) In general.--The Director shall issue regulations to 
     carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) authority for the Director to audit, provide for an 
     audit, or otherwise verify an enterprise's activities, to 
     ensure compliance with this section;
       ``(B) a requirement that the Director ensure that the 
     affordable housing fund of each enterprise is audited not 
     less than annually to ensure compliance with this section;
       ``(C) requirements for a process for application to, and 
     selection by, an enterprise for activities to be funded with 
     amounts from the affordable housing fund, which shall provide 
     that--
       ``(i) selection shall based upon specific criteria, 
     including a prioritization of funding 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 (d)(1), the extent to which rents for units in the 
     project funded are affordable, especially for extremely low-
     income families; and
       ``(V) in the case of rental housing projects under 
     subsection (d)(1), the extent of the duration for which such 
     rents will remain affordable; and

       ``(ii) an enterprise may not require for such selection 
     that an activity involve financing or underwriting of any 
     kind by the enterprise (other than funding through the 
     affordable housing fund of the enterprise) and may not give 
     preference in such selection to activities that involve such 
     financing; and
       ``(D) requirements to ensure that amounts from the 
     affordable housing funds of the enterprises used for rental 
     housing under subsection (d)(1) are used only for the benefit 
     of extremely low- and very-low income families.
       ``(3) Limitation.--Any regulations issued by the Director 
     pursuant to this section shall be no more restrictive on the 
     enterprises' activities in connection with the allocation of 
     after-tax income under this section than the regulations 
     issued to implement the affordable housing program of the 
     Federal home loan banks pursuant to section 10(j) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1430(j)).''.
       (b) Contributions for 2006.--
       (1) Reservation and contribution.--In 2006, each enterprise 
     (as such term is defined in section 1303 of the Housing and 
     Community Development Act of 1992) shall reserve for 
     contribution to the affordable housing fund to be established 
     by the enterprise pursuant to section 1337 of such Act (as 
     amended by subsection (a) of this section), an amount equal 
     to 3.5 percent of the after-tax income of the enterprise for 
     2005. Upon the establishment of such affordable housing fund, 
     each enterprise shall allocate to such fund the amounts 
     reserved under this subsection by the enterprise.
       (2) Exception to deadline for commitment.--Section 
     1337(e)(2) of the Housing and Community Development Act of 
     1992 (as amended by subsection (a) of this section) shall not 
     apply to amounts allocated to the affordable housing fund of 
     an enterprise pursuant to paragraph (1).
       (3) After-tax income.--For purposes of this subsection, the 
     term ``after-tax income'' has the meaning provided in 
     subsection (b)(3) of the new section 1337 to be inserted by 
     the amendment made by subsection (a) of this section.
       (4) Effective date.--This subsection shall take effect on 
     the date of the enactment of this Act.

     SEC. 129. 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 127 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. 130. 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--

[[Page 23836]]

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

                      ``Subpart C--Enforcement''.

     SEC. 131. 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) in sections 1345(c)(1)(A) and 1346(b) (12 U.S.C. 
     4585(c)(1)(A), 4586(b)), by striking ``Secretary's'' each 
     place such term appears and inserting ``Director's''; and
       (6) by striking section 1349 (12 U.S.C. 4589).

                  Subtitle C--Prompt Corrective Action

     SEC. 141. 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. 142. 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) 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 programs, and new 
     business activities.--A regulated entity that is classified 
     as undercapitalized shall not, directly or indirectly, 
     acquire any interest in any entity or engage in any new 
     program or new business activity 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. 143. 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 ``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:

[[Page 23837]]

       ``(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:
       ``(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. 144. 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) 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.
       ``(5) 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.
       ``(6) 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.
       ``(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.
       ``(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--

[[Page 23838]]

       ``(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 effect 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.--
       ``(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

[[Page 23839]]

       ``(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).

[[Page 23840]]

       ``(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 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

[[Page 23841]]

     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.
       ``(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;

[[Page 23842]]

       ``(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.

     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).

[[Page 23843]]

       ``(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.
       ``(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).

[[Page 23844]]

       ``(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.--
       ``(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) Affect 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.--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).

     SEC. 145. 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 added by section 144 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(c) (12 U.S.C. 4622(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

[[Page 23845]]

     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 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--
       (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'' and inserting ``any executive 
     officer of a regulated entity, any regulated entity-
     affiliated party, or any''; 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;
       ``(D) violates any written agreement between the regulated 
     entity and the Director; or
       ``(E) engages in any conduct the Director determines to be 
     an unsafe or unsound practice, shall forfeit and pay a civil 
     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

[[Page 23846]]

       ``(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;
       ``(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

[[Page 23847]]

     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 
     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 165(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 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 165(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 165(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

[[Page 23848]]

       (7) by striking ``any enterprise'' each place such term 
     appears in such subtitle and inserting ``any regulated 
     entity''.

                     Subtitle E--General Provisions

     SEC. 181. PRESIDENTIALLY APPOINTED DIRECTORS OF ENTERPRISES.

       (a) Fannie Mae.--
       (1) In general.--Subsection (b) of section 308 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 
     ``not less than 7 and not more than 15 persons, 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.--Paragraph (2) of section 303(a) 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 ``not 
     less than 7 and not more than 15 persons, 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 (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) Deputy directors' pay rate.--Section 5314 of title 5, 
     United States Code, is amended by adding at the end the 
     following new item:
       ``Deputy Directors, Federal Housing Finance Agency (3).''.
       (3) Pay rate for members of housing finance oversight 
     board.--Section 5315 of title 5, United States Code, is 
     amended by adding at the end the following new item:
       ``Members, Housing Finance Oversight Board.''.
       (4) Exclusion from senior executive service.--Section 
     3132(a)(1)(D) of title 5, United States Code, is amended 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 12-month period beginning on 
     the effective date under section 185.

     SEC. 185. EFFECTIVE DATE.

       Except as specifically provided otherwise in this title, 
     the amendments made by this title shall take effect on, and 
     shall apply beginning on, the expiration of the 1-year 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.

[[Page 23849]]

       ``(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 elected by the members and shall be a citizen 
     of the United States.
       ``(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 one-third of the 
     directors of each Bank shall be independent directors as 
     follows:
       ``(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, or 
     financial consumer protections.
       ``(C) Other directors.--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.
       ``(D) Conflicts of interest.--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.'';
       (2) in subsection (b)--
       (A) in the first sentence, by striking ``directorship'' and 
     inserting ``member directorship pursuant to subsection 
     (a)(2)''; and
       (B) by inserting after the period at the end of the first 
     sentence the following new sentence: ``Each independent 
     directorship pursuant to subsection (a)(3) shall be filled by 
     election by a plurality of the votes of the members of the 
     Bank at large, in which election each member shall be 
     entitled to nominate candidates and to cast the same number 
     of votes as in an election to fill a directorship allocated 
     to the member's State.'';
       (3) in subsection (c), by striking the second, third, and 
     fifth sentences;
       (4) in subsection (d)--
       (A) in the first sentence, by striking ``, whether elected 
     or appointed,'';
       (B) in the second sentence, by striking ``or appointed''; 
     and
       (C) in the third sentence, by striking ``an elective'' each 
     place such term appears and inserting ``a''; and
       (5) by striking ``elective'' each place such term appears 
     (except in subsection (e)).
       (b) Terms.--
       (1) In general.--Section 7(d) of the Federal Home Loan Bank 
     Act (12 U.S.C. 1427(i)) 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 2005''; 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 Act under section 211, including any director 
     elected to fill a vacancy in any such office.
       (c) Vacancies.--Subsection (f) of section 7 of the Federal 
     Home Loan Bank Act (12 U.S.C. 1427(f)) is amended to read as 
     follows:
       ``(f) Vacancies.--A Bank director elected to fill a vacancy 
     shall be elected for the unexpired term of his or her 
     predecessor in office. In the event of a vacancy in any Bank 
     directorship, such vacancy shall be filled by an affirmative 
     vote of a majority of the remaining Bank directors, 
     regardless of whether such remaining Bank directors 
     constitute a quorum of the Bank's board of directors. A Bank 
     director so elected shall satisfy the requirements for 
     eligibility which were applicable to his predecessor. If any 
     Bank director shall cease to have any qualification set forth 
     in this section, the office held by such person shall 
     immediately become vacant. ''.
       (d) 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.''.
       (e) 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), by striking ``by 
     formal resolution'';
       (5) 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'';
       (6) in section 15 (12 U.S.C. 1435), by inserting ``or the 
     Director'' after ``the Board'';
       (7) in section 18 (12 U.S.C. 1438), by striking subsection 
     (b);
       (8) 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'';
       (9) in section 23 (12 U.S.C. 1443), by striking ``Board of 
     Directors of the Federal Housing Finance Board'' and 
     inserting ``Director'';
       (10) 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 (e)(7), (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'';
       (11) 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'';
       (12) by striking ``the Board's'' each place such term 
     appears in such Act and inserting ``the Director's'';
       (13) by striking ``The Board's'' each place such term 
     appears in such Act and inserting ``The Director's'';
       (14) by striking ``The Finance Board'' each place such term 
     appears in such Act and inserting ``The Director'';
       (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:

[[Page 23850]]



     ``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 Bank may, with the approval 
     of the Director, and the approval of the boards of directors 
     of the Banks involved, merge with another Bank. 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--
       (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 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''.

     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 128 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.

     SEC. 211. EFFECTIVE DATE.

       Except as specifically provided otherwise in this title, 
     the amendments made by this title shall take effect on, and 
     shall apply beginning on, the expiration of the 1-year 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 1-year 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 1-year period 
     beginning on the date of the enactment of this Act, the 
     Director of the Office of Federal Housing Enterprise 
     Oversight shall, solely for the purpose of winding up the 
     affairs of the Office of Federal Housing Enterprise 
     Oversight--
       (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

[[Page 23851]]

     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, 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 
     201(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 201(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 1-year 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 1-year period 
     beginning on the date of enactment of this Act, the Board, 
     solely for the purpose of winding up the affairs of the 
     Board--
       (1) shall manage the employees of 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 1-year 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, and 
     determinations 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, or determination 
     is described under this subsection if it--
       (1) was issued, made, prescribed, or allowed to become 
     effective by--
       (A) the Board; or
       (B) a court of competent jurisdiction and relates to 
     functions transferred by this subtitle; and
       (2) is in effect on the effective date of the abolishment 
     under section 321(a).

[[Page 23852]]



     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, 
     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 one year 
     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 6-
     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 1-year 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''), solely 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)'' --
       (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.

       (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.

[[Page 23853]]

       (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) 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 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.

  The CHAIRMAN. No amendment to the committee amendment is in order 
except those printed in House Report 109-254. Each amendment may be 
offered only in the order printed in the report, by a Member designated 
in the report, shall be considered read, shall be debatable for the 
time specified in the report, equally divided and controlled by the 
proponent and an opponent, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question.
  It is now in order to consider amendment No. 1 printed in House 
Report 109-254.


                  Amendment No. 1 Offered by Mr. Oxley

  Mr. OXLEY. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:
  Amendment No. 1 offered by Mr. Oxley:
       Page 6, strike lines 3 through 5 and insert the following 
     new subparagraph:
       ``(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''.
       Page 12, line 8, strike the quotations marks and the last 
     period.
       Page 12, after line 8, insert the following new subsection:
       ``(g) Ombudsman.--The Director shall establish, by 
     regulation, an Office of the Ombudsman in the Agency. Such 
     regulations 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.''.
       Page 15, line 2, before the period insert ``, or request 
     that the Attorney General of the United States act on behalf 
     of the Director''.
       Page 15, after line 2, insert the following new paragraph:
       ``(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.''.
       Page 15, line 3, strike ``(2)'' and insert ``(3)''.
       Page 25, line 13, after the period insert quotation marks 
     and a period.
       Page 25, strike lines 14 through 16.
       Page 66, after line 12 add the following new subsection:
       (e) Effective Date.--This section shall take effect on the 
     date of the enactment of this Act.
       Page 102, after line 19, insert the following new 
     subparagraph:
       ``(A) Mortgages that finance dwelling units for low-income 
     families.''.
       Page 102, line 20, strike ``(A)'' and insert ``(B)''.
       Page 102, line 22, strike ``(B)'' and insert ``(C)''.
       Strike line 17 on page 119 and all that follows through 
     line 9 on page 138 and insert the following:

     SEC. 128. 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.--Each enterprise shall 
     establish and manage an affordable housing fund in accordance 
     with this section. The purpose of the affordable housing fund 
     shall be--
       ``(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 (k) and subject to paragraphs 
     (2) and (3) of this subsection and subsection (f)(5), each 
     enterprise shall allocate to the affordable housing fund 
     established under subsection (a) by the enterprise--
       ``(A) in the year in which the effective date under section 
     185 of the Federal Housing Finance Reform Act of 2005 occurs, 
     3.5 percent of the after-tax income of the enterprise for the 
     preceding year;
       ``(B) in the year after the year referred to in 
     subparagraph (A), 3.5 percent of the after-tax income of the 
     enterprise for the preceding year; and
       ``(C) in each of the first three years after the year 
     referred to in subparagraph (B), 5 percent of the after-tax 
     income of the enterprise for the preceding year.
       ``(2) Limitation.--An enterprise shall not be required to 
     make an allocation for a year to the affordable housing fund 
     of the enterprise established under subsection (a) unless the 
     enterprise generated after-tax income for the preceding year.
       ``(3) Suspension of contributions.--The Director shall 
     temporarily suspend the allocation under paragraph (1) by an 
     enterprise to the affordable housing fund of the enterprise 
     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.
       ``(4) 5-year sunset and report.--

[[Page 23854]]

       ``(A) Sunset.--The enterprises shall not be required to 
     make allocations to the affordable housing funds in the 5th 
     year after the year in which the effective date under section 
     185 of the Federal Housing Finance Reform Act of 2005 occurs 
     or in any year thereafter.
       ``(B) Report on program continuance.--Not later 6 months 
     before the end of the last year in which the allocations are 
     required under paragraph (1), 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 funds, should be extended and on any 
     modifications for the program.
       ``(5) Determination of after-tax income.--For purposes of 
     this section, the term `after-tax income' means, with respect 
     to an enterprise for a year, the amount reported by the 
     enterprise for such year in the enterprise's annual report 
     for such year that is filed with the Securities and Exchange 
     Commission, except that for any year in which no such filing 
     is made by an enterprise or such filing is not timely made, 
     such term means the amount determined by the Director based 
     on the income tax return filings of the enterprise.
       ``(c) Selection of Activities Funded Using Affordable 
     Housing Fund Amounts.--Amounts from the affordable housing 
     fund of the enterprise may be used, or committed for use, 
     only for activities that--
       ``(1) are eligible under subsection (d) for such use; and
       ``(2) are selected for funding by the enterprise in 
     accordance with the process and criteria for such selection 
     established pursuant to subsection (k)(2)(C).
       ``(d) Eligible Activities.--Amounts from the affordable 
     housing fund of an enterprise 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 amounts 
     provided from the Fund 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 the affordable housing fund of the 
     enterprise;
       ``(B) has an initial purchase price that meets the 
     requirements of section 215(b)(1) of the Cranston-Gonzalez 
     National Affordable Housing Act; and
       ``(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
       ``(3) public infrastructure development activities in 
     connection with housing activities funded under paragraph (1) 
     or (2).
       ``(e) Eligible Recipients.--
       ``(1) In general.--Amounts from the affordable housing fund 
     of an enterprise may be provided only to a recipient that is 
     an organization, agency, or other entity (including a for-
     profit entity, a nonprofit entity, a federally recognized 
     tribe, an Alaskan Native village, and a faith-based 
     organization) that--
       ``(A) has a demonstrated capacity for carrying out 
     activities of the type that are to be funded with such 
     affordable housing fund amounts; and
       ``(B) makes such assurances to the enterprise as the 
     Director shall, by regulation, require to ensure that the 
     recipient will comply with the requirements of this section 
     (including, in the case of any organization, agency, or 
     entity subject to paragraph (2), all of the requirements 
     specified under such paragraph) during the entire period that 
     begins upon selection of the recipient to receive amounts 
     from the affordable housing fund of the enterprise and ending 
     upon the conclusion of all activities under subsection (d) 
     that are engaged in by the recipient and funded with such 
     affordable housing fund amounts; and
       ``(C) in the case of any recipient who is not a for-profit 
     entity or a government agency or authority, complies with all 
     of the requirements under paragraph (2).
       ``(2) Additional requirements for recipients other than 
     for-profit entities.--The requirements under this paragraph 
     with respect to any organization, agency, or entity that is 
     not a for-profit entity or a government agency or authority 
     are that the organization, agency, or entity--
       ``(A) shall have as its primary purpose the provision of 
     affordable housing, as defined by the Director;
       ``(B) shall make such assurances to the enterprise as the 
     Director shall, by regulation, require to ensure that such 
     affordable housing fund amounts--
       ``(i) are used only to supplement, and to the extent 
     practical, to increase the level of funds that would, in the 
     absence of amounts made available from the affordable housing 
     fund, be made available from other sources for the recipient 
     to carry out activities of the type that are eligible under 
     subsection (d) for funding with affordable housing fund 
     amounts; and
       ``(ii) are not in any case used so as to supplant any funds 
     from other sources that are made available for such 
     activities of the recipient; and
       ``(C) does not, at the time during the period that begins 
     12 months before submission of an application for funding 
     from the affordable housing fund of the enterprise and ending 
     upon the expiration of the period referred to in paragraph 
     (1)(B)--
       ``(i) engage in any Federal election activity, as such term 
     is defined in paragraph (20) of section 301 of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431(20)), except 
     that, notwithstanding the 120-day limitation in subparagraph 
     (A)(i) of such paragraph, such term shall include voter 
     registration activity during any period;
       ``(ii) make any expenditure for any electioneering 
     communication (as such term is defined in section 304(f)(3) 
     of the Federal Election Campaign Act of 1971 (2 U.S.C. 
     434(f)(3));
       ``(iii) make any lobbying expenditure, (as such term is 
     defined in such section 501(h)(2)), except that this clause 
     shall not apply to any such expenditure by an organization 
     described in section 501(c)(3) of the Internal Revenue Code 
     of 1986 that is exempt from taxation under subsection (a) of 
     such section 501, to the extent that such expenditure does 
     not exceed the amount under such Code for which such 
     exemption may be denied; or
       ``(iv) maintain any affiliation with any organization, 
     agency, or other entity that does not comply with clauses 
     (i), (ii), and (iii) of this subparagraph.
       ``(3) Affiliation.--
       ``(A) In general.--A recipient organization, agency, or 
     entity shall be considered to be affiliated with another 
     entity, for purposes of paragraph (2), if such recipient 
     entity controls, is controlled by, or is under common control 
     with such other entity.
       ``(B) Control.--The existence of any of the following 
     relationships between a recipient entity and another entity 
     shall indicate that control exists for purposes of 
     subparagraph (A):
       ``(i) Overlapping board membership.--Individuals serve in a 
     similar capacity as officers, executives, or staff of both 
     the recipient entity and the other entity.
       ``(ii) Shared resources.--The recipient entity and the 
     other entity share office space, staff members, supplies, 
     resources, or marketing materials, including Internet and 
     other forms of public communication.
       ``(iii) Funding.--The recipient entity receives more than 
     20 percent of its total funding from such other entity or 
     provides more than 20 percent of the total funding of such 
     other entity.
       ``(iv) Other.--The recipient entity or such other entity 
     exhibits any other indicia of substantial overlap or common 
     control as may be set forth in regulation by the Director.
       ``(4) For profit.--For purposes of this subsection, the 
     term `for-profit entity' means any entity any part of the net 
     earnings of which inure to the benefit of any private 
     shareholder, member, founder, contributor, or individual.
       ``(f) Limitations on Use.--
       ``(1) Required amount for refcorp.--Of any amounts 
     allocated pursuant to subsection (b) in each year to the 
     affordable housing fund of an enterprise, 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 any 
     amounts allocated pursuant to subsection (b) in each year to 
     the affordable housing fund of an enterprise, not less than 
     10 percent shall be used for activities under paragraph (2) 
     of subsection (d).
       ``(3) Maximum amount for public infrastructure development 
     activities in connection with affordable housing 
     activities.--Of any amounts allocated pursuant to subsection 
     (b) in each year to the affordable housing fund of an 
     enterprise, not more than 12.5 percent may be used for 
     activities under paragraph (3) of subsection (d).
       ``(4) Deadline for commitment or use.--Any amounts 
     allocated to the affordable housing fund of an enterprise 
     shall be used or committed for use within two years of the 
     date of such allocation.
       ``(5) Use of returns.--The Director shall, by regulation--
       ``(A) provide that any return on a loan or other investment 
     of any amounts allocated pursuant to subsection (b) to the 
     affordable

[[Page 23855]]

     housing fund of an enterprise shall count against the 
     allocation required under subsection (b) to be made by the 
     enterprise for the year following such return; and
       ``(B) establish such limitations as may be necessary to 
     ensure that the amount or likelihood of return is not the 
     primary consideration of awarding of allocated amounts to 
     recipients.
       ``(6) Prohibited uses.--The Director shall--
       ``(A) by regulation, set forth prohibited uses of amounts 
     from the affordable housing funds of the enterprises, 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), amounts allocated to the affordable housing 
     fund of an enterprise may not be used for administrative, 
     outreach, or other costs of--
       ``(i) the enterprise; or
       ``(ii) any recipient of amounts from the affordable housing 
     fund; and
       ``(C) by regulation, limit the amount of any such 
     contributions that may be used for administrative costs of 
     the enterprise of maintaining the affordable housing fund and 
     carrying out the program under this section.
       ``(7) Prohibition of consideration of use for meeting 
     housing goals.--In determining compliance with the housing 
     goals under this subpart, the Director may not consider 
     amounts used under this section for eligible activities under 
     subsection (d). The Director shall give credit toward the 
     achievement of such housing goals to purchases of mortgages 
     for housing that receives funding under this section, but 
     only to the extent that such purchases are funded other than 
     under this section.
       ``(8) Prohibition on certain redistribution of amounts.--
     The Director shall, by regulation, ensure that amounts from 
     the affordable housing fund of an enterprise awarded under 
     this section to a national nonprofit housing intermediary are 
     not redistributed to other nonprofit entities.
       ``(g) Accountability of Recipients and Enterprises.--
       ``(1) Recipients.--
       ``(A) Tracking of funds.--The Director shall--
       ``(i) require each enterprise to develop and maintain a 
     system to ensure that each recipient of amounts from the 
     affordable housing fund of the enterprise 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 enterprises and recipients, regarding grants from 
     the affordable housing funds of the enterprises, which shall 
     include--

       ``(I) appropriate continuing financial and project 
     reporting, record retention, and audit requirements for the 
     duration of the grant to ensure compliance with the 
     limitations and requirements of this section and the 
     regulation 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.--If an enterprise determines that 
     any recipient of amounts from the affordable housing fund of 
     the enterprise has 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--
       ``(i) the enterprise shall notify the Director of such 
     misuse of amounts and the actions taken under this 
     subparagraph with respect to the recipient;
       ``(ii) such recipient shall be ineligible in perpetuity to 
     receive of any further amounts from the affordable housing 
     fund of such enterprise; and
       ``(iii) the enterprise shall require the recipient to 
     reimburse the enterprise for such misused amounts and return 
     to the enterprise any amounts from the affordable housing 
     fund of the enterprise that remain unused or uncommitted for 
     use.
     The remedies under this subparagraph are in addition to any 
     other remedies that may be available under law.
       ``(2) Enterprises.--
       ``(A) Quarterly reports.--The Director shall require each 
     enterprise to submit a report, on a quarterly basis, to the 
     Director and the affordable housing board established under 
     subsection (j) describing the activities funded under this 
     section during such quarter with amounts from the affordable 
     housing fund of the enterprise established under this 
     section. The Director shall make such reports publicly 
     available. The affordable housing board shall review each 
     report by an enterprise to determine the consistency of such 
     activities funded with the criteria for selection of such 
     activities established pursuant to subsection (k)(2)(C).
       ``(B) Replenishment.--If the Director determines that an 
     activity funded by an enterprise with amounts from the 
     affordable housing fund of the enterprise is not consistent 
     with the criteria established pursuant to subsection 
     (k)(2)(C), the Director shall require the enterprise to 
     allocate to such affordable housing fund (in addition to 
     amounts allocated in compliance with subsection (b)) an 
     amount equal to the sum of the amounts from the affordable 
     housing fund used and further committed for use for such 
     activity.
       ``(h) Capital Requirements.--The utilization or commitment 
     of amounts from the affordable housing fund of an enterprise 
     shall not be subject to the risk-based capital requirements 
     established pursuant to section 1361(a).
       ``(i) Reporting Requirement.--Each enterprise shall 
     include, in the report required under section 309(m) of the 
     Federal National Mortgage Association Charter Act or section 
     307(f) of the Federal Home Loan Mortgage Corporation Act, as 
     applicable, a description of the actions taken by the 
     enterprise to utilize or commit amounts allocated under this 
     section to the affordable housing fund of the enterprise 
     established under this section.
       ``(j) Affordable Housing Board.--
       ``(1) Appointment.--The Director shall appoint an 
     affordable housing board of 7, 9, or 11 persons, who shall 
     include--
       ``(A) the Director, or the Director's designee;
       ``(B) the Secretary of Housing and Urban Development, or 
     the Secretary's designee;
       ``(C) the Secretary of Agriculture, or the Secretary's 
     designee;
       ``(D) 2 persons from for-profit organizations or businesses 
     actively involved in providing or promoting affordable 
     housing for extremely low- and very low-income households; 
     and
       ``(E) 2 persons from nonprofit organizations actively 
     involved in providing or promoting affordable housing for 
     extremely low- and very low-income households.
       ``(2) Terms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term of each member of the affordable housing board 
     appointed pursuant to paragraph (1) (but not including 
     members appointed pursuant to subparagraphs (A), (B), and 
     (C)) shall be 3 years.
       ``(B) Initial appointees.--The Director shall appoint the 
     initial members of the affordable housing board not later 
     than the expiration of the 60-day period beginning on the 
     effective date under section 185 of the Federal Housing 
     Finance Reform Act of 2005. As designated by the Director at 
     the time of appointment, of the members of the affordable 
     housing board first appointed pursuant to paragraph (1) (but 
     not including members appointed pursuant to subparagraphs 
     (A), (B), and (C))--
       ``(i) in the case of a board having 7 members--

       ``(I) one shall be appointed for a term of one year; and
       ``(II) one shall be appointed for a term of two years;

       ``(ii) in the case of a board having 9 members--

       ``(I) two shall be appointed for a term of one year; and
       ``(II) two shall be appointed for a term of two years; and

       ``(iii) in the case of a board having 11 members--

       ``(I) two shall be appointed for a term of one year; and
       ``(II) three shall be appointed for a term of two years;

       ``(3) Duties.--The duties of the affordable housing board 
     shall be--
       ``(A) to determine extremely low- and very low-income 
     housing needs;
       ``(B) to advise the Director with respect to--
       ``(i) establishment of the selection criteria under 
     subsection (k)(2)(C) that provide for appropriate use of 
     amounts from the affordable housing funds of the enterprises 
     to meet such needs; and
       ``(ii) operation of, and changes to, the program under this 
     section appropriate to meet such needs; and
       ``(C) to review the reports submitted by the enterprises 
     pursuant to subsection (g)(1) to determine whether the 
     activities funded using amounts from the affordable housing 
     funds of the enterprises comply with the regulations issued 
     pursuant to subsection (k)(2)(C) and inform the Director of 
     such determinations, for purposes of subsection (g)(2).
       ``(4) Meetings.--The board shall meet not less than 
     quarterly, except that during the 2-year period referred to 
     in paragraph (7), the board shall meet only as the Director 
     determines necessary.
       ``(5) Expenses and per diem.--Members of the board shall 
     receive travel expenses, including per diem in lieu of 
     subsistence, in accordance with sections 5702 and 5703 of 
     title 5, United States Code.
       ``(6) Advisory committee.--The board shall be considered an 
     advisory committee for purposes of the Federal Advisory 
     Committee Act (5 U.S.C. App.).
       ``(7) Termination.-- The board shall terminate upon the 
     expiration of the 2-year period that begins upon the 
     conclusion of the last year referred to in subsection 
     (b)(1)(C).
       ``(k) Regulations.--
       ``(1) In general.--The Director shall issue regulations to 
     carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--

[[Page 23856]]

       ``(A) authority for the Director to audit, provide for an 
     audit, or otherwise verify an enterprise's activities, to 
     ensure compliance with this section;
       ``(B) a requirement that the Director ensure that the 
     affordable housing fund of each enterprise is audited not 
     less than annually to ensure compliance with this section;
       ``(C) requirements for a process for application to, and 
     selection by, an enterprise for activities to be funded with 
     amounts from the affordable housing fund, which shall provide 
     that--
       ``(i) selection shall be based upon specific criteria, 
     which shall provide that--

       ``(I) in any selection of activities occurring during the 
     2-year period beginning on the effective date under section 
     185 of the Federal Housing Finance Reform Act of 2005, 
     additional weight shall be given to applications for eligible 
     activities under subsection (d) that--

       ``(aa) are to be carried out in any area that was declared 
     by the President as a major disaster area pursuant to the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act as result of Hurricane Katrina or Hurricane Rita in 2005; 
     or
       ``(bb) the enterprise determines, in accordance with 
     regulations issued by the Director, serve persons 
     significantly affected by the occurrence of Hurricane Katrina 
     or Hurricane Rita in 2005 (including persons displaced as a 
     result of such hurricanes and persons whose affordable 
     housing opportunities are significantly affected by the 
     presence of persons displaced as a result of such 
     hurricanes); and

       ``(II) taking into consideration any additional weight 
     afforded applications pursuant to subclause (I), priority in 
     funding shall be based upon--

       ``(aa) whether activities are to be carried out in any area 
     that, not more than 2 years before such selection, was 
     declared by the President as a major disaster area pursuant 
     to the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act;
       ``(bb) greatest impact;
       ``(cc) geographic diversity;
       ``(dd) ability to obligate amounts and undertake activities 
     so funded in a timely manner;
       ``(ee) in the case of rental housing projects under 
     subsection (d)(1), the extent to which rents for units in the 
     project funded are affordable, especially for extremely low-
     income families; and
       ``(ff) in the case of rental housing projects under 
     subsection (d)(1), the extent of the duration for which such 
     rents will remain affordable; and
       ``(ii) an enterprise may not require for such selection 
     that an activity involve financing or underwriting of any 
     kind by the enterprise (other than funding through the 
     affordable housing fund of the enterprise) and may not give 
     preference in such selection to activities that involve such 
     financing;
       ``(D) requirements to ensure that amounts from the 
     affordable housing funds of the enterprises used for rental 
     housing under subsection (d)(1) are used only for the benefit 
     of extremely low- and very-low income families; and
       ``(E) limitations on public infrastructure development 
     activities that are eligible pursuant to subsection (d)(3) 
     for funding with amounts from the affordable housing funds of 
     the enterprises and requirements for the connection between 
     such activities and housing activities funded under paragraph 
     (1) or (2) of subsection (d).
       ``(l) Enforcement.--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.''.
       (b) Contributions for Transition Period.--
       (1) Reservation and contribution; prohibition of double 
     contributions.--If the date of the enactment of this Act does 
     not occur in the same calendar year as the effective date 
     under section 185 of this Act, each enterprise (as such term 
     is defined in section 1303 of the Housing and Community 
     Development Act of 1992) shall, in the year that such date of 
     enactment occurs, reserve for contribution to the affordable 
     housing fund to be established by the enterprise pursuant to 
     section 1337 of such Act (as amended by subsection (a) of 
     this section) an amount equal to 3.5 percent of the after-tax 
     income of the enterprise for the preceding year. Upon the 
     establishment of such affordable housing fund, each 
     enterprise shall allocate to such fund the amounts reserved 
     under this paragraph by the enterprise.
       (2) Exception to deadline for commitment.--Section 
     1337(f)(4) of the Housing and Community Development Act of 
     1992 (as amended by subsection (a) of this section) shall not 
     apply to any amounts allocated to the affordable housing fund 
     of an enterprise pursuant to paragraph (1) of this 
     subsection.
       (3) After-tax income.--For purposes of this subsection, the 
     term ``after-tax income'' has the meaning provided in 
     subsection (b)(5) of the new section 1337 to be inserted by 
     the amendment made by subsection (a) of this section.
       (4) 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(f)(1) of such Act.''.
       Page 238, strike line 6 and insert the following:
       (b) Conforming Amendments.--
       (1) Housing and community development act of 1992.--
     Subtitle B of title
       Page 238, after line 10, insert the following new 
     paragraph:
       (2) Federal home loan banks.--Section 25 of the Federal 
     Home Loan Bank Act (12 U.S.C. 1445) is amended by striking 
     ``Board under this Act'' and inserting ``Director under 
     section 1367 of the Housing and Community Development Act of 
     1992''.
       Page 248, line 4, after the semicolon insert ``or''.
       Page 248, strike lines 5 through 11 and insert the 
     following:
       ``(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.''.
       Page 249, strike lines 4 through 10 and insert the 
     following:
       ``(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.''.
       Strike line 22 on page 249 and all that follows through 
     line 5 on page 250, and insert the following:
       ``(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.''.
       Page 278, line 21, after the comma insert ``this title 
     shall take effect on and''.
       Page 278, line 23, strike ``1-year'' and insert ``6-
     month''.
       Page 296, line 19, after the period insert the following: 
     ``This section shall take effect on the date of the enactment 
     of this Act.''
       Page 296, line 21, after the comma insert ``this title 
     shall take effect on and''.
       Page 296, line 23, strike ``1-year'' and insert ``6-
     month''.
       Page 297, line 13, strike ``1-year'' and insert ``6-month''
       Page 297, line 19, strike ``1-year'' and insert ``6-
     month''.
       Page 297, line 22, strike ``solely''.
       Page 297, line 24, after ``sight'' insert ``and in addition 
     to carrying out its other responsibilities under law''.
       Page 302, line 25, strike ``201(a)'' and insert ``301(a)''.
       Page 303, line 14, strike ``201(a)'' and insert ``301(a)''.
       Page 304, line 13, strike ``1-year'' and insert ``6-
     month''.
       Page 304, line 17, strike ``1-year'' and insert ``6-
     month''.
       Page 304, line 19, strike ``solely''.
       Page 304, line 20, after ``Board'' insert ``and in addition 
     to carrying out its other responsibilities under law''.
       Page 305, lines 23 and 24, strike ``1-year''.
       Page 311, line 7, strike ``one year'' and insert ``6 
     months''.
       Page 311, line 11, strike ``6-month'' and insert ``3-
     month''.
       Page 312, line 17, strike ``1-year'' and insert ``6-
     month''.
       Page 312, line 20, strike ``solely''.
       Page 312, line 24, strike ``ment)''' and insert ``ment') 
     and in addition to carrying out the Secretary's other 
     responsibilities under law regarding such functions''.

  The CHAIRMAN. Pursuant to House Resolution 509, the gentleman from 
Ohio (Mr. Oxley) and the gentleman from Massachusetts (Mr. Frank) each 
will control 10 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Oxley).
  Mr. OXLEY. Mr. Chairman, I yield myself such time as I may consume.
  The manager's amendment that I offer makes a number of substantive 
and technical changes to H.R. 1461, the Federal Housing Finance Reform 
Act of 2005.

[[Page 23857]]

  H.R. 1461, as reported by the Committee on Financial Services, 
greatly expands the affordable housing role of Fannie and Freddie. 
There are major sections on new single-family and multifamily housing 
goals, duty to serve lower-income markets, and a new Affordable Housing 
Fund with contributions from the enterprises.
  The bill establishes a fund to finance construction of houses for 
underserved people. It is modeled after the successful Affordable 
Housing Program of the Federal Home Loan Bank System. Fannie Mae and 
Freddie Mac will manage programs funded by a percentage of their 
earnings.
  The manager's amendment moves the effective date of the entire bill 
up from 1 year to 6 months following enactment, including the 
affordable housing funds. For the first 2 years, Fannie and Freddie 
will contribute 3.5 percent of after-tax earnings and, subsequent to 
that, 5 percent of such earnings. Twenty-five percent of the GSEs' 
contributions will go annually to the Treasury Department to help pay 
off REFCorp, that is, S and L bonds, with the remainder going to the 
fund.
  The fund will sunset in 5 years, when its extension will be 
considered. During the first 2 years, priority consideration will be 
given to areas impacted by Hurricanes Katrina and Rita. Thereafter 
priority in funding will be based on greatest impact, geographic 
diversity, timely action, as well as other disaster area needs.
  Eligible recipients, for-profit builders, State housing agencies, and 
nonprofit organizations must have a demonstrated capacity for 
affordable housing activities and make assurances that they will comply 
with limits on the use of those funds. Funds may not be used for 
political activities, advocacy, lobbying, counseling services, travel 
expenses, and tax return advice.
  Nonprofit recipients must have affordable housing as their primary 
purpose, and beginning 1 year before applying, nonprofits and their 
affiliates cannot have engaged in Federal election activity, 
electioneering communication, or lobbying.
  Recipient use of funds will be closely tracked. Those misusing funds 
will be permanently barred from participation and must make 
reimbursement.
  In addition, the manager's amendment includes a request from the 
Committee on the Judiciary to require consultation with the Attorney 
General by the GSE regulator when exercising new litigation authority, 
and from the Committee on Government Reform to remove a Freedom of 
Information Act exemption for the proceedings of the new agency's 
oversight board.
  The Federal Housing Finance Agency will establish an ombudsman to 
hear complaints and appeals from the GSEs and those having business 
relationships with the GSEs.
  H.R. 1461 consolidates current GSE regulation by two agencies in HUD 
into one agency. The manager's amendment clarifies that existing rules 
and regulations will remain in force during the 6-month transition 
period and until changed by the new Federal Housing Finance Agency.
  I urge adoption of the manager's amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as 
I may consume.
  Mr. Chairman, I claimed the time in opposition to the manager's 
amendment because I am in opposition to a small part of the manager's 
amendment, and, like many Members, I have a dilemma. Much of the 
manager's amendment is what a manager's amendment ought to be, the 
result of taking into account in some cases things that happened after 
the bill came out of committee like the hurricanes, some refinements. 
It is a very good amendment.
  There are two small changes I would like to make. First, the 
manager's amendment says, unlike the bill that passed committee, that a 
nonprofit group may only ask for these funds and build housing with 
these funds if building housing is its primary purpose. Understand that 
that unequivocally says no faith-based institution may apply unless we 
have a faith-based institution that worships housing. I am not aware of 
any, but I do not want to be narrow-minded. There may be one. But any 
other faith-based institution has as its primary purpose its faith, and 
this excludes organizations that have been doing work.
  The gentleman from Louisiana correctly pointed out, well, if they 
have been already doing this, this does not stop them. It just means 
they cannot get the new money.
  But we want this money to be used well. There is a wealth of 
experience in the Catholic Church, in the Episcopal Church, in the 
Methodist Church, in the Jewish Community Housing For the Elderly. In 
other groups, the Local Initiative Support Corporation, in other 
groups, the Enterprise Fund, nonprofit groups, some of which have 
housing as their primary purpose and some do not, why do we want to say 
to groups that have a very successful record of building affordable 
housing, including church groups, that they cannot participate in this 
program? But that is what it does.
  So one thing that I would change in the manager's amendment is to say 
that they can do this if housing is one of their primary purposes, not 
their only primary purpose. It lets the faith-based groups back in.
  Secondly, we agree that we should prohibit the groups, and, remember, 
we are not talking about using the money from the Affordable Housing 
Fund for anything but housing. That is very clear.

                              {time}  1400

  The Members have said, well, and I kind of slipped into this, well, 
political activism, et cetera. Not a penny of the affordable housing 
funds can be used for anything but housing; and there are strict 
penalties if you get caught doing that. By the way, there may be some 
who think that if you participate in affordable housing that it will be 
so profitable that it will generate funds that you can use elsewhere.
  When I mentioned that point yesterday, people from the Catholic 
Conference and the Episcopal group and all the other groups started to 
laugh. Anyone who has done subsidized housing knows the organizations 
usually wind up further subsidizing with their own funds rather than 
end up making money.
  But we are talking about now only what you can do with your own money 
if you use affordable housing funds for affordable housing. We have 
agreed to a lot of restrictions. We have agreed that with your own 
money, if you agree to participate in this fund, you cannot engage in 
any Federal election activity as it is defined in the Federal Election 
Campaign Act. You cannot make expenditure for any electioneering 
communication as defined in the Federal Campaign Act. You cannot make 
any lobbying expenditure except under the limits of 501(c)3. All of 
those we have accepted. They are in the manager's amendment as further 
restrictions, and we accept them.
  All we are saying is that nonpartisan voter registration and get-out-
the-vote should be permitted uses, in other words, what the gentleman 
from Ohio talked about. We had the gentleman from Florida read the 
ACORN Plan. That plan by ACORN would have made them ineligible to 
participate in this fund. It was partisan. People have every right to 
be partisan. We have made a concession here, that, yes, we will say 
that if you are engaged in partisan political activity you cannot do 
this.
  Here is what will be the parliamentary situation. If this manager's 
amendment is defeated, I will offer as the recommittal motion 99.5 
percent, textually, of the manager's amendment. It is over there at the 
majority's side. We will not touch it from what it now is. The only 
changes we will make is we will, instead of saying this has to be your 
primary purpose, which excludes faith-based groups, we will say it has 
to be one of your primary purposes.
  We will continue the restriction on electioneering and lobbying, et 
cetera, but we will say that electioneering and communications or 
partisanship are banned, but nonpartisan voter registration and 
nonpartisan get-out-the-vote are not banned. That is the question.

[[Page 23858]]

  Should we say that if you do affordable housing, you cannot also do 
voter registration, nonpartisan voter registration. If you are caught 
doing it in a partisan way, then you would lose the funds under here.
  You cannot do get out the vote.
  Again, voting and residence are very closely linked in America. You 
vote from your home. In some cases you might vote in your home, if you 
are in an elderly development. What about the people, and the gentleman 
from Ohio raised this. The gentleman from Ohio said, well, we are going 
to work on it. Yes, it has to be worked on, because right now, thanks 
to the demands of the Republican Study Committee, it is not there, the 
right to do that.
  If you have a housing development, you cannot, under this manager's 
amendment, help the old people in the development vote. You cannot 
invite somebody in to do voter registration. They can come in on their 
own, but you cannot cooperate. Again, I want to emphasize and I would 
say to my Republican friends, this is a bill that has a lot of 
bipartisan support. We have some partisan differences in other areas 
than housing, but this one got pretty bipartisan.
  What happened is this: there are people who do not like affordable 
housing. I have to say the gentleman from Texas (Mr. Hensarling) is not 
here, but he said why do you not just do vouchers instead of this. He 
was being honest. He is not really for the affordable housing program 
at all.
  I did look up, on June 29th this year, the House by a majority 
adopted an amendment to increase section 8 vouchers. The gentleman from 
Texas (Mr. Hensarling) voted against that. Thirty Republicans voted for 
it. He was not one of them.
  I think there are people who do not want the housing to go forward, 
and there are others who do not want to see an increased voter 
participation by people they do not think will be serious enough 
voters. If that is what the House wants to vote on, okay.
  But procedurally what you have is a bill comes out of committee; it 
is held up for months because a part of the Republican Party does not 
want to put this to a fair vote. Well, I regret that. We should have 
had a fair vote. I am just offering you the next best thing. It is not 
the same thing. It is not a clean vote, but here is the functional 
equivalent.
  Members can have two choices: they can vote against the manager's 
amendment and know that I will offer a recommittal motion, which will 
be everything in the manager's amendment except the one provision that 
prevents faith-based groups from participating; and the one that says 
no nonpartisan voter registration or the voter turnout.
  Alternatively, if people vote for the manager's amendment, maybe some 
people will be afraid: well, I do not want to look like I am not 
helping the people in the hurricane area, then I will offer a recommit. 
The recommit will make those three small specific changes in the 
manager's amendment.
  In other words, Members will have a chance to vote on everything in 
the manager's amendment, all the restrictions on what these groups can 
do with their own money, all the restrictions of what they can do with 
affordable housing money, put our faith-based groups in and have the 
voter registration be allowed. That is what will be before us.
  Mr. Chairman, I reserve the balance of my time.
  Mr. OXLEY. Mr. Chairman, I am pleased to yield 4 minutes to the 
gentleman from Louisiana (Mr. Baker), chairman of the GSE subcommittee.
  Mr. BAKER. Mr. Chairman, I thank the gentleman for his continuing 
courtesy and leadership on this issue. I am going to try one more time 
on this thing. The bill as it is now constructed allocates 3.5 percent 
of net profit for the first 2 years from the various enterprises into a 
fund which gives as a priority Katrina victims, Rita victims and 
natural disaster victims, in that order.
  I can tell you if I were to go to the city of Baker, in my district 
today, walk down Groom Road to the FEMA trailer park and say to them, I 
am going to buy you a bus to haul you to go vote 2 years from now, or I 
am going to put money into building you a home, guess which one they 
would pick. People want out of the FEMA trailers, they want out of 
their circumstance; and almost every cent of this money, we will 
guarantee, I promise, to be utilized almost exclusively for Katrina and 
Rita.
  It is estimated as a result of the Katrina disaster, 100,000 homes 
are impaired or destroyed: 100,000. The guesstimate of what it might 
take to pay off mortgages, to clean the mess up, and to build homes 
back is easily $30 billion. That is Katrina. Then we talk about Rita 
and then welcome back and plug Wilma in as a natural disaster, $500 
million in the scope of this debate, concerning ourselves with creating 
a resource for additional political activism does not make sense.
  Now, let us talk about the administration of the program: who is 
going to run it, what is the program. I know how you check on a house. 
You go see if it is there. Then you can figure out if somebody is in it 
and who are they. You can look at their income tax return; and, yes, 
they are entitled to be here pursuant to the provisions of the program.
  How do you regulate a bus acquisition program used for hauling people 
to the polls? Who is going to do that? What are the rules? How about 
this? How about you leave Katrina/Rita victims alone, come back with 
regulations that create a system, something that makes sense. Here is 
how you do it. Here is how you comply. Then you get the money. No, we 
want to take the money first and figure it out later. That is what gets 
this place in trouble.
  Now, if we really want to work together and reclaim our bipartisan 
territory, let us take it one step at a time. Let us figure out what 
the problem is, figure out a remedy, let us promulgate it, make it 
subject to hearings, pass it through the Congress, and plug some money 
in later. Now, I know that may be too logical, but I really want to 
leave that as a thought before you vote against the manager's 
amendment.
  This is a well-crafted proposal with extremely limited resources 
aimed at an enormous problem that otherwise will not get resolved in a 
very cost-effective manner, and we will outstrip the resources of this 
proposal for 5 years, much less the 2 years for which the money has 
been officially dedicated for this purpose.
  Keep in mind, if you are building houses and hauling voters and 
registering and engaged in political advocacy as of the date of passage 
of this bill, you can still do it. You just do not get to back your 
truck up to the U.S. Treasury and download a bunch of this money. That 
is all. It is an easy choice, and I suggest to the House that it is a 
reasonable position for us to take and a responsible position. It is 
not an attack on the basic civil rights of this country.
  Mr. FRANK of Massachusetts. Mr. Chairman, I first yield myself 1 
minute to say I do not think it is a fair characterization of the low-
income housing activities of the Catholic Church or other organizations 
that they are trying to back up the truck to the Treasury. In the first 
place, there is no debate that every penny in the affordable housing 
fund goes for affordable housing.
  The question is, what do you have to give up as a choice of doing the 
affordable housing. Every faith organization in America, every 
Protestant denomination, every branch of Judaism, and the Roman 
Catholic Church says we do housing, and the gentleman is right. They 
could simply refuse to take any money from this and go forward, because 
they are not eligible for money from this.
  Why do that? Why say to the faith-based organization, whatever 
happened to your belief in the importance of helping faith-based 
organizations? Is it over already, that romance? Because that is what 
we just want to change. All we want is to allow our religious 
organizations in part to be able to participate without stopping their 
voter registration and other activity.
  Mr. Chairman, I yield the balance of my time to the gentleman from 
Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Mr. Chairman, I think we have debated a tough issue. I

[[Page 23859]]

am sure there are people on the other side that understand why we feel 
so strongly on this faith-based issue. We have maybe a chance to 
resolve this and come out of this House with a resounding victory.
  If we vote down the manager's amendment, we will include the entire 
manager's amendment in the motion to recommit with three exceptions. We 
will take out that the prime purpose has to be housing, so faith-based 
organizations can still consider God as a primary challenge and 
obligation.
  Secondly, we will add in the terms that will allow for voter 
registration and get-out-the vote on a nonpartisan basis. So this will 
only affect getting out the vote and voter registration in a 
nonpartisan way. Finally, what I urge my colleagues on the other side 
to do is vote down the manager's amendment, accept the motion to 
recommit, have a perfect bill that we can walk out of here today with 
almost a unanimous approval.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield for the purpose of 
making a unanimous consent request to the gentlewoman from Texas (Ms. 
Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I rise in opposition to the 
manager's amendment because it is a deal breaker with those provisions 
and certainly because the conference of Catholic bishops has indicated 
that they want to build houses and participate in democracy too.
  Mr. Chairman, I rise in opposition to the instant legislation, H.R. 
1461--especially insofar as it fails to remove the unfair and 
unreasonable language that provides that nonprofits will be prohibited 
from using their own funds to engage in nonpartisan voter registration 
and requires that housing be their primary purpose in order to receive 
funds.
  The Motion to Recommit made by Mr. Franks seeks to protect our faith-
based entities that need these valuable dollars to provide affordable 
housing.
  Not only would the Gentleman's amendment have redeemed this 
legislation, but his Motion to Recommit would have removed language 
contained in the current Manager's Amendment that bars organizations 
with proven experience in mobilizing community support and resources--a 
nonpartisan initiative. In addition, the Manager's Amendment would 
constrain the ability of experienced faith-based and community-based 
organizations to successfully compete for the affordable housing funds 
that are proposed in the underlying bill.
  My District of Houston, Texas, has a plethora of faith-based 
organizations that have plans that would provide much-needed affordable 
housing for the surrounding community. Our affordable housing stock has 
suffered for a long time, and I have been working steadfastly with the 
Secretary of Housing and Urban Development to facilitate the obtainment 
of opportunities by these groups. The nugatory provisions in the 
Manager's Amendment will contravene the hard work that I and many other 
Members have done to this end.
  While I applaud the effort made by the administration to remove 
barriers to full participation in Federal programs and funding faith-
based entities, proposals such as the Manager's Amendment will bar 
these groups from access to this funding while for-profit agencies 
remain free to engage in the same voter registration activities. This 
double-standard must be removed--it contravenes the spirit of the U.S. 
Constitution.
  Existing limits in H.R. 1461 on activities that qualify for 
affordable housing funds prevent abuse of this funding. Groups, many of 
which operate in my District of Houston sign certifications to receive 
Federal, State, and local government funds that prohibit diversion of 
program funds for political and lobbying purposes. There are multiple 
vehicles available to ensure that the new Affordable Housing Funds are 
protected from inappropriate use by grantees.
  Our faith-based groups need the proposed Affordable Housing Fund 
under H.R. 1461, especially in the devastated Gulf Coast region where 
hundreds of thousands of families have not been able to return to their 
homes. In such challenging times, it would be unfortunate if 
experienced faith-based organizations and nonprofits that have 
performed laudably in meeting the needs of these survivors would be 
barred from participation in funding that would help meet critical 
housing needs.
  Mr. Chairman, I support the legislation on the above limited basis.
  Mr. OXLEY. Mr. Chairman, I would simply say in summary to ask the 
Members to support the manager's amendment. We need to support the 
folks down in the gulf region that were affected by the hurricane. The 
purpose of the manager's amendment was twofold, to insure that money 
was available as quickly as possible to those victims who are 100,000 
homeless, just in Louisiana alone, to make certain that they can get 
access to that as quickly as possible; secondly, to make certain that 
the groups that are building those homes are not political front groups 
for a right or left agenda, but ones who are sincerely interested in 
building with bricks and mortar to provide that opportunity to those 
folks.
  If you want to help those folks in the gulf region, and you want to 
make certain that money is used effectively and not in a political way, 
support the Oxley manager's amendment.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIRMAN (Mr. Putnam). The question is on the amendment 
offered by the gentleman from Ohio (Mr. Oxley).
  The question was taken; and the Acting Chairman announced that the 
noes appeared to have it.
  Mr. BAKER. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Ohio (Mr. 
Oxley) will be postponed.
  It is now in order to consider amendment No. 2 printed in House 
Report 109-254.


                 Amendment No. 2 Offered by Ms. Carson

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

       Amendment No. 2 offered by Ms. Carson:
       Page 114, line 6, strike the quotation marks and the last 
     period.
       Page 114, after line 6, insert the following new paragraph:
       ``(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.''.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the 
gentlewoman from Indiana (Ms. Carson) and a Member opposed each will 
control 5 minutes.
  The Chair recognizes the gentlewoman from Indiana (Ms. Carson).
  Ms. CARSON. Mr. Chairman, I yield myself such time as I may consume. 
This amendment I am offering today will help low- and moderate-income 
families fulfill the American dream of homeownership.
  This amendment will not mandate, but encourage, the GSEs to purchase 
personal property loans secured by manufactured housing and will count 
towards the GSE underserved market goals.

                              {time}  1415

  This practice is consistent with the charters of Fannie Mae and 
Freddie Mac.
  In 2004, the average income of those who purchased manufactured homes 
was $28,000. These homes cost 30 percent less than a site-built house 
and are equal in quality, amenities, and efficiency. Currently only 
real property loans are considered for manufactured housing purchases, 
but the vast majority of manufactured home buyers rent the land on 
which it rests. Personal property loans are issued for the purchase of 
a manufactured home, but not tied to any piece of land. While these 
loans are typically financed as personal property, my amendment would 
allow for the GSEs to only purchase personal property loans that 
finance manufactured housing.
  In 1992, Congress set a goal for the GSEs to promote mortgage credit 
in areas where traditional credit opportunities were unavailable, 
inaccessible, or too costly. My amendment will help the GSEs achieve 
this goal by encouraging them to purchase personal property loans for 
manufactured housing.
  Mr. Chairman, this amendment will assist GSEs in continuing to serve 
home buyers in underserved areas and will encourage lenders to offer 
more and better loans to finance the purchase of new homes. It has the 
broad support of manufactured housing organizations as well as 
consumers. It has

[[Page 23860]]

bipartisan support. I encourage my colleagues to adopt this amendment.
  Mr. Chairman, I yield back the balance of my time.
  Mr. OXLEY. Mr. Chairman, I rise to claim the time in opposition to 
the amendment but am not opposed and would indicate that we are pleased 
to accept the amendment offered by the gentlewoman from Indiana and 
applaud her for her foresight and leadership in the area of 
manufactured housing.
  The Acting CHAIRMAN (Mr. Putnam). The question is on the amendment 
offered by the gentlewoman from Indiana (Ms. Carson).
  The amendment was agreed to.
  The Acting CHAIRMAN. It is now in order to consider amendment No. 3 
printed in House Report 109-254.


            Amendment No. 3 Offered by Mr. Davis of Alabama

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

       Amendment No. 3 offered by Mr. Davis of Alabama:
       Page 107, strike lines 20 through 24 and insert the 
     following new paragraph:
       ``(26) 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.''.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman 
from Alabama (Mr. Davis) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Alabama (Mr. Davis).
  Mr. DAVIS of Alabama. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, one of the goals of this bill is to stimulate 
affordable housing activity on the part of the GSEs in certain 
categories and areas that traditionally have been underserved, and one 
of those happens to be the rural portions of America. There have been 
various goals that have been added that will require the GSEs to be 
more proactive in their lending in rural America.
  The concern that I have with the underlying bill is that the 
definition of ``rural'' that has been adopted is one that is, number 
one, very different from the definition that has historically been used 
by the Congress beginning with the Housing Act of 1949; and, second of 
all, I think it is one that is unduly restrictive. The new definition 
would define ``rural'' as being, among other things, nonmetro areas.
  As many of us in this Chamber know, ``metro area'' is very broadly 
defined in this country, and a number of areas that we would all think 
of as being rural, that we would all view as being within the ambit of 
this bill, would certainly fall inside metro areas and thus be excluded 
from the purview of this bill, and would be excluded from the 
definition of ``rural.''
  So what our amendment, which I believe to be noncontroversial, would 
do would be to return to the traditional definition of ``rural'' that 
is contained in the Housing Act of 1949. That definition again is one 
that has long been accepted and long employed by this body.
  I should also note, Mr. Chairman, that we would retain some of the 
changes made in the substantive bill which would talk about 
micropolitan and tribal trust lands. Those would be included in the new 
definition, but we would return to the traditional definition that has 
been employed since 1949.
  Mr. Chairman, I reserve the balance of my time.
  Mr. OXLEY. Mr. Chairman, I rise to claim the time in opposition, but 
I also want to say I do not oppose this amendment. As a matter of fact, 
I want to congratulate the gentleman from Alabama for an excellent 
amendment and well thought-out. He is a valuable member of the 
committee. This side has no objections to the amendment.
  Mr. DAVIS of Alabama. Mr. Chairman, I thank the chairman for his 
compliments.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIRMAN. The question is on the amendment offered by the 
gentleman from Alabama (Mr. Davis).
  The amendment was agreed to.
  The Acting CHAIRMAN. It is now in order to consider amendment No. 4 
printed in House Report 109-254.


                  Amendment No. 4 Offered by Mr. Leach

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

       Amendment No. 4 offered by Mr. Leach:
       Strike line 21 on page 49 and all that follows through line 
     4 on page 51 and insert the following new subsections:

       ``(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(b) or 
     by order--
       ``(1) establish a minimum capital level, for any particular 
     enterprise, that is higher than the level specified in 
     subsection (a) or, for any particular Federal home loan bank, 
     that is higher than the level specified in subsection (b), as 
     the Director deems necessary or appropriate taking into 
     consideration the particular circumstances of the particular 
     regulated entity, which may include any prudential standards 
     necessary to ensure long-term insitutional viability and 
     competitive equity in the market; or
       ``(2) establish a minimum capital level for the 
     enterprises, for the Federal home loans 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) Effect on Other Authority.--Nothing in this section 
     may be construed to limit the authority of the Director to 
     require a regulated entity to raise or maintain capital under 
     other provisions of law, or pursuant to prompt corrective 
     action or administrative enforcement actions, or in 
     connection with conservatorship or receivership powers.''.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman 
from Iowa (Mr. Leach) and the gentleman from Massachusetts (Mr. Frank) 
each will control 5 minutes.
  The Chair recognizes the gentleman from Iowa (Mr. Leach).
  Mr. LEACH. Mr. Chairman, I yield myself such time as I may consume.
  My amendment is to strengthen the capital requirements of the bill. 
But first, let me acknowledge that between passage in the committee and 
the bringing of the bill to the floor, the capital standard provision 
has been strengthened, and I congratulate the committee for doing that.
  But secondly, let me stress that still at this point in time, even 
though the bill itself got a strong bipartisan committee vote, it lacks 
the support of the administration. The principal reason does not relate 
to some of the debate that has occurred earlier on a very important 
issue, it relates to the fact that the Department of the Treasury, that 
is the administration, does not want to have accountability for 
regulation if it is not given adequate authority. And, lacking adequate 
authority, it feels that this approach is not one that produces greater 
safety and soundness for the American financial system.
  So what this amendment does is strengthens the capital standard 
provision. Minimum capital is the amount of capital needed to protect 
financial institutions against broad categories of business risk, so 
when a crisis strikes, there is a reserve to fall back upon. Capital is 
especially important for GSEs because their short-term obligations are 
large, and they are single-industry-intensive. Fannie Mae and Freddie 
Mac, for instance, have debt obligations due within a year of about 45 
percent of their debt liabilities. Any problem with capital markets 
affecting these firms could become very large, very quickly.
  What might ``very quickly'' mean? Because of the scale of short-term 
obligations of the GSEs, the GSEs are rolling over many billions of 
dollars of obligations each week. For this reason, a market crisis 
could become acute in a matter of days, and this is something the 
country has to think through.
  Today's House vote comes nearly a year after Federal regulators 
ordered Fannie Mae to restate $10.8 billion in previously reported 
earnings because of accounting problems several years ago, and this is 
not long after Freddie Mac restated about $5 billion in earnings.

[[Page 23861]]

The stakes are significant, given that these two GSEs carry together 
about $1.5 trillion in debt. The failure of either institution could 
potentially make the savings and loan crisis of a generation ago look 
somewhat minor.
  I would stress here that Fannie and Freddie are very unique 
institutions. They are, on the one hand, secondary market institutions 
serving as intermediaries primary markets as well as a tertiary market. 
On the other hand, when they hold mortgages in their portfolios, they 
are, in effect, simply another S&L. Hence, while financial risk 
management tools are much greater than they were a generation ago when 
we had the S&L crisis, in one sense, for these two institutions, their 
use is a little bit more problematic, because in the housing industry 
risk is transferred to Fannie and Freddie disproportionately. They 
become receivers of risk and as risk becomes concentrated within these 
institutions, they disproportionately become on the hook if very 
extraordinary things happen in the economy, something that is not 
beyond thinking.
  In the 1980s, without sufficient capital, S&Ls grew larger and 
entered new lines of business as their capital basis shrunk, and, when 
things got bad, the taxpayer was on the hook for $250 billion. Fannie 
and Freddie today operate on a capital base much less than S&Ls did 
just before their collapse in the 1980s.
  It has been suggested by some--actually, a ``Dear Colleague'' letter 
has been circulated--that opponents believe that my amendment would 
limit the discretion of the new regulator. I would only suggest that 
that is not my intent, and it is clearly not the intent of the 
language.
  Let me just describe what the Federal Reserve says about this. In a 
letter dated October 5, 2005, Chairman Greenspan wrote, ``This 
amendment would improve the proposed legislation. . . The regulators 
for the GSEs should have a free hand in determining . . . minimum risk-
based capital standards for these enterprises. Your amendment would 
give the regulator greater discretion in this critical area.''
  It is one thing to have institutions established to have an advantage 
in cost of money provided by the United States Government, and another 
thing to also have advantage in leverage ratio provided by the United 
States Congress. So because the growing presence of GSEs in our markets 
and the possible risk they pose to our financial system are 
significant, it is clear we need a strong regulator, and I would urge 
that this regulator be given this additional authority.
  The Acting CHAIRMAN. The time of the gentleman from Iowa has expired.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 3 minutes.
  Mr. Chairman, the gentleman from Iowa is a thoughtful Member and the 
former chairman of the committee, who has been very critical of the 
role of GSEs, and I think this is, frankly, not so much a specific 
amendment as an expression of a sense that, a view that they have 
gotten too large. One particular aspect to the amendment seems to me to 
sum this up when it calls for higher minimum capital requirements as 
the director deems necessary or appropriate to ensure long-term 
institutional viability and competitive equity in the market.
  Now, we are all for long-term institutional viability, but 
competitive equity means, look, there are banks who complain that 
because Fannie and Freddie are perceived to have some back-up from the 
Congress, and let me say right now, if you are listening, if you are 
buying Fannie or Freddie's paper because you think I am going to vote 
to bail you out, sell it, and cash it in, I am not going to do that. I 
do not think there is a Federal guarantee. I certainly, as a great 
supporter of their housing role, do not plan to do that. But banks 
complain that they cannot meet Fannie and Freddie's price because 
Fannie and Freddie can borrow money more cheaply. That is part of what 
we are dealing with here when you talk about competitive equity.
  I agree that Fannie and Freddie get certain advantages in this. That 
is why we have virtual unanimity here. There are debates about 
restrictions on what happens when you go into the Affordable Housing 
Fund, but there is virtual unanimity about having an Affordable Housing 
Fund.
  What we are saying is there are two ways we can do this. We can 
reduce what we think is Freddie and Fannie's competitive advantage, or 
you can make sure that more of that competitive advantage is shared 
with the housing market, and that is the position that the majority, 
bipartisan majority of the committee has taken.
  When the gentleman from Iowa talks about competitive equity, it seems 
to me you are inviting the banks to say, wait a minute, that is not 
fair, and we do not want Fannie and Freddie to be able to do this as 
cheaply as possible because it is not fair to us.
  With regard to the powers of the regulator, the gentleman from 
Louisiana played a major role in this, and the gentleman from 
Pennsylvania was with him, and the chair and ranking member of the 
subcommittee. The regulator is fully empowered. The regulator within 
the bill is fully empowered to do whatever is necessary for safety and 
soundness. The regulator can raise capital in general; the regulator 
can decide that a particular activity is risky, and capital should be 
raised to compensate for that. But to go beyond and to get into 
competitive equity, it seems to me to be not so much a concern for 
safety and soundness as the philosophical question.
  I would also say that with all of the misdeeds of Fannie and Freddie, 
their safety and soundness has not been called into question. Yes, 
there were accounting misdeeds, and people got money who should not 
have gotten it, and some are being penalized as they should be, but 
safety and soundness has not been called into question, and this 
legislation further enhances what the regulator does.
  Mr. LEACH. Mr. Chairman, will the gentleman yield?
  Mr. FRANK of Massachusetts. I yield to the gentleman from Iowa.
  Mr. LEACH. Mr. Chairman, first I would like to make clear that what 
the amendment does is say, ``which may include'' consideration for what 
the gentleman has just indicated.
  Mr. FRANK of Massachusetts. Competitive equity.
  Mr. LEACH. That is correct. But secondly, if you do not have concern 
for competitive equity, you put the taxpayer at greater risk because 
you will have weaker standards. You also drive a system that we will be 
putting all assets of a given kind of industry within a governmentally 
privileged institution. That is what the trends are. So this is both a 
taxpayer protection and free market protection.

                              {time}  1430

  Mr. FRANK of Massachusetts. Well, I would say to the gentleman, we 
agree on this. Competitive equity has got nothing to do with protecting 
the taxpayers, except the taxpayers who happen to own banks. That is 
where competitive equity comes in.
  The fact is that safety and soundness is what protects the taxpayers. 
Competitive equity has to do with fairness to competitors. That does 
not implicate the Treasury.
  Mr. Chairman, I yield such time as he may consume to the gentleman 
from Texas (Mr. Neugebauer).
  Mr. NEUGEBAUER. Mr. Chairman, I rise in opposition to the Leach 
amendment. H.R. 1461 clearly stipulates that the new regulator for 
Fannie, Freddie, and the Home Loan Banks has the authority to increase 
the minimum capital levels ``to the extent needed to ensure that the 
regulated entities operate in a safe and sound manner.''
  This is a broad grant of authority to this new regulator. The Leach 
amendment, however, begins to limit the discretion of the regulator by 
adding several competitive issues in the determination of the minimum 
capital.
  The Leach amendment would effectively establish minimum capital at an 
arbitrary decision, by equating that to banks. Let us be very clear 
that these entities are not banks. One of the things that we need to 
make sure of is that if we are going to form a world-class regulator 
for these entities and that we are going to put in place people to 
manage that process and to regulate

[[Page 23862]]

these entities, we need to give them the discretion that they need to 
make sure that as they set those capital levels that they are 
considering the economy, the state of the markets at that particular 
time, and have the ability to regulate to those entities and not try to 
make those entities something that they are not, and these entities are 
not banks.
  The gentleman's amendment does not do anything to increase the 
safeness and the soundness of these institutions. By the very fact that 
the regulators will have the ability to do that, set those minimum 
capital levels at a level that they need to be, gives them the 
flexibility to do that.
  And so I would urge Members to vote against the Leach amendment.
  The Acting CHAIRMAN (Mr. Putnam). The question is on the amendment 
offered by the gentleman from Iowa (Mr. Leach).
  The question was taken; and the Acting Chairman announced that the 
noes appeared to have it.
  Mr. LEACH. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Iowa (Mr. 
Leach) will be postponed.


          Sequential Votes Postponed in Committee of the Whole

  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, proceedings 
will now resume on those amendments on which further proceedings were 
postponed, in the following order:
  Amendment No. 1 by Mr. Oxley of Ohio.
  Amendment No. 4 by Mr. Leach of Iowa.
  The Chair will reduce to 5 minutes the time for any electronic vote 
after the first vote in this series.


                  Amendment No. 1 Offered by Mr. Oxley

  The Acting CHAIRMAN. The pending business is the demand for a 
recorded vote on the amendment offered by the gentleman from Ohio (Mr. 
Oxley) on which further proceedings were postponed and on which the 
noes prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The Acting CHAIRMAN. A recorded vote has been demanded.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 210, 
noes 205, not voting 19, as follows:

                             [Roll No. 541]

                               AYES--210

     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boustany
     Brady (TX)
     Brown (SC)
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole (OK)
     Conaway
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (KY)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Doolittle
     Drake
     Dreier
     Duncan
     Emerson
     English (PA)
     Everett
     Farr
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gillmor
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Issa
     Istook
     Jenkins
     Jindal
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McKeon
     McMorris
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Pickering
     Pitts
     Poe
     Pombo
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Regula
     Rehberg
     Reichert
     Renzi
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schmidt
     Schwarz (MI)
     Sensenbrenner
     Sessions
     Shadegg
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Tancredo
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NOES--205

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Barrow
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Bishop (NY)
     Blumenauer
     Boren
     Boucher
     Boyd
     Bradley (NH)
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Carson
     Case
     Chandler
     Clay
     Cleaver
     Clyburn
     Conyers
     Cooper
     Costa
     Costello
     Cramer
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Ehlers
     Engel
     Eshoo
     Etheridge
     Evans
     Fattah
     Filner
     Ford
     Frank (MA)
     Gilchrest
     Gonzalez
     Gordon
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (MN)
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Leach
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy
     McCollum (MN)
     McDermott
     McGovern
     McHugh
     McIntyre
     McKinney
     McNulty
     Meehan
     Meeks (NY)
     Melancon
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Otter
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Petri
     Pomeroy
     Price (NC)
     Rahall
     Ramstad
     Rangel
     Ross
     Rothman
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Simmons
     Skelton
     Slaughter
     Smith (NJ)
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Sweeney
     Tanner
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Tierney
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Woolsey
     Wu
     Wynn

                             NOT VOTING--19

     Bishop (GA)
     Boswell
     Brown-Waite, Ginny
     Cannon
     Diaz-Balart, L.
     Diaz-Balart, M.
     Emanuel
     Foley
     Meek (FL)
     Moran (VA)
     Platts
     Reyes
     Reynolds
     Ros-Lehtinen
     Roybal-Allard
     Shaw
     Towns
     Wexler
     Whitfield

                              {time}  1457

  Mr. WEINER, Ms. MILLENDER-McDONALD, and Mr. GILCHREST changed their 
vote from ``aye'' to ``no''.
  Mr. SIMPSON changed his vote from ``no'' to ``aye''.
  So the amendment was agreed to.
  The result of the vote was announced as above recorded.


                          Personal Explanation

  Mr. FARR. Mr. Chairman, on rollcall No. 541, I inadvertently voted 
``aye.'' I wish the Record to show that had I voted correctly, I would 
have voted ``no.''


                  Amendment No. 4 Offered by Mr. Leach

  The Acting CHAIRMAN (Mr. Putnam). The pending business is the demand 
for a recorded vote on the amendment offered by the gentleman from Iowa 
(Mr. Leach) on which further proceedings were postponed and on which 
the noes prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The Acting CHAIRMAN. A recorded vote has been demanded.
  A recorded vote was ordered.
  The Acting CHAIRMAN. This will be a 5-minute vote.

[[Page 23863]]

  The vote was taken by electronic device, and there were--ayes 36, 
noes 378, not voting 19, as follows:

                             [Roll No. 542]

                                AYES--36

     Beauprez
     Blackburn
     Chocola
     Cooper
     Dicks
     Dingell
     Duncan
     Ehlers
     Flake
     Franks (AZ)
     Garrett (NJ)
     Gilchrest
     Gillmor
     Gutknecht
     Hensarling
     Hostettler
     Johnson (CT)
     King (IA)
     Kingston
     Latham
     Leach
     Lungren, Daniel E.
     Musgrave
     Nussle
     Paul
     Pence
     Petri
     Rohrabacher
     Royce
     Ryan (WI)
     Shadegg
     Shays
     Taylor (MS)
     Taylor (NC)
     Wamp
     Wynn

                               NOES--378

     Abercrombie
     Ackerman
     Aderholt
     Akin
     Alexander
     Allen
     Andrews
     Baca
     Bachus
     Baird
     Baker
     Baldwin
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Barton (TX)
     Bass
     Bean
     Becerra
     Berkley
     Berry
     Biggert
     Bilirakis
     Bishop (NY)
     Bishop (UT)
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boren
     Boucher
     Boustany
     Boyd
     Bradley (NH)
     Brady (PA)
     Brady (TX)
     Brown (OH)
     Brown (SC)
     Brown, Corrine
     Burgess
     Burton (IN)
     Butterfield
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Carson
     Carter
     Case
     Castle
     Chabot
     Chandler
     Clay
     Cleaver
     Clyburn
     Coble
     Cole (OK)
     Conaway
     Conyers
     Costa
     Costello
     Cramer
     Crenshaw
     Crowley
     Cubin
     Cuellar
     Culberson
     Cummings
     Cunningham
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (KY)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     Dent
     Doggett
     Doolittle
     Doyle
     Drake
     Dreier
     Edwards
     Emerson
     Engel
     English (PA)
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Fattah
     Feeney
     Ferguson
     Filner
     Fitzpatrick (PA)
     Forbes
     Ford
     Fortenberry
     Fossella
     Foxx
     Frank (MA)
     Frelinghuysen
     Gallegly
     Gerlach
     Gibbons
     Gingrey
     Gohmert
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Granger
     Graves
     Green (WI)
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hall
     Harman
     Harris
     Hart
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Inslee
     Israel
     Issa
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     Jindal
     Johnson (IL)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     King (NY)
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kucinich
     Kuhl (NY)
     LaHood
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     LaTourette
     Lee
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren, Zoe
     Lowey
     Lucas
     Lynch
     Mack
     Maloney
     Manzullo
     Marchant
     Marshall
     Matheson
     Matsui
     McCarthy
     McCaul (TX)
     McCollum (MN)
     McCotter
     McCrery
     McDermott
     McGovern
     McHenry
     McHugh
     McIntyre
     McKeon
     McKinney
     McMorris
     McNulty
     Meehan
     Meeks (NY)
     Melancon
     Menendez
     Mica
     Michaud
     Millender-McDonald
     Miller (FL)
     Miller (MI)
     Miller (NC)
     Miller, Gary
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (KS)
     Murphy
     Murtha
     Myrick
     Nadler
     Napolitano
     Neal (MA)
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Oberstar
     Obey
     Olver
     Ortiz
     Osborne
     Otter
     Owens
     Oxley
     Pallone
     Pascrell
     Pastor
     Payne
     Pearce
     Pelosi
     Peterson (MN)
     Peterson (PA)
     Pickering
     Pitts
     Poe
     Pombo
     Pomeroy
     Porter
     Price (GA)
     Price (NC)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Rehberg
     Reichert
     Renzi
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Ross
     Rothman
     Ruppersberger
     Rush
     Ryan (OH)
     Ryun (KS)
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Saxton
     Schakowsky
     Schiff
     Schmidt
     Schwartz (PA)
     Schwarz (MI)
     Scott (GA)
     Scott (VA)
     Sensenbrenner
     Serrano
     Sessions
     Sherman
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Slaughter
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Sodrel
     Solis
     Souder
     Spratt
     Stark
     Stearns
     Strickland
     Stupak
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Tiahrt
     Tiberi
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Van Hollen
     Velazquez
     Visclosky
     Walden (OR)
     Walsh
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Woolsey
     Wu
     Young (AK)
     Young (FL)

                             NOT VOTING--19

     Berman
     Bishop (GA)
     Boswell
     Brown-Waite, Ginny
     Diaz-Balart, L.
     Diaz-Balart, M.
     Emanuel
     Foley
     Markey
     Meek (FL)
     Moran (VA)
     Platts
     Reyes
     Reynolds
     Ros-Lehtinen
     Roybal-Allard
     Shaw
     Wexler
     Whitfield

                              {time}  1506

  Mr. ADERHOLT changed his vote from ``aye'' to ``no.''
  Mr. ROHRABACHER changed his vote from ``no'' to ``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  The Acting CHAIRMAN (Mr. Bishop of Utah). It is now in order to 
consider amendment No. 5 printed in House Report 109-254.


                  Amendment No. 5 Offered by Mr. Royce

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

       Amendment No. 5 offered by Mr. Royce:
       Page 53, line 20, after ``enterprise'' insert the 
     following: ``, with mitigating systemic risk to the housing 
     or capital markets or the financial system,''.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman 
from California (Mr. Royce) and the gentleman from Pennsylvania (Mr. 
Kanjorski) each will control 5 minutes.
  The Chair recognizes the gentleman from California (Mr. Royce).
  Mr. ROYCE. Mr. Chairman, I yield 1 minute to the gentleman from New 
Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. Mr. Chairman, I rise in support of this 
legislation, which strengthens the language with regard to portfolios 
and GSEs.
  The GSEs claim that they are shock absorbers in the system. One of 
the main reasons that Fannie and Freddie claim they should not have 
their portfolios limited is that they provide a stable means of support 
for the residential finance markets at times of crisis.
  Fannie's CEO, Dan Mudd, testified that ``our mortgage portfolio 
allows us to play a shock-absorbing function for the finance system 
during times of potential difficulty.''
  This week, Freddie's president, Eugene McQuade, was quoted as saying 
that the enterprises provided a source of stability to the mortgage 
finance market after the September 11 terrorist attacks.
  This is a nice thought, Mr. Chairman. However, their statements are 
not true.
  If you look at Fannie's purchases for its portfolio during every 
month of 2001, you will notice that its purchases in September of 2001, 
of that year, were the lowest level of anytime during that year.
  Fannie might argue that they acted as a shock absorber not by buying 
mortgages and MBS, but by committing to buy in succeeding months.
  Mr. Chairman, I will conclude by saying that we should support these 
significant portfolio limitations in order to make sure that GSEs are 
able to be reined in and not become what they have said they are and go 
out of their range of portfolio.
  Mr. KANJORSKI. Mr. Chairman, I yield 2 minutes to the gentleman from 
California (Mr. Gary G. Miller).
  Mr. GARY G. MILLER of California. Mr. Chairman, this amendment 
basically is unnecessary. It interferes with the GSEs' ability to 
provide stability and liquidity to the residential mortgage market, 
including during times of crisis, which is mostly important.
  The bill already allows the regulator to address safety and soundness 
concerns through risk-based capital, minimum capital, and portfolio 
powers. Adding this systemic risk language would likely add uncertainty 
and instability into the secondary-mortgage market, ultimately 
resulting in a negative impact on the housing markets.
  H.R. 1461 gives the new regulator the same powers and authority that 
bank

[[Page 23864]]

regulators have, and more, including the authority to limit the growth 
of the housing GSEs for safety and soundness reasons.
  Bank regulators do not have the authority to limit growth of banks 
for undefined systemic risk reasons. The Royce amendment goes beyond 
the bank-like regulation.
  Similar to bank regulatory authority, H.R. 1461 gives the GSE 
regulator the discretion to increase a GSE's capital requirement, 
particularly the minimum capital requirement, which effectively 
empowers the regulator to limit the growth of a GSE's portfolio.
  H.R. 1461 also gives the regulator the authority to adjust risk-based 
capital, which provides a risk-related measure by which the regulator 
evaluates all aspects of a GSE's business.
  H.R. 1461 already provides an unprecedented level of authority over 
the enterprises' portfolios.
  The bill gives the regulator broad authority over the size and 
competition of the GSEs' portfolios.
  The regulator could force an enterprise to dispose of any asset or 
liability if the regulator determines that doing so would be consistent 
with safety and soundness.
  Let me quote from the bill itself. H.R. 1461, page 53: 
``Notwithstanding the capital classifications of the GSE, 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 or liability, if the director determines that such action is 
consistent with the safe and sound operation of the GSE.''
  By harming the GSEs' ability to support our Nation's mortgage market, 
the Royce amendment would endanger housing.
  Reducing the size of the GSE portfolios for reasons other than those 
affecting the safety and soundness of the company could negatively 
impact home buyers and the mortgage market in the following ways: one, 
increasing mortgage rates for customers; two, limiting the liquidity 
available to small lenders to sell their mortgages, and many more.
  I strongly encourage a ``no'' vote for this amendment.
  Limiting the GSEs' ability to sustain the market in time of crises 
and keep mortgage rates stable.
  Reducing new mortgage product innovation--limiting the GSEs' ability 
to reach underserved populations and achieve their housing goals.

                              Conclusions

  GSEs are essential to housing market. The GSEs' mortgage investment 
activities are crucial to fulfilling their mission to provide 
liquidity, stability and affordability in the residential mortgage 
market.
  Banks are not obligated to provide liquidity, stability or 
affordability to the mortgage market. They are free to enter or leave 
the market at any time. When market conditions become less favorable, 
they will shift into other, more profitable investments.
  Royce will reduce liquidity. Arbitrarily forcing the GSEs to reduce 
their mortgage investments would reduce liquidity in the mortgage 
market, hinder the GSEs' ability to stabilize the market, and make 
mortgage credit more expensive.
  Mr. ROYCE. Mr. Chairman, I yield 1 minute to the gentleman from Texas 
(Mr. Hensarling).
  Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding me 
time, and I thank him for his amendment.
  First, I want to thank the gentleman from Ohio (Mr. Oxley) and the 
gentleman from Louisiana (Mr. Baker) for bringing us to this position 
in the first place.
  Clearly, there have been huge accounting irregularities at our GSEs. 
Clearly, something needs to be done; and with these accounting 
irregularities, we also know that we have very significant systemic 
risks to our economy that are involved with the GSEs' portfolio 
holdings.
  Chairman Greenspan has testified before our committee on numerous 
occasions about this. It is time that we do something.
  This is as straightforward an amendment as it can be. It simply adds 
a sentence to this legislation allowing the new regulator the authority 
to step in, where necessary, to reduce the size of Fannie and Freddie's 
portfolios, something that we know has nothing to do with their mission 
of creating liquidity in the secondary-mortgage market.
  Again, as Chairman Greenspan said before, ``Without the needed 
restrictions on the size of the GSE balance sheets, we put at risk our 
abilities to preserve safe and sound financial markets in the United 
States, a key ingredient of support for housing.''
  I urge a ``yes'' vote on the amendment.

                              {time}  1515

  Mr. KANJORSKI. Mr. Chairman, I yield 1 minute to the gentleman from 
Virginia (Mr. Tom Davis).
  Mr. TOM DAVIS of Virginia. Mr. Chairman, I rise in opposition to the 
amendment.
  Briefly, I want to note that the existing committee print already 
gives the regulator power to force Freddie Mac and Fannie Mae to sell 
assets for any possible safety and soundness problems. I am not sure 
that adding an additional test, one that is ill-defined, will 
accomplish any additional good.
  And it could do some harm. Here is why: under this amendment, a 
regulator could decide to force a healthy, over-capitalized Freddie or 
Fannie to sell assets at a time when the housing market could ill 
afford it. The ripple effects on local homeowners, communities, and 
economies could suffer, all in the name of this theoretical term of 
``systemic risk.''
  I should add this approach is not consistent with the banking world. 
This power to punish a healthy institution in advance of any real 
safety and soundness problem does not exist in the banking world. And 
many banks are now the same size as Freddie and Fannie. I urge Members 
to support the well-balanced committee print language.
  Mr. ROYCE. Mr. Chairman, I reserve the balance of my time.
  Mr. KANJORSKI. Mr. Chairman, I yield myself the balance of my time.
  I have a great deal of respect for the proponent of this amendment. I 
know he is a very serious and thoughtful Member; but I think this 
amendment goes overboard from the standpoint of during the 6 years of 
consideration of this bill, we balanced out very well the structure to 
create a regulator that would be similar to the bank regulators. The 
powers involved in this bill allow for the regulator to control safety 
and soundness and to have direction of the portfolio when systemic risk 
would occur in these particular organizations.
  This amendment goes far beyond that and allows the latitude to the 
regulator to get involved whenever there are capital-markets 
instability, not only housing instability, but capital markets or the 
financial system instability. What it means is we will always be 
subject to the whim and fancy of a regulator to require these GSEs to 
sell assets or sell liabilities at the whim of the regulator's thought 
that there may be some need to regulate systemic risk, when in fact 
these organizations suffer no systemic risk.
  I join with the gentleman from Virginia (Mr. Tom Davis) when he 
analyzes out that what we would be doing is arming a regulator who may 
not always be the most thoughtful individual in the world to take 
actions against our housing industry and our housing GSEs at the most 
inappropriate time and moment, causing destabilization to the housing 
market and, in effect, causing further destabilization and systemic 
risk to the financial markets. I urge my colleagues on both sides of 
the aisle to vote ``no'' on this amendment.
  Mr. Chairman, I yield back the balance of my time.
  Mr. ROYCE. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, I rise today in support of this amendment dealing with 
systemic risk to H.R. 1461, the legislation to reform oversight of the 
Nation's three housing GSEs.
  I think most people would assume that Congress would and should 
create a regulator with the authority to protect the broader financial 
system with respect to systemic risk, especially in light of the 
warnings of systemic risk from the Federal Reserve and the

[[Page 23865]]

Treasury, the $1.5 trillion of mortgage assets concentrated in just two 
companies, the special ties the GSEs have with the Federal Government, 
and the over-$2 trillion in GSE debt.
  Unfortunately, the fact of the matter is that H.R. 1461 fails to give 
the regulator the authority to protect the financial system against a 
potential shock that would seriously undermine the U.S. housing market 
and the global financial system.
  I have just spoken with Alan Greenspan's office this afternoon, and 
they totally reject the argument that the regulator has this ability to 
take into account the systemic risk and take the necessary actions in 
the bill; and also the Bush administration disagrees with that 
assertion. They think it is not in there.
  Furthermore, if the authority is already in the bill, what is wrong 
with my additional 14 words stating it explicitly. Let me also make the 
point that my amendment would allow the regulator to review the 
investment holdings of Fannie Mae and Freddie Mac, and this authority 
is necessary because the huge concentration of on-balance sheet assets 
of Fannie Mae and Freddie Mac create too much interest rate risk, in 
other words, too much exposure to swings in interest rates in the hands 
of only a few risk managers.
  The traditional mortgage guarantee business model at Fannie Mae and 
Freddie Mac provides liquidity in the mortgage market and helps 
homeownership without increasing risk to the taxpayer. However, the 
enterprises' on-balance sheet mortgage assets only benefit Fannie and 
Freddie shareholders at the expense of the taxpayer.
  Taking into account the unequaled levels of debt outstanding and the 
unprecedented use of derivatives to manage interest rate risk at the 
enterprises, the Federal Reserve and the Treasury Department believe 
that the on-balance sheet mortgage assets of the two enterprises create 
systemic risk to the global financial markets.
  Mr. Chairman, Congress failed to rein in the savings and loan 
industry in the early 1980s. That failure led to hundreds of billions 
of dollars in taxpayer losses. Today, however, Congress has been 
forewarned by the Fed, the Treasury, the OECD, and the IMF. I would 
like to end debate on this amendment with the words of our 
distinguished chairman of the Federal Reserve, Alan Greenspan, who has 
publicly urged the House of Representatives to defeat H.R. 1461 unless 
the threat of systemic risk is addressed. He said: ``To fend off 
possible future systemic difficulties, which we at the Federal Reserve 
Board assess as likely if GSE expansion continues unabated, 
preventative actions are required sooner rather than later.'' I urge my 
colleagues to support this amendment.
  The Acting CHAIRMAN (Mr. Bishop of Utah). The question is on the 
amendment offered by the gentleman from California (Mr. Royce).
  The question was taken; and the Acting Chairman announced that the 
noes appeared to have it.
  Mr. ROYCE. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from California 
(Mr. Royce) will be postponed.
  It is now in order to consider amendment No. 6 printed in House 
Report 109-254.


                  Amendment No. 6 Offered by Mr. Paul

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

       Amendment No. 6 offered by Mr. Paul:
       Page 64, after line 12, insert the following new section:

     SECTION 117. ELIMINATION OF AUTHORITY TO BORROW FROM TREASURY 
                   OF THE UNITED STATES.

       (a) Fannie Mae.--Section 304 of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1719) is amended 
     by striking subsection (c).
       (b) Freddie Mac.--Section 306 of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1455) is amended by 
     striking subsection (c).
       (c) Federal Home Loan Banks.--Section 11 of the Federal 
     Home Loan Bank Act (12 U.S.C. 1431) is amended by striking 
     subsection (i).

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman 
from Texas (Mr. Paul) and the gentleman from Massachusetts (Mr. Frank) 
each will control 5 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Paul).
  Mr. PAUL. Mr. Chairman, I yield myself 3 minutes.
  Mr. Chairman, my amendment is straightforward. It cuts off a line of 
credit to the Treasury. The GSEs have a line of credit of $2 billion. 
It is said that it is not important because they never use it. The 
answer really to that is if they never use it, why leave it on the 
books. But we do know they indirectly use it. It has been described as 
a subsidy, because the GSEs can go into the market and get a discount 
on their loan costs; therefore, they can out-compete the private 
sector. My amendment merely eliminates that line of credit, puts a 
greater burden on the marketplace to regulate the GSEs rather than 
depending on regulation.
  I think Members can see there is a problem with our GSEs. The debt is 
horrendous. Today, the administration sent a letter around and said 
that the debt of the GSEs totals $2.5 trillion, and they also guarantee 
in addition $2.4 trillion. That adds up to more money than the Federal 
Government has borrowed. So it is a tremendous amount of money and 
credit that is in the system; and people have become frightened about 
this, including chairman of the Federal Reserve Board, Alan Greenspan.
  But what we are doing here today is not addressing the real problem: 
Why is it out of control? Why is there a financial housing bubble that 
everybody is afraid is going to undergo a severe correction?
  One of the major reasons is the fact that it has this special line of 
credit. So if we want to address the real cause of the problem, we have 
to eliminate the line of credit. So it rather amazes me that we do this 
much legislating without addressing the real cause of our problem.
  Of course, there are other things that contribute to the housing 
bubble, something that we cannot deal with today, but the fact that 
there is easy credit and low interest rates, interest rates below the 
market level, that is then directed into the housing market. This also 
contributes to the size and the scope of the borrowing capacity of the 
GSEs.
  Also in this bill, of course, we are adding into this a brand new 
housing program which is said to probably involve another billion 
dollars in the next 2 years. I guess it is not surprising when The Wall 
Street Journal editorializes against this. Unfortunately, they are not 
very kind. They say this bill is another ``Republican policy 
embarrassment''.
  This housing bubble, a housing program that we are starting up, how 
do we finance it? Well, we tax the GSEs. Instead of arguing the case 
for the marketplace and letting people earn money legitimately without 
subsidies, what we do, we keep allowing the system to continue. They do 
make profits, and then we tax them. We are talking about an additional 
tax, and this might very well be the reason the administration has come 
out against this bill, because of this new tax.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 2 minutes.
  Mr. Chairman, first, the administration has been somewhat 
inconsistent on this. A year ago, Secretary of HUD Jackson boasted 
about the fact that he was insisting Freddie and Fannie increase the 
extent to which they do low-income housing because we have always had 
affordable housing goals enforced by law. So the administration last 
year was insisting that Fannie and Freddie use more of their money to 
help low-income people.
  Let me say, I am not surprised. The gentleman from Texas (Mr. Paul) 
has been straightforward. He is one of the most intellectually honest 
Members of the House. Sometimes, like on casino gambling and medical 
marijuana, I am glad to be with him. This time we disagree. He is very 
clear in saying we should not be doing subsidized housing. He is quite 
clear.

[[Page 23866]]

  If his amendment were to pass, we would not be able to have an 
affordable housing program because the level of profits Fannie and 
Freddie generate, which we are tapping in part, 5 percent, to do 
affordable housing, would substantially diminish.
  Yes, I think people ought to be able to work to build housing; but 
low-income people, people working at the minimum wage, a minimum wage 
the gentleman does not want to raise, are not going to be able to build 
their own housing.
  People in the hurricane area who get priority, if the affordable 
housing bill goes through, that part of the bill goes through, hundreds 
of millions of dollars will be available to replace housing literally 
washed away in Mississippi, Alabama, Texas, and in Florida. There is no 
way people down there will be able to do it on their own. The gentleman 
has been quite explicit, and I appreciate his being honest about it.
  If this amendment passes, the effect will be to substantially 
increase the capital cost to Fannie and Freddie. They will have to pay 
more for capital. Once they pay more for capital, not only would the 
affordable housing fund disappear, but so will the ability of the Bush 
administration, through Secretary Jackson, to demand that they meet 
certain housing goals. And leave aside the affordable housing program, 
the Bush administration, under Secretary Jackson, is proud of what it 
did to order Fannie and Freddie to do more to meet affordable housing 
goals, to buy up mortgages for people at 80 percent of median income. I 
hope that the gentleman's amendment in this particular case is 
defeated.
  Mr. Chairman, I reserve the balance of my time.
  Mr. PAUL. Mr. Chairman, I yield myself such time as I may consume.
  If we had a bill that was a little cleaner, we probably would be 
dealing with the problems we face with the GSEs and we would be dealing 
with a housing program, a new housing program, probably with a 
different bill.
  I see one attempt is to deal with this problem that we face. Another 
attempt is we are deciding that we need more money directed into the 
housing industry, and of course your building friends like this, too. 
And those are Republican allies as well. The builders love this because 
we will pump more money into the market so they can make more profits. 
So it is another government housing project. From a market viewpoint, 
this is not good because we want the money in the market to be 
allocated purely by the market and not by government direction.
  It is the government direction first from the inflation, the 
artificial interest rates, and then from the allocation of funds that 
cause distortion. That is what we are dealing with here, the distortion 
that people are literally frightened about because nobody can even 
measure the amount of derivatives that are involved with Fannie Mae and 
Freddie Mac. People are holding their breath for an accident to happen.
  I see this as an opportunity to talk about the marketplace, why we 
should move Fannie Mae and Freddie Mac into the market.
  A lot of people complained about the problems we had with Enron, and 
we needed that as an excuse to pass a lot more regulation. The truth is 
the market dealt with Enron. Enron was dealt with rather cruelly by the 
marketplace before the regulators got there. What we need to do is not, 
and especially as Republicans and conservatives, talk about a world-
class regulator and that it is going to solve all of these problems.
  My argument is if we do not solve the problem of basic underlying 
inflation distortion of interest rates, allocation of funds through 
housing programs, as well as this line of credit, believe me, we are 
not going to solve this problem. Please vote to strike this line of 
credit to the Treasury.

                              {time}  1530

  As it was stated earlier on this floor, we may have some regulations 
built into this that may even precipitate the puncturing of the housing 
bubble. That nobody can predict. But without addressing the basic flaw 
in the system that has created this $5 trillion worth of debt, believe 
me, we will not have an answer. I urge a ``yes'' vote on this 
amendment.
  The Acting CHAIRMAN (Mr. Bishop of Utah). The time of the gentleman 
from Texas has expired.
  Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 30 seconds.
  The gentleman's amendment actually does not go quite far enough, but 
he has a germaneness problem. What he really wants to do is abolish 
HUD, given his philosophy. He does not think there should be a Federal 
housing program. Since he cannot get at HUD, he goes after Fannie and 
Freddie in ways that would reduce substantially what we do in housing.
  And, by the way, the administration's objection to this bill is not, 
as says the gentleman, that it is too much regulation. It is that we do 
not give the regulator enough powers. So the administration's position 
is somewhat opposite to the gentleman from Texas', not for the first 
time, to his credit.
  Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman from Florida 
(Ms. Wasserman Schultz).
  Ms. WASSERMAN SCHULTZ. Mr. Chairman, I rise today to strongly oppose 
the Paul amendment and the civic engagement restrictions in the 
manager's amendment we previously debated. These will have a 
disproportionate and disparate impact on the State of Florida.
  I just came back from my district, where the damage caused by 
Hurricane Wilma has been extensive. Its effects will be felt for 
months, if not years. Thousands of Floridians are living in shelters, 
as thousands of homes in the State were severely or completely 
destroyed.
  People in Florida, Texas, the Gulf States, and across the country 
have been affected by these storms and have real life issues to deal 
with: food, shelter, clothing, fuel, lines for 2 and 3 hours to get 
fuel. I had to drive 150 miles today before I could find one gas 
station that only had about a half-hour line.
  These people need shelter. They are going to need affordable housing. 
They could care less about partisan politics. These restrictions are 
misplaced and unnecessary. They preclude legitimate nonprofits from 
accessing affordable housing funds at a time when hundreds of thousands 
of Americans desperately need this assistance. We should not be 
clouding the need for affordable housing with partisan politics.
  I urge my colleagues to stay focussed on the issues that are at the 
center of people's lives and vote ``no'' on this amendment and 
ultimately support the gentleman from Massachusetts' motion to 
recommit.
  Mr. FRANK of Massachusetts. Mr. Chairman, we have had very limited 
time here, so I am going to stray to another topic relative to the 
bill.
  Mr. Chairman, I yield 1 minute to the gentleman from California (Mr. 
Sherman).
  Mr. SHERMAN. Mr. Chairman, I thank the gentleman for yielding me this 
time and for inviting me to address the Garrett amendment, which comes 
up next, and to urge that we oppose that amendment.
  I want to thank the chairman and the ranking member for including in 
the bill when it left our committee language proposed by the gentleman 
from California (Mr. Gary G. Miller) and myself to raise the conforming 
loan limit in certain areas.
  The reason we have these GSEs is to help middle-class families 
achieve the dream of homeownership. Since the beginning, we recognized 
that a middle-class family cannot find a home in Alaska and Hawaii at 
the same amounts with the same level of mortgage as in the other 48 
States. So we have always had a higher limit for those States. We now 
must recognize that in Los Angeles, New York, and certain other areas, 
housing prices are every bit as high as in some parts of Alaska and 
Hawaii. And that is why the bill that we need to defend from the 
Garrett amendment provides for a conforming loan limit, that is either 
as high as it is in Alaska and Hawaii or such lower amount as equals 
the average home price in that area.
  We have middle-class families in my district, a police officer 
married to a

[[Page 23867]]

teacher, trying to get a home. Do not deprive them of the benefits of 
these GSEs on the theory that they are wealthy. They are not.
  The Acting CHAIRMAN (Mrs. Capito). The question is on the amendment 
offered by the gentleman from Texas (Mr. Paul).
  The question was taken; and the Acting Chairman announced that the 
noes appeared to have it.
  Mr. PAUL. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Texas (Mr. 
Paul) will be postponed.
  It is now in order to consider amendment No. 7 printed in House 
Report 109-254.


          Amendment No. 7 Offered by Mr. Garrett of New Jersey

  Mr. GARRETT of New Jersey. Madam Chairman, I offer an amendment.
  The Acting CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 7 offered by Mr. Garrett of New Jersey:
       Strike line 21 on page 81 and all that follows through line 
     4 on page 91.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman 
from New Jersey (Mr. Garrett) and the gentleman from California (Mr. 
Gary G. Miller) each will control 5 minutes.
  The Chair recognizes the gentleman from New Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. Madam Chairman, I yield myself 2 minutes.
  My amendment would strike the language in the bill that raises the 
conforming loan limits for certain parts of the United States. H.R. 
1461 would raise by 50 percent the maximum size mortgage Fannie Mae and 
Freddie Mac could buy.
  This language hurts the very basic functions of GSEs to provide 
liquidity and help lower-income home buyers.
  While the GSEs are chartered to operate in every district across the 
country, their effectiveness in serving low-income borrowers has been 
seriously hindered because they focus instead on bigger and bigger 
loans to higher and higher-income borrowers. Presently, Fannie and 
Freddie can buy first mortgages on single-family houses up to $359,000. 
That limit is the so-called ``conforming loan limit,'' and it rises 
every year. Next year it will go up to $400,000. But with the bill now, 
it will go up to $600,000 in 2006. A home buyer would need an income of 
almost $200,000 to buy that home. Is that what Fannie Mae was intended 
to help?
  According to a study by the Federal Reserve published last January, 
the interest rate difference between a conforming loan and a jumbo loan 
fluctuates between .15 percent and .18 percent, most of which is pure 
profit for Fannie Mae. Based on the current interest rate environment, 
this means at best Fannie is going to lower monthly costs by simply $60 
for someone buying that $200,000 loan who is now paying $3,300 or so a 
month in mortgage payments.
  The problem for Fannie is this extension into jumbo loans for higher-
income families and forgetting about their mission to help lower-income 
families comes with a an added price, a risk to their balance sheets.
  Chairman Greenspan and Secretary Snow have consistently raised their 
concerns about the systemic risks that the size of Fannie and Freddie's 
portfolios pose to our Nation's housing market. And if we allow them 
now to participate in the jumbo loan market as well, they will only 
continue to further exacerbate this dire situation.
  We should ask, why was it even proposed that Fannie get this added 
power to help high-income home buyers? Was there a problem that needed 
to be fixed? No such evidence was ever presented at any of the 
committee hearings.
  The private sector has adequate sources of funding for loans that are 
above the conforming limits. An active private secondary market for 
larger mortgage loans that did not exist when the enterprises were set 
up is now active to supplement these sources of funding, and allowing 
Fannie to take on higher costs in jumbo loans only takes valuable time 
and resources away from their enterprises.
  Madam Chairman, I reserve the balance of my time.
  Mr. GARY G. MILLER of California. Madam Chairman, I yield myself such 
time as I may consume.
  GSEs have been at the forefront of creating affordable housing 
opportunities for American families.
  While nationally the homeownership rate is at a record high of 69.2 
percent, many high-cost metropolitan areas across the Nation lag behind 
this national rate. In the second quarter of 2004, the national average 
was 69.2 percent. Yet in New York, New York it was 36.6; Los Angeles, 
California, 51.6; Orange County, California 61.4; and Boston, 
Massachusetts, 59.4.
  The high-cost area designation takes median home prices into account, 
but would be capped at 150 percent of the statutory loan limit, the 
same limit that now applies to Alaska, Hawaii, Guam, and the Virgin 
Islands. If it is good enough for Alaska, Guam, Hawaii, and the Virgin 
Islands, it should also be good enough for California; Michigan; New 
York; Connecticut; New Jersey; Nevada; Virginia; Washington, D.C.; 
Pennsylvania; Florida; New Hampshire; and many more. For example, in 
the North New Jersey Metropolitan Statistical Area, the median home 
price is $435,200. It this amendment passes, it would drop to $359,650 
under the loan limits.
  The conforming loan limit provision in this bill will make a 
meaningful cost difference for home buyers. Based on the current 
interest rate environment, the current monthly payment difference 
between a conforming loan and a jumbo loan can save a homeowner up to 
$171 per month. In high-cost areas a significant majority of entry-
level homes exceed the national conforming loan limit. The conforming 
loan limits language in H.R. 1461 will help nearly 245,000 first-time 
home buyers. In fact, in the gentleman from New Jersey's (Mr. Garrett) 
district alone, it helps 42,987 first-time buyers.
  There is broad-based opposition to this amendment. National 
Association of Realtors oppose it; National Association of Home 
Builders, National Association of Mortgage Brokers, Independent 
Community Bankers of America, National Alliance of Independent Bankers. 
I just received a call from HUD Secretary Jackson, who also opposes 
this amendment.
  There are three parts in section 123. The Garrett amendment deletes 
all three in this section. I think that is an error on his part.
  This section sets conforming loan limits and requires the agency to 
make annual adjustments to the limits based on increases or decreases 
in a housing price index maintained by the agency.
  Two, the accuracy of the housing price index is required to be 
audited by the GAO.
  And, three, for high-cost metropolitan statistical areas, the 
conforming loan limit is raised to the lesser of 150 percent of the 
statutory limit or the median home price in the area.
  The Garrett amendment does not just strike the high-cost area 
provision, it completely strikes the entire conforming loan limits 
section of the bill: One, how the loan limit is calculated. Two, it 
creates uncertainty on who is supposed to set the new loan limit every 
year. Three, it eliminates flexibility in loan limits to reflect market 
fluctuations, and the GAO study to develop loan limit is deleted by 
this amendment entirely.
  This basically is to make sure that high-cost areas are provided the 
same flexibility that Guam, Alaska, Hawaii, and Virgin Islands are 
currently benefiting from. The housing costs are going up across this 
Nation. This bill was worked in a fashion to allow for that, to allow 
systematic review yearly of these high-cost areas so GSEs can go out 
and compete in the jumbo marketplace, decreasing the cost of loans to 
individuals, decreasing their payments, allowing more individuals in 
the first-time marketplace to own a home and get the best possible home 
they can buy, especially during bad times.

[[Page 23868]]

  When the economy starts to fail, banks sometimes pull out of 
marketplaces. GSEs at that time pull into them in a heavier fashion to 
make sure there is liquidity.
  There is ample overview within this bill to make sure safety and 
soundness are taken into consideration. These loans are securitized. 
These loans just are just not sitting out there floating in the 
marketplace. These are good, sound loans based on people who need that.
  Madam Chairman, I reserve the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chairman, I yield myself 1 minute.
  We must remember what the original focus of the GSEs was when they 
were initially chartered by this Congress, they were to do two things, 
and that is to provide liquidity to the marketplace and also to help 
provide for facilitating low-income buyers coming into the marketplace.
  It is already set up in the law that the amount that GSEs can lend 
can go up every year. As it is right now, it stands at $359,000. It is 
set to go up to $400,000 for next year, in 2006. As the bill was 
amended in committee, it comes out now that that will go up by 50 
percent.
  I ask the question, how would we define somebody who is about to buy 
a $600,000 home? That individual would have to be making an income of 
around $200,000. Even if they are firemen, policemen, teachers, who 
have you, they would still need an income of $200,000 in order to buy a 
home at $600,000.
  That was not the intent of GSEs. The intent was to help the low-
income market to get their homes. By allowing the GSEs to get into this 
market, what we are doing is distracting them from their purpose and 
hurting those very people that they were intended to help: low-income 
people, whether they are in New Jersey or California or other high-
interest-rate States, to be able to buy their first time.
  Madam Chairman, I reserve the balance of my time.
  Mr. GARY G. MILLER of California. Madam Chairman, the gentleman 
should have been consistent and deleted Alaska, Guam, Hawaii, and the 
Virgin Islands.
  Madam Chairman, I yield 1 minute to the gentleman from New Jersey 
(Mr. Menendez).
  Mr. MENENDEZ. Madam Chairman, I rise in strong opposition to the 
Garrett amendment, which would be devastating for middle-class families 
across New Jersey and in high-cost areas throughout the country.
  While my colleague might argue that this amendment would have no 
effect on the ability of families to purchase a home, he is gravely 
mistaken.
  The Garrett amendment prohibits Fannie and Freddie from purchasing 
mortgages at a higher cost than the current limit. This means that in 
the high-cost areas such as those in New Jersey where the median home 
price exceeds the national price by at least $200,000 in counties like 
Bergen and Passaic, families would not have access to an affordable 
loan. Under this amendment families will be priced out of their own 
neighborhood.

                              {time}  1545

  Those who live in higher-cost areas do not deserve to be punished and 
should not have to move somewhere else to obtain an affordable home 
loan; yet that is exactly what this amendment does. This amendment is a 
step backwards for efforts to open the doors to affordable 
homeownership. We should be trying to expand opportunities for families 
who dream of owning a home in the area they want to live in, not 
shutting them out of achieving the American Dream.
  I urge a ``no'' vote on the amendment.
  Mr. GARRETT of New Jersey. Madam Chairman, I yield myself 20 seconds.
  Madam Chairman, the assertion that this would be devastating to the 
market runs contrary to the facts before the committee. There was no 
evidence whatsoever presented to the committee to say that the system 
in place in States such as New Jersey or California or elsewhere are in 
need of GSEs to come in to increase their conforming limits by 50 
percent. There is already an additional market out there that allows 
for people to buy jumbo loans; and there are a number of different 
variations, adjustable rate loans, that allow people who are in the 
upper brackets and making $200,000 to be able to afford and to buy 
these mortgages.
  Mr. GARY G. MILLER of California. Madam Chairman, I yield 30 seconds 
to the gentleman from New York (Mr. Israel).
  Mr. ISRAEL. Madam Chairman, what we are debating here is what is 
affordable, how much is enough. Middle-class families know the answer. 
If you are in the middle class, you are too rich to be eligible for 
Federal programs, but too poor to be able to keep up with the cost of 
living.
  The language that the gentleman from California (Mr. Gary G. Miller), 
the gentleman from California (Mr. Sherman), and I worked into this 
bill is a commonsense, bipartisan compromise that keeps up with that 
middle-class squeeze that makes the American Dream of homeownership 
possible. With all due respect to the gentleman, this amendment makes 
the American Dream of homeownership even harder. We should defeat this 
amendment.
  Mr. GARRETT of New Jersey. Madam Chairman, I yield myself the balance 
of my time.
  Madam Chairman, as stated, the purpose of Fannie Mae and Freddie Mac, 
the GSEs, was to provide liquidity difficult to the market and allow 
first-time homeowners to get into the market in the first place. 
However, we want to define who those people are, and I think some 
things we can agree on: those people who are making $200,000 and who 
want to expand and go up to larger houses should not be the ones that 
we define as lower-income individuals.
  The statistics also show that came before our committee that even if 
we put this into place, the differential on mortgage rates would 
account for around $60 to $70 per mortgage. So if you are buying that 
$600,000 house and paying $3,000 or $3,300 a month, even if this bill 
were to pass, you would only see your savings of around $60 or $70.
  I think the focus of Congress should be what it was when Fannie and 
Freddie were first set up, and that is to help those people get into 
their very first home. We can do that best by limiting their function 
to what it was prior to this amendment in the committee, and that is to 
focus on first-time home buyers in every State of the Union to be able 
to buy that first home, people of low and modest means who need the 
assistance of a government-backed program such as Fannie and Freddie to 
be able to know that there is a program there that allows them to get 
into that loan.
  We can allow the other market, which is already in place, which has 
been functioning properly, where there is no evidence whatsoever to 
come before our committee that says there was a need to expand in this 
area, to continue to provide the financing for people who are at the 
upper-income levels of $200,000 and the like to be able to buy those 
homes.
  Madam Chairman, I believe the best thing in mind is to make sure we 
remain in place the system that allows first-time home buyers the 
ability to get into their homes. By voting ``yes'' on this amendment, 
we be will be able to do that.
  Mr. FARR. Madam Chairman, I rise in strong opposition to the Garrett 
amendment that would prevent an increase in the Conforming Loan Limit.
  If the Conforming Loan Limit is not increased, middle income families 
on the Central Coast of California will not be able to own a piece of 
the American dream--their own home.
  Right now, Fannie Mae and Freddie Mac can purchase single family 
mortgages up to a nationwide limit of $359,650.
  Increasing the Conforming Loan Limit will allow these GSEs greater 
access to high cost housing markets, which will increase the 
availability of mortgage capital which will increase homeownership.
  I understand a mortgage of $359,650 sounds like a lot in some 
congressional districts, but in my district, middle class families

[[Page 23869]]

will be priced out of the housing market if the Conforming Loan Limit 
is not increased.
  Let me give you some examples of housing prices for my district--
  Monterey County, the median home sales price in September 2005 was 
$712,797.
  Santa Cruz County, the medium home sales price in September 2005 was 
$750,000.
  For the City of Salinas, in Monterey County, the median home sales 
price in September was $610,000, while the medium household income was 
$43,720, according to Census figures compiled for 1999.
  For the City of Watsonville, in Santa Cruz County, the median home 
sales price in September was $654,750, while the median household 
income was $37,617, according to Census figures compiled in 1999.
  There is a huge affordable housing-income gap in my district that 
will only get worse without an increase in the Conforming Loan Limit.
  The American dream--homeownership--should be an opportunity for all 
Americans.
  I urge a ``no'' vote on the Garrett amendment.
  Mr. MENENDEZ. Madam Chairman, I rise in strong opposition to the 
Garrett amendment, which would be devastating for middle-class families 
across New Jersey and in high cost areas throughout the country.
  One of the sensible actions this bill takes is allowing Fannie Mae 
and Freddie Mac to purchase mortgages that reflect the actual median 
home price instead of a set national limit.
  We all know that the price of purchasing a home is increasing. But 
Madam Chairman, it is blatantly wrong to pretend that the same loan 
limits should apply to areas where the average home cost is $75,000 as 
areas where the median cost is well over $350,000. The reality is, home 
prices in high-cost areas are skyrocketing at higher rates and to costs 
that are far above the national average.
  While my colleague from New Jersey argues that this amendment would 
have no affect on the ability of families to purchase a home, he is 
gravely mistaken.
  Because his amendment would prohibit Fannie and Freddie from 
purchasing mortgages at a cost higher than the current limit, families 
in high cost areas--such as those in New Jersey where the median home 
price exceeds the national median home price by at least $200,000--
would not have access to any affordable loan. Under this amendment, 
family will be priced out of their own neighborhood.
  These affordable loans help ensure families who seek the dream of 
homeownership have the same chance to own their own home as those with 
more means. Families that live in higher cost areas do not serve to be 
punished and should not have to move somewhere else to obtain an 
affordable home loan. Yet that is what this amendment would do.
  A family living in Bergen or Passaic County, for instance, where the 
median home price is $390,000, would not be able to get an affordable 
loan from Fannie or Freddie simply because they live in an area where 
the cost excess the current limit. So where are they supposed to go?
  This amendment is a step backwards for efforts to open the doors to 
affordable homeownership. We should be trying to expand opportunities 
for families who dream of owning a home in the area they want to live, 
not shutting them out from achieving the American dream.
  Mrs. MALONEY. Madam Chairman, I rise in opposition to the Garrett 
amendment. This amendment would take out of the bill a provision that I 
strongly support which raises the permissible loan limits for Fannie 
Mae and Freddie Mac up to the median home price in high cost areas such 
as New York City.
  This is a simple and common-sense amendment which recognizes that 
home prices in some parts of the country are higher than in most of the 
nation.
  In these areas middle class families cannot use lower rate GSE loans 
to buy a median price home, because the price will exceed the 
nationwide GSE limit. Simple fairness requires that we solve this 
problem and give middle class families in these areas the same 
opportunity to use a lower-cost GSE loan as those in other areas enjoy.
  This is about whether New York's policemen, firefighters, school 
teachers, government workers and other middle-class workers can aspire 
to home ownership.
  I strongly supported raising the loan limit in high cost areas and I 
strongly oppose taking this provision out.
  This amendment is critical to New York and other high cost areas. But 
it does not come at a cost to other areas. This is not a zero sum 
situation.
  So I urge my colleagues from these areas that are not affected by 
this amendment to join me in voting against it so that middle class 
workers across this nation will have a chance at the American Dream of 
owning your own home.
  Ms. WOOLSEY. Madam Chairman, my district, the 6th District of 
California, just north of the Golden Gate Bridge is a ``donor'' 
district. We pay a lot more in taxes than we get back, in fact, the 
median home price is approaching $1 million. This is almost three times 
the national median home price, and my constituents want their taxes to 
work for them.
  They want middle-class families in their area to be able to secure a 
GSE loan.
  They want teachers, firefighters, and policemen who serve and live in 
areas of the country where the housing market is soaring, to be 
eligible for an GSE loan.
  Madam Chairman, we can do that. We must preserve the section of the 
underlying bill that allows for raising conforming loan limits in high 
cost areas. I urge my colleagues to oppose the Garrett amendment and 
allow fair home mortgage lending.
  The Acting CHAIRMAN (Mrs. Capito). The question is on the amendment 
offered by the gentleman from New Jersey (Mr. Garrett).
  The question was taken; and the Acting Chairman announced that the 
noes appeared to have it.
  Mr. GARRETT of New Jersey. Madam Chairman, I demand a recorded vote.
  The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from New Jersey 
(Mr. Garrett) will be postponed.
  It is now in order to consider amendment No. 8 printed in House 
Report 109-254.


      Amendment No. 8 Offered by Ms. Loretta Sanchez of California

  Ms. LORETTA SANCHEZ of California. Madam Chairman, I offer an 
amendment.
  The Acting CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 8 offered by Ms. Loretta Sanchez of 
     California:
       Page 93, line 17, before the semicolon insert ``, including 
     the use of alternative credit scoring''.

  The Acting CHAIRMAN. Pursuant to House Resolution 509, the 
gentlewoman from California (Ms. Loretta Sanchez) and a Member opposed 
each will control 5 minutes.
  The Chair recognizes the gentlewoman from California (Ms. Loretta 
Sanchez).
  Ms. LORETTA SANCHEZ of California. Madam Chairman, I yield myself 
such time as I may consume.
  Madam Chairman, my amendment is very simple and straightforward. It 
merely adds alternative credit scoring as an element of the Annual 
Housing Report, as outlined in section 1324 of the bill.
  Before I continue, however, I would first like to thank the Committee 
on Rules for making the amendment in order and the Committee on 
Financial Services for its consideration. In particular I would like to 
thank the gentleman from Delaware (Mr. Castle), who has been a leader 
on exploring the challenges and the opportunities of alternative credit 
scoring. I look forward to working with the gentleman on this issue in 
the future.
  My amendment is a modest one, but I think its implications have far-
reaching potential. It is currently estimated that there are about 50 
million people in the United States who have little or no credit 
history. Many of these individuals make a solid income, they pay their 
bills, they have substantial savings and investments. However, these 
people face tough, if not insurmountable, conditions when they go to 
secure a loan. Those who do qualify often have to pay excessive fees or 
elevated interest rates. The irony is that you are more likely to 
secure credit if you have debt than if you have none.
  So the question is, how can these people who are outside the 
traditional banking system gain access to credit and home loans if they 
have no traditional credit history? One of the answers may be to use 
alternative credit scoring and alternative sources of information, such 
as utility bills and other types of payment systems so that they have a 
history. If we use that, then we could see that they would most likely 
pay their mortgage every month.
  Much work is being done to develop and automate the use of 
alternative credit information. Companies such as

[[Page 23870]]

Fair Isaac, the originator of the FICO score, has an algorithm which it 
uses to help lenders gain the credit worthiness of unbanked or 
underbanked applicants. Nevertheless, while the private sector is 
taking the initiative, I think it needs the support of the Federal 
Government. Let me tell you why.
  Recently, we had Hispanic Heritage Month here in Washington, D.C. 
where the Congressional Hispanic Caucus Institute does a summit. I did 
a particular forum on alternative credit scoring. Many of the actors, 
many of the first originators of loans for homes, for example, said 
that it would be much easier for them to approve people on alternative 
credit scoring if in fact the Fannie Maes, for example, of the world 
actually would buy these in the secondary market. Right now they do 
not.
  So I think it is important for us as the Federal Government to step 
up and to have Fannie Mae and Freddie Mac and others begin to look at 
using alternative credit scoring on a more regular basis. It would 
encourage primary lenders to follow suit; and more people, who should 
really be eligible for these loans, would be eligible.
  My amendment does not mandate nor does it direct GSEs to use 
alternative credit scoring. It only asks that they report on their use 
of these methods in the effort to promote greater homeownership, 
particularly in underserved communities. By raising awareness of 
alternative credit scoring, we could potentially be helping thousands 
of qualified home buyers who have always aspired to own their own home.
  Madam Chairman, I ask my colleagues for their support on this 
amendment.
  Madam Chairman, I yield back the balance of my time.
  Mr. OXLEY. Madam Chairman, I claim the time in opposition, although I 
am not opposed to the amendment. As a matter of fact, I am very much in 
favor of the amendment, and I congratulate the gentlewoman from 
California for her amendment. I know the gentleman from Delaware (Mr. 
Castle) and the gentleman from Michigan (Mr. Ehlers) and others on our 
side of the aisle have been very interested in this entire issue. I 
think it is a worthy amendment, and we have no objection on this side.
  The Acting CHAIRMAN. The question is on the amendment offered by the 
gentlewoman from California (Ms. Loretta Sanchez).
  The amendment was agreed to.
  Mr. OXLEY. Madam Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Baker) having assumed the chair, Mrs. Capito, Acting Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 1461) to 
reform the regulation of certain housing-related Government-sponsored 
enterprises, and for other purposes, had come to no resolution thereon.

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